I wrote this document for basic understanding of Co-Product and By-Product in Production order.
Product manufacturing in industry same time other products that are usually manufactured together using one production order. We called that Co product and By product
Co-Product: Co-product is a product, we getting this product while manufacturing finished material or main material. Same material might be used in other material manufacturing process
By-product By-product is a product, we getting this product while manufacturing finished material or main material. The material valuation of a by-product is always based on the price specified by price control in the material master.
Creating a production order to manufacture co-products has the following advantages:
- Main product and co-product(s) are settled to different receivers
- Goods movements can be posted simultaneously for all product manufacturing in the order
1. By- Product.
- In BOM maintained negative quantity , Then system automatically will pick as by product.
- Crete planned order and converted to production order
- At time Production order confirmation, system automatically post as By-Product,
- By-Product Movement type 531, See below picture
- If the by-product is indicated as being relevant to costing in BOM, the total cost of the process is reduced by the costs of the by-products
- The costs of by-products are calculated with the net realizable-value method. The costs of the by-products thus represent a reduction in the costs of the primary product.
- If you don’t want to calculate the cost of the By-product then remove the Costing relevancy from BOM Item detail
2. Co- Product
- In Material master MRP View 2 select the CO product
- In BOM maintained negative quantity for component.
- In BOM, item of the components detail select the CO product, if you not select the Co product in Item detail system consider as By Product
- Crete Production order
- Good movement of the Co Product,
- In Co product no automatic good receipt happen
- Go to MB31 and enter the Order
- In Co product Movement type is 101. See below Pic
- You can calculate the cost of goods manufactured for co-products by using an apportionment structure to allocate the total costs of the manufacturing process to the individual products involved
- The apportionment structure is defined in the costing view of the material master for the leading co-product click on joint production or in MRP2 view, Click on joint production and assigned apportionment structure
- In the apportionment structure, you can use equivalence numbers to control how the costs of the entire manufacturing process are apportioned for the co-products in percentage in case of multiple Co product.
- If no apportionment structure has been defined for a leading co-product or process material, an error message is issued.
Please refer below link for more detail of Co-Product costing and also consult with your FICO Team.
I hope this document helpful to everyone…