RE: Cost at Multiple Production Facilities

you can have a different standard cost, for the same item, in different
warehouses. i.e. one part number, but three different standard costs for
each warehouse - USA, Mexico, China.   The standard cost in this case is set
in the item balance record.

We do this only to a limited extent. The difficulty is determining what the
different costs are per warehouse. In other words, if you have only one part
number for the item, and only one PDM environment (I assume this is the
case), you can only get one rolled-up cost out of PDM for that item. But you
know there are really three different costs, depending on where it is
manufactured. You would need to change the overhead rates and do a cost
roll-up 3 times in PDM, in order to get the three different standard costs
to load in the item balance record.

This may or may not be feasible, depending on how many parts numbers you
have, how often you update overhead rates, etc.

Bill Mongan, CPA
Cost Accounting Manager
Generac Power Systems, Inc.
(262) 544-4811 x2097
bmongan@generac.com


-----Original Message-----
From: mapics-l-admin@midrange.com [mailto:mapics-l-admin@midrange.com]On
Behalf Of Shrader, Patrick
Sent: Tuesday, September 17, 2002 2:01 PM
To: Mapics Mailing List
Subject: Cost at Multiple Production Facilities


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Good afternoon, everyone. I need some ideas from you concerning multiple
costs. I know someone out here is producing the same item at multiple
locations, which is my problem.

I have PDM/IM. I do not have EPDM, PCC, or PMC installed.

I make the same item at three locations: USA, Mexico, and China. Lead times
are different for each -- the more expensive the overhead the quicker I can
deliver it to the customer. In order to accurately record the true cost of
the product, I have set up different part number for each location
(30xyz=USA; 40xyz=Mexico; 50xyz=China). I then set up a standard cost for
each of these part numbers, reflecting the different overhead rates for each
production facility.

The customer only orders the USA part number (30xyz). So, when the items are
transported back to the warehouse and all production is recorded, there is
an IA adjustment that reduces the 40 part number and increases the 30 part
number. Wa-la! I have 30xyz inventory available to ship/sell.

Now, you can probably imagine the problems I have scheduling and maintaining
inventory levels to meet customer demands. Not to mention any paperwork
needed by the customer concerning its device history.

All of this ruckus is designed to keep accurate standard costs for the
product in production, but it does nothing for me in determining accurate
profit (the cost of the sold item (30xyz) is substantially higher than the
true cost of the product).

How are you handling this situation? I need to accurately capture my costs,
creating a combined single standard cost (too bad there isn't a cost for
each location), and determine what the true value of my inventory is.
Additionally, customer service should be able to see one part number and
tell what the demand is, and when it will be fulfilled.

Perhaps I simply need a cost primer. I am certain that we have to change the
way we approach costing. Any hints you have will be appreciated.


Many thanks!

Patrick Shrader
White Knight Engineered Products

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