Discovering Product Cost Analysis by Period in Repetitive Manufacturing (Make-To-Stock Scenario)

In repetitive MTS production, you want to collect and analyze costs periodically on the product level. You analyze costs by period rather than by lot, which means that you collect the costs over an extended period of time and analyze them in each period. For this, the production accounting method product cost by period is used. In product cost by period, you use a product cost collector as the cost object. You create a separate product cost collector for each production version used in repetitive manufacturing (REM). You collect the production costs for the product that is produced with REM (and a specific production version) in an event-based manner on the respective product cost collector and analyze the costs in each period.

In the following the necessary master data for product cost by period in REM is presented.

Again, several master data need to be set up:

• bill of material (BOM)
• routing
• work centers
• production version
• material master record
• product cost collector

As with most of the necessary master data you are already familiar, they will not be discussed in detail. Only some specific settings regarding the routing, the production version, and the material master record in the context of product cost by period and REM are outlined below. Furthermore, as new master data the product cost collector is introduced.

In the routing, at last one operation must be specified as a milestone reporting point if you want to calculate work in process (WIP). For each reporting point set as a milestone, you can create confirmations. To set a reporting point for an operation, a respective control key is assigned to the operation. If you use only one milestone reporting point this is usually the last operation in a routing. The operations with a milestone reporting point must also be set to costing-relevant.

For the production versions that shall be used in REM, the indicator REM allowed must be set. Production version determines which BOM is used with which routing to manufacture a product.

With regards to the material master record in the MRP 4 tab the repetitive manufacturing indicator needs to be selected. As a result, through REM confirmations the product cost collector can be charged with actual costs for consumed materials and allocated activities. In addition, in the MRP 4 tab you need to assign a REM profile. This profile specifies when creating REM confirmations, whether you want to use reporting points, whether you want to allocate activities, and so on.

Moreover, a product cost collector must be created. For each production version you use in REM a separate product cost collector is needed. Therefore, product cost collectors are created for each combination of material, plant, and production version. This ensures that the costs that emerge from a production based on different production versions are collected on different product cost collectors. In addition, a product cost collector has the order category 05 (Product Cost Collector), and the settlement rule is created with the settlement type PER (Periodic).

The mentioned master data is necessary if, for instance, handlebars for bikes are produced in repetitive MTS manufacturing.