Fixed-Price Co-Products
Use
Joint production is a production process that yields two or more products simultaneously. Calculating the prices for the co-products of the production process is usually carried out using a cost apportionment structure, which is stored in the material master.
However, you can indicate in the material master that the co-product is a fixed-price co-product. Once you have done this, the material is entered in the cost estimate with the price that you specified, and price calculation does not involve a cost apportionment structure.
Prerequisites
You flag the material in the costing view of the material master as a co-product and also as a fixed-price co-product.
Features
If you flag a product as a fixed-price co-product, the quantity produced is multiplied by a price from the material master or material cost estimate. The result is subtracted from the total joint production process costs by means of the net realizable-value method (as with
by-products). The remaining costs are allocated to the co-products via an apportionment structure.
You can do the following with the price for a fixed-price co-product:
You can calculate the price using a cost estimate with or without quantity structure. However, in the case of a cost estimate without quantity structure, the co-product must have its own production process.
For materials with S price control, the fixed price equals the standard price.
For materials with V price control, the fixed price equals the price entered in the goods received valuation for the order delivery.
In the
itemization, fixed-price co-products are shown as items of type M, albeit with negative quantities and negative values, as is the case with by-products.
Note that in Cost Object Controlling, the order item is credited following the goods receipt of the fixed-price co-product in accordance with the cost element, which is determined via the material account assignment.
The debiting of the order item is based on the co-product distribution. All the costs posted to the order header under the cost element with which the order header was debited are distributed to the order items.
In joint production, the actual costs of the production process are collected on the order header of the production order. At period-end closing, you can distribute the actual costs from the order header to the order items. One co-product is entered for each co-product. The actual costs are distributed from the order header to the order items in accordance with defined equivalence numbers.
In joint production, the functions WIP calculation, variance calculation, and settlement are carried out at the order item level. By using the Distribution Co-Products function, you ensure that all the actual costs relevant at the time of WIP calculation, variance calculation, and settlement are included.
See also:
Information System: Features of Co-Products
Costing Co-Products
Features of Joint Production