2 Replies Latest reply: Mar 18, 2013 11:20 PM by 995074 RSS

    cost incurred and cost relieved

    991145
      in the WIP value summary there is a screenshot where is indicated the value of the job. which is the difference between "cost incurred" and "cost relieved"?
        • 1. Re: cost incurred and cost relieved
          PranitSaha
          The link - http://docs.oracle.com/cd/A60725_05/html/comnls/us/cst/stdtas09.htm
          says

          Costs Incurred: Costs associated with material issues/returns, resource, and overhead transactions of a job or repetitive schedule.
          Costs Relieved: Standard costs relieved by cost element when assemblies from a job or repetitive schedule are completed or scrapped.

          So that means, cost incurred is the actual cost (e.g.purchased cost) while cost relieved is the standard cost in your books that may not be same as cost incurred.

          Thanks,

          PS.
          • 2. Re: cost incurred and cost relieved
            995074
            Hi :

            COST INCURRED >> Term used to indicate the total amount spent to produce an assembly by using/consuming applicable MATERIALS (sub assembly & components) & RESOURCES (such as machine, man power, consumables, tools etc.)

            COST RELIEVED >> Cost or Rate of the assembly item produced by the manufacturing process, which is defined as Item standard cost at Item Costs form of costing module.

            Example:
            Assembly Item : SHIRT (Std Cost - $ 25)
            ~ Sub Assly 1: Material - Polyster Cloth - 2 Meters (Std Cost - $11)
            ~ Sub Assly 1: Resource - Sewing M/c + Tailor - 1 Unit (Cost - $5)
            ~ Sub Assly 2: Material - Button - 10 Nos (Std Cost - $2)
            ~ Sub Assly 2: Resource - Button Stiching - 1 Unit (Cost - $1)

            Let us consider a Job created for 3 Nos of Assly item - SHIRT ( Considering only Mat & Res costs for simplicity sake)

            So total cost incurred will be >> 3 X 11 (SA 1 Mat) + 3 x 5 (SA Res) + 3 X 2 (SA2 Mat) + 3 X 1 (SA 2 Res) >> 33+15+6+3 = $57

            Total Cost Relieved will be >> 3 x 25 = $75

            Variance Relived = 75 - 57 = $18

            Selling price of the shirt will be decided after consdiering other overheads & profit %, which will be more than $18.

            Regards,
            Kasi