Material Costing#

Overview#

Critical Manufacturing provides a mechanism to keep track of the current Material cost using the Cost Absorption method. Costs are incurred whenever a Material is processed at a step or incorporates other Materials.

The following picture illustrates the objects in the system which support costing.

Cost Absorption#

The following list describes in detail the mechanism used to keep track of the Material Cost:

1. Costs are only applied to the Material primary quantity
2. When a material is created, the standard product initial cost is used. The material will be valued at that product initial cost.
3. Time variable costs (Step, Resource and Labor) are incurred proportionally for every unit.
4. For incorporating time based costs, only the time between TrackIn and Abort as well as TrackIn and TrackOut will be considered.
5. The fixed and unit costs will be incurred only at TrackOut.
6. For Abort Material, time costs and unit costs are incorporated, but not fixed costs.
7. Fixed and unit costs are incurred at TrackOut for non pass-through Steps and at MoveNext, SpecialMoveNext and Rework for pass-through Steps.
8. For labor costs, the system considers the rate and time worked by every Employee that was (or has) Checked-In for any time when the Material was processing. It also includes any Calendar Day overtime as well as any Shift overtime. In case that more than one Material is In-Process at the Resource, costs are distributed in a quantity proportional manner. Note that pass-through steps will not use this information because it's not possible to determine correctly the processing time.
9. Because Employees can Check-in into and Check-out from the Resource at any time, every time an Employee checks-in or checks-out from a Resource with Materials InProcess, the labor costs are calculated and distributed at that time. For that reason, each Resource stores the date and time when the costs were calculated the last time. Also, because there may be already Materials InProcess when performing a Track-In, the labor costs are calculated and distributed for the Materials which are already InProcess. In every case, the labor costs are distributed in a quantity proportional manner.
10. In case that one Employee is checked-in at more than one Resource, costs are distributed proportionally to the quantity of the Materials InProcess at those Resources.
11. Pass-through steps do not incur in variable time costs, only variable units and fixed costs. For pass-through steps, these costs are incurred at MoveNext/SpecialMoveNext.
12. If a Material has SubMaterials and SubMaterial tracking is enabled, cost is nevertheless only incurred when the TopMost Material performs the TrackOut. For performance reasons, the cost will only be incorporated in the SubMaterials when the step of the Material changes. Meanwhile, the SubMaterials cost will be stored in an internal Material property called SubMaterialsDeferredCost. While these costs are not distributed, they are also added to the TopMostMaterial cost so that at any time, the total costs are reflected correctly.
13. Merges, combines, assembles, etc. add the cost of the incorporated source materials in the target material.
14. Splits, expands, etc. will work by distributing the costs proportionally to the quantity of the new materials.
15. Losses and Bonuses do not affect the Material cost (as a whole) although the Material unit costs will be changed proportionally to the new quantities.
16. Unit-of-conversion changes - costs are transferred one-to-one and remain unchanged (of course the material unit cost will be changed).
17. Change Material Quantity, Change Material Product and Change Material Flow and Step do not change the Material cost.
18. The transaction Change Material Cost can be used to adjust manually the cost for a Material.

Material Cost Transactions#

The section below describes the different Material transactions that affect the Cost, SubMaterialsCost and SubMaterialsDeferredCost properties of the Material.

