Revaluation of activity ith Machine hour base..

[Former Member]

Dear Experts,

My client is doing absorption costing. So i have planned something based on their expectation.

All Rm and Pm is based on moving and SFG and fg is based on standard price

We have MTS and MTO

Production order with ful settlement and wip is based on actual cost for both mto/MTS

My cost estimate contain BOM- Rm cost and pm cost based on Moving and Scrap Cost based on standard price

I will create 6 activity type - Machin,Repair and Maintaince,Labour,Consumable,Power and Fixed OH( Becoz our approach is absortion costing)

Activity type -Consumable,Fixed OH,Repair and Maintaince uom are Hour and qty equivalent to Machin Qty.

ie machin hour is defined 10 hour for I tn fg production so consumable ,R&M,Fixed OH qty will be same 10 hour but rate will be different in kp26 based on activity type.

Ie i know Fixed OH cost are 10 lakh and total machine hour are 10000 during the month so my fixed OH rate is 100 rs.Same way consumable and R&M activity rate will be calculated.

Month end i will do splitting ,actual activity price calculation and revaluation of activity .so that all my activities will be actualize based on actual booking on cost center.

then i will settle the variance to copa in c088.

My questions are

1) Revaluation of activity can be possible without activating actual costing.control only in version and activity type master data for revaluation(con2) need not to select actual costing indicator.

2)The above logic will work. like machine as base qty for fixed OH,R&M,consumable.

3) In case of standard price for Fg and SFG.Will all my ending inventory be revaluated based on standard price?.Becoz i am transfering all the variance between standard and actual to copa .

4) Rm is maintaned at moving Price.based on that i am calculating standard price for fg.Let say i released 10 rs FG standard price that time my rm moving price was 6 rs but later it is 7 rs.

then all my production order will charged 10rs target cost (which is released sandard price) or additional 1 rs also flow to cost and my productio order are charged with 11 rs target cost with additional 1 rs.

I think.It will be based on relaesed standard price only irrespective of change in rm cost during the month. M i correct?.

regards

RR

[ajaycwa1981 · Accepted solution]

Hi Raman

Q1- Revaluation of act price is possible only when you allow it in OKEQ - Version 0

You just need to allow the Revaluation in your Version 0 in OKEQ... Choose "own business transaction" under the revaluation section

OKEQ - Select Version 0 - Click on "Settings by each FY" - Choose 2011 - Go to the TAB "Price Calculation"

Choose Method = Periodic Price and Revaluation = own business transaction

Q2 - Yes, it will work

Q3 - W/o Mat Ledger, no ending inventory will be revaluated

Q4 - Yes, you are right.. target cost wil be based on released cost estimate.. Diff between target 10 and actual 11 will be treated as variance

br, Ajay M

[Former Member · Accepted solution]

Hi Ajay,

Thanks for your valuable suggestion

But few clarification

1)will I need to select actual price indicator 5 in activity master data along with okeq setting?.

2) In case of standard price of Fg .all my material difference will be only usuage variance for materials .becoz all RM/PM are based on moving price.So order settlement will contain material usuage variance and activity total variance(price+qty variance) in my process not material price variance.

In earlier post of mine ,the difference between 1rs due to change in moving avg price will not included in my order settlement.becoz all my production order have target cost of 10rs which is released price and i am not able to change rm price in production order.

so 1 rs will be inventorised in rm inventory.Must not considered for order settlement and target and actual price .m i correct?

regards

RR

[ajaycwa1981 · Accepted solution]

Hi

1. yes. You need to have actual price indicator 5 in Act Type Master (Act Price auto based on activity)

In case, you are using manual actual price, use SAP Note 732421

2. In your case, the 1 re variance will be Price Variance

What you are assuming that in your case only usage variance wil be there - Is not correct....In the example you quoted, the 1 re variance will be price variance and will be settled during order settlement

br, Ajay M