Costing BOM usage

[Former Member]

Hi Experts,

Please explain me with some examples what is the use of " BOM usage (6)costing BOM".

I have the following scenario where i was trying to use the Costing BOM concept.

To produce material 'A', I need component 'B' and 10 other consumable materials.

For the cost estimation purpose, the client wants to put the consumables in the BOM.

The production of A is happening like this, Prod. Order qty of A is 100000 Meter.

The confirmation of A will be taken place partially like 500 m, 700m, 900m...etc.

When i do the confirmation, Auto GR for material A and consumption of components by 261 movement type will be taken place.

Here i can monitor what is the actual consumption of component B and i will enter during confirmation. So that i can get the Plan Vs Actual quantity.

But for consumables i can not monitor what is the actual consumption since it is very less quantity and it will be filled in the tank as a bulk quantity.

Please thro' some light on the following 2 queries,

1.In the costing BOM i will put all the consumables and in Production BOM i will put only the prime material, how to avoid the Variance during every confirmation?

2.If i don't put the consumables in the BOM, i added it in the Costing sheet, and i am issuing all to Cost center by 201 movement type. In this case how to take the Plan Vs Actual variance?

Thanks in Advance.

Bala

[former_member196398 · Accepted solution]

Bala,

Purpose of Costing BOM is to get a rough cut cost estimate for a new product which is yet manufactured. Once the process is stablised and established, you need to have Material BOM for Standard Cost estimation and production order creation.

In your case if the value of the consumables are not considerable and incase if your not able to say how much is consumed per order, then the best option is to add this as a Overhead component in Costing sheet, based on Quantity. There wont be any variance as this overhead would also be a part of the Standard Cost Estimate.

Regards,

Prasobh

[former_member184655]

Dear Balamurugan,

Check out this,

Generally the Production BOM will be used for production as well as costing.Production in the sense which

will be used for running MRP or for creating a planned order or else a production order.

If you want to create a BOM for a material just for doing the cost calculation or if your company wants to

know the cost split up alone means then you can create a BOM using the usage 6,where the same will not

be considered for production that's in particular for running MRP.In case if you want to restrict that one

should not run MRP for a material which has a BOM (which has only Costing BOM) then in this case it will

be helpful.

Regards

Mangalraj.S

[Former Member]

Hi,

Normally for Standard Cost Estimation and Production order will consider the production BOM only. If you need the system to calculate the costly so accurately means, you mean to maintain your consumables in your production BOM. Otherwise you can handle the consumables as a Bulk Material and can be issued to production against cost center. This can be distributed to the production orders in the apportionment structure.

When the Plan / actual variances will come means, if you are posting the goods issue qty more than the qty what you have maintained your production BOM.

regards,

V. Suresh