thm_bp_co015_v1.1

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Project Name: TH Milk ECC 6.0 Implementation Project

Document

Name:

Cow farm costing (Agriculture Product)

Document ID: THM_BP_CO015_V1.1 Version: 1.1

Prepared by:Dat Huy Nguyen,Consultant

Contact No. Date:

Reviewed by:Khoa Duong, TeamLead

Contact No. Date:

Approved by: Suresh V Rajagopalan,Project Msanager

Contact No. Date:

Released by:

Suresh V Rajagopalan,Project Manager

Contact No. Date:

Revision History

SR.NO.

VERSION

NO.

DATEOFREVISION

SECTIONNUMBER

DESCRIPTION OFCHANGE

REASON FORCHANGE

CHANGEMADEBY

REVIEWEDBY

1 1.0 19/07/2010 Version 1.0 Dat Nguyen Khoa Duong

2 1.1 22/08/2010 Version 1.1 Dat Nguyen Khoa Duong

THM_BP_CO015_V1.1 Page 1 of 9 Confidential

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THM_SAP_IMPLEMENTATION_BLUE PRINT

Business Process Details

Module ControllingBusiness Process Cow farm costing (Agriculture Product)

Sub Process / No Not applicable THM_BP_CO015_V1.1Description Manage transaction specific to field crop, feed output and raw milk

costing

Sr No Topics1.1 Requirements & Expectations

i. Calculate standard cost for agriculture products such as output from field crop, output fromfeed center and raw milk.

Sr No Topics2.1 Existing Process General Explanation

i. Not applicable

2.2 Explanation of Existing Functions & Eventsi. Not applicable

2.3 Special Organizational Considerationsi. Not applicable

Sr No Topics3.1 Proposed Process General Explanation

i. - Total cost of farm includes agriculture products (raw milk, cow feed, and field crop) and

capitalized expenses.

- To calculate the cost of milk and capitalized expense, we divided each farm into 2 cost

centers: milking cow cost center and growing cow cost center. Process of calculating

cow capitalization will be presented in THM_BP_CO016_V1.1 - Cow farm costing

(Cow).

- Milking parlor is considered as a cost center at each farm.

ii. Field Crop Costing

- Field crop is considered as one separate profit center in SAP.

- For each crop, one CO process order will be created with the start and end day for

production. This process order will be used to record all direct material costs.

- Three cost centers will be created for 3 growing areas to absorb all the indirect costs

which cannot be allocated directly to each CO process order. These expenses will be

allocated back to CO process order using statistical key figure the area of each field -

at the period end, before WIP calculation.

- The output price of the CO process order can be calculated by market price less some

percentage. The production confirmation will be done by field crop staff- At the period end, WIP calculation will be run for each process order to post the


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difference between the direct expenses and the output of the process order to WIP

account. WIP calculation will be done by CO staff.

- Provision for loss can be made using Financial Accounting entry directly in G/L againstCOGS account (posting to Dummy Cost Center).

iii. Feed Output Costing

- Standard cost for feed output will be calculated periodically (monthly or quarterly) based

on a standard BOM and overhead cost which is calculated using one activity - output

feed.

- Activity rate for feed cost center output feed - will be calculated by divided the total

cost planning for feed cost center and allocation cost from supported cost centers by the

total production output quantity.

- There are a certain number of output feed products; for example, feed for milking cow,feed for dry cow (24), feed for heifer (7-12), feed for heifer (12-23), feed for nursery (0-

4), feed for calves (5-6). For one month, one process order will be created for each type

of output.

- The actual BOM can be different from the standard BOM when the actual goods issue

happens, depending on the stock availability. Production execution for feed output can

be referred to THM_BP_PP018_V1.0.doc

- The variance between the standard cost and actual cost will be settled to COGS.

iv. Milk Costing

- Standard cost for raw milk will be based on one activity: output raw milk.- SAP System will integrate with Afikim to get information about the output of raw milk

daily

- Plan for all cow farm activity at milking cow cost center. Another overhead cost needs to

be planned in general cost centers and after that allocated to milking cow cost center

and growing cow cost center.

- Variance analysis will be based on milking cow cost center report. And at the month end

this variance will be settled to COGS.

3.2 Explanation of Proposed Functions & Eventsi. Field Crop Costing

- Planning

Standard price of field crop output is maintained in material master (MM01). To

revise the standard price, using transaction code MR21.

