Product costing - Variance calculation, Information system,
Hi,
I have an issue reconciling variances in product costing when I run S_ALR_87013139 - Cumulative. For instance I am getting results like below
Tgt (Dts) Actual (Dbts) Scrap Variance WIP Control Costs
33946 183020 0 27248 -95034 0
I was expecting
Variance = (Actual Debits - WIP credited) - Target Debits.
But it is not so. Am I missing something here
Would also appreciate if someone could tell
1. What does the target cost mean/how is it different from planned costs.
2. When is the target cost calculated? Is it only after the order is complete and variance calculation in KKS2. I also fing that whenever a production order is created I dont get target costs. Only planned costs are there.
Thanks for your help.
Ram
Hi Ram
Following are explanations for clarifications u asked for
1) Target costs = Actual qty delivered X standard costs ( as per standard cost estimate for the material). This means standard costs for actual goods delivered to stock. Planned costs means standard cost for planned qty of production order
2) Variances are calculated if the status of the order is either DLV or Teco and if material is issued and activities are confirmed. WIP is cancelled and variances are calculated
3) When u create production order - system only calculated planned costs of the order for planned quantities. Target costs are calculated only when goods are delivered to stock for the order either partially or full. Even if one qty is delivered to stock target costs gets calculated
Hope the above clarifies and do your checks with above
Pls assign points for the above clarifications provided
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When you are settling product cost variance, It will hit two accounts, One GBB-AUF and PRD-PRF. And PRD-PRF should not be a cost elemen as per the best practice.
My question is, What are the impacts , if we create PRD-PRF as cost element?Steve,
Before impact, the production order variance is come from one of the cost object (Production order/Cost center), so you no need to send again to cost centers or any another cost objects.
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Hi Gurus,
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Output price variance calculation
Hello,
I have a question on output price variance calculation in SAP.
The help reads:
"Output price variances are reported in the following situations:
If the standard price has changed between the time point of delivery to stock and the time point when the variances are calculated "
I do not quite understand this as when I have a standard price change between the delivery to stock and the variance calculation, I will already have a CO-PA entry for the price change. So why do I need another CO-PA posting for the variance?
Looking at the simple example of having costs of 150 USD when producing a material of 150 USD. If nothing changes I have a variance of 0 USD.
However if I receive the finished product to stock with a value of 150 USD and then revaluate to 165 USD before the variance calculation happens, I understand SAP would post an output price variance of 15 USD? But I also get 15 USD price variance from the stock revaluation into my books, so isnt that a double count?
Thanks a lot for your help
KaiHi Kai Hoffmann ,
As the SAP Help says...
Output price variances are reported in the following situations:
If the standard price has changed between the time point of delivery to stock and the time point when the variances are calculated
With respect to the above point, pls follow the example and let me know if you agree or not...
Let us say, we have Standard Cost of Product X for the month of Feb as $100 per tonne.
One Production Order is created for 100 Tonnes and you made Goods Receipt for 50 tonnes during Febrauray. (50 Tonnes posted to Inventory a @$100). Now, at the month-end, you estimated the Standard Cost once again and the new Standard Cost effective for the month of March is $110 per tonne.
Revaluation of inventory is done for 50 tonnes (for GR posted alread and in stock) and $10 * 50 tonnes is posted to Price Difference Account.
Now, during the month of March, you made the GR for balance 50 Tonnes on the Production Order. Inventory is posted @ $110. Once you do TECO and do the variance calculation, the system will post $10 * 50 tonnes as output price variance, which will flow to COPA and Price Difference Account.
So, I dont feel there is a double count or duplication...
waiting for your comments
Srikanth Munnaluri -
Production order - variance per product
I have production order. In this order are components - for example 10 with backflush, 5 with manual issue method.
When the final product is made, user is doing Report completion and then Issue components. With report completion all items with backflush issue type are issued from stock and to stock is released final product. Then user is doing issue components and components are going out of stock.
When the issue of components is done after few days from report completion, in Summary tab in fields Variance is some difference between Actual component cost and Actual product cost. Why? I cannot undestand the logic, how is this diffrence calculated.
Thanks for explanantion.Dear Mr Verner,
I would suggest you to read the following presentations:
the first one explains what the Additional Cost could be:
https://websmp108.sap-ag.de/~form/sapnet?_FRAME=CONTAINER&_HIER_KEY=701100035871000437965&_OBJECT=011000358700003687172006E&_SCENARIO=01100035870000000183&
and
https://websmp108.sap-ag.de/~form/sapnet?_FRAME=CONTAINER&_HIER_KEY=701100035871000371280&_OBJECT=011000358700004837182004E&_SCENARIO=01100035870000000183& (from page 21).
