Cost Component with no cost

[former_member210780]

Hello,

I have a question regarding display of cost component break up for product cost. I will explain it with an example -

I have three raw materials, that manufacture a semi-finished item, there are multiple layers of semi-finished items until we get to Finished material. At every level there are raw materials consumed along with corresponding semi-finished item coming from lower level. Accounting wise we have separate consumption accounts for Raw materials and groups of semi finished items.

RM1, RM2, RM3 > SF1

SF1, RM4 > SF2

SF2, RM5 > Finished

Cost components look as follows -

Cot element                                                               Cost comp

-----------                                                                         ----------

Consumption cost element (GL account) 100000          Raw Material

Consumption cost element (GL account) 110000          Intermediates

Consumption cost element (GL account) 120000          Bulk Product

SF1 is associated with Intermediates and SF2 with Bulk Product.

When we roll the cost Cost break up and cost comp split looks as follows

Cost of SF1

Rm1     10

RM2     20

RM3     30

Labor    15

OH       25

Total   100

Cost comp breakup SF1 -

Raw Material      60

Intermediates       0

Bulk Prod             0

Labor                 15

OH                    25

Total                100

Cost of SF2

SF1          100

RM5           20

Labor          30

OH             10

Total         160

Cost comp breakup SF2 -

Raw Material       80

Intermediates        0

Bulk Prod              0

Labor                  45

OH                     35

Total                 160

We were expecting the breakup to show as -

Cost comp breakup SF2 -

Raw Material           20

Intermediates         100

Bulk Prod                  0

Labor                      15

OH                         25

Total                    160

What are we missing?

Thanks in advance for your responses.

- Subodh

[ajaycwa1981]

Hi Subodh

It seems you have activated the "Cost Roll Up" indicator for each cost component in OKTZ. With this, system behaves as it is doing now

I feel that is correct and thats how it should be because that gives you the PURE raw material cost at any level. Tomorrow if you have to take a Make or Buy decision for SFG, you should know how much is pure RM cost and how much is OH.. System currently is giving you that info

If you dont want that, try to deactivate the Cost Roll Up button and check. But i would advise strongly against it

Br, Ajay M

[former_member210780]

Paul, Kamal and Ajay, Thanks for your responses.

I have not tried switching structure yet, as I was looking at the 'Cost roll up' option. With that option it compels me to mark Inventory valuation and Cost of goods manufactured as 'Not Relevant' which does not sound like a good idea - not sure if I am missing something. After doing so, I observed that the cost calculated for materials up in the hierarchy is lesser. I am still testing this and will be able to share the results appropriately later today.

In the meantime, I wanted to ask whether it's possible have main cost component structure in a standard way and auxiliary structure without 'Cost roll up'? I am not completely familiar with Auxiliary Cost component option, but I believe it will give me another view of the cost. Let me know if this makes sense.

Thanks again for your responses. As I said above, I will share my observations later today.

Regards,

Subodh