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Ledger
Product Costing Overview
HR Human Materials
Materials SD Sales and
Resources
MM S&D
Management
Management Distribution
Why utilize Product Costing?
Material Master
Price Control
Stock Stock
Stock Coverage GR/IR Account
1 200,- 450,- 4
3 300,- 300,- 2
2 300,-
If the invoice receipt is
3 100,- for 100 units, the stock
coverage
is 200 units:
Consumption all differences stock Vendor
4 450,-
400,- 3
ok
Posting Example: Moving average price 2
Procedure Stock Stock Value V Price
1
2 Begin. inventory: 100 200.- 2.00
3 Goods receipt: 100 PC at 3.00 200 500.- 2.50
4 Goods issue: 150 PC at 2.50 50 125.- 2.50
Invoice receipt: 100 PC at 4.00 50 175.- 3.50
4 50.- 3 375.-
400.- 4
Posting Example: Moving average price 3
Stock Coverage
Even though all
With multiple delayed receipts between
invoice receipts: 2.- and 3.- were
Danger of Incorrect Valuation! valuated!
Characteristics of Price
Control V
Moving average price
1 200.-
3 240.- 240.- 2
2 200.-
2 40.- 20.- 3
220.- 3
Characteristics of Price Control
S
Standard Price
+ All stock postings take place at the standard price
+ Prices remain constant throughout at least one period
+ Price fluctuations do not debit/credit the cost objects (e.g. orders)
consistant controlling with the standard price as a bench mark
Finished Products
Raw Materials I
Distribution of
Price Differences?
Valuation Period
Actual Prices?
Intermediates Standard w/ ML
Act1
Production
Production
Cost Center
Act2 orders
VAR.
VAR..
.
CO-
PA F. Goods
VAR... Cost
Inventory
Object
Product Cost Flow
Plant Cost
View Sales & Mktg. View
Mfg. Cost Center
Process Order PA
Utilities
BOM Product Unit Cost (Profitability Analysis)
Salaries (Cost Component View) (SAP Value Fields)
Supplies Raw Matl 1 Cost of Goods Sold
Maintenance Raw Matl 2 Cost of Goods Mfg.
Depreciation Pkg Matl Raw Matl 1 Costs
Raw Matl 1 & 2 Costs
Training Raw Matl 2 Costs
Pkg. Matl Costs
Routing Pkg. Matl Costs
Direct (Activity Types)
Conversion Routing
Mach. Hrs.
Insur. & Taxes or Mach. Hr. Costs
Costs to Produce
Laboratory/QC lbs. Lab Tests Costs
Product testing costs
Waste Treatment Produced Mach. Setup Costs
Change Over costs
Shops & Stores Lab tests (setup costs)
General Services Setup Hrs. Fixed & Variable Cost Fixed & Variable Cost
Indirect Three Views Available:
Conversion 1. Cost Component
Total Product Cost 2. Cost Element
3. Cost Itemization
Product Costing At A Grp
Overhead Not OK
cost
planning
completed
Standard
Review
Yes for
Plan prices Cost
Approval
of raw Calculated
materials
were
entered
OK
Automatic Standard
Mark Standard Release price hase
Cost Estimate of been
Standard Price released
Product Costing At A Grp
Cost
estimate
has been
released
Manufacturi
ng order
has been
released
Product cost
Simultaneous
are
Costing
Yes
Cost object allocated
has been
created
Product Costing At A Grp
Period End Closing Product Costing
Product Revaluation
cost are activity types at
allocated actual prices
Calculation of
WIP
Yes
Periodic
Varaiance
calculation
PE Product
Settle cost
Costing has
object
been done
Product Costing At A Grp
GL Postings
Material
M,aster
Revaluate Updates
Stock
Allocation of
MM Goods Follow up Costs
Material Price Price Update in
Movements to Finished/Semi
Determination Finished
Actual Costing
Recorded
Products
Provisional GL Postings &
Posting Reversal
Material
M,aster
Updates
Product Cost Planning: Overview
Standard
StandardCost
Cost Estimate
Estimate Mark cost estimate with quantity structure
(once
(onceaayear)
year)
Release cost estimate with quantity structure
Prepare
PrepareProduct
Product Cost
Cost
Create Cost Object
Collector
Collector Preliminary Costing
Production
ProductionCosts
Costs Debit Secondary cost
Receive
ReceiveFinished
FinishedStocks
Stocks Credit Production Output
WIP Calculation
Month
MonthEnd
EndClosing
Closing Variance Calculation
Settlement
What is a Product Cost Estimate?