Transaction	Cost	SubMaterials Cost	SubMaterials Deferred Cost
• Create / Clone Material	Set with Product Initial Cost x Material Primary Quantity	Set with zero	Set with zero
• Change Material Cost	Set with the defined Cost (note that it must be greater than the SubMaterialsDeferredCost)	Unchanged	Unchanged
• Abort Material	Costs are calculated as: Time Variable Costs = (AbortTime - TrackInTime in hours) x (StepCostPerHour + ResourceCostPerHour) + LaborCost + Unit Variable Costs = (StepCostPerUnit + ResourceCostPerUnit) x Material.TrackInPrimaryQuantity and then distributed (added) proportionally for each Material in the Material hierarchy according its current Quantity LaborCost takes into account all Employees which were Checked-In at the time of the Material Track-In or checked-in before the Material Track-Out	Refer to the calculation on the column "Cost" at the left. SubMaterialsCost is increased by the Costs proportional to SubMaterialsPrimaryQuantity in relation to (PrimaryQuantity + SubMaterialsPrimaryQuantity) as it's distributed (added) across the Material hierarchy	Unchanged
• TrackIn Material (for TopMost Material)	Labor Costs for other Materials in Process at the Resource are calculated until the current time and distributed in a quantity proportional manner.	Unchanged	Labor Costs for other Materials in Process at the Resource are calculated until the current time and distributed in a quantity proportional manner.
• TrackIn Material (for non-TopMost Material)	Unchanged	Unchanged	Unchanged
• Resource Check-In	Labor Costs for Materials in Process at the Resource are calculated until the current time and distributed in a quantity proportional manner.	Unchanged	Labor Costs for Materials in Process at the Resource are calculated until the current time and distributed in a quantity proportional manner.
• Resource Check-Out	Labor Costs for Materials in Process at the Resource are calculated until the current time and distributed in a quantity proportional manner.	Unchanged	Labor Costs for Materials in Process at the Resource are calculated until the current time and distributed in a quantity proportional manner.
• TrackOut Material (for TopMost Material)	Costs are calculated as: Time Variable Costs = (TrackOutTime - TrackInTime in hours) x (StepCostPerHour + ResourceCostPerHour ) + LaborCost + Unit Variable Costs = (StepCostPerUnit + ResourceCostPerUnit) x Material.TrackInPrimaryQuantity + Fixed Costs = (StepFixedCosts + ResourceFixedCosts) and then it's added to the Material Cost LaborCost takes into account all Employees which were Checked-In at the time of the Material Track-In or checked-in before the Material Track-Out	Unchanged For performance reasons, the costs are effectively distributed only when the step of the Material changes.	Refer to the calculation on the column "Cost" at the left SubMaterialsDeferredCost is set with the Costs proportional to SubMaterialsPrimaryQuantity in relation to (Material.PrimaryQuantity + Material.SubMaterialsPrimaryQuantity) so that it can be distributed later across the Material hierarchy
• TrackOut Material (for non-TopMost Material)	Unchanged Costs are distributed (added) only when the Material Step changes or when a Ship transaction occurs	Unchanged	Unchanged (it's zero)
• Material MoveNext (if Step is Pass-Through)	Costs are calculated as: Unit Variable Costs = StepCostPerUnit x Material.TrackInPrimaryQuantity + Fixed Costs = StepFixedCosts and then distributed (added) proportionally for each Material in the Material hierarchy according its current Quantity LaborCost is taken from the user that performed the Abort	Refer to the calculation on the column "Cost" at the left. SubMaterialsCost is increased by the Costs proportional to SubMaterialsPrimaryQuantity in relation to (PrimaryQuantity + SubMaterialsPrimaryQuantity) as it's distributed (added) across the Material hierarchy.	Unchanged
• Material MoveNext • Special Material MoveNext • Rework Material • Receive Material • Change Material Flow/Step • Ship Material (local Facility) (for TopMost Material)	Decreased by the SubMaterialsDeferredCost as it will be distributed (added) to the SubMaterials	Added in the amount of SubMaterialsDeferredCost	Set with zero
• Material MoveNext • Special Material MoveNext • Rework Material • Receive Material • Change Material Flow/Step • Ship Material (local Facility) (for non-TopMost Material)	Increased in the SubMaterialsDeferredCost proportion of the Material PrimaryQuantity in relation to the TopMost Material SubMaterialsPrimaryQuantity	Increased in the SubMaterialsDeferredCost proportion of the Material SubMaterialsPrimaryQuantity in relation to the TopMost Material SubMaterialsPrimaryQuantity	Unchanged (it's zero)
• Split Material	• Main Material: Decreased proportionally to the Child Material PrimaryQuantity in relation with the original Material.PrimaryQuantity • Child Material: Set proportionally to the Child Material PrimaryQuantity in relation with the original Material.PrimaryQuantity	• Main Material: Decreased proportionally to the Child Material SubMaterials PrimaryQuantity in relation with the original Material SubMaterialsPrimaryQuantity • Child Material: Set proportionally to the Child Material SubMaterials PrimaryQuantity in relation with the original Material SubMaterialsPrimaryQuantity	• Main Material: If Main Material is TopMost, it's decreased proportionally to the Child Material SubMaterials PrimaryQuantity in relation with the original Material SubMaterialsPrimaryQuantity; otherwise it's unchanged • Child Material: If Main Materials is TopMost, it's set proportionally to the Child Material SubMaterials PrimaryQuantity in relation with the original Material SubMaterialsPrimaryQuantity; otherwise it's set with zero
