Historic actual cost (HAC)

Requirement

For raw materials, historic actual costs are calculated at period end. Calculation is based on the closing balances, and the cost of the previous period and received goods using the most recent invoiced cost of the current period.

For operations, historic actual costs are recalculated based on the actual outcome and the actual cost of cost centers and work centers during a period.

Based on these historic actual costs for raw materials and operations, the semifinished goods and the finished goods are recalculated according to the product structure.

Historic actual costs are used for inventory valuation and the cost of sold goods.

M3 solution

M3 supports the calculation of historic actual costs for raw materials following these principles:

  • Rolling average
  • Period average
  • LIFO
  • FIFO

Historic actual costs can be calculated per date or date range.

For operations, historic actual costs can be calculated by M3 CAC cost center accounting functions.

The calculation result for semi-finished and finished goods is stored on item level but not on lot number level.

Optionally, historic actual costs can be used for inventory valuation.

Variances can be followed up using additional accounting transactions for internal accounting. Alternatively, a separate new set of accounting transactions using historic actual costs for a periodic accounting approach can be created.

See KB 1994872 and education material on 'CCA_Cost Center Accounting'.

To ensure the integrity of an existing average price calculation, the back dating of inventory transactions (transaction date set to an early date as the entry date) gets blocked in Russian installations.

Configuration guidelines

Program ID Program name Description or comment
CAS900/H Settings - Cost Accounting

Select these check boxes:

  • Historic Actual Cost
  • Historic Actual Cost – materials
  • Historic Actual Cost – operations
  • Method for calculation HAC
PCS001/E Settings – Product Costing Define the costing type for HAC.
PCS120 Costing Component. Create Cost Rates Make sure that the relevant rates for operations are set.
PCS420 RD Rate. Transfer from Resource Driver

Optionally, calculated actual rates for HAC can be transferred to (PCS120).

Prerequisite: Cost center accounting must be setup and processed for the period.
CAS400 Historic Actual Cost. Calculate Create, review and process HAC.
CRS395 Accounting Rule. Set Define the various accounting types for HAC accounting
CAS950 Internal Account entry. Create Optionally, select the Upd his act cst check box to create additional internal accounting transactions for the variances between HAC and inventory accounting price.
CAS180/E Inventory. Open

Optionally, create an inventory evaluation round.

Set the Valuation type field to 2-HAC.