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Former Member
Jul 28, 2009 at 08:54 AM

Project costing in R&D projects


Dear Experts,

This is a typical R&D project scenario.

The scenario is:

We have 2 plants 1 is R&D and 2nd one is commercial plants located in different states, we carry out the projects at R&D plant.

After certain duration of the project, the testing should take place at the plant level to verify the m/c capacities and performance. For that, the material is procured at plant level and can be done the desired things. But this is under project stage only. So the costing of that particular activities and procurements should capture to the project. Here at plant level there is no PS, they use process orders. So the material is issued against the process orders and the activities are controlled through process orders.

I'm proposing to use the Project instead of process orders for this purpose at plant level also. So that the cost will be captured against the project and we can arrive to the exact costing.

But my concern is in that case the system shows that the activities are carried at R&D plant not at commercial plant. What are pros and cons of the statutory things w.r.t the material movement. Ex: The materials are delivered and consumed at commercial plant, but in system it shows as R&D plant. How to over come this? And the cost is shown in the books of R&D plant not at commercial plant.

Please through some light on this.