tfin20 2 en col95 fv part a4

TFIN20_2Management Accounting I

SAP ERP - Financials

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Participant HandbookCourse Version: 95Course Duration: 5 Day(s)Material Number: 50099817

An SAP course - use it to learn, reference it for work

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About This HandbookThis handbook is intended to complement the instructor-led presentation of thiscourse, and serve as a source of reference. It is not suitable for self-study.

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2010 © 2011 SAP AG. All rights reserved. iii

About This Handbook TFIN20_2

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iv © 2011 SAP AG. All rights reserved. 2010

ContentsCourse Overview ......................................................... vii

Course Goals .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .viiCourse Objectives ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .vii

Unit 1: Introduction to Product Cost Planning...................... 1Overview of Product Cost Planning ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

Unit 2: Material Cost Estimate without Quantity Structure......11Material Master.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Unit Cost Estimates... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Unit 3: Preparing for Product Cost Planning ...................... 35Costing Variant .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37Cost Component Split . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47Overhead Costing Sheet.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57Allocating Process Costs to a Product .. . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Unit 4: Material Cost Estimate with Quantity Structure......... 81Basics of Material Costing with Quantity Structure ... . . . . . . . . . . . . 82Material Cost Estimate ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110Prices in Material Master.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .126

Unit 5: Costing Run .................................................... 149Costing Run in Product Cost Planning ... . . . . . . . . . . . . . . . . . . . . . . . . .150

Unit 6: Overview of Cost Object Controlling ..................... 181Overview of the Components of Cost Object Controlling ... . . . .182

Unit 7: Sales-Order-Related Production Scenarios ............. 205Sales-Order-Related Production Scenarios .. . . . . . . . . . . . . . . . . . . . .206

Unit 8: Product Cost by Period ...................................... 221Master Data and Preliminary Costing ... . . . . . . . . . . . . . . . . . . . . . . . . . .222Simultaneous Costing ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .253Period-End Closing ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .266Addendum: Repetitive Manufacturing and Material Valuation .300

2010 © 2011 SAP AG. All rights reserved. v

Contents TFIN20_2

Unit 9: Controlling by Sales Order without Production(Service) ................................................................... 309

Master Data and Preliminary Costing ... . . . . . . . . . . . . . . . . . . . . . . . . . . 311Simultaneous Costing ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .332Period-End Closing ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .350Customizing ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .363

Index ....................................................................... 371

vi © 2011 SAP AG. All rights reserved. 2010

Course OverviewThis course covers master data, process-related postings, period-end closing inOverhead Cost Controlling (cost center accounting and controlling with internalorders), and the derivation of cost centers.

Target AudienceThis course is intended for the following audiences:

• Solution consultants who are responsible for the implementation ofManagement Accounting with SAP ERP Financials.

Course PrerequisitesRequired Knowledge

• SAP125 SAP Navigation• ERP001 Management Empowered by SAP ERP• ERP020 Management Empowered by SAP ERP Financials

Course GoalsThis course will prepare you to:

• To set up Product Cost Planning with SAP ERP Financials• To set up Cost Object Controlling with SAP ERP Financials

Course ObjectivesAfter completing this course, you will be able to:

• Set up Product Cost Planning with SAP ERP Financials• Set up Cost Object Controlling with SAP ERP Financials

2010 © 2011 SAP AG. All rights reserved. vii

Course Overview TFIN20_2

viii © 2011 SAP AG. All rights reserved. 2010

Unit 1Introduction to Product Cost Planning

Unit OverviewThis unit describes Product Cost Planning in detail. It also describes the goals ofProduct Cost Planning and the typical factors that affect cost planning during thelife cycle of the product. The unit describes the available Product Cost Planningmethods.

The slides for the costing results (itemization, cost components and costed BOM)have been moved to later units.

Unit ObjectivesAfter completing this unit, you will be able to:

• State the goals of product cost planning• Describe the product life cycle• Describe the various costing methods• Distinguish between tangible and intangible goods

Unit ContentsLesson: Overview of Product Cost Planning ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

2010 © 2011 SAP AG. All rights reserved. 1

Unit 1: Introduction to Product Cost Planning TFIN20_2

Lesson: Overview of Product Cost Planning

Lesson OverviewThis lesson describes the goals of product cost planning and the product life cycle.It describes costing methods and explains how to distinguish between tangibleand intangibIe goods.

Lesson ObjectivesAfter completing this lesson, you will be able to:

• State the goals of product cost planning• Describe the product life cycle• Describe the various costing methods• Distinguish between tangible and intangible goods

Business ExampleYour company wants to install the product cost planning component in the SAPERP. As a project member, you need to decide the functions of CO-PC-PCP(product cost planning) required by the company and when they will be required.You need to implement these functions.

Goals of Product Cost Planning

Figure 1: Goals of Product Cost Planning

What is the amount of the cost of goods manufactured and the cost of goods sold?

Can we justify production at this market price? What is my lower price limit?


TFIN20_2 Lesson: Overview of Product Cost Planning

From a cost accounting point of view, is it cheaper to produce in large or smalllot sizes?

How are costs broken down? For example, how do material costs compare towages?

How can the production process be improved?

Which organizational unit affects product costs the most? In which plant can theproduct be manufactured the cheapest?

What effect do machine depreciation and energy costs have on the product(primary costs)?

In the SAP ERP, materials are valuated with one price, which can be set by astandard cost estimate.

Product Life Cycle

Figure 2: Product Life Cycle

At the start of the product's life cycle, only rough estimates and specifications areavailable. Product Cost Planning should be able to provide initial precise costprojections. These projections must be:

• Delivered quickly• Flexible and variable• Made using existing, similar products or structures (where possible)• Without a large master data input



During the product design and specification phase, costs increase when refinementsare made to original specifications.

After transition to the prototype stage, the first constructive data can be entered inthe form of BOMs. During this phase, the need for integration and direct access todata in Logistics increases. Data that is not available in Logistics is added by theperson responsible for product cost planning.

After the products attain market maturity, the integration of master data fortangible goods has a significant impact. At this stage, the complete product rangeis costed regularly and precise cost shifts are monitored.

Improvements in the production process of important products should be reflectedby and analyzed in Product Cost Planning.

Figure 3: Costing Sequence

If you plan a new product for which there is no master data in the SAP ERP, youcan perform initial planning and cost projections by creating a Base PlanningObject using Reference and Simulation Costing. Using this method, you manuallyplan the costs for an item.

When the first material master data is created in the SAP ERP, you can use theMaterial Cost Estimate without Quantity Structure to manually plan the cost ofgoods manufactured and the cost of goods sold for the product. You can use thebase object cost estimate as a reference for this. Two methods are available formaterial cost estimate planning without quantity structure, multi-level unit costingand single-level unit costing. Multi-level unit costing enables you to plan cost atthe assembly level without requiring production bills of material.



When the complete master data (BOMs and routings) is available in the system,you can create a Material Cost Estimate with Quantity Structure, which willautomatically calculate the cost of goods manufactured and cost of goods soldfrom data existing in logistics applications.

Costing Methods

Figure 4: Methods, Objects, Results - Overview

In the early stages of the product life cycle, unit costing and multi-level unitcosting are the ideal costing methods that enable the following:

• Flexibility• Efficient data maintenance• User can detail and refine the cost estimate as required• Access existing data and cost estimates in the system

When a cost estimate with quantity structure is created, the system uses masterdata from Logistics. This method costs individual products precisely and providesvarious analysis options to compare various alternatives.

Costing runs are used to process mass data. They are used periodically to costthe entire product spectrum.

A focal point of this course is integration. Functions are introduced gradually.Consequently, the course material is not designed to be used as a reference. Forcomprehensive reference, refer to the SAP Library under Product Cost Planning.

The methods and objects circled above are discussed in this course.



Tangible and Intangible Goods

Figure 5: Tangible and Intangible Goods

Tangible goods:

• Materials can be produced in-house, subcontracted, or procured externally.Data for these materials is located in the logistics components PP, PP-PI, andMM. This data is accessed when the materials are costed.

• Product cost estimates can also be used for inventory valuation andcomparison purposes in Cost Object Controlling.

• This course provides examples that illustrate how the methods and conceptsof Product Cost Planning are used in make-to-stock production.

Intangible goods:

• Shipping: Container repacking, storage, quality checking• Telecommunications: A one-minute long-distance call• Consulting: A two-day CO overview• Hospital: A heart operation• Training: A product training session at customer premises

This course introduces intangible goods using the example of base object costing.Similar costing methods are provided for services in the form of a cost estimatewithout a quantity structure.



Lesson Summary

You should now be able to:• State the goals of product cost planning• Describe the product life cycle• Describe the various costing methods• Distinguish between tangible and intangible goods


Unit Summary TFIN20_2

Unit SummaryYou should now be able to:• State the goals of product cost planning• Describe the product life cycle• Describe the various costing methods• Distinguish between tangible and intangible goods


TFIN20_2 Test Your Knowledge

Test Your Knowledge

1. In the SAP ERP, materials are valuated with a price that can be set by aestimate.

Fill in the blanks to complete the sentence.

2. The purpose of Reference and Simulation Costing is to allow initialplanning and cost projections for a new product for which there is no

in the SAP ERP.Fill in the blanks to complete the sentence.

3. When a cost estimate with quantity structure is created, the system usesmaster data from Logistics.Determine whether this statement is true or false.□ True□ False

4. What are the characteristics of tangible goods in relation to product costplanning?Choose the correct answer(s).□ A Materials can be produced in-house, sub-contracted, or procured

externally.□ B Product cost estimates cannot be used for comparison purposes in

cost object controlling.□ C Data for these materials is located in the logistics components

PP, PP-PI, and MM.□ D Data cannot be accessed when materials are costed.□ E Product cost estimates are used for inventory valuation.


Test Your Knowledge TFIN20_2

Answers

1. In the SAP ERP, materials are valuated with a price that can be set by astandard cost estimate.

Answer: standard cost

2. The purpose of Reference and Simulation Costing is to allow initial planningand cost projections for a new product for which there is no master datain the SAP ERP.

Answer: master data

3. When a cost estimate with quantity structure is created, the system usesmaster data from Logistics.

Answer: True

When a cost estimate with quantity structure is created, the system usesmaster data from Logistics such as BOMs and routings.

4. What are the characteristics of tangible goods in relation to product costplanning?

Answer: A, C, E

For tangible goods, materials can be produced in-house, sub-contracted,or procured externally. Data for these materials is located in the logisticscomponents PP, PP-PI, and MM. Product cost estimates are used forinventory valuation. Data can be accessed when materials are costed. Productcost estimates can be used for comparison purposes in cost object controlling.


Unit 2Material Cost Estimate without

Quantity Structure

Unit OverviewThis unit explains how to maintain and describe the required entries in the materialmaster. It also explains how to execute a single-level unit cost estimate formaterials and a multi-level unit cost estimate for materials. The unit also providesinformation about the three types of costing results for a material cost estimate.


• Define the most important material master views for material costing• Describe the fields relevant to costing• Describe prices in material master• Execute a single-level cost estimate for materials• Execute a multi-level unit cost estimate for materials• List the basic steps of multi-level unit costing• Define and describe the three types of costing results for a material cost

estimate

Unit ContentsLesson: Material Master .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Lesson: Unit Cost Estimates ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18


Unit 2: Material Cost Estimate without Quantity Structure TFIN20_2

Lesson: Material Master

Lesson OverviewThis lesson provides an overview of the organizational structures for Material CostEstimates. It also describes material master views, prices, and fields relevant tocosting.


• Define the most important material master views for material costing• Describe the fields relevant to costing• Describe prices in material master

Business ExampleManagement decides to include the pump that you already costed using Referenceand Simulation Costing in the production program. The Cost Of GoodsManufactured (COGM) and Cost Of Goods Sold (COGS) should be calculatedbefore you can create the final BOMs and routings. You need to study andunderstand the costing and accounting views of material master, because a materialmaster record already exists for the new pump in the SAP ERP.


TFIN20_2 Lesson: Material Master

Organizational Structures for Material Cost Estimates

Figure 6: Organizational Structures for Material Cost Estimates

Material cost estimates are saved with reference to a plant.

• Example: Products produced in more than one plant have a separate costestimate for each plant.

To value material movements in Logistics, the system accesses the costing results.The valuation area determines the organizational level at which the material isvaluated. To use material costing, it is mandatory that you establish each plant asa valuation area.



Views in the Material Master

Figure 7: Views in the Material Master

The synonyms for the term material master are material, item master, product,and assembly.

The material master is described in detail in Materials Management (MM) courses.

In costing, the material master is involved in the calculation of material costsand updating prices.

The Accounting, Costing, and MRP views are relevant to costing.

• Accounting view:

– Relevant to material valuation, material price control, and accountdetermination

• Costing view:

– Contains control parameters for material costing– Also contains characteristics required for Cost Object Controlling– The Costing view should be maintained to be able to cost a material.

• MRP view:

– Material status in PP– Scrap factors– Special procurement– Indicators: Co-product/Bulk material– Production version



Costing and Accounting Views of Material Master

Figure 8: Material Master: Fields Relevant to Costing

The material type determines whether a costing view is allowed for a material.The material type contains default values that are used when a material is created.Lot size. The lot size entered here is used as the default value for the material costestimate. The lot size can be overwritten in individual processing. It cannot beoverwritten in mass processing.

Valuation class. The valuation class controls account determination. Theconsumption account is determined, which also appears as the primary costelement in the itemization.

Origin group as subgroup of a cost element. If an origin group is entered for amaterial, the combination of origin group and cost element is updated in the COsystem. You can thus define the following:

• Overhead for specific material groups, such as input material groups• Cost components for specific raw material groups

Overhead group: Key that groups materials manufactured for the same type ofoverhead application, based on the product.



Figure 9: Material Master: Prices

Planned Prices 1, 2 and 3: These can be maintained for raw materials andpurchased parts and used to valuate materials in the cost estimate.

Tax-based and commercial prices:These prices are entered for purchased partsin inventory costing to determine values such as the lowest value. An inventorycost estimate can use these prices for valuation and then update the costing resultsfor finished and semi-finished products in these fields.

Price control: Indicator for price control according to which the inventory of amaterial is valuated. The following options are available:

• Standard price• Moving average price

A standard cost estimate can be used to update the standard price.

You can branch from the accounting and costing views to the results of standardcost estimates. These results update the standard price.



Lesson Summary

You should now be able to:• Define the most important material master views for material costing• Describe the fields relevant to costing• Describe prices in material master



Lesson: Unit Cost Estimates

Lesson OverviewThis lesson explains single-level unit costing. It also describes multi-level unitcosting and its layout. It also explains the three types of costing results for amaterial cost estimate.


• Execute a single-level cost estimate for materials• Execute a multi-level unit cost estimate for materials• List the basic steps of multi-level unit costing• Define and describe the three types of costing results for a material cost

estimate

Business ExampleThe management of your company decides to include the pump that you costedusing Reference and Simulation Costing in the production program. The CostOf Goods Manufactured (COGM) and Cost Of Goods Sold (COGS) should becalculated before you can create the final BOMs and routings. You will usematerial costing without quantity structure by incorporating the existing baseplanning object, because a material master record already exists for the new pumpin the SAP ERP. For technical reasons, engineering is debating whether or not touse a steel flywheel instead of a normal one. You need to simulate the proposedchange using multi-level unit costing.


TFIN20_2 Lesson: Unit Cost Estimates

Single-level Unit Costing

Figure 10: Single-level Unit Cost Estimate for a Material

Material costing without quantity structure is designed to cost materials withoutaccessing BOMs and/or routings. The costing results can be written to price fieldsin the material master.

If BOMs or routings do not exist, you can manually enter the items that representthe quantity structure and value them with the cost estimate.

Price selection and overhead calculation are determined automatically and arebased on the valuation variant that is assigned to the costing variant.

You can use material costing without quantity structure:

• When costing and updating prices for new materials• When you want to perform costing using non-SAP production planning data



Figure 11: Single-level Unit Costing

Enter the material and plant for which the cost estimate should be created.

Select a costing variant:

• When you select the costing variant, you establish the valuation strategyfor costing items

• Also, the costing variant proposes validity dates for the costing variant andvaluation dates for material and activity prices

• If you do not enter a lot size, the system uses the lot size from the materialmaster.

A cost estimate header is created automatically. This can be used to:

• Change the lot size• Enter various text

When you save the costing items, the overhead and process costs are calculatedautomatically. The itemization and cost component split are then available foranalysis.

After saving the costing items , the material cost estimate is updated to thedatabase.



Multi-level Unit Costing

Figure 12: Multi-level Unit Costing: Basic Scenarios

Multi-level unit costing is a highly flexible screen that allows the hierarchicalstructure editing of base planning objects and materials without bills of materialand routings. Single-level unit costing only supports editing a single base planningobject or material.

Multi-level unit costing can be used in the following scenarios:

Scenario 1: New product

• You are creating new material masters or cost estimates for new materials.• As a rule, you create the structure from top to bottom by making further

refinements.

Scenario 2: Similar product

• You want to cost a new product that is similar to an existing one. You cancopy the subordinate structure to the new product and make changes to thenew (copied) structure.

Scenario 3: Product changes

• You want to make changes to an existing product.• Copy the existing cost estimate and make changes to the copy.



Figure 13: Example: Material Cost Estimate Without Qty Struct.

Prerequisite: Material master with costing view (accounting view alsorecommended).

Selecting the costing variant:

• When you select the costing variant, you establish the valuation strategyfor costing items

• The costing variant is maintained in Customizing for material costing• You enter the costing lot size to be used as a base

A cost estimate header is created automatically. This can be used to:

• Change the lot size• Enter various text

If you drag-and-drop a different material cost estimate from the worklist, thesystem prompts you to specify if you want to insert the original cost estimateor make a copy. Subsequent changes in the copied structure do not affect theoriginal cost estimate.

Enter the missing quantity in the list screen of the unit cost estimate.

If you are going to edit an entire change package, you should revaluate the wholestructure to maintain a consistent status.

After saving, the cost estimate is updated in the database.



Figure 14: Layout of Multi-level Unit Costing

The screen for multi-level unit costing is divided into three areas:

• Costing structure

The system can simultaneously display and process a costed multi-level BOM,multiple material cost estimates (with and without quantity structure), and baseplanning objects in the costing structure. The structure enables you to quicklyedit in a complex hierarchy and provides fast overview. It also offers the sameanalytical possibilities as the costed multi-level BOM.

• Unit cost estimate or cost estimate header

For base planning objects and material cost estimates without quantity structure,the unit cost estimate list screen is displayed. You can use the methods describedin the Reference and Simulation Costing unit. You can also alternate between thecost estimate header and the list screen. After the changes are made, the costingstructure is automatically updated.

• Worklist or detail lists

The worklist is designed so that frequently-used structures and resources areavailable to the cost planner. You can drag and drop substructures and individualcosting items from the worklist to the cost estimate in the costing structure. Thisfunction also works in the reverse direction. Or, you can use this area to preparereports for analytical purposes or display error logs.

Costing ResultsCost Estimate Results: Itemization



Cost Estimate Results: Costed Multilevel

Cost Estimate Results: Cost Component Split

Figure 15: Cost Estimate Results: Itemization

Costing results can be displayed and saved as an itemization. The report caninclude the cost element assigned to each item.

The itemization provides detailed data about the resources required to producea product. The costing information for each item includes details such as thequantity, unit of measure, and value.

Examples:

• The following data is stored for a material:

– Material and text– Plant– Quantity used– Price of material

• The following data is stored for an internal activity:

– Cost center and text– Quantity used– Activity type– Price



Figure 16: Cost Estimate Results: Costed Multilevel BOM

The Costed Multilevel Bill of Material report provides a hierarchical overview ofthe value added for each assembly item.

The display of costs for each component (assemblies and input materials) in thecosted multi-level BOM is based on the structure and content of the BOM forthe costed material.

You can also display other items such as manufacturing activities and overheadcosts.

Figure 17: Cost Estimate Results: Cost Component Split



The cost component split groups cost elements in cost components. When amulti-level structure is costed, the cost component split is rolled up so that theoriginal identity of the costs from the lower levels is retained for analysis.

For each product, the cost component split provides information about:

• The value added of the material (upper level)• The costs of subordinate materials in the BOM (lower level)

The cost component split is available for material cost estimates with and withoutquantity structure.



Lesson Summary

You should now be able to:• Execute a single-level cost estimate for materials• Execute a multi-level unit cost estimate for materials• List the basic steps of multi-level unit costing• Define and describe the three types of costing results for a material cost

estimate



Unit SummaryYou should now be able to:• Define the most important material master views for material costing• Describe the fields relevant to costing• Describe prices in material master• Execute a single-level cost estimate for materials• Execute a multi-level unit cost estimate for materials• List the basic steps of multi-level unit costing• Define and describe the three types of costing results for a material cost

estimate



Test Your Knowledge

1. An inventory cost estimate can use tax-based and commercial prices forvaluation and then update costing results for finished and semi-finishedproducts in these fields.Determine whether this statement is true or false.□ True□ False

2. In the valuation class, the consumption account is determined, which alsoappears as the primary cost element in the itemization.Determine whether this statement is true or false.□ True□ False

3. Name the views relevant to costing.

4. What is the role of origin group and overhead group?

5. Costing structure enables you to quickly edit in a complex hierarchy andprovides a fast overview.Determine whether this statement is true or false.□ True□ False

6. You can drag and drop substructures and individual costing items from theworklist to the cost estimate in the costing structure.Determine whether this statement is true or false.□ True□ False



7. For base planning objects and material cost estimates without quantitystructure, the list screen is displayed.Fill in the blanks to complete the sentence.

8. If you drag and drop a different material cost estimate from theworklist, the system prompts you to specify if you want to insert the

or make a copy.Fill in the blanks to complete the sentence.

9. When can you use material costing without quantity structure?

10. What happens when you select a costing variant?

11. What is the need to cost an entire structure?

12. What is the purpose of itemization in cost estimate results?

13. On what factors does the display of costs in the costed multi-level BOMdepend?



14. What information does the cost component split provide for each product?



Answers

1. An inventory cost estimate can use tax-based and commercial prices forvaluation and then update costing results for finished and semi-finishedproducts in these fields.

Answer: True

Tax-based and commercial prices are entered for purchased parts in inventorycosting to determine values such as the lowest value.

2. In the valuation class, the consumption account is determined, which alsoappears as the primary cost element in the itemization.

Answer: True

The valuation class controls account determination.

3. Name the views relevant to costing.

Answer: The Accounting, Costing, and MRP views are relevant to costing.

4. What is the role of origin group and overhead group?

Answer: Origin group is a subgroup of a cost element. If an origin group isentered for a material, the combination of origin group and cost element isupdated in the CO system. Overhead group is the key that groups materialsmanufactured for the same type of overhead application, based on theproduct.

5. Costing structure enables you to quickly edit in a complex hierarchy andprovides a fast overview.

Answer: True

The system can simultaneously display and process a costed multi-levelBOM, multiple material cost estimates (with and without quantity structure),and base planning objects in the costing structure.

6. You can drag and drop substructures and individual costing items from theworklist to the cost estimate in the costing structure.

Answer: True

The worklist is designed so that frequently-used structures and resources areavailable to the cost planner.



7. For base planning objects and material cost estimates without quantitystructure, the unit cost estimate list screen is displayed.

Answer: unit cost estimate

8. If you drag and drop a different material cost estimate from the worklist, thesystem prompts you to specify if you want to insert the original cost estimateor make a copy.

Answer: original cost estimate

9. When can you use material costing without quantity structure?

Answer: You can use material costing without quantity structure whencosting and updating prices for new materials and when you want to performcosting using non-SAP production planning data.

10. What happens when you select a costing variant?

Answer: When you select a costing variant, you establish the valuationstrategy for costing items. Also, the costing variant proposes validity datesfor the costing variant and valuation dates for material and activity prices.If you do not enter a lot size, the system uses the lot size from the materialmaster.

11. What is the need to cost an entire structure?

Answer: The entire structure should be costed because each change requiresa completely new cost estimate.

12. What is the purpose of itemization in cost estimate results?

Answer: The itemization provides detailed data about the resources requiredto produce a product. The costing information for each item includes detailssuch as the quantity, unit of measure, and value.

13. On what factors does the display of costs in the costed multi-level BOMdepend?

Answer: The display of costs for each component (assemblies and inputmaterials) in the costed multi-level BOM is based on the structure andcontent of the BOM for the costed material.



14. What information does the cost component split provide for each product?

Answer: For each product, the cost component split provides informationon the value added of the material (upper level) and the costs of subordinatematerials in the BOM (lower level). The cost component split is available formaterial cost estimates with and without quantity structure.


Unit 3Preparing for Product Cost Planning

Unit OverviewThis is the unit that has been added to the course to deal specifically withcustomizing requirements for the cost estimate. At this time in the course, theparticipants should be familiar with the purpose and definition of the differenttopics in the unit, however, no customizing has been demonstrated until this point.

This unit describes the concept, structure and settings of costing variants. Itdescribes how the valuation variant determines the prices and costing sheet usedin a cost estimate. It also describes the cost component split and explains how tomake the required settings in customizing The unit also describes the the overheadcosting sheet and application options of Activity-Based Costing.


• Explain the purpose of the costing variant• Describe the components of the costing variant• Explain the purpose of the cost component split• Describe the views of material cost estimate results• Describe the cost component structure• Describe the purpose of the primary cost component split• Explain the concept of overhead costs• Describe the costing sheet in detail• Describe activity-based costing• Assign templates to product cost estimates

Unit ContentsLesson: Costing Variant.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Exercise 1: Control of Product Costing (1) .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43Lesson: Cost Component Split. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Exercise 2: Control of Product Costing (2) .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53Lesson: Overhead Costing Sheet .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Exercise 3: Overhead Calculation... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61


Unit 3: Preparing for Product Cost Planning TFIN20_2

Lesson: Allocating Process Costs to a Product.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68


TFIN20_2 Lesson: Costing Variant

Lesson: Costing Variant

Lesson OverviewThis lesson provides an overview of the costing variant. It explains how todescribe the components of costing variant and the purpose of costing variant.


• Explain the purpose of the costing variant• Describe the components of the costing variant

Business ExampleYour company requires to produce cost estimates for various purposes usingvarious valuation strategies and methods of indirect cost allocation, such asoverhead sheets and process costs. Your task is to determine how the costingvariant controls costing results.

Overview of Costing Variant

Figure 18: Customizing Overview

When you create a cost estimate, it is always linked to a costing variant, whichcontains all the information required to execute a material cost estimate.



You define and check costing variants in Customizing for Product Cost Planning.

In contrast to the above figure, the costing variant for Base Object Costing containsonly the parameters for the costing type and valuation variant.

Components of Costing Variant

Figure 19: Costing Variant: Costing Type

Update prices: You specify the prices that are updated in the material master withthe results of the cost estimate. Example: The standard price in the material mastercan only be updated by a costing variant with the Standard price update.

Except when updating in multiple valuation, you always use legal valuation.

Date of update: Specifies the date on which the cost estimate is saved to thedatabase.

Example: Saving with start of period: Even if you create a standard cost estimateon 02/17/2000, the cost estimate will be saved internally with the date 02/01/2000.A cost estimate that is repeated on 02/17/2000 overwrites the first on 02/17/2000.You can internally create a costing variant for a current cost estimate without thedate. A new current cost estimate automatically overwrites the previous costestimate.

Other:

• Cost portion for overhead. You specify the cost component view thatshould be the subject of overhead application (usually the cost of goodsmanufactured).

• Partner cost component split: Business unit that is part of the value-addedchain. You can define a partner on a multi-dimensional basis from thefollowing organizational units:

Plant, company code, profit center, and business area



Figure 20: Costing Variant: Valuation Variant

The valuation variant determines the prices that are used to value componentmaterials, activity types, processes, subcontracting, and external activities.

The valuation variant searches the various price sources listed for each strategy.The price sources are searched in the sequence in which they are entered in thestrategy. The price that is first located from the strategy is selected for the costestimate.

For purchased materials, assembly materials without a valid BOM and routing,or when creating cost estimates without quantity structure, the valuation variantselects a price from either the material master record or purchasing data.

For activity types and processes, the price is selected from either Cost CenterAccounting or Activity-Based Costing. You enter the planned/actual version inthe valuation variant that should be used in the costing.

The strategy to value an externally processed activity can be either the price fromthe purchasing information record or the price from the operation in the routing.The routing is available only when costing with quantity structure.

For subcontract materials, the prices are selected from purchasing data.

• The Further Valuation Methods unit describes both externally processedactivities and subcontracting.



Figure 21: Costing Variant: Date Control

In costing, date control can be used to create the quantity and value structuresbased on various dates. It specifies the following:

• For material costing with quantity structure:

– The period of validity of the cost estimate– The date on which the quantity structure is determined (quantity

structure date)– The date on which the quantity structure is valued (valuation date)

• For material costing without quantity structure:

– The period of validity of the cost estimate– The date on which costing items are valued (valuation date)

The date control determines the dates that are proposed or displayed by the systemfor costing and if these dates can be changed.

Recommendation: If you want to calculate variances in Cost Object Controllingbased on the cost estimate, ensure that the cost estimate is valid in the periodsfor which variances should be calculated. Similarly, if you want to value scrapor work-in-process with the results of the standard cost estimate, ensure that thecost estimate is valid in the periods pertaining to the variances/work-in-processcalculation.



Figure 22: Costing Variant: Further Settings

Quantity structure: You specify if the lot size should be passed on. This isnecessary only for cost estimates with a quantity structure and in sales ordercosting.

Additive costs: Material costs that you can manually enter in a unit cost estimateand then add to an (automatic) cost estimate with quantity structure.

Update: Specifies if saving is permitted for the costing variant. If saving ispermitted, the system always saves a cost component split. It is recommended thatyou also save the itemization and the error log. Without the itemization, youcannot display costed multi-level BOMs or itemization reports.

Assignments: You can maintain the following settings and assignments of thecosting variant:

• Cost component structure• Costing version• If the cost component split is activated in the controlling area currency• If you require cross-company costing

Other: Error management. This area is described in the Appendix.



Purpose of the Costing Variant

Figure 23: Purpose of the Costing Variant

Depending on the purpose of the cost estimate, you can create various results forthe same material by making multiple costing variants with various settings forcosting type, valuation variant, dates, and quantity structure determination.

Examples:

• To make technical changes to the quantity structure, you can create a modifiedstandard cost estimate and compare it with the standard cost estimate.

• If you want to value a technical change with the current prices, you cancreate a current cost estimate.

Purpose of various cost estimates:

• Standard cost estimate: Valuation of the planned quantity structure withplanned prices. Calculation of standard prices for the valuation of S-pricematerials.

• Modified standard cost estimate: Valuation of current quantity structurewith planned prices. Costing of material during the fiscal year to analyzecost developments.

• Current cost estimate: Valuation of current quantity structure withcurrent prices. Costing of materials during the fiscal year to analyze costdevelopments.

• Inventory cost estimate: Valuation of actual quantity structure with tax-basedand commercial prices. Establishment of valuation approaches for inventoryvaluation.



Exercise 1: Control of Product Costing (1)

Exercise ObjectivesAfter completing this exercise, you will be able to:• Review important settings in the IMG for the control of product cost planning• Define the costing type and valuation variant for a costing variant

Business ExampleYour company has a requirement to produce cost estimates for various purposesusing various valuation strategies and costing types. You need to determine howthe configuration of the costing variant controls this. You are also responsible forreviewing the configuration of the cost component split.

Task:1. Call up the Implementation Guide for Product Cost Controlling.

2. Go to Product Costing with Quantity Structure and display costing variantPPC1.

3. Which costing type is assigned to this costing variant?

Costing type:

4. Which prices in the material master can be updated by a cost estimate thatuses this costing type?

5. Compare this to the costing types for the tax inventory (costing type 10) andfor a modified cost estimate (costing type 12). Which prices in the materialmaster can be updated by a cost estimate that uses these costing types?

6. What are the differences in the date control parameters that are referenced incosting variants PPC1 and PPC2? Costing variant PPC1 uses date controlPC01, costing variant PPC2 uses date control PC05.

7. Why may you want different date control parameters for different types ofcost estimates?



Solution 1: Control of Product Costing (1)Task:1. Call up the Implementation Guide for Product Cost Controlling.

a) Tools → Customizing → IMG → Execute Project (SPRO)

Select SAP Reference IMG

SAP Customizing Implementation Guide → Controlling → ProductCost Controlling

2. Go to Product Costing with Quantity Structure and display costing variantPPC1.

a) Product Cost Planning → Material Cost Estimate with QuantityStructure → Define Costing Variants

Select “PPC1”. Goto → Details

3. Which costing type is assigned to this costing variant?

Costing type:

a) Costing type 01 Standard cost est. (mat.)

4. Which prices in the material master can be updated by a cost estimate thatuses this costing type?

a) Select the Costing type details box in the Costing Variant. The firstUpdate tab identifies the Price Update in the Material Master. TheStandard price is selected for this costing type. Return to the IMGguide menu by selecting back one screen twice.

Continued on next page



5. Compare this to the costing types for the tax inventory (costing type 10) andfor a modified cost estimate (costing type 12). Which prices in the materialmaster can be updated by a cost estimate that uses these costing types?

a) Within the IMG

Controlling → Product Cost Controlling → Product Cost Planning→Material Cost Estimate with Quantity Structure → Costing Variant:Components → Define Costing Types

Select Costing type 10 and click the details button.

Costing type 10 allows update of the Tax-based price.

Go back to the costing type overview.

Deselect Costing type 10.

Select Costing type 12 and click the details button.

Costing type 12 does not allow the update of any material masterprices.

6. What are the differences in the date control parameters that are referenced incosting variants PPC1 and PPC2? Costing variant PPC1 uses date controlPC01, costing variant PPC2 uses date control PC05.

a) Within the IMG

Controlling → Product Cost Controlling → Product Cost Planning→Material Cost Estimate with Quantity Structure → Costing Variant:Components → Define Date Control

Select Date Control PC01 in one session and click the details button.

Deselect Date Control PC01

Select Date Control PC05 in the other session and click the detailsbutton.

The date control parameters have different default values.

7. Why may you want different date control parameters for different types ofcost estimates?

a) When creating a mid-year product cost estimate we may want tohave the most current BOM and routing as well as the most currentvaluation for our materials and activities. The effective dates of ourestimate control when we can use this cost estimate.



