You want to know how the target cost being calculated for activity confirmation on production order.
SAP S/4HANA Cloud
Target costs of manufacturing orders are calculated according to different source of plan costs adjusted to the actual output quantity at the time of goods receipt as following:
Lot-size-dependent costs: Costs vary with the lot size are divided by the costing lot size (and plan output quantity), then multiplied by the actual quantity delivered (the yield).
Lot-size-independent costs: Costs do not vary with the lot size (such as setup costs) are used directly as target costs.
You create a material cost estimate, under 'Quantity Structure' view, here you can find the related routing information.
Double click the routing number, you will jump to the routing master data,
Routing has 2 operations, operation 0010 and 0020.
Each operation assigns a work center, operation 0010 -> work center A, operation 0020 -> work center B.
Double click the work center A/B, you will jump to the work center master data.
Click the 'Costing' tab, you can find the related formula of each work center,
Work Center A, Formula A = Labor.
Work Center B, Formula B = Labor * Operation quantity / Base quantity.
Which means Formula A is lot size independent, Formula B is lot size dependent.
So how the target cost being calculated?
For material cost estimate, costing lot size is M.
Activity/work center A consumes h1 hour, cost is C1.
Activity/work center B consumes h2 hour, cost is C2.
Production order has actual quantity and plan quantity.
Total Target quantity = h1 + h2/M*actual quantity.
Total Target cost = C1 +C2/M*actual quantity.
2618359 - FAQ: Product Costing: On-the-Fly Target Cost Calculation in S/4 HANA Cloud CE2105.
Target cost; Target quantity; Order confirmation; Activity Type; Work Center Formula; Routing. , KBA , CO-PC-OBJ , Cost Object Controlling , Problem