Target cost calculation in S/4HANA Cloud – part 1

Background information

With old design in cost object controlling, plan costs/standard costs/target costs are stored in different tables.

In new design in cost object controlling , plan costs/standard costs are stored in table ACDOCP

Fiori application F1780 Production Cost Analysis provides real-time target costs information when goods receipt happens.

There are two plan categories can be selected,

One is Manufacturing Order Plan Cost ,which is calculated by production order BOM

Another is Manufacturing Order Standard Cost , which is calculated by material standard cost estimate or sales order cost estimate.

Target Cost could be on-the-fly calculated at every Goods Receipt based on these two plan categories.

In this blog ,we will focus on Manufacturing Order Plan Cost.

Target cost calculation analysis

Let’s take finished goods FG126 as an example to see the target cost calculation logic

Display Production Bill of material for FG126

The base quantity for FG126 is 100 PC

Take component RM120 as example, the corresponding component quantity is 100 PC, which means that it plans to consume 100 PC when producing 100 PC FG126

Go to material master data for RM120 , the price in global currency is 1.55 USD for 1 PC, which means it plans to cost 155 USD (1.55*100 ) when producing 100 PC FG126 according to BOM above.

Then go to app Production cost analysis , take order 1000202 as example， select plan category — Manufacturing order plan cost , and select Go

Choose > to see order cost detail for 1000202, the planned quantity for FG126 is 10 PC ,and the current actual quantity is 5 PC which means 5 PC FG126 have been received into the storage location.

Checking cost detail , according to BOM for RM120, the plan cost is 15.5 USD (1.55 USD/PC * 10 PC), and target cost is 7.75 USD （15.5*5 PC/10 PC）

For lot-size dependent item , Target Costs = Item Amount /Plan Output Qty. * Actual Output Qty

Let’s continue to see lot-size independent item, take set-up time as example

you see the amount is 60 USD as the same as the plan cost , since it is a mandatory and necessary cost when you set up machine which is independent with the lot-size, furthermore you can also investigate the formula in the work center to better understand the concept.