Product costing Scenario

Dear Experts,
I have a basic understanding that to calculate Material cost estimate data from MM and PP is required.From MM we will get material component data thu BOM and from PP we will get data for activity performed during production thru routing.
Now data from BOM is available but activities are not defined in the system. One plant is equal to 1 work center and all overheads are booked at company code level thru jv irrespective of the nature i.e direct or indirect overheads.No overhead cost is booked against process order currently.
I have to implement Product costing and below are the difficulties I`m facing:
1. Which overheads are normally booked against:
process orders
at company code level against production/service cost centers.
2. The production process of FG`s is muti stage but only 1 work center is created for 1 plant. In 1 process cycle at different stages different fg`s are produced. Is the approach of work center is correct or i have to change it.
3. I need to define cost center, what is the basic funda to consider what should be the cost center.
4. To create cost component structure what should be the things to consider.
Looking forward for quick suggestions.....
Regards
Nitisha

Hi Nitisha,
1. Which overheads are normally booked against:
You have to book direct and indirect over heads through costing sheet. First you have to check with client how they want to charge over heads, based on information provided you have to define cost sheet and attached this in the variant.
2. The production process of FG`s is muti stage but only 1 work center is created for 1 plant. In 1 process cycle at different stages different fg`s are produced. Is the approach of work center is correct or i have to change it.
If the process are multiple stages, then you have to create multiple work centres.
3. I need to define cost center, what is the basic funda to consider what should be the cost center
You can define cost centre based on functional side or physical location or allocation criteria. You can find lot of information about it in SCN. So search it.
4. To create cost component structure what should be the things to consider.
First of all how your costing information should display. Based on this you have to create cost component structure. Basically it breaks up the costs i.e. material costs, process costs and overheads. In this you can further sub divide.
Regards,
Mukthar

Similar Messages

Complex Product Costing Scenario- Separate overhead rates to same material

Hello- I have a strangely complex scenario at my current client.
They wish to apply different overhead rates to the same raw material (one material number in SAP) which is a part of two different BOMs to the same Semi-Finished product (one material number in SAP). This semi-finished product needs to be costed 2 different ways with 2 different BOMs, routings and overhead rates and then i need to use mixed costing to come up with a blended rolled-up cost to update in the material master of the semi-finished product. I am able to get past all challenges but the only open item is to be able to apply different overhead rates to the same material.
Limitations:
1- We have to use Standard price, not moving average.
2- Split valuation idea thrown out the window.
3- Using 2 different material numbers for the raw materials thrown out of the window.
4- Business area idea thrown out of the window.
basically, coming back to the original issue at hand, the challenge is to be able to apply different overhead rates to one material number in SAP.

Hi
There are available,, But you have thrown them out of the window already
I believe you need to rampup your overhead absorption mechanism... if ovh is dependant on the component, then it should remain fixed/.. however, if it is getting changed bsaed on the parent material, then driver is not the component, but the Parent material
hence, your overhead should be based on Parent material... Assign an overhead group to the Parent material say, 100 and 110 to the 2 Parent materials.... Now you maintain separate % of overhead per overhead group.... BASE would be the raw material consumption cost element
@ Subodh: Do you think above suggestion will work?? I think exit need not be used if I have understood his requirement clear
br, Ajay M

Product Costing - Process Order Confirmation

Dear Experts,
We are facing a situation with our Product Costing Scenario :
Under SFG Process Order Confirmation, there are Ten Phases to finally confirm the order. First Phase is for Raw Material Issuance. From Second Phase to Ninth Phase are relevant to Activity Types. Tenth Phase which is final phase, in this point Goods Receipt posting is generated.
At first phase, system posts Raw Materials Goods Issue (Movt Type 261) to Process Order:
Entry : RM (Cr), Consumption (Dr).
Client needs the system to post one more entry at the same time by : WIP (Dr), Inv Change (Cr).
Reason:
According to client, they have made consumption entry in finance but what if all raw materials are not consumed as yet and factory comes under fire, then how can they claim insurance on those Raw Materials which are not consumed and are still in the IN PROCESSING Stage?
My Answer was:
- They can find all material costs in Process Order as Debit Item.
- They can also calculate WIP but cannot post WIP in Finance unless the order is settled.
Ultimately, as per my knowledge client cannot check the unprocessed Raw Materials report in FI but they can check in CO. And this is the point of reservation from client.
They need an entry in Finance for WIP to claim insurance in case of fire and therefore they need a posting of WIP entry immediately after Goods Issue of Raw Materials to Order.
Can anyone please guide me further regarding this scenario and if any one can suggest any work around then it would be highly appreciated!
Regards,
Zain Bashir

