R/3 System Product Costing
Chapter 1: Introduction
Contents
About this Guide ....................................................1–1
Who Is this Guide For?............................................1–2
How to Use this Guide ............................................1–3
This guide is designed to help you to understand how the SAP product costing module can be used to collect and allocate costs in your manufacturing environment. It explains what you need to know to perform these tasks and helps you to assess the most appropriate costing method for your situation. About this Guide The SAP product costing module is a good example of the integrated nature of the R/3 System. Information is extracted from many modules including:
- Financial (FI)
- Controlling (CO)
- Material Master (MM)
- Production Planning (PP)
- Sales and Distribution (SD)
- Project Systems (PS)
It is precisely these integration aspects that combine to create a highly functional, albeit complex, tool. The most common issue arising from product costing is the lack of knowledge of these integration steps. Typically, SAP consultants focus on specific modules and may not be aware of how their decisions impact the other modules. It is the cross-modular aspect of product costing that this guide addresses. This guidebook is applicable from Release 3.1 onwards, except for chapter 4—the make-to-order strategy with valuated stock—which is available in Release 4.0:
Chapter 1: Introduction...........................................................1–1
About this Guide........................................................................1–1
Who Is this Guide For?.............................................................1–2
How to Use this Guide..............................................................1–3
Chapter 2: Product Costing Flow for Discrete Manufacturing Without Profitability Analysis.....2–1
The Production Process Using Production Orders........................2–3
Overview..................................................................................2–3
Processing Throughout a Period ................................................2–4
Month-End Processing ..............................................................2–6
T-Accounts: FI G/L Accounts ....................................................2–9
T-Accounts: CO Secondary Cost Elements .................................2–10
T-Accounts: CO Controlling Objects ..........................................2–11
FI/CO Reconciliation ................................................................2–12
FI ............................................................................................2–12
CO...........................................................................................2–12
Reconciliation ...........................................................................2–12
Reconciliation Procedure............................................................2–13
T-Accounts: FI/CO Reconciliation ..............................................2–13
Scrap .......................................................................................2–14
Chapter 3: Product Costing Flow for Discrete Manufacturing with Profitability Analysis.............3–1
Overview ..................................................................................3–2
The Production Process Using Production Orders.........................3–3
Overview...................................................................................3–3
Processing Throughout a Period ..................................................3–4
Month-End Processing ...............................................................3–6
T-Accounts: FI G/L Accounts .....................................................3–10
T-Accounts: CO Secondary Cost Elements .................................3–11
T-Accounts: CO Controlling Objects ...........................................3–12
FI/CO Reconciliation ..................................................................3–13
FI .............................................................................................3–13
CO............................................................................................3–13
Reconciliation ...........................................................................3–14
Reconciliation Procedure.............................................................3–14
T-Accounts: FI/CO Reconciliation ...............................................3–15
Cost-Based Profitability Analysis..................................................3–16
Design Decisions........................................................................3–16
Issues .......................................................................................3–18
CO-PA Fields Updated by an Invoice...........................................3–20
CO-PA Fields Updated by Period-End Controlling Processes .........3–21
Chapter 4: Product Costing Flow for Make-to-Order Production with Valuated Stock and Profitability Analysis......4–1
The Production Process Using Sales Orders with Valuated Stock .....4–3
Overview...................................................................................4–3
Processing Throughout a Period ...................................................4–4
Month-End Processing ................................................................4–7
T-Accounts: FI G/L Accounts .....................................................4–11
T-Accounts: CO Secondary Cost Elements ..................................4–11
T-Accounts: CO Controlling Objects .............................................4–13
FI/CO Reconciliation ...................................................................4–14
FI ..............................................................................................4–14
CO.............................................................................................4–14
Reconciliation .............................................................................4–14
Reconciliation Procedure .............................................................4–15
T-Accounts: FI/CO Reconciliation ................................................4–15
Cost-Based Profitability Analysis...................................................4–16
Overview ...................................................................................4–16
Design Decisions.........................................................................4–17
Issues ........................................................................................4–18
CO-PA Fields Updated by an Invoice............................................4–20
CO-PA Fields Updated by Period-End Controlling Processes...........4–21
Special Topics.............................................................................4–22
Make-to-Order Controlling Options ..............................................4–22
Chapter 5: Product Costing Flow for Make-to-Order Production with Profitability Analysis.... 5–1
