Estimating Cost Files & Defaults (DBA Classic)

One big advantage to using the Estimating module versus stand alone estimating programs is that it is part of a common database, meaning that all item numbers and costs are in one system and only have to be entered or changed in one place to be used by all programs and users.

Before actual estimates are created, you need to establish costs on materials, labor, setup, overhead, and outside processing.  These are created as follows.

Materials

You may get a vendor quote specifically for an estimate.  Vendor prices entered in PO-F  Enter Verbal RFQ's, assigned to the Estimate and flagged as Y to Use in Estimate will be used in the estimate regardless of other costs entered.

If you do not have a material cost specific to an individual estimate but wish to reflect quantity price breaks in your material costs, enter costs in ES-H  Enter Material Costs.  Up to five quantity breaks may be specified.  The material cost file is only used by the Estimating module.

If you issue material from inventory such that there is only one cost and no quantity breaks, you can either use ES-H, Enter Material Costs and only enter a quantity of 1.00 and a single cost, or you can ignore the material cost file altogether and use IN-L-A  Enter Standard Costs.  The Enter Estimates program always looks in the Verbal RFQ file first, the material cost file next, and, if no cost is found, it then reverts to the inventory standard cost file.  The standard cost file is used in a variety of inventory reports as a yardstick of comparison with actual or average costs.

If you periodically want your Last Cost or Average Cost to become your new Standard Cost, you can run IN-L-E  Update Material Standard Costs, which rolls either the Last or Average Cost into the Standard Cost fields for purchase parts only.

Labor

Labor can be costed either through work center labor rates multiplied by production rates established within routings, or by defining labor as a item number (inventory type L) and inserting it into the bill of material, using a standard cost for the hourly rate.

If you use routings to define each labor sequence, you will be specifying production rates in terms of parts/hour or time/part for each labor sequence.  The Enter Estimates program allows different production rates for each quote quantity within the same sequence.  The production rates will be multiplied by the labor rate specified in the work center for each labor sequence.

If you define labor in the bill of material, you can create one or a series of item numbers for labor in inventory, assigning each item number an inventory type L.  You can enter a standard hourly rate for each labor item number in IN-L-A  Enter Standard Costs.  Insert labor in bills of material, expressed in terms of decimal hours.

Setup

For Setup costing, routings provide more accuracy than the bill of material approach.  Each work center can hold a Setup rate, and setup time can be entered in each labor sequence within the Enter Estimates program.  If the bill of material approach is preferred, you could create a item number for setup and enter costs in ES-H  Enter Material Costs, which would allow different setup costs to be reflected for five different quantity levels.

Overhead

If you use the routings approach, hourly rates for overhead are specified in each work center and are applied to the labor and setup times defined in each labor sequence in the estimate routing.  Work centers have special fields for Estimating Fixed Overhead and Estimating Variable Overhead, thus allowing you to have separate overhead rates for Estimating as opposed to the fixed and variable overhead rates used for actual job costing and inventory accounting.

If you use the bill of material approach, you can include an overhead rate within the standard cost for labor as defined in IN-L-A  Enter Standard Costs.  You do not have to set up separate item numbers for overhead.  Enter the labor rate under Labor and the overhead rate under either Fixed Overhead or Variable Overhead or both.  Both the labor and overhead rates will be applied to each unit of labor specified in the bill of material.

Outside Processing

If you use the routings approach, outside processing is defined as specific sequences in the estimate routing, where you can specify a vendor, a unit cost, and a minimum cost if applicable.

If you use the bill of material approach, item numbers can be set up for outside processing with an inventory type T.  You can then set up a standard cost for this item number in either IN-L-A  Enter Standard Costs or, if multiple quantity breaks are applicable, you can set up costs in ES-H  Enter Material Costs.  Include the item numbers for outside processing in the bill of material as required.

Estimating Defaults

Defaults can be established in SD-G  Estimating Defaults for setting field values in ES-A  Enter Estimates.  Among the defaults that can be set are the days to expiration date, class, universal form or letterhead, and profit margins for material, labor, outside processing, overhead, and total margin.