Additive
You use additive costing to enable you to manually add costs that cannot
be calculated by the system to a material cost estimate.
Product Cost Planning: Overview
Cost estimate
with quantity
structure
Report
Quantity
structure Material costs
Cost estimate Production costs
Costing without qty
variant structure Overhead
Costing
Standard
Standard Cost
Cost
Costing Results Estimate
Estimate
for:
Usedfor:
Items Cost Values
Elements Stock
Stock Valuation
Valuation
Used
M Material 400000 Raw materials 600 000 USD Profit
Profit &
& Loss
Loss
E Activity 943201 Production hours 610 000 USD Statement
Statement
E Activity 943901 UT: Cooling Var. 612 000 USD
G Overhead USD
Concept of Cost Rollup
Product W Costing structure - Total
Internal External
Material Overheads
Activity Activity
W
W Costing structure Upper level
Z1
Z1 Z
Z 22 Internal External
- Overheads
Activity Activity
S1
S1 S2
S2 S3
S3
Costing structure Lower level
Internal External
Material Overheads
Activity Activity
Material - - -
Costing Variant
Costing Variant
Quantities Prices
Cost of Goods
Manufactured
Costing Variant
- Master Data
+ Material Master
+ Bills of Material
+ Routings
+ Master Recipe
+ Production Version
Production Version
ID,
Production line,
Validity period.
Quantity Structure: Procurement Alternatives
Mixed Product
Cost Estimate
Costing vs. Quantity Structure
ROUTING
Electricity SERVICE
COST CENTER
WORK CENTER /
Consumables RESOURCE
Maintenance
- Master Data
+ Materials
+ Cost Centers
+ Activity Types
+ Cost Elements
Cost Centers
Validity period
Category
Functional area
Activity Types
Validity period
Activity unit
Allocation cost element
Costing Structure: Material Master Data
Activity Type
Activity Price Calculation
Cost center:
Planned costs: 84,000
Machine
Cost center
1PDH01 Plan activity qty: 100 h
1
Activity Price
: Calculation
Apportionment of cost center costs
to activity types according to
particular criteria
Costing Structure
Planning 3 Cost Splitting
9103000 Product
1. Assign CC 9103004 to Splitting
Utilities (Common) Structure Z9 Steam service Cost Estimate
2. Perform cost splitting
2
9103000 Product
Di rigi
91000045 - TEG
st
O
rib al
u t CE
io
Steam service
n
94 ca ity
Ro via 54 n
n
..
39 tio
9103004
lo v
Al cti
A
1UTSTF Steam - fixed
g
in
5
ut
1UTSTV Steam var.
