Can we run the product costing without activity types/Over heads

[Former Member]

HI all,

I would like to have an expert openion on the below Two points,

1.Can i run the product costing without activity types (i.e costing sheet includes only material cost and remaining all Over Heads)

  If so, what will be the impact on the production order or costing scenario...?

2.Can i run the product costing without Over heads (i.e costing sheet includes only material cost and remaining all Activity types)

If so, what will be the impact on the production order or costing scenario...?

Thanks

kishore

[former_member184655]

Dear Kishore,

When we carryout the standard cost estimate with quantity structure,the system always sums up

the BOM cost(BOM components Cost) + the Activity cost(operation cost defined in the routing/rate

routing/master recipe) +Overhead cost provided the necessary config settings are maintained.

Basically the system picks up the BOM and the routing for the product based on the costing variant

used in CK11N/CK40N,check in OKKN--->Qty sturcture control--->BOM application and routing

selection.In case if the routing selection ID is not assigned,then the system may calculate only the

material's cost and it does not issues any error message.

In case if this activity cost is not included in the standard cost means,then the system always

valuates the GR cost of the product(as per the BOM cost alone).

Also in my understanding the best practice would be to include the activity cost also in the standard

cost estimate.

As such there would not be any impact if the overhead cost is not included in the standard cost

estimate and the material valuation would be always based on the MAP/standard price based on the

price control indicator set.

Regards

Mangalraj.S

[Former Member]

Hi Kishore,

You Standard Involve = Material+overhead+activity cost.

                                = 50+20+10

                                =80

this will be your standard price.

so when you do the production order Confirmation Good reciept

Cog dr - 100

FG inv cr 100

Good issue

RM/Activity Cost 60 will hit under production order.

If you cant run overhead calculation then 20 will not charge from production order and will be treated as Price variance.

If you cant do actualization of activity then only standard cost of activity will be charged from production order.

regards

Raman Rana

[Former Member]

Thanks for the reply,

Please consider the below examples and suggest,

if total 100 is the standard cost, (Which includes 60 mat+30 act +10 OH)

What would be the consequence in the below two scenarios.

1.If total 100 of std cost includes (Material cost 60+Activity cost40), means no OH.

2.If total 100 of std cost includes (Material cost 60+OH40), means no Activity.

My question is can i do product costing in two scenarios.?

Thanks

kishore

[Former Member]

Hi kishore,

We can able to production order only for 1st scenerio because without activities we cannot do production order.

Regards,

Sudharshan

[Former Member]

HI Kishore,

Please check Cost Estimate without Quantity Structure.