sap co-pc product costing in sap erp6.0 one
TRANSCRIPT
Product Costing
Agenda What is Product Costing in SAP All-in-one? Elements of product costing Detail within each Example of system postings
What is Product Costing in SAP All-in-one?
It is the valuation of • material components • internal activities (labour and machine time), and• external activities (subcontractors)
on a production order (discreet manufacture) or run schedule header
(repetitive manufacture) by utilising material prices, activity rates and subcontract costs. Plan and Actual values are recorder and reported with Variances Variances are disposed of as per Company policy
What is Product Costing? (contd) The components are costed as per the costing method (standard or
weighted average), by reading the values stored in the Material Masters.
The internal activities are costed as the product moves through the Routing operations performed in the Work Centres in the factory, by applying rates calculated via the Cost Centre to which the Activity Type is attached.
Subcontract costs can be posted directly to the product cost collector, or allocated thereto via Activity Types.
Overheads can be absorbed into the product cost via Activity Types or Surcharges calculated using Costing Sheets
Elements of Product Costing Order Types Costing Variants Activity Types Cost Components Costing Sheets Cost Estimates Preliminary Costing Costing Run Settlement Profile Settlement Structure Settlement Rule Variances
Order typesCO-OPA
PS CO-PC Internal Orders
SM
PP
PM
IM
SD Order (make to
order)
OPA is the 'Repository' of all
orders.There are three main
types of orders, namely :
1) PS, with one order per WBS number2) PC, with a Bom
and Routing3) Internal Orders,
with various options.
Costing Variants A Costing Variant is defined as :
• An alphanumeric key PL02• A Name Current Standard
It Contains, under Details :• Costing Type (Where)• Valuation Variant (What)• Quantity Structure Determination ID (How)• Transfer Control (What)
Other Aspects :• Date Control (When)• Order Type Determination (What)
Costing Type (e.g. 01) :
Tells the system which field to update in the material master (or PP Order) when a cost estimate is run, e.g.
• std cost estimate - material, • production order - actual, or • production order - planned
Valuation Variant (e.g. PL1)
Defines how the material, activities, subcontractors and overhead surcharges will be valued, using strategy sequences for each, e.g. first use 1, if it has no value, use 2, and so on.
Example :Material material master frozen standardActivities planned rateSubcontractors net purchase priceOverhead Surcharges costing sheet PP-PC2
Quantity Structure Determination ID (e.g. PC01)
Defines, for each plant, how the system is to find valid alternative BoM’s in multi-level BoM’s, e.g.
PC01 - Std quantity structure determination (SAP Default).
Transfer Control (e.g. PL02)
Tells the system what value to pick up, upon the transfer of a product, when costing a product which contains parts which are costed elsewhere (in the same plant or in different plants), e.g.
Single plant transfer strategy priority 1 = current std cost estimate Cross-plant transfer strategy priority 1 = current std cost estimate
Date Control (e.g. PC01)
Tells the system : From which date the result of the Costing Run is valid, e.g. start of
next month To which date the result of the Costing Run is valid, e.g. end of
financial year The BoM and Routing date that is valid for the Costing Run, e.g. start
of next month The date that must be used for picking up material and activity
values, e.g. the date the costing run is executed.
Order Type Determination (e.g. PPC01)
Tells the system which Order Type to use for product costing, e.g. PPC1 (production order-actual)
NOTE : Create one Costing Variant for Current and one for Future standard
cost Create one Costing Variant for Planned costs, and one for Actual costsExample : PL01(future std) and PL02(current std) are used to calculate cost
estimates for the material master, whereas PL03(plan) and PL04(actual) are used for calculating plan and actual
costs on PP production Orders.
Activity Types Activity Types are the SAP mechanism to cost the operations
performed in a work centre, and are used by the PP Module for shopfloor control and capacity planning.
An Activity Type is defined per operation in the work centre, and is linked to the Cost Centre that accumulates the costs associated with that work centre.(It is specified in the work centre master, and is planned and posted to on the cost centre)
A Planned rate is calculated per Activity Type by dividing the costs on the cost centre by the anticipated quantity - it is based on planned capacity to ensure full absorption.
