Production consumption variance w.r.t. Costing BOM

Dear Sir / Madam,
Our client is using BOM usage 1 as well as BOM usage 6 i.e., Production BOM and Costing BOM.
Consumption of Raw materials and MRP happens based on the BOM usage 1.
Costing of FG happens using BOM usage 6.
Users want to have a variance report between the actual raw materials consumed v/s the BOM components in the Costing BOM in value as well as quantity basis.
If the costing BOM says 100 components and the production consumption happens for 110 components then the difference must be highlighted to them in the variance report.
We have ML activated. Kindly help.

Hi
1. Create one more costing variant and valuation variant...
The Qty Structure Control in this Costing Variant should refer to Costing BOM
Also, assign this costing variant to Version 1...
2. Run Cost estimate using this Costing Variant and save it in Planned Price 2 or 3 field
3. Create Version 0 and Version 1 for target cost calculation (IMG > CO > Prod Csting > Cost Obj Contr > Prod cost by order > Variance calculation)
Version 0 will be based on Costing variant which releases Std Cost
Version 1 will be based on Valuation variant which releases the cost to Planned Price Field
Br, Ajay M

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Production Order Variance Split based on Cost Component Split

Hi All,
We want the material/labor/overhead variances on the production Order to go to different value fields in the P&L.
We will be issuing Actual Material/Overheads to the Production order and there will variances for both Material and Overheads due to differene in Standard and Actual Qty issued.
But Standard SAP Variance Split Functionality will club the Material/Labor/Overhead Variances as Input Qty Variances so we cannot split it into different lines in the P&L.
Any ideas on how this can be done.
Thanks and regards,
Ankur

Hi Ankur
Its not possble in FI, but certainly possible in COPA
Create as many assignment lines in PA Trf Str as your Cost Comp Structure...
Assign the relevant GL/Cost ele in the SOURCE and choose the radio button "Costs/Revenues", instead of "Variances"
You can then assign each assignment to a separate Val Field in COPA
br, Ajay M

Production order variance settlement to cost centers/internal order

Hi,
I am looking to configure the settlement of production order variances to cost centers/internal order. Is there a way to do this in the settlement profile. Would appreciate your help.
Thank you,
Ram

OKO7 will allow you to configure the Settlement Profile by selecting valid receivers.
This should be done with/or by FICO.
Then test, test, test
award points if helpful
Althea

Costing BOM usage

Hi Experts,
Please explain me with some examples what is the use of " BOM usage (6)costing BOM".
I have the following scenario where i was trying to use the Costing BOM concept.
To produce material 'A', I need component 'B' and 10 other consumable materials.
For the cost estimation purpose, the client wants to put the consumables in the BOM.
The production of A is happening like this, Prod. Order qty of A is 100000 Meter.
The confirmation of A will be taken place partially like 500 m, 700m, 900m...etc.
When i do the confirmation, Auto GR for material A and consumption of components by 261 movement type will be taken place.
Here i can monitor what is the actual consumption of component B and i will enter during confirmation. So that i can get the Plan Vs Actual quantity.
But for consumables i can not monitor what is the actual consumption since it is very less quantity and it will be filled in the tank as a bulk quantity.
Please thro' some light on the following 2 queries,
1.In the costing BOM i will put all the consumables and in Production BOM i will put only the prime material, how to avoid the Variance during every confirmation?
2.If i don't put the consumables in the BOM, i added it in the Costing sheet, and i am issuing all to Cost center by 201 movement type. In this case how to take the Plan Vs Actual variance?
Thanks in Advance.
Bala

Dear Balamurugan,
Check out this,
Generally the Production BOM will be used for production as well as costing.Production in the sense which
will be used for running MRP or for creating a planned order or else a production order.
If you want to create a BOM for a material just for doing the cost calculation or if your company wants to
know the cost split up alone means then you can create a BOM using the usage 6,where the same will not
be considered for production that's in particular for running MRP.In case if you want to restrict that one
should not run MRP for a material which has a BOM (which has only Costing BOM) then in this case it will
be helpful.
Regards
Mangalraj.S

