PRODUCT COSTING This is used for valuation of inventories i.e. Finished goods and Work in progress PP Module MM Module | FI Module | Product costing CO Module | Note: SAP lab :Product costing made easy BPB publication – Not covered product costing Crate a cost estimate with quantity structure Cost element with quantity structure At standard cost In the month end we get actual cost Variable will be settled to accounts How standard cost will be arrived at : Sales budget for next monthProduction budgetMaterial requirement Planning | | (Make to orders (confirmed orders) (This is same men budget) + And make to stock (expected orders)) Overhead planning = Standard cost Cost sheet for the product BILFG1 Raw materials xx Raw material overheads xx Production costs xx Cost of goods manufactured (COGM) xx Administration Expenses xx Sales & Distribution exp. xx ---- Cost of goods sold (COGS) xx To check with client at what level he wants to value stocks
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PRODUCT COSTING
This is used for valuation of inventories i.e. Finished goods and Work in progress
Note: SAP lab :Product costing made easy BPB publication –Not covered product costing Crate a cost estimate with quantity structure
Cost element with quantity structure At standard cost In the month end we get actual cost
Variable will be settled to accounts
How standard cost will be arrived at :
Sales budget for next month Production budgetMaterial requirement Planning | |
(Make to orders (confirmed orders) (This is same men budget) +And make to stock (expected orders)) Overhead planning =
Standard cost Cost sheet for the product BILFG1Raw materials xxRaw material overheads xxProduction costs xxCost of goods manufactured (COGM) xxAdministration Expenses xxSales & Distribution exp. xx
----Cost of goods sold (COGS) xx
To check with client at what level he wants to value stocksAt COGM level or At COGM +Admin level
Raw material standard costFor each product –we find out materials requiredFor BILFG1 We required BILRM1
To produce BILFG1 what materials are required and how much quantity BILRM1 1KgBILRM2 1KgRaw material standard cost =Quantity from BOM (PP)*Rate from Material Master (MM) (1*75)+1*125)=200
Raw material overheads
Overheads like freight charges :At the time of receipt it will be added to material –At the time of consumption the material cost includes freight also.
Overhead like loading and unloading normal amounts change directly to P & L account clients will tell us-how much percentage can be taken on raw material cost (consumption.) 5% of raw material costs
Eg: 250*5%=12.5
Production costs:Cost centers in PP Module :Work centers
Dept A Dept B Dept C Dept D
Dept A Dept B Dept C Dept DRaw material Issue Issue Issue finished product
All products need not go through all the Departments
Process flow for each product in PP module we call as routing.
PP Module: Routing (Process flow)Dept A Dept B Dept D
Raw material Issue Issue Finished product
Wages 300000Salaries 100000Power 320000
-------Planned cost 720000
=====Planned hours availableMachines 100 working for 3 shifts (24 Hours )No.of days 30 Days
Production cost : (Hours required in Dept A * Machine hour rate)+(Hours required in Dept B* Machine hour rate )+ (Hours required in Dept D * Machine hour rate)
Example :Why can’t we allocate based on production
Production Qty Hrs Req CostBILFG1 999 Kgs 1BILFG2 1 Kg 999
estimate with quantity structure- Define costing variants (TR code is OKKN)
Select position button
Cost variant :Select PPC1 standard cost estimate (Materials)
Enter
Select PPC1
Select details button
Select valuation variant button
Select create beside valuation variant /plant
Select new entries button
In plant :BILP
Save
Press enter to save in your request
Select back arrow
Select valuation variant :001 with plant BILP
Select details button
Select overhead tab
Give the costing sheet :BIL costing sheet both in the places
Save
Define cost component structure:
To know the break up of standard product costWhat is raw material cost?What is RM overhead cost ?What is production cost ?