As expenses are posted by cost element, and not by Activity Type, only one true Actual rate can be calculated per cost centre - several can be derived via actual cost splitting (CCA functionality).
Cost Components
The Cost of a product is usually made up of material, labour, overhead and subcontract costs.
A Cost Component Layout/Split allows one to record and report the Cost broken down into each of these Components.
You have to define the Origin of each Cost Component, which is usually a Cost Element Group associated with that Component.
Costing Sheets
A Costing Sheet is used to allocate indirect overhead to a product.
A specified percentage of overhead is applied to the product based on material issues or labour activity charges on the production order.
Cost centres containing the indirect overheads are credited.
Cost Estimates A Cost Estimate is the planned cost of a production cost carrier. It utilises the BoM and Routing to arrive at the planned cost, which can be
transferred into the material master as a Planned Price to be utilised in Product Costing to valuate the material.
There are several types:• Current Cost EstimateYou create a current cost estimate in certain decision-making, such as in situations
where you have to decide between producing in-house and procuring externally• Modified Standard Cost EstimateYou create a modified standard cost estimate if the basic costing data has changed
during the planning period. • Inventory Cost EstimateThe inventory cost estimate is used to calculate valuation bases for tax-based and
commercial inventory valuation
Cost Estimates (Contd)
You specify which cost estimate is to be considered the Standard Cost Estimate
If you mark a standard cost estimate, it is transferred into the material master record as the future standard price (costing and accounting view)
If you release a standard cost estimate, it is transferred into the material master record as the current standard price.
Preliminary Costing Used to calculate the planned costs on a production order for
a product that does not have a material master Types of preliminary costing are Product Costing (using BoMs
and Routings) and Unit Costing (without BoMs and Routings) Unit Costing is based on data in MM and CCA. You enter
material components, activities, etc. in the list screen of the unit cost estimate
Base Object Costing uses the functionality of Unit Costing , with a Base Planning Object operating essentially as a spreadsheet used to calculate product costs without BoMs and Routings.
Costing Runs
The Costing Run enables you to cost multiple materials at the same time.
It reproduces the entire process of costing a product with a BoM.
It can be executed in Background mode - for large volumes of materials.
You can use the results to mark and release several standard cost estimates at once.
Settlement Profile
Specifies how the actual costs must be settled, i.e. • must be settled in full, • can be settled, • must not be settled.
Specifies valid receivers (one or several) Specifies the default settlement structure Specifies the default PA settlement structure Specifies the Origin structure Contains other indicators and parameters, i.e.
• document type, • retention period, • method/type of settlement, e.g. %, amount.
Settlement Structure Contains a Settlement Assignment, which contains: The Origin, which is made up of the cost element/group posted onto the
order that are to be used as the source of the settlement values The Settlement Cost Element, which is the cost element on which the
settlement is posted. The Account Assignment Category, which specifies the type of receiver as
e.g. • asset, • network, • order, • profitability segment, • cost centre, • GL account.
Settlement Rule
Is defined in each order, and contains the Distribution Rule, with • the specific receiver • percentage to be received, and• settlement type, i.e. PER or FUL
Variances Variances can be defined as
• Standards VariancesThese are the differences between the ‘Frozen’ or current
standard and the planned standard on the production order• Actuals VariancesThese are the differences between the planned and actual
values on the production order• Standard/Actual VariancesThese are the differences between the ‘Frozen’ or current
standard and the actuals on the production order
Variances (Contd)
Variances are calculated at two levels :• Variances from Planningbeing the differences between the standard cost
estimate (current standard), and the target costs on the production order
• Production Variancesbeing the differences between the production
order target and actual costs
Variances (contd) : Target Costs SAP Calculates Variances as being the difference
between target and actual costs With Activity-independant costs, target costs are
equal to the planned costs With Activity-dependant costs, the system
calculates the target costs for each cost centre in each period, by adapting the planned costs to the actual activity, e.g.