Basic question on settlment of production order variance to FI

Hi Experts,
I know im asking a dumb question. I really understood the concept of variance generated in production order, to say it in simple words the difference between debits and credits. But when it comes back to FI im confused and lost, when we settle the production order variance, the following entry is posted.
Production variance a/c 100
COGM var a/c or Mfg ouput var a/c 100
Now my question here is, there is a debit and credit of variance for 100, which is equal to zero, so there is no net impact of variance in my P&L, the variance is not accounted in FI at all. How is the production order variance accounted in FI?
Could somebody please answer my question or provide me with some clarification. I know either i would have misunderstood the concept or something is wrong or may be i need to look over the entire postings.
appreciate for your time spent.
Thanks in advance,
Best Regards,
sk

Hi SK,
The net impact of settlement of production order on P & L is zero. The reason is actual consumption to that particular production order is booked to P & L at the moment the activities are confirmed over that order.
Variance is difference between Std cost of Goods recepit and actual consumption. Suppose actual material consumption is 100 Rs and your std cost of goods with which production order is credited is Rs 90. The diff is Rs 10. Now if you again book this 10 Rs to P & L as negative being excess and giving second effect NOT to P & L, you will not come to know what is actual consumption and the picture will be wrong. There will be mismatch between Actual physical consumption and what is booked to P & L.Hence the debit and credit is given to P & L to nullify the effect of variance.
Truely speaking, the variance account is to be observed to verify the actual consumption against standards and to correct BOM and Routing and/or to take necessary action for excess or less consumption.
Hope the matter is clear.
Makrand

Production Order Variance not posting to COPA

Hi,
I am hoping someone can help.
We settle our production order variances to COPA. - usually without any problem. The production orders settle to both Material (Mat) and PSG
However this month we had a situation where for 2 order there was no settlement to COPA for the variance.
For these 2 production orders there was no settlement rule to PSG in the master data so this obviously explains why it didnt create a settlement document but my dilemma is understanding why there is no PSG settlement rule.
Through testing it appears that the PSG settlement rule is not created at the time of production order creation at all but seems to be automatically created after the execution of KKS2 and CO88.
The 2 orders that I had issue with this month were for a new material and I am able to recreate this probelm for any new Production order against this new material. So I suspect that there is something specific to this material that is prveventing the PSG settlement rule from being created.
But this is where I am stuck! I can't find any setting in material master or other area that would seem to impact this.
Any help appreciated,
Thanks,
Tracee

Hi,
First you can settle these 2 orders individually with using KO88 Transaction code and see if there is any error. Also check the settlement profile of these 2 production orders.there you can check the " variances to costing-based PA" tick is there or not.If tick is not selected there,you can select the check box and run variance calculation (KKS2) and do the settlement for these 2 production orders (KO88).
I hope this wil help you and let me know if you have any queries.
Regards,
Puri.

Production Order variance report

Hi,
Is there any standard report where we can find the variance analysis for a Production Order?

Hi ramakanth,
To see the variance between the Actual & Planned cost...... in the production order navigate in
Go to -> Cost -> Analysis
Do let me know if you any further query on the same
Reward points if you find this info useful
Regrads
Kaushik

How to settle the production order variance to 3 GL account

dear all
i met a problem in the project ,the customer need see the production order variance category detail for (material,routine,overhead variance) in FI report ,so it need to settle the variance to at least 3 GL account
i don't know how to configure it ,i try to use result analyse like wip ,but go failed
do you have some suggestion
thank you

Hi ,
Through Standard SAP .. the same it not possible . Standard SAP will post the differences to one GL account ..The variance amount is not segregated..
The way out is to use report KKO0 .( Product Costing Drill Down Reports ) in CO . There are many reports available .. and you can compute the difference in CO Reports and manually make an entry in FI by manually reversing the original variance account and posting it to cost component wise variance accounts ..
To use the KKO0 report.. please perform the following tasks :-
1. Assign cost component structure in transaction OKN0 ( Date Extraction/Product Drill Down) tab.
2. Product Group Type = Material group..
3. Run KKRV after period end every month to collect the data for drill down reporting..
Please revert back for any further clarifications
Regards
Sarada
Sarada

