Use

This function in Product Cost Controlling for Discrete Industries enables you to determine variances for product cost collectors with quantity-based valuation. This application is only available for product cost collectors manufactured on the basis of an iPPE quantity structure.

Variance calculation does the following:

Shows the variance between target costs and control costs

Calculates the difference between actual costs and work in process in the Industry Business Solution Discrete Industries allocated to an object on the one hand, and the credit from goods receipt postings (total variance) on the other

Determines the scrap variances by valuating the unplanned scrap quantities at target cost

Determines production variances

Explains how the variances originated and assigns the variances to different variance categories depending on the cause

The system updates the variances for each object by cost element or cost element and origin. You can apply the knowledge acquired through the variance calculation function to control your costs.

You can also analyze your data for specific days, weeks, or months in the Business Information Warehouse using the Daily Production Costs function.

Integration

You can use the Schedule Manager to facilitate the period-end closing process.

If you use the Schedule Manager with the flow definition, you can correct the errors in the objects using the multilevel worklist.

User-defined error management enables you to indirectly influence the program flow of variance calculation.

Prerequisites

Make sure you have done the following:

Make sure you have taken account of the special requirements for product cost collectors with quantity-based valuation and the general prerequisites for product cost controlling with sales-order-related and make-to-stock production with reporting points .

If you want to include activities in costing and confirmation , you must link iPPE to Overhead Cost Controlling.

In make-to-stock environments, preliminary costing for the product cost collector on the basis of iPPE is required.

The product cost collector for which you want determine variances must have a valid variance key.Note that the Scrap indicator in the variance key is ignored. That is, scrap variances are always reported as long as scrap is activated in the valuation variant. In addition, the setting for Write line items is ignored – line items are never saved. In Customizing, you can specify the variance key as a default value for each plant. The system then transfers the variance key into the master records of the plant materials that you create. If you then create a production order or product cost collector for a material, the system transfers the variance key into the master record of the product cost collector.

For cost-critical materials, the Material origin indicator in the costing view of the material master record must be set, or origin groups must be used. The system can then determine which materials and which primary cost element caused the variances. If you have already created material master records in which Material origin is not selected, you can select this indicator for the affected materials automatically using program RKHKMAT0. To do this, choose Tools → ABAP Workbench → Development → ABAP Editor.

The product cost collector for which you want to determine variances must have a variance key.

Before you can start variance calculation, you must carry out the following steps in Customizing for Product Cost Controlling in Cost Object Controlling under Product Cost by Period → Period-End Closing ® Variance Calculation:

Define Variance Keys The Scrap indicator for unplanned scrap in variance calculation is ignored.

Define Default Variance Keys for Plants

Define Variance Variants: If you want the scrap variances to be shown in the target cost version to which the variance variant is assigned and the scrap variances to be deducted from the actual costs, select Scrap variance .

Valuation variant for WIP and scrap:

In the standard system, you specify in the valuation variant for WIP and scrap whether you want to determine the target costs for valuation of scrap variances on the basis of the following:

Preliminary cost estimate for the product cost collector or production order

Alternative material cost estimate

Current valid standard cost estimate

These settings are ignored for product cost collectors with quantity-based valuationThat is, the valuation variant for WIP and scrap in the s ettings for the target cost versions is not interpreted by the system.

When actual costs are posted, the target quantities for the component withdrawals and activities are specified in accordance with the posted assembly quantities. When the target costs are calculated, these component and activity quantities are valuated directly using the valuation variant specified in the costing variant planned of the product cost collector. No existing cost estimate is used in the valuation.Consequently, the valuation variant for WIP and scrap plays no role in quantity-based valuation.

Define target cost version: Note that in this scenario, the assignment of the target cost version affects variance calculation in a different way than the settings of the target cost version in the SAP standard system. Furthermore, the scope of functions in target cost calculation varies depending on whether you are in a make-to-order or make-to-stock production environment. You can find more information on target cost calculation for product cost collectors with quantity-based valuation under Types of Variance Calculation below.

The indicators mixed-price variances and minor differences are ignored in this scenario.

Take organizational steps to ensure that WIP is always calculated before the variances.

Product cost collectors are only included in variance calculation when the status of the order is not one of the following:

DLFL (deletion flag). You should assign status DLFL to product cost collectors that are no longer needed.

DLT (deleted)

You can withdraw the deletion flag after it has been set, for example if follow-up costs are incurred for the order. The deletion indicator, however, cannot be withdrawn.

Features

The variance calculation function for the Industry Business Solution Discrete Industries determines the planned quantities from an APO planned order or from the Rapid Planning Matrix. You can specify the corresponding actual quantities in APO when you enter the confirmation. The planned and actual quantities are then transferred into the DI system. Separate recording of variances in the DI system enables variances to be assigned directly to a product cost collector without reference to a production order. This provides detailed variance information in Controlling, where the variances are valuated and analyzed with the variance calculation function.

The variance calculation function always compares the control costs with the target costs. The system calculates target costs and control costs in accordance with the type of variance calculation and the production approach (mass production based on sales orders or make-to-stock production). In this scenario, you always perform periodic variance calculation in which the target costs of the period are compared with the control costs of the period.