Commodity Surcharge

Commodity Surcharge

HelpID: 497022074, 497022110, 497022076, 497022075

The Commodity Surcharge module tracks the spot price of commodities, and automatically adds a surcharge to an Invoice when the spot price of the commodity changes between the date the Quote was provided and the date the Invoice is generated.

The module has two general areas of setup:

  1. Commodity spot price: for each Commodity item the spot price is tracked by date and dollar amount.
  2. Item-Commodity content: for made items you can record the type of commodity contained in an item, and the amount of the commodity. A surcharge for the made item is calculated based on the total charges for the commodities it contains.

Information from these two sources is used to calculate the surcharge amount when documents are transferred to Invoice.

For example, a commodity of COPPER might have a spot price of $3.80 per LB on 1-APR-2012, when a customer is given a quote for a wiring harness which has 1.125 LB of copper in each unit. By the time the invoice is generated copper is now at $3.90. The Surcharge Module will use this information to calculate the difference between the two prices, and the total quantity of copper in the unit(s) sold, to add a surcharge to the invoice to cover the difference.

Setup

Navigation: Tools >> Setup >> Manufacturing >> MFG PowerPack Setup

Mark the box next to “Commodity Surcharge*”.

Double-click on “Commodity Surcharge*” to open the Surcharge Setup window.

Calculate Surcharge From: The two options are Quote Date and Order Date. If you normally provide customers with a Quote, then transfer the Quote to an Invoice, use Quote Date.

If you use Orders, you may user Order Date or Quote Date. Order Date will default to the Document Date, and Quote Date must be manually entered. However, you might create the Order and give the customer a “quote” as of a particular date, which is manually recorded on the Order.

When the Surcharge is calculated it will look at the spot price difference between the date you select here (Quote or Order date) and the “current date” when the document is transferred to Invoice.

Surcharge Method: The two options are:

  • Add Surcharge Items to Invoice: this method add Service or Misc Fee items as additional lines to the invoice. For example, a COPPER_SURCHARGE item might be used to add the surcharge to an invoice.
  • Add Surcharge to Item Price: the surcharge will be calculated ad added directly to the Price for the affected line items on the Invoice.

After performing this set, close GP, then log-in again to enable this feature. Other users will also need to restart GP.

Base Type Maintenance

Base Type Maintenance is used to define a commodity type. The Base Type is used to track the spot price at regular intervals.

Navigation: Cards >> Inventory >> Base Type Maintenance

A Base Type is a particular type of commodity. In the Item-Base Type Maintenance window you will assign one or more Base Types to each Item, and specify how much (quantity, weight) of the Base Type (commodity) is contained in the Item. It is important to decide in which unit of measure the spot price will be recorded, because that same unit must be used when specifying the amount of the commodity in each item.

For example, if the spot price of copper is recorded here in pounds, the quantity of copper in each item must be specified in pounds. In neither window is a specific unit of measure specified, so you must decide by convention how the price and quanity will be used.

Surcharge Threshold: when documents are transferred to Invoice, the Surcharge Module will calculate the applicable surcharge (plus or minus). If the surcharge for an item does not exceed the threshold no surchage will be assessed. See Adding Surcharges section for more details.

Surcharge Item: this must be a Service, Flat Fee, or Miscellaneous Charge item. If a surcharge needs to be added to an invoice, the Item specified here will be added to the invoice. See Adding Surcharges section for more details.

Scrolling Window: the commodity price can be recorded on a daily basis. When calculating surcharges, the system will locate the price that falls on the Quote Date, or the closest price on a date before the Quote Date, and then the price that falls on or before the Invoice Date.

Item-Base Type Maintenance

Item-Base Type Maintenance is used to assign one or more Base Types to an Item. The quantity of the commodity in the Item is recorded here, and used when assessing surcharges during invoice to determine the cost of the commodity contained in the item.

Navigation: Cards >> Inventory >> Item-Base Type Maintenance

Item Number: select an Item Number. The scrolling buttons at the bottom of the window scroll through all items (not just items with Base Types assigned).

Scrolling Window: assign a Base Type and specify the quantity of the commodity contained in the Item. It is important to decide what unit of measure will be used to record the spot price of the commodity (such as pound or ounce), and to specify the quantity in the item using the same unit of measure.

Surcharge Exclusions

Surcharge Exclusions records customers for whom no surcharges will be applied. Some customers may not accept surcharges, or there might be an alternative method used for these customers to calculate and assess surcharges.

Navigation: Cards >> Sales >> Surcharge Exclusions

Enter the customers for whom surchages should not be added during invoicing.

Adding Surcharges

When the Surcharge Module is installed, surcharges will be added automatically when documents are transferred to Invoice. This happens during transfer of a single document, or during a batch transfer.

The transfer of any document type (Quote, Order, Backorder) to Invoice triggers the Surcharge Module. The surcharge calculation depends on the difference between the Quote Date and the current date (it uses the date from the server, not the User Date).

If the document is a Quote, the Quote Date is the same as the Document Date. For other documents (Order or Backorder), the Quote Date is manually entered on the Sales Date Entry window. The Quote Date is also populated automatically when, for example, a Quote is transferred to an Order (or Invoice).

The surcharge calculation process when adding Surcharge Items to the invoice is as follows:

  • Any documents for Excluded Customers will be ignored.
  • Find an Item with one or more assigned Base Types
  • For each Base Type assigned to the Item:
    • Find the price on a date equal to, or less than, the Quote Date (QuotePrice in the formula below).
      • NOTE: the price check must find a valid date-price record. If the Quote Date is before the earliest spot price, or the price on that date is $0, this will return a Quote Price of $0, and no surcharge will be calculated.
    • Find the price on a date equal to, or less than, the Invoice Date (InvoicePrice in the formula below)
      • NOTE: the price check must find a valid date-price record. If the Invoice Date is before the earliest spot price, or the price on that date is $0, this will return an Invoice Price of $0, and so surcharge will be calculated.
      • In Fabrikam (TWO) the Invoice Date will be use “User Date”. In a live company the actual date (date on the server) will be used as the Invoice Date. The User Date is used in Fabrikam to make it easier to test/train/demo the module using dates consistent with the demonstration database dates (i.e. 4/12/2017).
    • Find the invoice quantity in the base unit of measure: ItemBaseQty
    • Find the quantity of the commodity in the Item: CommodityQty
    • Surcharge = (InvoicePrice – QuotePrice) * ItemBaseQty * CommodityQty
    • The Surcharge is rounded to 2-decimals
    • If the absolute value of the resulting amount is greater than the Threshold Amount, the surcharge is added to the invoice.

The surcharge is accumulated if there are multiple items on the Invoice which contain the same commodity. For example, if multiple items contain copper, and all of them result in surcharges, there will be only one Copper-Surcharge line added to the invoice.

Since an item could contain multiple commodities, such as gold and copper, each Base Type could result in a separate line being added to the invoice. NOTE: each Base Type could use the same Surcharge Item. The total accumulated surcharge will be added using the single item.

The surcharge calculation method when adding the surcharge to the Item Price is the same as described above, except new lines are not added to the Invoice. The total surcharge amount for an Item is simply added to the Unit Price (and therefore the Extended Price).