Production Costs 

When a material is produced internally, activities are used for which planned costs (production costs) can be calculated.

Whether production costs are calculated or not depends on the control key and the relevancy costing indicator in the corresponding operation in the routing.

For the kanban replenishment strategies with cost collector, the planned costs are calculated with reference to the material to be produced via a standard cost estimate. The standard cost estimate is calculated on the basis of the BOM and the routing. The system calculates the production costs depending on the control key and the "relevancy to costing" indicator in the corresponding operation in the routing.

In order to carry out the standard cost estimate so that the internal activities can be calculated automatically from the backflush data, you must maintain the work centers assigned to cost center and the activity types. You must also maintain the routing for the material. If no work center (assigned to cost center and activity) and no routing have been maintained, you can calculate the internal activities using the unit costing function. (Controlling ® Product cost accounting ® Product costing ® Costing ® Without quantity structure ® Create - Single-Level Product Cost Estimate)

To calculate the standard cost estimate for carrying out an operation, the system first sets up a quantity structure for the activities carried out. In a second step, prices are applied to the quantity structure.

The most important data for setting up a quantity structure for an activity is defined in the work center:

Every activity to be costed is assigned to an activity type. A formula is assigned to each activity type in the work center. Using the formula and the standard times in the operation, the system calculates how much activity is expected for a particular activity type in a particular operation. As soon as the system has calculated how much activity is expected, it can valuate the required activity per activity type. To do this, the system uses the activity price per activity type that is planned in cost center accounting.

All movements from in-house production in Logistics are valuated with the results of the standard cost estimate. If a material with standard price control is delivered to stock, for example, then this material’s stocks are valuated with the price determined using the standard cost estimate.

For replenishment strategies with a cost collector, the production costs are written to the cost collector under secondary cost elements. These cost elements are entered in the master record of the activity type.