.. 943954 UT: Steam fix
Product
91000060 - LLDPE
Valuation
Purchase price
Activity Type Price x Quantity
Overhead
Costing
Standard
Standard Cost
Cost
Costing Results Estimate
Estimate
for:
Usedfor:
ID Cost Values
Component Fixed & Variable Stock
Stock Valuation
Valuation
Used
101 Raw Materials 600 000 SAR Profit
Profit &
& Loss
Loss
110 Catalyst 0 SAR Statement
Statement
111 Chemicals 0 SAR
SAR
Cost Component Structure
CO- CO- Product Cost Planning
OM PC
Cost Centers
Utilities Utilities
Standard
StandardCost
Cost Estimate
Estimate
(once
(onceaayear)
year) Mark cost estimate with quantity
structure
Standard price
Only one validated standard price per product per period,
The price represents most desired (or most likely) costs
Only one price per product over the year (recommended)
Determined during costing runs for Z9P1 costing variants - standard cost
estimate is populated in appropriate valuation views
Includes variable and fix cost elements
Base for variances calculation; which is then posted to FI and CO-PA
Used for stock valuation of finished goods and semi-finished products
Stored in material master data (accounting view) in Legal, Group and Profit
Center valuation views after releasing the cost estimate
Price update
Future price
Future standard price
Stored in material master data (accounting & costing view) in Legal,
Group and Profit Center valuation views after marking the cost estimate.
Previous price
Replaced standard price by current one due to releasing the cost
estimate
Stored in material master data (accounting & costing view).
Price update
Analysis of Costing Results Material
Material Master
Master Data
Data
Standard Price
Future Current Previous
10
Stock Revaluation
Price update procedures
Partial selection
of materials
Selection
of
all materials BOM explosion
$ $
Execute costing run
$ $ $ $
$ $ $
Marking and releasing costing run results
Materials
(price update)
Product Costing: Overview
Production
ProductionCosts
Costs Debit Secondary cost
Receive
ReceiveFinished
FinishedStocks
Stocks Credit Production Output
WIP Calculation
Month
MonthEnd
EndClosing
Closing Variance Calculation
Settlement
Cost Object Controlling: Overview
Functions
Funkcje Product Cost by Order Product Cost by Period
Type of settlement
FULL PERIODIC
rule
Hierarchy of
Impossible Possible
Cost Objects
Cost Object Controlling: Overview
Product Costing
- Z9P1, Z9P2, Z9P3 costing run, verification, save
- Organizational measures: marking and releasing
- Cost estimate marking
- Cost estimate release
Master & control data definition
- Material Master Data, BOMs and Routings
- Product Cost Collectors incl. PREM costing
Production postings (backflush)
- Various analysis available
Create
Prepare
Prepare Cost
CostObject
Object Product Cost Collector
Preliminary costing
Objects in Cost Object Controlling
Production Version
ID,
Production line,
Validity period.
Objects in Cost Object Controlling
Operation 10 Material X
Phase A
Material Y
Operation 20
Resource
Requirements
Preliminary costing
Product Costing
- SPC1 SPC3 costing run, verification, save
- Organizational measures: marking and releasing
- Cost estimate marking
- Cost estimate release
Master & control data definition
- Material Master Data, BOMs and Routings
- Product Cost Collectors with Preliminary costing (PREM)
Production postings (backflush)
- Various analysis available
Ethylene 2.000
EDC 0.500
Materials 4.000
Overheads 1.500
Total 8.000
Simultaneous costing actual costs
Product Costing
- Z9P1 Z9P3 costing run, verification, save
- Organizational measures: marking and releasing
- Cost estimate marking
- Cost estimate release
Master & control data definition
- Material Master Data, BOMs and Routings
- Product Cost Collectors with Preliminary costing (PREM)
Production postings (backflush)
- Various analysis available
Confirmation types
Order header
Individual
Individual order confirmation
confirmation
Collective
Collective confirmation
confirmation
Operations
Milestone
Milestone confirmation
confirmation
Progress confirmation
Order confirmation
Components
Confirmation with reference
Components
Order quantity = 10 PC
Operation 30
Component XY
Required qty = 20 PC Warehouse
10 PC of Component XY
to be back flushed
Final Confirmation & Technical Completion
Operations
Operations Operations
Operations
Components
Components Components
Components
PRTs
PRTs PRTs
PRTs
Costs
Costs 100 20 Costs
Costs 100 20
50 50
Production Order
Step 1 Created and release
- Maintenance of Master Data
Status - RELEASED
Material
STATUS- CREATED
STATUS - RELEASED
This status allows for actual postings
Actual costs
Production Order
Step 2 Goods Issue to Order
- Actual Postings
Status GOODS MOVEMENT POSTED
Raw Order CO
Materials Material
FI Consumed
400000
1.100,-
Actual costs
Production Order
Step 3 Direct activity allocation
- Actual Postings
Status - RELEASED
Order
Material
400000 + 1.100
943201 + 7.500
Cost Center / Activity
150 * 50 = 7.500
943201 - 7.500,- quantity * price = cost
Actual costs
Production Order
Step 4 Goods Receipt from Order into Warehouse
- Actual Postings
Status PARTIALLY DELIVERED
Order CO
Production Material
FI Output
462001
400000 + 1.100 462001 - 5.000
943201 + 7.500
5.000,-
Finished
Products
119430
The results from the output receipts, plus material & resource
consumptions, update the stock records and provide
valuation of production according to standard cost approach.
