Warranty Parts Cost Calculation - Actual Cost vs Standard Cost

When configuring warranty parts pricing in Service Parameters, the system needs to know which stock cost value to use before applying any percentage uplift.

There are two available cost parameters:

• Actual Cost - Uses the FIFO price of the stock item.
• Standard Cost - Uses the Stock Order Price held against the part record.

Selecting the wrong cost parameter changes the value used as the starting point for the calculation. This results in a different warranty parts value, even when the percentage uplift is correct.

Why This Matters

Warranty manufacturers often specify a percentage uplift on the cost of parts.

For example, if the warranty agreement specifies Parts Cost + 8%, the system must apply the 8% uplift to the correct cost value.

If the parameter uses Standard Cost when the warranty agreement expects Actual Cost, the resulting warranty value will appear incorrect.

This is a configuration issue rather than a calculation defect.

Actual Cost and Standard Cost

The available options are:

Actual Cost reflects the FIFO cost associated with the stock item.

Standard Cost uses the Stock Order Price stored against the part record.

These figures might differ, so the selected parameter affects the final warranty parts calculation.

Example

A warranty parameter is configured as:

Parts Cost + 8%

The relevant Actual Cost is:

£37.50

The expected uplift is:

£37.50 × 8% = £3.00

The expected warranty parts value is therefore:

£37.50 + £3.00 = £40.50

If the system produces a higher value, check which cost parameter has been selected.

If Standard Cost is selected, the system applies the 8% uplift against the Stock Order Price held against the part instead of the £37.50 FIFO cost.

This makes the result appear as though a higher percentage has been applied.