The Production Process Using Sales Orders...................................5–3
Overview ...................................................................................5–3
Processing Throughout a Period....................................................5–4
Month-End Processing ................................................................5–7
T-Accounts: FI G/L Accounts .....................................................5–11
T-Accounts: CO Secondary Cost Elements ....................................5–12
T-Accounts: CO Controlling Objects ............................................5–13
T-Accounts: CO Results Analysis Cost Elements.............................5–14
FI/CO Reconciliation ..................................................................5–16
FI .............................................................................................5–16
CO.............................................................................................5–17
Reconciliation ............................................................................5–17
Reconciliation Procedure .............................................................5–18
T-Accounts: FI/CO Reconciliation ...............................................5–18
C...............................................................................................5–19
Overview ....................................................................................5–19
Design Decisions.........................................................................5–20
Issues .........................................................................................5–21
CO-PA Fields Updated by Period-End Controlling Processes..........5–22
Options for Using "Standard Costing" in the Make-to-Order Environment...5–24
Using Planned Sales Order Costs as the Standard .........................5–24
Using a Material Variant to Reference the Configurable Material .....5–24
Chapter 6: Product Costing Flow for Assemble-to-Order Production with Profitability Analysis..... 6–1
The Production Process Using Sales Orders....................................6–3
Processing Throughout a Period....................................................6–4
Month-End Processing .................................................................6–7
T-Accounts: FI G/L Accounts ......................................................6–11
T-Accounts: CO Secondary Cost Elements ....................................6–12
T-Accounts: CO Controlling Objects .............................................6–13
T-Accounts: CO Results Analysis Cost Elements.............................6–14
FI/CO Reconciliation ...................................................................6–17
FI ..............................................................................................6–17
CO..............................................................................................6–18
Reconciliation ..............................................................................6–18
Reconciliation Procedure...............................................................6–19
T-Accounts: FI/CO Reconciliation ................................................6–19
Cost-Based Profitability Analysis...................................................6–20
Overview....................................................................................6–20
Design Decisions.........................................................................6–20
Issues ........................................................................................6–22
CO-PA Fields Updated by Period-End Controlling Processes .........6–23
Chapter 7: Product Costing Flow for Repetitive Manufacturing with Profitability Analysis.....7–1
The Production Process Using Cost Collectors .............................7–3
Processing Throughout a Period ..................................................7–4
Month-End Processing ...............................................................7–6
T-Accounts: FI G/L Accounts ....................................................7–10
T-Accounts: CO Secondary Cost Elements .................................7–10
T-Accounts: CO Controlling Objects ............................................7–11
FI/CO Reconciliation ..................................................................7–12
FI .............................................................................................7–12
CO............................................................................................7–12
Reconciliation ...........................................................................7–12
Reconciliation Procedure.............................................................7–13
T-Accounts: FI/CO Reconciliation ..............................................7–13
Cost-Based Profitability Analysis.................................................7–14
Design Decisions........................................................................7–14
Issues ......................................................................................7–16
CO-PA Fields Updated by an Invoice..........................................7–18
CO-PA Fields Updated by Period-End Controlling Processes .........7–19
Cost Object Hierarchy ...............................................................7–20
Chapter 8: Product Costing Flow for Engineer-to-Order Production with Profitability Analysis....8–1
Overview .................................................................................8–2
The Production Process Using Projects (WBS Elements and Networks) ..8–3
Overview...................................................................................8–3
Processing Throughout a Period ................................................8–5
Month-End Processing ..............................................................8–8
T-Accounts: FI G/L Accounts .....................................................8–13
T-Accounts: CO Secondary Cost Elements ..................................8–14
T-Accounts: CO Controlling Objects ...........................................8–15
T-Accounts: CO Results Analysis Cost Elements ..........................8–17
FI/CO Reconciliation .................................................................8–21
FI ............................................................................................8–21
CO...........................................................................................8–21
Reconciliation ...........................................................................8–22
Reconciliation Procedure............................................................8–22
T-Accounts: FI/CO Reconciliation ..............................................8–22
Project System Structure for this Scenario...................................8–24
Overview..................................................................................8–24
Project Structure.......................................................................8–24
