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Thread: Price control change ROH & HALB - Cost estimation

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Replies: 14 - Pages: 1 - Last Post: Nov 30, 2010 4:47 AM Last Post By: Shaubhikg

Posts: 545 Registered: 7/26/08 Forum Points: 98

SAP 4 ME

Price control change ROH & HALB - Cost estimation Posted: Nov 19, 2010 5:29 PM

Dear All,

We are planning to move all of Raw materials & Semi Finished goods to Standard price(Price control :S) dueAlso we want to calculate the standard cost at the being of the year i.e. once a yearCan you suggest what are the precaution, steps and config changes we have to take care.We are in ECC6.0 and we have Material Ledger activated.

Do suggest.


Shaubhikg

Re: Price control change ROH & HALB - Cost estimation Posted: Nov 20, 2010 6:22 AM in response to: SAP 4 ME

Hello,

It is really helpful to have everything at standard price when you are having material ledger because in that case thequite transparent as the prices are fixed. There isn't much config change required except that inaccount assignment > Price control for material type you would need to maintain "S" as the default for all the materialthat in future every material is created with "S" .

The price control of the existing materials need to be changed from V to S (in understandand semi finished materials) You change the type of price control by overwriting the price control indicator in therecord with the new indicator. Changing the type of price control for a material does not changein both cases the current price becomes the new price. So in your case the Moving price would simply get converted to the standardprice.

I do not see much risk in this activity. Since you are planning to move from next year in that

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precautions

1. All stock adjustments in quantity and value (so far possible) should be completed atleast two daysthat you have some time to carry out the changes in the master data of the materials.

2. In case the business wants to revise the standards ie. say they want to move up thein that case those type of changes should happen on the 1st day of the year. You may obtain a projected standard pricethe year end.

3. Though I mention that the business might revise the standards but remember that the standard value of the raw materialsreflect proper valuation at which they are being carried because ML would consider the opening stockstandard price that you have in opening stock. Therefore if you had a valuation of Rs 10defined in Rs. 15 / Ton , ML would consider the price as Rs. 15 in case there are no procurements in the first month. In caseare procurements then ML would consider (Rs. 15 x Op Stk Qty + Procured price x procured quantity) / Total

4. Thus considering the above three points all actualizations should be done in current year and all standardization should be done in new year.

5. Execute the costing run CK40N on the 1st day of the next year after all RM pricing issues

6. Take dump of tables MARA and MBEW before each activity to keep track of the affairs.

7. Also track the stock related GL accounts (preferably keep copies of Trial) so that any

8. In case you have some price varinces posted in the current year try to absorb them in the standards to the extent they lie in thestock.

I do not remember any more points at this point of time and the discussion may continue furtheryour side.

Kind Regards // Shaubhik


SAP 4 ME

Re: Price control change ROH & HALB - Cost estimation Posted: Nov 20, 2010 9:39 PM in response to: Shaubhikg

Hi Shaubhikg,

Thanks for the reply.I am clear with most of teh points mentioned by you except the point no .3.

Can you put some more light on the PIONT No.3.

Also can you let me know whether we have to make change in the PC config (such as material valuation,etc)\.

If we adopt to move to standard for variable,will there be any impact in any transaction or reports.

As i have fewer knowledge about Material Ledger,i am not sure to make out the conclusion.

Once again thanks for the details info.

Do suggest.

Regards,

Shaubhikg Re: Price control change ROH & HALB - Cost estimation





Posted: Nov 21, 2010 4:55 AM in response to: SAP 4 ME

Hello,

Yes there is a bit of configuration change in costing configuration as well. I forgot to mention that you would also need tovaluation strategy in transaction OKK4 (your valuation variant) from Moving price to standard pricetake the Standard price of the RM and compute the cost estimate for FG & SFG.

Regarding point No. 3 what I wanted to mention is that though you can change the standard (aswhen you roll off material ledger but changing the standard can cause some problem. Let us consider the following

.............................................. Material A......Material B......Material C......Material DStock (Qty).................................0.................10.................10..................10Moving Price (31.12.2010)...........100..............100...............100................100Rev Std Price (01.01.2011)......... 120..............120...............100................120Receipts in January'11 (Qty).........10.................10.................10...................0Receipt Price............................130...............130...............130................NA

Periodic Unit Price (PUP).....................130.....................125....................115....................120

Material A: There was no stock though you increased the standard price over the existing moving price and thisinventory has been valued based on the current receipt price.

Material B: There was already a stock of 10 units and you increased the standard price from thesame as the carrying cost of the inventory and when receipts are made at 130 per unit the periodic unit price is

Material C: This is the case where valuation seems to be based on the carrying cost where with the new receipts the PUP is 115

Material D: In this case the no fresh stock have been received and the inventory is carried out in the revisedcarrying cost at the end of previous year.

