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Use

To make the most of Product Cost Controlling; it may be necessary to differentiate between the various methods of procurement for a material. This can help you find the most cost-effective procurement method. In addition, it may be necessary to analyze the costs of an entire value chain.

The system uses process categories to differentiate between the different types of procurement, with the central element in the value chain being the procurement process. Procurement processes deal with both internal and external procurement.

Examples of this are:

In the case of in-house production, procurement processes are called production processes. As a rule, a procurement process produces exactly one valuated material.

In the following situations, however, a procurement process can produce multiple valuated materials:

If multiple materials are produced or procured with one procurement process, it may be necessary to divide up these costs. The costs are divided among procurement alternatives that are then assigned to the particular material. If one process produces one material there is then a 1: 1 ratio between the procurement alternative and procurement process. If, however, a procurement process produces multiple materials, multiple procurement alternatives are then assigned to that process.

Integration

Procurement process and procurement alternatives are used:

Features

If Actual Costing/Material Ledger is active, a procurement alternative is created for each material at plant level. The Controlling level affected is called Material/Plant. You can analyze costs and quantities in greater detail if you set the Controlling level more precisely, i.e. if you add Production Version to the characteristics.

This graphic is explained in the accompanying text

Activities

You can find detailed information in the corresponding documentation concerning the use of procurement processes, procurement alternatives, and process categories, as well as controlling levels in conjunction with mixed costing or Product Cost by Period. You will find the relevant information there.

See also:

Structure link Mixed Costing

Production Processes

Structure link Product Cost Collectors

Procurement Alternatives

Procurement Processes

 

 

 

 

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