Standard v/s inventory cost estimate

Hi
In Indian context, which type of cost estimate should be used?
Regards
Samir

Samir,
Material Valuation determines or records the stock value of a material. The stock value is calculated using the formula:
Stock value = stock quantity x material price
Thus, if the stock quantity or the material price changes, the stock value changes.
Implementation Considerations
Material Valuation is not an independent application area, since most Material Valuation functions take place automatically in the SAP System. Depending on how a company is structured, tasks that have to be carried out manually belong to either Inventory Management or Invoice Verification. In Indian context also it will depend on these factors.
Integration: Material Valuation represents a link between Materials Management (MM) and Financial Accounting (FI), since it updates the G/L accounts in Financial Accounting.
Material Valuation serves the following purposes:
Adjusting material prices to market prices
Performing revaluations
Executing balance sheet valuation
Material Valuation is basically controlled by two factors:
System settings
Material master record
System Settings: By customizing the SAP System, you adapt Material Valuation to the requirements of your company. Below are some of the questions you answer when you configure the system:
At which level are materials valuated?
Which types of goods movements are relevant for valuation?
Which accounts must be posted to during a transaction?
Material Master Record: As a rule, a material master record is created for every material. The information contained in this record includes valuation data for the material. When maintaining the material master record, you must decide the following:
Whether a particular material should be valuated at all
Whether different sub-stocks of a material should be valuated differently
Whether the stock of a material should be valuated at a constant price (standard price) or whether the price should change in accordance with the delivered price (moving average price)
Which G/L account the stock value of a material should be managed in
The stock quantity and value of a material and the material price are also recorded in the material master record.
Hope this clarifies. let me know if you need anyother information.
Rgds
manish

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Inventory Costing Vs Material Costing

Can someone explain the difference between inventory costing and material costing ?
Edited by: VamsiM on May 3, 2010 2:14 AM

Hey,
An inventory cost estimate is used to update tax and commercial price, or prices other than
standard. In other words, the costing type is not for the standard price.
Best Regards
Young

Cost Estimates taking raw material in CK40N

Dear Experts,
We are running Costing run using CK40n by selecting site & article
type:ZMTG. (Only Finished Product)
But Standard cost is displaying for ROH/VERP in CK13n/MM43.
We only want to carry out std cost run for only ZMTG article.
In Costing varinat Priority is set for "Valuation Price according to price control" so the value give is correct. But the standard price field is getting updated in material master for Raw Material.
I want to know usually whether it used to take like this, if not where i need to make changes so that it should not take while costing the finished product.
Please reply asap.

Dear Abhisek,
It does not matter if the standard field updates with cost estimate, coz it does not effect financial results at all, reason behind the price control which is moving average for RAW materials.
Secodndly, it is helpful for you to find out the price of material when cost estimate was exucuted, coz it will not change until your further cost estimate run.
Raw Materials are part of BOM, so system always calculate their prices to reach at price of finish product, but system does not post any price change document for raw materials.
Further u can confirm using tcode CKMPCD
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M. Tayyab Aslam

Product cost estimate

Hi Experts,
Can somebody explain me the theoritical point of need for product cost estimate. From my know somepeople say we need to enter the standard price in the cost estimate tab of the material master, but sometime i see that when we run the CK11n the price automatically updated in the standard price field of the material master when we mark and relese the std cost estimate.
Do we need to enter price in the material master before the cost estimate for the materials or if we do the cost estimate do we do cost estimate only for the finished products so that all the cost under that product will be calcualted or do we need to do cost estimate for all material raw material, HALB & FERT?
what is the purpose of cost estimate and the result of cost estimate?
Thank you
Edited by: Nivi ram on Dec 29, 2009 9:52 PM

Hi Nivi,
Partly I agree with Pradeep, but I would to add more information regarding product cost estimate concept.
Maintaining material master on Accounting view or Costing view is mandatory prior to run Product Costing. It is true, by maintain price manually you cannot get cost breakdown or what so called as cost component structure. It is initial price which then later can be updated by "process Marking and Release" product cost estimatel.
How the system get the value of material costs and process costs are defined by Costing Variant. Costing variant control how the system find the BOM and routing to calculate the material costing and the production costing. System will access the material and activity cost based on Valuation variant in the Costing variant. I am sure you can costing variant use in the CK11N.
When the product cost are free of error then, you can go to the process to utilize the product cost estimate to update the material master with CK24 ( update material master indivdually). You can also use mass costing using CK40N - Edit Costing Run to maintain the costing and update material master. So product cost estimate can be run either for finished product (FERT), semi finished product (HALB) or other components
Hope this help.
Regards,
Irhasni

Precaution for releasing the cost estimate

Hello friends,
What are the precautions to be taken for releasing the cost estimates.
Like any delivery are done and invoices to to made in Sales.
What are the other precautions. Please let me know, as we have to release the cost estimate in production.
Regards,
SK