Question on costing BOM

Dear all,
I have a question on BOM Usage Type. We know that when the BOM Usage Type is 1 (Production) and when we have different alternative BOM's, Alternative BOM's are picked up by the Production version (based on lot size and other criteria).
Now the Question is:
When the BOM Usage Type is 6 (costing) and there are several alternatives BOM present for the same header material, where and how exactly are the alternative BOM's used in Costing. Because when the BOM usage type is 6 (costing), it will be not considered for the production but only considered for Costing. So the use of Prouduction version will not be there as there wont be any master recipe for production.
So similar to production version, there should be something which will pick up the alternative BOM for costing purpose. Please let me know on the same. It will also be great if a SAP help link on the same is shared.
Regards,
Brijesh

Hi,
check the following
While doing the costing run, SAP checks if you have maintained the "Production version to be considered for costing" MARC-FVIDK field in Costing View. It will use this Prodn Version for cost estimate.
If you have not maintained the production version field, then it will use the values maintained in the "Quantity structure data" section on costing view. I.e. it will use the BOM alternative. and recipe information from here.
If you have not maintained above values then system picks up the first BOM alternative (MAST table) and first recipe information (MAPL table) it finds for the material-plant combination.
Also according to my knowledge SAP cannot decide the Lot Size for Prodn Version while doing the costing run. You need to tell the system what data to be used for costing.
While standard cost estimate, In CK11n screen at Quantity structure tab you can choose, the required BOM and routing combination.
Like this you can have cost estimates for different combinations. But you can release only one.
regards
Venkat V

Costing Bom

Dear Sir or Madam,
We have repetitive manufacturing set up and the costing is always based production BOM. Now we are planning to switch over to costing BOM. Even though the priorities are set up in costing configuration to selection costing BOM the system by default selects production BOM. I made the changes in product costing quantity structure, BOM selection, BOM usage.
Is there anything else I have to do from the logistics side.

Hi,
BOM Usage
This key defines the area (such as engineering/design, production or costing) where a BOM can be used.
Use
Data is entered and edited according to organizational area.
The BOM can be displayed for a specific usage.
Procedure
Enter the usage for which you want to enter or edit the BOM.
For costing BOM, use usage as 6.
This BOM will be used by costing department only and will not participate in Production activities like in Planned orders or Production orders.
Srini

Material Error in PO and Costing BOM

Hello,
Am having error when am using a certain material in creating production order error is "In-House production is not intended for material 50 status inactive Prod. : DSS only" this same material also encountered error in changing Costing BOM error is "material status Z4 inactive prod.: DSS only does not allow BOM maintenance". what thus this error mean and how could this material be used with this transaction?
Please guide and help me solve this.
Thanks and Regards,
JJ

Hello,
You will find the Material Status in Basic Data 1 View as well as in MRP1 View (apart from other places)..\
For this material, it Seems that the status restricts the Material is Mat. Cost Estimate Procedure as "B"
And Production Order Header also "B" (Error Message).
One thing I would recommend is please check why this status is put?
Whether some one is intentionally put this status for any business reason?
or Blocked this material altogether?
Regards,
Siva

CO-Production Order Variance

Dear All
In the manufacturing loctions, we are using the standard cost for inventory valution of the finished and semi-finished goods.
During Production order settlement, the system is posting the entire variance between the planned cost vs actual cost to Price Variance Account. The above amount including the combined value of the Materail issue + Confirmations / Activity Cost +Oveherad Cost +Miscelleneous (Carry forwards from the child orders)
Our client wants to post the variance to different GL codes in the following manner:
(a) Materail varaince should post to one gl code
(b) Confirmation / Activity Cost should post to one gl code
(c) Overhead Cost should post to one gl code
Is there any option to configure the system ? if not, is there any functional solution that way i am able to bring comfort to the client (either report like summary of the the variance for all production orders during the period with the (a) (b) and (c) break up)
Kindly revert
Regards
Anilkumar

Dear Srikanth
Thanks for your reply, but the client requirement is the posting of the variance to FI, which need to have a break up
Kindly revert
Regards
Anilkumar

Production order Variance caculation(KKS1)

I run tcode : kks1 , system generate error message(KV 192) : Cannot calculate scrap variances.
But we do not have scrap movement in production order , could this error message be ignored by IMG config?Anyone can tell me how to do?