For field crop, well use CO production order to manage each field crop KKF1

For each material to be grown, we can create Material Cost Estimate without

Quantity Structure (KKPAN) or Base Planning Object (KKE1) using planning

data. This information later can be copied to each CO production order when

planning for a new field crop by exploding either Material Cost Estimate or

Base Planning Object.


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Planning for CO Production Order by exploding either Material Cost Estimate

without Quantity Structure or Base Planning Object using transaction code

KKF4 Plan for overhead expenses for general cost centers which support for

common field crop cost center such as Logistic Center, Maintenance, and

warehouse using transaction code KP06. Also, using KP06 to plan for direct

expenses for common field crop cost center.

Create and run assessment cycle for these expenses from general cost

centers to common field crop cost center using transaction KSUB. The naming

convention of the planning/actual assessment cycle is 1 letter of Company

Code + P (planning assessment cycle) or A (Actual assessment cycle) + 2

letters for Version and 2 letters for running number. For example, company

code 1000 will have assessment cycle for planning version 10 which will

assess cost from logistic cost center to Common Field Crop Cost Center as

1P1001.

Create and run assessment cycle for these expenses from common field crop

cost center to CO production order using transaction KSUB with statistical key

figure SKF001 (Area).

Statistical Key figure SKF001 Area is created using transaction KK01.

Enter planning value of SKF using transaction KP46 before doing assessment.- Execution

During production period, do goods issue to order for all material consumption

to the field crop using transaction code MB1A, movement type 261: ref to

THM_BP_MM019_V1.1

During the harvesting period, do goods receipt for the field crop output from

order using transaction code MB31, using movement type 101: ref to

THM_BP_MM018_V1.1

Overhead expenses, direct labour expenses and other expenses allocation to

field crop cost center will be posted to common cost center through normal FI

transaction or CO assessment transaction.

At the period end, before WIP calculation, do assessment from common cost

centers to CO Production Order using transaction code KSU5 with statistical

key figure SKF001 (Area).

Enter the actual value of SKF using transaction KB31N before doing

assessment.

At the period end, period cutoff is run using transaction code KKA0 before

calculating WIP. This period cutoff for field crop use version 0. All orders which

are before the period cutoff will be ignored during WIP calculation. Since this


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period cutoff will affect all company codes within controlling area 1000,

suggested that this transaction will not be run for all company codes since the

Go Live day of Company Code 1000. Production orders in other companycodes must be mark for deletion after 3 months.

If the WIP calculation (KKAX for Individual Processing or KKAO for Collective

processing) is correct, do actual run before posting WIP using transaction

CO88- settlement(accounting document is posted).

When the CO production order is finished with Technical Complete or Final

Confirmation (actual quantity receipt is equal to planned quantity), run variance

calculation using transaction KKS2 and then post settlement using transaction

CO88 (accounting document is posted).

After the CO production order is completed, close the order to prevent posting

goods receipt using transaction KKF2.

- Additional Transaction Codes

KAH1 create cost element group

KSH1 create cost center group

KOH1 create order group

ii. Feed Center Costing

- General Explanation

Output feeds include two processes, fermentation and output feeds processing

For fermentation processing, only Bill of Materials is created for the semi-

finished goods, overhead will not be included in this process

For output feed processing, both Bill of Materials and Master Recipe will be

created for standard cost calculation.

- Planning Standard Cost Estimate

Planning activity quantity for Output Feed Center using transaction code KP26.

Activity type 1110 Output Feed Center will be used for total quantity of output

feed.

Plan for overhead expenses for general cost centers which support for feed

center such as Logistic Center, Maintenance, and warehouse using transaction

code KP06. Also, using KP06 to plan for direct expenses for feed center.


centers to feed center cost center using transaction KSUB. The naming

convention of the planning/actual assessment cycle is 1 letter of Company

Code + P (planning assessment cycle) or A (Actual assessment cycle) + 2

letters for Version and 2 letters for running number. For example, company

code 1000 will have assessment cycle for planning version 10 which will

assess cost from logistic cost center to Feed Center Cost Center as 1P1001.


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Run cost splitting KSS4 to link activity type with corresponding expenses.

Run transaction code KSPI to calculate activity price of the services which are

to be allocated. Run standard cost estimate for cow using CK40N.

- Execution

Ref to PP business process THM_BP_PP018_V1.0.doc


feed center cost center will be posted through normal FI transactions or CO

assessment transactions.

