How to post the production loss of by-product

[Former Member]

Hi,

We have assigned by-product to header material in BOM. Some time production would get loss so the by-product material will go in loss. Could you suggest how to post this product loss of this by-product material?

Is there any possible way to create Accrual every time when the by-product is produced.

Regards,

Ajay

[former_member740051]

HI,

Actually BY product is produced while we produces one main product. So, for Main product, we must have Production order or Process order. While confirming the same PO, system automatically picks up the By product GR qty as per BOM maintained. While confirming, you need to change the quantity. so, actual by product will be picked up.

If my clarification is not clear and please ask me again.

Vijay

[Former Member]

Hi all,

Thanks for your reply.

It is not a matter of quantity. However we are not selling that by-product so just it's a additional expense for making final product. The key here is to show a loss /accrual each time the by-product is produced by value not by quantity.

[Former Member]

Hi,

Business Scenario:

We have scenario like, one by-product material is assigned in BOM of production order with negative quantity. When user do confirmation for this order, the by-product material inventory will increase and the value also. Earlier our client was selling that by-product but due to some conditions now they are not selling this by-product. So what ever the cost incurred in for this by-product is loss for the client. Now, they want to show this production loss in Accounting for by-product when ever it is produced.

Currently user is posting manual FI entries in the system but they want it automatic.

Our Approach:

We have come up with the approach that we will determine the different overhead rate for materials by maintaining different overhead keys and assign this to different overhead groups. We can assign these different overhead groups to material masters.

Questions:

Normally Overhead amount would be getting posted into secondary cost element, but user is asking to post these overhead amounts in Primary cost element which is balance sheet account in FI, we donu2019t know the settings to make postings into Accrual G/L account 1690000 (This GL account is a balance sheet account).

So, could you please tell us if there is any settings to make posting in Primary cost element for production loss of by-products.

Please let us know if you require any further information.

Thanks for your cooperation.

[Former Member]

PRODUCTION LOSS......IF THE INPUT QTY IS 2 LTRS, AND THE OUT PUT QTY IS 1.5 LTRS........YOU MAIN 2 LTRS IN BOM.....FOR 1.5 LTRS OF OUTPUT........HENCE .........PRODUCTION LOSS IS AUTOMATICALLY ACCOUNTED........IS IT NOT??

OR, WHETHER YOUR REQUIREMENT IS SOMETHING DIFFERENT......?

[Former Member]

Hi,

Thanks for your reply,

Our issue is:

Please find below the details of the issue related with Overhead keys:

Original issue was:

u201CClient 246 / FAS Lima ***

Lima has a by-product that they sell. Market conditions have changed to where it now COSTS them to produce (and sell) the by-product. Making the Standard Price negative would solve this problem, but they are not able to do this (i.e. through normal means - trans. MR21).

- Is it possible to change settings to allow negative Standard, or to allow a negative value for inventory?

- If not, what options are available? One suggestion is to create an "accrual" condition (i.e. USD 0.16 / LB generated / per ZFC production) - that they could settle out at month end. They would like to be adjusting this accrual rate every month.

- They would like a solution where they do NOT need to go into all the BOM's generating the material

- Material: 4650900 - AQUA AMMONIA 25%

- Plant: PO

- Sample Production Order (in DFU246): 546000007329u201D

Additional questions:

the approach of implementing an Overhead Key.

However, please answer the following:

Determine if and when G/L postings are made for the Overhead Key by completing your example order 546000013322 in DFU 246. Post the receipt of the production order material and settle the order.

If G/L postings are made for the overhead, determine how it can be assigned to account 1690000

Determine the flexibility of triggering the Overhead Key, since it should only be used when certain materials such as 4652100 are produced via production order.

Determine the flexibility of defining a different rate in the Overhead Key depending on the material produced. For each pound of material 4652100 produced, a certain quantity of byproduct 4650900 will also be generated. However, this ratio will be different for other finished materials.

Final question is:

How G/L postings are made for the Overhead Key & how it can be assigned to GL account (Balance sheet account)

Regards,

Ajay