Cost Element of Process order

[former_member224727]

I wanted to understand how system define Total target cost & "total actual cost" for the order?

I have order for which target cost of activity type is 1000 but actual is 800. How system capture these value & from where?

I understand that material consumption cost system capture based on yield conformation in COR6, but what about activity type? How system capture target & actual cost for diff activity type?

Reply appreciated.

[krishna_chandra5 · Accepted solution]

Hi Eric,

     Planned costs are the costs at the time of order creation and target costs are the costs which are active in the current period.

Example: the following scenario is tested

Old activity price (i.e. valid from 1st Jan 2012)

Labor Cost $6

New activity price (i.e. valid from 1st Feb 2012)

Labor Cost $12

Production order is created on 5th Jan 2012 with total qty of 10. The plan cost will be generated as $6 => 10 qty * $60 old activity price.

On 25th Jan 2012, 5 qty are complete and GR to the FG inventory. The target cost will be generated with $30 => 5 qty *6 old activity price.

On 1st Feb the activity price is updated as $12 per minute. The target cost in production order will be updated with the new price but not the plan cost. The plan cost will remain the same.

Upon completion of the order, the variance will be calculated from the difference between actual cost vs. target cost which in this case is already updated with the new one.

Regards,

Krishna Chandra

[former_member224727 · Accepted solution]

Thanks Krishna for nice explanation. This really helps, but can you suggest where we enter these $6 and $12 in system? Do we need to maintain these at cost center or some where else?

In this case where we maintain $6 with validity 1st Jan & $12 with 1st feb?

During conformation at COR6 we enter qty only, right? Can we enter correct price with qty during conformation?

[krishna_chandra5 · Accepted solution]

Hi Eric,

     You need to maintain the cost/unit for each activity type - cost center combination for a specific period in KP26. These activity types should be assigned in the work center. In confirmation based on the no. of time units entered the system will calculate the price.

Regards,

Krishna Chandra

[former_member224727 · Accepted solution]

Thanks for the reply. If I check my order costing information which is as below.

If I check at KP26 for one of the activity type then plan activity, capacity, & price (fixed) column is blank only I have variable price 494.33 for first activity type.

In the attached screen shot column name in this sequence; target cost, actual cost, target/actual var, var (%), curr, actual qty, target qty...

Can you help me to understand how system define value in order costing column?

[krishna_chandra5 · Accepted solution]

order costing column???????....please elaborate

Regards,

Krishna Chandra

[former_member224727 · Accepted solution]

I wanted to understand how system is calculating actual cost against the order, because I do not see any value in KP26 of my system but system is putting some value in actual cost column, which I want to understand.

[krishna_chandra5 · Accepted solution]

Hi Eric,

     Please send me the screen shots of KP26 and costs analysis of production order with column names.

Regards,

Krishna Chandra

[Former Member]

Hi Eric,

Pls check below examples of target & actual cost.

1.I wanted to understand how system define Total target cost & "total actual cost" for the order?

2.How system capture these value & from where?

A.Target Cost :-

Target Costs = Delivered Qty X Std Costs

And standard cost consider your all activity rate (Machine/Setup/labor ) from KP26 and time from routing and raw material price as per the BOM.

Suppose production Order for 10 Qty

Finish good Delivered Qty to FG stock location - 5

Std cost for the item is 100

Target costs = Delivered Qty * Std Cost = 5 *100 = 500

Please have look on this link too,

http://scn.sap.com/thread/1269227

Total Actual Cost :-

Suppose you are having 3 activities Machine, labour , set up ,

You have the plan price for the activites In KP26 as Machine 100 , Labour 200, Set up 50  ( In rs per Hr)

Now at the time of production order confirmation you have confirmed Machine 2 hr, Labour 3 hr , Setup 1 Hr

Now cost is as bellow

Machine 2 x 100 = 200

Labour 3 x 200 = 600

set  1 x 50 = 50

Total cost = 850

Now at the month end you came know that Actula activty rate is Mac 110, lab 210, set up 60 .( You can maintian Activity rate manually in KBK6 or You can calculate by using KSII)

at the month end when run MFN System will Revaluate the cost withe actula activity rate available in KBK6

Now cost is as bellow At po

Machine 2 x 110 = 220

Lab = 3 x 210 = 630

setup = 1 x 60 = 60

Total actual cost = 910

To allow revaluation of production order you need to confifuration in versions under price calculation tab select "Own Business transaction or Original Business transaction "

Hope clear to you.

TnX

[Former Member]

Hi,

until unless run Actual activity price calculation, you cannot get the actual price, once you run this transaction it will update in the KBK6, while executing revaluation of the order, the price will be updated to the order according to the KBK6 price.