Bill of Materials, operations

Dear Team,

What is the purpose of this checkbox -
‘Finished Goods based Operating Cost’

I have tried the Operations ‘Manage cost of operations’ checkbox and I understood the flow.

But can someone explain the meaning of finished goods based operating cost?

Thank you .

“Finished Goods based Operating Cost” (FG based Operating Cost) feature is designed to provide an alternative method for calculating operating costs. This feature is used to simplify the calculation of operating costs based on the quantity of finished goods being produced, rather than using detailed operations and workstation rates.

@NCP , I also assumed the same logic as what you have mentioned in your reply, however, there is a small doubt here.

Even if you want to calculate the operating costs based on the finished goods quantity, you have to calculate the operating costs right?
I mean without adding up the basic direct costs involved in manufacturing the product, how would you have arrived at the cost of the finished good straight ?
So if i am not wrong, although this is an alternative method, but it also involves adding up the costs step by step to arrive at the rate of quantity of the finished goods right.
Please let me know if you have an answer for this.

Thank you .