Path :SPRO-Controlling –Product cost Controlling –Product cost planning –Basic settings for material costing –Define cost component structure . (OKTZ)
Select cost component structure :01
Double click on cost components with attributes folder
Select component structure :01 with cost component 10 raw materials
Double click on assignment:Cost component –cost element interval folder
Select new entries button
Cost competent structure :01
Chart of Accounts :BIL
From cost element :400000
To cost element :400099
Cost component :select 10 RM
Save
Ignore the warning message press enter
Press enter to save in your request
Select back arrow
Double click on cost components with attributes folder
Select cost component structure 01 with cost component 80 Material over head
Double click on assignment:Cost component cost element –Interval folder
Select new entries button
Cost component structure :01
Chat of Accounts :BIL
From cost element :1200000 RM overhead
Cost component :80 Material overhead
Save
Press enter to save in your request
Double click on cost components with attributes folder
Select cost component structure :01 with lost component 50 production machine
Double click on assignment cost component –cost element interval folder
Select new entries button
Cost component structure :01
Chat of Accounts :BIL
From cost element :400100
To cost element :400299
Cost component :select 50 production machine
One more
Cost component structure :01
Chat of Accounts :BIL
From cost center :400500
To cost center :400599
Cost component :50
One more
Cost component structure :01
Chat of Accounts :BIL
From cost element :1200001
Cost component :50
Save
Double click on cost component structure folderFor cost component structure 01 select active check boxSave For cost component structure assignment structure 02 also for cost componentNote: The above procedure is to be followed to 02 also
Select new entries buttonPlant :BILPMRP controller :Mr.ASavePress enter to save in your request
Notes:Define floats (Scheduling margin key)
Floats –Buffer days or grace days
2 days grace daysProduction order creation 08.12.2008 10.12.2008Production order release 10.12.2008 12.12.2008Production start date 11.12.2008 13.12.2008Production end date 15.12.2008 17.12.2008
Path :SPRO-Production-Shop floor control- Master data-Define production scheduler
Select new entries buttonPlant :BILPProduction scheduler :BDescription :Mr.BSavePress enter to save in your request
Determine person responsible for work center
Path :SPRO-Production –Basic data –Work center –General data –Determination person responsible
Select new entries buttonPlant :BILPResponsible person : Mr.CPerson responsible for work center :Mr.CSavePress enter to save in your request
CO END USER AREA:
Planning cost center wise (KP06)
Version :0
From period :9 (December)
To period :9 (December)
Fiscal year :2008
Give the cost center :Dept G
Select page down button or next page button
Cost element :400100 Salaries A/c
Select from based radio button
Select overview screen button (F5)
For 400100 Plant fixed cost :720000
Save
Planning for machine hours
Path :Accounting –Controlling –Cost center accounting –Planning-Activity output /Prices-Change (KP26)
Version :0
From period :9
To period :9
Fiscal year :2008
Select next page or page down button
Cost center :Dept G
Activity type :BIL
Select form based radio button
Select overview screen button
Plant activity :72000
Save
calculation of Machine hour rate
Path :Up to planning the path is same – Allocations –Price calculation (KSPI)
Select cost center group radio buttonCost center group select :BILPRODExecuteSelect save buttonIgnore the message press enter
MM END USER AREA
Creation of material master (MM01)
A) Raw material 2B) Finished product 1
Give the material :BILRM2
Industry sector :Mechanical Engineering
Material type :Raw material
Press select view button
Select basic data1 :Select purchasing Select general plant data /storage /Accounting
Select organization levels button
Plant :BILP
Storage location :Hyderabad
Enter
Give the description :Raw material 2
Base unit of measurement :KG
Material group :BILC
Division :BS
Select purchasing tab
Purchasing group :BIL
Select accounting 1 tab
Valuation class :BIL1 RM Local
Price control :select V moving
Moving price :150
Save
One more material :BILFG1
Industry section :Mechanical engineering
