Price and Cost Determination

Price and cost determination is a key area that must be understood as it influences the charge-out rates (sell prices) and the cost rates that are being attributed to the company. There are three factors that impact the price and cost determination of the timesheet entry: 

1. The configuration of the system. 
2. The configuration of the item code. 
3. The employee or resource used on the timesheet line.   

The first factor that influences price and cost determination is the Eralis Job system configuration. Within in the system initialization you can use either the employee and resource charge-out rate, or the staff and resource cost from the item code. The company must define whether to base the charge-out rate on the person doing the work, or the type of work that is being performed. 

When the Employee/Resource Charge-out Rate has been selected, the charge-out rate will be paid based on an employee. First the system will check which item type that item code is set to. If the item type is set to Labor, the user price from the employee master will be used. However, if it is not set to item type Labor, the price will be based on the price list that is assigned to the business partner. If the system is not set to use this option, the charge-out rate will be based on the item code. 

The company must also define whether the cost will come from the item code, or from the employee. If the Staff/Resource Cost from Item Code is selected, the cost rate will come from the item code. This item code is the cost on the WIP (Work-in-progress) warehouse. However, if this option is left unselected, the system will check the item type for that item code. If the item type is set to Labor, the cost will come from the Employee Master. On the other hand, if it is not set to Labor, the cost will come from the WIP warehouse. 

The second factor of influence on the price is the item code configuration. To be used in timesheet entry, item codes must be set up as non-inventory items. The item codes must also be set to Standard Costed since SAP Business One does not hold a cost against non-inventory items. This means that if the cost is based on a non-inventory item code that has not been set to Standard Costed, the cost will come through as zero because SAP Business One does not have a cost for that item. Therefore, it is imperative that the item code is set to Standard Costed.   

The Item Type field also has an impact on the price and cost determination. The Item Type can be set to Labor, Travel or Items. When timesheets are recorded, the system will view items set to Labor as a time-related transaction. For example, the actual work being carried out must be set to Item Type – Labor. On the other hand, items set to Travel or Items are viewed as non-time-related transactions.