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 processBy-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.Prerequisite

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 Prerequisite 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.

Co-product:1.Material masterMRP/costing view (tick the co-product indicator) for all the co-products.(forleading product also select co-product indicator in BOM)2.If you want to use net realizable value and not apportionment structure - in material mastermaterial viewtick fixed price co-product.3.Material cost estimate with quantity structure determines the quantity structure using themaster data of the leading co-product.4.In BOM of leading co-productByproducts(costed using net realizable value) will be in negativequantity5.Non leading co-products also have negative quantitybut they are indicated in BOM item databy the joint production indicator.6.The non leading co-products are linked to the leading co-product in the production versionCosting of co-product1.For fixed price co-productsuse net realizable value method with fixed price / net realizablevalue method with cost component split.2.Use apportionment structure to calculate COGM for each primary product.(apportionmentstructure 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 suingequivalence number.4.Apportionment structure(AS, costing lot size, costing parameters are taken from leadingmaterial)list all co-products to which costs should be apportioned and assign equivalencenumbers. Source assignment of a source structure is maintained here.5.Co-products are designated in the itemization with item category A and will have negativequantities. (By productsM)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, whichcontains quantity structure data.8.For each co-product (including the leading product) the system generates an order item andturns on the multi items indicator9.Steps:a.Create process order, scheduling, availability check, preliminary costing, release oforder, simultaneous costing, material withdrawl, confirmations

b. GRc. Overhead costs / process costsd. Revaluatione. Preliminary settlement of co-productf.WIP calculationg.Order deliveredh.Variance calculationi.Settlementj.Archive/delete10.Maintain apportionment structure in process order, (equivalence numbers)11.When process order is createdcheck the followinga.Whether on the basis of apportionment structure, settlement rule is created or not(bothin the preliminary cost estimate and in the actuals)b.Whether settlement rule for every item is created or not12.Use a source structure, for getting different equivalence numbers depending on the posted costelements (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 % settlement14.Unless apportionment structure is maintained in master data, source structure cannot be used15.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 TECO17.WIP accrual to FI doesnt credit process order. WIP balances are stored in RA keys.18.In the case of manufacturing orders that have co-products and whose order itemhas settlement type FUL, variances can only be calculated when all order itemshave been delivered19.For manufacturing orders that have co-products for whose order item the settlement type isPER, the order balance is always interpreted as a variance20.No scrap variances can be calculated for co-products (so use variance key for which scrapindicator is not set.