Product Costing - Planning & Actuals

Hi All
I'm new to Product Costing. I dnt have much of functional knowledge aswell. I want to how the Planning Values & the actuals values are calculated in SAP thru PC. May be if you can explain me with an example, it wld be of grt help to me. I want PC for Make to Stock scenario. Expecting your reply.
Regards
Rajaram

Dear,
I will explain with an example.
Main product is A, Raw materials are B,C & D. Let us assume that relationship between FERT & ROH   is 1:1 ,
So for manufacturing 100 EA of A we need 100 EA of B,C & D.
Next let us assume that there is one operation involved in the shopfloor. The machine rate per hour (200 Rs) & the Labor rate per hour (300 Rs) . Let us say for manufacturing 100 EA it involves 2 hours of M/C & Labor.
The overhead costs of the company is 50 % of the operation cost (this percentage is maintained in the costing sheet against the secondary cost elements of the activity types).
Say there is a sub-contracting process involved which costs around 100 Rs per 100 EA of A.
Given the above conditions ,when you do the cost estimate the system will arrive at the cost of the product as follows.
Product A
Material Cost
Component                  Qty               Per unit Cost               Total Cost
      B                           100                      2                              200
      C                           100                      1                              100
      D                           100                       2.5                           250
Operation Cost
Activity                      Hours           Per hour Rate              Total Cost
   Machine                     2                        200                           400
   Labor                          2                        300                           600
Overhead
Overhead is 50 % of total operation cost       = 1000 * 0.5      =    500
External Processing Costs
Sub-contracting                                                                 =    100
Total Cost of Goods Manufactured                                       = 2150
Price of 1 A is 21.5 Rs.
Hope this explains you the four main segments invovlved in the product costing clearly.
Thanks & Regards,
Vijaya Bhaskar A
Edited by: Vijaya Bhaskar A on Jan 11, 2009 1:01 PM

Similar Messages

Product Cost Planning

We are embarking on production planning & I need to know best course for financials/product costing. Would the AC505 Product Cost Planning Course be suitable for a business who is about to embark on production planning . We are in manufacturing, and we will be using lots of components (BOMs) and process orders etc.

Hello Higgins:
There are 3 product costing courses:
AC505 - focus on product cost planning. for example, from BOM, routing to estimated / simulated cost.
AC520 - focus on ACTUAL cost scenario ,for example , make-to-stock , make -to order, sales, service, periodic
AC530 - focus on special module Material Ledger , for industries to get the actual cost (more precise)
so I understand that you start on Planning, so AC505 is the right course.
But I recommend to attend AC520 as well to understand the actual cost flow . so you can compare plan and actual together.
and if you like the most accurate cost , and implement ML (material ledger) - AC530 is another one.
Hope this help.
BR,
Manthana

Product cost planning & cost object controlling

Hi All
We are using KMAT material type for configurable materials.
Product cost planning:
My question is , Can we save cost estimate for the Kmat materials?
( I am assuming I dont have to run CK40N for these materails , As I am not going to have accounting tab for Kmat materails. and I do not know which materails and operations to use in super Bom and Super routing)
Please let me know If the above statement is true.
Cost object controlling:
Can i use cost obect controlling by production order or PCC?
*I am assuming I will be ale to use only cost object controlling by sales order....But I have nt worked on this previously...If I have to use cost object controlling by sales order , can you guys give me a link or steps that helps me in configuring Cost object controlling by sales order*

Hi,
See comments in bold
Product cost planning:
My question is , Can we save cost estimate for the Kmat materials?
( I am assuming I dont have to run CK40N for these materails , As I am not going to have accounting tab for Kmat materails. and I do not know which materails and operations to use in super Bom and Super routing)
Please let me know If the above statement is true.
You have goto VA02-->Costing
Sales order costing is big topic,please check this link
http://help.sap.com/saphelp_bw33/helpdata/en/90/ba6da4446711d189420000e829fbbd/content.htm
Cost object controlling:
Can i use cost obect controlling by production order or PCC?
*I am assuming I will be ale to use only cost object controlling by sales order....But I have nt worked on this previously...If I have to use cost object controlling by sales order , can you guys give me a link or steps that helps me in configuring Cost object controlling by sales order*
Sales order costing is big topic,please check this link
http://help.sap.com/erp2005_ehp_01/helpdata/en/90/ba6f9f446711d189420000e829fbbd/frameset.htm
Thanks,
Rau

