Actual Cost Component Split: Multilevel Material Price Determination

Multilevel material price determination rolls up data (such as the differences that arose for the input materials and the price differences of cost center activity prices from actual activity price calculation) as multilevel differences to the material being manufactured. The actual cost component split distributes these rolled-up differences to the corresponding cost components.

With a cost component split for the cost of goods manufactured, the difference between the planned activity price and the actual activity price is entered into the corresponding cost component for the production activity.

With a primary cost component split, the difference between the planned activity price and the actual activity price is distributed to the corresponding cost components, and is added to the cost components of the next-highest costing level.

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The closing entry carries the cost component split information of the ending inventory forward to the beginning inventory of the subsequent period.