What Is Cost Rollup?
Also known as: BOM cost rollup, standard cost rollup, cost roll-up, rolled-up cost
Definition
A cost rollup is the ERP process that calculates the standard cost of each manufactured item by summing component costs from its BOM with labor, overhead and outside processing from its routing, working from the lowest level up.
Cost Rollup Explained
The rollup starts at the lowest-level purchased parts, whose costs come from purchase price, a standard set by finance, or a last-cost field. It then moves up each BOM level: parent cost equals the sum of component cost times quantity per, plus operation cost, which is run time times labor rate plus setup spread across lot size, plus overhead applied by rate and any outside processing.
Results are normally stored as a pending or future cost, reviewed for large swings, and then released to become the current standard. Material, labor, fixed and variable overhead and outside cost are kept as separate buckets so variances can be traced. Infor SyteLine has a standard cost rollup routine run from the costing screens, Infor LN uses cost components and a standard cost calculation, and NetSuite uses standard cost on assembly items with BOM-based calculation.
Rollup accuracy depends on the inputs. A wrong quantity per, a stale routing time, a missing overhead rate or a zero-cost component produces a distorted standard, which then flows into inventory valuation, work-in-process and margin reporting.
Rollup is not actual costing. Actual cost records what was spent. The rollup sets what should have been spent, and the difference is variance.
Why It Matters
- Standard cost sets inventory valuation and cost of goods sold on the financial statements.
- Quotes and pricing use rolled-up cost as the base for margin decisions.
- Large unexplained cost changes after a rollup usually reveal bad BOM or routing data.
- Defense contractors with cost accounting standards need documented, repeatable cost calculation.
In Practice
A gearbox has 8 purchased parts totaling 140.00, 0.9 hours of labor at 45.00 per hour, overhead at 120 percent of labor, and 12.00 of outside plating. Rolled cost: 140.00 + 40.50 + 48.60 + 12.00 = 241.10. If routing time was mistakenly entered in minutes as 54 hours, the cost jumps by over 2,400 and the check for large swings catches it.
Frequently Asked Questions
How often should a cost rollup be run?
Typically once a year or per quarter for a standard cost reset, and ad hoc for new items or quotes. Frequent releases to current cost cause valuation churn.
What data feeds a cost rollup?
Component costs, BOM quantities and scrap factors, routing run and setup times, labor and overhead rates, and outside processing costs.
Why did my cost change a lot after the rollup?
Usually a data issue: a changed quantity per, a unit of measure mismatch, a stale routing time or a zero or very high component cost. Review the cost buckets by level.
Related Terms
Standard Cost
Standard cost is a predetermined per-unit cost for material, labor, and overhead, set in advance and used to value inventory and transactions. Differences between standard and actual are captured as variances that isolate where cost deviated.
BOM (Bill of Materials)
A BOM (bill of materials) is the structured, hierarchical list of components, sub-assemblies, and quantities required to produce one unit of a parent item, and it is the primary input MRP explodes to calculate material requirements.
Routing
A routing is the ERP record that defines the ordered sequence of operations required to manufacture an item, specifying for each step the work center or machine, setup time, run time per unit, move and queue time, and any outside processing.
Landed Cost
Landed cost is the total cost of bringing purchased goods into inventory, combining the supplier price with freight, insurance, customs duty, tariffs, brokerage, and handling, so inventory is valued at what the material truly cost to acquire.
Actual Cost
Actual cost is the real cost incurred to produce or acquire an item, accumulated from the specific material prices paid, labor hours reported, and overhead applied, rather than from a predetermined standard.
Go Deeper
How to Run Cost Rollup in SyteLine
Complete guide to running cost rollups in Infor SyteLine. Learn how to calculate rolled-up costs across BOM levels, validate results, and update standard costs.
How to Fix SyteLine Cost Rollup Variances
Diagnose and resolve cost rollup variances in Infor SyteLine including material, labor, and overhead cost discrepancies with SQL validation queries and BOM audit steps.
Working with Cost Rollup in a live environment? Our engineers do this every day - and our AI agents automate most of it.