Areas that Impact Standard Cost of Manufactured Items
Question
A manufacturing company is implementing Dynamics 365 Supply Chain Management.
The company uses a standard costing model to value inventory.
During the setup of the system, all areas that impact the standard cost of the item must be configured correctly to calculate a complete standard cost by using routing, Bill of materials (BOM) and overhead burden.
You need to verify that all areas of the system are correctly configured.
Which object does NOT impact the standard cost of manufactured items?
Answers
Explanations
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A. B. C. D.D.
In Dynamics 365 Supply Chain Management, the standard cost of an item is calculated using various parameters such as the cost of materials, labor, overheads, and other factors that impact the cost of production. Therefore, during the setup of the system, it is important to configure all areas that impact the standard cost of the item, including routing, Bill of Materials (BOM), and overhead burden.
Now, let's discuss each of the given objects and how they impact the standard cost of manufactured items:
A. Item Group: An item group is a way of grouping similar items in the system. It helps in managing items by applying a set of shared characteristics to a group of items. However, item groups do not impact the standard cost of manufactured items directly. The standard cost is calculated based on the BOM and routing used to manufacture an item.
B. Cost Groups: Cost groups in Dynamics 365 Supply Chain Management are used to group together costs that are incurred during production, such as labor, material, and overhead costs. By assigning a cost group to an item, the system can track the costs associated with that item during production. Cost groups do impact the standard cost of manufactured items as they are used to calculate the cost of production.
C. Cost Categories: Cost categories in Dynamics 365 Supply Chain Management are used to group together costs based on their nature, such as labor, material, or overhead costs. Cost categories impact the standard cost of manufactured items as they are used in conjunction with cost groups to calculate the cost of production.
D. BOM Formula: The BOM formula is a key factor that impacts the standard cost of manufactured items. It specifies the list of raw materials, components, and subassemblies required to manufacture a finished product. The BOM formula includes the quantity of each item required and the operations required to manufacture the finished product. The BOM formula is used to calculate the material cost, labor cost, and overhead cost for each item in the BOM.
Based on the above explanation, the object that does not impact the standard cost of manufactured items is the Item Group (option A). Although item groups can be used to group similar items together, they do not directly impact the standard cost of production.
