Define Target Cost Versions

In this step you define control parameters for

Actual costs are assigned to the different levels of the cost object hierarchy (such as cost object IDs, production orders, or run schedule headers).

At the end of the period you calculate the variances for the cost object hierarchy. The cost object category determines how the variances are calculated. You can

In this case, the system calculates variances for the individual orders assigned to the cost object hierarchy. Here the products or product groups are the focal point of controlling.
In this case, all costs are dynamically summarized and variances are calculated for each hierarchy node for which actual costs were posted. The responsibility for the costs (such as the production line or shop floor area) is the focal point here.

In both cases you must define a target cost version for which the following indicators are set:

The target costs are used as follows:

The system calculates what quantities were delivered to stock in the period for each product, and converts the results of the active standard cost estimate for each product correspondingly.
The target costs are passed on stepwise through the cost object hierarchy and compared with the cumulated actual costs for each node (such as material or production line). The differences are shown as variances.
The target cost version also determines what variance variant is used and thus what variance categories are calculated.
The actual costs entered at the level of the hierarchy are distributed to the orders in accordance with these equivalences. The distribution is carried out in proportion to the target costs for the cost element under which the actual costs were posted. Actual costs for material costs are distributed in proportion to the target costs for the origin group or material if you entered an origin group in the costing view of the material master record or if you have set the Material origin indicator.
If no target costs were calculated under this cost element, enter a cost element group in the target cost version. The actual costs are then distributed in proportion to the target costs for this cost element group. This cost element group should be complete. If costs were posted under a cost element that is not in this cost element group, no distribution is possible.

You can calculate equivalences on the basis of target cost version 0, 1, and 3.

Requirements

You must already have carried out the following steps:

To establish how the target costs for valuation of the scrap should be calculated, you can define a valuation variant for work in process and scrap (target costs) and specify this valuation variant in the target cost version.
Here you maintain a version in the general version maintenance and in the settings in the controlling area. Only the versions defined there can be specified as the target cost version in this step.

Standard settings

The standard system contains predefined target cost versions that you can copy into your controlling area without making any further changes.

Actions

1. Check whether the predefined target cost versions meet your requirements.
2. To create your own target cost version, 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) Select the control costs (planned costs or actual costs).
e) Select the target costs (planned costs or actual costs).
f) Specify a cost element group if necessary.
g) Save the target cost version.

Further Notes

For more information on target cost versions, see under Define target cost versions for run schedule headers and the document Cost Object Controlling.