Hi Zain
This is a very unusual question
Buddy, there is something in accounting called as "Going Concern Concept" which we all were taught in our accounting days.. That means when you do business, do it with a mindset that you are goinig to do it for long / for ever.. Accidents dont happen every day and you cant build a system around such things
Assume there is a fire (God forbid).. After the accident, you wont even know how much was lying there unconsumed which got gutted in the fire..
And insurances not just covers the stock lying consumed, but also stock manufactured and stock in the process of manufacturing (WIP)
And most importantly, dont expect SAP to throw up a figure at the click of a button.. Does your client really think that they will simply submit the report generated from SAP as-is to Insurance people?? SAP is just a technology enablement, which requires human intervention at various places
My opinion - Dont build system for such requirements
Br. Ajay M

Business scenario of Product Costing

Hi all
pls explain me about business scenario of product costing
thanks in advance

Hi:
(From the link: https://www.sdn.sap.com/irj/sdn/go/portal/prtroot/docs/webcontent/uuid/4f0f6717-0b01-0010-949b-9ab68dd45fec [original link is broken])
Identified Need: You need to accurately determine the costs incurred in producing the goods and services that your company provides.
Business Process to Meet that Need: Product Costing
Product Costing helps a company know the costs incurred by its products in order to successfully manage its product portfolio.The product cost accounting business process calculates cost of goods manufactured (COGM) or cost of goods sold (COGS) broken down by each step of the production process.
For config:
www.sap-topjobs.com/SpecialPP/samplepc.doc
Assign points if info helps
Vj

ADDDITIVE COST FOR PRODUCT COST BY SALES ORDER SCENARIO.

Dear friends,
We are using costing for sales order & we have maintained the costing variant under the path IMG> Controlling> Product Cost Controlling> cost object controlling> Product cost by sales order >premliminary costing & order based costing>product costing for sales order costing>Costing variant for Product costing >Check costing variant for product costing.
Under this we have maintained the Costing variant, Now we need to have Additive cost. But didnt found the tab in the costing variant where as when we check in T.code OKKN which is a part of Product cost planning we can find the Additive cost tab.
How to run addtive costing run for Product cost by sales order scenario & please guide me with one example.
Or else is there any configuration where we can assign standard costing variant PPC1 instead of Costing variant SOC1 ( which is a costing variant of Product cost by sales order.
Please guide me
regards,
Sandeep

Hi Sandeep,
You may please try using Unit Costing for Sale Order.
It is over an above the sale order costing you have done. So in case you want to post any additional known cost, you may do the unit costing for the sale order after the sale order costing.
Trust this helps

Business scenario for product costing make to stock in pharma

Hello sap gurus,
how to explain the business scenario of make to stock product costing. did any one explain about this.
regards,
suneetha

http://help.sap.com/

Co-Product and By-Product Costing in SAP PP Scenario

Frds,
Somebody can tell me, settings/enhancement in PP for Co-Product and By-product Costing along with Header Material?
Thanx

You have posted in a wrong forum. This should have been posted in PP forum
G. Lakshmipathi

Error while creating Product Cost Collector

Hi SAP Gurus,
While creating Product Cost Collector I am getting the following Error:
Enter a distribution rule for Order without a validity limit
Message no. KD059
Diagnosis
The settlement profile used requires you to define a distribution rule for Order. For period 009 2008, however, you have not created a distribution rule for Order.
Procedure
Create a distribution rule for Order without a validity limit, because, if the distribution rule does have a validity limit, the system always issues this message in the period following the last valid period.
You can also use a different settlement profile that does not require such a distribution rule, or change the settlement rule used.
Can any one help where exactly i need to maintain this.
The settlement profile settings are fine.
I am getting this error only after i have changed the scenario to Reproting point back flushing

