Difference between Shop Order Costing and Product Structure Costing

Question

Hi All,

We got an issue from a client saying that they need to check the deviation of production for the month of January 2023. So, we suggested to get the costing from ‘Shop Orders Costs’ window after running ‘Aggregate Shop Order Costs per Shop Order’ job.

But the client is saying they are calculating the costing from Product Structure level and wants to know the difference of logic deviation between product structure costing and the shop order costing.

App version: 8

Thank you in advance.

AanHGTS · Accepted Answer

@EntDhanaPWhen you say Product Structure cost I believe you refer to Standard part Cost, which calculate based on the Product Structure and the Routing info.Shop order costing can be deviate due to few reasons.Changes done in So level - this changes the Estimated Cost of SOActual report of Material and operation is deviates the original - this changes the Actual Cost of SO

Roberts548 · Answer

Hi All,We got an issue from a client saying that they need to check the deviation of production for the month of January 2023. So, we suggested to get the costing from ‘Shop Orders Costs’ window after running ‘Aggregate Shop Order Costs per Shop Order’ job.But the client is saying they are calculating the costing from Product Structure level and wants to know the difference oflogic deviation between product structure costing and the shop order costing.App version: 8Thank you in advance.Shop order costing and product structure costing are two methods used in manufacturing to determine the cost of producing a product. Here are the differences between the two methods:Shop order costing: In this method, the cost of producing a product is determined by assigning costs to each production order or job. This means that each time a new product is made, a new order is created, and the costs associated with that order are recorded. The cost of raw materials, labor, and overhead are all tracked and assigned to each order, allowing for an accurate calculation of the cost of production.Product structure costing: This method determines the cost of a product by analyzing the cost of each component or part that makes up the product. A product structure, also known as a bill of materials, is created to identify the parts and components needed to make the product, and the cost of each of these parts is calculated. The cost of labor and overhead is also assigned to each component, and the total cost of the product is then calculated by adding up the costs of all the components.

Difference between Shop Order Costing and Product Structure Costing

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