It should be noted that this scenario is only applicable to Raw Material and stores item which were valuated at moving pricestandards are indirectly affected in a sense that these prices build up the standard and are considered in calculation PUP for them at the monthend.

Conclusion

1. If any price variance is required to be adjusted in the inventory at the end of the year before rolling offby 31.12.2010.

2. Unnecessary increase / decrease in valuation of RM and Stores items should be restricted

3. In case any changes in standards are carried out then the same would effect the profitability of the organisation because itwell.

4. Any increase in the standard price of the RM would be in effect until unless the opening inventory is fully issued.

This is a chance to correct all valuation issues in the system for the organisation and they should bewould have effect on their profits for the next year.

I hope this explains, please revert back in case there are more issues.


SAP 4 ME Re: Price control change ROH & HALB - Cost estimation Posted: Nov 22, 2010 10:30 AM in response to: Shaubhikg





Hi,

Thanks for the reply.

But i suppose once the value of all RM has been changed to S from V(i.e.01.01.2011) as per your

.............................................. Material A......Material B......Material C......Material DStock (Qty).................................0.................10.................10..................10Moving Price (31.12.2010)...........100..............100...............100................100Rev Std Price (01.01.2011)......... 120..............120...............100................120Receipts in January'11 (Qty).........10.................10.................10...................0Receipt Price.................................130...............130...............130................NAPeriodic Unit Price (PUP)...............120..............120.................100................120Price difference a/c......................10.................10..................30..................0

The difference in the price between the Rev standard price and Receipt price has to be transferred to pricebeen any updates in periodic unit price.

Do correct,if i am wrong.

Is there any other report and transaction that has to included or excluded once with change to

i.e. we have execute CK40N on 01.01.2011 and then on 31.12.2011 for all our FG & SFG. I am bit confused on what are thethat we have execute or exclude, once the change over is carried out in begin of next year.

Do suggest.

Regards,


Shaubhikg


Hello,

Yes, once everything goes to standard price then the difference between the revised standard and the receipt price isdifference account and at the end of month when you run actual costing the amount lying incompute the PUP.

Regarding the transactions, on 01.01.2011 you would need to run CK40N (after all conversion exerciseplanning for the new year is complete) and the closing process would be in the following sequence

1. All CCA Assessment , Distribution etc.2. Actual Price Calculation of OH3. Revaluation of Orders for OH Part4. WIP Calcultation5. Variance Calculation6. Settlement7. Distribution of Usage variance (in case you have PCC, repetitive scenario) 8. Actual Costing Run (Including Post Closing)

Regarding report you can have a look at the Information System in the ML section (for going to ML menu directly type CLML) thereare good reports there and you can use all the other reports used previously






SAP 4 ME


Hi,

Thank you once again for the info.

If i have understood correctly,i have to execute the the closing process on or before 31.12.2010 (before making the config changesmaterial master for V to S ) and execute CK40N on 01.01.2011.

As we have planned to execute the COST ESTIMATION once in a year i.e. 01.01.2011,(so thatgoods price) at the end of year we are planning to run all variance and do our settlements.

Are we are in right direction.if not do comment.

Thank you once again.

Regards,


Shaubhikg

Re: Price control change ROH & HALB - Cost estimation Posted: Nov 22, 2010 1:17 PM in response to: SAP 4 ME

Yes you are correct. Completing all adjustments in 2010 would help you to start afresh in 2011.



SAP 4 ME


answered


SAP 4 ME


i All,

Thanks for your mail.

We want to maintain the standard cost estimation even across the whole year, i.e. No change inproducts.Eg:Stand.Cost Actual Cost VarianceRaw Mat : 100 110 - 10Labor: 50 55 -5 Overheads: 60 55 5Total Cost: 210 220 10

And we like to have the cost 210/- across the year 2011 (from Jan till Dec) and all the above variance has to be posted to P&L (not to inventoried)Can you suggest the CO closing process and changes to be applied in (configuration & Masterstandard in P&L => no inventory value adjustment.




Currently we have the following CO closing procedure….KSV5, KSS2, KSII, CON2, KKA0, KKAO, KKS1 & CO88. Apart from executing CK40N.Do suggest how to achieve this requirement. And hope that we have to execute CK40N atWe have Material Ledger activated and we are with 6.0 version.Do Comment.Regards,


SAP 4 ME

Re: Price control change ROH & HALB - Cost estimation Posted: Nov 26, 2010 4:41 PM in response to: SAP 4 ME

Hi All,

Can you kindly provide us the suggestion on our requirement.

