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FG and SFG - costing

Hi Experts,

To meet some client requirements and with some restrictions on material ledger, we are considering to have SFG and FG at moving average prices. Yes I have read and understood OSS note 81682, but I think the issues mentioned there can be overcame with the following solution. Can anyone of you review and tell me the loop holes if any.

1. Every SFG and FG will be confirmed and taken into stock @ existing MAP. This will be taken into a specific batch.

2. Everyday a scheduled program will be run to pick up the production orders with at least 1 qty confirmed. Do the TECO for the production order, settle it through KO88 and remove the TECO status to REL status. So that when I settle the production order the variances will flow only to the quantities existing to the production order. Or it will apportion the variance to inventory and P/L based on the quantity in stock relevant to the particular production order only.

3. To ensure that only correct raw material quantities are flowing into the production order, back flushing is activated at all levels.

With this solution if one production order is partially confirmed and consumed to the next level before settling the same, those items will move at existing MAP. Also activity price variances will have to be monitored regularly and changed prospectively for the next period.

Best Regards

Vimal Vijayan

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  • Posted on Apr 21, 2011 at 09:00 AM

    Hi Vimal

    I would say its a half hearted approach...

    Variances are calculated at month end after all allocations and act price calculations are done.. By that time, the Stock would not exist fully and the Variance of 100 units may get inventorized on say, 10 units... Even though you do TECO, variance will still be calculated

    I would strictly adivse against this

    br, Ajay M

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