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Modified Standard Cost Estimate

Former Member
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Hi Experts,

What is the difference between Standard Cost Estimate and Modified Standard Cost Estimate.

Where we can use Modified Standard Cost Estimate.

Bhaskar

Accepted Solutions (0)

Answers (2)

Answers (2)

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Dear Bhaskar Reddy,

Stand cost estimate can be done at the time of launching a new product or periodically for existing product.

Standard cost estimate it estimates cost of the product based on BOM & Routing and multiplies price as per valuation Variant  and also same can be referred as a bench mark. The standard cost estimate can compare with actual cost and will get the variance as well as we can analyze variance category wise.

You can use the modified standard cost estimate to calculate the cost of goods manufactured of a material in the course of the fiscal year, and to ascertain changes to the standard cost estimate ("revised standard"). You can transfer the results of a modified standard cost estimate to the material master as the planned price.

The modified standard cost estimate valuates the current quantity structure with the standard price.

You can also use the modified standard cost estimate in Cost Object Controlling as follows:

  • For the calculation of production variances by period in Product Cost by Order and Product Cost by Period
The target costs are calculated using the modified standard cost estimate and the yield, and are compared with the actual costs less any work in process and scrap.

In both cases, you can use target cost version 3 that is supplied with the standard system. When you use target cost version 3, the calculation of target costs is based on the modified standard cost estimate.

  • In Product Cost by Period
    • When you use a cost object hierarchy to distribute the actual costs
    • To valuate work in process

link: http://help.sap.com/saphelp_erp60_sp/helpdata/en/7e/cb7e1943a311d189ee0000e81ddfac/content.htm

Best Regards,

Krish.

Former Member
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Dear Bhaskar,

Modified Standard Cost Estimate:-

You can use the modified standard cost estimate to calculate the cost of goods manufactured of a material in the course of the fiscal year, and to ascertain changes to the standard cost estimate ("revised standard"). You can transfer the results of a modified standard cost estimate to the material master as the planned price.

http://help.sap.com/saphelp_erp60_sp/helpdata/en/7e/cb7e1943a311d189ee0000e81ddfac/content.htm

Standard Cost Estimate :-

You usually create a standard cost estimate for a material at the beginning of a fiscal year or a new season. The standard cost estimate then remains valid for the entire year or season. You can use it to establish a standard price for materials for the time period.

You should not change the standard cost estimate during this time. The standard costs then remain constant and are not influenced by price fluctuations or changes in the production structure during the planning period.

You valuate the planned quantity structure of a standard cost estimate with standard prices. A standard cost estimate for a material is not associated with an order or production version.

for more detail

http://help.sap.com/saphelp_erp60_sp/helpdata/en/7e/cb7dff43a311d189ee0000e81ddfac/content.htm

Thanks

Trinath

Former Member
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Hi Trinath,

Thanks for your reply

Can you give the valid example, how it works for month end activities like WIP, Variance and Settlement of Orders as compared to Standard Cost Estimate.

Which cost should take the system say suppose mid of the month done modified std cost estimate due to some BOM are routing structure differe as compare to standard cost estimate which alredy marked and released bigining of the month.

Finally at month end which cost can be considered to get the variance either (Std Cost Estimate - Actual) or (Modified Std Cost Estimeate - Actual) ?

Thanks,

Bhaskar.

Former Member
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Dear Bhaskar,

Modified cost estimates can’t be released. Variance is always against the standard.

thanks

Trianth

Former Member
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Hi Bhaskar,

To answer your qtn directly,

-Finally at month end which cost can be considered to get the variance either (Std Cost Estimate - Actual) or (Modified Std Cost Estimeate - Actual) ?

Ans: After changing the cost estimate , system will take new cost estimate only for GR. So the plan will be with old cost estimate and actual will be new cost estimate, and here one more key point regarding variance is, it will calculate output variance (one of variance category) the difference b/w old cost estimate and new cost estimate.

I hope, it solves your query. if any, let me know.

Thanks,

Kumar