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What is the meaning for Target Cost / Actual Cost and Plan Cost ?

Former Member
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Dear All,

I am studing the Target/Actual - Comparsion Report in Production Order (CO02). However, I don't understand some figure in this report.

Target Cost (Materials / Labor) - this value come from cost estimate (Material Update - CK11N and CK24)

Actual Cost (Labor) - this value come from change Activity Type/Price Planning (KP26).

Howver, I can't find how to calculate the value for Materials.

Plan Cost (Labor) - this value come from (Actual Cost (Labour) * no. of operations in the routing).

However, I can't find how to calculate the value for Materials.

Besides, I am not sure the calculation about the value for Overhead.

Is it set in img (Define Costing Sheet) ?

Am I correct for my finding ?

Please help to explain the Target Cost / Actual Cost and Plan Cost

Thanks in advance.

Best Regards,


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Answers (1)

Answers (1)

Former Member
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<b>Cost Elements</b>

A distinction is made between primary and secondary cost elements:

<b>Primary Cost Elements</b>

Costs that are considered as primary cost elements include:

Material costs

Costs for external procurement/external processing

These costs are assigned to the order, for example, via primary costs, such as material withdrawals or the purchasing of externally processed parts.

Secondary Cost Elements

Costs that are considered to be secondary cost elements include:

Production costs

Material overhead costs

Production overhead costs

These costs are allocated to the order via internal cost allocation.

<b>Cost Segments</b>

Cost elements are recorded in so-called cost segments that are managed per fiscal year. The system uses the latest start date of the operation or the requirement date of the material to calculate in which period of which fiscal year the planned costs of an order are incurred.

<b>Planned/Actual Cost Comparison</b>

Both planned costs and actual costs are recorded in cost segments. Actual costs are updated when material withdrawals or confirmations are carried out for the order, or when a goods receipt is posted for an externally procured material component, for example. This enables you to compare planned with actual costs at any stage of order processing.

<b>Planned Costs for Material Manufactured In-house</b>

If a material is manufactured in-house, the system calculates the planned costs of the material using the valuation variant and a price stored in the material master record.

In customizing, a costing variant is defined per order type and plant. The costing variant refers to a valuation variant, which determines which price from the material master record is used to calculate the planned costs of a material (for example, the moving average price or the standard price).

<b>Overhead Costs</b>

Overhead costs are costs which can be assigned only indirectly to the production order, such as electricity costs or general storage costs.

Overhead costs are assigned to the production order via overhead surcharges. They are updated in the order under the cost elements defined in the costing sheet.

A costing variant is defined in customizing per order type and plant. The costing variant refers to a costing sheet. The costing sheet determines what overhead surcharges are assigned to the order.

The costing sheet specifies:

Which direct costs to apply surcharges to

Under which conditions an overhead is calculated

How high, depending on these conditions, the surcharge percentage is

Which object (for example, a cost center) is credited under which cost element during actual postings

If you need further clarification on costing you can refer the following link

If useful please reward me..

Thanks & Regards

B Venkat