Hi CWTEO,
Standard costs-In manufacturing enterprises, standard costs are calculated in the following ways:
In make-to-stock production, the standard cost of a material is calculated in a standard cost estimate for the material (cost estimate with quantity structure; cost estimate without quantity structure).You create the standard cost estimate for a material in the application component Product Cost Planning.
The standard cost estimate for a material is normally created at the beginning of each fiscal year. In Cost Object Controlling, a standard cost is a predetermination of what the cost should be. This means that actual cost should not exceed standard cost. When variances are determined in the period-end closing process of Cost Object Controlling, standard costs are used as the basis for calculating target costs.
The total standard cost of a material can be written to the material master record as the standard price and used to valuate the material during the year.
In sales-order-related production when you are using a valuated sales order stock, standard cost is determined according to a predefined strategy sequence The total standard cost can be updated to the stock segment of a make-to-order material as the standard price and used to valuate the sales order stock.
Actual Costing-In the R/3 System you perform actual costing in the application component Actual Costing/Material Ledger (CO-PC-ACT).
An alternative to standard cost accounting, enabling you to assign the costs incurred in the period directly to your materials.
Actual costing in the R/3 System is based on materials that are valuated with a preliminary standard price and then revaluated with the difference between the preliminary price and actual cost.
Each time a transaction is run that is relevant to valuation (such as a goods receipt, invoice receipt, or production order settlement), the system records the preliminary standard price and the variances against that price (such as price differences and exchange rate differences). At the end of the period, you can assign these variances to the material inventories and consumption of the previous period across multiple production levels. The resulting material valuation is based on the periodic actual values
Hope this helps you. Please assign points.
Rgds
Manish
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