"group" standard cost

[Former Member]

Hello experts,

My client is a multi-national company who has a requirement to value the finished product at a common value that is the same to all group of companies.

The GL accounts concerned are:

- finished goods inventory

- cost of goods sold 

- delivery of finished goods from production to the warehouse

The common value is set according to the lowest standard cost within the whole group. So if one item is produced in several plants across the world, the plant producing with the lowest standard cost will set the "group standard", every other plant will have to book their inventory/COGS/production delivery by making reference to the "group" standard cost, which is kept unchanged during the year (it is updated only once or even twice per year and update is always done at the beginning of a new year).

I plan to use standard cost in the group valuation view to hold the "group" standard cost. Because different plants will have their own standard costs, this would mean that I can not use the standard SAP function to mark and release standard cost. In stead, I have to manually change (MR21) the standard cost of the same material in different plants to the same value, but only in group valuation view.

Personally I do not see this is a problem at all. I understand that in SAP changing of SC just cause a re-distribution between standard cost portion and variances portion, but the actual cost as whole do not change. So even if a material is assigned a value equal to a "group" standard cost which is different from its own standard cost run, it's not going to create any problem because the actual cost would still be the same. i.e. before the change material A has actual cost of 15 with 12 as SC and 3 as variance; if I change the SC to 10, SAP would determine a new variance for the material which will be 5, so my total would still be 10+5 = 15.

So my questions are:

- are there any undesirable consequences if I use MR21 to change the SC, especially in terms of product costing?

- is there a way to do massive SC update?

Can you please share provide your valuable thoughts. For your information, the client has set up one controlling area for the whole group and uses multiple valuation approaches and actual costing in ML.

[ArturoSenosain · Accepted solution]

About mas MR21, you can try bapi BAPI_M_REVAL_CREATEPRICECHANGE

Create a Z program or a LSMW (There are some post in the SDN that explain how to create LSMW with IDOCs)

Arturo.

[Former Member · Accepted solution]

Arturo,

The other discussion I am having now is regarding my proposal to use group valuation to hold this "group" standard cost - is it an "abuse" of the group view in ML?

Group valuation view in ML is intended to eliminate the inter-company profit in inventories held at period end. With my proposal to change the SC of finished product at each plant to a group common standard, will it jeopardize the goal of group valuation view (elimination of inter-company profit)?

My answer is no it will not and let me explain why.

Assuming a plant produces finished product A at standard cost of 10 (both Legal and Group view) but the actual cost to produce is 12 and it sells product A to sales company at legal price 15 without any delivery costs incurred. Let's further assuming that the best cost country can produce product A at the cost of 8 so "group" standard cost will be 8.

At this point in time, I have not changed the SC in group view to "group" standard cost (8). So when I transfer product A to the sales company, the manufacturing plant will record a sales of 10 and also a COGS of 10 in Group view, making zero profit. And the sales company will record inventory of 10 upon MIGO.

Now what if I change the SC in group view from 10 to 8? The plant will report a sales as well as a COGS of 8, making zero profit in group view; but the sales company will record inventory of 8 when doing goods receipt.

The result seems to be different. However we have the actual costing across legal company functionality that comes with EHP 5. So at month end, when we do actual cost revalulation:

Without SC change: plant will record a production order variance of 2 (in both legal and group view) and in group view that variance will be passed over to the sales company. So the sales company gets a purchase price difference of 2, and inventory value will become 12 upon revaluation.

With SC change: plant will record a production order variance of 4 (in group view, which is the difference of actual 12 and group standard cost 😎 and in group view that variance will be passed over to the sales company. So the sales company gets a purchase price difference of 4. End of the month when we run actual cost revaluation, inventory value will become 12 (=8+4).

In both case, we end up in the same "actual" group cost. And in both case the inventory value in group view will exclude the inter-company profit. In addition, we achieve the goal of measuring COGS/Inventory/Production Delivery at "group" standard cost.

Could you please help evaluate the idea and give your insights.

A million thanks.

JH

[ArturoSenosain]

Hi Jianhong.

* 15 with 12 as SC and 3 as variance; if I change the SC to 10 SAP would determine a new variance for the material which will be 5, so my total would still be 10+5 = 15  

>> Yes, this is correct! I know some companies that never in their live run Standard and live happy with their actual. And periodically change the standard with MR21. Never see a company that change only the standard in one view.

* Your Customer have COPA ?  Keep in mind the rule of Valuation use to pick the standard at invoicing. There are some workarounds explainded in the SCN. When you transfer the actual CCS from ML to PA, everithing is OK.

Arturo.

[Former Member]

Thanks for your valuable advise Arturo. Do you see any problem if I change the SC in group view only? I understand that ML runs three parallel valuations independent of each other.

[ArturoSenosain]

Hi.

Letme correct my post. I dont know any company that 'plan' to change the standard in one valuation only, but lot forget to change in the other views (This also happen to me in my test system) Its annoying  for me change the standard in the 3 views. So i guess you dont have problems with this.

And yes, the ML close is independent on each valuation.

[rajneesh_saxena]

Interesting one.

I would like to invite on this. I will also wait eagerly for suggestions with you, Jianhong.

Rajneesh