Hi,
do you mean released to standard price?
1: cost estimate needs status "costed without error".
2: marking allowance in CK24 must be set for company code/period for the costing variant used.
3: Costing variant is assigned to a costing type that allows price update to standardprice.
4: Cost estimate is marked (without errors).
Aftre that its possible to release the cost estimate to S-price.
best regards, Christian

Material ledger and standard cost estimate

Hi Gurus,
When standard cost estimate is done in a scenario, where material ledger is activated, does the entire stock get revaluated andl post a credit in my P/L? Is it possible to keep my inventory(FG and SFG) at periodic unit price ie at the actual manufacturing price over a longer period say 3 years? Please fill this gap in my understanding.
Best regards
Vimal

Hi Vimal,
Material ledger uses the standard price as 'preliminary price' always during the current month, independent of the question if a new standard price was estimated and released.
But: After period end, when the actual price is calculated the posting will adjust the inventory and P/L accounts to the actual price, with posting date in the recent period.
That means if you have a material that was manufactured once and then consumed over a 3 year period, and during that period you calculate the same material in a standard cost estimate with changing results, that would mean: Looking back at any month during the 3 years the consumption and stock values will be valued at the actual price of manufacturing. But during the currently open period it will always be valuated at the price of the last released cost estimate.
I hope I understood your scenario correct...
Best regards, Udo

Is it possible to do Standard Cost Estimate even if we have open sales Orde

Hi,
I have a small doubt and questions regarding Standard cost estimate.
Is it possible to Execute Standard cost estimate when we have Open Sales orders and Open Purchase orders?
Is there any problem if we execute standard cost estimate when we have open Sales orders and Open purchase orders?
Kindly clarify my doubt and help me.
Thanks
Supriya

Dear Supriya,
There is no relation between sales order or purchase order and a standard cost estimate.
Standard cost estimate basically sums up the cost of the BOM components and the operation(activity
cost) or the processing cost(if sub-contracted) based on the material's procurement type and the
costing variant used.
Check and revert back.
Regards
Mangalraj.S

Excise Duty - Standard Cost Estimate

Hi Experts,
We have defined Excise duty as one of the cost component in the cost component structure. Can some one explain how this Excise duty is posted as planned values in the Standard Cost Estimate ( For material cost quantity from the BOM and price from Material Master is picked up according to the Valuation Variant - defined strategy - similarly for Excise Duty how the system captures the Value).
Please Help - thanks in advance.

Hi
If your Plant is not in an Excise Free Zone - Then You should not add Excise Duty as a cost component because you will be getting credit for the same
If your Plant is in an Excise Free Zone - Then your MAP/Planned Price etc must be inclusive of Excise duty.... This is handled by marking the excise condition as Non Deductible
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br, Ajay M

Problem with rounding in standard cost estimate.

Hi All,
Happy 4th of July!
I have a problem with the standard cost estimate where the system try to calculate overhead costs (from costing sheet) with a fix percentage (9.7%) to the value coming from material consumption costs element.
Let say I have $1.71 material consumption and the overhead rate of 9.7%
The real calculation should be (1.71*0.097) = $0.16587
But at CK11N screen, it shows only $0.16 (two decimal rounding)
Is there a way that I can bump the rounding to at least 3 decimal point to make it more accurate?
Very appreciate any input you guys can share. Thank you.
Charitha

Hi Chari ,
My experience says that you can use only 2 decimals ..
Moreover , please have a look into SAP Note : 639410 - CK11N, CK13N: Message CK869 due to rounding
differences.
There a some source code corrections also on rounding differences- check if it helps you also...
Regards
Sarada

Standard cost estimate could not be found for the material

Dear All,
We have 4 manufacturing plants and 30 sale depots. We are maintaining price control (S) for FG and SFG in Manufacturing plants,price control (V) at depots for the same material code. we are getting an error message " standard cost estimate could not be found for the material" while doing billing at depot.
Please give me suggestion.
Your suggestion should be appreciate.
Thanks in advance............
AND
My client want to see profitability at manufacturing plant level and need break up for the COGM. So how can i get the values of depot sales.
please let me know how to do........

Hai
Price control should be S for Depot also. You need to run standard cost estimate in DEPOT after entering additive cost under CK74N for frieght, excise duty etc. To transfer the standard cost from the source plant you need to make configuration in OMD9 defining the receiver and sender combination so that system can pick up the cost from source plant. This special produrement type needs to be asigned in the material masters of DEPOT under MRP 2 view.
Pushkala

Recursive Loop Error while doing standard cost estimate

SAP Gurus,
We are trying to do standard cost estimate on a material and we are getting error because it is going in recursive loop even though we have used "recursive allowed" indicator for item components in the BOM. The error message numbers are CK 730 and CK 740. We are using 4.6c. I have tried the same scenario in ECC 6.0 and still I get the same problem.
Below is my BOM structure:
Material 10890345 (has low-level code 012)
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10867220
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10846733
        ---> 10890345 (has low-level code 012) and has recursive allowed indicator
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For some weird reason while doing the costing run for material 10890345, it s not stopping and going in a loop.10890345 and 10846733 should ideally have the same low-level code as they are recursive.
Please help to provide some solutions at the earliest on how to avoid recursive loop during costing.
Regards,
Swapnil