Product Costing: Overview
WIP
Calculation
Month
MonthEnd
EndClosing
Closing
Variance
Calculation
Settlement
Period and year-end closing
Production Order
Step 5 Work-in-Process Calculation
- Period-end closing
Status RESULTS ANALYSIS CARRIED OUT
Order
Material
WIP Report:
Work-in-Process
8.600 - 5.000 = 3.600
Period and year-end closing
Production Order
Step 6 Settlement
of - Period-end closing
Status RESULTS ANALYSIS CARRIED OUT
Work In Order CO
Progress Material
FI (WIP)
462201 400000 + 1.100 462001 - 5.000,-
943201 + 7.500
3.600
Work In
Progress
(WIP)
119460
WIP is being updated on the
order as statistical value for
3.600
information purposes.
Period and year-end closing
Order
Material
Order
Material
400000 + 5.000
WIP Report (cumulated):
Work-in-Process
13.600 - 12.000 = 1.600
Work-in-Process
in previous period
8.600 - 5.000 = 3.600
Cumulative: 2.000
Period and year-end closing
Work In Order CO
Progress
FI Material
(WIP)
119460 400000 + 1.100 462001 - 5.000
943201 + 7.500 462001 - 7.000
1.600
400000 + 5.000
Work In
Progress
(WIP)
462201
As WIP is reported as
1.600 cumulative value.
Period and year-end closing
400000 + 5.000
Production
Output WIP WIP
462001 462201 119460 As a result of a posting the
balance of the order was
1.600 3.600 3.600 posted to production
Negative variance: difference account and
Actuals > Plan. cumulated WIP was
reversed.
Period and year-end closing
Variance: Integration
CO-
Standard Cost Estimate Product Cost Collector PC
Material CATALYST
Materials Labour Depreciation Quantity prod.: 10 pcs
600 1.100 300
Actual Costs
Materials 800
Labour 1.200
Material Master
Depreciation 400 Target Cost Ver. 0
Accounting View
2.400
Standard Price Price 150
200
10pcs * 200 Goods Receipt - 2.000 Quantity 50
Variance 400 Structure 200
Accounting
FI Stock Price difference
2.000 400 Profitability CO-
Analysis PA
MM Stock
Settlement Variance 400
Period and year-end closing
Variance PA Assignment
Cost Element Group Value Field
Category lines
+
Period and year-end closing
CO-
PC
Product cost collector
Material: MEG
Period accounting Quantity: 10 pieces Cost of goods sold
CO-
Revenue
Revenue PC
Actual costs Sales deductions
Sales deductions
Manufacturing costs by
Overheads plus Variances Actual costs 2.400,- standard price
(Contribution margin I)
+/- Change in Stock
Goods receipt -2.000,- Variances
= Result of a period
= Result of a period
Variances/WIP 400,-
PrCtr 1
% %
Overheads
Period and year-end closing
Period-end closing
Process costs
Periodic
costs Revaluation
Overheads
Calculations Work-in-Process
and
analysis Scrap
Variances
Postings Settlement
FI/CO
Period and year-end closing
CO-
PC
Product cost collector
Material: MEG
Period accounting Quantity: 10 pieces Cost of goods sold
CO-
Revenue
Revenue PC
Actual costs Sales deductions
Sales deductions
Manufacturing costs by
Overheads plus Variances Actual costs 2.400,- standard price
(Contribution margin I)