(actual activity/planned activity) x 100.
Variances (Contd) Variances from Planning :
• Lot Size variance, being batch quantity differences• Resource Usage variance, being replacement parts differences• Quantity variances• Remaining variance, being rounding, or the balance of variances not
categorised as above
Production Variances :• Price variance• Lot Size variance• Resource Usage variance• Quantity variance• Remaining variance
Variances (Contd) Scrap is excluded when calculating production variances Variances are generally calculated cumulatively as soon as the
status for the production order is set to ‘delivered’ With Standard Costing, variances are expensed With Moving Average Costing, variances are settled to stock The Variance Variant determines which variance categories are
calculated. Variances can either be expensed or capitalised, and can be
calculated cumulatively or periodically. You select one of each option for all variances - you cannot select these options for variances individually.
Example of System Postings
FI CO
CCAPC/OPA
PADebit CreditAccount
300 000
320 000
110 101
400 020
325 000
420 000
621 500
891 000
Description
Inv-RM
Bank
RM Cons
Salaries
Machine Hr
Inv-WIP
Inv * WIP
Inv-FG
(1)
(1)(2)
(2)
(3)
(3)
(2)
(3)
(-4) (4)
(5)
(5)
(6)
(6)
(7)
895 000 Bk to store (7) (-7)
(-8) (8)Var to PA
CC Asses-PA (-9) (9)710 000
(6)(-5)
Material with a Quantity Structure
Serial # A
Serial # B
Serial # C
Quantity 1
Quantity 1
Quantity 1
Standard Cost
Material Master
Storage Location
Serial Number
Table
Total = 3Standard
BoM
Configurable MaterialsStandard Cost
Estimate
Configurable BoM
Characteristics
Sales Order BoM
Planned Production Order
Characteristic Values
Material Master for Variant of
Configurable BoMSales Order
Optional
Object Dependencies
Sales MRP
Work Centers & Routings
Cost Centre
Work Centre
Standard Value Key
Standard ValueParameter
Activity Type Formula
Cost Centre
Expense
Scrap
Packaging
Freight
Subcontract
Variance
EXPENS
VARIAN
FRGHT
ZOLNER
CASING
SCRAP HUNG06
HUNG05
HUNG04
HUNG03
HUNG02
HUNG01
Activity TypeRate
RoutingOperation
1 EA
1 EA
1 EA
1 EA
1 EA
1 EA
Standard ValueEfficiency Rate
100%
100%
100%
100%
100%
100%
Activity Type
Note : (a)One can onlyassign 1 Cost Centre to a
Work Centre, but manyWork Centres can have the
same Cost Centreassigned.
(b) The Formula in theWork Centre is usually
Activity Rate * StandardValue per Routing, but it
could be OperationQuantity
Costing Sheet
Base 1 : Coel 400000(in receiver)
Credit 1 : Coce PurchasingCoel 670000
Over 1 : 10% of line 10
Credit 2 : Coce FinanceCoel 671000
Over 2 : 10% of line 30
Base 2 : Coel 400000 to499999
Costs 4xxx 1000 Costs 4xxx 2000 Costs 4xxx 2000
Secondary Alloc (500)
O/head Recov (500)
Secondary Alloc (500)
O/head Recov (600) Secondary Alloc 500
Secondary Alloc 500
Activity Recv (3000)
Purchasing CostCentre
Finance CostCentre
ManufacturingCost Centre
Production OrderCosting Sheet 1
10
30
20
40
Calculation Base
Overhead Key Credit Key
Material Issues (per BoM)400 000 $5000
Subcontract Costs420000 $1000
Activity Charge $3000
Overhead Charge670000 $500
Overhead Charge671000 $600
10% of$5000
10% of$6000
Summary
Order
Order Type
Bill of Material
MaterialMaster
SettlementRule
Routing
CostingVariant
SettlementProfile
Costing Sheet
SettlementStructure
Cost Centre
Work Centre
Activity Type