SAP offers two methods of inventory valuation and product costing: standard cost and (weighted) moving average. The method to be used is identified on the material master level, thus different materials can use different methods within a plant. Although SAP does not restrict this choice, moving average is typically used only on purchased materials.
The decision to use moving average for certain materials should reflect the approach used to analyze contribution margins, and variances in manufacturing and purchasing. Use of moving average on purchased materials may be appropriate where the item is an easily obtained commodity, with small fluctuations in cost. In such situations, the impact on margins is minimized, reducing the need for formal variance analysis.
From a practical point of view, some of the key differences and considerations in how this would be reflected in the system are identified below. Read more…
Controlling CO ML
This document explains all about report painter, like how to create reports with the help of report painter.
This document contains how to use report painter to get your desired report form sap system without getting help form ABAP and technical team. In this document all the processes has been given in step by step manner with the help of screenshots too.
Following concepts has been explains following concepts of Report painter. Read more…
Controlling CO IO, CO ML, CO PA, CO PC, report
Product Costing Period End Process
The period end process needs to be carried out only for real internal Order. After completion of activity /process, we needs to settle the cost to one or more receivers (cost center, Profitability segment or Assets etc)
Define settlement rules: Settlement rules can be defined at the time of creation of IO or before settlement of IO. For settlement of order we need to define distribution rules in each of senders. This Settlement rules will determines where the cost to be settled. Settlement rules will be defined by concerned Divisional Head/Dept Head. Read more…
Controlling CO IO, CO ML, CO PA
Internal order is going to be used for budgeting, collection of cost. Internal order will be used for control of Capital Expenditure, Advertisement cost, R & D expenses, Exhibition Cost, Manufacturing meet, Project etc.
During planning stage planned cost is estimated and once the planned cost is approved, funds equivalent to approved planned cost is prescribed as budget.
In case of unforeseen events, additional budget requirement due to for example Price rise in external activities will be updated as Supplementary Budget and similarly in case of reduction, budget can be reduced by updating Return. Read more…
Controlling CO IO, CO ML, CO PC
Cost Estimation
The price of the finished goods (FG) and semi-finished goods (SFG) manufactured is determined through Standard Cost estimate. Standard cost is estimated based on the cost of input materials, planned cost of activities and overheads. It is the price at which the finished and semi-finished goods are valuated in finance. The standard cost once estimated is valid for a specific period interval.
A standard cost estimate is created at the end of the period and is valid for the entire next period. When the standard cost estimate for the respective material (FG & SFG) is released, the system updates the result of this estimate as standard price in ‘Accounting 1’ and ‘Costing 2’ view detail screen of the material master record. This price is then valid for valuation of material in financial accounting till next cost estimate is run. The materials are revaluated when the next standard cost estimate is released.
In this specific period interval, all the FG and SFG produced through production order or product cost collector are valued at the standard cost updated in the material master. This is termed as ‘Cost of goods manufactured’ (COGM).
Following are the important tools used in cost estimate.
Costing Variant
Cost Component Split
Costing Estimate with/without quantity structure
Costing Run/Price Update
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Controlling CO ML, CO PC
Product Costing Controlling
Product Cost Planning is a tool for setting standard prices of FG and SFG. The standard price is compared against the actual cost of production and any difference between the standard price and actual cost is recorded as variance by the system. It will also form the basis for valuation of FG and SFG inventories at the period and year end. It uses information from the Overhead Cost Planning to calculate costs such as labour, machine, or factory overhead.
Product Cost Controlling includes:
Overhead Cost Planning: It consists:
• Planning of activity output quantity and activity prices for production cost center.
• Overhead rate maintenance in overhead cost sheet for overhead prices.
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Controlling CO ML, CO PC
Product Costing Master Data in SAP
Following are the important related master data to Product Cost Controlling Integration.
a. Material Master view related to Product Costing
b. Bill of Material
c. Work Center
d. Routing
e. Production Order
f. Product cost collector
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Controlling CO ML, CO PC
Statistical Key Figures in SAP
Statistical Key Figures are used to capture statistical information like number of employees, kwh, sqft etc and it can be used as a basis for cost allocations between cost objects.
As you can see in the Diagram, SKF on the basis of No. of Employees are planned for each of the Receiving cost Centers. The Costs of Administration Department are allocated to the Receiver cost Centers based on the Number of Employees (SKF) planned in each one of them. Read more…
Controlling CO ML, CO PC
This document explain SAP Actual Costing / Material ledger (CO-ML) and in step by step manner with the help of system screenshots.
This document is very useful for all SAP FI CO consultant and or who are having aspiration to be FI CO consultant. This document helps you to understand SAP Actual Costing / Material ledger (CO-ML) configuration in systematic manner and you need not to waste your time in SPRO for SAP Actual Costing / Material ledger (CO-ML) configuration.
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Controlling CO ML, CO PC