Dear Suryanarayana
Please check the corresponding settlement profile for product orders.
In most of the cases message KD059 means that no distribution rule is assigned to your production order.
This is not an error, but the system design. In order to avoid message KD059 you will either have to enter settlements parameters and a distribution, or change settlement profile for valid receivers in transaction OKO7 from 'settlement required' to 'Can be settled'.
I hope this helps resolve the issue for you. I wish you the best in your endeavours.
Kind Regards,
Brendan

Product Costing in SAP Retail Solution

Hi experts
I have a question about product costing in SAP Retail (SAP ECC 6.0).
In material master data (Tr. MM43 - Tr. MM42) Product Costing view for Logistics:CD sheet is activated.
Although, for Logistics:Store sheet is not activated.
In customizing, we have tried to activate the Product Costing view for Logistics:Store sheet, but there no standard dynpro to use it. So, we have some doubts:
- Do we have to create customer (Z) dynpros in order to activate Product Costing view for Logistics:Store sheet?
- Does SAP allows Product Costing functionality in SAP Retail solution?
If both answers are YES, i have another doubt:
- In our business scenario, the store is supplied by the Distribution Center. So, does it make sense to run product costing for
a articles in a Store?
We think it makes sense to apply product costing functionality in Distribution center. In order to analyze deviations from
Standard costs to real costs. But we are not sure about Stores.
Does anyone have experience in customizing product costing functionality for a SAP retail in a Logistics:Store?
Thank you for your time
Regards

hi
Product hierarchy in R3 is termed as Merchandise category hierarchy in SAP IS retail
But in R3 Product hierarchy is not used much but Merchandise category hierarchy that is termed as MCH is a basic thing reqd for defining master data that is article master data which is nothing but material master in R3
As i said Product hierarchy levels are available in R3 also but not much used
Merchandise category hierarchy levels is most commonly used in SAP IS retail
What we call material group in R3 is same as Merchandise category in SAP IS retail and material in R3 is article in Retail
Merchandise category hierarchy levels
Say a Retail mall has merchandise items
Under merchandise there are 2 divisions Food and non food
Under nonfood say there are 2 divisions say hardware and apparel
Under apparel there 2 divisions say Mens wear and ladies wear
Under mens wear you have t shirts,shirts and pants etc
Here t shirts,shirts and pants etc are individual articles
Menswear and ladies wear are material groups
Hardware and apparel are merchandise hierarchy level 1
Food and non food merchandise hierarchy level 2
Retail mall is merchandise hierarchy level 3
like that hierarchy levels are commonly defined and used as a must to have efficient master data in SAP retail and the maximum no of hierarchy to have ideally is 6 apart from Merchandise category
In our example we have defined three levels
The same functionality can be used as product hierarchy in R3 also but doesnt been put in to use much
In Retail the no of articles a store is going to manage to be will be huge hence this sort of seggregation is needed there must
For more clarity try to post this in retail forum(Trading industries)
Regards
Raja

Product costing valuated sales order stock

Hi all,
We are in complex mfg & currently re-vamping all the ERP SAP instances ( totalling 13 company codes into one single)
All 13 units( who use NON Valuated scenarios for cost object controlling) wil use valuated sales orders & projects. The old 13 companies will be trated as profit centers with transfer pricing functionality ( Multiple valuations)
My issue is to get a product cost for sales order in <b>profit center view</b> ( plan cost) exactly same as to the marked standard cost itemisation of the FERT material.
We mark & release the std cost in Jan & the client wants to have the same itemisation of the cost ( with same values) even if they create a sales order in 2nd or 3rd or last quarter. ( As you might be knowing that the sales order wil always cal;culate the values as per the current qty structure date. In Std SAP date control, there is nothing which allows us to cost exactly the same cost estimate as marked & released in JAn)
Could somebody pls give pointers as how to get this sales order plan cost itemisation exactly equal to prevously marked & released itemisation ?
We use the Std costing variant ( Costing Type = Profit center valuation) with Std date control.
Thanks in advance to all of you,
Warm Regards
Dhiraj

