Dears
We have Material Ledger active with actual costing run every period.
During the variance calculation, target cost is appearing as zero (0) for all the production orders. All settings are in place. We release the standard cost for the sales order before the production order is created. Also, TECO process is done regularly before starting the CO closing. Still the target cost is ZERO for all orders. No idea where are we going wrong.
After the variance calculation, I find actual cost and Actual allocated cost. The difference is coming as variance.
If I post this variance, will it be proper variance in my book at the time of order settlement ? Or should I have Target cost for proper variance ?
Please help me in this difficult situation.
Regards
Hi Nikki,
Is it happening to all the order or individual order? If all the order then please check if the variance key is assigned to the Target cost version, and if not then the Target cost version would be inactive. (If the configuration is good)
Then the way system works is during variance calculation, the system user the cost estimate that is valid on the date when the order has status TECO or DLV, if such cost estimate is not there, check if you have cost estimate correct on the valid dates of order when it was TECO/DLV?
Thanks,
Nishan
Hello Nishan
We use the target cost verions '0' and variance variant 001 is already assigned to it.
Still all production orders, no target cost is calculated.
On checking, we found that there is valid cost estimate at the time of variance calculation. In fact, we release the SO cost estimate before starting the production.
Also, no comment is given for my query : whether the variance calculated by the system based on the actual allocated cost instead of target cost would be correct ?
Hi Nikki,
This may occur because one of the following criteria are true:
Solution
CO-Product Scenario
Please check variance variants in SPRO that all checks like input price variance, mixed prices variance are properly marked.
please also check your target cost version that current standard cost estimate is selected.actual cost is selected for control cost
Pleas also check that variance key is assigned to plant.
Please make sure that order must be TECO
which t code you are using for variance calculation?
well there are three types of variances
Total Variance
Production Variance
Planning Variance
out of these variances, only total variance is settles to FI. Total variance is based upon input variance and output variance.
Input variance = actual cost - target cost
out put variance= target cost - allocated actual cost
the formula to calculate the variance is
Variance = Actual Costs − Actual Costs Allocated (credits) − WIP − Scrap
Thanks for the input.
But still I did not get answer to my question :
"whether the variance calculated by the system based on the actual allocated cost instead of target cost would be correct ?"
Regards