co product costing detailed trng
TRANSCRIPT
Thursday, November 27,
2014
1
Product Costing
Thursday, November 27,
2014
2
Product Cost Controlling -
Benefits
Legal Requirements
l Valuation of:
n Raw Materials
n Semi finished Goods
n Finished Goods
l Work-in-Process
l Reserves for Losses
Management Requirements
l Support cost reduction
concepts
l Strategic Decision Support
n which products
n where or how to produce
l Operating Decision Support
n pricing of products
n effectiveness of manufacturing
Thursday, November 27,
2014
3
What can Cost Object
Controlling do for me?• What actual costs did we incur in our area
in the current period?
• What costs were we expecting based on the quantities manufactured?
• Are some product groups performing significantly better than others?
• What is causing these variances?
• What are the scrap costs of our new line?
• Did continuous improvements show cost effects?
Thursday, November 27,
2014
4
Product Controlling by Order
When to Use?
• Very flexible production
environment
• High set-up costs
• Full cost tracking needed
• Controlling by individual
production lots needed
• Example: Order related
production
Work center 3
Lot
Lot
LotWork center 1
Work center 2
Thursday, November 27,
2014
5
Product Controlling by PeriodWhen to Use?
• High volume production
• Stable and continuous
production
• No individual lot oriented
controlling needed
• Collecting costs on product
cost collectors
• Example: Repetitive
production
Line
am-120
am-200
am-line1
am-110 am-210 am-220
am-100
Thursday, November 27,
2014
6
Product Cost by Sales OrderWhen to Use?
• Cost and revenues collected by sales
order irrespective of manufacturing
scenario
• Collecting special sales costs on
sales order
• Tracking Funds committed
• Calculating Work in process and
Reserves with results Analysis
• Example: Controlling complex Make-
to-Order Production
MMMSales Order
Thursday, November 27,
2014
7
Product Cost Controlling -
Components
Work in process
Scrap
Variances
Settlement
Planned
costs,
Actual
costs
BOM RoutingRoutingOrder
Material $
Labor $
Overhead $
Process $
Total ...
Prices for Materials
Prices for Activities
Prices for Processes
Overhead
Cost estimate:
Standard costs
Product Cost Planning
Value Structure
Quantity Structure:
PP Master Data
Final Costing
Period-End Closing
Preliminary Costing,
Simultaneous Costing
Cost Object Controlling
Thursday, November 27,
2014
8
Product Cost PlanningPC- Planning stage
Quantity StructureQuantity Structure
Plan Overhead rates:Energy = Rs.10 / hr
Running = Rs.80 / hr
Value StructureValue Structure
Routing
BOM +
Men Cost = Rs. 20 per kg
Standard BOM
to give standard
material cost
Standard Routing
to give standard
overhead consumption
quantity
Standard Overhead rates
Standard Material
consumption
cost
Standard
Overhead costs
Standard cost of Manufactured goods includes the planned cost of Raw Material
and Planned cost of Overheads
Thursday, November 27,
2014
9
Cost - Object ControllingPC - Actual stage
Cost centers
Production Operation
FinancialAccounting
Activities
Overhead expenses
Cost Sheet
Overhead costs
posted to budget
cost centers
Overhead costs re-
allocated in between
cost centers
Overhead costs
allocated from Cost
Centers to Production
Operations using two
methods
Standard cost of FGOverhead costs
allocated to Finished
Goods at standard
overhead rates
Variances
Overhead variance are
accounted along with
Production varianceFinished Goods
Thursday, November 27,
2014
10
Production Order: Process Chain
Production Order CreateOrder archived / deleted
Schedule
Availability check
Settlement
Calculate costs
Variance calculation
Final goods receipt
WIP calculation
Revaluation
Material issue
Release of order
Shop paper printing
Overhead/Process costallocation
Production
Order
Order Execution
Partial goods receipt
Period end closing
Simultaneous costing
Thursday, November 27,
2014
11
Allocation of Overhead Costs
Activity type allocation Process allocation
Overhead
surcharges
Cost
allocation
Activity
quantity