Blogs for Product Cost Planning (CO-PC-PCP)

The intent of this thread is to collect the relevant blogs in CO-PC-PCP are
1. How to Configure Mixed Costing
/people/young.sun/blog/2010/05/17/how-to-configure-mixed-costing
2. Currency translation when calculating price from purchasing info record
Blogs for Product Cost Planning (CO-PC-PCP)
Edited by: Young Sun on Oct 7, 2010 7:50 AM

Hi,
Followings are the steps for configure the mixed costing in sap
A. Create a Procurement Altternative in CK91N for each of the 4 prod version... Choose process category = Production in CK91N
B. 1 Now, create a mix cost ratio for each of these 4 proc alternative in CK94....
B.2 To maintain a mix ratio in CK94, you need to maintain Qty Structure Type.. Follow the below steps
create a Qty Structure Type in IMG - Controlling > Product Cost Controlling > Product Cost Planning > Selected Functions in Material Costing > Mixed Costing
> Define Quantity Structure Types - Define Qty Str Type here and assign it in the next step
> Define Costing Versions - Assign Qty Str Type to your costing version 1 and Costing Type
C. Now run CK11N.. Your std cost will be a weighted average of all the 4 prod versions... And target cost in production order will be based on the prod version used in prod order
Regards
Ashok verma

Product Cost Planning report

Hello,
I am trying to make a report painter report which would display all the different cost components (columns) for a range of different materials (rows).
However this is the error message I get when I try and execute the report.
Can someone please advise on how to fix this probs. Above all, please explain in plain english what the message is all about.
Thanx
NIK
"Report contains more than one report object"
Message no. KN089
Diagnosis
The report is for more than one report object. This causes performance problems. This is not supportedc in product costing in particular.

"Report contains more than one report object"
Message no. KN089
Diagnosis
The report is for more than one report object. This causes performance problems. This is not supportedc in product costing in particular.
Hello All,
I still am not able to figure out why am I getting this error message. Can some one please help me out and explain what does this mean. All the details of the report that I am trying to define is present in the previos posts I have made on this thread.

Raw Material Costing with Overhead, Product Cost Planning

Hi,
I have an issue applying overhead to purchased raw materials. We need to apply this overhead for only a certain materials. So, I have defined a overhead key/overhead Group, and assigned the group in the material master of the raw material. The overhead is 2% freight on raw material costs.
In the std.costing variant, I have assigned the costing sheet under Overhead on material components tab of the corresponding valuation variant. I have also included the Freight OH in the cost component structure.
However, when I run the costing with CK11N for the raw material, it is showing only the raw material cost, not the overhead.
What could be the problem?
I appreciate your help.
Thanks,
Ram

Is the overhead rate a percentage type or quantity based?
Have you maintained both actual and plan rates (1 & 2) under define % based OH rates or Qty based OH rates accordingly?
Does the validity date (in define OH rates )cover the date of costing?
Is the Costing sheet assigned to the valuation variant at plant level?
Is the OH base in the costing sheet includes the cost element of the raw material?

Product Cost Planning (PP)

Frds,
How to do costing i.e. settings/configuration for Co-Product and By-Product along with Header Material/Product in SAP PP point of view?

Hi,
As reddy said, check the cost component structure......
and the check the following/.
Check the activity rate in KP26.
Check the Bom and routing whethre they flaged for costing or not...
Also check the valuation variant, as the priority all prices are available or not...
Regards,
RAM

Percentage based overhead based on target cost of actual production

Hello,
I'm trying to calculate percentage overhead (overhead as a % of total cost of production) using the usual overhead group, overhead key ,costing sheet, etc.
Also put the overhead group in the material master.
Although I am getting it correctly as part of product cost planning, when it comes to calculating this overhead on a production order, it does it based on 'total actual costs' posted to the order. I want it to calculate the % overhead based on the standard cost of actual production (the target cost).
I would really appreciate some help on this.