Note that the Actual Component Cost and the Acutla Product cost takes the information in the stock tab of the item master data of the components.
Kind Regards,
Marcella Rivi
SAP Business One Forums Team -
About production oder variances
dear all:
we use the standard cost method .
the details for my problem:
1) i created a new production order type (we can call it LED01).
2) i created a new production order using type LED01.(tcode co01)
3) i make production order actual settlement through tcode co88.
my problem:
the system have not produced variance account documents (i.e there is no production cost variances,but i need).
so i want to kown that how to maintain variance settlement when i create
a new order type?
thank you!
best regards!
Message was edited by:
zhao gang
Message was edited by:
zhao gangHi,
Pls check thatyou have done the following:
1) Defined a Costing Variant for Manufacturing Orders (T-Code - OPL1)B if the Standard Costing variants do not meet your requirements.
2) A number range is defined for the new Order Type (T-Code - KOT2)
3) Assign the new Order type to all relevant Plants
4) Define Cost Accounting Relevant Default Values for Order Types & Plants
5) Define Target Cost Versions (T-Code - OKV1)
6) Ensure the appropriate GL Account has been assigned (T-Code OBYC) for Transaction PRD - General Modifier PRF for the Finished Goods Valuation Class.
Regards,
Assign points if useful -
Dear Experts
can anybody explain what variance calcualtion?, what is meant by target cost, actual cost and allocated cost.Dear,
Variance is nothing but planned value vs actual value. activity pricing is calculated for planned quantity. after confirmation of production order only we will get the actual value. difference in planned and actual is variance.
Examplr
When u confirm the process order the actual production cost is calculated as 100 INR. (Due to raw material price change & Extra Activity time for operation)
The diffrence is Variance ( 100- 75 =25 INR) .
That Variance is settled during the Order settlement.
Please refer this link,
[Variance |Variance]
Regards,
R.Brahmankar -
MFBF run before updating product cost collector
Dear Sir,
I have done cost run through CK40N and not updated the Product cost collector. So system should stop me doing MFBF (Backflashing).
But without update to Product cost collector system is allowing to do MFBF (Backflashing).
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In your REM profile you might have defined to backflush using Prel. cost estimate rather than std. cost estimate, please check and revert back.
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Ramana -
COMAC - COHV: manage object profile for order information system
Hi,
when you carry out an collective availability check from transaction COHV or COMAC, it is possible to select a layout or a profile. The layout can be defined within the transaction.
What about the profile ? I can't find how to create a new profile in the customizing for order information system.
In standard the profiles are:
000001 standard profile
000002 pick list
000003 collective availability check
000004 documented goods movements
Do you have any idea where the profiles can be maintained ?
Many thanks
RegardsHi,
Go to SPRO > Production >Shop Floor Control > Information System>Define Profile for Order Information System.
Hope this helps
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Error during variance calculation for production order "NO cost estimate "
hi all,
I'm gettin this error message while trying to calculate the variance for a production order. error is "No cost estimate for material xxxx for 01.10.2008.
when i look at material xxx in MM02, under cost estimate for current period there is a value but nothing for previous period. So i'm guessing the the Cost estimate was not run of this material? am i correct here?
Now if i try to run cost estimate for material for the missing periods using CK11N, i get an error "cannot save for past period"
Could some one tell me how can i get a prior year estimate into the material master?
I tried CK40N and CKN1 but just cant get it to work...
Thanks heapsHi Tom
unfortunately there is no easy way to get a product cost estimate for a past date. One of the reasons for this would be inconsistant product valuation.
You could in theory create a cost estimate in a current date and use an ABAP or manually adjust the valid from and to dates directly in the tables (e.g. KEKO). To do this in a production environment would be restrictive off course.
The standard cost estimate is the basis for the target costs so as an alternative you could look to change the configuration of the target cost version in OKV6 to either of the following:
- Plan Cost/Preliminary Costing (that is the plan calc done on your production order)
- Alternative Material Cost Estimate (one that is not necessarily a product costing that is set for marking and release).
I hope this is of some help.
Elaine -
Gurus,
How do we calculate Product variance?
What is the procedure / process?
Where can the effect be seen?
Edited by: Bhatia on Oct 15, 2008 6:44 PMHi,
Variance Calculation
As long the production order is not fully delivered or flagged Technical Complete the remaining order balance is treated as WIP. Otherwise the order balance shows up in variance calculation.