Material type :Finished product
Press select view button
Select basic data1, MRP1, MRP2,MRP3, Work scheduling, general plant data /storage1,
accounting , Costing 1
Select organizational levels button /enter
Enter
Plant :BILP
Storage location :Hyderabad
Enter
Description :Finished product 1
Base unit measurement :KG
Division :BS
Select MRP1 tab
MRP type :select PD (MRP)
MRP controller :A
Lot size :select EX lot for –lot order quantity
Select MRP 2 tab
In –house production :0 days
Schedule margin key :select BIL
Select MPR 3 tab
Ignore the warning message press enter
Availability check :select KP (no check )
Select work scheduling tab
Production scheduler :B
Select accounting tab
Valuation class :BIL2 Finished products
Price control :S (Standard price)
Standard price :300
Select costing one tab
Overhead group :select BIL1
Save
Note :BOM=Bill of Material
PP END USER AREA
Creation of Bill of Material
Path :Logistics –Production –Master data –Bills of material –Bill of material –Material BOM –Create (CS01)
Give the material :BILFG1
Plant :BILP
BOM usage :select 1 production
Enter
For item :10
Give the component :BILRM1
Quantity :1
Item :20
Give the plant :BILRM2
Quantity :1
Save
Creation of work center
Path :Up to mater data the path is same –Work centers –then work centers-create (CR01)
Plant :BILP
Work center :Dept G
Work center category :select 0001 Machine
Select basic data button
Give the description :Dept G
Person responsible :Mr.C
Usage :009
Under standard value maintenance
Standard value key :SAP1 Normal production
Select costing tab
Start date :01.04.2008
Cost center :Dept G
For machine activity :Give activity type BIL
Activity unit :H (Hour)
Formula key :SAP002 (Production machine time)
Save
Creation of routings
Path :Up to master data the path is same –Routings –Routings –Standard routings –Create (Tr code is CA01)
Give the material :BILFG1
Plant :BILP
Enter
Usage :select 1 production
Status ;select 4 (released (general))
Select operation button
For operation 10 give the work center :Dept G
Control key :select PP01 in hour production
Double click on operation :10
Machine standard value :5
Unit :H (Hour)
Save
Note: Routing is process flow as a department wise
CO –END USER AREA
Creation of cost estimate with quantity structure:
Path :Accounting –Controlling –Product cost controlling –Product cost planning-Material costing –cost estimate with quantity structure –Create (Tr code is CK11N) Give the material :BILFG1
Plant :BILP
Costing variant :select PPC1 (standard cost estimate for material )
Enter
Costing date from :Today’s date
Note :In live environment next month first day date, this is planning date, In training
Select costing variant PPP2 production Order Actual
Select details button
Select valuation variant button
Select create beside valuation variant/plant
Select new entries button
In plant :BILP
Save
Press enter to save in your request
Select back arrow
Select valuation variant 007 with plant :BILP
Select details button
Select overhead tab
Costing sheet :select BIL costing sheet
Save
Define goods received valuation for order delivery:Same path
Select new entries buttonValuation area :BILPValuation variant :007 production order -ActualSave Press enter to save in your request
Work in process customization
Creation of 5 secondary cost elements (Tr code is KA06)
Give the cost element :1100000
Valid from :01.04.2008 to 31.12.9999
Enter
Name & Description :Order /Project result analysis
Cost element category :select 31 (order /project results analysis)
Save
Cost element :1100001
Reference cost element :1100000
Controlling area :BIL
Enter & Save
Cost element :1100002
Reference cost element :1100000
Controlling area :BIL
Enter & Save
Cost element :1100003
Reference cost element :1100000
Controlling area :BIL
Enter & Save
Cost element :1100004
Reference cost element :1100000
Controlling area :BIL
Enter
Save
Define results analysis keys
Path :SPRO-Controlling –Product cost controlling –Cost object controlling –Product cost by order –Period end closing –Work in process –Define results-Analysis keys (Tr code is OKG1)
Result analysis key :FERT WIP calculation for production orders
Give the cost element group :BILPRODNEnter Description :Production cost element for BILSelect Edit-Cost element -Select insert cost element button400100 400299 Personnel & Manufacturing400500 400599 Depreciation 1200001 Activity allocation Save
