A customer wants you to explain the results of the preliminary costing of a production order. How are the results determined?

Preliminary costing uses planned quantities from the order, not actual quantities, which are used for subsequent cost analyses.

While reference orders can exist, preliminary costing primarily relies on the specific order's quantity structure and its associated costing variant.

The standard cost estimate from the material master is a basis for target costing but is not directly copied and adjusted for preliminary order costing; instead, the order's specific structure and costing variant are used.

Preliminary costing for a production order leverages the quantity structure, which includes the Bill of Material (BOM) for components and the routing for activities, present within the production order itself. These quantities are then valuated using the pricing strategies, overheads, and other settings defined in the costing variant assigned to the production order type.