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Actual costing and Group valuation
  • Financial Planning & Analysis

Use Case Description

  • RAK Ceramic Wanted a System which can calculate actual cost of the ceramic products taking into consideration Wastage , Raw material actual cost , Quality loss etc. Key challenge was to get actual cost at the batch level.
  • To get Profitability on dimensions like Customer ,Geography , SKU code .
  • To find out profit element tied up in the closing inventory when one legal entity of RAK sells goods to another legal entity of RAK.

Solution Brief

  • Implement Product costing to design Costing and overhead accounting system .
  • Implemented Actual costing / Material ledger to calculate actual cost at the Batch level .
  • Implemented Batch valuation .
  • Implemented Group costing functionality as in ECC EHP 5 to get the cost visibility at group level .
  • Developed a utility to confirm consumption of clay on multiple work order based on total consumption per day .

Outcomes

  • RAK ceramic is able to calculate Actual cost for every batch of SKU produced .
  • Able to figure out group Profit tied up in the closing inventory , This enable early consolidation of legal entities .
  • Able to close MIS reporting ( On multiple dimensions ) Quicker and accurately .
  • Automation of clay consumption eased out manual intervention.
  • Able to track Standard Vs Actual Cost at SKU level . Enabling variance analysis and thereby taking corrective actions.