Dear,
I have 2 things to shear with you.
The method we followed to solve the iteration is as below
1.Config change -
Valuation variant in the costing variant, we changed the sequence as below
material valuation
4 planned price 1
2 std price
3 Mov ave price
2. Material master change
made all the semi finished goods and finished goods
procurement type = E,
costing with qty structure,
Enter the planned price1
By doing this what happens is
when system first start the iteration, takes the planned price 1 and start iterating and next time in the second iteration it takes the calculated price from qty structure till it finds the difference between the value calculated is less than .001. Then it gives the result
Why lot size is important is, in our case in some levels the usage is very less compared to the first material header qty and system used to stop in between and not even reaching the last level as during the cycle it was reaching less .001 difference. may be in your case it may not be the case...just check
Please come back after trying this. this was the only last option i had to solve the issue in my client.
Another alternative is to have a different material for costing purpose to stop the iteration which i will not recommend as we need to do some calculation for each stage and input the cost of dummy material in each stage.
My client is happy with the result as the difference between manual calculation and system calculation is less then .1%...this is because SAP will not consider the difference beyond .001, but in excel you get as many as decimals you want.

Blocking creation of production order if standard cost estimate is not done

Hi PP gurus,
Can anyone help me in blocking the creation of production order if the standard cost estimate is not done for the particular posting period.

Hi,
I do not think there exist a standart check. You can use exit EXIT_SAPLCOZF_003 to block creation of production order by sending error messages based on any condition.
Regards.

Re:No release of production order without standard cost estimate

Hello Experts
I do not want to release any production order without standard cost estimate
I have come acroos the same problem raised by some other users and can you please suggest how to achieve this?
Is there any way to achieve this without user exit?
Thanks and Regards
Subbu

Hello Subbu,
In this case, you need to put the status as "B4" Blocked in costing 1 view of material master, when you create the costing view and change it to "03" status when you released the cost estimate.
Please note that this field can be overwritten in MRP view also. Hence please get the good control of material master and good coordination with PP team to achive this.
Please let me know if you require any clarifications.
Thank you,
Regards,
Santosh
Please reward points if helpful.

No release of production order without standard cost estimate

Hi All,
I have an requirement, that is production order for a material should not be released or saved if standard cost estimate for that period is not released. Basically it should not allow to release or save the production for that material, is SCE is not run for that period. I tried various options, i also overheard its possible through user exit and many people have succeed in that.
Has anybody overcome this problem, please do let me know. And which user exit??
Thanks in advance
With Best Regards
GJ.

Hi...
I have faced the same problem in my previous project. What i have instructed to my client is to take control of Master data and put the status as "03" Blocked for movement till the statndard cost is released for this material.
You can relase the status to "E2" in Cross Plant Status Field in Costing one view once the cost estimate is released for the material.
I hope this works for you.
Please let me know if you require any fruther information.
Thank you,
Regards,
Santosh
Rewards points if helpful.

Issue with Standard Cost estimates / Material Ledger

Background:
We have been using SAP for the last 5 years with Material Ledger active. Due to a number of reasons, we have not revised its standard cost estimates from 2001 till now. This means that at month end, we do not mark and release prices as recommended, nor do we mark prices and use dynamic release.
What Happened:
A new material called PFSW3 was made. This is a FERT. Before production
could start my team released the standard cost estimate for this material. Production was now able to proceed without problem. Then, when the time came to sell the material (VF02), SAP again raised the error 'cost estimate not found'. On checking the standard price in MM03, we discovered that the future cost estimate was missing. So we created and marked a new cost estimate in the middle of February 2007.
Problem:
When the first sale took place, SAP released the marked cost estimate and posted a Price Change document to adjust for the new standard cost. I understand this was due to dynamic release. Now, when month end came, the system settled all the production orders of material PFSW3 but did not do multi level costing on it.
Internal Investigation:
My team has determined that the material PFSW3 has price determination 2 set by mistake. All our other production materials (HALB and FERT) are
set to price determination 3 in the material master (accounting view).
Questions:
To sum this situation up,
we need to know why the material PFSW3 was not marked closed in its period status (CKM3) at the time of closing through CKMLCP?
What are the implications of not closing this material in Feb 2007 (current period status is showing 'Quantities and values entered')?
How can we close this material this month?
The future cost estimate is again missing for PFSW3 in March 2007 and I
fear we are going to face more problems as this material is sold to customers.
Please respond this is an urgent issue.

Dear Shumyl,
Please, have a look at Note 645083 - Material period status set to "Closing Entry Completed" that might help to closing your material in previous period.
Hope it will be useful.
Regards,
Flaviano.

Standard v/s inventory cost estimate

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