Use

You create an inventory cost estimate to calculate tax-based or commercial prices for semi-finished and finished products. After you have costed the inventory, you can transfer the costing results to the material master as tax-based and commercial prices.

Prerequisites

Settings Required to Update the Lowest Value in the Costing Type

Every cost estimate you create is based on a costing variant. This costing variant is assigned to a costing type. The settings in the costing type specify whether the lowest value is determined when the material master is updated:

In this case, the lowest value is determined when the prices are updated in the material master record. The system compares the valuation price as per the price control of the current or previous period with the price from the cost estimate. If the valuation price is lower than the cost estimate price, the valuation price becomes the tax-based or commercial price in the material master.

In any event, the costing results are transferred into the material master, irrespective of the comparison with the valuation price.

Settings for Inventory Valuation in the Cost Components

Cost component views enable you to specify which part of the cost component in the inventory valuation should include commercial and tax-based physical inventory valuation, and which part of the itemization should have overhead applied to it. In standard cost estimates, overhead is applied to those cost portions that are flagged as cost components for inventory valuation. For inventory costing, you can specify a different cost component view. If you do not specify a cost component view, the cost estimate works with those cost portions of the material item that are assigned to the inventory valuation. If, in the inventory cost estimate, the variable or fixed part only of certain cost components is being used in inventory valuation, define a corresponding cost component view in Customizing.

Settings in the Valuation Variant

You create an inventory cost estimate based on a costing variant. The valuation variant contained in the costing variant enables you to specify that the following data should be included:

In the valuation variant, you specify the order in which the system looks for a price to valuate the materials in a cost estimate. For inventory costing, you define the access to tax-based and commercial prices in the material master.

In the valuation variant, you define the order in which the system looks for prices to cost the internal activities. You also specify the plan/actual version on which the price determination is to be based.

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Versions are used in Cost Center Accounting to carry different plan data in parallel. You can define a version in which a price is determined that leads to conservative prices for internal activities. You can also copy actual values into a plan version.

If you want to valuate the internal activities used for the inventory cost estimate according to the recognition-of-loss principle , you define in Customizing a valuation variant in which you enter the version that uses the conservative prices.

For more information, see Planning and Parallel Valuation in Multiple Versions

To calculate the overhead for inventory costing, you define a costing sheet in the valuation variant. This costing sheet can be used to distinguish between the amount of overhead from the costing sheet of the standard cost estimate, for example.

Relevancy to Costing Indicator and Price Factors

The Relevancy to costing indicator indicates whether a costing item is relevant to costing or not. You can link the costing relevancy indicator to factors, in order to make inventory adjustments for packaging costs in a cost estimate, for example. (See also: Inventory Cost Estimates ). These factors are included through the settings in the cost components. The cost components are linked here with the costing variant.

For the standard cost estimate , the modified standard cost estimate , and the current cost estimate , you flag the BOM items and operations as being either relevant or not relevant to costing. This enables you to ignore costs for operations that are only relevant for scheduling, for example.

In the standard system, the indicator X is linked with factor one (relevant to costing), and the empty indicator with factor zero (not relevant to costing). For inventory costing, define two further indicators in Customizing, such as A and B .

In Customizing, link the Relevancy to costing indicator to both fixed and variable costs, so that BOM items or operations can be adjusted on a percentage basis in the cost estimate, as required. You can define this assignment for a certain valuation variant or for all valuation variants.

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Example 1

The BOM of a material specifies how the product is packaged. The packaging costs are USD 10. The packaging costs in the standard cost estimate are also USD 10.

For inventory costing, link the relevancy to costing indicators to factors with the factor 0.500 . The packaging costs in the inventory cost estimate are USD 5.

Example 2

The inventory cost estimate contains 80% of the costs for BOM items or operations with the indicator "A" and 20% of the costs for BOM items or operations with the indicator "B".

In the standard cost estimate, the modified standard cost estimate and current cost estimate, the costs for these BOM items and operations are interpreted as being relevant to costing. This means that the factors are set by the system to 1.

Example 3

The valuation variant for the inventory costing is 001. For the BOM item, the relevancy to costing indicator "A" is set For the valuation variant "001", the system only finds the entry with the relevancy to costing indicator "N", because a particular valuation variant existed. The BOM item is valuated with the zero factor.