Hi,
If you choose costing version in variance calculation 0, then system calculates variance based on std. cost est. and actual cost. if you select 1, then system calculates variance based on planned cost and actual cost.
Go to customization settings in variance analysis calculation and change the costing version from 0 to 1.
Please refer this thread also,
Re: TARGET COST ZERO
Regards,
R.Brahmankar
Edited by: R Brahmankar on Sep 5, 2008 10:23 AM

Production Order Variance Configuration

Hi Gurus,
Would you please help me with configuring the Production order variances in product costing. I would really aapreciate if you can send me some documentation. My scenario is to configure the automatic calculation of production order variance and its settlement to Copa. I would really appreciate an early response. If you have any documentations please send it to kamkhan.sap at gmail.
Thanks

Hi MKR,
You can calculate the following variances in the R/3 system:
Planning variances
Production variances
Production variance of the period
Total variance
You control the variance calculation process by specifying a particular target cost version.
In make-to-stock production, standard cost is calculated in the standard cost estimate for the material. In sales-order-related production with a valuated sales order stock, standard cost is determined using a predefined valuation strategy.
During production, actual costs are collected on the order (product cost collector or manufacturing order). The actual costs that are compared with the target costs are reduced by the work in process and scrap variances (the result is called the net actual cost).
You can determine the production variances of the period by comparing an alternative material cost estimate with the (net) actual costs. This alternative material cost estimate can be the modified standard cost estimate or the current cost estimate, for example.
Total Variance
The total variance is the only variance that is relevant to settlement. This means that only the variance categories of target cost version 0 can be transferred to Profitability Analysis (CO-PA).
The total variance is the difference between the actual costs debited to the order and the costs credited to the order due to deliveries to stock. The difference between the debit and credit of the order is passed to Financial Accounting (FI) and Profit Center Accounting (EC-PCA) when the order is settled.
The target costs for the total variance are calculated as follows:
In make-to-stock production, the target costs are calculated using the standard cost estimate for the material and the quantity delivered to stock.
In sales-order-related production with a valuated sales order stock, the target costs are calculated using the cost estimate relevant to the valuation of the sales order stock (such as a sales order cost estimate or a standard cost estimate for the manufacturing order) and the quantity delivered to stock.
For the total variance, the control costs are equivalent to the following:
In Product Cost by Order, the control costs are the actual costs less the scrap variances.
In Product Cost by Period, the control costs are the actual costs less the work in process and scrap variances.
The variance calculation process compares the itemization of the cost estimate on which the calculation of target costs is based with the line items in your actuals.
The itemization contains detailed information based on the costing lot size, such as the materials to be used and the activities to be performed.
When you release a standard cost estimate for a material, the price calculated therein becomes the standard price in the material master record of the material being manufactured. In the standard system, an itemization is always created for standard cost estimates for materials.
The following variance categories can be reported for the total variance:
Input price variance
Resource-usage variance
Input quantity variance
Remaining input variance
Scrap variance
Mixed-price variance
Output price variance
Lot size variance
Remaining variance
When you settle, you can transfer the total variance to Profitability Analysis (CO-PA) broken down into variance categories.
In CO-PA, the standard cost of goods manufactured for the product is compared with the revenues to calculate an initial contribution margin for the period. The variances between actual cost and standard cost of goods manufactured can be used to calculate a second contribution margin for the period.
When you calculate the variances, you can transfer the difference between the debit and credit to CO-PA only as a total.
You calculate the total variance with target cost version 0.
Hope this helps. Please assign points and let me know if you need more information.
Rgds
Manish

Production order variance and purchase variance go to one business area.

Hi Experts,
I have a issue while Purchase order we have ordered 3000 qty and while goods receipt we posted 300000 qty and same was issed for prodction order instead of 3000 and got variance. Then afterward purchase order qty was rectified with correct qty then purchase variance happed. The production order variance is getting offsetting by purchase order variance and no effect on gross profit.
Now my question is production variance is going one business area and purchase variance is going another business area. It should not be like that. Both should be showed only one business area. Please provide solution.
Thanks in advance.
Balu

Dear Balu,
You can try OKB9 wherein you need to select the indicator 'BAlrn' against the cost elements of Purchase price difference account. Then select the line item and click the folder 'Detail for business area/valuation area' and input your business area. Thereby you can capture this variance in same business area, even if any other business area is entered or derived differently.
Further, if your production variance account is also a cost element, you can direct the postings to the same business area, we can do the same as explained above. If not, we have to think of another configuration or work around. Pl let me know.
Trust this helps much!
Regards,
Ashok SINGH

Production consumption variance w.r.t. Costing BOM

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