# Actual cost

Please check and confirm solution for the following case:

1. For example : For May.2014 - Standard cost estimate give the rates as Rs.100/-

2. After May.2014 month end variance was found by Rs.5/-. So that means is my actual cost of product should be Rs.105/-

So while running the standard cost estimate for the next month ( June.2014 ). Can system consider Rs.105 as standard cost for June.2014 ?

If yes then how can we achieve this and if no then what is the alternative solution to achieve this.

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### Related questions

• Posted on Jun 10, 2014 at 09:07 AM

The basis for the standard cost estimate is as follows:

Material cost picking from the price in the material master for raw material.

For the overheads, it will consider cost sheet if we have maintained.

For activity cost it will consider the prices in KP26/KP06.

how the system will know the variance in the period of May,2015 and that price to be taken as a base for June,2014.

Regards,

Pavan Kumar Arvapally

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• Posted on Jun 10, 2014 at 09:16 AM

Hi Sun

Material ledger/Actual costing is the solution for your requirement in my opinion. Let others also comment. I would also like to know if there is anything apart from ML which can do so.

Regards

Rajneesh Saxena

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• Posted on Jun 10, 2014 at 10:14 AM

Hi,

Based on the current month actual, you can plan the standard price for next month to minimize the variance. But standard price is always calculated based on valuation strategy and overhead and activity cost as defined above.

You need to manually adjust the calculation formula.

Or for e.g. you have calculated the variance and then actual cost. Lets say you update this price manually in planned price 1 tab in material master. Then you need to define the valuation strategy in such a way that it picks price from material master field.

Regards

Mohit

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• Posted on Jun 12, 2014 at 07:35 AM

Hi,

Kindly let us know, if the above answers are helpful for you ?

Regards

Mohit Singla

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• Former Member
Posted on Jun 12, 2014 at 09:25 AM

Hi Sun,

Yes. You can Change cost in standard cost estimate of june.

But here your have to change the RM price in the material master and Activity prices(KP26).

As per the formula Actual cost = Std cost + Variance.

So Change your source price (Add your respective variance to your existing plan price accordingly) before calculating Next month std cost estimate, then it will consider new prices and give according to your requirement.

Please let me know if you have any queries.

Thanks,

AK

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• Former Member sun riser

Hi,

This is only possible with ML and actual costing (as mentioned before by Rajneesh Saxena).

The concept is called multi-level costing.

Regards,

Szymon