Overhead cost

[Former Member]

Dear All,

Could some one tell how to tackle below scenario.

Month Jan : Raw material is costed with material cost 100 and Overhead cost 10 (Qty based O/h), Total cost is 110

Month Feb: Raw material is costed with material cost 110 and Overhead cost 10  (Qty based O/h), Total cost is 120

Is there any way we can avoid Overhead cost 10 in the the month  of Feb with out removing Overhead group from Material master. So basically cost should be same as Jan i.e 110.

Thanks,

Ram

[ajaycwa1981 · Accepted solution]

Hi Ram

Why do you release std cost for RM??

Also, if it is to be same as 110, then why do you release it in Feb?? Cant you turn on the Do Not Cost indicator??

I don't think there is any option other than changing overhead group.

[Former Member · Accepted solution]

Dear Ajay,

Thanks for your reply.

The reason is that we are simply inflating cost by Overhead amount when we run the mass cost every time  ,and  for user it is very difficult to track those material one by one and  filter those material from mass costing, moreover these materials are part of BOM of finished goods.

Thanks

[ajaycwa1981 · Accepted solution]

Hi

Some change you will have to do to tell system that overhead must not be calculated.

I see the only options which I proposed.

Br. Ajay M

[ajaycwa1981 · Accepted solution]

May be you do additive cost for RM with validity of 1 month

In Feb when you calculate cost estimate, it won't figure in

What say??

Br. Ajay M

[Former Member · Accepted solution]

Hi Ajay,

Thanks for your answer,

Could you tell me how can I configure additive cost for raw materials and how can I incorporate this when we are doing mass costing for all products.

Thanks

[ajaycwa1981 · Accepted solution]

Hi Ram

1. Activate additive cost in val variant, material prices section

2. Activate additive cost in costing variant

3. Assign cost element for additive cost in OKTZ. You will see option on top left side of screen

4. Do CK74N for additive cost followed by ck11n

Br. Ajay M

[Former Member · Accepted solution]

HI Ajay,

Thanks again for your response. Sorry if could not explain my case  clearly before.

I would like to give more insight into this so that you can throw more light into this...

Actually our costing strategy is ( Planned Price 1 ->  Price from info record -> Standard cost ), and we have quantity based O/h ($ 10  per 100 LBS) for Raw material freight.

We don't have any issues adding O/H to  material cost whenever there is new info record and change in info record but actual issue is if there is no change in info record or info record is deleted , then when we do our regular mass costing, system is taking existing standard cost (As per cost strategy) and on the top of that its calculating O/H, which we want to avoid whenever there is no change in cost. So am looking for any controls to release same cost as before with out adding O/H whenever there is no change in cost.

Highly appreciated...

Thanks

Ram

[ajaycwa1981 · Accepted solution]

Hi

I would prefer removing the standard cost as strategy sequence in valuation variant.

That would fix the issue for good

Br. Ajay M

[Former Member · Accepted solution]

HI Ajay,

Thanks for reply,

We are unable to cost the materials (error message “ No Price could be determined -CK465)   with the cost strategy by removing the standard cost. What we need that to release with same standard cost as before with out adding O/H cost.

Thanks,

Ram

[former_member182339 · Accepted solution]

Ram,

Sorry i am jumping in when Ajay is there What i understood is you wanted to cost it without adding OH. once you added the addictive cost then

Select the strategy in valuation variant - valuation price according to price control in material master instead which may help to release the cost as everything else remains the same.

Strategy sequence

1- Planned Price

2-Valuation price according to price control in Material master

3-Price from purchasing Info Record.

One suggestion once a RM is costed why dont you check Do not cost flag. when ever there is a change in info record you un check the do not cost flag it will be more easier.  some kind of process and user training is important in this case.

Thanks

Hrusikesh

[Former Member · Accepted solution]

Hi Hrusikesh,

Thanks for your response.

