Co-product:

1. Material master – MRP/costing view (tick the co-product indicator) for all the co-products.(for
leading product also select co-product indicator in BOM)
2. If you want to use net realizable value and not apportionment structure - in material master –
material view – tick fixed price co-product.
3. Material cost estimate with quantity structure determines the quantity structure using the
master data of the leading co-product.
4. In BOM of leading co-product – Byproducts(costed using net realizable value) will be in negative
quantity
5. Non leading co-products also have negative quantity – but they are indicated in BOM item data
by the “joint production” indicator.
6. The non leading co-products are linked to the leading co-product in the production version

Costing of co-product

1. For fixed price co-products – use net realizable value method with fixed price / net realizable
value method with cost component split.
2. Use apportionment structure to calculate COGM for each primary product.(apportionment
structure can be in material master or in process order)
3. The total costs of the process are allocated to the co-products for each cost component suing
equivalence number.
4. Apportionment structure(AS, costing lot size, costing parameters are taken from leading
material) – list all co-products to which costs should be apportioned and assign equivalence
numbers. Source assignment of a source structure is maintained here.
5. Co-products are designated in the itemization with item category A and will have negative
quantities. (By products – M)
6. Cost each co-product (and ensure all the co-products are selected).
7. If A is leading co-product, then B has to specify that product A is the header material, which
contains quantity structure data.
8. For each co-product (including the leading product) the system generates an order item and
turns on the “multi items” indicator
9. Steps:
a. Create process order, scheduling, availability check, preliminary costing, release of
order, simultaneous costing, material withdrawl, confirmations
b. GR
c. Overhead costs / process costs
d. Revaluation
e. Preliminary settlement of co-product
 f. WIP calculation
g. Order delivered
h. Variance calculation
i. Settlement
j. Archive/delete
10. Maintain apportionment structure in process order, (equivalence numbers)
11. When process order is created – check the following
a. Whether on the basis of apportionment structure, settlement rule is created or not(both
in the preliminary cost estimate and in the actuals)
b. Whether settlement rule for every item is created or not
12. Use a source structure, for getting different equivalence numbers depending on the posted cost
elements (ex: material costs to co products in the ratio 3:2 and overhead costs in 1:1)
13. Check in settlement profile: - tick mark for equivalence umber or % settlement
14. Unless apportionment structure is maintained in master data, source structure cannot be used
15. WIP for co-products is to be valuated at actual cost; wip to order (excludes credits from GR)
16. WIP is calculated for Co-products till header becomes DLV or TECO
17. WIP accrual to FI doesn’t credit process order. WIP balances are stored in RA keys.
18. In the case of manufacturing orders that have co-products and whose order item
has settlement type FUL, variances can only be calculated when all order items
have been delivered
19. For manufacturing orders that have co-products for whose order item the settlement type is
PER, the order balance is always interpreted as a variance
20. No scrap variances can be calculated for co-products (so use variance key for which scrap
indicator is not set.
21.