Lesson Summary

You should now be able to:• Explain the purpose of the costing variant• Describe the components of the costing variant


TFIN20_2 Lesson: Cost Component Split

Lesson: Cost Component Split

Lesson OverviewThis lesson explains the purpose of the cost component split. It describes theviews of material cost estimate results and the cost component structure. It alsoexplains the purpose of the primary cost component split.


• Explain the purpose of the cost component split• Describe the views of material cost estimate results• Describe the cost component structure• Describe the purpose of the primary cost component split

Business ExampleYour company requires cost estimates for various purposes using various valuationstrategies and methods of indirect cost allocation, such as overhead sheets andprocess costs.

You need to also maintain the cost component split. You determined how thecosting variant controls costing results.

Purpose of Cost Component Split

Figure 24: Purpose of Cost Component Split



The purpose of a cost rollup is to ensure that the cost of goods manufactured(material and production costs) of all materials in a multi-level BOM are includedin the cost estimate of the higher-level material. This is achieved by assigning thecosts in a cost estimate to cost components.

Cost components are established by grouping together cost elements. Thisprovides transparency to the type of costs, such as material, activity types, oroverhead that comprise a product.

When a multi-level BOM is costed, the costs are rolled up. The cost componentsof the cost component split are passed up in the hierarchy to the cost estimateof the higher-level material.

For each material, the cost component split provides information about:

• The value added of the material (upper level)• The costs of the subordinate materials (lower level)

A maximum of 40 cost fields can be rolled up in a cost component split.

A cost component can carry fixed and variable costs.

Views of Material Cost Estimate Results

Figure 25: Views of Material Cost Estimate Results

A cost component view consists of a combination of cost components based onvarious characteristics.

It creates a filter in Information System reports so that only data assigned to theview is displayed.

In the cost estimate header, you can display up to 5 views as the initial costingresult. You assign these views in the Settings menu in the cost estimate header.



Figure 26: Example: Cost Component Split by View

Views are available for material costing results in the following forms:

• Cost component split• Itemization• Costed multilevel BOM

Cost Component Structure

Figure 27: Customizing: Cost Component Structure



Cost components divide costing results in groups of material costs, machine costs,personnel costs, production costs, overhead, and external activities.

Cost elements are assigned to cost components in the cost component structure.

For each cost component, you determine the following:

• If the costs are rolled up (if they appear in higher-level assemblies)• If costs are included in the standard price or inventory price of the material• The views of the cost estimate or information system in which the costs

appear• The cost component group to which the cost component is assigned• If it is relevant to inventory and cost of goods manufactured• If it should contain a total amount or if there should be a fixed or variable split

A cost component structure is assigned to each costing variant.

You can also assign various cost component structures for each company codeand plant.

For standard cost estimates (costing type 01), only one cost component structure ispermitted for each company code. Similarly, a complete cost component structureshould be used for cross-company code cost estimates.

Purpose of Primary Cost Component Split

Figure 28: Purpose of Primary Cost Component Split



There are several requirements to create primary cost component splits, such as:

• You assigned a cost component structure in the CO version in cost centerand process cost planning.

• You determined the prices through planned price iteration.• You defined a cost component structure for the primary cost component

split of Product Cost Planning.• You defined a transfer structure for the transfer of cost components in cost

centers and Activity-Based Costing to the cost components of the primarycost component split in Product Cost Planning.

Example: There are three cost components in Cost Center Accounting for wagegroups X, Y, and Z. In Product Cost Planning, only the cost component for thewages is required. The transfer structure enables you to transfer cost componentsX, Y, and Z to wages.

When you create a material cost estimate, you can decide if the system shouldcreate a cost component split only for the cost of goods manufactured, only aprimary cost component split, or if both splits should be created simultaneously.You make this choice when you assign the costing variants and enter the costcomponent structures for the main and auxiliary cost component splits.



Exercise 2: Control of Product Costing (2)

Exercise ObjectivesAfter completing this exercise, you will be able to:• Review important settings in the IMG for the control of product cost planning• Configure the cost component layout for product cost planning

Business ExampleYour company requires cost estimates for various purposes using various valuationstrategies and costing types. You need to determine how the configuration ofthe costing variant controls this. Also, you are responsible for reviewing theconfiguration of the cost component split.

Task 1:1. Go to the details screen of costing variant PPC1 and use the function Print

Preview to display all the control parameters for this costing variant:

2. From the print preview, determine which cost component layout is assignedto this costing variant for the main cost component split? (In plant 1000)?

Cost component layout:

3. Which cost elements are assigned to cost component 10 of this costcomponent layout (chart of accounts INT)?

Cost elements:

Task 2:1. Exit the display of the costing variant and call up the documentation for

defining the cost components.

2. Look at the documentation for Defining Cost Components. What is a costcomponent?

3. From the documentation, determine how many cost components can becreated that contain full costs?



Solution 2: Control of Product Costing (2)Task 1:1. Go to the details screen of costing variant PPC1 and use the function Print

Preview to display all the control parameters for this costing variant:

a) Within the IMG

Controlling → Product Cost Controlling → Product Cost Planning→ Material Cost Estimate with Quantity Structure → Define CostingVariants

Select costing variant PPC1 → details button

Click on the Print Preview icon at the right of the costing variantdescription.

2. From the print preview, determine which cost component layout is assignedto this costing variant for the main cost component split? (In plant 1000)?

Cost component layout:

a) From the print preview, determine which cost component layout isassigned to this costing variant for the main cost component split? (Inplant 1000)?

Scroll to the Cost component structure assignments.

Cost component layout “01 Product Costing” is assigned to allplants by using the wildcard character “++++”.

3. Which cost elements are assigned to cost component 10 of this costcomponent layout (chart of accounts INT)?

Cost elements:

a)

Cost elementfrom

Cost elementto

Origin Cost Component

400000 400010 010 Raw Materials

400000 400010 PB00 010 Raw Materials




Task 2:1. Exit the display of the costing variant and call up the documentation for

defining the cost components.

a) Within the IMG

Controlling → Product Cost Controlling → Product Cost Planning→ Basic Settings for Material Costing

Double-click on the documentation icon for “Define CostComponent Structure”

2. Look at the documentation for Defining Cost Components. What is a costcomponent?

a) Grouping of cost elements, such as the costs of a material, anactivity type, or a business process, according to the requirementsfor material valuation and profitability analysis.

Hint: Use the hypertext link in the online documentation. Youshould see hypertext links in the documentation denoted by adifferent color font for the word(s) that have a link.

3. From the documentation, determine how many cost components can becreated that contain full costs?

a) The cost components are listed in a cost component structure thatcan contain up to 40 cost components (cost fields)

You can create up to 40 cost components that contain variable costs.

For cost components that contain full costs, the system createsa second cost field internally for fixed costs. You can create amaximum of 20 cost components for full costs.



Lesson Summary

You should now be able to:• Explain the purpose of the cost component split• Describe the views of material cost estimate results• Describe the cost component structure• Describe the purpose of the primary cost component split


TFIN20_2 Lesson: Overhead Costing Sheet

Lesson: Overhead Costing Sheet

Lesson OverviewThis lesson describes the concept of overhead costs. It also describes the costingsheet in detail.


• Explain the concept of overhead costs• Describe the costing sheet in detail

Business ExampleThe enterprise is debating how to apply overhead to their product cost. You havebeen asked to review the structure of a costing sheet and customizing settings thatneed to be made for this method of overhead application. You will do this bydetermining the elements of a costing sheet, the assignment of the costing sheet to avaluation variant, creating a cost estimate, and reviewing the overhead calculation.

Overhead Costs

Figure 29: Overhead Costs (1)



Overhead costing is one of the methods to allocate indirect costs to cost estimates.This involves applying a percentage or quantity-based fixed amount to a specifiedcost base. To determine overhead, you use the direct costs that were posted tothe order. In the manufacturing industry, for example, these are usually laborand material costs.

The rules to apply overhead are summarized in the overhead costing sheet.

Costing Sheet in Detail

Figure 30: Costing Sheet in Detail

Calculation base:

You can combine cost elements in base rows. You can also split cost elementsby origin such as raw materials only with origin XYZ. Also, you can divide thecalculation base as fixed and variable costs.

Overhead:

You can calculate overhead on the lines of the calculation base. You can define theoverhead percentage so that it differentiates among planned costs, actual costs,and area of validity based on specific fields. You can also allocate quantity-basedoverhead such as USD 100 for every 30 pieces.

Credit:

You assign a credit key to each overhead line in the costing sheet.



The amount of the overhead is credited to a cost center, business process, or orderunder a secondary cost element. The cost element is important in Product CostPlanning because it controls overhead costs. You can specify the percentage ofthe overhead that is fixed costs.



Exercise 3: Overhead Calculation

Exercise ObjectivesAfter completing this exercise, you will be able to:• Understand the definition of the costing sheet and customizing requirements

to assign a costing sheet to a valuation variant• Review the calculation of the overhead surcharge during cost estimate

creation

Business ExampleThe enterprise is debating how to apply overhead to their product cost. You havebeen asked to review the structure of a costing sheet and customizing settings thatneed to be made for this method of overhead application. You will do this bydetermining the elements of a costing sheet, the assignment of the costing sheet to avaluation variant, creating a cost estimate, and reviewing the overhead calculation.

Task 1:The costing sheet is automatically determined during the creation of a costestimate. Using the IMG, determine the costing sheet that is selected for a costestimate created using the costing variant PPC1.

1. Determine the valuation variant assigned to costing variant PPC1.

2. Determine the costing sheet assigned to this valuation variant.

Costing sheet:

Task 2:1. The costing sheet consists of the calculation base, the overhead percentage,

and the receiver of the overhead credit. The base can be defined by costelement, and if necessary, subdivided by origin. From the IMG, determinethe following for the costing sheet COGS, controlling area 1000.

2. What is the cost element range of the calculation base for the materialoverhead?

3. What is the material overhead surcharge rate for controlling area 1000,overhead type 1, OH key SAP10?

4. In order to apply different overhead rates based on the product beingproduced, the overhead key can be assigned to an overhead group for amaterial. Where is the overhead group specified for a material?




5. What cost element and cost center are specified to receive the credit for thecalculated material overhead?

6. What is the surcharge rate for the administrative overhead for controllingarea 1000?

7. What cost element and cost center are specified to receive the credit for thecalculated administrative overhead?

8. Using cost component layout 01, chart of accounts INT, determine what costcomponent group the cost element for administrative overhead assigned?

Task 3:

1. Create a new cost estimate for material L-40C, plant 1200, and determinethe overhead costs that have been applied via the costing sheet. Use costingvariant PPC1, and accept the default costing dates. (Since all participants arecosting the same material, you may receive messages that the materials areblocked for costing. Ignore this message and proceed.)

2. From the valuation data, determine what costing sheet was determined bythe valuation variant.

3. Go to the itemization report for the cost of good sold view. What is the valueof the calculation base for the material overhead surcharge?

4. What is the calculated value of the material overhead (surcharge)?

5. What is the calculated value of the sales and administrative overhead? Arethese overhead charges included in the cost of goods manufactured? How isthis controlled?



Solution 3: Overhead CalculationTask 1:The costing sheet is automatically determined during the creation of a costestimate. Using the IMG, determine the costing sheet that is selected for a costestimate created using the costing variant PPC1.

1. Determine the valuation variant assigned to costing variant PPC1.



SAP Customizing Implementation Guide → Controlling → ProductCost Controlling → Product Cost Planning →Material Cost Estimatewith Quantity Structure → Define Costing Variants

Select the detail screen for Costing Variant PPC1

Valuation variant: 001, Planned valuation-mat

2. Determine the costing sheet assigned to this valuation variant.

Costing sheet:

a) From the costing variant detail screen, click the Valuation variantbutton. Select the overhead tab.

Costing sheet for Finished and Semifinished Goods: COGS, Cost ofGoods Sold

Costing sheet for Material Components: COGS, Cost of Goods Sold

Task 2:1. The costing sheet consists of the calculation base, the overhead percentage,

and the receiver of the overhead credit. The base can be defined by costelement, and if necessary, subdivided by origin. From the IMG, determinethe following for the costing sheet COGS, controlling area 1000.

a) Tools → Customizing → IMG → Execute Project


SAP Customizing Implementation Guide → Controlling → ProductCost Controlling → Product Cost Planning → Basic Settings forMaterial Costing → Overhead → Define Costing Sheets




2. What is the cost element range of the calculation base for the materialoverhead?

a) Select costing sheet COGS, then select Costing sheet rows fromthe dialog structure. Select the row for the line containing BaseB100, and select Base from the dialog structure. Enter Controllingarea 1000.

Cost element range 400000 to 410000

Depending on the training system, cost element 890000 may beincluded.

3. What is the material overhead surcharge rate for controlling area 1000,overhead type 1, OH key SAP10?

a) Return to the Costing Sheet Rows: Overview, and select the linecontaining Overhead key C010. Select Overhead rate from thedialog structure.

Overhead rate: 10%

4. In order to apply different overhead rates based on the product beingproduced, the overhead key can be assigned to an overhead group for amaterial. Where is the overhead group specified for a material?

a) The overhead group is assigned in the costing view of the materialmaster record.

5. What cost element and cost center are specified to receive the credit for thecalculated material overhead?

a) Return to the Costing Sheet Rows: Overview, and select the linecontaining the Credit key E00. Select Credit from the dialogstructure. Enter Controlling area 1000.

Cost element: 655100

Cost center: 4130

6. What is the surcharge rate for the administrative overhead for controllingarea 1000?

a) Return to the Costing Sheet Rows: Overview, and select the linecontaining the Overhead key A300. Select Overhead rate fromthe dialog structure.

Surcharge rate: 20%




7. What cost element and cost center are specified to receive the credit for thecalculated administrative overhead?

a) Return to the Costing Sheet Rows: Overview, and select the linecontaining the Credit key E03. Select Credit from the dialogstructure. Enter Controlling area 1000.

Cost element: 655300

Cost center: 4130

8. Using cost component layout 01, chart of accounts INT, determine what costcomponent group the cost element for administrative overhead assigned?



SAP Customizing Implementation Guide → Controlling → ProductCost Controlling → Product Cost Planning → Basic Settings forMaterial Costing → Define Cost Component Structure

Select Cost Component Structure 01, then choose Assignment: CostComponent – Cost Element Interval

For Cost Component Structure 01, Chart of Accounts INT, costelement 655300 is assigned to cost component group: 100 AdminOverhead

Task 3:

1. Create a new cost estimate for material L-40C, plant 1200, and determinethe overhead costs that have been applied via the costing sheet. Use costingvariant PPC1, and accept the default costing dates. (Since all participants arecosting the same material, you may receive messages that the materials areblocked for costing. Ignore this message and proceed.)

a) Accounting → Controlling → Product Cost Controlling → ProductCost Planning → Material Costing → Cost Estimate with QuantityStructure → Create (CK11N)

Enter material L-40C

Plant 1200

Enter Costing Variant PPC1

Select enter

Accept the default costing dates

Press Enter.




2. From the valuation data, determine what costing sheet was determined bythe valuation variant.

a) The costing sheet is displayed on the Valuation tab.

Costing sheet:COGS

3. Go to the itemization report for the cost of good sold view. What is the valueof the calculation base for the material overhead surcharge?

a) On the Costs tab, change the cost component view to the cost ofgoods sold.

Then select itemization

To group the costs by cost element, choose Layout Settings → SelectLayout icon from the itemization report toolbar. Choose layout1SAP09 Cost Elements (Grouped)

The calculation base is listed for cost element range 400000 to410000.

4. What is the calculated value of the material overhead (surcharge)?

a) Material overhead: 10 % of the calculation base, listed under costelement 655100.

5. What is the calculated value of the sales and administrative overhead? Arethese overhead charges included in the cost of goods manufactured? How isthis controlled?

a) Admin overhead: displayed by cost element 655300

Sales overhead: displayed by cost element 655400

Included in COGM: No,Why: Based on the configuration of costcomponent layout 01, the cost components 100 and 110 do nothave the COGM indicator selected. The cost component view forCOGM includes only those cost components with the COGMindicator selected. This prevents them from being included in theCOGM total. The indicator for the sales and administration isselected for the sales and administration cost components.

To verify this, return to the Costs screen, select the COGM view,and select the itemization report. If necessary, change the reportdisplay to the cost element report by choosing layout 1SAP09 CostElements (Grouped). Both the Sales and Administrative overheadcharges are listed with the value 0.



Lesson Summary

You should now be able to:• Explain the concept of overhead costs• Describe the costing sheet in detail



Lesson: Allocating Process Costs to a Product

Lesson OverviewThis lesson describes activity based costing and explains how to work withtemplates.


• Describe activity-based costing• Assign templates to product cost estimates

Business ExampleYour company requires cost estimates to be produced for various purposes,using various valuation strategies and methods of indirect cost allocation, suchas overhead sheets and process costs.

The company entrusted you with the task of determining if the company shoulduse activity-based costing and origin-based allocation of overhead blocks toallocating process costs to its products or if this should be done at a later stage.

Activity-Based Costing

Figure 31: Process Costs and Product Cost Planning

This section briefly explains how to use Activity-Based Costing and the technicalaspects of template allocation in Product Cost Planning.


TFIN20_2 Lesson: Allocating Process Costs to a Product

The objective of this section is to help you decide if your company should useActivity-Based Costing and the origin-based allocation of overhead blocks orif this should be done at a later stage.

The Activity-Based Costing component is illustrated by simple examples withideas about using the template technology.

Course AC420 Activity-Based Costing describes in detail the role ofActivity-Based Costing in cost accounting.

The course also explains the use, application, and customizing of templateallocation.

Figure 32: Activities and Aims

Overhead transparency:

• Use of resources by processes• Quantity-based allocation of overhead

Increased efficiency:

• Use of capacity of indirect areas• Constant monitoring of internal processes• Interface management on a process-oriented basis

Accurate costing:

• Origin-based allocation of internal activities• Examples: Complexity costs, costs owing to product and process changes



Figure 33: Cost Parts

Material costing with quantity structure can allocate cost parts that are notcontained in the BOM or routing.

The two main areas are:

• Identifying overhead blocks and their costs.• Identifying causal origin-based relationships with products that use these

overhead blocks.

Example:

• Despite IT support, work scheduling costs in a company consume increasingamounts of production, because of the following reasons:

– Consistently small production lot sizes– Dwindling periods between order receipt and delivery

• The costs for coordination of production are clearly represented by the wagesof the work scheduler and the intensive use of IT resources.

• The work scheduling activity can be measured by the amount of lotsproduced. In the following year, approximately 10,000 separate orders aredue for production.



Figure 34: Business Process

The business process is one of the master data objects used in Activity-BasedCosting.

It is a measurement for output.

Like cost centers, business processes can be planned on cost accounting lines.

The system can calculate a price for the output quantity of a business process.To determine the price, the system uses an allocation cost element stored in thebusiness process master.

Example: Business process planning

• For the business process Work scheduling, the number of processedproduction orders is established as the output measurement. 10,000 ordersare anticipated.

• The following are required to process these orders:

– 86,400 CPU minutes by the IT cost center

(20 work days * 12 months * approx. 6 h * 60 Min)

– An estimated 100 hours of IT support– 4 work schedulers = 4 employees * 20 days * 12 months = 960 days

• The total planned costs amount to X.• The price for coordinating the work scheduling is X / 10,000 per order.



Working with the Template

Figure 35: Creating the Template

Templates are centrally maintained tabular frameworks that are highly flexibleand, through their use of formulas, dynamic.

What is to be allocated? The Object column can contain business processes, costcenters/activity types, templates, or object formulas.

• Example - object formula: There are two plants:plant 1 and plant 2, eachwith local work scheduling. You created two business processes, WS-1 forplant 1 and WS-2 for plant 2. You want the system to ensure that productsin plant 1 are allocated automatically to WS-1 and products in plant 2 areallocated automatically to WS-2. The object formula can be: “If productfrom plant=1 then WS-1; if product from plant=2 then WS-2”.

• Template in template: This function can be used for an overall view andreuse the rules.

How many should be allocated? The Quantity column is subdivided as plan andactual quantities, because the planned and actual quantities to be allocated havedifferent sources. (For example, the planned quantity can be the lot size and theactual quantity can be the true quantity.)



Under what conditions should the allocation take place? The Activationcolumn is subdivided as plan and actual quantities.

• Example: The business process Work scheduling should be allocated only ifproducts are semi-finished and finished. This applies to both plan and actualquantities. The activation formula can be: Material type = HALB or FERT.

Figure 36: Formulas in the Template

The use of formulas in templates provides a high degree of flexibility andefficiency in representing origin-based rules. These enable you to make decisionson allocation quantities and if allocation should take place at all.

The standard system contains functions that assign environments to templates.The environment of a template supplies the system with information relevantto cost drivers. An environment basically provides only functions that areapplicable in the context selected. For example, the standard SAP ERP containsenvironments for the following:

• Production, Product Cost by Period, Sales orders, and Reference andSimulation Costing.

Functions and enhanceability: The standard functions are arranged in functiontrees and contain short descriptions. The template is designed so that it canbe enhanced by the user. For example, you can create user-specific functionscentrally and make them available in the environments.

Consequently, you can access external and customer-specific structures andadditional master data fields and use them in object, quantity, or activationformulas. The technical process of creating customer-specific functions is usuallyhandled by IT departments, because it requires programming knowledge.



The templates and formulas are designed to be maintained centrally by trainedpersonnel for automatic use in cost accounting throughout the company.

Figure 37: Assignment of Template

You make settings to assign the costing sheet/overhead key to the template inCustomizing.

The overhead key is always assigned through the master data:

• Material master → Overhead group → Overhead key• Base planning object, master record → overhead key

You can use the overhead key to specify if the system finds one or more templates.

Explanation facilities: When you execute a material cost estimate, you candisplay the system's interpretation of the template “rules” for the material with thevalues with which the formulas were called or returned.

When you are in the display mode, you can go to only one of the templates found.

Recommendation:

Follow the formula explanation properly when you create the template. Thisensures that the allocation rules are correctly converted to the template formulalanguage.



Lesson Summary

You should now be able to:• Describe activity-based costing• Assign templates to product cost estimates



Unit SummaryYou should now be able to:• Explain the purpose of the costing variant• Describe the components of the costing variant• Explain the purpose of the cost component split• Describe the views of material cost estimate results• Describe the cost component structure• Describe the purpose of the primary cost component split• Explain the concept of overhead costs• Describe the costing sheet in detail• Describe activity-based costing• Assign templates to product cost estimates



Test Your Knowledge

1. Costing variants are defined and checked in customizing for.


2. In costing, date control can be used to determine the quantity andbased on various dates.


3. When a multi-level BOM is costed, the costs are .Fill in the blanks to complete the sentence.

4. What are the forms in which the views for material costing results areavailable?

5. For standard cost estimates, multiple cost component structures are permittedfor each company code.Determine whether this statement is true or false.□ True□ False

6. Determining prices through planned price iteration is not a requirement tocreate primary cost component splits.Determine whether this statement is true or false.□ True□ False

7. To determine overhead, you use the that were postedto the order.Fill in the blanks to complete the sentence.



8. Why is the cost element important for overhead allocation in product costplanning?

9. Material costing with quantity structure can allocate cost parts that are notcontained in the BOM or routing.Determine whether this statement is true or false.□ True□ False

10. The standard system contains functions that assignto templates.




Answers

1. Costing variants are defined and checked in customizing for product costplanning.

Answer: product cost planning

2. In costing, date control can be used to determine the quantity and valuestructures based on various dates.

Answer: value structures

3. When a multi-level BOM is costed, the costs are rolled up.

Answer: rolled up

4. What are the forms in which the views for material costing results areavailable?

Answer: The views for material costing results are available in the followingforms: Cost component split, Itemization, and Costed multi-level BOM

5. For standard cost estimates, multiple cost component structures are permittedfor each company code.

Answer: False

For standard cost estimates (costing type 01), only one cost componentstructure is permitted for each company code.

6. Determining prices through planned price iteration is not a requirement tocreate primary cost component splits.

Answer: False

Determining prices through planned price iteration is one of the requirementsto create primary cost component splits.

7. To determine overhead, you use the direct costs that were posted to the order.

Answer: direct costs



8. Why is the cost element important for overhead allocation in product costplanning?

Answer: The cost element is important in Product Cost Planning becauseit controls overhead costs.

9. Material costing with quantity structure can allocate cost parts that are notcontained in the BOM or routing.

Answer: True

The template can be used to allocate cost parts that are not contained inthe BOM or routing.

10. The standard system contains functions that assign environments totemplates.

Answer: environments


Unit 4Material Cost Estimate with Quantity

Structure

Unit OverviewThis unit will focus on the integration of product costing with logistics masterdata. You will analyze the results of material cost estimate with quantity structure,and learn how to update prices in the material master record, to include thestandard cost.


• Analyze the results of a material cost estimate with quantity structure• Use the BOM to determine the material costs• Use Routing and work centers to determine production costs• Link work centers to cost centers to valuate production costs• Describe the required entries in the Logistics master data• Create a material cost estimate with quantity structure• Analyze the results of a material cost estimate with quantity structure• Update prices in the material master• Use price control techniques in material valuation• Use the functions of material costing with quantity structure efficiently

Unit ContentsLesson: Basics of Material Costing with Quantity Structure ... . . . . . . . . . . . . 82

Exercise 4: Displaying a Material Cost Estimate ... . . . . . . . . . . . . . . . . . . . . . 99Lesson: Material Cost Estimate... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .110

Exercise 5: Creating a Material Cost Estimate ... . . . . . . . . . . . . . . . . . . . . . .115Lesson: Prices in Material Master .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .126

Exercise 6: Price Update ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .133


Unit 4: Material Cost Estimate with Quantity Structure TFIN20_2

Lesson: Basics of Material Costing with QuantityStructure

Lesson OverviewThis lesson will help you in analyzing the results of a material cost estimatewith quantity structure. The lesson provides detailed information regarding thelogistics master data which will help you use the BOM, routing, and work centersto determine the material and production costs.


• Analyze the results of a material cost estimate with quantity structure• Use the BOM to determine the material costs• Use Routing and work centers to determine production costs• Link work centers to cost centers to valuate production costs• Describe the required entries in the Logistics master data

Business ExampleAs the cost planner for your company, your task is to check the latest cost estimatefor a pump, which is currently being produced in a repetitive manufacturingprocess. The manufacturing engineer responsible for this material requiresconfirmation that the costs are accurate because his supervisor wants to comparethe costs of manufacturing this material internally against buying the pump froma vendor, either as a complete unit or in assemblies.


TFIN20_2 Lesson: Basics of Material Costing with Quantity Structure

Overview of Material Costing

Figure 38: Overview

The results of a material cost estimate with quantity structure do not differ fromthose without a quantity structure; they are identical from a costing point of view:

• Cost component split• Itemization• Costed multilevel BOM

This means that the valuation principles outlined in earlier units also apply here.

It is only the method by which costing results are obtained that differs.

Material costing with quantity structure can determine the product structure andproduction plans as entered in Logistics, and convert them to structures of theitemization and cost component split.

This explains the emphasis on describing the logistical data.

In addition, Activity-Based Costing is briefly covered.

Finally, this unit describes the price update process after the execution of astandard cost estimate.



BOM

Figure 39: BOM

The bill of material (BOM) is a directory for an object and its constituent parts,containing information such as the name, reference number, quantity and unit ofmeasure.

BOMs are used in:

• Material Requirements Planning for procuring parts• production for staging parts• costing for calculating material costs

The procedures for maintaining the basic data (BOM and routing) are described incourse PLM114.



Figure 40: BOM: Example

Costing levels are automatically determined by the system when you create acost estimate.

Assigning materials to costing levels ensures that costing is performed in thecorrect sequence: raw materials and purchased parts, followed by semi-finishedproducts, followed by finished products.

Figure 41: BOM: Header

The BOM header contains information that applies to all the items in the BOM.

The BOM status must be active for costing to enable the BOM to be read for acost estimate.



The above figure lists the fields in the BOM header that are relevant to costing.

BOM usage: Examples for BOM usage: BOMs used exclusively for engineeringor costing purposes.

BOM status: If complex changes are made to a BOM, you can use the BOMstatus to control when the BOM is used, such as for a cost estimate.

Area of validity: A BOM can be defined as valid for only a limited range of lotsizes, such as 1 to 1,000 units. You can then create a different BOM for lot sizesexceeding 1,000 units. Therefore, only one BOM can be used for the definedcosting lot size.

Alternative BOM: Alternative BOMs can describe different product structuresthat create a product with the same properties. For example, one alternative usessheet metal A, while the other alternative uses sheet metal B.

Figure 42: BOM: Item

Item category:

• L = stock item, valuation in accordance with material valuation strategy orseparate cost estimate

• N = non-stock item (see next figure)• R = variable-size item, valuation in accordance with material valuation

strategy or separate cost estimate

Fixed quantity indicator: This indicates whether the quantity entered is dependenton the lot size. It applies mainly to unavoidable material loss at the start of theproduction process.

Planned scrap: This topic is covered in detail in the unit Further ValuationMethods.



Relevancy to costing indicator: If this indicator is not selected, the system ignoresthe BOM item in the material cost estimate. For standard cost estimates, modifiedstandard cost estimates, and current cost estimates, the only decision to be madeis whether or not the item will be costed (“X”or “ ”). For inventory costing, arelevancy to costing indicator can be entered here that has a devaluation factorin Customizing. This enables you to devaluate BOM items, such as packagingmaterials, on a flat-rate basis for inventory or commercial purposes.

The settings in the BOM usage and BOM item categories enable you to specifywhether this field contains a default value and whether this value can be changedwhen the BOM is maintained.

Bulk material: Bulk material is usually posted as consumption at production costcenters as soon as it is procured. Therefore, it is not included in the cost estimatein the standard system. A user exit is available for costing bulk materials.

Figure 43: BOM: Nonstock Materials

Nonstock materials are materials that are not kept in inventory. They are alwaysprocured externally and assigned directly to the order.

Nonstock materials have either no material master or are maintained with anonstock material master for the entry tool.

• For nonstock materials without a material master, data that is relevant tocosting (such as prices) is entered directly in the BOM item (purchasing data).

• For nonstock materials with a material master, no prices can be maintainedand materials are valuated in accordance with the strategy specified in thecosting variant. The price shown in the BOM need not be the same as theprice in the cost estimate selected in accordance with the valuation strategy.



Routing and Work Center

Figure 44: Routing

Production costs are determined through the routing, the work centers at which theoperations are performed, the cost centers, and the relevant activity types.

A routing consists of one or more operations.

Each operation contains information about the work center, production resources,and tools, material assignments, operation texts, and standard values (how long,how much).

Rate routings and recipes can be used for repetitive manufacturing and processmanufacturing.

Figure 45: Work Center



Work centers are used in plans (routings, networks, inspection plans, maintenancetask lists, and rough-cut planning profiles).

Machine group and capacity planner group are synonyms for work center.

Work centers are defined with reference to a plant.

Work centers are assigned to cost centers.

Figure 46: Use of Work Center and Routing

The routing/work center can be adapted to these areas because it is used as basicdata by many applications.

Figure 47: Fields: Work Center



The standard value key enables you to define up to six standard values for anoperation. The system assigns a parameter key to the standard values of theoperation and the work in the network activity. This parameter key specifies thefollowing:

• Keyword appearing with the standard value on the screen, such as setup,machine, personnel, teardown, and so on.

• Dimension (time, quantity, volume, and so on) in which the standard valuesmust be maintained.

• At the same time, the parameter key represents the names of the formulaparameters. You can use the formula parameters to represent the standardvalues in a formula to determine the following: execution time, capacityrequirements, and costs.

The control key specifies the business functions you want to execute with anoperation:

• Scheduling• Capacity planning• Costing: This ensures that the operation is included in costing.• Confirmation: Here you specify whether and how the operation is confirmed.• External processing: Here you specify whether the operation is processed

internally, externally, or both.

The performance efficiency rate is the ratio of target duration time to actual timeattained. The standard times used by capacity planning and costing are modifiedby this rate.

Figure 48: Routing: Header

Material – plan assignment: A routing can contain multiple materials involvedin the same production process.



You use a task list usage to assign routings to various work areas. This way, youcan create several routings to produce one plant material. These routings aredifferentiated in your task list usage.

Routing status: You use this status to indicate the processing stage of a plan.For example, you could indicate whether the plan is still at the creation stage, orwhether you have already released it.

Figure 49: Routing: Operations

Relevancy to costing:

• If the control key specifies that the operation is not relevant to costing, therelevancy to costing indicator is ignored in the operation.

• If the control key specifies that the operation is relevant to costing, you canoverride it̀ with the relevancy to costing indicator in the operation.

Assigment of activity types/business process:

If the reference indicator is turned off in the work center, you can overwrite thestandard values of the work center in the routing. Linking the standard times withthe activity types is performed using the formulas in the work center.



Links

Figure 50: Where Are the Entries Made?

Production costs are created by combining data from Production Planning withCost Center Accounting/Activity-Based Costing.

The routing describes the quantity of an activity and the location of the operations.

The work center describes where an operation is performed.

It is linked to a cost center to valuate the activities.

The planned activity prices for the work center are calculated through the link to acost center and the activity type planning for the cost center.

Figure 51: Links

You can have up to six standard values in the operation. If no activity type hasbeen entered for a standard time, it is not included in the cost estimate.



Figure 52: What Is Entered in the Formulas?

The standard value key enables you to define the six standard values in theoperation. The system assigns a parameter key to the standard values of theoperation and the work in the network activity. This parameter key specifies thefollowing:

• Keyword appearing with the standard value on the screen, such as setup,machine, personnel, teardown, and so on.

• Dimension, such as time, quantity, volume, and so on, in which the standardvalues must be maintained.

• At the same time, the parameter key represents the names of the formulaparameters. You can use the formula parameters to represent the standardvalues in a formula, to determine the following: Execution time, capacityrequirements, and costs.

Formula: You can use formula parameters to which you have assigned values.You can then link these parameters with mathematical operations such as addition,subtraction, multiplication, or division.

Example: Formula 2 = Standard value * Operation quantity / Base quantity

The formulas are maintained in Customizing for the work center.



Figure 53: What Is the Costing Result?

The system calculates the costs by multiplying the quantity by the price. Thequantity comes from the standard values for the operation and is modified by theperformance efficiency rate and a formula.

In the itemization for the cost estimate, an internal activity for the costcenter/activity type is displayed. Furthermore, the assignment to the operation andwork center is saved in the itemization.



