Since the release of S/4HANA 1610 the functionality of splitting the production price variances account in variance categories is available. Together with the COGS account split these 2 functionalities are the biggest enhancement in Account Based COPA.
I am making use of the account split functions in my projects a lot, but recently I found an interesting OSS note (2829427) about a restriction or conflict when you use this together with Actual Costing. I would like to share with you the details.
If you want to learn more about other enhancements and new functionalities in COPA, you will find below blogpost interesting as well:
- Realignments in Account Based COPA
- Attributed Profitability Segments
- Statistical Sales Conditions in Account Based COPA
- COGS split with Actual Costing
Production variance price difference split
During the settlement of production orders the result and variance of the order is getting posted to the accounts configured in OBYC. The price difference account (PRD) normally gets posted to one single account. With the new price split functionality, it is possible to further split the difference based on the standard variance categories defined by SAP or based on source cost element groups. This is defined in the configuration.
The accounting posting after settlement will look as follows:
As you can see the main price difference account from account key PRD is reversed in the third line and the amounts are split posted to the detailed GL accounts.
This works perfectly fine until you do actual costing at period end.
Relation with Actual Costing
The point with actual costing is that all price difference (single-level / multi-level) captured during the month will be revaluated to inventory, WIP or Cost of Sales (CoGS). The balances of all price difference accounts should become zero after you run actual costing.
The problem with the price difference split in combination with actual costing is that the price difference split functionality is already reversing the original price variance account (PRD) in order to distribute the amounts to the detailed GL accounts. During Actual Costing the same amounts is getting reversed again by material ledger. Even if the Material Ledger price difference account is a different account in the P&L, the balance of all price difference accounts should become zero.
When using price splitting in combination with actual costing this is not the case. See below why:
|(GBB) 600000 – order settlement||200 USD|
|(PRD) 600100 – Price Variances||200 USD|
Price Difference Split:
|(PRD) 600100 – Price Variances||200 USD|
|600110 – Price Variances cat. 1||100 USD|
|600120 – Price Variances cat. 2||100 USD|
Material Ledger actual costing:
|(PRY) 420000 – Price Differences (ML)||200 USD|
|(BSX) 300000 – Inventory||200 USD|
Total of the balance of the price difference accounts used in order settlement and actual costing is:
-200 + 200 + 200 = 200 USD
Not zero even though all off the price differences were distributed to the inventory.
SAP therefore recommends that customers who use the actual costing do not use the price difference split functionality.
What does it mean?
According to SAP you should not use price split together with actual costing. The reason they give is that the total balance of your price difference accounts will not be zero. But what if I create my detailed price difference accounts in the same range as my main price difference account as in my above example? They belong to the same P&L group. The total of all accounts will be zero. So, I don’t see the point of SAP.
Even if you don’t enable price splitting, when using actual costing all price variances will be revaluated. We have the actual cost component split functionality in place and at the end of the day you will be able to see the split in your P&L anyway after selling the products. The initial Cost of Goods Sold posting will be split based on standard costs and the cost component structure defined. The delta after actual costing will be split to the same accounts as well providing you the actual CoGs on P&L level.
When it comes to analyzing the production variances, we can still make use of the old-fashioned production order reports. Or use the new (on the fly) “Production Cost Analysis” and “Analyze Costs by Work Center” Apps.
What do you think? Let me know in the comments.