I tried with the strategy you told, the results are same as before, i Could not avoid O/H cost on the top of Material cost.

Then regarding your suggestion, we can not release the cost for finished product , if  this specific raw material is part of BOM of finished  product. And other thing dealing with each and every raw material with do not cost check on the basis info record is changed or not really cumbersome activity.

Thanks,

Ram

[former_member182339 · Accepted solution]

Ram,

Well when you change you Info Record you will have to do it manually right each one by one or mass?

There must be a list maintained which info record you are changing by purchasing Dept either weekly, Monthly or periodically?

Based on this you can check do not cost flag it does not take long you can do it in MASS too may be couple of minutes. And incase you want to change the PIR at the time of change you can have that changed list and uncheck the  Do not cost flag.

As far as do not cost flag materials are concerned FG release will not be impacted by the flag on lower level of materials cost, As it will consider existing cost of RM. Infact its standard practice to check do not cost flag you wanted to avoid in Cost run for RM.

SAP output is based on input we direct or provide. There  has to be some logic and input to get into desired result.

I feel this is the option, There might be better way to handle this which i may not be aware which experts may comment.

Thanks

Hrusikesh

[Former Member · Accepted solution]

Thank Hrusikesh,

Your suggestions sounds very reasonable , could you tell me one thing, If those raw material (which are marked for cost deletion ) are part of BOM of finished product , and  when I run the cost for finished product ,for sure they would not be costed but still they should be part of cost of finished product right ?  ( Which we want , as they should be still part of finished product cost)

For eample

Month Jan costing ( Previous Month)

Finished Product  : 100 USD

RM 1 : 50 USD

RM 2 : 50 USD

Now we checked "Do not cost" indicator for RM 1

Month Feb costing (Current Month)

Finished Product : 100 USD

RM 1 : 50 USD

RM 2 : 50 USD

Highly appreciated  for your response.

Thanks,

Ram

[former_member182339 · Accepted solution]

yes you are right.Do not cost check mark indicator material is excluded from selection and BOM explosion. remember just by flagging the material without do not cost flag does not stop them from cost calculation. You have to make sure if check do not cost indicator in costing tab.

If the material is included in another cost estimate as a component to be valuated then simply it takes the cost as per the valuation variant.

So in your example you are right.

Thanks

Hrusikesh

[Former Member · Accepted solution]

Hi Hrusikesh,

Thanks for your response, It really sounds like great fix.

But what we are thinking of going with  this approach is that change the cost strategy as below .

Planned Price 1

Price from Info record

Planned Price 2

Standard Price

Every month we update the planned price 2 with (Standard cost - O/H cost ) for all material with procurement key F, so whenever there is no info record is active , it picks the cost from planned price 2 and apply the O/H then it will be same cost as before , now you may get doubt why we should  not  use Planned price 1, this is because we are using the planned price 1 for certain kind of materials, we don't want to impact those materials.

Please let me know if you see any flaw with thus approach.

Thanks Hrusikesh for all your thoughts and time into this...

Highly appreciated.

Thanks,

Ram

[former_member182339 · Accepted solution]

Ram,

There is many ways to upload the cost of RM so i don't see any problem with this approach. one question how do you cost your FG, Do you have std BOM and Routings for in house production?

If so then you will probably want valuation price according to price control in material master somewhere in the strategy.

Thanks

Hrusikesh

[Former Member · Accepted solution]

Hi Hrusikesh,

We cost the finished products by Master recipe.

Our price control across the board is "S".So even if  I include "valuation price according to price control in material master" into my cost strategy, issue will remain same  as system takes standard cost (Mat cost + O/H ) and on top of that O/H will be there.

Thanks,

Ram

[former_member182339 · Accepted solution]

I think you can maintain the strategy in sequence 4 without any problem as you will be checking do not cost flag for the same issue as we discussed. If your issue is resolved please close the thread

Thanks

Hrusikesh