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
Distribute the actual costs posted to the cost
object IDs to the individual orders
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.
Treat the cost object hierarchy as a whole
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:
Actual costs set to "control
Standard cost estimate set to "target
The target costs are used as follows:
For variance calculation, target costs are calculated so that
the variances between actual and plan are calculated on the same
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
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.
Target costs are calculated for actual cost distribution so
that equivalences between the products can be created for
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
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
You can calculate equivalences on the basis of target cost
version 0, 1, and 3.
You must already have carried out the following steps:
If you want to calculate scrap for the orders or production
cost collectors assigned to the object hierarchy, set the
Variances indicator in the variance key
cost object profile.
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.