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Co-Product and By-product in Production order

Hello Everyone,,

I wrote this document for basic understanding of Co-Product and By-Product in Production order.

Product manufacturing in industry same time other products that are usually manufactured together using one production order. We called that Co product and By product

Co-Product: Co-product is a product, we getting this product while manufacturing finished material or main material. Same material might be used in other material manufacturing process


By-product By-product is a product, we getting this product while manufacturing finished material or main material.  The material valuation of a by-product is always based on the price specified by price control in the material master.

Creating a production order to manufacture co-products has the following advantages:


  • Main product and co-product(s) are settled to different receivers
  • Goods movements can be posted simultaneously for all product manufacturing in the order


1. By- Product.

   

Prerequisite


  • In BOM maintained negative quantity , Then system automatically will pick as by product.


pic 2.JPG

  • Crete planned order and converted to production order
  • At time Production order confirmation, system automatically post as By-Product,
  • By-Product Movement type 531, See below picture

pic 3.JPG


  • If the by-product is indicated as being relevant to costing in BOM, the total cost of the process is reduced by the costs of the by-products
  • The costs of by-products are calculated with the net realizable-value method. The costs of the by-products thus represent a reduction in the costs of the primary product.
  • If you don’t want to calculate the cost of the By-product then remove the Costing relevancy from BOM Item detail


2. Co- Product


     Prerequisite


  • In Material master MRP View 2 select the CO product


pic 4.JPG

  • In BOM maintained negative quantity for component.


pic 5.JPG


  • In BOM, item of the components detail select the CO product, if you not select the Co product in Item detail system consider as By Product


pic 6.JPG

  • Crete Production order
  • Good movement of the Co Product,
  • In Co product no automatic good receipt happen
  • Go to MB31 and enter the Order
  • In Co product Movement type is 101. See below Picpic 8.JPG


  • You can calculate the cost of goods manufactured for co-products by using an apportionment structure to allocate the total costs of the manufacturing process to the individual products involved
  • The apportionment structure is defined in the costing view of the material master for the leading co-product click on joint production or in MRP2 view, Click on joint production and assigned apportionment structure
  • In the apportionment structure, you can use equivalence numbers to control how the costs of the entire manufacturing process are apportioned for the co-products in percentage in case of multiple Co product.
  • If no apportionment structure has been defined for a leading co-product or process material, an error message is issued.


Please refer below link for more detail of Co-Product costing and also consult with your FICO Team.

http://www.scribd.com/doc/109331756/Co-Product-settings-for-SAP-costing


I hope this document helpful to everyone…


Request to all expert suggest and guide if anything wrong in this document


Thanks & Regards

Umesh Mali

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