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Sep 15, 2020 at 03:01 AM

Different costing of material in 2 plants


Dear guru,

We recently set up new plant #2 which was split from old plant #1 and we moved a few production lines from plant 1 to plant 2 to produce some FG materials. So for these FG materials production, plant 1 is planning plant and plant 2 is manufacturing plant. Both plants have the same BOM of FG 5xx, but BOM of SFG 3xx is only with plant 1, not plant 2. In the period, users rolled up the material costs CK11N and found standard price was different for the same FG material for the two plants and came to me. My answer - different standard prices in this situation is correct. The reason: plant 2 has production process for the material so there is routing/recipe (labor + overhead) which adds value to the material, but plant 1 does not have routing, which makes the material costing different (the material + freight for the FG is the same for both plants which is correct). Since this is new to us, is my answer correct? We have quite a few materials in the same situation, going forward, the two plants will have different standard costs for all these materials in case only plant 2 is manufacturing while plant 1 not ? Screenshot is for plant 2 for $52.07. Plant 1 is $2.35 with no routing.

Thank you very much for your help.