Run KSS2 cost splitting to link activity type with corresponding expenses.

Run KSII to calculate activity price of output feed center

Revaluate process order at the actual price of activity using transaction code

CON2

Run WIP calculation using KKAX for Individual Processing or KKAO for

Collective processing. If everything is correct, do actual run before posting WIP

using transaction CO88- settlement(accounting document is posted).

When process order is finished with Technical Complete or Final Confirmation

(actual quantity receipt is equal to planned quantity), run variance calculation

using transaction KKS2 and then post settlement using transaction CO88

(accounting document is posted).

After process order is completed, close the order to prevent posting goods

receipt using transaction COHVPI.

iii. Milk Costing

- General Explanation

Milk processing will include only activity type of Milk cost center. This activity

will cover all expenses for raw milk. No Bill of Materials will be created for Milk

cost calculation

- Planning

Planning activity quantity for Milk Cost Center using transaction code KP26.

Activity type 1100 Output Raw Milk will be used for total quantity of milk

output.

Plan for overhead expenses for general cost centers which support for Milk

Cost center such as Logistic Center, Maintenance, and warehouse using

transaction code KP06. Also, using KP06 to plan for feed expenses and direct

expenses for milk cost center.


centers to milk cost center using transaction KSUB. The naming convention ofthe planning/actual assessment cycle is 1 letter of Company Code + P


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(planning assessment cycle) or A (Actual assessment cycle) + 2 letters for

Version and 2 letters for running number. For example, company code 1000

will have assessment cycle for planning version 10 which will assess cost fromlogistic cost center to Milk Cost Center as 1P1001.

Run cost splitting KSS4 to link activity type with corresponding expenses.

Run transaction code KSPI to calculate activity price of the services which are

to be allocated.

Run standard cost estimate for cow using CK40N.

- Execution

Ref to PP business process THM_BP_PP017_V1.0.doc

Goods issued of medicine, vaccine, from logistic center to farm: Ref to

THM_BP_MM019_V1.0

Accounting of feed issued from feed center to each farm: Ref to

THM_BP_MM019_V1.0s


Milk cost center will be posted through normal FI transactions or CO

assessment transactions.

Run KSS2 cost splitting to link activity type with corresponding expenses.

Run KSII to calculate activity price of Milk Cost Center.

Revaluate process order at the actual price of activity using transaction code

CON2

When process order is finished with Technical Complete or Final Confirmation

(actual quantity receipt is equal to planned quantity), run variance calculation

using transaction KKS2 and then post settlement using transaction CO88

(accounting document is posted).

After process order is completed, close the order to prevent posting goods

receipt using transaction COHVPI.

3.3 Special Organizational Considerations

i. Not applicable

Sr No Topics4.1 Change Management Issues

i. Not applicable

4.2 Description of Improvementsi. Not applicable

4.3 Description of Functional Deficitsi. Not applicable

4.4 Approaches for covering Functional Deficiti. Not applicable


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Sr No Topics

5.1 Notes on Further Improvementi. Not applicable

Sr No Topics6.1 System configuration considerations

i. Normally, in SAP standard system, actual/planning assessment/distribution should only repostcosts within CO-OM. This means cost is only allowed to repost between cost center andinternal order. However, in our business scenario, we have the process of reposting cost fromcost center to production order. To do this, we have to activate the following businesstransactions for production order (Object type ORF): RKIU/RKIV/RKBU/RKBV.

6.2 File conversion considerations (Master data maintenance).i. Not applicable

6.3 Interface / Enhancements considerationsi. Not applicable

6.4 Reporting / Layout considerationsi. Not applicable

6.5 Authorization considerationsi. Not applicable


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Business Process signoff document

Module ControllingBusiness Process Cow farm costing (Agriculture Product)Sub Process / No Not applicable THM_BP_CO015_V1.1Description Manage transactions for agriculture product raw milk, feed and field

crop

Organizational Units Business Process OwnerTHM Cow Farm Nguyn L Huy

Project THM TeamName Designation Signature DateNguyn nh Thng

Core Team Members

Nguyn L Huy CO Process Owner

Nguyn Th Anh Project Coordinator

Gilbert Jardin Project Manager

Project CSC TeamName Designation Signature Date

Nguyen Huy Dat FICO Consultant

Duong Dang Khoa FICO Team Lead

Suresh V Rajagopalan Project Manager


thm_bp_co015_v1.1

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