Hi
If that's the requirement, you can achieve through template allocation. Refer the doc contributed by arturo senosain
I use a workaround for such cases. Add an activity type in routing with activity quantity same as base qty of routing.. Say, 1 PC
Maintain the activity price as .15. And you are done
Br. Ajay M

Product Costing and Production Planning

Hi,
Is Product Costing absolutely required before implementing Production Planning, specifically PP orders? My client does not want to plan costs or need any cost estimates. They want to use a PP order to check availability for a BOM, and then issue it out to an external vendor for services. After this material is processed by the external vendor, he would ship it back and we would be doing a goods receipt at the parent level of the BOM. The whole purpose of this is to get the accurate price of the BOM parent which would include all service costs. This parent would finally be sold via the regular SD sales order process. Our Logisitics consultant suggested that the only way this could be accomplished is a PP order. All this looks okay, but he also mentioned that a PP order cannot work without Product Costing and the process cant be accomplished CO-PC. I am unable to grasp why SAP would force us to have costing when the client doesnt need any cost estimates, planning etc. Could any one please tell me if we need CO-PC for this scenario?

Dear SAPFicon,
Technically, to run PP without using product cost planning would cause a lot of problems during business process of production order. Because, once a production order is created then the data structured is freezed in the PO and if there is any missing data it will cause errors. Any errors in production order would stop the following transactions. We never know what would be the error level of the production order. The worst case, the production or should be cancel and start it all over again.
But by using product costing or product cost planning, this is a preliminary step to prevent and eliminate any error of the products tobe produced.
So, ideally, there is one person in charge to ensure that the products which be produced in the production orders are free of error.
So, the product costing is an integrated module that take data from variouse module such as PP, MM, CO, HR.
The product costing use the Logistic master data such as folllowing;
1. Bill of material
2. Routing
3. Work center
4. Material master
How you can say, that running PP without PC will run, while the to run the smooth production order, you need to mandatory parameter in Material Master that belong to Costing area.
Without having product costing, I can assure that your client will trap in a lot of troubles with their business process.
Please see the online documentation for product costing for a better overview or you are welcome to ask again
Regards,
Irhasni

How to Close Planned Over Heads in product costing

HI,
We are maintaining planned over heads through KP26 and Costing sheet.Kindly tell me how to close planned over head wether it is periodicall closing or other?
Kindly provide me the guide lines how to do this Planned overheads closing in the system?How many ways are there to close planned overheads in the system?
Kindly adviice me?
Thanks
Sunitha

Dear Sunitha,
To run the Cost estimate or close the planned overhead KP26 and Costing Sheet is not enough you have to move forward and you need to define Cost component Structure (OKTZ) Path: SPRO > IMG > Controlling > Product Cost Controlling > Product Cost Planning > Basic Setting for Material Costing > Define Cost Component Structure. After maintaining cost component structure you need to define Costing variant T.code OKKN Path: SPRO > IMG > Controlling > Product Cost Controlling > Product Cost Planning > Material Cost Estimate with Quantity Structure . Here you copy PPC1 standard and create your own costing Variant.
After Maintaining the Configuration go to T.code CK11n and run your costing and if it is correct then save it. To update Price in MM run T.code CK24 and release Material and update it.
thx.
Ganpat

Product Costing Related Reporting

Hi Gurus,
Kindly provide the Transaction codes for Product Costing reports and any other related but useful to Product costing reports.
Also, what is the TCode for consumption reports to compare actuals with planned..?
Many thanks.
Points available.
Cheers..!!

HI,
There are lot of Product costing report available under Information system menu. Product Cost Controlling-> Product Cost Planning ->Information system.
Hope this helps.