Production Version

Figure 54: Production Version

You can maintain the production version in the material master:

• MRP view 4• Costing view 1

Figure 55: How Does the System Find a BOM?



Quantity structure control is a process by which the system searches foralternatives if multiple BOMs and/or routings exist for a material.

You enter the quantity structure control ID in the costing variant. This ID describesa list of priorities for the BOM and routing through the BOM application androuting selection keys.

The BOM application determines (by means of a selection ID) which BOM usageis selected first. It enables you to prefer an alternative of a multilevel BOM from acertain date and specifies whether the status is relevant for the BOM selection.

Standard criteria:

• Period of validity: The BOM must be valid on the quantity structure date.• Lot-size range: The costing lot size must fall within the lot size range.• The status allows costing.

Explanation facilities: To check the BOM that was costed in the cost estimate,you need to do the following:

• Use the Info icon to go to the BOM.• Go directly to the quantity structure by double-clicking on the material

number.

Figure 56: How Does the System Find a Routing?

If a production version is found or defined, the routing contained in it is used.

The selection ID for the routing determines which routing is selected first, theparameters being the task list type, task list usage, and plan status.



Standard criteria:

• Period of validity: The routing must be valid on the quantity structure date.• Lot-size range: The costing lot size must fall within the lot size range.• The status allows costing.

Explanation facilities: To check the routing that was costed in the cost estimate,you need to do the following:

• Use the Info icon to go to the routing.• Go directly to the quantity structure by double-clicking on the routing group.

The effect of the Alternative sequences switch is that, if the system finds a routing,it uses alternative sequences (in accordance with their validity) as opposed tothe standard ones.

Figure 57: Master Recipe – Task List Type of the Process Industries

The process industry uses a master recipe instead of a routing.

The production version in the material master defines a fixed and unique linkbetween an alternative of the recipe group and an alternative of a multiple BOM.

You can include the master recipe in Customizing for the quantity structure controlin order to access the recipe in the cost estimate. However, this can be overriddenfor materials in the material master or for costing in the costing request screen.



Exercise 4: Displaying a Material CostEstimate

Exercise ObjectivesAfter completing this exercise, you will be able to:• Use the display functions of a material cost estimate• Interpret the result of a material cost estimate and use various standard

reports for analysis purposes• Learn how to use the explanation facilities to work more efficiently• Trace the data origin of individual costing items and describe how the

production costs of the finished product are calculated

Business ExampleAs the cost planner for your company, your task is to check the latest cost estimatefor a pump that is currently produced in a repetitive manufacturing process. Themanufacturing engineer requires confirmation that the costs are accurate becausehis boss wants to compare the costs of manufacturing this material internallyagainst buying the pump from a vendor, either as a complete unit or in assemblies.

Task 1:Display the most current cost estimate for material P-100 in plant 1000 with thestatus FR (released without errors) and valid on today’s date. Use the costingvariant PPC1 and costing version 1.

1. The manufacturing engineer wants to know how many units the setup costsare based on. Therefore, determine the costing lot size.

2. The costs are usually determined per unit. Set the cost base so that thecost per 1 piece is displayed. Keep this setting so that you can answer thefollowing questions.

Hint: Changing the cost display does not result in a new calculationof producing just one pump. It simply changes the reported valuesfrom presenting the value for 100 pumps to presenting the valueof 1 pump.

3. In which posting period was the cost estimate created? In which fiscal yearwas the cost estimate created?




Task 2:Now answer some questions relating to the cost situation of your pump. Themanufacturing engineer wants to know which components have the highest costsand which areas incurred significant costs.

1. What is the total cost of goods manufactured for the pump, and what arethe fixed costs?

2. Management is considering whether to outsource certain components. Whichassembly has the highest costs? What is the cost of goods manufactured forthis assembly? What is the material number of this component?

3. Which routing operation has the highest costs, and why?

4. Select an appropriate report layout and determine the total material costs(COGM view).

Task 3:The purchasing department has informed you that the price of one of the materialcomponents, 100-700, purchased for production will decrease due to supplieroverstock. Your task is to suggest how future cost estimates can take this pricechange into account. In order to update the correct price field in the materialmaster, you need to identify which price is used based on the valuation strategy inthe valuation variant.

1. First note which BOM was used in the cost estimate for the pump.

2. Using the explanation facility of costing variant PPC1, find out whichvaluation variant was used.

3. Which strategy is defined for material price valuation in this valuationvariant?

4. Which price field could be changed in the material master for 100-700 inorder to take the planned price change into account that would not affect thecurrent standard price of the inventory?

Task 4:The production costs for pump P-100 are derived from the routing used for thecost estimate with quantity structure. The manufacturing engineer wants to knowhow the costs were calculated and the areas in the system from which the data wastaken. Use a costing lot size of 100 pumps and enter the data in the table at the endof this exercise. Change the cost display back to the costing lot size.

1. Which routing was used to determine the activities? Check the quantitystructure data for this.




2. In the itemization, select a report layout that arranges the costs intooperations. Which internal activities are performed in operation 10?

3. Go back to the routing via the explanation facilities. Operation 10 wasperformed at which work center?

4. The standard values represent the expected duration of the productionprocess. Find the default values for operation 10 and write them down in thetable below. The activity types are used to represent different productionprocesses that can occur from a cost accounting perspective. Note theplanned activities for operation 10. select only the activities for which astandard value was set.

5. What is the base quantity on which the standard value is based?

6. The basic data for the work center in the routing operation contains a keyfor performance efficiency rate that controls the relationship between thetarget time and the actual time. This key links the operation directly to thework center at which the operation is performed. If there is no specificentry here, 100% can be assumed. What is the performance efficiency ratefor this work center?

7. The work center provides a link to the Controlling environment by itsassignment to a specific cost center. The cost center collects the costsoccurring at the work center. To which cost center is the work center fromoperation 10 assigned?

8. Formula keys are entered for every activity type in the work center. Thesekeys are used to calculate the activity quantities. What is the formula key forthe activity type found, and what has been entered in the key?

9. The activity quantity can now be determined using the information at hand.This will then be valuated using the price from the cost center/activity type.

1. Using the valuation variant in Customizing, state which strategy has beendefined to valuate the activities. Use the Goto possibilities in the display.

2. Find the price that was determined for the cost center and the activity typein operation 10. In addition to the total price, note the fixed and variableportions of the price. Include the price unit and activity type unit. Whichallocation cost element are the activities displayed under?

10. You can now calculate the costs for the internal activity, and check theaccuracy of the result using the itemization.



Solution 4: Displaying a Material CostEstimateTask 1:Display the most current cost estimate for material P-100 in plant 1000 with thestatus FR (released without errors) and valid on today’s date. Use the costingvariant PPC1 and costing version 1.

1. The manufacturing engineer wants to know how many units the setup costsare based on. Therefore, determine the costing lot size.

a) Menu → Accounting → Controlling → Product Cost Controlling →Product Cost Planning → Material Costing → Cost Estimate withQuantity Structure → Display (CK13N)

Enter the following data:

Material: P-100

Plant: 1000

Costing variant: PPC1

Costing version: 1

Valid on: Today's date

Use the binoculars to search for cost estimates that meet these criteria,and enter the following:

Material: P-100

Plant: 1000

Current standard cost estimate


Costing version: 1

Costing status: FR

Most current, valid on: Today's date

With quantity structure.

Execute the function.

You see the costing lot size in the header in the right-hand screenarea. The costs are based on a costing lot size of 100.




2. The costs are usually determined per unit. Set the cost base so that thecost per 1 piece is displayed. Keep this setting so that you can answer thefollowing questions.

Hint: Changing the cost display does not result in a new calculationof producing just one pump. It simply changes the reported valuesfrom presenting the value for 100 pumps to presenting the valueof 1 pump.

a) select Settings → Cost Display and select Costs based on 1 piece.select Enter.

3. In which posting period was the cost estimate created? In which fiscal yearwas the cost estimate created?

a) Go to the Dates tab. The cost estimate was for posting period ____in fiscal year _______.

Task 2:Now answer some questions relating to the cost situation of your pump. Themanufacturing engineer wants to know which components have the highest costsand which areas incurred significant costs.

1. What is the total cost of goods manufactured for the pump, and what arethe fixed costs?

a) Go to the Costs tab. The COGM for one pump is ___ EUR. Thefixed costs are __ EUR.

2. Management is considering whether to outsource certain components. Whichassembly has the highest costs? What is the cost of goods manufactured forthis assembly? What is the material number of this component?

a) In the lower right screen area, select the itemization reporticon. select layout 1SAP04 Assemblies/Raw materials (overview).Assembly 100-300 (shaft) has the highest costs. The COGM ofassembly 100-300 is __ EUR.

Note: Make sure that the COGM view was selected in thescreen area above.

3. Which routing operation has the highest costs, and why?

a) Change the report layout to 1SAP06 Operations (grouped).Operation 10 (Staging in acc. with picking list) has the highest costsbecause this operation incorporates all the materials.




4. Select an appropriate report layout and determine the total material costs(COGM view).

a) To view the total material costs, select report layout 1SAP01 Itemcategories (grouped). The total material cost in the cost of goodsmanufactured view is ___ EUR.

Task 3:The purchasing department has informed you that the price of one of the materialcomponents, 100-700, purchased for production will decrease due to supplieroverstock. Your task is to suggest how future cost estimates can take this pricechange into account. In order to update the correct price field in the materialmaster, you need to identify which price is used based on the valuation strategy inthe valuation variant.

1. First note which BOM was used in the cost estimate for the pump.

a) To check the quantity structure data, go to the tab Quantitystructure.

BOM: 00000014

Usage: 1

Alternative: 1

2. Using the explanation facility of costing variant PPC1, find out whichvaluation variant was used.

a) Click i (Information on Cost Estimate) in the toolbar. Navigate to thecosting variant. The valuation variant Planned valuation-materialapplies. Click the valuation variant button.

3. Which strategy is defined for material price valuation in this valuationvariant?

a) You are now in the overview for the material valuation strategy.

The following strategy is defined in valuation variant 001:

Priority 1: Price from purchasing info record

Priority 2: Planned price 1

Priority 3: Standard price

Priority 4: Moving average price




4. Which price field could be changed in the material master for 100-700 inorder to take the planned price change into account that would not affect thecurrent standard price of the inventory?

a) The Planned price 1 field could be changed in the material master.

Exit the explanation of the valuation variant and costing variant.

Task 4:The production costs for pump P-100 are derived from the routing used for thecost estimate with quantity structure. The manufacturing engineer wants to knowhow the costs were calculated and the areas in the system from which the data wastaken. Use a costing lot size of 100 pumps and enter the data in the table at the endof this exercise. Change the cost display back to the costing lot size.

1. Which routing was used to determine the activities? Check the quantitystructure data for this.

a) select Settings → Cost Display to select the costing lot size. selectEnter.

1. To check the routing data, go to the tab Quantity structure andrefer to the right-hand side of the screen area.

Task list type: N

Group: 50000002

Group counter: 1

2. In the itemization, select a report layout that arranges the costs intooperations. Which internal activities are performed in operation 10?

a) Select display variant 1SAP06 Operations (grouped) in theitemization. In operation 10, the internal activity of activity type1421 was performed.

3. Go back to the routing via the explanation facilities. Operation 10 wasperformed at which work center?

a) Click i (Information on Cost Estimate)icon. Navigate to the routing.Operation 10 was performed at work center 1310.

4. The standard values represent the expected duration of the productionprocess. Find the default values for operation 10 and write them down in thetable below. The activity types are used to represent different production




processes that can occur from a cost accounting perspective. Note theplanned activities for operation 10. select only the activities for which astandard value was set.

a) Select operation 10 and choose Details → Operation (or double-clickon operation 10). The standard value for activity 1421 (labor) is10 minutes.

5. What is the base quantity on which the standard value is based?

a) Remain in the operation details screen. The base quantity is 1 piece.

6. The basic data for the work center in the routing operation contains a keyfor performance efficiency rate that controls the relationship between thetarget time and the actual time. This key links the operation directly to thework center at which the operation is performed. If there is no specificentry here, 100% can be assumed. What is the performance efficiency ratefor this work center?

a) Go directly to the work center by choosing the symbolWork center.On the Basic Data tab, verify the value in the Key for PerformanceEfficiency field. Since no performance efficiency rate was set, 100%is assumed.

7. The work center provides a link to the Controlling environment by itsassignment to a specific cost center. The cost center collects the costsoccurring at the work center. To which cost center is the work center fromoperation 10 assigned?

a) Remain in the work center master record and go to the Costing tab.Cost center 4230 (Assembly Pumps) is assigned to work center1310.

8. Formula keys are entered for every activity type in the work center. Thesekeys are used to calculate the activity quantities. What is the formula key forthe activity type found, and what has been entered in the key?

a) The formula key for activity type 1421 reads SAP007 Prod: Laborreqmts.

Place your cursor on formula key SAP007 and select Displayformula.

Formula: (SAP_03 * SAP_09 / Sap_08) or Labor * Operationquantity / Base qty

9. The activity quantity can now be determined using the information at hand.This will then be valuated using the price from the cost center/activity type.

1. Using the valuation variant in Customizing, state which strategy has beendefined to valuate the activities. Use the Goto possibilities in the display.




2. Find the price that was determined for the cost center and the activity typein operation 10. In addition to the total price, note the fixed and variableportions of the price. Include the price unit and activity type unit. Whichallocation cost element are the activities displayed under?

a) 1. Go back to the cost estimate and click i (Information on CostEstimate). Navigate to the costing variant. In the Control tab, clickValuation variant. Click the Activity Types/Processes tab.

Priority 1: Plan price as average of all fiscal year periods

Priority 2: Plan price for the period

2. Exit the explanation facilities. Create a new session. Go to theCost Center Accounting menu.

Menu → Accounting → Controlling → Cost Center Accounting →Planning → Activity output/prices → Display

Enter the following:

Version: 0

From period: 1

To period: 12

Fiscal year: Valuation date year ofP-100 cost estimate

Cost center: 4230

Activity type: 1421

Choose Overview screen.

Total price: EUR

Fixed price: EUR

Variable price: EUR

Price unit:

Activity unit: H

Allocation cost element: 619000

10. You can now calculate the costs for the internal activity, and check theaccuracy of the result using the itemization.

a)




Lot size 100 pc

Routing

Operation

Activity

Work center

Standard value

Base quantity

Task list type N, task list grp50000002, group counter 1

10

1421

1310

10 mins

1 pc

Work center Performanceefficiency rate

Cost center

Formula key

Formula

1310

100%

4230

SAP007

Labor * operation quantity / basequantity

Cost center

Activity type

Valuation variant

Strategy sequence for activitytypes/processes (first priority)

Total price per unit

Fixed price per unit

Variable price per unit

Allocation cost element

4230

1421

001

Plan price as average over all fiscalyear periods

___EUR/100H

___EUR/100H

___EUR/H

619000

Cost of internal activityFormula / Performance eff. rate* Price / Unit

(((10min * 100 pc /1pc)/60)/100%)* (Total Price per Unit - fromabove) ___/100 or (16.667 Hours)/Performance Effi Rate * TotalPrice/H



Lesson Summary

You should now be able to:• Analyze the results of a material cost estimate with quantity structure• Use the BOM to determine the material costs• Use Routing and work centers to determine production costs• Link work centers to cost centers to valuate production costs• Describe the required entries in the Logistics master data



Lesson: Material Cost Estimate

Lesson OverviewThis lesson details the creation of a material cost estimate with quantity structure.The lesson also helps you to analyze the results of a material cost estimate withquantity structure.


• Create a material cost estimate with quantity structure• Analyze the results of a material cost estimate with quantity structure

Business ExampleThe prototype of a new product has been successful and production is tocommence shortly. Your task is now to cost a new pump. You can create anautomatic cost estimate because work scheduling has already defined BOMs androutings. After executing the cost estimate, the engineering department informsyou that an additional material and other costs should be added to the BOM androuting for your product. However, Engineering has not yet entered these changesin the quantity structure data. You decide to simulate the costs using multilevelunit costing so that these costs are included in the current cost estimate.

Creation of Material Cost Estimate

Figure 58: Example: Material Cost Est. with Quantity Structure


TFIN20_2 Lesson: Material Cost Estimate

Prerequisite: Material master with costing view and accounting view.

When you create a cost estimate with a quantity structure, you enter the costingvariant, the material and the plant.

The dates are proposed from the costing variant and determine the following:

• The validity period of the cost estimate (costing date from/to)• The determination of the quantity structure (quantity structure date)• The valuation date for materials and activities (valuation date)• The system determines and values the quantity structure automatically.• The cost estimate is not updated in the database until it is saved.

Enhanced Efficiency

Figure 59: Material Cost Estimate: Enhanced Efficiency

The material cost estimate has been redesigned, which improves the efficiency andvisibility of the cost estimate information.

The costing result, itemization, cost component report and Costed BOM are nowvisible from a single screen.

You can save the layout settings for individual users. To do this, choose Savesettings. The detail reports are called with the initial variant.



Error log: There are two options for analyzing the error messages of a costestimate:

• Overall log: Contains the complete list of messages for all the materialscosted. The error log contains display variants that enable you to performsummarized analysis of the error(s).

• If you double-click the material in the header of a cost estimate or in thestatus display, the messages are displayed.

Figure 60: Analyzing the Material Cost Est. with Qty Structure

You can analyze the costing results with standard reports and display variants.

You can use different cost component views for the costing results (such as thecost of goods manufactured or the cost of goods sold).

Recommendation:

• Define your own display variants and initial variant.• Use the navigational options to access reports.• Navigate through the multilevel BOM to the reports and error logs.



Figure 61: Explanation Facilities

The explanation facilities enable the cost planner to do the following:

• Quickly access data and information in the costing environment.• Remain in the cost estimate or the analysis while accessing the above data.

You can access the explanation facilities in various ways. The facilities availabledepend on the object to be costed.

You can access the facilities by choosing the Info icon in the cost estimate header.

You can branch from the itemization, costed multilevel BOM, and unit costestimate list screen to the master data of the selected object(s).

You also have the option of double-clicking, for example, the costing variantin Customizing (in material costing).



Exercise 5: Creating a Material CostEstimate

Exercise ObjectivesAfter completing this exercise, you will be able to:• Create a material cost estimate• Interpret the data in the material cost estimate• Use the Information System efficiently for analysis purposes• Simulate enhancements using multi-level unit costing

Business ExampleYour task is to cost a new pump. You can create an automatic cost estimate,because work scheduling has already defined BOMs and routings.

After executing the cost estimate, the engineering department informs you that anadditional material and other costs should be added to the BOM and routing foryour product. But, engineering has not yet entered these changes in the quantitystructure data. You decide to simulate the costs using multilevel unit costing sothat these costs are included in the current cost estimate.

Task 1:Create a cost estimate with quantity structure for material R-F1##: Use costingvariant PPC1, plant 1000, costing lot size 10 pieces, and costing version 1. Donot enter any BOM or routing data. The cost estimate should be valid at the startof the following fiscal period. For the Costing to date, enter the maximum date.Accept the default quantity structure date and valuation date.

1. What is the costing status of your cost estimate?

2. What is the pump’s total cost of goods manufactured?

3. Why has a log been issued? Examine the message list and determine whichmessage type should appear in the log.

4. Which components were costed? Access the costing result for the flywheelof your pump R-B2##. What is the total cost of goods manufactured forthe flywheel?




Task 2:Optional:

You deliberately did not enter any quantity structure data in the initial screen ofthe cost estimate.

1. Using the tab for the quantity structure, identify the BOM and routing readby the system for the automatic cost estimate.

2. Where did the system obtain the information for the BOM and routing data?

3. Which BOM application and which Routing Selection ID were read by thesystem?

4. Which routing is sought by the system as its first priority?

Task 3:Save the cost estimate:

1. Save the cost estimate with cost component split, itemization, and log.

Task 4:Go to the Information System for material costing and select a detail report thatitemizes your cost estimate for material R-F1##. Choose the COGM view.

1. What are the total material costs of your cost estimate?

2. What is the total cost of the internal activity?

3. You now want to focus on the costs that exceed 100 EUR. Set the appropriatefilter.

4. Delete the filter.

5. What are the total costs of all assemblies? To answer this question, select asuitable report layout.

Task 5:Optional:

Engineering has informed you that further components will be added to the BOMin the near future. To include these costs now in a new cost estimate for yourpump, use multilevel unit costing to simulate the change. Select costing withoutquantity structure and edit on a multilevel basis.

1. Create a material cost estimate in the costing structure for material R-F1## inplant 1000. Select costing variant PPC1 with a lot size of 10. For comparisonpurposes, select costing version 2. Accept the default dates.




2. In order to edit the cost estimate you created with quantity structure, usethe function Explode material cost estimate and explode the cost estimatefor material R-F1## one level. Be sure to select the cost estimate that youcreated in the previous exercise.

3. Enter an additional 10 pieces of material 400-310 from plant 1000 under therelevant item category in the first available item row.

4. Create a variable item (1 piece). The price is 100 EUR per piece, of which50% is fixed. Enter cost component 120 and a description of your choice.Save the results.

5. Transfer your costing items to the costing structure and revaluate your pumpin the costing structure.

6. What is the pump's total cost of goods manufactured and total cost of goodssold?



Solution 5: Creating a Material CostEstimateTask 1:Create a cost estimate with quantity structure for material R-F1##: Use costingvariant PPC1, plant 1000, costing lot size 10 pieces, and costing version 1. Donot enter any BOM or routing data. The cost estimate should be valid at the startof the following fiscal period. For the Costing to date, enter the maximum date.Accept the default quantity structure date and valuation date.

1. What is the costing status of your cost estimate?

a) Menu → Accounting → Controlling → Product Cost Controlling →Product Cost Planning → Material Costing → Cost Estimate withQuantity Structure → Create (CK11N)


Material: R-F1##

Plant: 1000


Costing version: 1

Costing lot size: 10

Select the Dates tab. Click the Default values button. Accept thedefault values with Enter. The system executes the cost estimateautomatically.

1. Select the Costing data tab. The status of your cost estimateshould be Costed without errors.

2. What is the pump’s total cost of goods manufactured?

a) Select the Costs tab. The total COGM of the pump is ___ EUR.

3. Why has a log been issued? Examine the message list and determine whichmessage type should appear in the log.

a) Select the message list by choosing Extras → Log or the symbolLog with All Messages. The list contains warning and informationmessages.




4. Which components were costed? Access the costing result for the flywheelof your pump R-B2##. What is the total cost of goods manufactured forthe flywheel?

a) The costing structure (left screen area) shows that the followingcomponents were costed:

Casing Material R-B1##

Flywheel Material R-B2##

Hollow Shaft Material R-B3##

Electronic Turbo Drive Material R-B4##

Note: The material numbers of the assemblies are also inthe itemization.

Position your cursor on the flywheel (material R-B2##) in thecosting structure and double-click on it. You can now analyze thecosting result for this material in the right screen area.

The total COGM of the flywheel is ___ EUR.

Double-click on the pump in the costing structure.

Task 2:Optional:

You deliberately did not enter any quantity structure data in the initial screen ofthe cost estimate.

1. Using the tab for the quantity structure, identify the BOM and routing readby the system for the automatic cost estimate.

a) 1. Select the Quantity structure tab.

The following BOM was read:

BOM: 0000####

Usage: 1

Alternative: 1

The following routing was read:

Task list type: N

Group: 50000###

Group counter: 1




2. Where did the system obtain the information for the BOM and routing data?

a) The system finds the information from the Quantity structurecontrol that is assigned to costing variant PPC1.

3. Which BOM application and which Routing Selection ID were read by thesystem?

a) Select the symbol i (Information on Cost Estimate). Navigate tothe explanation facilities for the costing variant. From the costingvariant, click Quantity structure control. Choose BOM application.

BOM application PC01 Costing was entered in the Quantitystructure control.

Go back to the Quantity structure control and click the Routing tab.

The routing selection ID 01 was entered in the Quantity structurecontrol.

4. Which routing is sought by the system as its first priority?

a) Choose Routing selection.

The system’s first priority is to search for a routing of usage 1 withstatus 4 (released – general) for production.

Exit the explanation facilities and go back to the initial screen ofyour cost estimate.

Task 3:Save the cost estimate:

1. Save the cost estimate with cost component split, itemization, and log.

a) Save the cost estimate with cost component split, itemization, andlog.




Task 4:Go to the Information System for material costing and select a detail report thatitemizes your cost estimate for material R-F1##. Choose the COGM view.

1. What are the total material costs of your cost estimate?

a) Menu → Accounting → Controlling → Product Cost Controlling →Product Cost Planning → Information System → Detailed Reports→ For Material → Itemization (CK84_99)

Make the following settings:

Material: R-F1##

Plant: 1000


Costing version: 1

Costing date: 1st day of following month

Cost base: 10

Cost component view: Cost of goodsmanufactured

Execute the report.

1. The report is sorted by item category. The total material costs(material components and assemblies) are ___ EUR.

2. What is the total cost of the internal activity?

a) The costs of the internal activities are ___ EUR.

3. You now want to focus on the costs that exceed 100 EUR. Set the appropriatefilter.

a) Select the Total value column. Click the symbol Set Filter or themenu path Edit → Set Filter.

Select the Total value field and click Selection Options icon in thefilter criteria and select Greater than or equal to for the Total Valuefield. Then select Continue (Enter).

In the Total Value field, enter 100.00 EUR and confirm with Execute(Enter).

4. Delete the filter.

a) Delete the filter by choosing Edit → Delete Filter.




5. What are the total costs of all assemblies? To answer this question, select asuitable report layout.

a) Choose Settings → Layout → Choose and then report layout1SAP04 Assemblies/Raw materials (overview).

The total costs of all assemblies are ___ EUR.

Task 5:Optional:

Engineering has informed you that further components will be added to the BOMin the near future. To include these costs now in a new cost estimate for yourpump, use multilevel unit costing to simulate the change. Select costing withoutquantity structure and edit on a multilevel basis.

1. Create a material cost estimate in the costing structure for material R-F1## inplant 1000. Select costing variant PPC1 with a lot size of 10. For comparisonpurposes, select costing version 2. Accept the default dates.

a) Menu → Accounting → Controlling → Product Cost Controlling →Product Cost Planning → Material Costing → Cost Estimate withoutQuantity Structure → Edit Multilevel (CKUC)

Select the symbol Create. Choose Create material cost estimate andenter the following data:

Material: R-F1##

Plant: 1000


Costing version: 2


Click the Dates tab. Accept the default dates.

Confirm with Enter (upper left). Acknowledge any warningsregarding lot size by selecting Enter (upper left).




2. In order to edit the cost estimate you created with quantity structure, usethe function Explode material cost estimate and explode the cost estimatefor material R-F1## one level. Be sure to select the cost estimate that youcreated in the previous exercise.

a) Position your cursor on the first row of the Costing items – basicview area and choose Functions → Explode material cost estimate.

Make the following settings:

No. of levels: 1 (select)

Material: R-F1##

click Continue (Enter).

Make the following selection:

Material: R-F1##

Plant: 1000


Costing version: 01

Costing status: KA

Most current, valid on: First day of following month

Click Execute and double-click on the cost estimate.

Click the icon Paste to insert the items from the clipboard.

3. Enter an additional 10 pieces of material 400-310 from plant 1000 under therelevant item category in the first available item row.

a) Go the first available item row and enter the following:

Item category: M

Resource: 400-310

Plant: 1000

Quantity: 10

Click Enter/OK, and continue past the information message byselecting Enter.




4. Create a variable item (1 piece). The price is 100 EUR per piece, of which50% is fixed. Enter cost component 120 and a description of your choice.Save the results.

a) Select the next available item row.

Item category: V

Quantity: 1

Unit: PC

Description: Variable item

Price total: 100

Price fixed: 50

Price unit: 1

Cost component: 120

Confirm with Enter.

5. Transfer your costing items to the costing structure and revaluate your pumpin the costing structure.

a) Select Transfer.

Select the costing structure, place your cursor on the pump andpress the right mouse button. Click Revaluate substructure.

6. What is the pump's total cost of goods manufactured and total cost of goodssold?

a) The COGM and COGS can be displayed from the header of thecost estimate. Select the Header icon next to the material numberabove the Costing items – Basic view.

The total COGM of the pump is ________ EUR.

The total COGS of the pump is ________ EUR.

Save the work session.



Lesson Summary

You should now be able to:• Create a material cost estimate with quantity structure• Analyze the results of a material cost estimate with quantity structure



Lesson: Prices in Material Master

Lesson OverviewThe lesson will give you an insight on how to update prices in the material master.The lesson will help you to use the functions of material costing with quantitystructure efficiently.


• Update prices in the material master• Use price control techniques in material valuation• Use the functions of material costing with quantity structure efficiently

Business ExampleThe prototype of a new product has been successful and production is tocommence shortly. Your task is to ensure that an accurate initial standard priceis calculated and set. You must therefore ensure that all the settings required forvaluation are made, and that the correct quantity structure data is used.

Update in Prices

Figure 62: Material Master: Prices


TFIN20_2 Lesson: Prices in Material Master

Planned prices 1, 2, and 3: These can be used for raw materials and purchasedparts, and to valuate the materials in the cost estimate.

Tax-based and commercial prices: These prices are entered for purchased partsin inventory costing to determine values such as lowest value. An inventory costestimate can use these prices for valuation, and then update the costing results forfinished and semifinished products in these fields.

Price control: Indicator that controls which price is used to valuate the inventoryof a material. The following options are available:

• Standard price• Moving average price• These prices are used to valuate goods movements within the SAP ERP

and to valuate inventories.

A standard cost estimate can be used to update the standard price.

You can branch from the accounting and costing views to the results of standardcost estimates. These results update the standard price.

Figure 63: Update of Prices in the Material Master

You can analyze the different cost estimates and write the results to price fields inthe material master depending on the purpose of costing.

The costing type determines which, if any, price field in the material master can beupdated with the results of the cost estimate.



You can update the following:

• The result of the standard cost estimate as the standard price.• The results of the modified standard cost estimate or the current cost estimate

as planned prices 1, 2, and 3.• The results of the inventory cost estimate as commercial prices 1, 2, and 3 or

tax-based prices 1, 2, and 3.

In the valuation strategy, you can refer to different prices in the material master sothat you can use these prices in other cost estimates.

The standard price is updated in the material master in two steps:

• Marking a standard cost estimate• Releasing a standard cost estimate

Integration and Procedure

Figure 64: Integration: Standard Price and Std Cost Estimate

Price control plays a crucial role in material valuation. When the price controlindicator is set to S, the inventory is valuated at standard price. In addition,goods movements are valuated directly in the SAP ERP using a price selected inaccordance with the price control indicator.

If the standard price was updated by a standard cost estimate, it can be used inCost Object Controlling.



The system can use the itemization of standard cost estimates to determine thetarget costs for manufacturing orders. The difference between target cost andactual cost can be analyzed at the level of variance categories, such as quantityor price variances. The saved itemization provides the basis for the variancecalculation.

In Profitability Analysis, you can use standard cost estimates (or other materialcost estimates) to compare the revenues of the billed quantity with the costcomponent split of the product.

A standard price is also required in the Material Ledger to determine the actualprice.

Figure 65: Procedure: Update of Standard Price

Execute material cost estimate: Use a costing variant that is applicable to astandard cost estimate (costing type). Example: In December 2000, you create anew standard cost estimate for January 2001 (that is, a validity date of 01.01.2001valid until 12.31.9999).

Accuracy of costing results: The system can notify the user of possible errors viathe technical status. Content errors, such as incorrect prices or quantites, cannot bedetected by the system.

Recommendation: In the Product Cost Planning reporting, use object lists whichcan be compared with material master prices and set the inspection severity inaccordance with your requirements.

Update allowed: You must grant an allowance once for the business period. Thisis carried out for the company code, valuation variant, and costing version. Ensurethat the valuation variant is also used in your costing variant.



Marking: Once the above steps have been carried out, the material cost estimatecan be marked. The future planned price is updated in the material master andlinked to the standard cost estimate. You can mark the cost estimate in Decemberfor January.

Release: You can only release cost estimates once. It can also only be carried outin a period corresponding to the valid from date.

Figure 66: Example: Update of Standard Price

Situation: The “old” standard cost estimate has already been released and has seta current planned price of 10. The material master is subject to S price control andthe inventory is valuated with 10 * 10 = 100.

Marking: The future planned price of 15 is set in the material master and a link tothe “new” standard cost estimate established. No revaluation takes place.

Release: Release converts the future standard price of 15 to the current standardprice. The previous current standard price of 10 is now shown as the previousplanned price and is linked to the “old” standard cost estimate.

Revaluation: If the material has inventory, the inventory is revalued. In thisexample, the inventory value is increased by 50 and a profit posting “Profit fromrevaluation” of 50 is displayed. The valuation class (and its account determination)in the material master control how the system finds the balance sheet accountsand profit and loss accounts.



Changing the Standard Price

Figure 67: Changing the Standard Price

Price change without affecting the released standard cost estimate

• You change the S price with price change transaction MR21.• The standard system does not allow this type of price change if a released

standard cost estimate exists. Authorization may be granted via user-definederror management in Customizing for the Material Ledger to allow this.

• Changing the material price creates a document from which you can go tothe accounting documents generated.

• The standard price is changed. However, the released standard price and itslink to the standard cost estimate remain. Note the effects of the price changein Cost Object Controlling and in the valuation in Profitability Analysis.

Price change with effect on released standard cost estimate

• Delete the cost estimate. Use the menu option Delete Test Data for this.When you delete the current standard cost estimate, the cost componentsplit and itemization are removed from the database. Similarly, the link tothe material master is deleted, and the current planned price is set to _. Thestandard price is unaffected.

• Execute a new, corrected standard cost estimate and proceed with the priceupdate process described above.



Figure 68: Distinguishing Between Material Cost Estimates

If you create more than one cost estimate for the same material, several businessquestions arise, such as:

• What is the proportion of costs attributable to technical and organizationalimprovements?

Example: Use of current quantity structure and valuation at historical prices.

Subsequent comparison with standard cost estimate.

• What is the influence of changed raw material prices and potential wageincreases?

Example: Use of historical quantity structure and valuation with current orfuture prices. Subsequent comparison with standard cost estimate.

• How are the current costs broken down?

Example: Current quantity structure with current prices.

• “What If” analyses.

Example: Maintaining and valuating make-or-buy acceptances, prices,quantities and structures under a separate version.



