Performing Preliminary Costing for Production Orders

Objective

After completing this lesson, you will be able to perform preliminary costing for a production order

Preliminary Costing for Production Order

The system valuates the planned quantities of the material components using the material list.

The system determines the planned activity quantities using the master recipe. To valuate the planned material components, activities, and business processes, the system uses the planned valuation variant specified in the default values for the order type/plant combination. The system calculates the overhead costs using the costing sheet specified in the planned valuation variant.

If template allocation is being used, the template which is used must be assigned to the following:

  • Controlling Area

  • Environment, for and production orders environment 001.

If you want to use different Templates for different material-numbers and production orders, you can use the Costing Sheet and, within the definition of the Overhead Rate, an Overhead Key. The Overhead Key you assign to an Overhead Group, which you enter in the material master of the product. With the use of overhead keys and overhead groups, you can define different overhead rates for different material numbers in the same environment. Regarding the Template usage, you can expand the assignment of the Template to the following:

  • Controlling Area

  • Environment

  • Costing Sheet

  • Overhead Key

The order costs are actually calculated on the order header. A preliminary cost estimate could be generated automatically for the production order when it is saved or released, in accordance with the Customizing settings in the default values for the order type, together with the plant.

Check Preliminary Costing for a Production Order

ExerciseStart Exercise

Summary

  • Preliminary costing valuates planned quantities using bill of material and routing.
  • Planned valuation variants determine how material components, activities, and processes are valued.
  • Overhead costs are calculated using a costing sheet specified in the valuation variant.
  • Templates are selected for allocation using costing sheets and overhead keys.

Learning

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