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Function documentation Joint Production Costing 

Use

Joint production is a production process that yields two or more products simultaneously. A production process can yield

co-products and by-products (residual materials).

The costs for such products can be calculated by means of a non-order-related material cost estimate. The co-products are valuated differently, depending on whether they are co-products or by-products.

Prerequisites

The prerequisites for joint production are fulfilled in the master data (material master and BOM):

  • For co-products, the Co-product indicator is set in the
material master.
  • In the
  • BOM for the leading co-product, the by-products are represented by items with negative values. The Co-product indicator is also set for co-products in the BOM for the leading co-product.

    Features

    Co-products are costed using production versions.

    These are processed and stored in the costing view of the material master.

    For more information, see

    Quantity Structure Control in Joint Production.

    How the costs are calculated depends on whether the product is a co-product or a by-product. The costs for co-products are calculated using the apportionment method, and those for by-products are calculated using the net realizable-value method. However, it should be noted that co-products designated as fixed-price co-products are costed in accordance with the net realizable-value method.

    The costs for fixed-price co-products and by-products are subtracted from the total costs. If a price is used from the material master, this value can be contained in a single cost component. If a fixed-price co-product or by-product has its own cost estimate, the cost component split of the cost estimate is taken into account when the costs are deducted from the total costs. In the process, the costs in a cost component are deducted from the total costs in the cost component to which it belongs.

    After the costs for by-products and fixed-price co-products have been taken into account, the total costs of the production process are apportioned for all cost components to the co-products. Equivalence numbers are used for the apportionment process. To apportion the costs, an apportionment structure is available. Each production version can have its own apportionment structure. You maintain the apportionment structure in the costing view in the material master.

    A

    cost component split is created for the costed co-product of a manufacturing process. The cost component split is created when the apportionment structure is applied to the total costs of the process.

    The system also creates an

    itemization and a costed multilevel BOM. When the costing result of a co-product is displayed, the other co-products are represented as individual lines with item category A. In such items of category A, the output quantity of the co-product has a negative quantity and negative value. The negative value is equal to the cost portion of the co-product that was calculated through the apportionment structure. By-products are displayed as items of category M, also with negative quantities and values.

    Note

    For more information, see the following sections in the Product Cost Controlling Information System of the SAP Library:

    CO-PC Information System
  • Features of Joint Production
  • Reports in Product Cost Planning

    To cost a co-product using the recipe of a process material, you must create a costing view for the process material. For process materials (material type PROC), information is stored in the costing view of the material master for use when costing the co-products:

    • For the application of overhead to co-products, the overhead group from the material master of the process material is used. (The overhead groups in the material master of the co-product are not included in this case.)
    • The costing lot size of the process material is used when costing the co-products.

    Note

    To calculate WIP and variances, all the co-products must be costed (not just the leading co-product), and the cost estimate saved. For more information, see

    Special Features in Joint Production in Cost Object Controlling.
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