Production costs for material with price control V

Dear all,
Can anyone pls tell me, how will the costing occur for a material produced in-house and having price control 'V' ? I am not able to see the target costs.
Also kindly tell me the settings to be done in CO, like target cost version, valuation variant, costing variant, etc.
Thank you,
Shrenik

Rather than giving my own versions I have compiled here SAP inputs. Pl let me know if you require any clarifications:
Costing variant has the following components:
<b>Define Costing Types
Define Valuation Variants
Define Date Control
Define Quantity Structure Control
Define Transfer Strategy
Define Reference Variants</b>
<u>Costing type:</u>
In the costing type, you define the purpose of a material cost estimate by specifying, for example, which field in the material master record the costing results can be transferred to:
Update Cost Estimate
Standard price Standard cost estimate (01)
Tax-based price Inventory cost estimate
Commercial price Inventory cost estimate
Price other than std price Modified standard cost estimate or
current cost estimate
No update Any cost estimate
Define Valuation Variants:
Define Valuation Variants
Here you create a valuation variant containing the parameters required for valuation of a cost estimate.
You also specify which costing sheet should be used to calculate overhead.
Valuation Strategies
Material valuation
Here you define the sequence in which the system searches for prices from the accounting view or costing view of the material master record to valuate materials. You can also access prices from purchasing info records and condition types.
For material cost estimates, you also specify whether additive costs can be added to the selected price.
With configurable/configured material components and with procurement alternatives, the sequence defined here is ignored if the strategy "price from purchasing info record" was selected, in which case that strategy is always executed first. For more information, refer to the SAP Library in the component Product Cost Planning under Raw Material Costing or Mixed Costing.
Activity Types / Processes
Here you define the sequence in which the system searches for prices in activity type planning or actual activity price calculation in Cost Center Accounting or Activity-Based Costing to valuate the utilized activity types and business processes.
You also specify which plan/actual version is used.
Subcontracting
Here you define the sequence in which the system searches for prices in the purchasing info record. In purchasing, quota arrangements are used to create a mixed price for materials that are manufactured with external vendors with parts provided by the customer. You can specify whether the quota of the individual vendors that are entered in the source list for the material to be processed should be determined through the planned quota arrangement or the actual quota arrangement.
External processing
Here you define the sequence in which the system searches for prices in the purchasing info record or routing operation for valuation of the external activities.
Strategy Sequence
You define the individual valuation methods for the valuation variant as strategy sequences. For the valuation of the material components you define a strategy sequence that reads the fields of the material master record in a particular sequence such as:
1. Planned price 1
2. Standard price
3. Moving price
The first price that is not zero is used to valuate the material component.
Target versions:
Target cost versions are used in the following ways:
In variance calculation:
To control which variance (total variance, production variances or planning variance) is calculated
To valuate unplanned scrap( scrap variance)
Unplanned scrap is valuated in the period-end closing activities when the variances are calculated. You can specify in a valuation variant for WIP and scrap which cost estimate you want to use to calculate the target costs for the valuation of unplanned scrap. You assign the valuation variant to target cost version 0 if you want to include it in the valuation of scrap.
When you are using a cost object hierarchy with active distribution, you use the target cost version to control which cost estimate the system uses to calculate the target costs, which are used as the basis for determining equivalences for actual cost distribution.
The actual costs collected at the level of the hierarchy are distributed across the orders in accordance with these equivalences. This distribution is proportional to the target costs for the cost element under which the actual costs are written. Actual costs for material costs are distributed in proportion to the target costs for the origin group, such as for the material, if you have entered an origin group in the costing view of the material master record and have set the indicator Material origin, for example.
If no target costs were calculated under this cost element, enter a cost element group in the target cost version. The actual costs are distributed in proportion to the target costs for this cost element group. This cost element group should be complete. If costs were updated under a cost element that is not in this cost element group, no distribution is possible.
You can calculate equivalences on the basis of SAP standard target cost versions 0, 1 and 3.
The standard system supplies the following target cost versions:
Target cost version 0 ( total variance)
The amount of the total variance generates a posting in Financial Accounting during settlement.
For this version, select actual costs as the control costs and standard cost estimate as the target costs.
Target cost version 1 ( production variance)
For this version you choose actual costs as the control costs and planned costs as the target costs.
Target cost version 2( planning variance)
With target cost version 2, the costs from the preliminary order cost estimate are interpreted as control costs.
For this version, select planned costs as the control costs and current cost estimate as the target costs. You cannot calculate planning variances for the product cost collector.
Target cost version 3 (production variance of the period)
You compare the planned costs of the period calculated on the basis of an alternative material cost estimate (such as a modified standard cost estimate) with the actual costs of the period on the basis of the yield delivered to stock in the period.
The base quantity for variance calculation is the yield.
For this version, you choose the actual costs as the control costs and the alternative material cost estimate as the target costs. To determine the alternative material cost estimate, enter a costing variant and choose a costing version.
The target cost version specifies which data is to be compared. The target cost version also specifies which variance variant is used and therefore which variance catagories are calculated. You can define a different target cost version for each controlling area

Doubt-product costing

Experts:- plz clarrify this one:-
2. what is the difference between:-
a.product cost planning,
b.cost object controlling
c.sales order costing.