Regards,

Parveen


Shaubhikg


Hello Parveen,

As I understand that you would like to absorb this year's variances in the inventory and would like to move withon the same in the next year. Before I make my suggestions the following must be considered

a) The total price variance posted in the P&L in 2010 is not required to be carried outapplicable to the materials sold.

b) You are carrying out CON2 which means that you revaluate your production orders with actual activity prices calculated at theclose of the period then in that case it is together with the usage variance that has arisen from

SO far the process that you should adopt I can make two suggestions and any of this processthe analysis of the variances and reset the standards (for raw materials, stores and activity rates) which are discussed in thesection.

1. Run Standard Cost Run (CK40N) on 31.12.2010 and adjust the revluation account postingsremaining should be charged off to the P/L

2. Carry the proportionate price variance to a balance sheet account and run revaluation (CK40N) on 01.11.2011 and then adjust this account with the revaluation account. The carrying to the balance sheet account (say FG Inventory CK40N activity (once the figures are derived)

ANALYSIS OF THE VARIANCES

The variance that you can find in the books can be categorised below

Input Price Variance: This is the variances that happen when you buy the RM and Stores. Atbetween stock and consumption. Allocating to the stock is easy because you can simply calculate it but the problem isbeen consumed but not sold and this would also include WIP. The best thing that we can do is to arrive a revised rate for RM based on thesevariances and recalculate the standard price of FG based on that.

Price Variance from Settlement




As you are revaluating the orders with the actual price of the cost centers then there are no differences that can come from this side as all thecenter price and usage variance along with the material usage variance is buit up in the price variancevariance is easy to tackle as you can calculate a revised price for the activities but the usage variance needs to be determinedwould also include material usage as well. You may take up a marathon calculation as under tocalculated and taken over to the next year as price variance alone would leave the usage variance and the same would be

For each PO you would need to calculate:

(RM Consumed Qty in PO minus BOM Qty x Produced Units of FG) x Revised Price of RM

Activity Qty in PO minus Routing Qty x Produced Units of FG) x Revised Price of Activity


Shaubhikg

Re: Price control change ROH & HALB - Cost estimation Posted: Nov 28, 2010 6:17 AM in response to: Shaubhikg

Therefore the steps that you can follow are as under. I have considered that you would complete all CCA closing stuff

Step 1 : Determination of Revised Price and Change in Standard of RM

+RM Op Stk Value + Purchase + Variances / (Op Stk + Purchases) = Revised usage rate+

Therefore the standard price of the RM can be changed (use MR21 with date as 31.12.2010) with this value which would lead to credit postings in Revlauation A/c.+ In SPRO - Valuation and Account Assignment check whether the price change can benext year.+

Step 2 : Revaluation of WIP (Manual)

The WIP are the open production orders which have not been completed. In that case the besthave some RM issued to them and then post the differential amount as an FI journal entry using transaction FB01.relevant order number.

RM Consumption - Dr (input the material no. as well)To Price Variance A/c

The differential would be

Original Price (as mentioned in the Order) - Revised Price x Quantity issued to the order

In this step you would increase the value of the WIP in order to carry it to the next year.

Step 3: Calculate WIP.

The value of WIP should include the increase in PO done in the previous step

Step 4: Post Settlement

This step would post the WIP and post the price variance entries for the entire year

Step 5: Seggregate usage variance

The usage variance should be seggregated and posted to a Balance sheet account for the purpose ofcharged off to PL as the goods are sold in next year.

Step 6: The actual activity prices should be used in calculating the new standard cost estimates andto pick actual price or revise the price in KP26 with what has been calculated with KSII

Step 7: Revaluation of FG / SFG

Once all the revised prices of raw materials and activities are determined you can calculate the revised price for the SFG and FG




Step 8: The Adjustment of the variances and revaluation account can take place depending on the strategy oulined ie. whether you run on01.01.2011 or 31.12.2010.

These steps are for the transition that would take place and the post implementation closing steps areyou are implementing material ledger I would request you to follow the accounting details outlined in note 908737 so



SAP 4 ME


Hi,

Thanks for the info.

Just i want to know how can we treat the cost estimation for new fert materials.

Some times in a month we use to get 1000+ new FERT materials and how can we exclude all the old FERT materials forhave already executed STAND COST ESTIMATION (i.e.in the month of Jan-2011).

If we run CK40N it will again calculate the cost estimation for all FERT Materials and if we execute CK11N,its not possible forexecute for 1000+ new FERT material....

Also we are an option to deactivate the Material Ledger,do you have any idea about the same.

If so,do suggest.

Regards


Shaubhikg


Hello,

Regarding deactivating the mateial ledger you can consult SAP note 108374 which would guide you about the procedure. But incase you would loose all material ledger documents created in the system. Deactivation is required if youCKMSTART (ie. ML is Productive).

You can refer to table KEKO to find out the last costing dates for the material and then execute CK40Nthere in that table.


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