Wip 1699812250

WIP Variance Calculation
I tried to explain a scenario where production order linked to Product cost collect, How the WIP and
variance calculation for product level with Target cost.
Configuration settings:
1. Check Costing Variants for Product Cost Collectors (OPL1): In this configuration step we
create a costing variant which is required to calculate preliminary cost estimate for PCC. PREM is
the standard SAP costing variant available. Preliminary costing for Product Cost
Collectors check box should be selected for the costing type that we use in costing variant.
Figure 1: Costing variant configurations settings
2. Create a new costing variant for Simultaneous costing: PPP3 is the standard SAP costing variant
available. Here we assign our costing sheet to the valuation variant.
3. Create Order type with order category 5 – product cost collector: Here, we assigned our settlement
profile and assigned number ranges.
1 Prepared By:Elanche/Elanchezian
Figure 2: Order type creation with PCC category.
4. Define Cost-Accounting-Relevant Default Values for Order Types and Plants:
In this step, we maintain default value to update in PCC automatically at the time of creation. STR is the
default settlement type for PCC. PPC6 costing variant for preliminary costing for PCC and PPP3 costing
variant is for actual costing. Result analysis key will be determined in PCC from this configuration step.
Figure 3: Default values for order type and plant.
5. Check Control Data for Repetitive Manufacturing Profiles :
We create RME profile in Repetitive Manufacturing process. “GI Backflush at GR posting” we select this
check box if we want to post Goods Issue to the PCC at the time of GR with backflush (MFBF). We
choose “RP backflush” to process RP backflush for each operation. If we want to calculate WIP and scrap
for PCC, we have to choose RP backflush check box. Under Cost Accounting header, we choose whether
activities based on the preliminary costing of PCC or standard costing of Materials. We choose first radio
button when you are producing a material without changes in quantity structure in a period. Else, we select
2nd radio button when we produce a material with multiple production versions within the period.
Figure 4: Repetitive Manufacturing profile creation with WIP settings.
6. Period-End Closing:
Under this step, we maintain configuration settings of WIP, Variance and settlement that are similar to by
order scenario. However, there are few changes in WIP configuration steps.
WIP Calculation:
•
o Define Valuation Method (Target Costs): Here, when you click on new entries, system
will show separate window with options. we choose Target costs option where the WIP
calculations happens based on target cost in by period scenario.
Figure 5: Choose “Target costs” option while creation of Valuation method.
Figure 6: System will create entries once you submit valuation method by selecting Target cost option.
•
o Define Valuation Variant for WIP and Scrap (Target Costs):
Here we choose valuation strategy priority for calculation of WIP and scrap in by period scenario.
1st priority is given for Preliminary cost estimate in below screen shot.
Figure 7: Valuation variant for scrap and WIP calculation
•
o Assignment of Valuation Variant for WIP: We assign above valuation variant to our
controlling area.
•
o Define Updates: We maintain Result analysis cost elements to the Line ID categories and
Result analysis key.
•
o Define Posting Rules for Settling Work in Process: Balance sheet and P&L accounts
maintained in this step for each Result analysis cost elements.
Variance Calculation:
•
o Target cost version: we do this configuration step to calculate total variance. Total
variance = Control cost (Total actual cost – WIP- scrap) – target cost ( Total actual
quantity * standard cost estimate).
Figure 8: Target cost version to calculate variance.
Settlement:
•
o Settlement Profile:
Figure 9: Settlement profile creation screen
7. Define order type-dependent parameters (OPL8):
We select “Cost Collector” check box for order type that is created for production order. So that
production order is created with reference to PCC. All Logistic transactions like Good issue and
Operations confirmation will be posted to Production order and the same cost will be carried to PCC. The
Default settlement rule has to be PP2 which is for Periodic settlement.
Figure 10: Maintain Order type dependent parameters with Cost Collector option
============================================================================
Test This scenario :

