Thanks adam and Kranthi, appreciate it very much for your clarifications and I agree to your comments as it is not very clear from the help.
Typically, I use a planned costing version under FIFO, (thanks to adam for clarifying this to my earlier posts) and run the BoM price calculations and activate the planned costs and sales price. {Note: for procurement items, I sometime activate the fixed receipt price and when I set up the fixed receipt accounts, and activate the same in the purchase posting profile, it captured the PPV in the profit/loss accounts correctly}. However, I would caution using this in a mix of all three prices activated for an item as I got mixed results may be perhaps I ran test in a sample data.
two related questions:
Costing overview gives me a picture of what the estimated and realized consumption is after RAF and when I end the production. However, I got bit confused when I set up a BoM as below:
Parent BoM with 1 raw of qty 2; Route of 5 hour at the rate of $50/hr; raw is $50 per item;
sub-BoM - 1 raw component; 1 route - 2 hours at same rate; OVH is proportionate to manufacturing @ $10/hr rate. raw is 40 per item;
When I created a production BoM for the parent, the route came up to twice the cost, which is $500 instead of $250 but when I looked at the component it is 2 so it made sense. two questions 1) if I increase the number of resources, does the production time come down as I am using operational scheduling with infinite.
The cost of sub-BoM, the price showed up correctly which is per qty. This cost is rolled up in to the Parent BoM when i ended the production order,
Okey. But If I run the master planning, I get two planned production order 1 for Parent BoM and another for Sub-BoM. So when I complete the production for Sub-BoM, the cost is accounted for it and when I finish the parent BoM the cost of that is accounted. But I see a situation where Sub-BoM cost will be accounted twice. I hope I am wrong.
II) So far, in order to decipher the manufacturing cost and the difference between planned and actuals, what I am trying is to create separate accounts to capture during WIP stage and when I end the production. that way, I may possibly compare with these two accounts and get the price difference say when I post the job or route card with different times/cost. Costing sheet does show me the difference as well but is there any report where I can see the planned and actual costs?
Thanks again for your clarifications. please correct/update my understanding