Re: Costing versus Lot Size

Bill.

Had this discussion with a cost accountant at a client's location a while
back.
His view was the set up costs are distributed equally to the units in the
lot.

A lot of 100 and a setup cost of $50 dollars means each unit gets 50 cents
in setup costs applied.
A lot of 1000 and the same $50 setup cost means each unit gets 5 cents in
setup costs applied.
If the units are a sub-assembly or component then the material + labor +
setup costs are carried to the end item.

Reviewed the client's position with a CPA associated with an audit firm.
The CPA confirmed the validity of the client's position.


Roy Luce

Direct: 847-540-9635
800-913-PLUS (7587)
Cell: 847-910-0884
Email: rluce@xxxxxxxxxxxxxxxxxxx

-----Original Message-----
From: bpcs-l-bounces+lwl=ix.netcom.com@xxxxxxxxxxxx
[mailto:bpcs-l-bounces+lwl=ix.netcom.com@xxxxxxxxxxxx] On Behalf Of Bill
Sent: Thursday, January 13, 2011 2:09 PM
To: bpcs-l@xxxxxxxxxxxx
Subject: [BPCS-L] Costing versus Lot Size

BPCS 405CD

My cost accountant swears that the lot size of an item affects the end
cost of items made from it if there's a setup charge in the router.

This is not my understanding of how setup should be handled and the UBI
book on costing doesn't shed any light on the subject (though I haven't
read every page yet).

My understanding was that lot size was for MRP and ties into the order
basis code. Does lot size also affect items made from this item?

Bill