Process order_Target Cost_Resource usage variance

[Former Member]

Hi All

Trying to figure out how Target cost variance & Cost element are derived for the attached Process order,

system calculated Target costs- Resource usage variance only.

As per my understanding when we run KKS1 / KKS2 variances will get calculated

• Pre-conditioned
  • Partial Goods receipt is done
  • Cost estimates exist.
• For the specific example i am looking at we have
  • Input Price Variance
  • Input Qty Variance
  • Output Price Variance  &

• Input Resource usage variance
• Lot size variance

• I am seeing an amount posted only in "Target costs" , and nothing in Actual costs
  • In variance fields its showing against "Resource usage variance".
    • Not sure if this helps, but the variance amount is equal to ( Lot size variance - Target cost balance)
  • The Variance amount is again getting split and getting posted against two Overhead rate cost element category : 41.

Below are the questions that i am trying to find answers for :

1. Whats the calculation that system is doing when its posting only in Target costs ?
2. How are "Overhead rate" cost elements derived from ?

FYI. The costing sheet assigned to the process order, does not have any rate or credit key defined.

We use Templates to allocate the costs from business process to Process orders.

Appreciate your insight into this.

Thanks & Regards,

Kalyan

[kamalkumar_biswas2]

How are "Overhead rate" cost elements derived from?

It is derived from OH Costing sheet "Define credit" component where Sec CE is assigned through which cost center is credited and order is debited

[Former Member]

Thanks for your response kamal.

We  have cost sheet assigned, but we only use it to derive the templates. ( we use templates to allocates overheads from business process --> process orders, based on the template formulas defoned).

Basically,  we dont have any credit defined in our costing sheets.

Any further leads where i can check the derivation.

Thanks

Kalyan

[Former Member]

Hi Kalyan,

The answers for your questions are like below:

1.       What’s the calculation that system is doing when its posting only in Target costs ?

The material is there in the BOM, executed the cost estimate but there is no actual goods issue for this material. In this situation system will derive the target cost as per deliver quantity and consider the standard price of that material.

In your example it will applical for overhead.

2.       How are "Overhead rate" cost elements derived from?

Please check your cost component structure for this overhead cost element which is coming, I mean the cost component which is related to overhead.

Regards,

Ravi

[Former Member]

Hi Ravi

Thanks for your input.

There is one material, that's in BOM but it have not got issued.That had resulted in resource usage variance.

But, if you have observed the cost analysis that I have attached, I see an amount that only got posted in TARGET COSTS (without origin).

This is what I am trying to find the calculation behind it.

On cost element derivation, correct me if I am wrobg.

cost component structure is used to group our costs into different buckets.

I think it will not be used in any cost element derivation.

Thanks

Kalyan

[kamalkumar_biswas2]

Hi

  1. First of all Order should be status "Delivery completed" not partial

  2. Check your order control tab Variance key should be defaulted

  3. Check OKVG variance variant all categories is ticked

     This may give you real cause of your prob