Show TOC

Valuation Variant for WIP and Scrap (Target Costs)

In this section you can create a valuation variant for the valuation of work in process and unplanned scrap (scrap variances) at target costs. You define how the system calculates the target costs for the valuation of work in process and how it calculates the target costs for the valuation of scrap.

The target costs can be calculated as follows:

You also specify the costing variant and the costing version.
See also: Check Requirements Classes

If you always want to valuate the work in process and scrap at the target costs calculated on the basis of a standard cost estimate, do not create a valuation variant for work in process and scrap.

Requirements

Make sure that the cost estimate used as a basis for calculating the target costs fulfills the following requirements:

The itemization for the preliminary costing for manufacturing orders is generated dynamically when the work in process or variances are calculated. Note that this may have adverse effects on performance.

To be able to calculate work in process at target costs, the order must have the settlement type PER (Periodic). That is, the default values for the order type must be as follows:

See also:

You must also have carried out the following steps:

Recommendation

The valuation of the work in process and scrap at target costs most closely approximates your true costs. If the quantity structure of the production order and process order is changed, or if the routing for the production version is changed, the affected orders can be recosted. Future confirmations and the confirmations that have already been made in the current period are valuated on the basis of this new cost estimate.

Activities

1. Decide whether you want to valuate the work in process and the scrap at target costs that are not calculated on the basis of a standard cost estimate.
2. If appropriate, define a valuation variant for work in process and scrap (target costs).
3. If you want to valuate the work in process in accordance with the valuation variant, assign the valuation variant for work in process and scrap to a results analysis version.
See also:
Assignment of valuation variant for WIP to results analysis version
4. If you want to valuate the scrap in accordance with the valuation variant, enter the valuation variant for work in process and scrap in target cost version 0 in the field Valuation variant for scrap.
See also: Define target cost versions

Further Notes

In repetitive manufacturing, if you want to valuate the work in process and scrap on the basis of a preliminary cost estimate for the product cost collector, you should make sure that the confirmations that affect simultaneous costing are made on the basis of a preliminary cost estimate for the product cost collector . This means that when you confirm, the system gives you default activity quantities on which the preliminary cost estimate for the product cost collector are based.

See also:

Check Confirmation Data for Repetitive Manufacturing Profiles

For detailed information on the valuation of work in process and scrap at target costs, see the document Cost Object Controlling -> Product Cost by Period.

For detailed information on the calculation of standard prices with a valuated sales order stock or project stock, see the documentation Cost Object Controlling -> Product Cost by Sales Order .