• Merge Material	• Main Material: Increased by the Child Material Cost • Child Material: Set with zero	• Main Material: Increased by the Child Material SubMaterialsCost • Child Material: Set with zero	• Main Material: In case that the Main and Child Material belong to different Material hierarchies, if the TopMost of Main Material SubMaterialsDeferredCost > 0 then it's distributed proportionally to the Main Material Hierarchy so it will be zero after the merge; otherwise it will remain unchanged • Child Material: a) In case that the Main and Child Material belong to different Material hierarchies, if the TopMost of Child Material SubMaterialsDeferredCost > 0, then it's distributed proportionally to the Child Material Hierarchy b) Set with zero
• Combine / Compose Material	• Source Material: a) The cost is decreased in proportion to the combined quantity in relation with the original Source Material quantity. b) In case that the Source is not TopMost and the TopMost of Source has the property SubMaterialsDeferredCost > 0, the cost is further decreased by the SubMaterialsDeferredCost in proportion to the combine quantity in relation to the TopMost of Source SubMaterialsQuantity • Target Material: a) If TopMost of TargetMaterial SubMaterialsDeferredCost > 0 then it's distributed proportionally to the Target Material Hierarchy b) Increased by the Cost calculated above for the Source Material	• Source Material: Unchanged • Target Material: Unchanged	• Source Material: Reduced by the item b) in column Cost at the left for the Source Material • Target Material: If TopMost of TargetMaterial SubMaterialsDeferredCost > 0 then it's distributed proportionally to the Target Material Hierarchy; otherwise unchanged
• Assemble Material • Disassemble Material • Replace Assembled Material	• Source Material: Decreased in proportion of the assembled quantity in relation to the Material PrimaryQuantity • Target Material: Increased by the source material assembled quantity cost	• Source Material: Unchanged • Target Material: Unchanged	• Target Material: Unchanged • Target Material: Unchanged
• Attach Material	• Parent Material: In case that the TopMost of Parent Material has the property SubMaterialsDeferredCost > 0 then it's distributed proportionally to the Parent Material Hierarchy; otherwise it remains unchanged • Child Material: In case that the Child Material has the property SubMaterialsDeferredCost >0 the SubMaterialsDeferredCost is distributed proportionally to the Child Material Hierarchy; otherwise it remains unchanged	• Parent Material: Increased by the Child Material Cost (refer to the column Cost at the left for its calculation) • Child Material: Unchanged	• Parent Material: In case that the TopMost of Parent Material has the property SubMaterialsDeferredCost > 0 then it's distributed proportionally to the Material Hierarchy and will be set with zero; otherwise it remains unchanged • Child Material: a) In case that the Child Material has the property SubMaterialsDeferredCost > 0 the SubMaterialsDeferredCost is distributed proportionally to the Child Material Hierarchy b) Set with zero
• Detach Material	• Parent Material: Unchanged • Child Material: In case that the TopMost of Parent Material has the property SubMaterialsDeferredCost > 0 the SubMaterialsDeferredCost is distributed proportionally to the Child Material PrimaryQuantity; otherwise unchanged	• Parent Material: a) Decreased by the Child Material Cost (refer to the column Cost at the left for its calculation) b) Decreased by the Cost of the Child Material • Child Material: Unchanged	• Parent Material: In case that the Parent Material has the property SubMaterialsDeferredCost > 0 then it's decreased proportionally to the Child Material PrimaryQuantity; otherwise it remains unchanged • Child Material: Remains unchanged (must be zero)
• Expand Material	• Main Material: In case that the TopMost of Main Material has the property SubMaterialsDeferredCost > 0 then it's distributed proportionally to the Main Material Hierarchy; otherwise it remains unchanged • Sub Material: Set proportionally to the SubMaterial Quantity	• Main Material: Increased by the SubMaterial Cost (refer to the column Cost at the left for its calculation) • Sub Material: Set with zero	• Main Material: Unchanged • Sub Material: Unchanged
• Collapse Material	• Main Material: If MainMaterial IsSubMaterialsDeferredCost > 0 then the SubMaterialsDeferredCost is distributed proportionally to the the Main Material Hierarchy The cost is increased by the SubMaterial Cost plus SubMaterial SubMaterials Cost • Sub Material: Set with zero	• Main Material: Decreased by the SubMaterial Cost plus SubMaterial SubMaterials Cost • Sub Material: Set with zero	• Main Material: If MainMaterial IsSubMaterialsDeferredCost > 0 then the SubMaterialsDeferredCost is distributed proportionally to the the Main Material Hierarchy; otherwise it remains unchanged • Sub Material: Unchanged
• Transfer SubMaterial	• Old ParentMaterial: Unchanged • Sub Material: If TopMost of Old ParentMaterial SubMaterialsDeferredCost > 0 then the SubMaterialsDeferredCost is distributed proportionally to the the Old Parent Material Hierarchy; otherwise it remains unchanged • New ParentMaterial: Unchanged	• Old ParentMaterial: Decreased by the SubMaterial Cost (refer to the column Cost at the left for its calculation) • Sub Material: If TopMost of Old ParentMaterial SubMaterialsDeferredCost > 0 then the SubMaterialsDeferredCost is distributed proportionally to the the Old Parent Material Hierarchy; otherwise it remains unchanged • New ParentMaterial: Increased by the SubMaterial Cost (refer to the column Cost at the left for its calculation)	• Old ParentMaterial: If TopMost of Old ParentMaterial SubMaterialsDeferredCost > 0 then the SubMaterialsDeferredCost is distributed proportionally to the the Old Parent Material Hierarchy; otherwise it remains unchanged • Sub Material: Unchanged (must be zero) • New ParentMaterial: If TopMost of New ParentMaterial SubMaterialsDeferredCost > 0 then the SubMaterialsDeferredCost is distributed proportionally to the the New Parent Material Hierarchy; otherwise it remains unchanged
• Ship Material (remote Facility)	Set with zero	Set with zero	Set with zero

Table: Material Cost Transactions