If a lot-based product-controlling WIP, is valuated at actual costs. The WIP is calculated as the difference between the debit and credit of an order as long as the order does not have the status DLV (delivered).
In lot-based product controlling the variances are not calculated until the order has the status DLV (finally delivered) or TECO (technically completed). This means that at the time the order has reached this status, the system no longer interprets the difference between the debit and the credit as work in process but as a variance. In lot-based product controlling orders never have work in process and variances at the same time.
Variance calculation compares the actual costs incurred for the production/process order with the target costs according to the standard cost estimate for the finished material, and assigns the individual variances to variance categories. The target costs are calculated using the quantity delivered for the order.
In this way you can find out which variances occurred between the value of the delivery and the actual costs and you can find the reason for the posting to the price difference account for materials with standard price control.
Variances from production (target version 1)
Variance calculation compares the actual costs incurred for the production order with the target costs for the production order and assigns the individual variances to variance categories. The target costs are calculated using the quantity delivered for the order.
This enables variance calculation to find out which variances occurred between the time the production order was created and the end of the production process.
Variances from planning (target version 2):
Variance calculation compares the planned costs for the production order with the target costs according to the standard cost estimate for the finished material, and assigns the individual variances to variance categories. The target costs are calculated using the quantity delivered for the order.
This enables variance calculation to find out which variance occurred between the time the standard cost estimate was created and the time the production order was created.
Variance categories:
The system assigns every variance to a variance category. The variance category indicates the cause of the variance (such as price change, lot-size variance). Variances are updated to the information system and passed on to Profitability Analysis according to variance category.
You differentiate between variance categories on the input side and on the output side:
u2022 Variances that occur because of goods issues, internal activity allocations, overhead and G/L account postings are displayed on the input side. Price variances, quantity variances, resource-usage variances and input variances are displayed on the input side.
u2022 Variances that occur because too little or too much of the planned order quantity were delivered, or because the delivered quantity was valuated differently are displayed on the output side.
Variances on the output side occur when you deliver using a price that differs from that found by dividing the target costs and the delivered quantity. If you deliver using the standard price, a variance can occur when the order lot size differs from the costing lot size. This is displayed as a lot-size variance.
For config
3.1.4.2 Variances & Settlement
Variance Calculation determines differences between the actual costs incurred on a production order and the standard costs of the material produced. Variances are calculated not at once, but for different variance categories. The variances computed are then transferred to CO-PA.
3.1.4.2.1 Define Default Variance Keys for Plants
Use
The Variance Key is part of the order header and controls variance calculation. The system selects the value set by this step as default value when a material master is created. From the material master the variance key then is transferred to the order when an order for the material is created.
Procedure
1. Access the activity using one of the following navigation options:
Transaction Code OKVW
IMG Menu Controlling Product Cost Controlling Cost Object Controlling Product Cost by Order Period End Closing Variance Calculation -> Define Default Variance Keys for Plants
2. Make the following entries:
Plant Variance Key
BP01 000001
BP02 000001
BP03 000001
BP0X 000001
3.1.4.2.2 Define Target Cost Versions
Use
The target cost version controls various parameters related to calculation of target costs in variance calculation. In variance calculation, target costs are needed as a comparison to the actual costs incurred.
Procedure
1. Access the activity using one of the following navigation options:
Transaction Code OKV6
IMG Menu Controlling Product Cost Controlling Cost Object Controlling Product Cost by Order Period End Closing Variance Calculation Define Target Cost Versions
2. Choose New entries and enter the following values or copy from default settings of CoArea 0001 to BP01:
CoArea TgtCostVsn Text Variance Variant Control Cost Target Cost
BP01 0 Target Costs for Total Variances 001 Actual Costs Current Std cost Est
BP01 1 Target costs for production variances 001 Actual Costs Plan Costs / Preliminary Cost Estimate
BP01 2 Target costs for planning variances 001 Plan Costs Current Std cost Est
3.1.4.2.3 Create Settlement Profile
Use
The settlement profile controls various parameters related to settlement.
Prerequisites
Allocation Structure
Procedure
1. Access the activity using one of the following navigation options:
Transaction Code SPRO
IMG Menu Controlling Product Cost Controlling Cost Object Controlling Product Cost by Order Period-End Closing Settlement Create Settlement Profile
2. Choose New Entries and enter header data. Then for each new entry choose Details and enter remaining data.
3. Overview of data records:
Profile Text
YGPI00 BP Process Order w/o CO-PA
YGPP00 BP Production Order w/o CO-PA
YGPI00 YGPP00
Actual costs/costs of sales
To be settled in full X X
Can be settled
Not for settlement
Default Values
Allocation Structure A1 A1
Source Structure
PA Transfer Struct.