+/- Change in Stock
Goods receipt -2.000,- Variances
= Result of a period
= Result of a period
Variances/WIP 400,-
PrCtr 1
Variance PA Assignment
Cost Element Group Value Field
Category lines
+
Material Ledger: Overview
1. Actual Costing.
During the period, valuation of all goods movements is done
with the preliminary valuation price which is normally the
standard price. All variances from the preliminary valuation are
maintained in the ML. At period end, revaluation of ending
inventory can be performed with the determined actual price.
This is not mandatory. Actual prices can be calculated for
statistical purposes only.
2. Parallel currencies and/or valuations of material stocks.
All goods movements in the ledger can be maintained in 3
currencies. The values are translated into other currencies
using the historical exchange rates. Prerequisite for usage of
transfer pricing functionality.
Benefits of the Material
Ledger
Variances of Finished Goods
Variances from external procurement (purchase orders) as well as
from production activities are rolled up from raw and semi-
finished materials to the finished goods level.
To provide support for procurement related decisions.
Detailed reporting for procurement processes and sources
possible. Make vs.. Buy, Vendor A vs.. Vendor B. Price History.
Combines the benefits of Moving Average and Standard Price
Stable prices used for controlling purposes (standard) and actual
prices used for valuation purposes (average).
Easy to use display and error finding by consolidating the views.
Allows quick access to detailed views of material master,
standard costs and documents
Benefits of the Material Ledger
Production
Production
Level
External
External Procurement
Procurement
Level
External
External Procurement
Procurement
Level
Multi - Level Settlement
Production
Production
Level
Production
Production
Level Multi
-Level
External
External Procurement
Procurement
Level
External
External Procurement
Procurement
Level
Multi - Level Settlement
Production
Production Material Valuation with
Multi-Level Actual
Costing
Preliminary Valuation
During the Period
Production
Production
Revaluation at Period
End with Actual Price
External
External Procurement
Procurement External
External Procurement
Procurement
The ML updates the Material Master
The Integrated Material Ledger Display
Material Ledger Overview
Actual Costing
Revaluation of stock at
actual prices or accrual of
variances.
Material Ledger
MATERIAL STOCK
Parallel Valuations
(Transfer Prices)
Parallel Currencies Group
Translation at historic rates Legal
(up to three)
Profit Center
ML Overview Parallel Currencies
Material Ledger
(Valuation Area / Plant)
10 Local currency
30 Group currency
Material
Master
Price Control
Moving average price Standard Price
(V Price) (S Price)
Changed after every receipt Stable for long period
Recommended for raw and Recommended for finished
externally procured and semi-finished
materials. products.