Exercise 6: Price Update

Exercise ObjectivesAfter completing this exercise, you will be able to:• Use the concept of updating prices in the material master• Define the prerequisites and the procedure to use costs for inventory valuation• Check the price update results in the material master

Business ExampleYou create a material cost estimate for pump R-F1## and analyze the saved result.This costing result is used to trigger a revaluation of your inventories. Initially,only the costing result of an assembly of the semi-finished product should beupdated to the standard price field in the material master. The result of the priceupdate process is observed in the material master.

Task 1:In the following exercises you will update the standard cost fields in the materialmaster with the results of the material cost estimate.

1. Display the material master records of your product R-F1## and semi-finishedmaterial R-B1## in plant 1000. Select the accounting and costing views.

2. Enter the prices in the table below.

Field R-F1## R-B1##

Tax price 1

Future standard costestimate price

Current standard costestimate price

Previous standard costestimate price

3. To which periods do the cost estimates refer?




Task 2:Create a standard cost estimate for product R-F1##.

1. Use plant 1000, costing variant PPC1, and costing version 1. Enter a costinglot size of 100 pieces. Choose today's date for the costing from date. Thecost estimate should be valid until 31.12.2010. Accept the default quantitystructure date and valuation date.

2. What is the error status of your cost estimate?

3. Go to the material overview. Which products were costed in this transaction?

4. Go to Customizing using the explanation facilities, and verify that you canupdate the standard price for assembly R-B1## with this result.

5. Save the cost estimate, including the log.

Task 3:Go to the menu option for the price update to verify that marking for companycode 1000 is allowed for the current posting period.

1. For which costing variant and version was marking and release allowedfor the current period?

Task 4:Mark the cost estimate of assembly R-B1##, plant 1000, for the current period inthe current fiscal year.

1. Turn off the indicator for the test run in the processing options. Do not leavethe result list until answering questions 5 and 6.

Task 5:Display the material master record of your component R-B1##:

1. From the result list, display the material master record of your componentR-B1## in plant 1000 by selecting the material from the result list. Select thecosting 2 view.

Enter the prices in the table below.

What is the period?




Field Price for R-B1## Period

Future standard cost estimate price

Current standard cost estimateprice

Previous standard cost estimateprice

2. What is the current stock balance of R-B1##? Go to the accounting view 1to determine this.

Task 6:Release cost estimate R-B1##, plant 1000.

1. Go to the log in the result list, and navigate from the price change documentto the display of the accounting documents. Do not leave the result list untilanswering the questions in Task 7.

Task 7:Display the material master record of R-B1##:

1. From the result list, display the material master record of R-B1## in plant1000. Go to costing view 2.

2. What are the prices?

3. What is the period?

Task 8:1. Go to the material master of the finished product R-F1## and select the

Costing 2 view.

2. Has the price field that you entered earlier changed?

3. Give reasons for your answer.



Solution 6: Price UpdateTask 1:In the following exercises you will update the standard cost fields in the materialmaster with the results of the material cost estimate.

1. Display the material master records of your product R-F1## and semi-finishedmaterial R-B1## in plant 1000. Select the accounting and costing views.

a) Menu → Logistics → Materials Management → Material Master →Material → Display → Display Current (MM03)

Enter material R-F1## and choose Select view(s). Select bothaccounting views and both costing views.

Choose Continue (Enter).

Enter plant 1000 and choose Continue (Enter).Do exactly the samefor material R-B1##.

2. Enter the prices in the table below.

Field R-F1## R-B1##

Tax price 1

Future standard costestimate price



a) 1. The tax price is found on the Accounting 2 view. The remainingprices can be found on the Costing 2 view.

Field R-F1## R-B1##

Tax price 1 ________ EUR ________ EUR

Future standard cost estimateprice

Blank Blank


________ EUR ________ EUR


________ EUR ________ EUR




3. To which periods do the cost estimates refer?

a) 2. The period for the cost estimates can be found directly above theprice field in the Costing view 2 in the material master.

Task 2:Create a standard cost estimate for product R-F1##.

1. Use plant 1000, costing variant PPC1, and costing version 1. Enter a costinglot size of 100 pieces. Choose today's date for the costing from date. Thecost estimate should be valid until 31.12.2010. Accept the default quantitystructure date and valuation date.

a) Menu → Accounting → Controlling → Product Cost Controlling →Product Cost Planning → Material Costing → Cost Estimate withQuantity Structure → Create (CK11N)


Material: R-F1##

Plant: 1000


Costing version: 1


Go to the Dates tab. Choose the Default Dates and then change thedefault dates as follows:

Costing date from: Today's date

Costing date to: December 31, 2010

Quantity structure date: 1st day of following month

Valuation date: 1st day of following month

Choose Enter. The system executes the cost estimate automatically.

2. What is the error status of your cost estimate?

a) Go to the Costing data tab. The status of the cost estimate shouldbe Costed without errors.




3. Go to the material overview. Which products were costed in this transaction?

a) Go to the overview by choosing Goto → Material Overview.

The following materials appear in the list: R-F1##, R-B1##,R-B2##, R-B3##, R-B4##, R-T1##, R-T2##, R-T3##, R-T0##,R-T4##, R-T5##.

All should have the status KA (costed without errors).

Go back to the costing result overview.

4. Go to Customizing using the explanation facilities, and verify that you canupdate the standard price for assembly R-B1## with this result.

a) Choose Costing Variant and then choose the Costing Type. You seethat costing type 01 Standard cost est. (mat.) allows the standardprice to be updated in the material master.

5. Save the cost estimate, including the log.

a) 4. Go back to the initial screen and save the cost estimate with costcomponent split, itemization and log.

Task 3:Go to the menu option for the price update to verify that marking for companycode 1000 is allowed for the current posting period.

1. For which costing variant and version was marking and release allowedfor the current period?

a) Menu → Accounting → Controlling → Product Cost Controlling →Product Cost Planning → Material Costing → Price Update (CK24)

Posting period: Current month

Fiscal year: Current fiscal year

Choose Marking allowance.

Select company code 1000.

Allowed costing variant for standard cost estimate: PPC1

Costing version: 1

Exit the display.




Task 4:Mark the cost estimate of assembly R-B1##, plant 1000, for the current period inthe current fiscal year.

1. Turn off the indicator for the test run in the processing options. Do not leavethe result list until answering questions 5 and 6.

a) Menu Accounting → Controlling → Product Cost Controlling →Product Cost Planning → Material Costing → Price Update (CK24)

Make the following entries:



Company code: 1000

Plant: 1000

Material: R-B1##

Deselect the Test run indicator and choose Execute.

Note: Make sure that the cost estimate has the status VOMarked without errors

Do not exit the result list until answering the questions in Task 5.

Task 5:Display the material master record of your component R-B1##:

1. From the result list, display the material master record of your componentR-B1## in plant 1000 by selecting the material from the result list. Select thecosting 2 view.

Enter the prices in the table below.

What is the period?





Future standard cost estimate price



a) Place your cursor on the result line and click the material R-B1##.Select the Costing 2 view.

The prices are in the Costing 2 view.

The period is the current period of the current fiscal year.



Result from costestimate

Currentperiod



The entries for the current and previous period are unchanged.

2. What is the current stock balance of R-B1##? Go to the accounting view 1to determine this.

a) Go to Accounting 1.

The total stock is 10 pieces, the total stock value R-B1## is alsolisted.




Task 6:Release cost estimate R-B1##, plant 1000.

1. Go to the log in the result list, and navigate from the price change documentto the display of the accounting documents. Do not leave the result list untilanswering the questions in Task 7.

a) Menu → Accounting → Controlling → Product Cost Controlling →Product Cost Planning → Material Costing → Price Update (CK24)

Choose the Release button.




Company code: 1000

Plant: 1000

Material: R-B1##

Deselect the Test run indicator and choose Execute.

The cost estimate should have the status FR (Released withouterrors).

To find the price change document, scroll to the right of the resultlist. Display the price change document by placing the cursor onthe document number for the price change document.

The price change document is displayed.

Choose Accounting documents.

Choose Accounting document.Go back to the result list

Task 7:Display the material master record of R-B1##:

1. From the result list, display the material master record of R-B1## in plant1000. Go to costing view 2.

a) Place your cursor on the material (casing material R-B1##) in theprice change document. Goto the Costing 2 view of the materialmaster to see the affect of the price change.

2. What are the prices?

a) The prices are in the Costing 2 view.




3. What is the period?

a) The price comes from the current period in the current fiscal year.

Field Price forR-B1##

Period



Result from costestimate

Currentperiod


Task 8:1. Go to the material master of the finished product R-F1## and select the

Costing 2 view.

a) Menu → Logistics → Materials Management → Material Master →Material → Display → Display Current (MM03)

Material: R-F1##

View selection: Costing 2, Accounting 2

Choose Enter

Enter plant 1000.

2. Has the price field that you entered earlier changed?

a) No price field was changed.

3. Give reasons for your answer.

a) 2. Marking and release was performed only for assembly R-B1##.The remaining assemblies and the final result are not affected bythis.

If the costing result for material R-F1## should be written to thestandard price field, marking and release must be carried outspecifically for this material.



Lesson Summary

You should now be able to:• Update prices in the material master• Use price control techniques in material valuation• Use the functions of material costing with quantity structure efficiently



Unit SummaryYou should now be able to:• Analyze the results of a material cost estimate with quantity structure• Use the BOM to determine the material costs• Use Routing and work centers to determine production costs• Link work centers to cost centers to valuate production costs• Describe the required entries in the Logistics master data• Create a material cost estimate with quantity structure• Analyze the results of a material cost estimate with quantity structure• Update prices in the material master• Use price control techniques in material valuation• Use the functions of material costing with quantity structure efficiently



Test Your Knowledge

1.can determine the product structure and production plans as entered inLogistics, and convert them into the structures of the itemization andcost component split.Fill in the blanks to complete the sentence.

2. Where can you use BOMs?

3. What does the control key specify?

4. How do you use formula parameters?

5. What is quantity structure control?

6. Select the standard costing valuesChoose the correct answer(s).□ A Lot size□ B Dates□ C Quantity structure□ D All of the above



7. What is the use of the explanation facilities vis-a-vis cost planning?

8. What is the significance of tax-based and commercial prices?

9. What is the purpose of undertaking the profitability analysis?

10. How can you change the standard price without releasing a cost estimate?



Answers

1. Material costing with quantity structure can determine the product structureand production plans as entered in Logistics, and convert them into thestructures of the itemization and cost component split.

Answer: Material costing with quantity structure

2. Where can you use BOMs?

Answer: BOMs are used:

• In Material Requirements Planning for procuring parts.• In Production for staging parts.• In costing for calculating material costs.

3. What does the control key specify?

Answer: The control key specifies the business functions you want toexecute with an operation:

• Scheduling• Capacity planning• Costing• Confirmation• External processing

4. How do you use formula parameters?

Answer: You can use formula parameters to which you have assignedvalues. You can then link these parameters with mathematical operationssuch as addition, subtraction, multiplication, or division. The formulas aremaintained in Customizing for the work center.

5. What is quantity structure control?

Answer: Quantity structure control is a process by which the systemsearches for alternatives, should multiple BOMs and/or routings exist for amaterial.



6. Select the standard costing values

Answer: D

The standard costing values are lot size, dates, and quantity structure.

7. What is the use of the explanation facilities vis-a-vis cost planning?

Answer: The explanation facilities enable the cost planner to quickly accessdata and information in the costing environment. They remain in the costestimate or the analysis thereof while accessing the above data.

8. What is the significance of tax-based and commercial prices?

Answer: Tax-based and commercial prices are entered for purchased partsin inventory costing for values such as the determination of lowest value. Aninventory cost estimate can use these prices for valuation, and then updatethe costing results for finished and semifinished products in these fields.

9. What is the purpose of undertaking the profitability analysis?

Answer: In Profitability Analysis, you can use standard cost estimates (orother material cost estimates) to compare the revenues of the billed quantitywith the cost component split of the product.

10. How can you change the standard price without releasing a cost estimate?

Answer: You can change the standard price without releasing a cost estimate:Delete the cost estimate. Use the menu option Delete Test Data for this.When you delete the current standard cost estimate, the cost componentsplit and itemization are removed from the database. Similarly, the link tothe material master is deleted, and the current planned price is set to _. Thestandard price is unaffected.


Unit 5Costing Run

Unit OverviewThis unit explains how to create a costing run. The unit also explains how to createa selection list using flexible material selection for a costing run. It explains howto execute a costing run. In this unit, we analyze the results of the costing run.Based on these results, we then explain how to set up the costing run efficiently.


• Create a costing run• Create a selection list using flexible material selection for a costing run• Execute a costing run• Analyze the result of a costing run• Use the costing run efficiently through effective error handling

Unit ContentsLesson: Costing Run in Product Cost Planning... . . . . . . . . . . . . . . . . . . . . . . . . . .150

Exercise 7: Costing Run... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .163


Unit 5: Costing Run TFIN20_2

Lesson: Costing Run in Product Cost Planning

Lesson OverviewThis lesson explains how to create a costing run. It also explains how to create aselection list using flexible material selection for a costing run.


• Create a costing run• Create a selection list using flexible material selection for a costing run• Execute a costing run• Analyze the result of a costing run• Use the costing run efficiently through effective error handling

Business ExampleYou regularly provide all cost estimates, such as standard, modified , and othercost estimates, for the products and materials in your company.

You use the costing run as a tool for product cost planning to process this massdata.

You also need to monitor cost changes, both positive and negative, by makingregular comparisons.

Another task is to analyze and account for costing variances and correct errors inthe master data and/or price maintenance.


TFIN20_2 Lesson: Costing Run in Product Cost Planning

Overview and Process Flow

Figure 69: Overview: Costing Run

The costing run is a tool used for mass processing in Product Cost Planning.

The following situations are examples of using the costing run:

• Standard cost estimate of all the materials in one plant.• Standard cost estimate of all the materials in all plants.• Monthly modified standard cost estimate of all materials.• Current cost estimate of all materials of a product group.• Current cost estimate of a highly complex product structure.

The costing run organizes the processing steps and checks the material costestimates generated. After a costing run and its processing steps are successfullycompleted, it can be deleted. The administrative data in the costing run is alsodeleted, but the material cost estimates generated by a costing run remain and canbe reorganized and/or archived, if required.



Figure 70: Costing Run: Process Flow

After each processing activity, you can study the activity in the message log, and,if required, repeat the activity until costing is free of errors.

• Example: If a few materials are costed with errors, only the costing activityis repeated before price update is performed.

In the case of partial selection of assemblies, the structure must be exploded againafter the selection.

If you repeat the selection activity, the subsequent activity must also be repeated.



Flexible Material Selection

Figure 71: Flexible Material Selection

Business Value

• Flexible selection of materials for costing enables more precise selection ofmaterials in support of the cost estimator’s requirements.

Realization

• There is a separate transaction to maintain the parameters to select materialsand generate the selection list (transaction CKMATSEL).

• The selection of materials can be restricted through the followingcharacteristics:

– Material number, plant– BOM usage– Additional material master fields found in the accounting and costing

views– Criteria for existing cost estimates– Referencing materials from an existing costing run

• After the initial material list is created, it is possible to manually edit theselection list (transaction CKMATCON) by adding or deleting materialsfrom the selection list.

• The selection list can be used to select materials for a costing run (transactionCK40N) by assigning the selection list to the Selection step.



Figure 72: Maintenance and Use of Selection List

The selection list is created using the transaction CKMATSEL. Materials canbe selected using material master fields from the accounting and costing viewssuch as:

• Profit Center• Valuation Class• Special Procurement Type

Materials can also be selected based on the characteristics of previous costestimates, such as:

• Costing Variant• Costing Dates• Costing Status

If required, the materials selected can be manually edited using the transactionCKMATCON.

The selection list can be used in future costing runs, as required.



Working with Costing Run

Figure 73: Creating a Costing Run

A costing run is identified by its name and the costing run date.

• Recommendation: Use the long text to explain the purpose of costing (suchas “Plan 04/2000, plant 0001”).

Create with reference: As a rule, you should execute costing runs for the sameplants on a monthly, quarterly, or yearly basis. If you use this function, all thenecessary data and parameters are copied. All you need to do is execute theprocess and alter the names and long text.

General data

• The costing variant specifies the explosion and valuation strategies.• You need to enter only the company code if the costing run should be limited

to one company code and cross-company costing has not been enabled inCustomizing.

• Similarly, you need to enter only a server group if you use parallel processing.This is required only for extremely large quantities of data.

Before you can initiate the costing run, you need to save the General Data.



Figure 74: Executing a Costing Run

The processing activities are offered according to context. They are arranged andthe flow is from left to right and top to bottom. You can execute the activitieseither by clicking icons (hotspots) or context menus.

Processing activities are categorized as Change parameters and Execute. Thefunctions of the Parameters column (Change parameters) enable you to checkor maintain the options of the activity (for example, the material numbers forselection). By choosing Execute, the processing activity is initiated or scheduled.Other columns that are used to execute a function are Authorization and Log. Thesymbol in the Authorization column indicates if marking/release is permitted (openor closed padlock) or if issuing authorization is not possible (red cross). If youchoose the padlock, you are taken to the screen that is used to issue authorization.The Authorization column is displayed only for standard cost estimates. If youchoose the Log column, you are taken to the log.

The Background processing option enables you to specify if processing shouldtake place online or in the background. When you choose Execute, the systemeither starts the activity or schedules it in the background.

Statistics are generated for each activity.



Costing Results and Analysis

Figure 75: Costing Results

The Costing results area enables you to analyze the results of a processing activity.You can obtain an overview of the material selected or check the results ofindividual cost estimates.

Three reports are available:

• Costing levels: Provides an overview of the number of materials selected andcosting levels created. The lowest level contains the material components,purchased parts and raw materials. If you select specific costing levels andgo to the material list, the system displays the materials of only the selectedlevels.

• Material list: Contains the selected materials. You can also check the statusof the cost estimate for the material. There are several navigation options,such as the context menu, double-click, and the toolbar menu, which can beused to access more cost estimate screens and reports.

• Analysis: This report is generated by the identical processing activity in theAnalysis area. It enables you to compare costing results with the resultsof other costing runs or with the prices in the material master. Navigationoptions similar to the material list are available. You can also accesscomparison reports.

Recommendation: SAP recommends the use of the Analysis option to comparenew standard cost estimates with the standard price. Also, when there are largeamounts of data, you can quickly display analysis reports that were created in thebackground.



Figure 76: Analyzing the Costing Run

The standard system provides several variants of this report for various analysispurposes. You can access these reports either in the costing run by choosing themenu option Settings or through the Information System (outside of the costingrun).

• Results of Costing Run: Displays the results of a costing run.• Price versus Cost Estimate: You can compare the selected cost estimates

with one of the prices in the material master. You can simulate the revaluationof inventories that would result if the selected cost estimates were released.

• Variances Between Costing Runs: Enables you to compare two costingruns.

For an overview of all report options, use the All selections option.

Exceptions: Checks the value against which the threshold values should becalculated. If the comparison value is a material master price, you need to enterthe price to be checked under Output.

You can go from the object list to the detailed reports. For example:

Display cost estimate, multi-level BOM, itemization, cost component split.

For more information on analyzing costing runs, see the SAP Library.



Figure 77: Information System – Analyzing the Costing Run

The Analysis option in the costing run enables only one mass report. Whenanalysis is performed again, the old result is overwritten.

The Analyze Costing Run report in the Information System does not have thisrestriction. Also, time-consuming retrieval and formatting of mass data isperformed in the background and an extract is generated. The extract is interactiveand can be quickly displayed. The important feature here is the interplay betweenselection variants, display variants, and extracts.

Recommended procedure:

• Define and use appropriate display variants (including totals, sorting, andfilters).

• Define and use appropriate selection variants that are assigned to the displayvariants.

• Specify the extracts in which the content should be saved.• Start background processing with defined selection variants.• To call the report, you need to specify the extract to be read. In the

displayed extract, you can use the sorting, filtering, and totalling functionsand go to the detailed reports.

For more information about analyzing costing runs, see the SAP Library.



Error handling in the Costing Run

Figure 78: Error Handling in the Costing Run

Costing by costing level: When you cost mass data for the first time andyou anticipate numerous errors or the quality of the master data is poor, it isrecommended that you execute costing by costing level.

• In the parameters for the Costing activity, select the relevant costing levelsand proceed with costing. Process the errors and remove their causes.Perform costing again until the results are satisfactory.

• In the parameters of the same costing run, select the higher costing levels.The material cost estimates of the lower levels are automatically included.

Cost estimates with errors only: This procedure is recommended when fewerrors are anticipated or for the above situations for one or more selected costinglevels.

• The example shown above on the right illustrates a case where all the costinglevels are costed. In such cases, the error severity of message CK 318 shouldbe set to Error in the user-defined error message, so that all cost estimatescontaining cost estimates with errors are flagged accordingly.

• For repeated cost estimates, set the indicator Cost ests with errors only inthe Costing parameter.



Figure 79: Costing Run – Managing Logs

In mass processing, logged messages and errors are the rule and not the exception.Message numbers (and consequently message causes) generally account for asmall proportion of the logs.

If extremely large costing runs are executed, you can create a log for each costinglevel to assist the analysis process.

The standard system contains display variants for error logs that enable you tosummarize and group the data. You should define your own display variants forfilters and sorting, so that you can quickly access the required data.

You can print the log at each stage of the costing run. This is not recommended forlarge costing runs because it increases the processing time and uses a considerableamount of the system's resources (spools).

It is a good idea to save the log and analyze it later.



Exercise 7: Costing Run

Exercise ObjectivesAfter completing this exercise, you will be able to:• Perform the activities of a costing run• Define the uses of the costing run• Choose materials for a costing run using flexible selection• Create a costing run, select materials for editing, explode a structure and

execute costing• Mark and release the cost estimates

Business ExampleThe objective is to cost materials efficiently. You will use the costing runto simultaneously cost multiple materials with their assemblies and materialcomponents. You will execute the various activities of the costing run and use theanalysis options.

Task 1:Create a flexible selection list:

1. Create a flexible selection list to selection materials for your costing run.Select the materials R-F1## and R-F2## for plant 1000.

Caution: Ensure that you select only the products of your groupthrough multiple selection of materials.

2. Assign the name Select## to your selection list. Enter a short descriptionof your choice.

Task 2:Create a costing run with the name GR## using current date as the costing run date.

1. Enter the description Group ## mid-year cost estimate. Use costing variantPPC1 and costing version 01. Execute the costing run for controlling area1000 and company code 1000.

2. The cost estimate is to be marked and released today. Make the relevantdate settings.

3. Save the costing run.




Task 3:1. Display the process activities for the costing run and assign your flexible

selection list Select## for material selection. In the processing options, turnoff the indicator for background processing and save your entries.

2. Execute the selection step. The pre-selection of materials should display twomaterials with the status SE (Selected without Errors). Check the costingresult in the list of costing levels.

Task 4:1. Maintain the parameters for the next costing run step, the structure explosion.

Turn off the Background processing indicator, so that the activity can beexecuted online.

2. Now that you have maintained the parameters, you can execute the structureexplosion step.

3. How many costing levels were selected? What is the reason for this?

4. Which new materials appear in the material overview of the costing run?

5. View the selection status SE from the materials overview list, by changing tothe list layout 1SAP01.

Task 5:Proceed with the costing step.

1. Go into the parameter maintenance for the costing step and turn off theBackground processing indicator. Make sure that the log is set for costinglevels.

2. After saving the settings, execute costing.

3. From the materials overview, make sure that all the materials that have beencosted have a yellow or green traffic light.

Task 6:You now want to analyze the costing results using special reports.

1. In the analysis parameters, select display variant SAP&11. Using theparameters, select your costing run GR## with the relevant costing dateand save it.

2. Execute the analysis and select a layout that compares the costing result withthe standard price for every material, in order to see the impact that willoccur if these results are released as the new standard cost.

3. From the report, display the Mulitlevel BOM report.




Task 7:1. Mark the costing results. First, check whether marking has been allowed in

the current period for your costing variant.

2. Turn off the Background processing and test run indicators in the parametersettings. Execute the update run.

3. From the materials overview, check the costing result for a given material bydouble-clicking on the material number.

4. Go to the material master (Costing view 2) for these materials. Place yourcursor on the material number, click on the right mouse button and go to thematerial master. Make sure that the Future standard cost estimate pricefield has been updated.

Task 8:1. Finally, release the costing results. Make sure that release will be carried out

online and then execute the release. Do not execute a test run.

2. From the Price Update: Release Standard Price list, make sure that allmaterials have the status FR (Released without Errors). Navigate to thematerial master directly from the Price Update: Release Standard Price listby selecting the material. Check the results of the release in the Accounting1 and Costing 2 views.

3. From the Price Update: Release Standard Price list, display the financialaccounting document for the revaluation of inventory. Which materialscaused the inventory balance to be revalued?

4. In the Edit Costing Run screen, go to the overview of the costing run inthe Schedule Manager to display the activities that were performed in thecosting run.



Solution 7: Costing RunTask 1:Create a flexible selection list:

1. Create a flexible selection list to selection materials for your costing run.Select the materials R-F1## and R-F2## for plant 1000.

Caution: Ensure that you select only the products of your groupthrough multiple selection of materials.

a) Menu → Accounting → Controlling → Product Cost Controlling→ Product Cost Planning → Material Costing → Costing Run →Selection List → Create (CKMATSEL)

Go to the Multiple selection function for the material and enterthe following:

Material number: R-F1##

R-F2##

Copy the values.

Enter plant 1000.

2. Assign the name Select## to your selection list. Enter a short descriptionof your choice.

a) Execute the selection of the materials. Save the result.

Save the selection list.




Task 2:Create a costing run with the name GR## using current date as the costing run date.

1. Enter the description Group ## mid-year cost estimate. Use costing variantPPC1 and costing version 01. Execute the costing run for controlling area1000 and company code 1000.

a) Menu → Accounting → Controlling → Product Cost Controlling →Product Cost Planning → Material Costing → Costing Run →EditCosting Run (CK40N)

Choose the function Costing Run → Create.


Costing run: GR##

Description: Group ## mid-year cost estimate

Costing run date: Current date


Costing version: 01

Controlling area: 1000

Company code: 1000

Choose Continue (Enter)

2. The cost estimate is to be marked and released today. Make the relevantdate settings.

a) Make the following settings:

Costing date from: Current date

Costing date to: Maximum date

Accept the default quantity structure date and valuation date.

3. Save the costing run.

a) Save the run by choosing Costing Run → Save.

Note: You are now at the editing stage of the costing run.The system displays the overview of the processing activitiesto be taken.




Task 3:1. Display the process activities for the costing run and assign your flexible

selection list Select## for material selection. In the processing options, turnoff the indicator for background processing and save your entries.

a) For flow step Selection, click on the icon within the Parametercolumn. The system displays the Change Parameters screen forthe Selection step.

Enter the Selection List Select##.

Deselect the Background processing indicator in the Processingoptions area. Save your entries and go back to the Edit CostingRun screen.

2. Execute the selection step. The pre-selection of materials should display twomaterials with the status SE (Selected without Errors). Check the costingresult in the list of costing levels.

a) You can now see the Execute symbol in the Execute column for theSelection step. Click on this symbol to proceed with this step.

Expand the Costing Results. Select the costing level 1 line and thenchooseMaterials Overview. You will see the two materials R-F1##and R-F2## were selected without errors in costing level 1.

Task 4:1. Maintain the parameters for the next costing run step, the structure explosion.

Turn off the Background processing indicator, so that the activity can beexecuted online.

a) Click on the Parameter column for the Structure explosion step.The system displays the Change Parameters screen for this step.Turn off the indicator for background processing and save yourentries. Go back to the Edit Costing Run screen.

2. Now that you have maintained the parameters, you can execute the structureexplosion step.

a) You can now see the Execute symbol in the Execute column forthe Structure explosion step. Click on this symbol to proceed withthis step.




3. How many costing levels were selected? What is the reason for this?

a) Call the Costing Results. You see that three costing levels havebeen selected.

Since no settings for transfer control have been made, the structureexplosion reads the BOM for the selected materials. The systemdisplays the level for finished products, assemblies, and materialcomponents.

4. Which new materials appear in the material overview of the costing run?

a) Within the Costing Results, select the three costing levels and selectthe Materials Overview. In addition to R-F2## and R-F1##, thefollowing materials are listed:

R-B2##, R-B3##, R-B4##, R-T0##, R-T4##, R-T5##.

(additional components may be listed).

The subassembly R-B1## is not listed because during the previousexercise, a standard cost estimate was released for R-B1## in thecurrent period. This can be verified by accessing the log for thestructure explosion.

5. View the selection status SE from the materials overview list, by changing tothe list layout 1SAP01.

a) Remain in the materials overview and choose layout 1SAP01Calculation Results. You see that all the materials have the statusSE (selected without errors).

Task 5:Proceed with the costing step.

1. Go into the parameter maintenance for the costing step and turn off theBackground processing indicator. Make sure that the log is set for costinglevels.

a) Click on the Parameter column in the Costing step. The systemdisplays the Change Parameters screen for this step. Deselect theBackground processing indicator and select the indicator Log percosting level

2. After saving the settings, execute costing.

a) Save the setting and go back to the Edit Costing Run screen. Youcan now see the Execute symbol in the Execute column for theCosting step. Click on this symbol to proceed with this step.




3. From the materials overview, make sure that all the materials that have beencosted have a yellow or green traffic light.

a) Call the materials overview again in the Costing Results section.You will see that all materials have either a yellow or green trafficlight.

Task 6:You now want to analyze the costing results using special reports.

1. In the analysis parameters, select display variant SAP&11. Using theparameters, select your costing run GR## with the relevant costing dateand save it.

a) Click on the Parameter column for the Analysis step. Select variantSAP&11 Results of Costing Run and choose Enter. The systemdisplays the Change Parameters screen for this step.


Costing run: GR##

Costing date: Current date

Save your settings and go back to the Edit Costing Run screen.

2. Execute the analysis and select a layout that compares the costing result withthe standard price for every material, in order to see the impact that willoccur if these results are released as the new standard cost.

a) You can now see the Execute symbol in the Execute column for theAnalysis step. Click on this symbol to proceed with this step.

From the report, choose the Select Layout symbol and select layout1SAP03 Standard Price vs Cost Est/Revaluation. Copy the settingand continue past the information message.

3. From the report, display the Mulitlevel BOM report.

a) Select R-F2##, then select the icon Detailed Report: Multilevel BOM.




Task 7:1. Mark the costing results. First, check whether marking has been allowed in

the current period for your costing variant.

a) Go back to the Edit Costing Run screen and click on theAuthorization column for theMarking step. Click on company code1000. You see that marking (and release) is allowed for costingvariant PPC1.

You assigned this costing variant in the parameters for the costingrun.

Go back to the Edit Costing Run screen.

2. Turn off the Background processing and test run indicators in the parametersettings. Execute the update run.

a) Click on the Parameter column for theMarking step. Deselect theBackground processing indicator and the Test Run indicator andsave your entries. Go back to the Edit Costing Run screen.

You can now see the Execute symbol in the Execute column for theMarking step. Click on this symbol to proceed with this step.

Go back to the Edit Costing Run screen.

3. From the materials overview, check the costing result for a given material bydouble-clicking on the material number.

a) Go to the materials overview in the costing results. Double-click onany material number. You can analyze the costing result in detail(multilevel BOM, cost views, itemization).

Go back to the materials overview.

4. Go to the material master (Costing view 2) for these materials. Place yourcursor on the material number, click on the right mouse button and go to thematerial master. Make sure that the Future standard cost estimate pricefield has been updated.

a) Remain in the materials overview. Place your cursor on a material.Press the right mouse button and choose Extras → Material master.Scroll along the tabs until you reach Costing 2.

In Costing 2, you can see the result of your marking in the Futureplanned price field.




Task 8:1. Finally, release the costing results. Make sure that release will be carried out

online and then execute the release. Do not execute a test run.

a) In the Edit Costing Run screen, click on the Parameter column forthe Release step. Deselect the Background processing and Testrun indicators. Save your settings and go back to the Edit CostingRun screen.

You can now see the Execute symbol in the Execute column for theRelease step. Click on this symbol to proceed with this step.

Remain in Price Update: Release Standard Price.

2. From the Price Update: Release Standard Price list, make sure that allmaterials have the status FR (Released without Errors). Navigate to thematerial master directly from the Price Update: Release Standard Price listby selecting the material. Check the results of the release in the Accounting1 and Costing 2 views.

a) The Price Update: Release Standard Price list is immediatelydisplayed after the release of cost estimates is executed. Fromthe Price Update: Release Standard Price list, the costing status isdisplayed. You will see that all the materials have the status FR(released without errors).

Remain in the same list and click on any of the material numbers.This will take you immediately to the material master. Scroll alongthe tabs until you reach Accounting 1 and Costing 2.

In Costing 2, you can see the result of your release in the Currentplanned price field. You can also see the new standard price in theAccounting 1 tab. Any materials in existing stock subject to S pricecontrol are revaluated with this price.




3. From the Price Update: Release Standard Price list, display the financialaccounting document for the revaluation of inventory. Which materialscaused the inventory balance to be revalued?

a) Scroll to the right of the Price Update: Release Standard Pricelist. Select the document number for the price change. The pricechange document lists the old and new price for each materialincluded in the costing run.

To display the revaluation document select Accounting Documents,from the list of accounting documents select the entry Accountingdocument. To display the material number in the accountingdocument choose the layout 4SAP (choose Select different displayvariant icon). An inventory revaluation occurred for a materialif there was stock in the warehouse at the time the new standardprice was released.

4. In the Edit Costing Run screen, go to the overview of the costing run inthe Schedule Manager to display the activities that were performed in thecosting run.

a) Return to the Edit Costing Run screen, and choose Goto → ScheduleManager. A list of the activities you performed is displayed.



Lesson Summary

You should now be able to:• Create a costing run• Create a selection list using flexible material selection for a costing run• Execute a costing run• Analyze the result of a costing run• Use the costing run efficiently through effective error handling


TFIN20_2 Unit Summary

Unit SummaryYou should now be able to:• Create a costing run• Create a selection list using flexible material selection for a costing run• Execute a costing run• Analyze the result of a costing run• Use the costing run efficiently through effective error handling



Test Your Knowledge

1. The administrative data in a costing run should never be deleted.Determine whether this statement is true or false.□ True□ False

2. Which parameters are required to create a costing run?

3. Which activities are involved in flexible material selection?

4. What is the use of background processing in a costing run?

5. List the three reports available for analyzing the results of a processingactivity.

6. You should print the log at each stage of a large costing run.Determine whether this statement is true or false.□ True□ False



Answers

1. The administrative data in a costing run should never be deleted.

Answer: False

After a costing run and its processing activities are completed successfully ,it can be deleted. The administrative data in the costing run is also deleted.

