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Production Variances of semifinished goods in COPA

Former Member
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Hi,

We are using Costing based COPA, which is updated at the time of billing.

The production variances are posted to COPA when the settlement of the production orders are done.

The production variances if brought within the purview of COPA report (based on sales), the plan vs actuals can be compared. However, in case of actuals, the production variances would appear only to the extent of tha particular product sold (that too, to the extent of qty produced and not qty sold)..

I have two issues:

1. Whether system can explode the BOM and bring in the production variances of semi-finished goods into the total production variances, if I drill down only on the Finished product sold. The total actual cost would include the variances of relevant SFG also. Is this possible, if so how?

2. Whether, by bringing production qty and sales qty, the proportionate prod variances be calculated (total prod var * sales qty / prod qty). This can surely be done by inserting formulae. But is this justified from business point of view?

Please help me resolving this issue..

Edited by: Swapvik on Mar 17, 2009 7:11 AM

Accepted Solutions (0)

Answers (3)

Answers (3)

Former Member
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Hi Swapvik,

Issue No.1:

When you are using only Standard Costing in CO-PC, variances will not get rolled-up to the next level. Only costs get rolled-up. As per your requirement, when you see the report in COPA, when you see the details of FG and you want to see the variances of it's SFG also, this would be possible only if you have activated Material Ledger. If ML is active, variances also get rolled-up along with costs.

Issue No.2:

The ultimate purpose of bringing Variances into COPA and making part of them in a report is to consider COGM subject to the variances. Though it is not 100% justified, it gives you the most appropriate analysis compared to where you don't consier the variances at all. If you don't consider variances there, that means, you are considering only COGM and not taking the effect of variances, which will definitely not a correct picture of Profitability.

Pls revert back for further explanation...

Srikanth Munnaluri

Former Member
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if you want to consider variances in stock valuation, you can do stock balance sheet valuation with FIFO/LIFO, which will consider variances also.

regs,

ramesh b

Former Member
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Hi Ramesh,

Can you explain in detail how to do it..if possible with some example...

Thanks in advance

Srikanth Munnlauri

Former Member
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Hi..

Any more ideas / solutions please..

waman_shirwaicar
Active Contributor
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Hi,

I think production variance would be posted to COPA when the production order is settled to COPA. Normally a production order will be settled to COPA only after the production run is complete.

So i don't think semi-finished goods are relevant here.

Also from a business point of view it does not seem to make sense to get semi-finished goods to COPA. Later on the semi-finished goods would be processed again which would result in duplicate costs in COPA

regards

Waman