1. Create FG Material and maintain RME profile in MRP 4 tab as shown in below screen shot.
Create Production version and assign BOM and routing that we created for this SFG material.
Figure 11: Material master creation with REM profile and Production version
2. Create Quantity structure: RM21 and RM32 components used in BOM and 4 operations created
where each options has 2 qty to manufacture 1 FG qty. the activity hour price is 10/- for all activities used
here.
Figure 12: Quantity structure maintained for SFG material
TO post auto GR after final operation confirmation, make sure that we configure Control keys with mile
stone confirmation option in OPJ8 Transaction code. Here, I am going to use 2 control keys RAO1 and
RAO2. First one is configured with milestone confirmation and without Auto GR check box. 2nd key
created with Auto GR and milestone confirmation. These control keys are assigned in Routing for each
Operation as shown in above screen shot.
Figure 13: Control key confirmation screen
3. Create Product cost collector using KKF6N transaction code:
We have 3 options to create production version. Create PCC with Production version, Create PCC with
specific BOM and routing & create PCC without quantity structure by entering only production and
planning plants.
Figure 14: Product cost collector creation screen.
We can see the Preliminary cost estimate of PCC in below screen shot.
Figure 15: Preliminary cost estimate screen for PCC
4. Create Production order with reference to PV used for PCC:
Go to CO01 transaction code and provide material number, production plant and production order type that
we created with “Cost Collector” check box in order type dependent parameters configuration. Once you
press enter, system will take us to inside of the production order. Enter total quantity, start date and finish
date. Then click on Production version button that displays on top right side, choose production version
that was used to create PCC and then select “Choose”.
When you go to “Control data” tab, we see a new product cost collect button where this Production order
linked to PCC. If you click on this button, system will take to you the PCC screen. Click on release button
on top left side of production order and save it. Here, “RA Key” and “Variance Key” fields are blank
because, we perform Result analysis and variance calculations at Product level and not at production order
level.
Figure 16: Production order created with reference to production version
Figure 17: Product cost collector linked with production order
=======================================================================
Month 1:
5. We confirmed Operation 1 for the production order using CO11N:
Figure 18: Operation confirmation with component materials
6. End of the First Month, we perform month end activities. Below is the OH calculation:
Figure 19: Overhead calculation for SFG
7. WIP calculation (KKAS – Calculate):
Figure 20: Work in process calculation for 1st month
8. Variance calculation (KKS6 – Individual Processing):
Figure 21: Variance calculation
Below is the detailed item level standard cost estimate and preliminary cost estimate for SFG materials.
Figure 22: Standard cost estimate and preliminary cost estimate of SFG
Below is the screen shot that shows actual cost posted in 1st month. Also we can see detailed
information of WIP and variance calculation;
Figure 23: Explanation how the WIP & Variance values calculate after 1st operation confirmation.
Figure 24: PCC actual cost screen shot, variance is credited to the PCC after settlement.
==========================================================================
MONTH 2:
9. Operation 2 confirmed with Yield 120, issued Remaining components to PCC.
Operation 3 is also confirmed with Yield 100 qty. (No components here)
Below is the screen shot of Operation 2 with Goods Issue.
Figure 25: Operation 2 confirmation in 2nd month with remaining components.
Figure 26: Operation 3 confirmation in 2nd month.
==========================================================================
Perform Month end activities for 2nd Month.
10. Actual OH calculation: (CO42 – Individual Processing):
Figure 27: Actual OH calculation in 2nd month.
11. WIP Calculation: (KKAS – Calculate)
Figure 28: WIP calculation.
12. Variance Calculation (KKS6 – Individual Processing)
Figure 29: Variance calculation.
Below is the screen shot that show with actual cost posted in 2nd month and cumulative cost of 1st
and 2nd months.
Figure 30: Actual cost posted in 2nd period and the total actual cost till 2nd period.
Below is the screen that shows detailed information of WIP and variance calculation in 2nd month;
Figure 31: WIP and Variance calculation at each actual cost item level.
Accounting document posted with the variance amount and credited to PCC.
Figure 32: Accounting document screen after settlement in 2nd period.
if we see below PCC actual cost, variance credited to PCC.
Figure 33: PCC actual cost screen shot where Variance is posted.
========================================================================
MONTH 3:
13. Final Operation confirmed with Yield 100 qty and GR is posted 100 qty as per production order
plan quantity.
Figure 34: Final operation confirmation in 3rd period and GR posted.
14. WIP Calculation (KKAS – Calculate):
Figure 35: WIP calculation screen after final operation processed with GR quantity.
15. Variance calculation (KKS6 – Individual Processing)
Figure 36: Variance calculation screen.
in below screen shot, We see the actual cost posted in period 3, and detailed explanation of WIP and
Variance calculation after final Operation confirmation with total GR quantity.
Figure 37: We can observe in above screen shot how the WIP and Variance calculation happens.
After all 3rd Month end activities completed, below is the PCC actual cost screen shot where WIP
and Variance amount adjusted.
Figure 38: PCC actual cost screen shot where WIP and Variance amount adjusted.

Wip 1699812250

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Wip 1699812250

Uploaded by

Copyright:

Available Formats

WIP Variance Calculation

Figure 1: Costing variant configurations settings

Figure 2: Order type creation with PCC category.

4. Define Cost-Accounting-Relevant Default Values for Order Types and Plants:

Figure 3: Default values for order type and plant.

Figure 4: Repetitive Manufacturing profile creation with WIP settings.

Figure 5: Choose “Target costs” option while creation of Valuation method.

Figure 7: Valuation variant for scrap and WIP calculation

Figure 8: Target cost version to calculate variance.

Figure 9: Settlement profile creation screen

7. Define order type-dependent parameters (OPL8):

Test This scenario :

Figure 12: Quantity structure maintained for SFG material

Figure 13: Control key confirmation screen

3. Create Product cost collector using KKF6N transaction code:

Figure 14: Product cost collector creation screen.

Figure 15: Preliminary cost estimate screen for PCC

4. Create Production order with reference to PV used for PCC:

Figure 16: Production order created with reference to production version

Figure 17: Product cost collector linked with production order

Figure 18: Operation confirmation with component materials

Figure 19: Overhead calculation for SFG

7. WIP calculation (KKAS – Calculate):

Figure 20: Work in process calculation for 1st month

8. Variance calculation (KKS6 – Individual Processing):

Figure 21: Variance calculation

Below is the screen shot of Operation 2 with Goods Issue.

Figure 25: Operation 2 confirmation in 2nd month with remaining components.

Figure 26: Operation 3 confirmation in 2nd month.

Perform Month end activities for 2nd Month.

10. Actual OH calculation: (CO42 – Individual Processing):

Figure 27: Actual OH calculation in 2nd month.

11. WIP Calculation: (KKAS – Calculate)

Figure 28: WIP calculation.

12. Variance Calculation (KKS6 – Individual Processing)

Figure 29: Variance calculation.

Figure 32: Accounting document screen after settlement in 2nd period.

if we see below PCC actual cost, variance credited to PCC.

Figure 34: Final operation confirmation in 3rd period and GR posted.

14. WIP Calculation (KKAS – Calculate):

15. Variance calculation (KKS6 – Individual Processing)

Figure 36: Variance calculation screen.

You might also like