Hi,
Product cost planning is used to calculate the standard costs of the Materials. For which we need to prepare one cost sheet which calculates the overheads used in Production and cost component structure which includes all the cost elements with which the product is costed(materials,activities etc). In planning we create a Costing variant to capture / calculate the standard cost of the product. Costing variant is again a combination of valuation variant(which includes the strategy to calculate ur materials i.e. whether standard price or mov avg price,costing sheet etc.), date control, qty structure control etc. Planning can be done in 2 ways. 1 with qty structure and 2 without qty structure. with qty structure uses a bom and routing selection and without qty structure does not. When we run a standard cost estimate the system calculates the cost of the material based on the settings we make in planning.
After making settings for the planning we need to make settings for costing the object i.e order, Cost collector etc. Cost object controlling settings are different for Order, Period(repetitive) and Sales order Production types.
In cost object controlling we need 2 more costing variants.one for calculating and capturing planned costs as per ur BOM and another for calcualting the actuals which we confirm during production(sap standard ones will be used generally for both). Once the production is confirmed, the system calculates the variance i.e. the difference between ur standard cost and the actuals. Apart from order settings we also need to make settings for calculating WIP, Variance and Settlement of Order or Cost Collector in Cost object controlling.
Sales order costing is one type of production like make to stock, make to order, repetitive. unlike others, in sales order costing production is done based on the sales order of the customer. Generally FMCG and other consumer goods are produced with make to stock and order.
Hope this would help u.
Pls assign points if useful.
Regards,
Vishnu.

Product Costing InfoCube

Hi all,
Does any one created Product Costing customized Info Cube?
I am new to BI , I would like to create customized Info Cube and use this Cube to BOBJ.
Do we have any standard Info Cube in BI for Product Costing, so that i can customize.
Thanks in advance.
Muvva

Hi,
Product Costing Cubes and DS,
CUBES & QUeris and DS Info):
0PC_C01 : Cost Object Controlling
0COPC_C07 : Actual Costing / Material Ledger u2013 Cost Component Split
0COPC_C08 : Product Cost Planning u2013 All Cost Estimates ( DS : 0CO_PC_PCP_01)
Queries on :
The following queries can access this InfoCube:
0COPC_C08_Q0001: Cost Estimate: Overview, All Cost Estimates for a Material
0COPC_C08_Q0002: Cost Estimate: Detailed Report, Cost Component Split
0COPC_C08_Q0003: Cost Estimate: Detailed Report, Fixed and Variable Costs
0COPC_C08_Q0004: Cost Estimate: Detailed Report, Level/Lower Level Costs
For more Info :
http://help.sap.com/saphelp_nw70/helpdata/en/64/0a6937adf79120e10000009b38f842/frameset.htm
Regards
Ram.

Material Ledger,Revaluation Production Cost Center ,Standard Cost

Hi, I have a problem with revaluation of production cost centers.
Firstly, production cost center expenses are settled via activity types onto the production order at the end of the period. However, CKMLCP revaluate cost centers after the settlement because of using standard price. So cost centers at the end of the period have some amount.
As a result we can not find actual price for production orders.
If I use standard cost in order to consume on cost centers, material ledger revaluates again this cost centers. I dont want this condition. Because this cost center is settled to other cost object before closing.
Thanks.
Message was edited by:
Ergul Taslacioglu

Hi
Go to the following path in SPRO:
Controlling -> Product Cost Controlling -> Actual Costing/Material Ledger -> Actual Costing -> Activate Actual Costing. Double-click on "Actiavte Actual Costing" and change the indicator from "2" to "1".

Product Costing - Planning & Actuals

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