Checking the Assembly Backflush Results for Operation 0010 – Cropping and Forming

In our Handlebar production scenario when operation 0010 - Cropping and Forming is finished, the actual values are entered in the Confirm Repetitive Manufacturing app using the Assembly Backflush method.

The following figure shows that using the app, only the actual activity quantities of the Machine and Labor activity have to be entered as they differ from the default values in the routing. The actual component quantities correspond to the default values in BOM, so using the app no data change is necessary.

When you choose the Post button, a goods issue is automatically posted as the message in the figure shows. You will also see the Material Management document number.

In the following, we will first show the posting results on the product cost collector which has order number 700021 in our scenario and then will we will first calculate all results and finally see which documents are posted in parallel when the Post button in the Confirm Repetitive Manufacturing app is executed.

If you open the Product Cost Collector Details - Event-Based app, you will find that at the end of operation 0010 - Cropping and Forming Actual Costs of EUR 291 result as well as a Total Cost Variance of EUR 22. WIP is EUR 269.

If you had executed the Schedule Product Costing Jobs app after this first operation, you would have got the information that EUR 20 of the Total Variance of EUR 22 represents the Input Quantity Variance and EUR 2 refers to the Remaining Variance. This amount results from an overhead production percentage of 10% which was calculated on top of the activities' amount (and here on top of the Input Quantity Variance of EUR 20).

We will execute the Schedule Product Costing Jobs app when also operation 0020 is finished!

In the following, we will first see how the values on our product cost collector are calculated. In a second step, we will have a look at the documents posted.

The following figure shows you how the material costs and the overhead costs are calculated.

This figure shows you how the calculation of the production costs takes the following into account: the actual quantities for activity MACH are 4 min per one S11-000 Handlebar and 3 min for activity PERS. In addition, 10% of the production costs represent the calculated production overhead costs.

The following table gives an overview of the actual material costs and production costs and explains that the Total Actual Costs at the end of operation 0010 are EUR 291.

The following figure summarizes all the relevant data for the calculation of the Target Costs and also contains the cost rates of the activities. These are plan cost rates!

The following figure explains how to calculate Target Costs which are always calculated dynamically but not stored in the database.

The formula in the figure explains how to calculate Target Costs.

Here some annotations:

• In general, the target quantity is the planned quantity adjusted to the actual output of the product.
• In our scenario, the planned quantity of 10 S11-000 handlebars equals the quantity of 10 handlebars produced.
• Since 10 handlebars were planned in our scenario and 10 handlebars are actually also produced, the number of input materials of R111-000 - Bar depends on the lot size of 10 pieces.
• As a result, the planned quantity and the actual delivery quantity are the same in our scenario.
• This means that the factor in the formula, namely "Actual Output Quantity/Costing Lot Size", is 10/10 = 1.

At the same time, the actual delivery quantity corresponds to the yield of 10 S11-000 handlebars on the order because there is no scrap. Since no setup costs were planned in our scenario, the Planned Lot Size Independent Costs are zero in the formula.

Since WIP is valuated based on Target Costs, the result value for both is EUR 269.

The following figure explains how the Total Variance of EUR 22 is calculated.

As you can see, the difference between Actual Costs and Target Costs results in the Total Variance.

If you run the split run, the Total Variance is split in variance categories. In our scenario, EUR 20 of EUR 22 refer to the Input Quantity Variance and EUR 2 of EUR 22 refer to the Remaining Variance.

The following figure explains how the Input Quantity Variance is calculated.

We will now focus on the documents that are created when the Post button in the Confirm Repetitive Manufacturing app is executed.

When you select the Post button in the Confirm Repetitive Manufacturing app, you will get information about the Material Management Document Number and will find that a goods issue of 10 pieces of material R111-000 - Bar was posted on the product cost collector (that is, order ID 700021) using G/L Account 51100000 - Consumption - Raw Material together with Movement Type 261 - Goods Issue.

If you check the Material Documents Overview app for your Material Management Document, you will get some more detailed information about the goods issues including the storage location out of which the material was taken for production.

In addition, you get information about the accounting document which was created in parallel. This is shown in the Process Flow section of this app.

Checking the accounting document using the Manage Journal Entries app, you will see that the stock of material is reduced by 10 pieces and an amount of EUR 200. This is represented by a credit posting on the asset G/L Account 13100000 - Inventory Raw Material.

The debit posting is done on expense G/L Account 51100000 - Consumption Raw Material.

In addition you can see that a further accounting document is created.

When you check the second accounting document you can see that it represents the posting of the material overhead costs. They are debited with EUR 14 on the originator of the costs, that is, the product cost collector (Order ID 700021). Cost Center 10101201 - Purch and Store 1 (DE) is credited in parallel according to the setup of Costing Sheet 1010EP - Event-based costing sheet (DE).

Once again, we will focus on the documents created when the Post button in the Confirm Repetitive Manufacturing app is executed.

You will also get information about the REM Backflush Document if you open the posting message and double-click the confirmation number which is 907 in our scenario.

The document will show you that the yield quantity actually is 10 pieces since the scrap quantity is zero.

The accounting document in the following figure shows how many activity quantities of activity MACH and PERS cost center 10101302 - Manufacturing 2 (DE) delivered for the production of the S11-000 - Handlebar and in which amount this cost center was therefore credited. The product cost collector (that is, Order ID 700021) as the cost object is therefore debited with the same amount.

This accounting document also references a further accounting document that contains the production overhead costs.

Checking the second accounting document you can see that it represents the posting of the production overhead costs.

The product cost collector (Order ID 700021) as the originator of the costs is debited with EUR 7 and in parallel Cost Center 10101301 - Manufacturing 1 (DE) is credited according to the setup of Costing Sheet 1010EP - Event-based costing sheet (DE).

The last accounting document contains two postings

• The Total Variance posting
• The WIP posting

The Total Variance posting document is posted on the product cost collector (Order ID 700021) and Product S11-000 Handlebar as a debit posting on G/L account 52070000 - Loss Prodn. Var for the S11-000 Handlebar. The credit posting is done on offset G/L account 55100000 - Adj. Plnt act. prod. Order.

The increase of WIP is posted to the product cost collector (Order ID 700021) with a debit posting on G/L account 13200000 - Inventory WIP.

The credited offset G/L account is G/LAccount 54200100 - Inv. Ch WIP Evt Based.