Costing & Pricing Program Concepts

The programs are on the Costing and Pricing menu.

The Suggested Cost/Price Entry (ICE410) program allows you to enter and/or maintain suggested cost and/or prices by unit of measure for individual inventory items.

Use the Create Suggested Costs/Prices (ICU410) update program to create suggested costs and prices, based on user specified parameters, for a range of items. For example, you may choose to update the current selling price of all items supplied by a given vendor by 5%. Based on this information, this program calculates and creates the suggested price record for every item provided by that vendor. Update Suggested Costs/Prices (ICU430) updates suggested costs and prices based on user specified parameters for a range of items selected by the user. Costs and prices that are updated are written to the current costing/pricing files and are then removed from the suggested cost/pricing files. eCatelog Note: When a list price is changed, the system adds a record to the eCatalog log file for the next update to the eCatalog database.

Use Erase Suggested Costs/Prices (ICU420) to erase suggested costs and prices based on user specified parameters for a range of items selected by the user. The Print Suggested Costs/Prices (ICR410) program allows you to print suggested costs and prices based on user specified parameters for a range of items selected by the user.

The Cost/Price List - Vertical (ICR420) program prints, in a vertical format, current costs and prices based on user specified parameters for a range of items selected by the user.

The Cost/Price List - Horizontal (ICR425) program prints, in a horizontal format, current costs and prices based on user specified parameters for a range of items selected by the user.

Use LIFO/FIFO F/M (ICF410) to create and maintain last in first out (LIFO) or first in first out (FIFO) costing layers. It is only available for use when the LIFO/FIFO Layers flag in the IC Static Control Record is set to O-LIFO or F-FIFO. Information is entered for each item by warehouse. It includes for each level (up to 10 levels allowed) the sequence number of the layer, date received, received cost and quantity received. This file is updated by Purchase Order receipts and through the IC Adjustment Entry program when the adjustment code is RC (receipts) is used.

LIFO/FIFO Cost Layer Print (ICR430) prints a list of all LIFO/FIFO costing layers and available quantities for each item. An average weighted cost is also included for each item. Report information includes the following: (1) warehouse code and description, (2) item number and description and (3) for each costing layer the costing layer number, sequence number, receipt date, received cost, costing unit of measure, units received, current on hand, committed and available quantities and stocking unit of measure. An average-weighted cost is provided along with the total on hand, committed and available quantities for each item. The total number of items listed is also included.

Program Concept Details

Suggested Cost/Price Entry (ICE410)

The entry screen of Suggested Cost/Price Entry consists of four sections:

• Header, where you enter the item number, effective date, list price, and manual cost

• A browser that displays suggested cost and/or price lines by unit of measure for:

• Standard pricing, where you enter suggested standard pricing and commission information for each valid pricing unit of measure. Standard pricing information is based on the item's unit of measure. The standard price may be entered as a basis and multiplier, a set price or a change %. The valid options for basis for standard price are List Price or Manual Cost. All of the item's valid pricing unit of measures are displayed, from smallest to largest. Up to seven lines of standard prices can be displayed at one time.

• An edit feature that allows you to modify suggested cost and/or price information for the selected line. Note that when a standard price, a list price and quantity break prices are being entered, the highlighted line returns to the same line after editing, and to the next line after adding a new price.

• A delete feature that allows you to delete the selected suggested cost and/or price line.

• Price Level pricing information, where you enter suggested price level and commission information for the item and unit of measure selected. The level price may be entered as a basis and multiplier, a set price or a change %. The valid options for basis for level price are List Price, Manual Cost, Standard Price, or any prior Price Level. Price levels can be set up for each pricing unit of measure available for an item.

• Quantity Break pricing information, where you enter suggested quantity breaks, prices and commission information for the item and unit of measure selected if your company offers quantity breaks. Suggested Cost/Price information is based on selling unit of measure. The quantity break price may be entered as a basis and multiplier, a set price or a change. The valid options for basis for quantity break prices are as follows: list price, manual cost, standard price, or any previous quantity break price.