Price control
Price fluctuations can not be adjusted to the finished products of higher levels (in case
S price)
Only recommended for raw materials or goods procured externally (real-time price for
goods receipt known)
False entries with severe consequences (compounded errors)
Danger of incorrect valuations with delayed invoice receipt
Price control
Standard Price
Multiple currencies/valuations
Price control
ML can record up to 3 different
S V
V currencies / valuations. This is a
requirement for transfer price
Price determination
2 Standard Moving
Transaction based price price
3 Standard
Standard Cannot be Actual Costing
Single-/ multilevel activated
price determination price
Unit periodic manually Revaluation of stock at actual
price price
Price determination control
3 S
Internal
Cost centers
orders
Orders
Level 3
Activity
types
S
Internal 3
Cost centers
orders
Orders
Level 2
Activity
types
2 V
External Level 1
Procurement
Material Master - Price control
Material
Moving average price Master Standard Price
(V Price / 2 Activity-related) (S Price / 3 Single-/multi-
level)
Legal valuation
USD
Group valuation
SAR
Profit center
valuation
SAR
Material Master - Transparency
Material
Master
Actual Values Overview
Purchasing,
PRD PRF
*
Stock
Movement,
Cost (price) GL (PL) 464017 Revenue Revenue
differences
Production PRA Price Diff -Purchasing
PRU
COGS COGS
- *
GL (PL) 464018 Input price
PRY variance
Material Ledger PRF Production Variance
Cost (price)
Closing - Single differences Input quantity
Level (mater.ledg PRA variance
er)
Resource-usage
PRU variance
* Remaining input
GL (PL) 464019 variance
-
Price Diff - Good
PRV Issue Mixed-price Production
variance
Material Ledger Material
PRF
Variances
Closing - Multi ledger Output price
Level Level fr.low.level PRA variance
s price dif.
* Lot size-/fixed-
PRU GL (PL) 4640020 cost variance
Price Diff -Transfer Remaining
Postings variance
Scrap Adjustment
Material Ledger UMB to COGS
Closing - Gain/loss
Release Future from Price Diff -
from
Price revaluation GL (PL) 464021 Purchasing capitalising
Gains/Loss on
Inventory Revaluation Price Diff - Good Variances
Issue
Price Diff - Adjustment to
Transfer Postings COGS from
Material Ledger LKW Gains/Loss on
Inventory
Closing - Do not Accruals and
defer.acct(mat GL (BS) 119610 Inventory Revaluation
revaluate Stock erial ledger) ML Provisions Revaluation
Gross margin
Actual Values Overview
S
Internal
Cost centers
orders
Orders
Level 1
Activity
types
External
Procurement
Price differences
Stock transfers
(standard price in another plant)
External procurement
se
i h (purchase order or invoice value)
r
a ug
.
.. hro Internal production
t
(order settlement)
Actual Values Overview
Activity
types
S 462001 464018
Internal
Cost centers . . .
Pr. Inven. Price diff.
orders
Orders
Activity
types
V
External
Procurement
Activity
types
S 119430 464017
Internal
Cost centers . . .
End Inven. Price diff.
orders
Orders
Activity
types
V Price
differences
are not
External applicable
Procurement
Activity
types
S 119490 464017
Internal
Cost centers . . .
End Inven. Price diff.
orders
Orders
Activity
types
V Price
differences
are not
External applicable
Procurement
Material consumption
Price difference (464017) ML accrual (119610)
(400002)
10 CL 10.5 325 CL 10.5
20
Period End Overview Periodic Unit Price
+ Periodic
unit
- price
Variances
Summarized Object
Object
Analysis List Comparisons
Detailed
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Report Selection
The Report Tree can be used to select Reports in the Information System. The Report
Tree is the central collection point and hierarchical outline of all Reports in an
application component.
The standard Report Tree supplied by SAP should not be changed. A personalized Report
tree can be created to which standard Reports as well as one's own creations can be
assigned.
Report
Material
Ledger
Reports
Object Detailed
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Displaying
Documents
Information System Overview
Materials
to be Product Cost
costed Planning
Reports
Summarized Object
Object
Analysis List Comparisons
Detailed
Reports
Report Selection
The Report Tree can be used to select Reports in the Information System. The Report
Tree is the central collection point and hierarchical outline of all Reports in an
application component.
The standard Report Tree supplied by SAP should not be changed. A personalized Report
tree can be created to which standard Reports as well as one's own creations can be
assigned.
Information System Overview
Information System Overview
Material
Ledger
Reports
Object Detailed
List Reports
Displaying
Documents
Report Output Types
Variable output areas
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