Introducing costs

When you create a BOM A stock assembly and process costing system, which provides facilities to specify the structure of finished items in terms of sub-assemblies and components., you will consider the material and operation costs. These are the stock item or raw materials The base materials from which sub-assemblies, components and finished goods are made. costs that you need to build the finished item. However, there will also be additional costs. Additional costs include labour costs, machine setup costs, run costs and close-down costs.

In the bicycle example, three occurrences of additional costs were included for labour. Separate setup costs were included to build each wheel.

In chemical and food processing industries, you might consider additional costs for cleaning machinery.