Costing variant forms the link between the application and Customizing, since all cost estimates are carried out and saved with reference to a costing variant. The costing variant contains all the control parameters for costing.

The configuration parameters are maintained for costing type, valuation variants, date control, and quantity structure control. In costing type we specify which field in the material master should be
updated. In valuation variant we specify the following

• The sequence or order the system should go about accessing prices for the material master (planned price, standard price, moving average price etc).
• It also contains which price should be considered for activity price calculation.
• How the system should select BOM and routing.

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