Diff erence between target cost and plan cost

what is the diffenece between target cost and plan cost , in product cost controlling?

Hi
Plan cost is some thing anticipated cost i.e cost estimates here we can say the standard cost.
Target cost is the cost of (yeild) of the production at plan cost.
Ex: Standard cost for X product is 10
      production lot size is 100
      production yeild is 90
then your plan cost will be = 1000
and target cost will be       =   900
and the variance of 100 of 10 units will be as variance.
Regards
Laxmiprasad

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Dear,
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Message was edited by:
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What is the difference between Target cost and planned cost in discrete production orders? Please advise.

Dear
Planned costs will be updated after creation of production order.
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In the production order, when we displays the cost analysis, we get Target cost. Can anyone please explain how the target cost for indirect activity allocation (ex:Machine hrs,Wage hrs etc.,) is calculated? I mean is there any specific formula or calculation involved in the same?

Hi,
In production order (CO03 --> Cost analysis) I want to know what different between Target cost & Plan cost & Actual cost?
Total Plan Cost = Std Cost the material required to Produce X Planned Qty of the required material
Target Cost = Std Cost the material planned to Produce X Std Qty of material required to produce, for Produced Actual Qty
Actual Cost = Std Cost the material planned to Produce X Actual Qty of material consumed, for Produced Actual Qty
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Mat C - 4Nos X INR 60 = INR 240
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Mat B - 1.5 Nos ( X INR 50 = INR 75 )
Mat C - 2 Nos ( X INR 60 = INR 120 )
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Mat B - 1 Nos ( X INR 50 = INR 50 )
Mat C - 1.5 Nos ( X INR 60 = INR 90 )
Activity Cost = 1 hrs ( X INR 10 = INR 10 )
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Target cost in COR3

Hi All,
In COR3 --> Costing Analysis how is the target cost and target quantity. The variances are calculated and the order is TECO. We are having a huge variance between Target/Actual and unable to find.
Rewards for the correct answer.
-- Syed Abid Hussain

Hi Syed
Target cost and Target qty is the pro-rated standard qty for the actual output
Eg: If your Standard says 100 Kg of Input for 90 Kg of Output, and You manufacture say 60 Kgs, then your Target input qty would be 60/90 * 100 = 66.67 Kgs
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regards
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Calculation of Var. at target cost

hi gurus,
i want to know hw are variances occurred using PCC. the various types of variances that can possibly occour during a prodcut costing.
regards
sayeed

Dear Sayeed,
1.Under what conditions is the variance calculated while using PCC (Product cost collector)?
Say for example for order qty of 2 nos, planned price is 10 & Hours to be produce is 2 hrs
Niow while confirming , user will Give activity time as 3 hrs for order qty 2 nos
so now variance is 1 hr cost of machine, labour etc
2 .How is target cost determined ?
Check this link
[what different between Target cost & Plan cost & Actual cost;
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Madhu

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Message was edited by:
Jörg Demtschuk

Hi Jorg,
To my understanding if you need hard pegging then in SAP only Individual requirement is possible.
Or else you need to create a custom transactions/table to identify Sale order and when ever a process order is created by selecting the sale order record, the process order detials should also get updated against that.
You need to take the help of ABAP expert for this,
Regards,
Prasobh
Reward points if this was useful

Links between MM , FI and PP

Dear All ,
How MM is linked with FI and PP ??? PLs explain the functions ???

Pls go through this
Cost Object Controlling
Purpose
The Cost Object Controlling component is designed to answer the question: What costs have been incurred for which objects? For this purpose, the component assigns costs to the output of the company. The output can be materials manufactured in-house, individual orders, or intangible goods.
This component provides real-time cost management functions that measure the cost of goods manufactured in all plants.
Cost Object Controlling enables you to determine the cost of goods manufactured and the cost of goods sold.
You can:
· Establish planned costs (budgeted costs)
· Record actual costs for the cost objects
· Compare actual costs with target costs and with planned costs, and analyze variances
· Determine price floors for products or individual orders
You can use the functions of Cost Object Controlling by lot or by period.
Cost Object Controlling supplies basic information for the following business functions:
· Price setting and general price policy
· Inventory valuation
· Cost of goods manufactured
· Profitability analysis
· Profit center accounting
Implementation Considerations
Here are some of the ways you can utilize Cost Object Controlling:
· Determine whether the actual costs of an order matched or exceeded the planned costs
· Determine the production variances between actual costs and target costs, and why these occurred
· Decide whether to accept a particular sales order (whether the sales order will be profitable)
· Identify areas in your company where you have particularly low costs and therefore which cost objects you should concentrate on
· Decide whether it would be more profitable to manufacture a cost object in-house or to outsource it
· Determine whether and how the cost of goods manufactured can be reduced
Cost Object Controlling also can provide special information on:
· The cost of unplanned scrap
· Cost savings resulting from new production methods
· Cost behavior during capacity bottlenecks
The cost of goods manufactured for finished products and the work in process for orders can be used to capitalize the inventories in your balance sheet.
Integration
Before you can use Cost Object Controlling, you calculate the planned costs for each product in a cost estimate. You can use different costing methods in Product Cost Planning(CO-PC-PCP) for this purpose.
Cost Object Controlling accesses master data and transaction data in Production Planning (PP), Production Planning - Process Industries (PP-PI), Materials Management (MM), Sales and Distribution (SD), and Overhead Cost Controlling (CO-OM).
You can view the data of Cost Object Controlling in the Product Cost Controlling Information System (CO-PC-IS).
When you settle, you can transfer the data of Cost Object Controlling to other components in the system:
· Actual Costing/Material Ledger (CO-PC-ACT)
· Financial Accounting(FI) for purposes such as capitalizing unfinished and finished products and automatically creating reserves
· Profitability Analysis(CO-PA) to analyze the costs by market segment
· Profit Center Accounting (EC-PCA) to analyze the results by profit center
See also Integration of Cost Object Controlling
Features
All postings of actual data that refer to a cost object result in an immediate debit of the cost object.
The closing activities at the end of the period allow you to do the following:
· Revaluate activities at actual prices
· Allocate overhead using template allocation and by defining overhead rates for cost objects
· Determine the work in process (the value of unfinished goods)
· Determine the variances between target costs and actual costs
· Transfer the calculated data to other objects and application components
· Compile periodic reports on a regular basis
Analysis functions are supported by the Cost Object Controlling Information System.
You can analyze planned costs, target costs, actual costs, and quantity information at various levels such as the plant, product group, or individual cost object. The data is always available in real time.
Drilldown capabilities enable you to access detailed information.
From the evaluations at plant level, you drill down to the product groups and from there down to materials/products or individual orders.
See also:
Cost Object Controlling is subdivided into the following application components:
· Product Cost by Order
· Product Cost by Period
· Product Cost by Sales Order
· Costs for Intangible Goods and Services
For detailed information on creating material cost estimates, such as for the purpose of calculating the standard costs of your materials, see Product Cost Planning.
For information on cost accounting in engineer-to-order, see Project System.

Diff erence between target cost and plan cost

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