2. Which parameters are required to create a costing run?

Answer: You require the following parameters to create a costing run:

• Company code• Costing variant• Costing dates

3. Which activities are involved in flexible material selection?

Answer: You will need to perform the following activities to performflexible material selection:

• Provide name and short text of Selection List• Enter selection parameters for materials• Execute material selection• Manually add or delete materials included in the selection list• Use the selection list with material selection for a costing run

4. What is the use of background processing in a costing run?

Answer: The Background processing option enables you to specify ifprocessing should take place online or in the background. When youchoose Execute, the system either starts the activity or schedules it in thebackground, as applicable.

5. List the three reports available for analyzing the results of a processingactivity.

Answer: To analyze the results of a processing activity, you can use thefollowing three reports:

• Costing Levels• Material List• Analysis



6. You should print the log at each stage of a large costing run.

Answer: False

You can print the log at each stage of a costing run. In a large costing run,printing at each stage increases the processing time and uses a considerableamount of the system's resources (spools). It is a good idea to save the logand analyze it later.


Unit 6Overview of Cost Object Controlling

Unit OverviewThis unit deals with Product Cost Controlling in general and CostObject Controlling in particular. Particular emphasis is placed on themake-to-stock-production scenarios, and the differences between the order view(controlling based on lot size) and the period view (controlling by period) arediscussed.


• Describe the position and objective of “Cost Object Controlling” in theControlling module

• Explain the terms “preliminary costing, simultaneous costing, final costing”• Explain the terms “Product Cost by Order, Product Cost by Period, and

Product Cost by Sales Order”• Differentiate between product-level and order-level controlling

Unit ContentsLesson: Overview of the Components of Cost Object Controlling ... . . . .182


Unit 6: Overview of Cost Object Controlling TFIN20_2

Lesson: Overview of the Components of Cost ObjectControlling

Lesson OverviewYou are in the cost accounting department of the IDES Group. With the help ofexternal consultants, IDES has implemented the SAP ERP System, includingCost Object Controlling.

We can identify the business processes in our plant that will utilize Cost ObjectControlling.

We must determine which logistical production types are used and which maindemands are made on Cost Object Controlling.

Therefore, we must know what options Cost Object Controlling in the SAPERP system offers to map the creation process of the goods and services of ourcompany.


• Describe the position and objective of “Cost Object Controlling” in theControlling module

• Explain the terms “preliminary costing, simultaneous costing, final costing”• Explain the terms “Product Cost by Order, Product Cost by Period, and


Business ExampleYou work in a company that uses various production processes to produce goodsand services. You would like to learn about suitable mapping methods for theseproduction processes in the SAP ERP system.


TFIN20_2 Lesson: Overview of the Components of Cost Object Controlling

Architecture

Figure 80: CO Components

How can we reduce our overhead costs? Many companies are seeing theiroverhead costs increase dramatically. These include costs that cannot be attributeddirectly to products or services. While production areas often indicate greatprogress in controlling costs and optimizing processes, overhead costs continue toprovide little transparency. The entry and allocation of overhead costs accordingto cause are supported by the following components in Overhead Cost Controlling(CO-OM = Overhead Management).

Are our responsibility areas really working efficiently? Cost Center Accounting(CCA) examines where overhead costs are incurred within the organization. Youcan allocate the overhead costs from organizational sub-areas to the actual costcauses. You have a broad range of allocation methods, which consider quantityas well as values, to choose from. In particular, activity allocation permits thecause-based allocation of many costs in the form of activities that would normallynot be assigned to products.

How high are the costs of our organizational measures? Are they within budget?Overhead orders (OPA = Order Process Accounting) gather and control costsincurred from measures taken by the organization. You can manage budgets forthe orders and monitor their observance with the system.

How can we optimize internal processes? Optimizing business processes is notonly the goal of individual divisions, but the goal of the entire organization. Inrecent years, controlling organization-wide business processes has expanded howbusiness functions and products are monitored. The functional view of yourorganization is increased by a cross-functional, process-oriented view. CO-ABC



(ABC = Activity-Based Costing) not only enables you to improve your businessprocess performance, but also provides you with an information base for strategicdecision-making processes.

What costs are incurred within the organization? Cost Element Accounting (CEL= Cost Element Ledger) makes sure that only expenses and income that fulfillthe criteria for costs and revenue (in terms of the operative purpose, based onperiod and that can be valuated) enter CO. The reconciliation ledger facilitatesreconciliation between Controlling and Financial Accounting (FI). It displays anydifferences and can automatically create reconciliation postings if desired.

Figure 81: CO Architecture: Quantities and Values

The diagram above illustrates the flow of quantities and values between thecomponents of the SAP ERP System from the perspective of accounting, whichaccompanies the quantity flows in terms of a preliminary costing, a simultaneouscosting, and a final costing.

The typical quantity flows of logistics generally follow the supply chain:procurement, production, stock movements, sales, and billing.

Product cost controlling:

• Valuates material movements• Provides cost component splits for valuation in Profitability Analysis• Allocates overhead costs from cost centers and business processes to cost

objects (such as production orders, sales orders, networks)• Determines WIP• Determines variances and their settlement in Profitability Analysis



Product Cost Controlling: Benefits

Management Requirements Legal Requirements

• Support of cost reductionconcepts

• Support of strategicdecision-making:

– Which products– Where or how to produce

• Support of operativedecision-making:

– Pricing– Manufacturing efficiency

• Valuation of:

– Raw materials– Semi-finished goods– Finished goods

• Work in process• Reserves for imminent losses

With Product Cost Controlling, you have the following benefits:

• Valuation of manufacturing efficiency

– Set relevant standards to measure performance– Variance analyses– Reports for individual plants, product groups, products or orders

• Supports strategic decision-making

– (Primary) cost component split, cost component splits by organizationalunit

– Scrap costs, full integration of activity-based costing• Inventory valuation

– Alternative valuations – according to ((commercial) law, group, profitcenter)

– Three parallel currencies– Standard costs– Actual costs using the Actual Costing/Material Ledger (AC/ML)

component• Valuation of finished and semi-finished goods

– Standard prices provided by cost estimates– Creation of alternative cost estimates for balance sheet purposes for

closing activities• Determination and valuation of work in process at period-end closing• Period-based accrual calculation with provisions for imminent losses

– In a make-to-order environment



– Corresponding updates of balance sheet and profit and loss statements

Benefits of Product Cost Controlling

Figure 82: Product Cost Controlling: Components (1)

Product Cost Planning refers to the costing of goods manufactured and services.This occurs without any reference to a production order (costing is carried outindependent of any production order). If a quantity structure (bill of material androuting) is available in the PP (Production Planning) module of the SAP ERPsystem, you can carry out costing automatically based on the PP data. If there isno quantity structure, you can manually enter the costing items in a unit costing orad-hoc costing. You can also use the batch input method to transfer the quantitystructure from a remote system to the SAP ERP system.




In Cost Object Controlling, the costs incurred during the creation of a productor service are collected on a cost object (such as a production or sales order).Which cost object is used depends on your controlling requirements. Possible costobjects are sales orders, production orders, process orders, product cost collectors,and projects, among others. Cost Object Controlling allows for simultaneouscosting (mapping and valuation of logistical quantity flows) and final costing(period-based accrual calculation and variance calculation). The calculated valuescan be settled in Financial Accounting and Profitability Analysis.




Actual Costing is used to calculate the actual cost of goods manufactured at the endof the period. The result may be saved in the material master as a periodic averageprice for the closed period. As of Release 4.5, the quantity structure is deriveddynamically from the material movements in the SAP ERP system. The valuesconnected with these movements are collected in the Material Ledger. Single-levelsettlement is available as of Release 4.0A, and as of Release 4.5 multi-levelsettlement, which can allocate variances over multiple procurement levels.

What can Cost Object Controlling do for me?

• What actual costs did we incur in our area during the current period?• What costs were we expecting based on the quantity manufactured?• Are some product groups performing significantly better than others?• What is causing these variances?• What are the scrap costs of our new production line?• Did continuous improvements have an effect on costs?• What kind of profit is brought about by a concrete sales order?



Cost Object Controlling

Figure 85: Preliminary Costing – How Does It Work?

Product Costing uses the data in logistics to determine the foreseen materialconsumption (BOM) and the activities required (routing). This data forms thequantity structure.

Product costing valuates this quantity structure with the following information:

• Material costs• Production costs• Process costs• Overhead on the direct material and production costs• Overhead for sales and administration costs

The results are saved as a cost component split and an itemization (optional, butrecommended), and are also used by other applications.



Figure 86: Simultaneous Costing – How Does It Work?

The actual costs of the cost object result from the following processes:

• Goods movements in Materials Management• Invoice receipts in Financial Accounting• Confirmations in production (Production Planning)• Reposting and allocation of overhead in Cost Accounting

You can enter material withdrawals from the warehouse, confirmations, and goodsreceipts in separate operations.

You can use the control key of the operation to specify that a goods receipt isto be posted automatically when the operation is confirmed (normally the lastoperation). You can also assign consumable materials to an operation and specifythat a goods issue for these materials is automatically posted with the confirmation.

You can create the confirmation on the order or operation level. Confirmation onthe operation level is recommended for calculation of WIP and variances later.



Figure 87: Period-End Closing – How Does It Work?

Template allocation is a new allocation technique for activities and processes inCost Object Controlling (and also in Profitability Analysis). Essentially, it can useall information from SAP ERP as a cost driver to assign overhead costs strictlyaccording to cause. Template allocation is even possible between Overhead CostControlling objects.

If an actual price calculation is performed in Overhead Cost Controlling, theactivities and processes calculated onto cost objects can be revaluated with theseactual prices.

Overhead allocation is a traditional method of calculating overhead costs of costcenters onto cost objects using surcharges on direct costs.



Figure 88: Executing Period-End Closing

Work in process can either be determined on the basis of actual costs (when usingfull settlement) or on the basis of target costs (when using periodic settlement).

Variance calculation determines the target costs of an order, and on that basis, thetarget/actual comparison. The scrap is calculated on the basis of the target costs.

For objects that cannot deliver to the warehouse, a Results Analysis will beperformed instead of a WIP and variance calculation.

Settlement is the last step of period-end closing in Cost Object Controlling. Thevalues determined are settled in other components (such as FI and CO-PA) andat the same time, the appropriate line items are created (in the Material Ledgeras well).

Figure 89: Product Cost by Order



Product Cost by Order is used when the controlling focus is on concretequantities.

For this, you must use a cost object that can include an output quantity. Examplesare CO and PP production orders.

Figure 90: Example: Production Order

Costs for goods issues, confirmations and goods receipts are posted to the costobject (such as a production order).

The settlement rule has the settlement type FUL.

For period-end closing, either WIP or variances will be calculated depending onthe status of the cost object.



Figure 91: Relevance of Status in Product Cost by Order

In the Product Cost by Order component, either WIP or variances will becalculated depending on the status of the cost object:

• If the order has neither been delivered (DLV) nor technically completed(TECO), work in process (WIP) is calculated on the basis of actual costs. Thedifference between all debits and credits of the order is the size of the WIP.

• If the order has been delivered (DLV) or technically completed (TECO),any existing work in process will be cancelled and the system interprets theentire remaining order balance as variances where various variance causesare examined and represented by appropriate variance categories.

• Product Cost by Order does not realize variances until the last period ofproduction.



Figure 92: Product Cost by Period

Product Cost by Period is used when the controlling focus is not on concretequantities, but more on a successive, continuous production process.

Many cost objects only use cost by period (such as product cost collectors). Somecost objects that are normally based on lot sizes can be changed to cost by period.

Figure 93: Example: Product Cost Collector

Costs for goods issues, confirmations and goods receipts are posted to the costobject (such as product cost collectors).

The settlement rule has the settlement type PER.

For period-end closing, work in process is calculated in target costs and variancessimultaneously.



Figure 94: Periodicity in Product Cost by Period

In Product Cost by Period, work in process is calculated in target costs andvariances simultaneously:

• For repetitive manufacturing you must enter reporting point backflushes foroperations. For production and process orders controlled by period, youmust enter confirmations for the operations. The product cost collector is therecommended cost object for repetitive manufacturing.

• The system determines the target costs of the cost object based on costingthat you can specify with a valuation variant in Customizing. Based on this,work in process and scrap are calculated at target cost.

• Variances result from deducting work in progress and scrap at targetcost from the balance, where various variance causes are examined andrepresented by appropriate variance categories.

• Variances are realized by period in Product Cost by Period.



Figure 95: Product Cost by Order vs by Period

Some cost objects can only be controlled by order, while others can only becontrolled by period.

There are order-related cost objects that can be switched to cost by period inCustomizing.

Figure 96: Cost by Sales Order and Customer Project



Sales-Order-Related Production is used when the activity output does not takeplace until after a sales order has been received. With make-to-stock production,items are first manufactured to stock and sold later, while with sales-order-relatedproduction, they are first sold, and then manufactured. With “sales-order-relatedproduction with cost by sales order”, a sales order item is a cost object.

Both scenarios are possible for the production and retail of goods. However, aservice can only be mapped as sales-order-related production.

If the sales order alone does not provide all functions or options for integrationthat you desire, you can combine the sales order with other cost objects, such asprojects or networks. This is especially recommended for complex make-to-orderproduction scenarios, such as:

• Make-to-order production to customer specifications• Complex products like structures, ships, etc.• Large-scale variant manufacturing

Product Cost by Sales Order and Customer Project allow you to:

• Calculate and analyze planned costs and actual costs by sales order itemor WBS element

• Calculate and analyze planned revenue and actual revenue by sales order itemor WBS element (depending on the operating indicator of the WBS element)

• Calculate the value of your stock of finished and semi-finished products• Create reserves automatically• Transfer data to Financial Accounting (FI)• Transfer data to Profitability Analysis (CO-PA)• Transfer data to Profit Center Accounting (EC-PCA)



Figure 97: Sales Order-Based Control vs. Make-to-Order Production

If a sales order is added to a Product Cost by Order or by Period, work with theobjects mapping the production does not have to change.

Instead, you can set up Customizing so that the sales order scenario offers the salesorder as an additional controlling object, but the remaining scenario is not mappedtoo differently as it is in make-to-stock production.

Figure 98: Cost by Customer Project

For especially complex scenarios, it can be advantageous to add a project. In sucha scenario, the project takes on the role of the cost object, while the sales order isattached to a billing element of the project as a purely logistical object.



You can set up Customizing so that the customer project scenario offers the projectas an additional controlling object, but the remaining scenario is not representedtoo differently as it is in make-to-stock production or Product Cost by Sales Order.

Figure 99: Order-Level Controlling

You can define the Controlling level in Cost Object Controlling.

Generally, Controlling takes place on order level. This means that each logisticalobject (such as a production order) is also a cost object.

Depending on the cost object used, cost by order or period can be carried out.

Figure 100: Product-Level Controlling



You can also specify that Controlling should take place on a higher level, that is,on product level. In this case, logistical objects (such as production orders) arenot cost objects, rather the costs are posted on a separate product cost collector(decoupling scenario). A product cost collector may exist for each product of aplant and then collects all costs, which are posted to the logistical object of therespective product. Logistical objects are not cost objects in this case!

The following can be used as Controlling levels:

• Production version• Routing/BOM combination• Product and plant

As the product cost collector only allows for Controlling by period, such a scenariocan only be realized as Controlling by period. Logistical objects can still containproduction quantities.



Lesson Summary

You should now be able to:• Describe the position and objective of “Cost Object Controlling” in the

Controlling module• Explain the terms “preliminary costing, simultaneous costing, final costing”• Explain the terms “Product Cost by Order, Product Cost by Period, and




Unit SummaryYou should now be able to:• Describe the position and objective of “Cost Object Controlling” in the

Controlling module• Explain the terms “preliminary costing, simultaneous costing, final costing”• Explain the terms “Product Cost by Order, Product Cost by Period, and



Unit 7Sales-Order-Related Production

Scenarios

Unit OverviewThis unit contains an overview of the special features of make-to-order production.


• Describe sales order processing• Describe the value flow for sales-order-related production with and without

Product Cost by Sales Order• Explain the value flow for scenarios with valuated and unvaluated sales

order stock

Unit ContentsLesson: Sales-Order-Related Production Scenarios.. . . . . . . . . . . . . . . . . . . . . .206


Unit 7: Sales-Order-Related Production Scenarios TFIN20_2

Lesson: Sales-Order-Related Production Scenarios

Lesson Overview


• Describe sales order processing• Describe the value flow for sales-order-related production with and without


order stock

Business ExampleYou work in a company that uses various production processes to produce goodsand services. You would like to learn about suitable mapping methods for theseproduction processes in the SAP ERP system. In addition to manufacturingprocesses in stock, you also create activities for sales orders directly (productsor services).

Sales Order Management

Figure 101: Sales Order Management


TFIN20_2 Lesson: Sales-Order-Related Production Scenarios

Effective sales order processing ties all activities to customer demand with a seriesof tightly integrated processes. The “Sales Order Management” module providesyou with this integrated processing by building a series of logical processingsteps upon each other.

The sales process can begin with pre-sales activities and ends with customerpayment for goods received and services rendered. In Sales, each of these processsteps creates electronic documents that are linked with each other and represent adocument flow, which can be used for evaluations.

• The process can begin with pre-sales activities. Example: In response to aRequest for Quotation (RFQ), you create and send a quotation.

• Create a sales order when you receive the order from the customer. Thesystem can check availability and create delivery proposals.

• A procurement process will be triggered if the contents of the order are nolonger in stock or cannot be in stock (such as materials or services not kept instock). The system distinguishes between internal and external procurement.For internal procurement, the system can trigger a production process, forexample. For external procurement, the system can determine the correctvendor and procurement conditions based on any data stored in Purchasing.The relevant documents are generated when carrying out the procurementprocess.

• Delivery to the customer generates a delivery document.• For billing, you create a billing document. Billing is the point at which the

turnover is set in Controlling.• When the payment is received, the amounts received are posted to Financial

Accounting (FI).

The document flow of the “Sales Order Management” module makes managingand evaluating the sales order process easier.

Order Management: Pre-Sales Activities

Pre-sales activities may include:

• Mailing lists• Phone call records kept on the SAP ERP System• Inquiries• QuotationsIs Pre-Costing Necessary?

Sales cycles sometimes begin with a sales query, such as an inquiry or requestfor quotation. Sales queries help you enter and use important, sales-relatedinformation in the sales process for possible subsequent sales order processing.



You can also use this pre-sales information to develop sales strategies or help buildand maintain a long-term relationship with the customer.

• This data can also be very useful later, particularly for:

– Tracking lost sales– Recording pre-sales data to help negotiate large contracts– Selling to large organizations that require documentation of the entire

process

Any one of the activities listed above can begin the sales process.

Order Management: Order Processing

• Customers place orders with a customer service representative.• Standard orders normally contain:

– Customer and material information– Pricing conditions for each item– Schedule lines and delivery information– Billing information

Is Costing Information Required for Individual Items?

A sales order is an electronic document that records your customer's orders withreference to goods and services.

The sales order contains all pertinent information for processing the sales orderand for the entire sales process.

Sales and Distribution automatically proposes appropriate existing data fromrelevant master records in order to minimize errors and redundant partial processes.

You can enter a sales order with many items in a single screen, or create a complexorder using an expanded order view.

Order Management: Procurement Alternatives

Procurement Alternatives determine:

• If the product is available (availability check)• How the product will be procured:

– From stock– By replenishment activities (production order, purchase order)– Make-to-order production– Shipped from an external supplier– Shipped from another warehouse



The customer can inquire about tangible and intangible goods:

• Tangible goods can be in stock and simply withdrawn. Alternatively, theycan be produced in-house or externally procured.

• Intangible goods are by nature never in stock, but can be self-provided orexternally procured.

For goods and services produced in-house, the procurement process, depending onthe situation, can be mapped by a cost object:

• without prepared quantity structures• with prepared quantity structures (such as BOMs and routings)• or with variant manufacturing.

For external procurement, the system can determine the correct vendor andprocurement conditions based on any data stored in Purchasing.

Corresponding documents are generated for all processing.

Order Management: Delivery

Delivery supports:

• Creating delivery documents• Creating transfer orders (picking)• Packing (if required)• Goods issue

Delivery creates a delivery document, to which certain data is transferred from thesales order, such as materials and quantities.

The delivery document is the electronic means to help you manage all the activitiesof delivery processing, including rational product selection, packing, planning andmonitoring shipments, preparing shipping papers, and posting goods issues.

Creating a transfer order includes copying information from the delivery documentto the transfer order. The transfer order is essential for controlling the movementof goods within your warehouse. It is based on a simple principle: From where towhere are you relocating goods within your warehouse? There is a source locationand a destination location for every transfer order.

When you post a goods issue, you see the update to the general ledger:The expense accounted is debited, and the stock account is credited. Bothquantity-based and value-based stocks go down; costs go up.

Order Management: Billing



Billing supports:

• Creating invoices for deliveries and services• Creating credit and debit memos on the basis of orders• cancelling business transactions• Transferring billing data to financial accounting

Billing creates a billing document using data from the sales order and the deliverydocument.

The billing document serves several important functions:

• The FI invoice document is created based on the FI billing document(result of the billing document). The billing document serves as a sourcefor Financial Accounting (FI) and helps you with the monitoring andmanagement of customer payments.

• When you create a billing document you see the automatic update to thegeneral ledger: The customer's accounts receivable account is debited, andthe revenue account is credited.

Order Management: Payment

• Final step of the Sales Order Management cycle• Customer Payment includes:

– Posting payments against invoices– Reconciling differences, if necessary

When a customer's payment is posted, the general ledger is automatically updated:The cash account is debited, and the customer's accounts receivable account iscredited.

Make-to-Order

• A product and its sub-assemblies are individually manufactured for aparticular customer.

• Stocks can be managed in individual customer segments: Sales order stock.• Quantities produced for a particular sales order cannot then be used directly

to cover another sales order requirement.• Components can be procured specially for an individual sales order.

For make-to-order production (sales-order-related production, engineer-to-orderproduction), the requirement for a make-to-order material is planned using thesales order item number and thus a separate segment is created in the planning runof requirement planning. In this planning segment, the requirements and stocksof the sales order items are managed separately. Thus, various customer-specificvariants of a product can be managed using only one material number.



Starting from the sales order, single-item planning can be carried out for anylevel of the BOM structure. Therefore, it is also possible to procure assembliesand components specifically for the sales order and manage this stock individuallyfor the sales order. This is of particular importance if components can also beconfigured for the production of the individual customer product.

Make-to-Order: Controlling ScenariosImportant Decisions

• Make-to-Order Production with or without Product Cost by Sales Order?• Do you want to maintain your sales order stock valuated or unvaluated?

Without Product Cost by Sales Order

EnvironmentsProduction controlling focused on product groupsHigh volume productionProduct cost by sales order similar to make-to-stock

Examples:

• Assemble to order• Make-to-order with packaging variants

Use this option when your production controlling is strictly focused on productsand not on the sales order itself.

This procedure fits perfectly to a make-to-stock environment or make-to-orderproduction that only requires the sales order for logistical reasons. No additionalperiod-end closing activities have to be performed for the sales order.

In such a situation, Sales Controlling is carried out by Profitability Analysis.



Figure 102: Value Flow Without Product Cost by Sales Order

The new functions for make-to-order production introduced in Release 4.0mean that the system handles make-to-order production in a similar way tomake-to-stock production. If the sales order is only important to you logistically,you can also use the sales order without the cost object property.

The sales order could have a purely logistical significance if:

• The sales order creates the independent requirement for you logistically• The sales order is required for variant configuration

A sales order cost estimate is possible in both cases. However, the estimate resultsare only updated on the cost object as plan values if it is a cost object. The resultsof sales order costing are used for:

• Sales and pricing decisions• Planned costs (only for cost objects)• Methods of Results Analysis based on the percentage of completion (only

for cost objects)

Sales order costing with quantity structure supports the cost component split andprovides a costing structure, a cost element itemization, and an itemization.

If you use a project in addition to the sales order (customer project production),use the project as the cost object. In this case, the sales order is created withoutthe cost object property.



Figure 103: With Product Cost by Sales Order

Figure 104: Value Flow With Product Cost by Sales Order

Product Cost by Sales Order is recommended if the following information isimportant for your business:

• How high is my profit margin for this particular sales order?• How can I map special sales costs?• How high is my funds commitment? Is this sales order performing well

from a costing point of view?• Where did late customer changes greatly affect my production costs?



You can also use Results Analysis to:

• Automatically create reserves for expected losses• Manually add reserves for foreseen risk• Calculate goods in transit where goods have been shipped but not yet

invoiced

Product cost by sales order is necessary if you want to work with unvaluatedsales order stock (not recommended).

Valuated or unvaluated sales order stock

Figure 105: Unvaluated vs Valuated Sales Order or Project Stock

The new SAP ERP functions for valuated sales order stock introduced in Release4.0 mean that the system handles make-to-order production in a similar way tomake-to-stock production.

In Release 3.0/3.1, this stock is always unvaluated. As of Release 4.0, you canchoose whether you manage this stock as unvaluated or valuated sales order stock.

Valuated Sales Order Stock

• Combined quantity and value flow• Simplified inventory determination• Assembly costs shown with multi-level make-to-order production• Variances can be determined for these production orders• Similar to make-to-stock production• Enables more controlling scenarios and the first step in logical decoupling of

CO-PC and PP



The new SAP ERP functions for valuated sales order stock (or project stock)introduced in Release 4.0 mean that the system handles make-to-order productionin a similar way to make-to-stock production. All deliveries to sales order orproject stock credit the delivering object and form an accounting stock. Allconsumption from the sales order and project stock debit the consumer and reducethe accounting stock.

This enables you to:

• Calculate production variances of related production orders• Settle these variances to Profitability Analysis• Provide a cost component split for the cost of goods sold

Sales order costing can be used as the basis for stock valuation.

Figure 106: Combined Quantity and Value Flow for Valuated Sales Orderor Project Stock

Because the inventories assigned to sales orders and projects carry costs as well asquantities, goods movements for these inventories generate postings in FinancialAccounting. The costs of the materials can be determined by costing the salesorder or production order. The stock value can therefore be shown immediatelyin Financial Accounting - a material cost estimate in the Controlling module isnot necessary. The valuated goods movements result in debits and credits to theaffected objects.

The goods receipt, including the stock value, is valuated using a predefinedvaluation strategy sequence.



The first goods receipt prompts a valuation on the basis of one of the subsequentstrategies and serves as the valuation basis from this point onwards:

• The system calculates the standard price on the basis of customer exitCOPCP002 material valuation for valuated sales order stock.

• The system calculates the standard price using a pre-designated sales ordercosting. This sales order costing can be based on a unit costing or on aproduct costing.

• The system determines the standard price using the costing for the productionorder or the planned costs for the WBS element. If there are multipleproduction orders for the same sales order item, the system uses the standardprice that results from the production order that delivers first.

Unvaluated Sales Order Stock

• The quantity flow is separate from the value flow

– The quantity flow (goods receipts, goods issues) is made via individualcustomer stock

– The value flow is made directly with the sales order item and allassigned orders

• Costs are not posted to the sales order item until order settlement or until theinvoice is received for purchased goods

• No variance calculation on assigned production orders• Cost Object Controlling by Sales Order is necessary!

As individual requirements material kept in stock is withdrawn from sales orderor project stock without being valuated, these costs are missing in the productionorders of a multi-level production process.

The value of the goods that are in sales order or project stock on a quantity basis isactivated for delivery to the customer as work in process (WIP).



Figure 107: Separate Quantity and Value Flow for Unvaluated Sales Orderor Project Stock

Therefore:

Figure 108: Key Message for Valuated Sales Order or Project Stock

With the two values of the “ Valuation of Sales Order Stock” and “Product Cost bySales Order” criteria, there are theoretically, four possible combinations:



Figure 109: Decision Table

However, the combination “unvaluated sales order stock without Product Cost bySales Order” is not technically possible. Both values “with valuated sales orderstock” are to be favored from the accounting perspective due to the advantagesmentioned above.



Lesson Summary

You should now be able to:• Describe sales order processing• Describe the value flow for sales-order-related production with and without


order stock



Unit SummaryYou should now be able to:• Describe sales order processing• Describe the value flow for sales-order-related production with and without


order stock


Unit 8Product Cost by Period

Unit OverviewThis unit shows controlling by period using the example of order-relatedproduction with a product cost collector as the cost object (decoupling scenario).


• Create the master data for a production order and a product cost collector• Explain the Customizing for a “decoupling scenario”• Carry out preliminary costing for a product cost collector• Carry out goods movements and confirmations for the production order• Make direct postings from Financial Accounting to the product cost collector• Describe the typical steps for period-end closing in make-to-stock production

with Product Cost by Period• Calculate work in process (WIP) at target cost and explain the associated

Customizing• Carry out variance analysis• Describe the integration of period-end closing• Describe repetitive manufacturing• Assess the different strategies of material valuation

Unit ContentsLesson: Master Data and Preliminary Costing... . . . . . . . . . . . . . . . . . . . . . . . . . . .222

Exercise 8: Master Data and Preliminary Costing ... . . . . . . . . . . . . . . . . . .237Lesson: Simultaneous Costing... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .253

Exercise 9: Simultaneous Costing - Product Cost Collectors .. . . . . . .257Lesson: Period-End Closing... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .266

Exercise 10: Period-End Closing... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .289Lesson: Addendum: Repetitive Manufacturing and Material Valuation..300


Unit 8: Product Cost by Period TFIN20_2

Lesson: Master Data and Preliminary Costing

Lesson Overview


• Create the master data for a production order and a product cost collector• Explain the Customizing for a “decoupling scenario”• Carry out preliminary costing for a product cost collector

Business ExampleA manufacturer produces various types of pumps make-to-stock. Sales controllingis only carried out in Profitability Analysis (CO-PA).

The popular types are produced in a continuous production process and mapped inthe system with repetitive manufacturing. A less popular type should instead beonly produced based on lot size with production orders and only when the stock inthe warehouse drops below the reorder point. To be able to better compare thecost objects, all production processes should be accompanied by controlling byperiod. Each pump has a production version for repetitive manufacturing andanother production version for order-related production.

In this example, we will take a close look at the production for production orders.

A production order should be created in the master data while a product costcollector should serve as a cost object for Controlling by period.


TFIN20_2 Lesson: Master Data and Preliminary Costing

Master Data

Figure 110: Periodicity of Product Cost Collectors

To perform product cost by period,

• Use either a cost object that allows for controlling by period, or• Use a product cost collector that takes on the role of the cost object. The

logistical production objects (such as production orders) are not cost objects.

Postings in Materials Management, Production, and Financial Accounting resultin actual costs.

• You post confirmations, goods issues and goods receipts with reference to theproduction order. You configure the orders so that these costs are assigned tothe product cost collector automatically.

• You can assign other costs, such as process costs or material overhead,directly to the product cost collector. All period closing activities areperformed using the product cost collector.

Periodic actual costs from the cost object can be grouped as follows:

• Costs for products for which a goods receipt in the warehouse has been listedin the current period (“delivery to stock”).

• Costs for work in process. These are target costs for the production quantitiesthat have been confirmed for the operations but not yet delivered to stock.

• Production variances that are calculated using the following formula:Variances = actual debit - goods receipt - work in process.



Figure 111: Using Product Cost Collector

Product cost collectors are created independent of the production type. This meansthat you can collect actual costs on a product cost collector for:

• Order-related production (that is, when you use production orders).• Process manufacturing (that is, production with process orders).• Repetitive manufacturing, for which the cost object is always a product cost

collector. This also applies to KANBAN production methods.• Mass production based on sales orders when you are using valuated sales

order stocks, and in repetitive manufacturing when you are producingindividual requirements materials.

This means that the product cost collector has “two uses.” For repetitivemanufacturing, it is always used. It is also always used as a cost object whencontrolling is not to take place for logistical objects (decoupling scenario).



Figure 112: Production Order and Product Cost Collector: Process Chain

In Product Cost by Period, costs are collected and analyzed on the product costcollector. Production orders do not serve as cost objects; they are used only forlogistical processing.

In order to ensure that the costs of a manufacturing order are collected on aproduct cost collector, you must make the necessary settings for the order type ofthe manufacturing order in Customizing for Product Cost by Order under DefineDefault Values for Order Types .

You must manually create a product cost collector before you start production.When the manufacturing order is created, it is linked to the product cost collectorautomatically.

If you neglect to create a product cost collector, the costs are collected on themanufacturing order. In this case, it is only possible to link the manufacturingorder to the product cost collector as long as no actual costs have been updated tothe manufacturing order.

Note on terminology: This course often uses the term manufacturing order. Thisis an umbrella term for production order and process order.



Figure 113: Automatic Assignment of Orders to Product Cost Collectors

The production order is assigned to the product cost collector by the productionprocess. The system generates the production process automatically when theproduct cost collector is created.

Product cost collectors are linked to production orders and to the productionversions in repetitive manufacturing in the same way.

Production orders that are linked to product cost collectors receive the status PCC.



Figure 114: Controlling: Level

The production process has characteristics whose values are unique to thatproduction process. You specify which characteristics are updated for theproduction process by means of the controlling level.

There is a separate controlling level for each plant material and process category.The relevant process category in Cost Object Controlling is production.

When you create the product cost collector, you decide on which level the costsshould be collected on the product cost collector. You can choose from thefollowing levels:

• Production version• Any BOM/routing combination• Material per plant



Figure 115: Product Cost Collector and Production Process

If you are using the controlling level Production version, the product cost collectoris created for the characteristics material, production plant, planning plant, andproduction version. SAP recommends this controlling level whenever you areusing production versions. In repetitive manufacturing, you should always usethis controlling level.

If you are using the controlling level BOM/Routing, the product cost collector iscreated for the characteristics material, production plant, planning plant, BOM,and routing. BOM/Routing should only be used if the material does not have anyproduction versions. The BOM is identified by the BOM usage and the alternativeBOM. The routing is identified by the task list type and task list group.

