Define Target Cost Versions

In this step you define how you want to calculate the target costs and therefore the variances.

Variance calculation calculates target costs so that the calculation of variances between the actual costs and the planned costs uses the same reference basis.

For example, if you compare the costs in the standard cost estimate with the costs in the run schedule header, the system adjusts the costs in the standard cost estimate to the quantity that was delivered to stock in the period for the run schedule header.

In repetitive manufacturing, the standard costs for the product are standardized to the quantity that was delivered to stock in the period for the run schedule header. Variances are calculated by comparing the target costs calculated in this way with the actual costs.

The standard cost estimate for the product manufactured forms the basis for the calculation of the target costs. For variance calculation, you must ensure that:

The actual costs are collected on a production cost collector if you enter the goods receipt or a reporting point quantity in the PP module. Further actual costs for internal activities and overhead can be collected in the CO module.

Besides the variances, the actual costs for the period can also contain the costs for work in process (WIP) and scrap. When the variances are calculated, these values are subtracted from the actual costs for the period in order to prevent the variances from being distorted by the value of unfinished or unusable products. Here you must ensure that

The WIP is calculated on the basis of the reporting point quantities. Reporting point quantities are valuated with the standard costs for the operations carried out.
The confirmed scrap is valuated with the standard costs for the operations carried out.

In repetitive manufacturing, you can use a target cost version, the so-called total variances. For this version you select Actual costs as the reference object and Standard cost estimate as the comparison object.

All other target cost versions can only be used in order-related production and process manufacturing.

The target cost version also determines what variance variant is used, and therefore what variance categories are calculated.

Requirements

You must already have carried out the following steps:

Standard settings

The standard system contains predefined target cost versions that you can copy into your own controlling area without having to make any changes.

Actions

1. Check whether the predefined target cost versions meet your requirements.
2. To create your own target cost versions, proceed as follows:
a) Choose New entries.
b) Enter the controlling area, a number, and a name for the new target cost version.
c) Enter a variance variant.
d) Choose a reference object (actual costs).
e) Choose a comparison object (standard cost estimate).
f) Save the target cost version.