In a manufacturing plant, two purchase components P1 and P2 and a resource R1 are required to assemble a product. The cost of the assembly is calculated by using the standard costing method. The work definition and resource rates of the assembly have been defined as required.
A cost accountant is estimating cost of the assembly, analyzing rolled-up costs before finally publishing estimates as frozen standards to cost accounting by using a cost planning scenario. While reviewing rolled up costs, the extended costs of purchase components are not included in a rolled-up scenario.
Identify the reason.