If you are using the controlling level Production Plant/Planning Plant, the productcost collector is created for the characteristics material, production plant, andplanning plant. These product cost collectors have a number of features. Forexample, it is not possible to create a preliminary cost estimate for a product costcollector. This affects subsequent functions. Problems may arise if you makechanges to the reporting points of the production versions.



Figure 116: Product Cost Collector: Default Values for Order Type

A product cost collector is an order. The order type of the product cost collectormust belong to order category 05 (product cost collector).

For product cost collectors, default rule STR (strategy for tracing factordetermination) is specified in the table Cost-Accounting-Relevant Default Valuesfor Order Types and Plants. This default rule is linked to settlement type PER(periodic). As a result, the settlement rule for the product cost collector receivessettlement type PER. Default rule STR also ensures that the values to be settledfrom a product cost collector can be distributed. This is necessary, for example,when the product cost collector collects the costs of materials that have beenassigned different valuation types (such as special batch inventories) or that arepart of a valuated sales order stock. When the product cost collector is settled, thesystem apportions the balance among the different stock in accordance with thedelivery values for the period. The settlement process generates the distributionrule automatically on the basis of the delivery values. The system createsequivalence numbers based on the delivery values, and transfers these equivalencenumbers into the dynamic distribution rule.

A results analysis key must be specified in all product cost collectors for whichyou want to calculate work in process.

For preliminary costing and simultaneous costing, enter the costing variant andvaluation variant in the order type. This defines the valuation procedure formaterials, internal activities, external activities, and business processes. It alsodetermines which overhead structure is used to calculate overhead.



Figure 117: Production Order and Production Process

If a production order is assigned to a product cost collector, the status PCC will beassigned to the production order.

A preliminary cost estimate can be generated for the production order but theresults cannot be saved to the production order as planned values.

Figure 118: Customizing: Production Order



Default rule PP2 (periodic) must be specified for the order type of the productionorder.

The costing variant and valuation variant specified in the order type for theproduction order are used for the preliminary cost estimate for the productionorder (this cost estimate is for information purposes only). If you do not want thesystem to create this cost estimate, you don't need to enter the costing variant orvaluation variant.

No results analysis key is specified in the order type because WIP is calculatedon the product cost collector.

Preliminary Costing




Figure 120: Preliminary Costing - Overview (1)

You can create a preliminary cost estimate for a product cost collector. Thepreliminary cost estimate costs the quantity structure defined by the productionprocess. If you are using the controlling level “Material by ProductionPlant/Planning Plant”, you cannot create a preliminary cost estimate for theproduct cost collector.

In repetitive manufacturing, the activity quantities determined in preliminarycosting can be used as default values for the confirmations. This requires thatyou make the appropriate setting in Customizing in the repetitive manufacturingprofile.

Target costs can be calculated on the basis of preliminary costing to:

• Valuate WIP with the WIP calculation function• Valuate the scrap variances in the variance calculation function

In repetitive manufacturing, if the reporting point structure of your routingchanges, you can update the preliminary cost estimate to convert the quantitiesconfirmed at the reporting points to the new reporting point structure.



Figure 121: Preliminary Costing – Overview (2)

The production process quantity structure is valuated as defined in the valuationvariant of the costing variant.

Figure 122: Preliminary Costing: Direct Materials Costs

To calculate direct materials costs, the input quantities of the materials determinedby the BOM are multiplied by the prices selected through the valuation variant.

The system uses the BOM of the production process.



You have already specified which costing variant and valuation variant are used bythe preliminary cost estimate in Customizing in Define Cost-Accounting-RelevantDefault Values for Order Types and Plants.

Figure 123: Preliminary Costing: Direct Costs of Production

To calculate the direct costs of production, the system multiplies the planned setuptimes, machine times and labor times by the prices selected in accordance withthe valuation variant.

The system uses the routing of the production process.

The standard values are specified in the operations in the routing and can bedefined as either fixed or variable (lot-size-dependent) values.

• Lot-size-dependent standard values (such as labor and machine time) aremultiplied by the costing lot size and divided by the base quantity on whichthe standard values are based.

• Fixed standard values (such as setup costs) are independent of the productionquantity and are known as ordering costs. They can still indicate steppedcosts for technical reasons (such as a tool change required above a certainorder quantity). These are known as semivariable costs.

The exact algorithm is stored in formulas for the work center, which is assignedto the individual operations of the routing. The cost center and the activity typefor each operation are in turn assigned to the work center. This determines theprice of the activity.



Figure 124: Preliminary Costing: Process Costs

Template allocation is a new technique for allocating the costs of Overhead CostControlling according to cause as closely and “as comfortably as possible” (thatis, without manual effort). All objects of the Controlling are suitable for use asreceivers, especially cost objects and profitability segments of the CO-PA.

The template allocation technique allocates ABC processes and activity typesof the cost centers. In principle, all information in the system can be used asthe cause value (cost driver).

The process template is determined dynamically based on the followingparameters:

• The costing sheet for the application of overhead is selected with thevaluation variant.

• The overhead key is either entered directly in the cost object or derived fromthe overhead group from the material master (costing view 1).

• With the combination of overhead key and costing sheet, you can assigna template in Customizing.

The templates are grouped in Customizing by their usage (environment). Forexample, a template of the “material cost estimate” environment can only be usedfor product costing (and PP production orders), while a template of the “salesorder” environment can only be used for sales orders.



Figure 125: Preliminary Costing: Overhead Costs

In traditional cost accounting, overhead costs are passed on to cost objects withoverhead surcharges. While these cost objects are debited, overhead cost objectsare credited in return (cost centers, orders). You can define both quantity-basedand percentage overhead rates.

Overhead is calculated using a costing sheet. The costing sheet consists of threetypes of rows:

• Base Rows: Here you enter cost elements, cost element groups and/or origingroups to which overhead should be applied.

• Overhead Rate Rows: Here you specify the overhead rates to be used inapplying overhead to the base rows.

• Credits: Here you enter which overhead cost object (cost center, process, orinternal order) should be credited under which cost element.

If you want to apply overhead in different ways depending on the material beingmanufactured, you can use overhead keys. You then define overhead rates basedon the overhead keys that can be derived from overhead groups in Customizing.You enter these in the material master record.

In preliminary costing for the product cost collector, the system uses the costingsheet specified in the “planned” valuation variant. In simultaneous costing for theproduct cost collector, the system uses the costing sheet specified in the “actual”valuation variant. This is the costing sheet that is displayed in the product costcollector.



Exercise 8: Master Data and PreliminaryCosting

Exercise ObjectivesAfter completing this exercise, you will be able to:• Create a product cost collector and a production process• Review the cost data for a product cost collector• Analyze a preliminary cost estimate and display the customizing for the

costing variant• Create a production order, and display the control data provided by the

product cost collector and production process• Review the quantity structure (BOM, routing) allocated to the production

order• Display the Customizing settings for the product cost collector and the order

type parameters for a production order

Business ExampleThe pump assembly R-F1## is a finished product with a stable manufacturingprocess that utilizes production orders. You want to use the concept of ProductCost by Period for cost controlling.

You are a member of the controlling department, and have decided to use productcost controller as cost object. In order to do so, you create a product cost collectorfor the pump, and analyze the cost data of the cost collector. It is also necessary tocreate a production order and review the control data transferred from the productcost collector to the production order.

Although all customizing has been completed, you will need to verify the settingsfor the order types and costing variants relevant for the Product Cost by Periodscenario.

Task 1:To manage the cost object controlling for pump assembly R-F1##, a productcost collector must be created. The controlling level for the pump will be theBOM/routing level.

1. Create a product cost collector for pump assembly R-F1## in plant 1000.The order type is RM01. The product cost collector must be valid for aBOM and routing. While creating the cost collector, enter BOM usage 1,alternative 01, and search for a valid routing for material R-F1## in plant1000. Save the product cost collector. Choose Yes when asked if you want tocreate a preliminary cost estimate for the product cost collector.




2. Using the display transaction for the product cost collector, display the costdata. What cost data was assigned to the cost collector? What order type isassigned to the cost collector?

Costing sheet:

Overhead key:

Results Analysis key:

Variance key:

Order Type:

Order number:

Production Process:

3. Verify the planned costing variant and the actual costing variant for theproduct cost collector. A different costing variant is specified for the plannedcosts than for the actual costs. Why is this necessary?

Planned Costing Variant:

Actual Costing Variant:

Why is this necessary?

Task 2:A preliminary cost estimate was created for your product cost collector. Reviewthe results of the cost estimate and display the customizing settings for the plannedcosting variant and order type RM01.

1. Display the preliminary cost estimate for the product cost collector. What arethe costs of goods manufactured for 10 pieces?

COGM:

2. Display the itemization report for R-F1##. Determine the calculated costsfor the assembly R-B1##.

Costs: ____________

3. Create another session. Display the current cost estimate for assemblyR-F1##. Compare the preliminary cost estimate calculated for the productcost collector for assembly R-F1## with the current standard cost estimatefor this material. How can there be differences between these two prices?

Standard: ____________




4. The planned costs were calculated using the costing variant PREM. Checkthe assignment of this costing variant to the order type RM01 in thedefault values of plant 1000. Which costing variant was assigned for thissimultaneous costing?

_____________________________________________________________

_____________________________________________________________

5. Display the customizing settings for the calculation of the planned materialcosts for the product cost collector. Which valuation variant was assigned tocalculate the planned order costs for costing variant PREM?

_____________________________________________________________

_____________________________________________________________

6. What types of costs can be updated with the costing variant?

_____________________________________________________________

_____________________________________________________________

_____________________________________________________________

7. What price selection strategy is selected for calculating the materialcomponents?

_____________________________________________________________

_____________________________________________________________

_____________________________________________________________

8. What price selection strategy is selected for calculating the production costs?

_____________________________________________________________

_____________________________________________________________

_____________________________________________________________

Task 3:Create a production order and analyze the connection with the production processand the product cost collector.

1. Create a production order for 10 pieces of material R-F1##, using productionplant 1000, order type PP08. Use forward scheduling and enter today's dateas the start date.




2. Check the control data for the production order. How were the costingvariants for actuals, the costing sheet and overhead key determined for theproduction order? Can they be changed for the production order?

3. What order status is related to the use of a product cost collector?

4. Locate the production process on the Control data screen. Is this productionprocess unique for this BOM and routing, or is it valid for R-F1## at plant1000 in general?

5. On the Assignment tab page, determine which profit center has been assignedto the production order. Which master record determined the profit center?

6. Select Operation Overview, and review the operations that have been selectedfor this production order. Which work center is assigned to operation 0010?What is the control key for this operation?




7. Review the material components and verify the required quantity for eachcomponent. What are the required quantities of components R-B1## andR-B2##? Is there any planned scrap for these components?

8. Release the production order.

9. Save the production order. Record the order number.

Order number ______________

Task 4:1. The use of a product cost collector is dependent on the order type selected

for the production order. Display the order type defaults for plant 1000 andorder type PP08, and review the Customizing settings.

2. Is the product cost collector indicator selected?

3. What is the default rule for the CO settlement?

4. If a product cost collector is found for a material, will the RA Key andCosting variant for order type PP08 default to the production order?



Solution 8: Master Data and PreliminaryCostingTask 1:To manage the cost object controlling for pump assembly R-F1##, a productcost collector must be created. The controlling level for the pump will be theBOM/routing level.

1. Create a product cost collector for pump assembly R-F1## in plant 1000.The order type is RM01. The product cost collector must be valid for aBOM and routing. While creating the cost collector, enter BOM usage 1,




alternative 01, and search for a valid routing for material R-F1## in plant1000. Save the product cost collector. Choose Yes when asked if you want tocreate a preliminary cost estimate for the product cost collector.

a) Accounting → Controlling → Product Cost Controlling → CostObject Controlling → Product Cost by Period → Master Data →Product Cost Collector → Edit (KKF6N)

Create a product cost collector for pump assembly R-F1## in plant1000. The order type is RM01. The product cost collector must bevalid for a BOM and routing. While creating the cost collector, enterBOM usage 1, alternative 01, and search for a valid routing for materialR-F1## in plant 1000. Save the product cost collector. Choose Yeswhen asked if you want to create a preliminary cost estimate for theproduct cost collector.

Enter your material R-F1##.

Plant 1000

Select Create.

Enter order type RM01.

Select BOM/routing

Enter BOM Usage 1.

Enter alternative BOM 01.

Enter task list type Routing

Search for the routing group using the material R-F1##, Plant 1000,task list type N.

Choose Confirm (Transfer data)

Save your entries.

Choose Yes when asked if you want to create a preliminary costestimate for the product cost collector.

2. Using the display transaction for the product cost collector, display the costdata. What cost data was assigned to the cost collector? What order type isassigned to the cost collector?

Costing sheet:

Overhead key:

Results Analysis key:

Variance key:

Order Type:




Order number:

Production Process:

a) The product cost collector is immediately displayed:

The following information is displayed on the Data tab:

Costing sheet: COGM

Overhead key: SAP10

Results Analysis key: FERT-P

Variance key: 000001

The following information is displayed on the Header tab:

Order Type: RM01

Order Number:

The following information is displayed on the Production Process tab:

Production Process Number:

3. Verify the planned costing variant and the actual costing variant for theproduct cost collector. A different costing variant is specified for the plannedcosts than for the actual costs. Why is this necessary?

Planned Costing Variant:

Actual Costing Variant:

Why is this necessary?

a) The costing variants are displayed on the Data tab:

Planned Costing Variant: PREM

Actual Costing Variant: PPP3

Caution: You must select a unique costing variant fordetermining both planned and actual costs, since the assignedcosting type initiates the update of the results of either thepreliminary cost estimate or the actual costs of the product costcollector. In addition, different material and activity pricescan be selected for preliminary costing and simultaneouscosting. Different valuations may also be selected for externalprocurement and external activities.




Task 2:A preliminary cost estimate was created for your product cost collector. Reviewthe results of the cost estimate and display the customizing settings for the plannedcosting variant and order type RM01.

1. Display the preliminary cost estimate for the product cost collector. What arethe costs of goods manufactured for 10 pieces?

COGM:

a) The cost estimate is displayed on the tab page Header: Choose Displaycost estimate.

To display the cost for 10 pieces, change the entry for Costs based on toUser entry and enter 10 in the quantity field.

The COGM for 10 pieces is displayed:

2. Display the itemization report for R-F1##. Determine the calculated costsfor the assembly R-B1##.

Costs: ____________

a) The value for 10 pieces of R-B1## is displayed in the Itemization report.

3. Create another session. Display the current cost estimate for assemblyR-F1##. Compare the preliminary cost estimate calculated for the productcost collector for assembly R-F1## with the current standard cost estimatefor this material. How can there be differences between these two prices?




Standard: ____________

a) Create another session (System → Create session).

Logistics → Materials management → Material master → Material→ Display → Display current (MM03)

Before beginning the task, choose Add to favorites.


Select Enter.

Select view Costing 2.

Select Enter.

Enter plant 1000.

Select Enter.

The current standard is displayed under the column marked Current.

The costing variant used to calculate the standard cost estimate andthe costing variant used to calculate the product cost collector mayuse different valuation variants. However, even if the same valuationvariants are used, the prices of the component materials and activityprices may have changed between the time the standard cost estimatewas created and the time when the cost was calculated for the productcost collector. Also, the current BOM or routing (quantity structure)may be different than the quantity structure used in the standard costestimate.

In addition, if more than one procurement process is available forR-F1##, mixed costing could have been used to calculate the standard.

4. The planned costs were calculated using the costing variant PREM. Checkthe assignment of this costing variant to the order type RM01 in thedefault values of plant 1000. Which costing variant was assigned for thissimultaneous costing?

_____________________________________________________________




_____________________________________________________________



Choose SAP Reference IMG.

Controlling → Product Cost Controlling → Cost Object Controlling→ Product Cost by Period → Product Cost Collectors → DefineCost-Accounting-Relevant Default Values for Order Types and Plants(OKZ3)

Select plant 1000, order type RM01.

Choose Details.

The costing variant for the simultaneous costing is PPP3.

5. Display the customizing settings for the calculation of the planned materialcosts for the product cost collector. Which valuation variant was assigned tocalculate the planned order costs for costing variant PREM?

_____________________________________________________________

_____________________________________________________________

a) Return to IMG node Product Cost Collector, then choose CheckCosting Variants for Product Cost Collectors → Costing Variants toDetermine Activity Quantities (OKKN)

Select Costing Variant PREM.

Choose Details.

Valuation Variant Preliminary Cost Estimate (190).

Back out of the Valuation Variant.

6. What types of costs can be updated with the costing variant?

_____________________________________________________________

_____________________________________________________________

_____________________________________________________________

a) Select the Costing Type view on the Details screen.

Select the Misc. tab.

The costing type determined that the preliminary cost estimate for theproduct cost collector is updated.

7. What price selection strategy is selected for calculating the materialcomponents?




_____________________________________________________________

_____________________________________________________________

_____________________________________________________________

a) Select the Valuation Variant view on the Details screen.

The selection strategy is:

1. Price from purchasing info record2. Planned price 13. Standard price4. Moving average price

8. What price selection strategy is selected for calculating the production costs?

_____________________________________________________________

_____________________________________________________________

_____________________________________________________________


Select the Activity Types/Processes tab.

The selection strategy is:

1. Planned price as average of all fiscal year periods2. Planned price for the period




Task 3:Create a production order and analyze the connection with the production processand the product cost collector.

1. Create a production order for 10 pieces of material R-F1##, using productionplant 1000, order type PP08. Use forward scheduling and enter today's dateas the start date.

a) Logistics → Production → Shop Floor Control → Order → Create→ With Material. (CO01)



Enter production plant 1000.

Enter order type PP08.

Select Enter.

Enter the quantity of 10.

Enter today’s date as the start date.

Change the scheduling type to Forwards.

2. Check the control data for the production order. How were the costingvariants for actuals, the costing sheet and overhead key determined for theproduction order? Can they be changed for the production order?

Answer: Select the Control data view.The actual costing variants, costing sheet and overhead key were assigned tothe order via the product cost collector. In this scenario, costs are not updatedto the production order, but to the product cost collector. The display of thesefields is for information only, they cannot be changed on the productionorder. Only the costing variant for planned costs can be changed.

3. What order status is related to the use of a product cost collector?

Answer: Select Status. The status PCC indicates that a product cost collectoris being used.

4. Locate the production process on the Control data screen. Is this productionprocess unique for this BOM and routing, or is it valid for R-F1## at plant1000 in general?

Answer: The production process and BOM/routing are displayed on theControl data tab page. The production process is unique for this BOM androuting. This was determined when the product cost collector was created.




5. On the Assignment tab page, determine which profit center has been assignedto the production order. Which master record determined the profit center?

Answer: Select the Assignment tab.The profit center is displayed. The profit center is maintained in the materialmaster record for R-F1##.

6. Select Operation Overview, and review the operations that have been selectedfor this production order. Which work center is assigned to operation 0010?What is the control key for this operation?

Answer: Select Operation overview.Work center R-M## is assigned to operation 0010. The control key is PP01.

7. Review the material components and verify the required quantity for eachcomponent. What are the required quantities of components R-B1## andR-B2##? Is there any planned scrap for these components?

a) Select operation 0010.

Choose Components (icon in lower area of screen).

R-B1## → 10 PC

R-B2## → 10 PC

There is no planned scrap for these components. This can be confirmedby displaying the Component detail screen using the icon on the lowerleft.

8. Release the production order.

a) Choose Release order .

9. Save the production order. Record the order number.

Order number ______________

a) Select Save.




Task 4:1. The use of a product cost collector is dependent on the order type selected

for the production order. Display the order type defaults for plant 1000 andorder type PP08, and review the Customizing settings.

a) Favorites → Tools → Customizing → IMG→ Execute Project (SPRO)


Controlling → Product Cost Controlling → Cost Object Controlling→ Product Cost by Order → Manufacturing Orders → DefineCost-Accounting Relevant Default Values for Order Types and Plants(OKZ3)

Select plant 1000, order type PP08.

Choose Details.

2. Is the product cost collector indicator selected?

Answer: Yes, the product cost collector indicator is selected.

3. What is the default rule for the CO settlement?

Answer: The default rule for CO settlement is PP2, periodic settlement.

4. If a product cost collector is found for a material, will the RA Key andCosting variant for order type PP08 default to the production order?

Answer: No, the RA key and costing variant for order type PP08 will notdefault to the production order. The settings for the product cost collectorwill be used.



Lesson Summary

You should now be able to:• Create the master data for a production order and a product cost collector• Explain the Customizing for a “decoupling scenario”• Carry out preliminary costing for a product cost collector


TFIN20_2 Lesson: Simultaneous Costing

Lesson: Simultaneous Costing

Lesson Overview


• Carry out goods movements and confirmations for the production order• Make direct postings from Financial Accounting to the product cost collector




When carrying out the production, goods issues and confirmations for theproduction order are carried out while direct postings from Financial Accountingdirectly address the product cost collector.




Figure 127: Debit of Product Cost Collector with Actual Costs

The following business transactions can result in actual costs on cost objects: G/Laccount postings in FI; goods movements in MM; repostings of primary costs;repostings of line items; internal activity allocations; repostings of internal activityallocations; direct assignment of personnel costs to cost objects using time sheets;



process cost allocation; manual process allocation; template allocation; calculationof overhead; revaluation of activities at actual prices; confirmations in Logisticsthat result in activity allocations; subcontracting.

Logistical functions such as goods issues and confirmations are still performedwith reference to the manufacturing order (or, in repetitive manufacturing, withreference to the production version). The resulting costs are updated to theproduct cost collector.

You can enter goods issues, confirmations, and goods receipts independently ofeach other. You can also have activity allocations and goods issues and/or goodsreceipts generated automatically when you confirm. You make the settings thatenable this in Logistics.

You can confirm the order header or individual operations. In Product Cost byPeriod, it is recommended that you confirm operations (affects the calculation ofwork in process).

Figure 128: Credit of Product Cost Collector by Goods Receipt



The price control of the material is specified in the material master record:

• Price Control Indicator V: The material is valuated at the moving averageprice (unit price). The moving average price changes with each goodsmovement or when orders from Cost Object Controlling are settled. Thevalue of the goods receipt is determined by the valuation variant for delivery.

• Price Control Indicator S:The material is valuated at the standard price. Inmake-to-stock production, this price is usually calculated in a standard costestimate for the material. In sales-order-related production with a valuatedsales order stock, the valuation price is selected using a predefined valuationstrategy and acts like a standard price.

• For materials whose price control is S, receipts into stock are valuated at thestandard price. The credit applied to the product cost collector is the quantityreceived into inventory multiplied by the standard price. For materials whoseprice control indicator is V, the receipt into inventory and the credit to theproduct cost collector is controlled by the valuation variant for delivery. Thevaluation variant for delivery determines which price field from the materialmaster is selected to value the goods receipt. When the product cost collectoris settled (for example, during the period-end closing), the postings formaterials with price control indicator S can differ from those for materialswith price control indicator V.

When the goods receipt is entered, the system automatically debits the balancesheet account and credits the inventory change account. The product cost collectoris credited using the primary cost element that corresponds to the plant activityaccount (inventory change account).

For internally manufactured materials, SAP recommends valuation at the standardprice.



Exercise 9: Simultaneous Costing -Product Cost Collectors

Exercise ObjectivesAfter completing this exercise, you will be able to:• Analyze the actual costs of material withdrawal and the related (component

scrap)• Analyze the actual production costs for the confirmation of production

activities• Analyze the actual cost for the receipt of the finished product• Display the Customizing settings for simultaneous costing

Business ExampleThe actual costs for a production order are posted with goods receipts and issuesas well as with confirmations for operations.

For the manufacturing of the pump assembly, the components are issued manually,via inventory management. If any components are scrapped during production,additional quantities are issued to the production order. The production floorrecords the progress (products made, execution times) of a production orderby utilizing order confirmations. During the confirmation, you can change thesuggested execution times. Goods receipts can be processed either manually usingInventory Management or automatically during production confirmation. Thisdepends on the control key of the operation. In our case, the goods receipt isautomatically updated with the confirmation. During the confirmation, you canenter scrap quantities.

Any changes to the suggested quantities (target quantities) cause quantity variancesfor the variance calculation that is carried out later during the period-end closing.

Task 1:Since the production order has been released to the shop floor, inventorytransactions and production confirmations can be posted against the order. Thesimultaneous costing is recorded on the assigned product cost collector.

1. Enter the goods issue for the production order. Due to material scrap thathas occurred during assembly, change the withdrawal quantity of materialR-B1## from 10 to 11. Will this quantity change be reported as a variance?

2. Enter a final confirmation for operation 10 of the production order. Entera yield of 10 pieces, and increase the labor time by a factor of 10 % toreflect the additional processing time necessary because of the scrappedcomponents. Save the confirmation.




3. Enter a partial confirmation for operation 70 of the production order.Enter a yield of 5 pieces and a scrap quantity of 1 piece. Save the partialconfirmation. Continue past the warning regarding the activity recalculationdue to the partial confirmation.

Hint: Because the operation uses control key PP99, this is amilestone confirmation with an automatic goods receipt.

Task 2:Use the Target/Actual - Comparison report to review the actual cost informationfor the product cost collector of material R-F1##.

1. Display the quantity of material R-B1## that was debited to the product costcollector. Display the activities that were debited to the product cost collector.

2. Locate the credit to the product cost collector for the goods receipt ofR-F1##. Was the cost collector credited for the confirmation of the assemblythat was reported as scrap?

3. What value was used to credit the product cost collector for the goods receiptof the pump assembly? Why?

Task 3:The actual costs for the activities were calculated using the costing variant PPP3.Review the customizing settings for the simultaneous costing of the costs for theproduct cost collector.

1. Display the assignment of this costing variant to the order type RM01 defaultvalues for plant 1000.

2. Which valuation variant is assigned to calculate the actual order costs forcosting variant PPP3?

Valuation variant:




3. What price is selected for calculating the production costs? Is this the sameprice that was used to determine planned costs (preliminary cost estimate)for the product cost collector?

Activity price selected for actual costs:

Activity price selected for planned costs:



Solution 9: Simultaneous Costing -Product Cost CollectorsTask 1:Since the production order has been released to the shop floor, inventorytransactions and production confirmations can be posted against the order. Thesimultaneous costing is recorded on the assigned product cost collector.

1. Enter the goods issue for the production order. Due to material scrap thathas occurred during assembly, change the withdrawal quantity of materialR-B1## from 10 to 11. Will this quantity change be reported as a variance?

a) Logistics → Production → Shop Floor Control → Goods Movements→ Goods Issue (MB1A)


Enter movement type 261, plant 1000, and storage location 0001.

Choose To order.

Enter the production order number.

Select Enter.

Change the withdrawal quantity for R-B1## from 10 to 11.

Save the material withdrawal.

Select Enter to continue past any warning message regarding reservedquantity.

Yes, a quantity variance will be determined for this material componentduring variance calculation.




2. Enter a final confirmation for operation 10 of the production order. Entera yield of 10 pieces, and increase the labor time by a factor of 10 % toreflect the additional processing time necessary because of the scrappedcomponents. Save the confirmation.

a) Logistics → Production → Shop Floor Control → Confirmation →Enter → For Operation → Time Ticket (CO11N)


Enter the order number and operation 0010.

Select Enter.

Enter the confirmation type Final confirmation.

Confirm a yield of 10 pieces.

Enter a labor execution time approximately 10% greater than thedefault time.

Save the confirmation.

3. Enter a partial confirmation for operation 70 of the production order.Enter a yield of 5 pieces and a scrap quantity of 1 piece. Save the partialconfirmation. Continue past the warning regarding the activity recalculationdue to the partial confirmation.

Hint: Because the operation uses control key PP99, this is amilestone confirmation with an automatic goods receipt.

a) Favorites → Confirmation → Enter → To Operation → Time Ticket(CO11N)

Enter the order number and operation 0070.

Select Enter.

Enter the confirmation type Partial confirmation.

Confirm a yield of 5 pieces.

Enter a scrap quantity of 1 piece.

Save the confirmation.

Continue past the warning messages regarding activity time calculation.




Task 2:Use the Target/Actual - Comparison report to review the actual cost informationfor the product cost collector of material R-F1##.

1. Display the quantity of material R-B1## that was debited to the product costcollector. Display the activities that were debited to the product cost collector.

a) Accounting → Controlling → Product Cost Controlling → CostObject Controlling → Product Cost by Period → Information system→ Reports for Product Cost by Period → Detailed Reports → ForProduct Cost Collectors (KKBC_PKO)


Enter plant 1000.

Choose Execute.

The activity types and materials are displayed in the Origin column.

To display the actual quantities for the line items:

Choose Change layout.

From the Column Set, select Total Actual Quantity.

Select Show selected fields.

Select Transfer (Enter).

2. Locate the credit to the product cost collector for the goods receipt ofR-F1##. Was the cost collector credited for the confirmation of the assemblythat was reported as scrap?

Answer: The product cost collector was credited for the goods receiptposting of 5 pieces. The 1 piece that was reported as scrap is not credited tothe product cost collector. It will be calculated as scrap value when variancesare calculated for the product cost collector.

3. What value was used to credit the product cost collector for the goods receiptof the pump assembly? Why?

Answer: The standard cost estimate was used to valuate the goods receipt.All materials that use standard price control also credit the product costcollector with the standard price. Only materials with moving average priceuse a valuation variant to determine the cost object credit at time of goodsreceipt. This can be confirmed by displaying the accounting view of R-F1##and locating the price control (Standard) and the current standard price.




Task 3:The actual costs for the activities were calculated using the costing variant PPP3.Review the customizing settings for the simultaneous costing of the costs for theproduct cost collector.

1. Display the assignment of this costing variant to the order type RM01 defaultvalues for plant 1000.

a) Favorites → Tools → Customizing → IMG → Execute Project(SPRO)


Controlling → Product Cost Controlling → Cost Object Controlling→ Product Cost by Period → Product Cost Collectors → DefineCost-Accounting-Relevant Default Values for Order Types and Plants(OKZ3)

Select plant 1000, order type RM01.

Choose Details.

The costing variant for the simultaneous costing is PPP3.

2. Which valuation variant is assigned to calculate the actual order costs forcosting variant PPP3?

Valuation variant:

a) Return to the IMG node Product Cost Collectors, then choose

Check Costing Variants for Product Cost Collectors → CostingVariants for Valuation of Internal Activities (OPL1)

Select Costing Variant PPP3.

Choose Details.

Valuation Variant Production Order - actual (007).

3. What price is selected for calculating the production costs? Is this the sameprice that was used to determine planned costs (preliminary cost estimate)for the product cost collector?

Activity price selected for actual costs:




Activity price selected for planned costs:



The strategy sequence for actual costs is:

1. Plan price for the period

To display the planned cost strategy, return to the IMG node and choose

Check Costing Variants for Product Cost Collectors Choose CostingVariants to Determine Activity Quantities (OKKN)

Select Costing Variant PREM.

Choose Details.

Choose Valuation Variant.


The price selection strategy sequence is:

1. Plan price as average of all fiscal year periods2. Plan price for the period

No, they do not use the same price.



Lesson Summary

You should now be able to:• Carry out goods movements and confirmations for the production order• Make direct postings from Financial Accounting to the product cost collector



Lesson: Period-End Closing

Lesson Overview


• Describe the typical steps for period-end closing in make-to-stock productionwith Product Cost by Period

• Calculate work in process (WIP) at target cost and explain the associatedCustomizing

• Carry out variance analysis• Describe the integration of period-end closing




Period-end closing is carried out completely on the cost object in Controlling; inthis scenario, on the product cost collector.


TFIN20_2 Lesson: Period-End Closing

Template Allocation, Revaluation, Overhead

Figure 129: Period-End Closing for the Product Cost Collector

Functions in the period-end closing process for product cost collectors:

• Template allocation for automatic allocation of process costs and activitytypes.

• Revaluation, at actual prices, of activity types and business processes withwhich cost objects were debited.

• Allocation of overhead.• Calculation of work in process (WIP): In Product Cost by Period, the work

in process is calculated at target cost.• Variance calculation: The variance calculation function investigates the

causes of the order's balance. This function provides answers to questionssuch as: Why did the production process cost more than anticipated?

• Settlement

– The work in process is settled to Financial Accounting and ProfitCenter Accounting

– The order balance is settled to Financial Accounting and Profit CenterAccounting (also to the Material Ledger, if active)

– The variance categories are settled to Profitability Analysis

The Schedule Manager simplifies the period-end closing process. It is addressedextensively in course AC690.



Figure 130: Template Allocation

Template allocation is a new technique for passing on the costs of the OverheadCost Controlling to cause as closely and “as comfortably as possible” (that is,without manual effort). All objects of the Controlling are suitable for use asreceivers, especially cost objects and profitability segments of the CO-PA.

• The template allocation technique allocates ABC processes and activitytypes of the cost centers. In principle, all information in the system can beused as the cause value (cost driver).

• The process template is determined dynamically based on the followingparameters:

– The costing sheet for the application of overhead is selected with thevaluation variant.

– The overhead key is either entered directly in the cost object or derivedfrom the overhead group from the material master (costing view 1).

– With the combination of overhead key and costing sheet, you canassign a template in Customizing.

For the previous example, you must define a template in which you use thefunction ORDER_TARGET_PROCESS_QUANTITY to calculate the actualprocess quantity. In this function, the target costs of the process are calculated onthe basis of the current standard costs.



Figure 131: Revaluation at Actual Prices (1)

You can determine the actual prices for activity types and business processes at theend of the period. The actual prices are the actual costs divided by the activity andprocess quantities consumed.

You control whether revaluation at actual prices is possible in Customizing in theparameters for the actual version that depend on the fiscal year, as well as in themaster data of the activity type.

You calculate actual prices in Overhead Cost Controlling.

Revaluation at actual prices is performed in the period-end closing process for theproduct cost collector. The cost object is charged with the difference between theactual price and the price originally allocated to it.

You can revaluate activities and business processes at actual prices in thefollowing components:

• In Cost Object Controlling, for all cost objects (product cost collectors;production orders and process orders, sales order items (if they are being usedas cost objects), internal orders; cost object hierarchies; general cost objects)

• In the Project System (projects (WBS elements), networks, networkactivities)



Figure 132: Revaluation at Actual Prices (2)

In this example, the planned cost center cost differs from the actual cost. Theplanned price is 10.00 per hour. However, only 9 hours were allocated instead ofthe 10 that were planned in the preliminary costing. At the planned price, thisresults in 90.00 being allocated to the product cost collector.

