Calculating Surcharges
While there is one standard process when calculating surcharges in sales and purchase document lines (as ultimately calculated in the Exp. Alloy Amount field), there are different calculation methods.
Calculating based on alloy quotations
The alloy quotation is calculated based on several factors, including various settings on Alloy Conditions that allow you to set different periods for calculations and to stagger your calculations. You can also set specific quotations per customer and vendor. In general, the alloy quotations are calculated using the following formula:
(Alloy Quotation – Alloy Base) / 100 * Total Alloy Weight in KG
Example: Alloy Quotation
Your alloy surcharge agreement with a vendor is set up that the alloy base for copper is 50.00 but you use the standard alloy quotation for calculating the surcharge. You order 100 units of this item, which has a total alloy weight of 43, in a time period when the alloy quotation is 680.00. The expected alloy surcharge will be 270.90.
(680 - 50) / 100 * 43 = 270.90
Example: Specific Quotation
Your customer uses a specific alloy quotation amount of 500.00 for copper. When they order a copper item, the alloy quotation is 500.00, regardless of the market price for that time period. If there is no alloy base and the total alloy weight of the item is 43, then the expected alloy surcharge will be 215.00.
500 / 100 * 43 = 215.00
Example: Staggered Quotation
A staggered quotation adjusts the date or date range that is used to calculate or find the alloy quotation.
You have two customers that have an alloy condition for copper with the Receipt of Order Date as the Reference Date and Quarter as the Calculation Formula. The second customer chose to use a Staggered calculation. The alloy quotation for copper is:
| Period Date | Lower Quotation | Upper Quotation | Average Quotation |
|---|---|---|---|
| 03/01/2022 | 750 | 850 | 800 |
| ... | ... | ... | ... |
| 12/01/2021 | 800 | 900 | 850 |
| ... | ... | ... | ... |
When the first customer places an order on 01/27/2022, the Period Start Date and Period End Date are calculated as 01/01/2022 to 03/31/2022. The found alloy quotation is 800, which will be used to calculate the alloy surcharge based on the defined calculation formula.
When the second customer places an order on 01/27/2022, the Period Start Date and Period End Date are calculated and moved one month earlier as 12/01/2021 to 02/28/2022. The found alloy quotation is 850, which will be used to calculate the alloy surcharge based on the defined calculation formula.
Calculating based on alloy quotations including reference surcharges
Reference surcharges are typically applied to alloy quotations for electronic items but can be used in other scenarios as well. A reference surcharge is basically an overhead charge that is added to the alloy quotation, which is then used to calculate the expected alloy amount. The formula to calculate the alloy quotation is:
Alloy Quotation + (Alloy Quotation * Reference Value / 100)
Example
Your alloy surcharge agreement with a vendor is set up to include a reference surcharge of 1% for copper items. You order 100 units of a copper item, which has a total weight of 43 and the alloy quotation for the time period is 680.00. Due to the 1% reference surcharge, the alloy quotation is calculated as 686.80.
680.00 + (680.00 * 1% / 100) = 686.80
The expected alloy surcharge is then calculated at 295.32 using the standard formula.
686.80 / 100 * 43 = 295.32
Calculating based on scale surcharges
With scaled surcharges, the expected alloy amount is calculated based on a percentage of the determined alloy quotation. The formula is:
(Surcharge %) / 100 * Unit Price * Quantity
Example
Your customer is set up for the following scale surcharges when purchasing aluminum:
- 0.00 - 149.00 = 3%
- 150.00 - 169.00 = 5%
- 170 - 189 = 7%
- > 190 = 9%
If your customer places an order for 100 pieces of this item that has a unit price of 3.80, and the alloy quotation amount is 180.00 for the time period, they will be charged 26.60.
7% / 100 * 3.80 * 100 = 26.60
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