IC Static Control record Require Descending Prices Flag

If the Require Descending Prices flag (in the IC Static record) is set to Y, all price breaks must be the same type (basis/multipliers or fixed amounts). Furthermore, if basis/multiplier is used, all price breaks must either use the same basis or they must be based on another price break. For example, if manual cost is the basis for break 1, the bases for breaks 2 through 6 must be either manual cost or one of the previous price breaks. The basis for levels 2 - 6 may not be set to list price or standard price.

If the Require Descending Prices flag is set to Y, the prices for breaks 1 through 6 must be entered in a descending order. For example, if price break 1's price is $5.00 then the price for price break 2 must be less than or equal to $5.00.

Methods for Creating Suggested Costs and Prices

The Suggested Cost/Price Entry program allows you to set up manual cost, list price, standard price, level prices and quantity break level prices for an item or range of items.

Suggested Cost Price Entry allows the manual cost basis to default to the current manual cost basis when entering a new item. This way if the manual cost is based on list price and the multiplier is to be changed, you only have to enter the new multiplier and not also change the basis from fixed price to list price.

Basing Manual Cost and All Prices Off of List Price

Note that if the manual cost or a price is based on another price, changing the price that they are based on will automatically cause the cost or prices that are based on it to change. In that case, there is no need to step through all of the costs and prices for them to be updated.

For example, if your manual cost and all prices are based on list price, entering the new list price in Suggested Cost/Price Entry is all that is needed for the manual cost and all the other prices to be updated. There is no need to go through the manual cost fields or any of the other price fields in Suggested Cost/Price Entry to make them get the new values. When Update Suggested Costs/Prices is run, all of the values that are based on List Price will automatically be calculated using the new list price.

For further clarification, when, for example, manual cost is based on list price, no actual value for manual cost is stored anywhere in FACTS; instead, the manual cost is calculated whenever it is needed by getting the current list price and applying the multiplier.

There are three methods for creating suggested costs and prices:

1. Using a basis and multiplier

This method uses another existing cost or price as the basis of the new cost/price and a multiplier is applied against the existing one.

If for example, the basis price was $100.00 and the multiplier was .9400, the new calculated price would be $94.00 ($100.00 x .9400). Taking this example further, in terms of setting up level prices, you can determine that each one is based on some percentage of the list price. If the list price is $100.00 and the levels are 1) $95.00, 2) $94.00, 3) $93.00, 4) $92.00, 5) $91.00 and 6) $90.00 the level prices may be set up using a basis, list price, and multipliers: 1) .9500, 2) .9400, 3) .9300, 4) .9200, 5) .9100, 6) .9000.

When entering costs/prices using the basis and multiplier method, the actual price is not calculated and stored in the pricing files. Rather, the basis and multiplier are stored in the pricing files and the price is calculated at the time the item is sold in the sales order entry programs. The advantage of using the basis and multiplier method is that when the basis price changes, that is the only price you have to change; the multipliers fix the rest of the price levels for you.

For example, if the standard price is always a multiplier of manual cost, then the standard price will automatically be changed if the manual cost is changed.

2. Using a dollar amount

Using this method, you only enter the actual dollar amount of the costs and prices. No calculations are necessary. The price entered is the price that is stored in the pricing files and is what the system presents when the item is sold in the Sales Order Entry programs.

3. Using a change % (percent)

Costs/prices may be entered by entering a change % (percent) from the existing cost/price. For example, if a standard price of $100.00 is increasing by 3% then you enter a change percent of 3.000. The system then calculates and displays the new calculated price of $103.00. When entering a change percent, the system calculates and stores the actual dollar amount in the pricing files. In this example, the system would store $103.00 the pricing files and this is the amount that would appear in Sales Order Entry programs.

4. Commissions

In addition to these three options for setting up the standard price, price levels and quantity breaks, you may also enter a commission percent. A Sales Order Static F/M flag determines whether this flag is available throughout the costing/pricing subsystem.

If the flag is turned off, the system does not give you the option to enter the commission %. If the flag is turned on, each cost/price you create will require you to enter a commission %.

When entering the commission %, you also have the option to set it to "no priority" (which leaves the field blank), indicating that commission is not generated based on the price being set up. (If the item is set to "no priority", any commission % entered in the pricing system will be ignored). For more information on commissions, refer to the Commission Basis flag set in System Management>File Maintenances>Company Control F/M.