At the end of the period, the total activity-related cost at the cost center isdetermined to be 117.00. At 9 allocated hours, this results in a target price of 13.00per hour, that is, 9 x 13.00 = 117.00 in total. The difference of 27.00 is charged tothe product cost collector with the revaluation at actual prices function.

In this example, revaluation at actual prices is illustrated using an activity type.It also applies to business processes.



Figure 133: Actual Overhead Calculation

Actual overhead calculation allocates cost objects with actual overhead.

Overhead is allocated to cost objects using quantity-based or percentage allocationrates.

You can simulate overhead allocation (test run).

The overhead calculation process generates the following postings:

• Overhead costs are charged to the cost objects (product cost collectors,manufacturing orders, or general cost objects).

• The Overhead Cost Object (cost center, order, process) is credited.

The costs are updated using the secondary cost elements specified in the creditrows in the costing sheet.

Actual overhead calculation uses the costing sheet entered in the product costcollector.



Work in Process

Figure 134: Work in Process (WIP) at Target Cost

Calculating the WIP means valuating the unfinished goods (work in process).

In Product Cost by Period, work in process is valuated at target cost. The operationquantities confirmed for the manufacturing orders or production versions arevaluated at the target cost of the operation provided that the quantities are notscrap and no goods receipt has been entered.

In Customizing, you can use a valuation variant to define which cost estimateshould be used to calculate the target costs for the valuation of the work inprocess and the scrap. If you are using a product cost collector, in many cases itis appropriate to calculate the target costs using the preliminary costing for theproduct cost collector.

The difference between the work in process in the current period and the work inprocess in the previous period corresponds to the inventory change of unfinishedgoods and is transferred to financial accounting when you settle.



Figure 135: Customizing: Work in Process at Target Cost

You can specify a valuation variant to select the cost estimate for the valuationof work in process and scrap variances at target cost.

Target costs can be calculated on the basis of:

• Planned costs (that is, the costs calculated in preliminary costing for themanufacturing order or for the product cost collector).

• Based on an alternative material cost estimate (such as a modified standardcost estimate or an actual cost estimate). To identify the costing, enter acosting variant and costing version.

• The current standard cost estimate.

You assign a valuation variant for work in process and scrap to a combination ofcontrolling area, Results Analysis version, and Results Analysis key.

The only Results Analysis keys that are relevant are those used for the calculationof work in process at target cost.



Figure 136: Customizing: Assignment Table

You assign the following cost elements to line IDs:

• All cost elements with which an order is debited and credited.• With work in process at target cost, all cost elements in the costing used for

the calculation of target costs for the valuation of work in process (such asall cost elements listed in the preliminary cost estimate for the product costcollector).

– For valuation-relevant costs (such as direct material costs), you mustcreate line IDs of category “K” (costs).

– If you want no work in process to be created for entire line IDs (forexample, because the costs are accrued), you must assign these line IDsto category “N” (not included).

The line IDs break down the costs incurred for the order into direct materials costs,direct production costs, material overhead, and so on. These groups can be basedon the structure of the cost of goods manufactured in the cost component structure(cost component split), for example. You can specify a percentage that cannot becapitalized separately for each line ID.

You can mask your entries. The entry 00004+++++ includes the cost elementsfrom 400000 to 499999. If you want particular cost elements to be treatedseparately, enter them unmasked (example: 0000415000).



Figure 137: Customizing: Update Table

In this step, you specify with a Results Analysis category how the ResultsAnalysis is handled and which Results Analysis cost elements of type 31 theResults Analysis is saved under on the cost object.

• For valuation-relevant costs (such as direct material costs), you must createline IDs of category “K” (costs).

• If you want no work in process to be created for an entire line ID (forexample, because the costs are accrued), you must assign this line ID tocategory “N” (not included).

Figure 138: Customizing: Posting Rules Table



In this step, you specify to which G/L accounts in Financial Accounting work inprocess is settled. The assignment is carried out:

• By Results Analysis category: In many cases it will be sufficient to generatea posting rule for the work in process with a requirement to capitalize(category WIPR).

• By Results Analysis cost element.

You assign a balance sheet account and an account of the income statement toeach Results Analysis category (such as each Results Analysis cost element).You cannot create cost elements in CO for the G/L accounts that you specify inthe posting rules.

When the work in process is settled, a posting document is generated in FI. Whenthe system capitalizes the work in process, it debits Unfinished Goods Inventory(WIP) (balance sheet account) and credits Changes in Unfinished Goods Inventory(WIP) (income statement account).

If you have specified a profit center in the product cost collector, data is alsotransferred to Profit Center Accounting.

Variance Calculation

Figure 139: Variance Calculation: Target Version



As of Release 4.5, you can deduct the scrap variances from the actual costs forthe calculation of control costs. The scrap variation is calculated by valuating theunplanned scrap quantities with the target costs minus the planned scrap costs.The unplanned scrap quantity is the difference between the actual scrap quantityof the operation and its target scrap quantity.

In variance calculation, target cost versions are used mainly to control the typeof variance (total variance, production variance, or planning variance). Theycan also be used to valuate the scrap variances. The standard system uses thefollowing target cost versions:

• Target cost version 0 (total variance). The total variance equals the orderbalance. For this version, choose actual costs as the control costs andstandard cost estimate as the target costs.

• Target cost version 1 (production variance). For this version, choose actualcosts as the control costs and planned costs as the target costs.

• Target cost version 2 (planning variance). With target cost version 2, thecosts in the preliminary order cost estimate are interpreted as control costs.For this version, choose planned costs as the control costs and currentstandard cost estimate as the target costs. You cannot calculate planningvariances for product cost collectors.

• Target cost version 3 (production variance of the period). You compare theplanned costs of the period calculated on the basis of an alternative materialcost estimate (such as a modified standard cost estimate) with the actualcosts of the period on the basis of the yield delivered to inventory in theperiod. The base quantity for variance calculation is the yield. For thisversion, choose actual costs as the control costs and alternative material costestimate as the target costs.

In Product Cost by Period, WIP and scrap variances are always deducted from theactual costs.



Figure 140: Variance Calculation: Variance Categories

Examples for variance categories:

Input price variances:Raw material 1 was valuated at 10 in the standard cost estimate. When thematerial was withdrawn from inventory, however, the goods movement wasvaluated at 11 (the price control specifies that valuation is at the movingaverage price). This results in a price variance of 1.

Input quantity variance:Machine time of 15 minutes was planned, but 17 minutes were confirmed.The activity price for the machine time is 5 per minute. This results in aquantity variance of 10.

Resource-usage variance:Raw material 2 is used instead of raw material 1. The costs for both rawmaterials are reported as resource-usage variances.

Remaining input variance:Because the price for material 1 changed, the material overhead is higherthan planned. The difference between the planned and actual materialoverhead expense is reported as a remaining input variance.

Mixed-price variance:If the standard price of a material was costed using multiple procurementalternatives (mixed cost estimate), a later production without variances willstill have a difference to the standard price. This is the mixed-price variance.



Lot size variance:If another quantity was used for production than previously generated in theproduct costing, the fixed costs are adjusted proportionally with anotherquantity, that is, the fixed costs per piece change. This is the lot size variance.

Output price variance:The material is transferred to inventory at a price other than the standardprice (such as a moving average price). The difference is determined as anoutput price variance.

Remaining variance:If the system cannot determine the target costs, it will determine onlyremaining variances.

Figure 141: Addendum: Assembly Scrap and Operation Scrap



Figure 142: Addendum: Planned Scrap

The planned scrap rate reflects the planned material requirements and the plannedinternal activities, and is included in the standard cost estimate of the material.

Component scrap refers to materials that are faulty before they enter theproduction process. Component scrap increases the quantity of input materials.Planned component scrap is taken into account in the standard cost estimate andtherefore affects the standard price. Variances in the actuals are considered inputquantity variances.

Planned operation scrap is the scrap that is expected to be incurred in an operation.

Assembly scrap can be calculated by the system on the basis of the operationscrap. Assembly scrap increases the planned order quantity and also the quantityof the input materials. For example, if the assembly scrap for a material is 56.25%and you create a production order for the material with a planned order quantity of100 units, the system increases the planned order quantity to 156.25.

If you do not want the assembly scrap to affect the input quantities of certaininput materials, set the Net indicator in the BOM for these materials and enter theoperation scrap in the BOM.



Figure 143: Variance Calculation: Scrap Variance (1)

The scrap variance is the value of the scrap variance quantity. The scrap variancequantity is the difference between the target scrap quantity (planned scrap quantityconverted to yield) and the actual scrap quantity (confirmed scrap quantity).

The scrap variance quantity is valuated at target cost less planned scrap cost.

The following formula calculates the target scrap quantity: 850 units = 80%(yield), 20% scrap = x

Therefore: (850 x 0.2) 0.8 = 212.5.



Figure 144: Variance Calculation: Scrap Variance (2)

Figure 145: Variance Calculation: Lot Size Variance

Lot size variances can be calculated for all target cost versions that reportvariances on the output side.

Lot size variances are calculated in the following formula:

Lot size variance = Lot size-independent target costs x (1 – Control quantity/ Planned quantity).

Lot size variances are only calculated if the planned quantity does not equal theconfirmed quantity (the delivered quantity).

In this example, the costs that are independent of lot size (such as the setup andteardown costs) are 40.00 per unit.

Example: The standard price for a finished product as calculated in thestandard cost estimate is 120.00.



The costs for 10 units of finished product delivered to inventory in the periodwere updated to the product cost collector. The actual cost is 840.00. Thegoods receipts are valuated at 1,200.00 (quantity delivered to inventorymultiplied by the standard price as calculated in the standard cost estimate).The target costs, however, are 10 x 40.00 for materials, 10x 40.00 for internalactivities, and 1 x 40.00 for setup = 840.00. The difference between thetarget costs and credit is the lot size variance.

Figure 146: Variance Calculation: Mixed-Price Variance

If you want to perform mixed costing in Product Cost Planning, you must createa procurement alternative for each production version and then define a mixingratio. The mixed cost estimate calculates a mixed price. This price can be writtento the material master as the standard price.

Mixed-price variances arise when the system updates the mixed price as thestandard price in the material master and valuates the stock with it. Themixed-price variance results from the difference between the target credit (actualquantity x standard cost of procurement alternative) determined in the variancecalculation process and the actual credit posted at the time of the goods receipt(actual quantity x standard price).

If you have not activated the field mixed-price variance in the variance variant,mixed-price variances are reported as output price variances.



Figure 147: Customizing for Variance Calculation

You always enter the valuation variant for scrap in target cost version 0. Evenif you calculate variances in a different target cost version (such as target costversion 1), the scrap variance may be valuated with the valuation variant specifiedin target cost version 0.

You normally use the same valuation variant for the valuation of work in processat target cost and for the valuation of scrap variances.

In the variance variant, you specify which variance categories you want the systemto report. You link the variance variant to the target cost version.

Variances can only be calculated on a cost object if you have stored a variancekey in its master record. You specify the variance key in the costing view of thematerial master record; it is transferred from there into the product cost collector(in Product Cost by Order, it is transferred into the manufacturing order). You canspecify the variance key as a plant-based default value in Customizing for ProductCost by Period or Product Cost by Order. The variance key is then transferredinto all material master records created in the plant in question.



Settlement

Figure 148: Settlement

If the price control indicator is set to S, settlement debits the price differenceaccount and credits the inventory change account. The value of the total varianceis posted.

If the price control indicator is set to V, settlement debits the inventory accountand credits the inventory change account.

Settlement also transfers the work in process to Financial Accounting.

The value of the total variance and the work in process can also be transferredto Profit Center Accounting.

The value of the total variance is also updated in the Material Ledger (if active).

You can settle the variance categories to Costing-Based Profitability Analysis(CO-PA). The only variances that are relevant for settlement to ProfitabilityAnalysis are those calculated on the basis of target cost version 0. The value fieldsare assigned to the variances for each category and cost element.

If the price difference account has a corresponding cost element, the pricedifference is settled to Account-Based Profitability Analysis in a similar way asto Financial Accounting.



Figure 149: Customizing: Settlement Profile

The settlement profile for a product cost collector must allow settlement to amaterial. If you want to settle variances to Profitability Analysis, the Variancesindicator must be selected and settlement to a profitability segment must beallowed.

The settlement profile is defaulted through the order type of the product costcollector.

The settlement profile also has fields for the allocation structure and the PAtransfer structure. These structures control settlement to costing-based ProfitabilityAnalysis.

In the settlement structure, you indicate whether you want to settle with sourcecost elements or with settlement cost elements.



Figure 150: Customizing: PA Transfer Structure

In the PA transfer structure, you specify which variance category and cost elementgroups are assigned to which value fields in Profitability Analysis.

Values and quantities must be transferred into different value fields. The valuescan either be differentiated by the fixed/variable indicator or transferred as a sum(Fixed/variable indicator = 3).



Exercise 10: Period-End Closing

Exercise ObjectivesAfter completing this exercise, you will be able to:• Allocate process costs to the product cost collector using the allocation

template and review the customizing settings for the template• Allocate overhead costs to the product cost collector and review the

customizing settings for the costing sheet• Calculate WIP at target cost for the product cost collector and explain the

customizing settings• Execute variance analysis for the product cost collector and analyze the result• Analyze the target cost for unplanned scrap of the finished product• Execute settlement of the WIP balance and the variances to FI and PA

Business ExampleAt the end of the period, all cost objects are processed in period-end closing,which consists of the typical steps as follows: template allocation, revaluationof activity and process allocation at actual price, WIP calculation, variancecalculation, and cost object settlement.

Your controlling department has decided to use ABC to allocate order processingcosts. Indirect warehousing costs are allocated to the product cost collector usingthe costing sheet. After allocation of all actual costs of the current period to theproduct cost collector, WIP must be calculated at target cost and transferred toFinancial Accounting. During the subsequent variance calculation, period-basedvariances are generated according to their causes (variance categories), saved tothe order, and later transferred to Financial Accounting (as a sum) and ProfitabilityAnalysis (in detail).

Task 1:Complete the process cost allocation for the product cost collector for materialR-F1##.

1. Using the individual processing transaction for Business Process CostAllocation, apply the actual process cost to the production order for version 0of the current period.




2. From the detailed list display, determine the value of the process costallocation. What is the total cost and quantity for process 300900?

3. Check the configuration settings for the determination of the processtemplate. What process template is selected for the product cost collector?

Task 2:

1. The performance of period-end closing activities, such as revaluation ofactivities, which have already been posted, is improved by using product costcollectors. This is because the number of cost objects is less than productcosts per order.Determine whether this statement is true or false.□ True□ False

2. The revaluation of activity prices can be used to support the valuationstrategy of Actual activity price of previous period.Determine whether this statement is true or false.□ True□ False

3. The revaluation of actual prices follows the allocation of process costs andoverhead costs.Determine whether this statement is true or false.□ True□ False




Task 3:Calculate the overhead costs for the product cost collector for R-F1##.

1. Using the individual processing transaction, calculate the overhead costs forthe current period to the product cost collector.

2. From the detailed list display, determine the value of the overheadcalculation. What are the total overhead costs? What cost center has beencredited for the overhead allocation?

3. Display the configuration settings for the determination of the overheadcosting sheet. What costing sheet is assigned to the valuation variant foractual costs, valuation variant 007?

Task 4:Calculate WIP for your product cost collector.

1. Using the individual processing transaction, calculate (WIP) value for yourproduct cost collector, using the current period and Results Analysis version0.

2. From the product cost collector WIP display access the detailed report byselecting WIP Explanation.

3. The report dynamically explodes the costing details for operation 0010. Thisshould reflect the quantities confirmed for the previous transactions. A yieldof ten pumps was confirmed for operation 0010. Then, a yield of 5 pieceswere confirmed for operation 0070 where 1 piece was also reported as scrap.This leaves a remaining WIP quantity of 4 pieces for operation 0010.

4. Remain in the WIP explanation report. Using a different session, display thepreliminary cost estimate for the product cost collector. Change the costingdisplay to 4 pieces to match the WIP quantity.




5. Go to the Itemization report. Change the display variant to view the costsby operations (grouped). Explode the summation rows for operation 0010.Compare the costs of the preliminary cost estimate with the calculated WIPcosts. They should be identical to include the process and overhead costs.

6. Leave the preliminary cost estimate for the product cost collector, anddisplay the actual costs for the product cost collector. Continue to display theWIP explanation report in the other session. Compare the calculated totalWIP amount with the remaining balance for your production order. Are theythe same value? Can you explain this?



Solution 10: Period-End ClosingTask 1:Complete the process cost allocation for the product cost collector for materialR-F1##.

1. Using the individual processing transaction for Business Process CostAllocation, apply the actual process cost to the production order for version 0of the current period.

a) Post the process costs.

Accounting → Controlling → Product Cost Controlling → CostObject Controlling → Product Cost by Period → Period-End Closing→ Single Functions: Product Cost Collector→ Template Allocation→ Individual Processing (CPTE)

Enter your material number.

Plant 1000

Version: 0

Period: Current month

Fiscal year: Current year

Deselect test run.

Select the indicator Detail lists.

Choose Execute.

2. From the detailed list display, determine the value of the process costallocation. What is the total cost and quantity for process 300900?

Answer: Select the order number.Choose Goto → Period screenThe fixed and variable costs for process 300900 are displayed.




3. Check the configuration settings for the determination of the processtemplate. What process template is selected for the product cost collector?

Answer: Tools → Customizing → IMG→ Execute Project (SPRO)Choose SAP Reference IMG.Controlling → Product Cost Controlling → Cost Object Controlling →Product Cost by Period → Basic Settings for Product Cost by Period →Templates → Assign Templates to Cost Objects (KTPF)The process template COPC-10 is assigned to Controlling area 1000, costingsheet COGM, OH key SAP10, and Environment 010.

Task 2:

1. The performance of period-end closing activities, such as revaluation ofactivities, which have already been posted, is improved by using product costcollectors. This is because the number of cost objects is less than productcosts per order.

Answer: True

2. The revaluation of activity prices can be used to support the valuationstrategy of Actual activity price of previous period.

Answer: True

3. The revaluation of actual prices follows the allocation of process costs andoverhead costs.

Answer: False




Task 3:Calculate the overhead costs for the product cost collector for R-F1##.

1. Using the individual processing transaction, calculate the overhead costs forthe current period to the product cost collector.

a) Accounting → Controlling → Product Cost Controlling → CostObject Controlling → Product Cost by Period → Period-End Closing→ Single Functions: Product Cost Collector → Overhead →Individual Processing (CO42)


Plant 1000

Period: Current month

Fiscal year: Current year

Deselect test run.

Select the indicator Detail lists.

Select the indicator Dialog Display.

Choose Execute.

2. From the detailed list display, determine the value of the overheadcalculation. What are the total overhead costs? What cost center has beencredited for the overhead allocation?

Answer: From the Basic List, select Next List Level.The value of the overhead is displayed.The cost center 4130 is credited as the sender.




3. Display the configuration settings for the determination of the overheadcosting sheet. What costing sheet is assigned to the valuation variant foractual costs, valuation variant 007?

Answer: Tools → Customizing → IMG→ Execute Project (SPRO)Choose SAP Reference IMG.Controlling → Product Cost Controlling → Cost Object Controlling →Product Cost by Period → Product Cost Collectors → Check CostingVariants for Product Cost Collectors → Costing Variants for Valuation ofInternal Activities (OPL1)Select Costing Variant PPP3.Choose Details.Choose Valuation Variant.Select the Overhead tab.The costing sheet Costs of Goods Manufactured (COGM) is assigned tothis valuation variant.

Task 4:Calculate WIP for your product cost collector.

1. Using the individual processing transaction, calculate (WIP) value for yourproduct cost collector, using the current period and Results Analysis version0.

a) Accounting → Controlling → Product Cost Controlling → CostObject Controlling → Product Cost by Period → Period End Closing→ Single Functions: Product Cost Collectors → Work in Process→Individual Processing→ Calculate (KKAS)


Plant 1000

WIP to Period: Current month

Fiscal Year: Current fiscal year

Results Analysis version 0

Deselect Test Run.

Choose Execute.

2. From the product cost collector WIP display access the detailed report byselecting WIP Explanation.

a) Choose the product cost collector.

Select WIP Explanation.




3. The report dynamically explodes the costing details for operation 0010. Thisshould reflect the quantities confirmed for the previous transactions. A yieldof ten pumps was confirmed for operation 0010. Then, a yield of 5 pieceswere confirmed for operation 0070 where 1 piece was also reported as scrap.This leaves a remaining WIP quantity of 4 pieces for operation 0010.

a)

4. Remain in the WIP explanation report. Using a different session, display thepreliminary cost estimate for the product cost collector. Change the costingdisplay to 4 pieces to match the WIP quantity.

a) Accounting → Controlling → Product Cost Controlling → CostObject Controlling → Product Cost by Period → Master Data →Product Cost Collector → Edit (KKF6N)


Enter plant 1000.


Select the Header tab.

Select Display Cost Estimate.

In Costs Based On select User Entry and enter 4 pieces.

5. Go to the Itemization report. Change the display variant to view the costsby operations (grouped). Explode the summation rows for operation 0010.Compare the costs of the preliminary cost estimate with the calculated WIPcosts. They should be identical to include the process and overhead costs.

a) Select the Itemization report. To review itemization by operation,choose Select Layout.

Select Operations (Grouped).

The operation subtotal is displayed. In addition, the overhead cost(which is not assigned to a specific operation) has been included inthe WIP calculation.




6. Leave the preliminary cost estimate for the product cost collector, anddisplay the actual costs for the product cost collector. Continue to display theWIP explanation report in the other session. Compare the calculated totalWIP amount with the remaining balance for your production order. Are theythe same value? Can you explain this?

Answer: Display the Planned/Actual Cost Report.Accounting → Controlling → Product Cost Controlling → Cost ObjectControlling → Product Cost by Period → Information system → Reportsfor Product Cost by Period → Detailed Reports → For Product CostCollectors (KKBC_PKO)Enter your material R-F1##.Time Frame: Cumulated.Enter plant 1000.Choose Execute.The balance is displayed on the bottom of the report.No, the remaining order balance is not the same as the calculated WIP attarget cost.With Product Cost by Period, WIP is calculated by using the actual remainingquantity at the planned cost.For this product cost collector, a quantity of 10 pieces was confirmed foroperation 0100. Then, 5 pieces were confirmed and 1 additional piece wasreported as scrap. This leaves a remaining WIP quantity of 4 pieces.



Lesson Summary

You should now be able to:• Describe the typical steps for period-end closing in make-to-stock production


Customizing• Carry out variance analysis• Describe the integration of period-end closing



Lesson: Addendum: Repetitive Manufacturing andMaterial Valuation

Lesson Overview


• Describe repetitive manufacturing• Assess the different strategies of material valuation

Business ExampleA manufacturer produces various types of make-to-stock pumps. Sales controllingis only carried out in Profitability Analysis (CO-PA).

The popular types are produced in a continuous production process and mapped inthe system with repetitive manufacturing. A less popular type should instead beonly produced based on lot size with production orders and only when the stock inthe warehouse drops below the reorder point.

You want to examine the representation of the production using “RepetitiveManufacturing” and the difference between “S” and “V” price-controlled material.

Repetitive Manufacturing

Figure 151: Repetitive Manufacturing


TFIN20_2 Lesson: Addendum: Repetitive Manufacturing and Material Valuation

Repetitive manufacturing refers to production planning and control without theuse of production orders.

The planned requirements for repetitive manufacturing are normally createdautomatically by material requirements planning (MRP), although they can alsobe created manually. Production planning and control uses the planned ordersfor capacity planning and scheduling.

The goals of repetitive manufacturing are as follows:

• Creation and revision of production quantities on a period and quantity basis(reduction in individual lot and order-specific processing)

• Reduction in production control and simpler backflushing tools (with theoption of using the full scope of the PP functionality)

Figure 152: Repetitive Manufacturing: Important Characteristics relevantto Cost Object Controlling

Cost object controlling is carried out for the controlling level of the material.With repetitive manufacturing, the controlling level is normally the productionversion or material.

The production version(s) are created in the material master record. You requirea BOM and a routing.

Costs are recorded on a product cost collector.



Figure 153: Repetitive Manufacturing Profile

Specific master data is required for Repetitive Manufacturing. This includes therepetitive manufacturing profile and the product cost collector.

The repetitive manufacturing profile in the master data of the MRP viewdetermines whether

• Activities are backflushed• Reporting points are used• A goods receipt is automatically posted after the last reporting point has

been confirmed

If you do not want to post any activities through reporting point confirmations,you can enter an internal activity allocation in the Controlling module and specifythe product cost collector for the material (and production version, if necessary).In addition, you can assign the product cost collector to a cost object hierarchy,and post the activities to the relevant cost object node. During period-end closing,the activity costs posted to the cost objects of the hierarchy can be distributed tothe assigned product cost collectors.

If you want to calculate work in process and scrap during period-end closing, youmust record backflush quantities at the reporting points.

If the activities are to be backflushed, you define in the repetitive manufacturingprofile whether the standard cost estimate for the material or the preliminary costestimate for the product cost collector should be used to determine the activityquantities for the backflush. The price is determined by the “Actual” valuationvariant for the product cost collector.



Material ValuationAddendum: Material Valuation - Overview (1)

• Valuation at Standard Price (S price)

– The standard price remains constant for one or more periods, often upto a year or longer.

– The standard price is normally calculated in a standard cost estimatefor the material.

– The total inventory value is the total inventory quantity multiplied bythe standard price.

– The price control field for the material is set to “S”.

The standard price remains valid for at least one period. The period is defined inMaterials Management (MM).

Addendum: Material Valuation – Overview (2)

• Valuation at the Moving Average Price (V price)

– For externally procured materials, the moving average price isrecalculated after every goods receipt and invoice receipt.

– For internally manufactured materials, the moving average price isrecalculated after every goods movement and each time an order issettled.

– The moving average price is the total inventory value of the materialdivided by the total quantity in inventory.

– The price control field for the material is set to “V”.• Valuation at the Periodic Output Price.

– The periodic output price is recalculated each time a period is closed.– The price control field for the material is set to “S”.

For internally manufactured materials, you can define a valuation variant for thevaluation of the goods receipts.

Addendum: Valuation of Materials at Standard Price

Advantages Disadvantages

• Standard cost accounting• Analysis of the effects of changes

in the production scenarios

• Inventories are valuedconsistently with plannedcosts



• Allocation of variance categoriesto costing-based ProfitabilityAnalysis (CO-PA)

• Products with widely fluctuatingpurchase prices or frequentchanges in the production processshould often be valuated at actualcost

Therefore:

Valuation at standard price is recommended for materials manufacturedin-house.

If the price control indicator is set to “S” (standard price) in the material masterrecord, a price difference account is debited with the total variance of the productcost collector for the period.

The material is not revaluated when the variances for the product cost collector aresettled to FI. During settlement, the system calculates a new statistical movingaverage price and transfers this statistical value to the accounting view of thematerial master record.

Settlement results in the following posting in FI: The price difference account isdebited and the inventory change amount is credited (inventory change).

Addendum: Valuation of Materials at Moving Average Price

Advantages Disadvantages

• Variances caused by differentpurchase prices of externallyprocured materials are includedin inventory valuation.

• Variances arising during theproduction of materials areincluded in inventory valuation.

• If material movements and ordersettlements overlap, the movingaverage price may be incorrect.

• Variances are not rolled upthrough the production structure.

• It is not possible to settle variancecategories to CO-PA.

Therefore:

Valuation at moving average price is not recommended for materialsmanufactured in-house.

If the price control indicator is set to V in the material master record, the inventoryaccount for the material is debited with the total variance of the product costcollector for the period.

The moving average price is re-calculated during settlement, updated in theaccounting view of the material master record and the inventory revaluedaccordingly. The corresponding revaluation document is generated in FI.



The following posting is made in FI:

• The inventory account is debited and the inventory change account iscredited.

If the inventory quantity is equal to or greater than the quantity produced by theorder, the full order balance is posted to the inventory account.

If no goods were received into inventory during the period, the actual costs aresettled to the price difference account. If the inventory quantity is less than thequantity received into inventory from the order, the system settles the difference tothe price difference account.

For information on the effects of the moving average price on internallymanufactured materials, see the documentation in Cost Object Controlling.



Lesson Summary

You should now be able to:• Describe repetitive manufacturing• Assess the different strategies of material valuation



Unit SummaryYou should now be able to:• Create the master data for a production order and a product cost collector• Explain the Customizing for a “decoupling scenario”• Carry out preliminary costing for a product cost collector• Carry out goods movements and confirmations for the production order• Make direct postings from Financial Accounting to the product cost collector• Describe the typical steps for period-end closing in make-to-stock production


Customizing• Carry out variance analysis• Describe the integration of period-end closing• Describe repetitive manufacturing• Assess the different strategies of material valuation


Unit 9Controlling by Sales Order without

Production (Service)

Unit OverviewThis unit shows controlling by sales order in a service scenario that works withoutlogistical quantity structures and is not integrated with production logistics.


• Explain the quantity and value flows in Controlling by sales order for aservice

• Explain unit costing for sales orders• Understand when to use resource-related billing• Explain the necessary settings in Customizing• Debit the sales order with direct activity allocations and with actual costs

using the time sheet• Use resource-related billing• Understand network confirmations• Understand Execution Services• Explain the Results Analysis for the sales order• Describe the settlement of the sales order• Explain Customizing for the requirements class• Describe Results Analysis methods• Explain Customizing for resource-related billing (DIP profile)

Unit ContentsLesson: Master Data and Preliminary Costing... . . . . . . . . . . . . . . . . . . . . . . . . . . .311

Exercise 11: Master Data and Preliminary Costing - Service Order .327Lesson: Simultaneous Costing... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .332

Exercise 12: Simultaneous Costing - Service Order.. . . . . . . . . . . . . . . . . .341Lesson: Period-End Closing... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .350

Exercise 13: Period-End Closing - Service Order.. . . . . . . . . . . . . . . . . . . . .353


Unit 9: Controlling by Sales Order without Production (Service) TFIN20_2

Lesson: Customizing ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .363



Lesson: Master Data and Preliminary Costing

Lesson Overview• Controlling services or assembly with a sales order• Resource-related billing


• Explain the quantity and value flows in Controlling by sales order for aservice

• Explain unit costing for sales orders• Understand when to use resource-related billing• Explain the necessary settings in Customizing

Business ExampleA customer would like to utilize your consulting services for a few days. As this isa simply structured service, you decided to use a sales order as the cost object.

Alternative: A customer places an order with you for a professional installation ofnewly acquired turbines. As this is a simple on-site assembly, a sales order couldbe the suitable cost object. If the customer also wants the turbines themselves,the conception, consulting, and training, the total package will be more complex.As the tasks are provided by different departments of your company but shouldbe subject to a common and consistent Controlling, you would use a project inaddition to the sales order.



Master Data

Figure 154: Sales Order

In standard cases, make-to-order production assumes that the customer places anorder before we become active (first the sales process, then the service creationprocess). With the account assignment category in Customizing, you can definewhich cost objects you want to use for the account assignment of costs and anyrevenue.

Figure 155: Scenarios: Master Data and Combinations



In addition to the sales order, other cost objects and combinations of multiple costobjects are available for sales-order-related and engineer-to-order production. Asper the graphic above, the following options are available:

• 1 and 2 represents processes of make-to-order production

– For 1, the sales order item serves as the sole account assignment objectfor costs and revenue, which is useful when the provided functions ofthe sales order item suffice for representing the Cost Object Controllingscenario. If this is not the case, such as when BOMs and routings areto be processed or a detailed planning is to take place, additional costobjects can be added to the scenario. The typical account assignmentcategory is “E”.

– For 2, a network was added. The network contributes a logisticalquantity structure (such as internal activities, external activities,material) that can also be used for automatic planning (cost estimate).Scheduling and capacity monitoring are also possible. The costs canbe assigned to the sales order item as well as network operations. Thenetwork is generally settled to the sales order item. Revenue is alsoassigned to the sales order item using billing. The typical accountassignment category is “E”.

• 3 and 4 represents processes of customer project production.

– For 3, a project is created in addition to the sales order. This is useful iftypical abilities of he project are required in the Cost Object Controllingscenario: such as budgeting, availability control, PS Cash Management,Easy Cost Planning, employee assignment, division of the endeavorinto various subprojects that can represent various tasks, responsibilityareas and assignments (profit center, company code). In this scenario,the project is the leading object. That means, the sales order item isnot controlled as a cost object but assigned to a billing element of theproject. Costs and revenue are assigned to accounts on the project. Thetypical account assignment categories are “G”, “D” and “Q”.

– For 4, a network is automatically immediately created using the salesorder. A project is automatically created for this network (derived froma standard network and a standard project). This is called assemblyprocessing. This option is useful if you already know that a networkand a certain project with a certain structure will be required when thesales order item is created, without having to consider other alternativesfor procurement and representation. The typical account assignmentcategories are “D” and “Q” (with KZVBR = P).

The account assignment category D requires you to use unvaluated sales orderstock.



Figure 156: Project Controlling: Project Maintenance with Project Builder

You can use Project Builder to create or change objects of the project (projectdefinition, WBS elements, activities, activity elements, PS texts, documents,milestones, material components). You can work with detailed screens, lists, orwith graphics (hierarchy graphics, network structure graphics) (1 - 4).

You can use operative project structures (work breakdown structures, networks) orstandard structures (standard work breakdown structures, standard networks) as atemplate, in addition to manually creating project structures (7).

You can include work breakdown structures, standard work breakdown structures,and standard networks in an existing project structure (5).

When you create projects, you can copy an operative project or standard project,including all subordinate objects (WBS elements, activities, PS texts, documents,milestones, components) (6).



Figure 157: Work Breakdown Structures: Functions

Work breakdown structures are the basis for further planning steps in the project.The focus is on the planning, analysis, description, control, and monitoring ofcosts, basis dates, and the budget.

Dates, costs, and outgoing payments are often planned with activities that areassigned to WBS elements.



Figure 158: Cost Project I/00##: Project Structure

Use operative indicators to set the properties of a WBS element and to specifywhich tasks the WBS element takes on in the project execution.

• Classify WBS elements as planning elements on which you want to manuallyplan costs.

• Classify WBS elements as account assignment elements on which you wantto post actual costs.

