Skip to Content
author's profile photo Former Member
Former Member

Production Variances of semifinished goods in COPA

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

Add a comment
10|10000 characters needed characters exceeded

Assigned Tags

Related questions

3 Answers

  • Posted on Mar 17, 2009 at 10:31 AM

    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

    Add a comment
    10|10000 characters needed characters exceeded

  • author's profile photo Former Member
    Former Member
    Posted on Mar 19, 2009 at 10:12 AM

    Hi..

    Any more ideas / solutions please..

    Add a comment
    10|10000 characters needed characters exceeded

  • author's profile photo Former Member
    Former Member
    Posted on Mar 19, 2009 at 11:04 AM

    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

    Add a comment
    10|10000 characters needed characters exceeded

Before answering

You should only submit an answer when you are proposing a solution to the poster's problem. If you want the poster to clarify the question or provide more information, please leave a comment instead, requesting additional details. When answering, please include specifics, such as step-by-step instructions, context for the solution, and links to useful resources. Also, please make sure that you answer complies with our Rules of Engagement.
You must be Logged in to submit an answer.

Up to 10 attachments (including images) can be used with a maximum of 1.0 MB each and 10.5 MB total.