Surcharge question

["McCready, Joan" <Joan.McCready@xxxxxxxxxxxxxxx>]

To all -

Our sales department came to me with an interesting question. We manufacture
stainless steel parts. Metals prices fluxuate constantly, and at the moment
certain raw materials are fluxuating enough that we need to make a sales
price increase to compensate. We need to track a "metal surcharge" per item
to reflect this fluxuation (updated annually, unless a given material
increases significantly in the shorter term).

Example: part XYZ sells for $125, but we need to add $10 to the price to
cover the increase in raw materials used to make the alloy. The customer
order, therefore, is for $135 each. How/where do we track historically that
the part sells for $125 and the metal surcharge is $10. I.e. how can we tell
if an historic sale price increase is due to raw materials increases (which
we can't control), or due to manufacuring & overhead increases (which we can
control), or both (i.e. metal surcharge is $10 and actual price increase is
$5, raising price from $125 each to $140 each; in the future, raw material
prices drop so we don't need the surcharge - sale price drops from $140 to
$130, keeping the actual price increase).

Any suggestions? We have one customer who wants to see these surcharges, so
we have a separate CO line item for the metal surcharge per part (i.e. they
order 10 items, we issue a CO with 20 line items - first the part for $125,
then that part's surcharge ($10), then the next part ($250), then its
surcharge ($15), etc.) However, most customers want to see a single line
item for (using example) $135 each... I know we can't be the only company
having to track this information, so I look forward to your collective
wisdom / experience.

        Thanks as always - Joan

Joan McCready, IS Manager      phone:  636-479-4499
MetalTek International               fax:  636-479-3399
The Carondelet Division             www.metaltekint.com
<www.metaltekint.com> 
8600 Commercial Blvd
Pevely, MO  63070