• Classify WBS elements as billing elements on which you want to postrevenue.

The “Statistical” indicator determines whether a WBS element is only used forstatistical purposes or whether it can be debited with real costs.

In the example of the graphic above, you can plan up to level 2 of the projecthierarchy. Subordinate WBS elements starting with level 3 are purely accountassignment elements. The WBS element I/00##-1 is also a billing element.

The Sales Order as a Cost Object

A single sales order is enough for the previous example.



Figure 159: Sales Order Controlling for Services

This example shows the creation of a service such as a consultation or assemblycarried out with the customer. As the sales order item is controlled as a cost object,the costs of the service are collected directly on the sales order item.

The sales order can be billed and customer or activity-specific or condition recordscan be taken into account. You can choose various forms of billing:

• Starting from a standard price, a sales price is derived using the pricedetermination schema of the SD.

• Starting from the costing result of the sales order or project, a sales price isderived using the price determination schema of the SD.

• The sales price is found based on the actual expense in resource-relatedbilling.

The following process is represented in our example:

• Costs are charged to the order through goods issues, posting internalactivities, travel expense reporting, etc.

• Resource-related billing is run. The revenues are calculated in SD pricingon the basis of the billed line items.

• The sales order is settled to Profitability Analysis (CO-PA).

Option: Resource-Related Billing



Figure 160: Resource-Related Billing

The billing can be carried out based on planned revenue (with or without a billingplan) or based on the actual costs with a resource-related billing which generatesso-called “dynamic items” from the cost information (for example, costs formaterial and personnel). Before a billing request is created, you will be shownan overview screen containing relevant information that you can modify thatenables you to determine what the billing request should look like. You generatethe billing request from this overview screen. You can use this screen for example,to simulate prices or save the information itself. This is also where you determinewhich data the system copies to the billing request after you have finished workingwith the overview screen.

There are two aggregation levels:

Level 1: The system aggregates the data records for the overview screeninto dynamic items.Level 2: The system generates a billing request using the data from thedynamic items. If necessary, the data is reaggregated based on the assignedmaterials. Aggregation depends on the settings in the profile of the “dynamicitem processor”.

If you do not want to bill a customer for a dynamic item, you can enter yourreason (for example, warranty) in the overview screen for dynamic items as anapportionment reason. The reason will only be used for internal purposes suchas calculating profits.

You follow the same procedure as above when creating a quotation from a serviceorder.



Figure 161: Dynamic Item Processor

The dynamic item processor is a tool that the system uses to summarize data ondynamic items during resource-related quotation creation and billing (for example,line items that arise through the posting of goods movements, completionconfirmations or surcharges). Further entries are made according to use . Youcontrol the creation of dynamic items in Customizing with the profile of the“dynamic item processor” (DIP profile).

You can use the DIP profile for creating quotations and billing (bothresource-related and flat-rate).

Assignment to the DIP profile is performed in the service order header or in thesales order item. You can enter the default profile when making customizingsettings for service order types or sales document item types.

You will find the customizing settings for quotation creation and billing in theIMG under Plant Maintenance and Customer Service → Maintenance and ServiceProcessing → Basic Settings Basic Settings → Quotation Creation and Billingfor Service Orders.

You have the following user exits at your disposal: AD010001 (change objectlist and hierarchy), AD010002 (delimit selection and/or filter data that isdetermined), AD010003 (create user-defined DI characteristics), AD010005(create user-defined sources), AD010006 (Menu exit: Change DI value),V46H0001 (Enter additional item data and insert a partner for the item).



Preliminary Costing

Figure 162: Sales Order Processing: Preliminary Costing

In our example, you create a sales order and chose the option of planning theendeavor on the sales order using a unit cost estimate.

In the subsequent execution of the task, post the resulting costs directly to thesales order item.

Figure 163: Planning Options with Unit Costing

You can plan the costs of a service with a unit cost estimate. You use them likespreadsheets to make costing decisions and to access information on materialcosts, internal activity prices, purchasing costs, overhead, and process costs. Forexisting cost estimates, you can refer to these and copy the relevant items intothe unit cost estimate.



Within unit costing you can calculate totals, sub-totals, and formulas formathematical operations. As the information in the cost estimate becomes out ofdate, you can use the “revaluation” function to determine the most current materialor activity prices for the items in the cost estimate.

If the unit costing includes a material item with a cost estimate, you can explodethis cost estimate to display the items that make up the material cost. Likewise, ifyou enter a base-planning object as an item, you can explode its cost estimate.

Figure 164: Item Categories in Unit Costing (1)

To support the full integration between unit costing and product costing, the newitem categories F (external service) and L (subcontracting) are available in unitcosting as of Release 4.0.

The item category P (process manual) is used if you want to include businessprocesses in a unit costing manually without using a template.



Figure 165: Item Categories in Unit Costing (2)

The item category X is created automatically when using a template to calculateprocess quantities.

The item category Y (customer exit) can be activated as enhancement KKEK0001,if customers require their own calculation logic.

Easy Cost Planning

“Easy Cost Planning (ECP)” is availably in addition to the unit cost estimatefor projects:

Figure 166: Easy Cost Planning (ECP)



As of Release 4.6C, Easy Cost Planning is available to you as a simple tool forplanning costs on WBS elements. Easy Cost Planning for the project is called fromthe Project Builder and costing items are created for the WBS planning elements.Costs are planned with Easy Cost Planning using the original cost elements.

You can define planning variants for entering costing items and use variables(characteristics) in doing so. For this, values are given (above, 100) forcharacteristics (above, “Work in hours”). The characteristic values of the planningvariants are linked with quantities, values, or actions of costing items (above,with the quantity of an internal activity).

The planned costs are in the periods of the order start dates of the WBS elements.Changes to the order start dates and revaluation causes the costs to be redistributed.

Easy Cost Planning can serve as a simple preliminary costing for projects that canbe replaced in a later phase of the project by an automatic costing, such as by thecosting of quantity structures like networks or operations. The resources plannedwith Easy Cost Planning can also serve as the basis for later actual postings ifentered with the “Execution Services” commitments and actual costs.

In Customizing for Easy Cost Planning, you can specify which plan data the COplan version should be updated in. As of SAP R/3 Enterprise Extension 2.00, youcan also enter several alternative CO plan versions for Easy Cost Planning. In thiscase, you can decide which of the alternative CO plan versions you to run the costplanning in, each time you run Easy Cost Planning.

Figure 167: Planning Variants for Easy Cost Planning



Easy Cost Planning is realized technically with a template that is embedded in aplanning variant. This kind of planning variant (costing model) is created in threesteps in Customizing:

• You can define characteristics that are available as variables in the template• An entry screen is created in HTML format for the characteristics that can be

edited and modified• Finally, the resources are stored in the template that are later planned

or allocated. The characteristics are also available for calculations likefunctions of the ABC, if active.

When Easy Cost Planning is run, the user is asked for the value of thecharacteristics. The system then plans the resources according to the template.The quantities entered or calculated are valuated with prices or rates.

Figure 168: Cost Estimate with Network

The network primarily contains operations that describe work and project steps.

Operations are linked by relationships to set a casual and temporal order.

If you plan dates and resources in the operations of the network, the systemautomatically determines the corresponding planned costs.



The planned costs are determined for the following objects:

• Activity inputs for internal processing operations (internal activity)• Primary costs for external processing and service operations (external

activity)• Primary costs for cost activities• Primary costs for material components.

Activity elements are treated as operations for the costing.

Figure 169: Planned Costs Work Breakdown Structure with Network

Caution: The previous example is based on an activity-assigned network. Theplanned and actual costs of each operation are shown on the respective operation.If the network were header assigned, the costs of the operations would only beanalyzed in total at the level of the network header.



Figure 170: Network Costing:Summary

Internal Processing Operation:If no distribution key has been maintained in the operation or work center,the costs are distributed equally over the earliest dates of the operation.The valuation is done with the price according to the valuation variant.Depending on the strategy, the system can determine the most current date.

Cost Activity:If an invoicing plan has been maintained, the values are put into periodsaccording to the invoicing plan.Otherwise, the operation value is distributed to periods according to thedistribution key in the operation. If there is no distribution key, the costs aredistributed equally over the earliest dates of the operation.

External Processing and Service Operations:If an invoicing plan has been maintained, the values are put into periodsaccording to the invoicing plan. Otherwise, the values are put into the periodof the latest operation start date.The invoicing plan has priority for the values. If there is no invoicingplan, the system determines the prices from the purchasing info record orthe operation value.

Material Components:If an invoicing plan is present, the periods and values are taken from theinvoicing plan. If no invoicing plan is present, the values are taken fromthe unit cost estimate, purchasing info record, or price from the materialmaster according to the valuation variant. In this case, the period is that ofthe requirement date of the material.



Exercise 11: Master Data and PreliminaryCosting - Service Order

Exercise ObjectivesAfter completing this exercise, you will be able to:• Carry out quantity and value flows in Controlling by Sales Order for a service• Create a unit cost estimate for a sales order• Carry out resource-related billing• Analyze the necessary settings in Customizing


In plant S300, you offer these consulting services. You create a sales order for thisservice and can use unit costing to calculate your costs for the sales order.

Hint: Use controlling area S300 for this exercise. Transaction Code -OKKS

Task:Start by creating a sales order for and estimating the cost of the consulting task.

1. Create a sales order for the consulting item:


Order type: ZSP1 (SP: Service order)

Sales Organization: S300

Distribution Channel: S3

Division: S3

Choose: Enter





Sold-to party: 3221

Material: ISP-CONSLT

Order Quantity: 10 days

Choose: Enter

2. Create a unit cost estimate to determine the consulting costs.

If required, choose: Unit Costing

Menu path:

Extras → Costing

Choose Unit Costing

In the dialog box, enter the following data:

Costing variant:

Not available in T36, also not forControlling Area S300.

PCO4

Base planning object: Consulting

Choose: Enter

Adjust the proposal. You estimate 20 hours for senior management(MANG2), and 60 hours for consulting CONS1N. You do not include anyother costs.

Choose: Save

3. Save the sales order.

Make a note of the sales order number displayed in the status bar when yousave your data.

______________________________________________________



Solution 11: Master Data and PreliminaryCosting - Service OrderTask:Start by creating a sales order for and estimating the cost of the consulting task.

1. Create a sales order for the consulting item:


Order type: ZSP1 (SP: Service order)

Sales Organization: S300

Distribution Channel: S3

Division: S3

Choose: Enter


Sold-to party: 3221

Material: ISP-CONSLT

Order Quantity: 10 days

Choose: Enter

a) Menu path:

Logistics → Sales and Distribution → Sales → Order → Create(VA01)

2. Create a unit cost estimate to determine the consulting costs.

If required, choose: Unit Costing

Menu path:

Extras → Costing

Choose Unit Costing





Costing variant:

Not available in T36, also not forControlling Area S300.

PCO4


Choose: Enter

Adjust the proposal. You estimate 20 hours for senior management(MANG2), and 60 hours for consulting CONS1N. You do not include anyother costs.

Choose: Save

a) Create a unit cost estimate to determine the consulting costs.

Menu path:

Extras → Costing

Choose Unit Costing


Costing variant: PCO4


Choose: Enter

Adjust the proposal. You estimate 20 hours for senior management(MANG2), and 60 hours for consulting CONS1N. You do not includeany other costs.

Choose: Save

3. Save the sales order.

Make a note of the sales order number displayed in the status bar when yousave your data.

______________________________________________________

a) Choose: Save



Lesson Summary

You should now be able to:• Explain the quantity and value flows in Controlling by sales order for a

service• Explain unit costing for sales orders• Understand when to use resource-related billing• Explain the necessary settings in Customizing



Lesson: Simultaneous Costing

Lesson Overview


• Debit the sales order with direct activity allocations and with actual costsusing the time sheet

• Use resource-related billing• Understand network confirmations• Understand Execution Services


After your consultant has returned, enter these services, receipts that have beenbrought back, and any material consumption that has taken place.



Allocation of Resource Usage for the Service

Figure 171: Goods Issue for Material Needed for the Service

You post the goods issue for the material needed for the service. The sales orderitem is debited with the cost of the material.

Figure 172: Allocating Internal Activities

You can use the Cross-Application Time Sheet (CATS) for the allocation of theinternal activities of your employees. You can also post the activities with adirect activity allocation. If you use routings, you can enter confirmations forthe operations.



Figure 173: CATS – Cross-Application Time Sheet

CATS is an integrated function for entering actual times that are important in theHCM, PS, PM, SM, CO, or MM-SRV areas.

You can use data entry profile to set the layouts.

Reports transfer the released (and, if necessary, approved) data to the variousapplications. The actual times can be important for various applications at thesame time. This causes multiple transfers to various applications.

Note on PP production orders:

You can use CATS to enter hours for the “Production order” receiver object (Orderfield). This entry of hours is posted on the production order as an internal activityallocation when transferred (to CO). You cannot use CATS to enter confirmationsfor yields and scrap quantities for production orders.



Figure 174: Time Sheet: Data Entry View

Time recording is carried out for one of more employees.

Flexible screen arrangement (for the initial screen, worklist, and entry section):

• Depending on the employee group (with the data entry profile)• user-defined (using TableControl)

Worklist for employees by:

• Operations to which the employee is assigned with the work center ordistribution of work to employees (for PS, PM, CS)

• Operations with the pool of confirmations (for PS, PM, CS)• Objects that the employee is currently processing (with the CATS database)• Objects with user exits

Addition Options with a Project



Figure 175: Aspects of Realization for a Project

If you use a project to realize an endeavor, you can enter and evaluate other data inaddition to costs and revenue. To enter actual data, you must release the project.

Business transactions update this actual data on the project from the various areasof the SAP system, for example.

MM: Purchasing: Purchase order, goods receipt of materials andservices, Inventory Management: Goods issue of reservations

SD: Sales order billing

PP: Confirmation of assigned production orders

PM: Confirmation of assigned PM orders

CO: Internal activity allocation, assigned CO orders

FI: Deposits, payments

AM: Settlement to assets

HCM: Task recording for employees and update as an orderconfirmation or as an internal activity allocation

(Note: The CATS can also be used without HCM)



Figure 176: Integrating Costs using Account Assignment

For the business transactions displayed above, the connection to the WBS elementor operation is made using account assignment. This causes the resulting actualcosts to be posted directly to the WBS element or to the network or operation.

The account assignments correspond to the cost planning transactions. Theseare, for example:

• For purchase requisitions, purchase orders, goods receipts:

external and service operations, material components that are directlyprocured

• For material withdrawals:

stock items or primary cost planning

• For invoice postings:

primary cost planning, revenue planning, cost activities

• For activity allocation:

planning of activity inputs

• For confirmation:

internal processing operations



Figure 177: Execution Services

As of Release 4.6C, you can use Execution Services to enter commitments andactual costs for items that you have planned with Easy Cost Planning.

The following postings are possible:

• Internal activity allocation (for internal activities)• Direct process allocation (for processes)• Reservation (for material items)• Goods issue (for material components)• Purchase requisition

(for material items, external activity items, service items, variable items)

• Purchase order

(for material items, external activity items, service items, variable items)



Figure 178: Integrating Costs Through Assignment

For the business transactions displayed above, the connection to the WBS elementis made using an assignment.

This causes the resulting actual costs to remain on the order or network untilthey are settled.

In the information system, you can evaluation all assigned funds (planned costs,commitment and actual costs) with the assigned WBS element. In the informationsystem for structures, you can evaluate and interactively process the assignedorders in addition to WBS elements and operations.



Exercise 12: Simultaneous Costing -Service Order

Exercise ObjectivesAfter completing this exercise, you will be able to:• Debit the sales order with goods issue postings• Debit the sales order with activity allocations with and without the time sheet

Business ExampleA customer would like to be consulted by you for a few days. As this is a simplystructured service, you decided to use a sales order as the cost object.

In plant S300, you offer these consulting services. You create a sales order for thisservice and can use unit costing to calculate your costs for the sales order.

In addition, you can use the activity allocation and the Cross-Application TimeSheet (CATS) to post the actual consulting time required for the sales order item.

Hint: Use controlling area S300 for this exercise.

Task:Actual Postings

1. Employee 515991## will enter their time for activity CONS1N in theCross-Application Time Sheet. Record their time in the Cross-ApplicationTime Sheet. Remember to release your entries before saving.

Menu path:

Accounting → Controlling → Product Cost Controlling → Cost ObjectControlling → Product Cost by Sales Order → Actual Postings → Timesheet → CATS Classic →Record Working Times (CAT2)


Data Entry Profile: ISP_SD (or CO2)

Personnel Number: 515991## (ifunavailable: 9910751)

Press button Enter Times (F5)





Sales order: Your sales order number

Sales order item: 10

Quantity: 5 hours each day for the lastthree days

Confirm your entries

Choose: Release view

Select the indicator next to the line with your time entries.

Select: Release

Choose: Save

2. Use the CATS to approve the time entered, so that it can be transferred toFinancial Accounting. Select the time entries using your personnel number515991## as a reference.

Menu path:

Accounting → Controlling → Product Cost Controlling → Cost ObjectControlling → Product Cost by Sales Order → Actual Postings → TimeSheet → Approval → Approve Working Times (CATS_APPR_LITE)

Select the posting date Up to today.

Enter your Personnel number.

Execute

If no entries have to be approved, Customizing is set so that no times in theCATS required approval. Continue with the next subtask.

If there are entries that require approval:

Select your personnel number from the general hierarchy display. Theapproval screen is displayed.

Menu path:

Edit → Select All

Choose: Approve

Save your entries.

3. Transfer the CATS to Accounting.

Menu path:

Accounting → Controlling → Product Cost Controlling → Cost ObjectControlling → Product Cost by Sales Order → Actual Postings → Timesheet → Transfer → Accounting (CAT7)





Personnel number: 515991##

Choose: Execute

4. Enter an activity allocation for the activity MANG2 for your sales order. InExtras → Set Controlling Area, set the controlling area to S300.

4 hours have been consumed from the sender cost center S-3310. Use thescreen variant Sales Order/Cost Object, to process this activity allocation.

5. Go to the information system for Product Cost by Sales Order and review theplanned to actual cost report for your sales order.

Menu path:

Accounting → Controlling → Product Cost Controlling → Cost ObjectControlling → Product Cost by Sales Order → Information System →Reports for Product Cost by Sales Order → Detailed Reports → For SalesOrder (KKBC_KUN)

Select the Layouts icon and select layout 1SAP01 Plan/Actual Comparison.



Item: 10

Choose: Execute



Solution 12: Simultaneous Costing -Service OrderTask:Actual Postings

1. Employee 515991## will enter their time for activity CONS1N in theCross-Application Time Sheet. Record their time in the Cross-ApplicationTime Sheet. Remember to release your entries before saving.

Menu path:

Accounting → Controlling → Product Cost Controlling → Cost ObjectControlling → Product Cost by Sales Order → Actual Postings → Timesheet → CATS Classic →Record Working Times (CAT2)



Personnel Number: 515991## (ifunavailable: 9910751)

Press button Enter Times (F5)




Quantity: 5 hours each day for the lastthree days




Select: Release




Choose: Save

a) Confirm the internal activity by recording the consulting time in theCross-Application Time Sheet . Remember to release your entriesbefore saving.

Menu path:

Accounting → Controlling → Product Cost Controlling → CostObject Controlling → Product Cost by Sales Order → Actual Postings→ Time sheet → CATS Classic → Record Working Times (CAT2)



Personnel Number: 515991##

Press button Enter times (F5)


Sales order: Your sales ordernumber


Quantity: 5 hours each day for thelast three days




Select: Release

Select: Save

2. Use the CATS to approve the time entered, so that it can be transferred toFinancial Accounting. Select the time entries using your personnel number515991## as a reference.

Menu path:

Accounting → Controlling → Product Cost Controlling → Cost ObjectControlling → Product Cost by Sales Order → Actual Postings → TimeSheet → Approval → Approve Working Times (CATS_APPR_LITE)






Execute

If no entries have to be approved, Customizing is set so that no times in theCATS required approval. Continue with the next subtask.



Menu path:

Edit → Select All

Choose: Approve

Save your entries.

a) Use the CATS to approve the time entered, so that it can be transferredto Financial Accounting. Select the time entries using your personnelnumber 515991## as a reference.

Menu path:

Accounting → Controlling → Product Cost Controlling → CostObject Controlling → Product Cost by Sales Order → ActualPostings → Time Sheet → Approval → Approve Working Times(CATS_APPR_LITE)



Execute

If no entries have to be approved, Customizing is set so that no times inthe CATS required approval. Continue with the next subtask.



Menu path:

Edit → Select All

Choose: Approve

Save your entries.

3. Transfer the CATS to Accounting.

Menu path:




Accounting → Controlling → Product Cost Controlling → Cost ObjectControlling → Product Cost by Sales Order → Actual Postings → Timesheet → Transfer → Accounting (CAT7)



Choose: Execute

a) Transfer the CATS to Accounting.

Menu path:

Accounting → Controlling → Product Cost Controlling → CostObject Controlling → Product Cost by Sales Order → Actual Postings→ Time sheet → Transfer → Accounting (CAT7)



Choose: Execute

4. Enter an activity allocation for the activity MANG2 for your sales order. InExtras → Set Controlling Area, set the controlling area to S300.

4 hours have been consumed from the sender cost center S-3310. Use thescreen variant Sales Order/Cost Object, to process this activity allocation.

a) Enter an activity allocation for your sales order.

Accounting → Controlling → Product Cost Controlling→ CostObject Controlling → Product Cost by Sales Order → Actual Postings→ Activity and Business Process Allocation → Enter (KB21N)

In Extras → Set Controlling Area, set the controlling area to S300.

Document Date: Today’s date

Posting Date: Today’s date

Screen Variant: Sales order/costobject

Sending Cost Center: S-3310

Activity Type: MANG2

RecSaleOrd (Receiver salesorder): RecItm (Receiver salesorder line item)

your sales ordernumber and item number




Quantity: 4 hours

Save

5. Go to the information system for Product Cost by Sales Order and review theplanned to actual cost report for your sales order.

Menu path:

Accounting → Controlling → Product Cost Controlling → Cost ObjectControlling → Product Cost by Sales Order → Information System →Reports for Product Cost by Sales Order → Detailed Reports → For SalesOrder (KKBC_KUN)

Select the Layouts icon and select layout 1SAP01 Plan/Actual Comparison.



Item: 10

Choose: Execute

a) Go to the information system for Product Cost by Sales Order andreview the planned to actual cost report for your sales order.

Menu path:

Accounting → Controlling → Product Cost Controlling → CostObject Controlling → Product Cost by Sales Order → InformationSystem → Reports for Product Cost by Sales Order → DetailedReports → For Sales Order (KKBC_KUN)

Select the Layouts icon and select layout 1SAP01 Plan/ActualComparison.



Item: 10

Choose: Execute



Lesson Summary

You should now be able to:• Debit the sales order with direct activity allocations and with actual costs

using the time sheet• Use resource-related billing• Understand network confirmations• Understand Execution Services



Lesson: Period-End Closing

Lesson Overview


• Explain the Results Analysis for the sales order• Describe the settlement of the sales order

Business ExampleA customer would like to utilize your consulting services for a few days. As this isa simply structured service, you decide to use a sales order as the cost object.

After the service has been performed, we can post a resource-related Billing andthen a period-end closing on the sales order. Different results can be obtained fromthe Results Analysis depending on the time and data collection. Period-basedrevenues and the cost of sales are settled to Profitability Analysis, stock andreserves to Financial Accounting and Profit Center Accounting.

Results Analysis and Settlement

Figure 179: Results Analysis/Settlement (1)



You can use the Results Analysis to calculate the costs and revenue of the costobject based on the period by various methods and to form stock and reservesif required. For sales orders, the Results Analysis is carried out for each salesorder item. For projects, it is carried out on the billing elements for the entireproject hierarchy including assigned objects. You can set exactly how it worksin Customizing. The revenues and costs of the sale are settled to ProfitabilityAnalysis, where as stock and reserves are settled to Financial Accounting andProfit Center Accounting.

Figure 180: Billing with Resource-Related Billing

If you wish to conduce resource-related billing, create a debit memo (billingrequest) based on the CO line items.



Figure 181: Results Analysis/Settlement (2)

If a sales order is given the status “Final billing”, no more revenue is expected forthat sales order item. Only debit memos and credit memos can be entered. For thisreason you can normally cancel all stock and reserves on the revenue side. Thesame is valid for the status “technically completed” on the cost side.



Exercise 13: Period-End Closing - ServiceOrder

Exercise ObjectivesAfter completing this exercise, you will be able to:• Carry out Results Analysis for the sales order• Settle the sales order


After the service has been performed, we can post a resource-based billing andthen a period-end closing on the sales order. Different results can be obtained fromthe Results Analysis depending on the time and data constellation. Period-basedrevenues and the cost of sales are settled to Profitability Analysis, stock andreserves to Financial Accounting and Profit Center Accounting.

Hint: Use controlling area S300 for this exercise.

Task 1:Period-End Closing Before Billing

1. Carry out Results Analysis and review the results. Write down the COS andrevenue in excess of billings.



Item: 10

Period: Current period


RA version: 0

Choose: Execute

Save the results of the Results Analysis.

2. Carry out sales order settlement. To view the settled amounts, select DetailLists. Note that the amounts settled to PA reflect the COS and revenuecalculated by Results Analysis.






Item: 10



RA version: 0

Background Processing: Deselect

Test run: Deselect

Detail lists Select

Check transaction data: Deselect

Choose: Execute

Task 2:Resource-Related Billing

1. Create a debit memo request for the consulting activities.

Menu path:

Logistics → Sales and Distribution → Sales → Order → Subsequentfunctions → Resource-Related Billing Document (DP91)


Sales document: Your sales order number


Choose: Save billing request

Confirm the prompt and save the billing request.

2. Create a billing document based on the debit memo request. Note that theinvoice value matches the revenue in excess of billing calculated duringResults Analysis.

Menu path:

Logistics → Sales and Distribution → Sales → Order → Subsequentfunctions → Billing Document (VF01)

Choose: Save




3. Go to the information system for Product Cost by Sales Order and reviewthe planned to actual cost report for your sales order. Check whether therevenues for the invoices were updated on the corresponding sales order item.

Task 3:Period-End Closing after Billing

1. Carry out Results Analysis again, review the logs, and analyze the results.Since all costs have been billed, the revenue in excess of billings shouldbe zero.



Item: 10


Fiscal year: current fiscal year

RA version: 0

Choose: Execute


2. Carry out sales order settlement. Display the settled amounts by doubleclicking on the sender.



Item: 10



RA version: 0


Test run: Deselect

Detail lists Select


Choose: Execute



Solution 13: Period-End Closing - ServiceOrderTask 1:Period-End Closing Before Billing

1. Carry out Results Analysis and review the results. Write down the COS andrevenue in excess of billings.



Item: 10



RA version: 0

Choose: Execute





a) Menu path:

Accounting → Controlling → Product Cost Controlling → CostObject Controlling → Product Cost by Sales Order → Period-EndClosing → Single Functions → Results Analysis → Execute →Individual Processing (KKA3)



Item: 10



RA version: 0

Choose: Execute

Note the debit for material ISP-CONS1N. This material was derivedfrom the configuration of the DIP profile, based on the cost elementassigned to the activity CONS1N. The sales price is established for thismaterial. The COS value reflects the cost of the consulting activity thathas been posted to the sales order. No other actual costs have beenposted to the sales order. The WIP value reflects the revenue that canbe generated based on the sales price of ISP-CONS1N. In the revenueoverview, you can see the revenue not yet billed. At this point, billinghas not been executed for this sales item.


Choose: Save

2. Carry out sales order settlement. To view the settled amounts, select DetailLists. Note that the amounts settled to PA reflect the COS and revenuecalculated by Results Analysis.



Item: 10






RA version: 0


Test run: Deselect

Detail lists Select


Choose: Execute

a) Menu path:

Accounting → Controlling → Product Cost Controlling → CostObject Controlling → Product Cost by Sales Order → Period-EndClosing → Single Functions → Settlement (VA88)

b) To view the settled amounts, select Detail lists.

Select the settlement line, and choose either Sender, Receiver orAccounting docs to review the settlement values. The settlement valuesare displayed.

Task 2:Resource-Related Billing

1. Create a debit memo request for the consulting activities.

Menu path:



Sales document: Your sales order number







a) Create a debit memo request for the consulting activities.

Menu path:



Sales document: Your sales ordernumber




2. Create a billing document based on the debit memo request. Note that theinvoice value matches the revenue in excess of billing calculated duringResults Analysis.

Menu path:


Choose: Save

a) Create a billing document based on the debit memo request. Note thatthe invoice value matches the revenue in excess of billing calculatedduring Results Analysis.

Menu path:


Choose: Save




3. Go to the information system for Product Cost by Sales Order and reviewthe planned to actual cost report for your sales order. Check whether therevenues for the invoices were updated on the corresponding sales order item.

a) Menu path:

Accounting → Controlling → Product Cost Controlling → CostObject Controlling → Product Cost by Sales Order → InformationSystem → Reports for Product Cost by Sales Order → DetailedReports → For Sales Order (KKBC_KUN)



Item: 10

Choose: Execute

The revenue has been updated to the sales order item.

Task 3:Period-End Closing after Billing

1. Carry out Results Analysis again, review the logs, and analyze the results.Since all costs have been billed, the revenue in excess of billings shouldbe zero.



Item: 10


Fiscal year: current fiscal year

RA version: 0

Choose: Execute





a) Menu path:

Accounting → Controlling → Product Cost Controlling → CostObject Controlling → Product Cost by Sales Order → Period-EndClosing → Single Functions → Results Analysis → Execute →Individual Processing (KKA3)

b) Note that the WIP value in the cost overview is zero. Zero also remainsto be billed in the Revenue Overview.

c) Save the results of Results Analysis.

2. Carry out sales order settlement. Display the settled amounts by doubleclicking on the sender.



Item: 10



RA version: 0


Test run: Deselect

Detail lists Select


Choose: Execute

a) Menu path:

Accounting → Controlling → Product Cost Controlling → CostObject Controlling → Product Cost by Sales Order → Period-EndClosing → Single Functions → Settlement (VA88)

To view the settled amounts, select Detail Lists.

Select the settlement line, and choose either Sender, Receiver orAccounting docs to review the settlement values. The settlement valuesare displayed.



Lesson Summary

You should now be able to:• Explain the Results Analysis for the sales order• Describe the settlement of the sales order


TFIN20_2 Lesson: Customizing

Lesson: Customizing

Lesson Overview


• Explain Customizing for the requirements class• Describe Results Analysis methods• Explain Customizing for resource-related billing (DIP profile)


In Customizing, you must be sure that the scenario takes place within theboundaries that you have planned.

Account Assignment Category, Results Analysis andDIP profile

Figure 182: Customizing: Requirements Class



You can use the requirements type determination in Customizing to find therequirements class. The account assignment category defines the scenario.

Figure 183: Account Assignment Category B

The account assignment category “B” specifies that consumption postings areposted directly on the sales order item, but no separate sales order stock is kept.

Figure 184: Results Analysis: Method-Based Customizing

If you use method “14”, the cost of sales is derived from the resource-relatedbilling. For this, the following applies: All line items of cost postings that havealready been billed are cost of sales. Those that have not yet been billed are costsin stock (WIP). The revenues are calculated in SD pricing on the basis of thebilled line items.


TFIN20_2 Lesson: Customizing

Figure 185: Customizing: DIP Profile

The DIP profile (the profile of the “dynamic item processor”) takes on the controlof the resource-related billing, which you can use for creating quotations as wellas billing. You decide on the type of sales documents that are to be generated(quotation, billing request and credit memo request) per usage. In addition, youcan determine if the system should perform a warranty check during billing. Allother data should be entered when you are creating a document.

Characteristics relevant to the determination of “dynamic items” are fixed foreach usage. In addition, various characteristic attributes, and the way in whichthey are presented during the processing of the billing request, are defined. Youcan define your own characteristics and enter values for these characteristics usingthe customer exit AD010003.

The sources define the data used to determine dynamic items (for example, theactual costs of line items or totals records, planned costs and so on). You can alsoselect the characteristic values from which “dynamic items” should be determined(that is, exclusion of other characteristic values from billing). Selection isperformed using the sets to be determined for this purpose. You can define yourown sources using the customer exit AD010005.

You can define which service materials are determined from characteristic valuesfor billing request items or quotations. The selection criteria here are also enteredin the form of sets.



Lesson Summary

You should now be able to:• Explain Customizing for the requirements class• Describe Results Analysis methods• Explain Customizing for resource-related billing (DIP profile)



Unit SummaryYou should now be able to:• Explain the quantity and value flows in Controlling by sales order for a

service• Explain unit costing for sales orders• Understand when to use resource-related billing• Explain the necessary settings in Customizing• Debit the sales order with direct activity allocations and with actual costs

using the time sheet• Use resource-related billing• Understand network confirmations• Understand Execution Services• Explain the Results Analysis for the sales order• Describe the settlement of the sales order• Explain Customizing for the requirements class• Describe Results Analysis methods• Explain Customizing for resource-related billing (DIP profile)


TFIN20_2 Course Summary

Course SummaryYou should now be able to:

• Set up Product Cost Planning with SAP ERP Financials• Set up Cost Object Controlling with SAP ERP Financials


Course Summary TFIN20_2


IndexAAnalysis, 157BBase Planning Object, 4Ccost estimate header, 23Cost Object Controlling., 6Costing Dates, 154Costing levels, 157Costing results, 24Costing run, 151Costing Sequence, 4Costing Status, 154Costing structure, 23Costing Variant, 154Ddisplay variants, 159Eextracts, 159IItemization, 24LLot size, 15MMaterial cost, 13Material Cost Estimate, 4Material Cost Estimate withQuantity Structure, 4

Material Cost Estimatewithout Quantity Structure,4

Material list, 157Material Master, 14Multi-level unit costing, 21OOverhead group, 15PProduct Cost Planning, 2Product Life Cycle, 3Profit Center, 154RReference and SimulationCosting, 4

Sselection variants, 159Special Procurement Type,154

standard cost estimate, 151TTangible Goods, 6UUnit cost estimate, 23VValuation class, 15Valuation Class, 154WWorklist, 23


Index TFIN20_2


FeedbackSAP AG has made every effort in the preparation of this course to ensure theaccuracy and completeness of the materials. If you have any corrections orsuggestions for improvement, please record them in the appropriate place in thecourse evaluation.
