Periodic Costing calculations do not distinguish a purchased item from a manufactured item. Instead, the system handles transactions that exist for the item and treats them accordingly. The system calculates RCT-PO and RCT-WO transactions without validating whether the item in the transaction is a purchased item or a manufactured item—according to the item-site planning configurations. This approach is taken because the focus is on the actual operations that occurred for that item in the GL period and not on how the items are sourced by default. The item cost is calculated, beginning from the bottom of the BOM; then, typically purchased components and raw materials, level by level via sub-assemblies, to the top of the BOM—finished goods. The MRP item-level definition is assumed for this.