Default object Type
Indicators
100% Validation X X
%-Settlement X X
Equivalence Nou2019s X X
Amount Settlement
Var. to co. bsd. PA
Valid receivers
G/L account N N
Cost center O O
Order O O
WBS Element O O
Fixed asset N N
Material O O
Network N N
Profit. Segment N N
Sales order O O
Cost objects O O
Order item O O
Business proc. N N
Real est. object N N
Other parameters
Document type SA SA
Max.no.dist.rls 3 3
Residence time 3 3
You have to assign Variance Key in material master for semi-finished and Finished goods in costing 1 tab also.
To Execute
KKS1-Collective Variance calculation
KKS2-Individual Variance calculation
CO88-Collective settlement
KO88-Individual settlement
Thanks,
Rau -
Production variances calculation when using assessment to PP orders
Hi,
I managed to activate assessment to Production orders in BS12.
I activated business transactiun RKIU for PP orders object.
Now it's possible to allocate OH costs from Cost centers to production orders.
However, I have some problem of other nature.
When I do the standard price calculation - the Overhead costs from Production Departament CC are calculated as % overhead using costing sheet. It is done by cost element with cost element ctg 41.
The actual OH costs from Cost centers are allocated using assessment. Other cost elements with cost element category 42 are being used here.
How will the system calculate production variances in this case?
Do u think it is possible to match these two different cost elements?
Will this CE with 41 ctg be considered during variances calculation and if yes - which variance category will it be.
I am uncertain about that, cause in normal cases - activitity CE or materials consumption CE are the same in actual and target. In my case overhead CE are different in actual and in target.
Can u help me with that?
Best wishes,
KarolIt's looks like you are right. I've made production version for configured material and production order created. Thanks.
Due to such a behavior we have to make two different integration models - the first for KMATs and its PDSs and the second for configured variants. And we have to make production versions for all variants.
Am I right? -
Target cost calculation in Process Order based on Variance Calculation
Hi all,
I have a question on Target cost calculation in Process Order. My understanding is, the Target Costs gets calculated when the confirmation and GR is made for the Process Order.
But if the confirmation/GR is not done, whether the target costs gets calculated for only the activity types after the Variance Calculation (KKS2).
I have two scenarios. In one, the target costs got calculated for the activity types without the confirmation/GR after the Variance calculation.
In another scenario, the target costs are not getting calculated for the activity types without the confirmation/GR if I try to do the variance calculation in KKS2.
SO i want to know which scenario is correct?
Can anyone answer this question?
Thanks and Regards,
BrijeshHi,
In general, the target costs are calculated once you deliver the order.
Target costs for the components and the activities are updated only once you deliver the order and the target cost for the finished product gets updated when you do the variance calculation.
Consider your scenario number 1 - you said the target costs got calculated for activity types without confirmation / GR after variance calculation.
Now, if the order is not having any status like PDLV, DLV or TECO it will not calculate the variances in the first place.
Your second scenario is correct - without GR the system does not calculate any target costs. Also it will not calculate any variances because the order status is still not DLV.
Best Regards,
Sameer -
No Target Costs, so No Variances calculated
We have an order type (PCOL) for Collective Orders. If we create 1 that is just a single order, it calculates target costs, and resulting variances fine (same as our std order type PP01). However, if we create a structured set of PCOL orders (Lead order with multiple sub orders), none of these calculate variances (PA doc), and we get message KV017 when we run variances on them.
Looking into it further, I can see all the target costs on these orders are nil, despite the fact the all the costing data on the control tab is the same as the songle PCOL order.
We does this structured set of orders not calculate any Target costs, and consequently no PA variances?
Any advice greatly appreciated
Thanks
GrahamHello again
The full errorr text is during varinace calculation (trans. cosd kks2) is:
Only remaining var. in version 0 - no target costs for 000002000063
Message no. KV151
Diagnosis
For the calculation of variances with 000002000063 , the target costs in target cost version 0 are missing for the following reasons:
There were no planned costs and/or planned quantities (see earlier message).
The quantities on which the planned costs were based are zero in the time period concerned. This may be caused by the fact that no goods receipt for a cost object (such as a product cost collector or production order) has been entered.
This results in target costs of zero.
System Response
Because no target costs were calculated, the difference between the
planned and actual costs could not be broken down into variance categories. The difference is updated as a remaining variance.
there is a released standard cost fir the material
i checek that an itemization is saved for the costing varinat (planned costs for pp order)
I would be Grateful to get some help
Best regards
Michal
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