Goods issue and Costing

Goods issue and Costing

When you create a goods issue of components through the pick-list or through the Goods issue transaction codes, you are actually issuing goods required for production, which hold significant value. At goods issues to the order, the Moving average price of the product  (from Material Master price per unit) is registered as the price of the component for a unit mentioned. Thus for a given quantity issued to the order, SAP calculates the total cost of the component issued to the order and assigns that cost as the cost of raw materials. This is done for all the components issued to the order.

 

When the order is created in SAP, the system calculates the planned cost of the production for the raw material consumption, using the moving average price for the component, set in material master. SAP Understand the planned components and their quantities from the reservation list created for the production of the order.

 

Similarly when the actual goods issues are created for the order with the actual quantities, the system again calculates the actual cost of production using the moving average price for the component, set in material master. SAP Understand the actual goods issues from the order goods issue tables such as AUFM.

 

SAP would eventually add the material cost, the activity cost, the overheads (if any), to arrive at the total cost of production. This is carried out for the planned as well as the actuals and the difference in value between the planned values for material cost and the activity cost, the overheads is tranferred to a price difference account. This is carried out for all the orders on the shop floor. These costs are eventually settled on the material account.

 

 

For Example:

 

 

Deriving Planned Raw Material cost:

 

Thus if you three components planned for issue to the order with the quantities shown below, the planned cost would be:

 

C1 = Planned Qty -100 Units (Per Unit price = $2)  = Planned Cost = $200

C2 = Planned Qty -50 Units (Per Unit price = $0.5) = Planned Cost = $25

C3 = Planned Qty -200 Units (Per Unit price = $1)  = Planned Cost = $200

 

The Total Planned cost of Raw Material = $200 + $25+ $200 = $425

 

 

Deriving Actual Raw Material cost:

 

The actual cost of production is derived from the actual issues of raw material as shown below, with the actual costs:

 

C1 = Actual Qty -110 Units (Per Unit price = $2)  = Actual Cost = $220

C2 = Actual Qty -60 Units (Per Unit price = $0.5) = Actual  Cost = $30

C3 = Actual Qty -200 Units (Per Unit price = $1)  = Actual Cost = $200

 

The Total Actual cost of Raw Material = $220 + $30+ $200 = $450