Entering content frameExample for Product Cost by Order Locate the document in its SAP Library structure

A pump manufacturer wants to control his production costs using the R/3 System. The pumps are not made for specific customers.

  1. The manufacturer creates a standard cost estimate at the beginning of the fiscal year. This cost estimate uses the information in the routing and bill of materials.
  2. This standard cost estimate calculates the standard price for the pump. All goods movements (goods issues and receipts) for this pump are valuated using the standard price for the corresponding plant.
  3. In requirements planning, the manufacturer creates a planned order for 100 pumps. The manufacturer then converts this order into a production order.
  4. The information in the production order is then used to calculate the planned costs for manufacturing the pumps. The manufacturer calculates the variances by comparing the results of the preliminary cost estimate (planned costs for the order) with the results of the standard cost estimate (planned costs for the material). He then uses this information to decide whether to manufacture the pumps.
  5. The manufacturer enters the actual costs for the materials used, the activities used, and the overhead with reference to the released production order.
  6. When a pump is delivered to stock, the order will be credited using the standard price.
  7. Variance analysis: After the last goods receipt, the manufacturer compares the actual costs for the order with the standard cost estimate and the preliminary cost estimate.
  8. Differences between the credit postings on goods receipt and the actual costs are settled to stock and to Profitability Analysis.

At the end of the period, the manufacturer can also:

Note

If you have access to the IDES training system, you can go through this scenario using material P-100 in plant 1000. Create production orders for these materials for this purpose.

If you have access to the IDES training system, you can go through an example of Cost Object Controlling in process manufacturing using materials Z-300 and Y-300. Create process orders for these materials for this purpose.

 

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