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Estimation cost is greater than Realized cost in Production order

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Posted on by 1,534

Dear Experts,

Hope you are Well! i have question regarding cited matter, we have some production orders in which estimation cost of item is greater than actual cost , while actual cost of item is same in work order as per item cost price, i had run inventory re-calculation and rest my work order also, but did not get any clue.We are using Weighted average method.

Please guide where might be issue.

Regards,

  • Suggested answer
    munsif Profile Picture
    munsif 1,534 on at
    RE: Estimation cost is greater than Realized cost in Production order

    Dear Ludwig,

    Thanks for your valuable support with time to time.

  • Verified answer
    Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: Estimation cost is greater than Realized cost in Production order

    Ah ok. I see.

    Making this change should be fine as it does not mess up historical transactions/valuations.

    The issue is fixed then, right?

    If so, can we get the answers verified and this thread completed?

    Many thanks and best regards,

    Ludwig

  • munsif Profile Picture
    munsif 1,534 on at
    RE: Estimation cost is greater than Realized cost in Production order

    Dear Ludwig, we already using weighted average , i did not make any changes there, i just change in Calculation Group cost price model in setup from item cost to inventory price, while by default setting was item cost.

    Regards & Thank you so much for lot of guidance.

  • Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: Estimation cost is greater than Realized cost in Production order

    Hi Munsif-ur-Rehman,

    Many thanks for the screenprints.

    So, you made a change to the inventory model and selected 'weighted avg.'

    Is that right?

    What was the previous value?

    Best regards,

    Ludwig

  • munsif Profile Picture
    munsif 1,534 on at
    RE: Estimation cost is greater than Realized cost in Production order

    Good Day to You, Ludwig, Thanks for your support and valuable guidance ,

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    pastedimage1601541281660v3.png

  • Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: Estimation cost is greater than Realized cost in Production order

    Good morning Munsif-ur-Rehman,

    Can you share some screenprints of the changes that have been made?

    Also share details of the calculation group.

    It sounds that there is something not ok with the configuration of those groups for your production items.

    Many thanks and best regards,

    Ludwig

  • munsif Profile Picture
    munsif 1,534 on at
    RE: Estimation cost is greater than Realized cost in Production order

    Thanks, Ludwig,One thing i must to share, i just go to Calculation group and change its type from item cost to inventory & reset my production order, again estimate , its become equal to actual cost.

    As we are using weighted average model, i believe we need to keep price model group inventory not item cost.

    Your valuable suggestion will be appreciated. 

  • Suggested answer
    Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: Estimation cost is greater than Realized cost in Production order

    Good morning Munsif,

    Well, I would expect that for each new item a BOM calculation is run and that you have a schedule on which you regularly do BOM recalculations to have price changes incorporated into your calculations. I think this is something that should be included in your regular routines.

    Best regards,

    Ludwig

  • munsif Profile Picture
    munsif 1,534 on at
    RE: Estimation cost is greater than Realized cost in Production order

    Thanks, Ludwig, You means that we should run Bom Calculation whenever we create new BOM, and currently we did not run any bom calculation because this is fresh system .

  • Suggested answer
    Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: Estimation cost is greater than Realized cost in Production order

    Hi Munsif,

    What is the last BOM calculation amount that was made?

    Can you see that in your costing version?

    Have you tried doing a new/fresh BOM calculation?

    Once that is done, start a new production order to see whether this makes a difference.

    It looks as if the original BOM calculation is just old and outdated.

    Best regards,

    Ludwig

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