Define Valuation Variant for WIP and Scrap (Target Costs)

In this section you can create a valuation variant for the valuation of work in process and scrap at target costs. You define how the system calculates the target costs for the valuation of work in process and how it calculates the target costs for the valuation of scrap.

The target costs can be calculated as follows:

You also specify the costing variant and the costing version.
You specify in the requirements class how the standard price for individual requirements materials in a valuated sales order stock is calculated.
See also: Check Requirements Classes

If you always want to valuate the work in process and scrap at the target costs calculated on the basis of a standard cost estimate, do not create a valuation variant.

Requirements

Make sure that the cost estimate used as a basis for calculating the target costs fulfills the following requirements:

The itemization for the production order and process order is generated dynamically when the work in process or variances are calculated. Note that this may have adverse effects on performance.

To be able to calculate work in process at target costs, the order must have the settlement type PER. That is, the default rule PP2 "PER" (periodic settlement) must be specified in the default values for the order type.

See also:

Define Default Values for Order Types

If you want to valuate the work in process and scrap on the basis of a version-specific cost estimate, make sure that the confirmations that affect simultaneous costing are also made on the basis of a version-specific cost estimate.

See also:

Check Confirmation Data for Repetitive Manufacturing Profiles

You must also have carried out the following steps:

Recommendation

The valuation of the work in process and scrap at the target costs calculated on the basis of the preliminary order cost estimate/version-specific cost estimate most closely approximates the true costs. If the quantity structure of the production order and process order is changed, or if the routing for the run schedule header is changed, the affected orders can be recosted. Future confirmations and the confirmations that have already been made in the current period are valuated on the basis of this new cost estimate.

Activities

1. Decide whether you want to valuate the work in process and the scrap at target costs that are not calculated on the basis of a standard cost estimate.
2. If appropriate, define a valuation variant for work in process and scrap (target costs).
3. If you want to valuate the work in process in accordance with the valuation variant, assign the valuation variant for work in process and scrap to results analysis version 0.
See also:
Assignment of valuation variant for WIP to results analysis version
4. If you want to valuate the scrap in accordance with the valuation variant, enter the valuation variant for work in process and scrap in target cost version 0 in the field Valuation variant for scrap.
See also: Define target cost versions

Further notes

For more information on the valuation of work in process and scrap at target costs, and for information on standard price calculation with a valuated sales order stock, see the document Cost Object Controlling.