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.

• 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

• 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

• In BOM maintained negative quantity for component.

• 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

• 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 Pic

• 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