Mixed Costing

Use

You can use this function when you

  • use different production processes to manufacture a product

  • use different sources for procuring a material

The costing of either of these alternatives leads to differing manufacturing costs or purchase prices. Within a mixed costing you can calculate a mixed price.

Prerequisites

  • You have defined the Procurement alternatives

  • You have defined a quantity structure type in Customizing

  • You have defined mixing ratios for the procurement alternatives in the application as based on the quantity structure type defined above

  • You have assigned this quantity structure type to a costing version in Customizing

  • You have carried out the material costing based on the above-defined costing version

For procurement alternatives with process categories Purchase order or Subcontracting :

Check the settings for the valuation variant in Customizing for Product Cost Planning. In order for the system to be able to include the conditions of the different vendors, the strategy Price from purchasing info record must be used. If this strategy is entered, the valuation of procurement alternatives and configured raw materials will always be completed using this strategy first; in other words any specified strategy sequence will be ignored. This strategy can also be entered as the end of the sequence, if other valuations use other strategies.

Features

A mixed cost estimate allows you to calculate a mixed price. You can update the mixed price as a standard price, and also use this mixed price to valuate materials controlled with S price.

The mixed price is arrived at by applying a weighting factor for each of the cost estimates to the procurement alternatives using equivalence numbers. You create a mixed cost estimate as described in Creating a Cost Estimate with Quantity Structure . It is based on the costing version, to which the quantity structure type is assigned.

The system first costs the procurement alternatives, before mixing the cost estimates (using the defined mixing ratios) and calculating the mixed price.

All mixed cost estimates contain a cost component split , a costed multilevel BOM , and a special itemization . Each row of the itemization corresponds to a procurement alternative by means of the equivalence number with which the procurement alternative is weighted. There is also an indicator showing that a mixed cost estimate is involved. You can transfer the cost component split for the mixed cost estimate to the Profitability Analysis (CO-PA) module. For more information, see Features of using Mixed Costing .

You can execute more than one mixed cost estimate for the same plant material at the same time. Costing versions enable you to distinguish between different mixed cost estimates for the same material. You define costing versions in Customizing for Product Cost Planning. You specify which mixed cost estimate is to be used to update the standard price in the material master by marking and releasing . This is carried out with reference to a particular costing version.

You can calculate mixed price variances between the standard price that was calculated by the mixed cost estimate and the calculated price of the procurement alternative. The mixed price variance is a separate variance category of the output side of an order (product cost collector or manufacturing order). Target cost calculation and target credit refer, in this context, to the cost estimate created for the respective procurement alternative. Actual credit of the order is calculated with the standard price arrived at from the mixed cost estimate. The mixed price variance is calculated from the difference between the actual credit of the mixed cost estimate and the target credit calculated based on the procurement alternative. For more information about variance calculation, see Variance Calculation .

See also:

Implementation Guide for Product Cost Controlling