Master Data..............................................................................8–25
Cost-Based Profitability Analysis................................................8–26
Overview..................................................................................8–26
Design Decisions.......................................................................8–27
Issues ......................................................................................8–28
CO-PA Fields Updated by Period-End Controlling Processes........8–29
Special Topics...........................................................................8–30
Options for Using "Standard Costing" in the Engineer-to-Order Environment ......8–30
Earned Value Calculation in Projects ..........................................8–31
Appendix A: Standard Versus Moving Average in R/3 ............A–1
Overview ................................................................................. A–1
SAP Recommendation............................................................... A–1
Standard Price........................................................................... A–2
Definition and Description ......................................................... A–2
Getting a Standard Cost into the System ..................................... A–4
Moving Average Price ............................................................... A–5
Definition and Description ......................................................... A–5
Getting a Moving Average Cost into the System........................... A–7
Appendix B: Fixed and Variable Costs ...................................B–1
Overview ................................................................................. B–1
Activity Prices........................................................................... B–1
Activity Prices: Fixed and Variable split....................................... B–2
Overhead ................................................................................. B–3
Costing of Production Objects.................................................... B–3
Costing Analysis........................................................................ B–3
Summary.................................................................................. B–4
Appendix C: Work-In-Process and Results Analysis................C–1
Overview .................................................................................C–1
List of Configuration Transactions..............................................C–2
Detailed Configuration Settings................................................... C–3
Results Analysis Key................................................................. C–4
Results Analysis Version............................................................ C–4
Valuation Method—Actual (Order-Related)................................. C–6
Valuation Method—Planned (for Order related and Repetitive)...... C–8
Valuation Method—Sales Order-Related ..................................... C–9
Define Line IDs.........................................................................C–17
Define Assignment .................................................................... C–18
Define Update .......................................................................... C–21
Define Posting Rules.................................................................. C–23
Define Number Ranges.............................................................. C–25
Appendix D: Settlement............................................................D–1
Overview ................................................................................. D–1
What Settlement Is ................................................................... D–1
What Settlement Is Not ............................................................. D–1
Settlement Profile ..................................................................... D–2
Transaction OKO7.................................................................... D–2
Settlement Structure.................................................................. D–5
Transaction OKO6.................................................................... D–5
PA Settlement Structure............................................................. D–7
Transaction KEI1...................................................................... D–7
Define Number Range............................................................... D–10
Transaction KO8N.................................................................... D–10
Appendix E: Overhead............................................................. E–1
Overview ................................................................................. E–1
Costing Sheet Method................................................................ E–2
Configuration Overview ............................................................ E–2
Configuration Tips .................................................................... E–3
Planned Overhead—Setting Standards ........................................ E–6
Actual Overhead Period-End Procedures .................................... E–6
Task List Method ..................................................................... E–7
General Approach ..................................................................... E–7
Data Relationships and Terminology........................................... E–7
Alternate Uses of Standard Values ............................................. E–9
Planned Overhead—Setting Standards ........................................ E–12
Actual Overhead—Shop Floor Activity ....................................... E–12
Appendix F: Process Industry in Release 4.5.............................F–1
PP-PI Functionality Available in Release 3.x ................................F–1
PP-PI Functionality Available in Release 4.5x .............................F–1
Appendix G: Special Profitability Analysis Topics ..................G–1
Alternate Operating Concern Design for Cost-Based CO-PA.........G–1
CO-PA Fields............................................................................G–2
Account-Based Profitability Analysis ..........................................G–3
Differences in Postings for Cost-Based and Account-Based CO-PA....G–4
Appendix H: Special Topics in Setup ...................................... H–1
Setup Costs in Discrete Manufacturing ....................................... H–1
Setup Costs in Repetitive Manufacturing .................................... H–2
Setup Included in Standard Cost................................................. H–2
Setup Not Included in Standard Cost .......................................... H–2
Setup Using the Cost Object Hierarchy as a Cost Collector .......... H–3
Setup in Customer Order Scenarios ............................................ H–4
Index.......................................................................................I–1
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