X
Price
Process
quantity
x
Price
Cost Center
Cost CenterActivities
Cost DriverCost CenterActivities
Direct activity
allocation
Production
Order
Production
Order
Production
Order
Thursday, November 27,
2014
12
Revaluation of Activities With
Actual Prices
Cost
Object
Production
Cost
Collector
Actual CostsRevaluation of
posted activities
Actual
Activity
Prices
Cost Center
Cost ElementCost Element
• periodic
• average
• accumulated
Price
Difference
xactivity
quantity
=cost
difference
Process
Order
Production
Order
Thursday, November 27,
2014
13
Overhead Surcharges
1 barrel
Warehouse Warehouse Cost CenterWarehouse Cost Center
Credit from overheadCredit from overhead
calculation: –200calculation: –200
SurchargeSurcharge
PercentPercent
20%20%
Production OrderCosting sheet COGM
Oil 1,000
Storage
overhead 200
Thursday, November 27,
2014
14
Period-End Closing: Work in
Process
Work in process is calculated for
each order and settled to Financial
Accounting and Profit Center
AccountingBY COMPANY BY PROFIT CENTER
PrCtr 1PrCtr 1
Production OrderCO-PC
Period Accounting
Revenues
- Sales deductions
- Total costs
+/- Stock changes
= Profit for period
EC-
PCAFI
Actual
Material 800
Production 1,200External 400Stock change – 1,000Order balance 1,400
Thursday, November 27,
2014
15
WIP Calculation Using
Actual Costs
WIP
Material: P-100
Settlement using
posting rules
8001,200
4002,400
1,0001,400
MaterialProductionOverhead
Plant activity
Actual Costs
FIFIEC-EC-
PCAPCA
CO-CO-
PCPC
-
1,400
-1000Delivery
400Overhead
1200Confirmations
800Material Withdrawals
Thursday, November 27,
2014
16
Posting of Work in Process
Work in Process 1,400
Apportionment for WIP
Material 800
Production 1,200
Overhead 400
To be capitalized 1,120
Not to be capitalized 280
WIP Stock change
ExpenseReserve
FINANCIAL ACCOUNTING
Profit Center ACCOUNTING
Division
Product group
Product
Postings
via
Settlement
Production Order
Thursday, November 27,
2014
17
Period-End Closing: Variances
Variances are calculated for each
order and settled
• with variance category to Profitability
Analysis
• as well as one amount to Financial
Accounting
BY COMPANY BY PROFIT. SEGMENT
•Product
group
•Distribution
channel
•Region
FICO-
PA
Material: P-100
8001,200
4002,400
-2,000
400
MaterialProductionOverhead
Goods receipt
Variances/scrap
Actual Costs
Cost of Sales Accounting
Revenues
- Sales deductions
- Cost of goods manufactured as
1st and 2nd contribution margin)
- Variances
= Profit for period
CO-
PC
Thursday, November 27,
2014
18
Variance Analysis
20
50100
Input Price
InputQuantity
RemainingInputoverhead 25%150,- (actual )
instead of100,- (target)
Resource-usage
Variances between the
planned prices and the actual
prices of the resources
Variances between theplanned input quantities andthe actual input quantitiesof the resources
Variance between the targetcredit (standard price) and the
actual credit(e.g., moving average price)
v
S
RemainingOutput
Variances between planned
costs and actual costs(independent of lot size) as
calculated in the delivery
Variances that cannot be
assigned to any other variancecategory, such as
rounding differences
set up
Outp .price
Lot size
variances:
output side
Variances caused by adifferent resource beingused than was planned
Variances that cannot beassigned to any othervariance category, suchas overhead surcharges
Rounding
differences
variances:
input side
Thursday, November 27,
2014
19
Period-End Closing:
Settlement
CO-CO-PCPC
Material: T-F100Quantity produced: 10 pcs.
Actual Costs 2,400,-Actual Costs 2,400,-
Stock Change -2,000,-Stock Change -2,000,-
Variances 400,-Variances 400,-
Actual Costs
CO-
PCProduction Order
PERIOD ACCOUNTING
Revenues
– Sales deductions
– Total costs incl. Variances
+/- Stock - WIP Changes
= Profit in periodProfit in period
BY COMPANY
PrCtr 1PrCtr 1
BY PROFIT
CENTERFI
EC-PCA
COST-OF-SALES ACCOUNTING
Revenues
– Sales deductions
– Cost of goods manufactured
(1st and 2nd contribution
margin)
– Variances
= Profit in periodProfit in period
BY COMPANYBY PROFIT.