Hi,
If the sales order stock is valuated, you have immediate access to its value in Financial Accounting. The assigned accounts are debited and credited as a result of the valuated goods movements. From the viewpoint of MRP, the sales order stock is available for the sales order only.
If the sales order stock is not valuated, it is managed via a cost collector. The system does not carry out invoice verification postings for goods movements, and you cannot obtain an overview of how the stock is valuated until the end of the settlement period in Controlling.
Valuated sales order stocks have the following advantages:
The full costs are available at each manufacturing level.
All goods movements are immediately reflected in Financial Accounting
Assign points if helpful
Regards,
Saurabh

Need Product Costing Interview Questions and Answers

Hi SAP Gurus,
I am looking for the product costing interview questions and answers or just questions which covers all the steps like
1. Product Cost planning, Cost Object controlling, WIP and settling in all the Scenarios (Make to Stock, Make to Order, Repetitive Manufacturing)
2. period end processing Scenario wise
3. Entries made by each step in each scenario.
I have already gone through help.sap.com--> Product Costing and some other forum links but I need with questions and answers which can make me to recall the process and understand the whole process scenario wise completely. Please share with me if you have any documentation.
Thanks.
Harter
Edited by: Harter21 on Jun 25, 2010 6:39 AM

Could some one help me?
Thanks,
-Harter

Use of Product cost collector in REM

Hi All,
I am new to PP module, I got some doubts when working on costing of the product.
1. In REM scenario why do we need an extra step of creating product cost collector ??
2. when a product is produced will the prod cost collector is used for both debiting(raw and semi) and crediting(finished prod) ?

Dear Reddy,
1.Product cost collector is the cost collecting object for a period based production or in a REM - repetitive manufacturing
scenario.
2.Without having any product cost collector you cannot carryout production confirmation(assembly backflush) for a product.
3.So for all the products for which production confirmation will be declared requires a individual product cost collector.
4.Prior to this you require a production version for the material.
5.Production version and a product cost collector is also the master data for a REM scenario.
Now check and revert back.
Regards
Mangalraj.S

Production cost

hi friends,
in the routing for finished material i have defined the base quantity as 1 and labour as 10 mins. there is no setup and production activities to be captured.
a labour activity is created and is entered in the work center costing view. the formula to that is given as sap003 which is labor*operation quantity /base quantity /operation splits.
i created a production order for quantity 100. after production the production cost is showing as 7500.
now the labour minutes is 900mins. in activity price planning (kp26) i have defined as 10rs per minute.
can anyone tell me how did it arrive at 7500.
pls guide.
thanks
sita

Hi
Cost for any production order having say 2 operations is calculated as
Cost required to make 1 PC = (Total Cost of operation 10 / Price Unit) + (Total cost of operation 20 / Price Unit)....Be precise about units of activities
This is for 1 PC. If you have 10; multiply this with 10
Apart from above prices; it also checks components maintained via BOM
You relate above things with your scenario or give some more details. Also check the break up of costs from production order i.e. Goto > Costs and also see the SCE for this material
Rgds

How to see materials which donot comes under product cost collector

hello every body,
can any one help me in finding materials which donot comes under product cost collector.
thanks for all the people who are supporting me
regards,
Bh.krishna mohan

Dear Krishna,
1.Usally the product cost collectors will be maintained for the materials which are executed using a REM scenario.
2.Check in table MARC for the materials for which REM profile does not exists(means this field should be empty) for a given plant.
3.After executing download this and if needed pass it to MARA table to get the FERT and HALB materials.
4.So only those materials for which REM profile is empty ,the product cost collector does not exists.
Check and revert with your queries.
Regards
S Mangalraj

Product cost by period

hello gurus,
Can anyone please tell me the what are the configuration is required to Product cost by period
thanks
rihana

Dear Rihana,
In my understanding product cost by period will be used in a REM scenario(Repetitive manufacturing).
The product cost collector serves as the cost collecting object and for each Semifinished or finished product for which
confirmation(backflush through T Code MFBF) are made a product cost collector should exist.
Product cost collector will be generally created for Order type RM01 and number ranges has to be defined.
Each product cost collector has a number and using the no,the variance and the cost will be settled periodically.
Product cost collectors will be created using T Code KKF6N or KKF6M and the preliminary cost estimate can be done through
MF30.
Regards
Mangalraj.S

Product costing Scenario

Similar Messages

Maybe you are looking for