Variance Calculation

[Former Member]

Hello

I understood, the system calculates the variance based on the planned cost vs actual cost.

The planned cost calculates in the following manner:

Standard Cost of Finished Goods / Semi-Finished Goods = Planned Material Cost as per the BOM + Planned Activities units * Planned Activity Rate per Unit + Overhead Cost from cost sheet

(a) Planned Material Cost = Quantity as per BOM * Moving Average Price / standard cost as per price control in the material master.

(b) Activity Cost = Time / Units maintained under Routing * Planned activity rate maintained through KP26

(c) Overhead Cost = as per the assigned cost sheet

The actual cost calculates in the following manner, the total of the following:

(a)Material Cost :- Actual Quantity Consumption * Moving Average Price / Standard Cost as per the price control in the material master

(b)Activity Cost = actual time / units recorded during production process * Planned activity rate maintained through KP26

(c)Overhead Cost = as per the assigned cost sheet

Here, the observation is the actual activity cost consideres the planned acitivty rates that maintained through KP26

Our client requirement is , during the actual cost calculation the system should not consider the activity rates planned activity rates and need to consider the actual activity rates.

Since, we updates the planned activity rates through KP26 on yearly basis, Is there any option to maintain the actual activity rates in the system ? besides the system should consider the planned activity rates for planned cost calculation and actual activity rates for actual costing.

Kindly revert

Regards

Anilkumar

[Former Member]

Hi anil,

the answer to your question is the concept of Cost Splitting.

What is cost splitting?

The cost which is activity independant, we will assign those costs using the cost splitting.

Once the cost is split (attached to the activities, based on the activities we planned using KP26 we can calculation.

For actual activity rates will be calculated based on the actual cost incurred and the actual quantities confirmed from various orders.

Steps to be taken care from Configuration stand point:

1. Define the Splitting Structure - KES1

2. Assign the splitting structure to cost centers - KEW1

Steps from end user stand point:

For plan rate calculation

1. Define activity quantities in KP26. Here no need to define the activity rates. Activity rates need to be defined only when you are going to define the rates manually and not automatically.

2. Execute Cost Splitting for plan values - KSS4

3. calculate the Plan Activity Price - KSPI

For Actual Rate Calculation

1. The catual values of cost incurred will be captured from FI. (the postings could be month end)

2. The quantities of activities are posted through confirmations from various orders

3. Execute Cost Splitting for plan values - KSS2

4. calculate the Plan Activity Price - KSII

The is all about the cost splitting concept.

Hope you are clear now to proceed further.

best regards

Surya

[Former Member]

Hi,

The actual activity rates get calculated by the system only when the Confirmations of the relevant orders(Process or Production Orders) happen.

Once you confirm the order,then go to the Cost Analysis of that Process/Production order.There you would see the Actual Price calculated by the system for that particuular activity type when you confirm the order.

Hope this is helpful.