difference between plan,actual and target in order

[Former Member]

hi

plz tell me ans.

In the manufacturing order WHAT is the difference PLAN, ACTUAL and TARGET.

In the CK11N, we will estimate plan cost for one finished product but in order we are taking 2 costing variant that is PRODUCTION ORDER PLANDED (PPP1) and PRODUCTION ORDER ACTUAL(PPP2) . in the ORDER calculation which is taken as an account and tell me their functionality separately

thank u

sowmya

[Former Member · Accepted solution]

Plan Cost means this is the cost of Product or Material or Activity or any others statistical price which we estimate and Plan prices for organizations future activities.

Actual cost is the original/Actual cost we incurred for Product or Material or Activity or any other.

Target cost are the costs that are expected for a certain operating rate. It is the dynamic value which will be calculated on the basis Operating rate (Operating rate = (Actual activity / Plan activity) X 100), and It is a consistent basis useful for comparisons of the plan and actual costs of a period.

Ex:

we plan $110 per hour of Labor activity.

but we incurred $125 as actual cost.

for this Target cost is (125/110)*100=113

We use Costing variant for plan to calculate plan price of Order.

when order is created system posts planned costs to the order according to standard cost estimate of product, which uses the planned cost variant.

when the production is carried out Actual costs are posted to the order using Costing variant for actual. when order is completed system uses this two values to calculate the variance of production order. which can be settled to FI.

Hope U got...

[Former Member · Accepted solution]

Simple but confusing terminoloy, here is the clarity:

In short:

Plan Cost = Planned Quantity X Planned Price

Actual Cost = Actual Quantity X Actual Price

Target Cost = Actual Quantity X Planned Price

Ambadas

[Former Member]

Sowmya,

In general, we will have 3 costing variants, 1 std costing variant for regular cost estimates (used in CK40N or CK11N), to make cost estimate with or without qty structure,that is with or without BOM and Router (recipe in Process order ).

the second one costing variant for Premiliminary cost estimate in orer to calculateth Target costs on Production order/Process order in this there will not be any Accounting entries,

the last one is Symultanious costing variant used for calculating the Acutual costs on Prod order or Process order,where we will have Accounting entries,

Paartha

[Former Member]

Hello

In the Manufacturing order the following sequence are as follows;

1, Preliminary costing, 2. Simultaneous costing and period end closing. In prel costing, Calculate the standard cost as per the quantity structure defined in BOM and routing etc., there you can use Prel cost estimate ( PPP1) and where as in the simultaneoud costing Actual costing will be done basing onthe goods posting onthe confirmation of the order and calculation of the overheads cost etc., there you can use actual costing ( PPP2).

Finally at the end of the period ending process you calculatethe variances wip etc., at such time you will caculate the target cost. but you can calculate the target cost in the following manner that means so many versions are there

Version 0: Target cost= Actualy qty * standard cost estimte material

Version1- Actual qty * planned costs ( prem cost estimte)

like wise basing on the business procees you can define the target cost for calculating the variances.

Regards

Madhav