SEGMENTCO-PA
SETTLEMENTFI
Thursday, November 27,
2014
20
Settling the Order to the
Material
R
S Standard price control
V
Moving average
price control
Stock Price difference
2,000 400
Plant activity
2,400
Warehouse
stock?
Quantity in stock = 10
Quantity in stock = 1
MM
FI
FINANCIAL ACCOUNTING
Stock Price difference
2,400
Plant activity
2,400 FI
FINANCIAL ACCOUNTING
CO-CO-PCPC
Material: T-F100Quantity produced: 10
Actual Costs 2,400,-Actual Costs 2,400,-
Stock Change -2,000,-Stock Change -2,000,-
Variances 400,-Variances 400,-
Actual Costs
CO-
PCProduction Order
Stock Price difference
2,040 360
Plant activity
2,400 FI
FINANCIAL ACCOUNTING
Thursday, November 27,
2014
21
PA Transfer Structure
R
PA TransferPA Transfer
AssignmentAssignmentVarianceVariance
CategoryCategoryCost ElementCost Element
GroupGroupQuantity/Quantity/
Value FlagValue FlagFixed/Fixed/
Var. FlagVar. FlagValueValue
FieldField
20
50100
PRICE
QUANTITY
MaterialA
MATERIALS
400000
400100
400200
Internal Activities
600000
620000 Text20
50100
PRICE
QUANTITY
MaterialA
MATERIALS
400000
400100
400200
Internal Activities
600000
620000 Text
1
1
1
1
3
3
3
3
10
20
30
40
MVARQ
AVARP
AVARQ
MVARP
Thursday, November 27,
2014
22
Information System: Contents
• Structure of the information system
• Overview standard reports for effective
controlling
Thursday, November 27,
2014
23
CO-PC Report Trees
Main tree
Product Cost Planning
Product Cost by Period
Product Cost by Order
Product Cost by
Sales Order
Costs for Intagible
Goods and Services
Actual Costing /
Material-Ledger
Information System
CO-PC
Order Selection
Component tree
Object lists
Detailed reports
Object Comparisons
Other Reports
Summarized Analysisy
PlantMaterial
Order Hierarchies
Thursday, November 27,
2014
24
Summarized Analysis -
Product Drill Down
Product-Drill- Down
++-
++
Power Plant IPower Plant IIIndustry
AutomotiveChemicals
1002
3459
3986
P-100
P-100
P-101
P-101
1,000
1,200
900
950
1,000
1,250
850
1,800
Order Material Plan Actuall Target / Actual
l Variance Analysis
l Plan / Actual
l Work in Process
Order Selection
Order Hierarchy
Detailed Reports
Thursday, November 27,
2014
25
Drilldown Reporting - Example
R
Plant 1000 Target Actual Price var . Res .-usage var . Quantity variance
Product group A 6,000 6,000
Product group B 12,000 17,500 1,500 1,000 3,000
Product group C 5,500 7,500 2,000
Drill-down: Materials in product group B
Product group B Target Actual Price var . Res .-usage var . Quantity variance
Material P-100 2,800 4,000 1,200Material P-200 3,500 4,500 500 500
Material P-300 2,500 3,000 100 400
. . .
l Variance categoriesl WIP
l Actual costs
l Planned costs
l Plan/actual comparison
l Target/actual comparisonl Target/actual/variance
Material P-100 Target Actual Variances
Order 123 1,800 3,000 1,200
Order 456 400 400
Drill-down: Orders for material P-100
Standard Reports
Thursday, November 27,
2014
26
Order Summarization
Through ClassificationHierarchy Description
COPC-VAR
Controlling area
Material group 001
Plant 1000
Plant 1100
Material group 002
Material group 003
Plant 1200
Settings ->Planned costs/actual costs
50,000 59,000
30,000 30,500
20,000
32,000 33,500
82,000 92,500
65,000 68,000
197,000 219,500 Standard ReportsStandard Reports
Variances categories
WIP
Actual costs
Planned costs
Plan/actual comparison
Tgt/actual comparison
Tgt/actual/variance
28,500
Order with variances
Thursday, November 27,
2014
27
Thank You . . .