Create allocation structure:
Path :SPRO-Controlling –Product cost controlling- Cost object controlling –Product cost by order-Period end closing –Settlement –create allocation structure
Select new entries button
Allocation structure :B2
Text :BIL Production differences allocation structure
Save
Press enter to save in your request
Select :B2
Double click on assignments folder
Select new entries button
Assignment Text
01 Direct costs(Raw materials)
02 Material overheads
03 Production costs
Save
Select assignment 01
Double click on source folder
From cost element :400000
To cost element :400099
Double click settlement cost elements folder
Select new entries button
Receiver category :select G/L, GL account
Select by cost element check box
Save
Double click on assignments folder
Select assignment 02 Material overheads
Double click on source folder
From cost element :1200000 RM overhead rate
Double click on settlement cost elements folder
Select new entries button
Receiver category :select G/L , GL Account
Select by cost element check box
Save
Double click on assignment folder
Select assignment 03 production cost
Double click on source folder
Give the cost element group :BILPRODN
save
Double click on settlements cost elements folder
Select new entries button
Receiver category :select G/L
Select by cost element check box
Save
Create settlement profile:Same path
Select new entries button
Settlement profile :BIL
Description :BIL production order differences settlement profile
Select to be settled in full radio button
Allocation structure :B2
Default object type :select G/L
Select % settlement check box
Select equivalence number check box
Select amount settlement check box
Under valid receivers for GL account :Select settlement required
Document type :SA
Maximum no.of distribution rules :999
Residence time :12 months
Save
Press enter to save in your request
Define CO.No.range interval for the business transactions
RKL -Actual Activity Allocation
KZPI- Actual overhead (Periodic)
User transactions code :KANK
Give the controlling area :BIL
Select maintain groups button
Double click on RKL
Double click on KZPI
Select Co. No. range interval for BIL check box
From the menu select –Edit –Assign element group
Save
Ignore the warning message press enter
Define exchange rate for type P (Standard truncation for cost planning for INR to EURO
(Transactions code OB08)
Select new entries buttonExchange rate type :PValid from :01.12.2008From currency :INRTo currency :EURDirect quotation :0.02SavePress enter to save in your request
FI Consultant job BILRM2 receipt
Purchase order Opening stock|GR|IV
Inventory RM local DR BSXTo Stock taking GBB BSA Current liability & provision
Production order differences are to be settled to accountsProduction order differences manufacturing DR PRD
To INC/DEC in stocks FG GBB AUA
Creation of 2 GL masters (FS00)
Give the GL A/c No.400201
Company code :BIL
Select with template button
Give the GL A/c No. :400200 Conversion charges
Company code :BIL
Change short text and GL account long text to production order differences
Select create /bank/Interest tab
Field status group change to G014 MM adjustment account
Save
GL A/c No. :100599
Company code :BIL
Select with template button
Give the GL A/c No.100500 VAT payable
Company code :BIL
Enter
Select type /Description tab
Chang short text and GL account long text to Stock taking
Select create /bank /interest tab
Change the field status group G049 (manufacturing cost accounts)
Save
Give the GL account no.300200 INC/DEC stock in FG
Company code :BIL
Select edit cost element button
Valid from :01.04.2008 to 31.12.9999
Enter
Cost element category :select 22 external settlement
Save
Assignment of account for automatic postings (OBYC) (See the material )
Double click on transaction PRD Cost (Price) differences
Give the Chart of Accounts :BIL
Enter
Save
Give A/c No.400201 production order differences
Save
Press enter to save in your request
Select back arrow
Double click on GBB offsetting entry for inventory posting
Valuation modifier :X
General modification :BSA opening stock taking
Valuation class :BIL1
Account no. :100599 stock taking account
Valuation modifier :X
General modification :AUA production
Valuation class :BILL
Account :300200
Save
Press enter to save in your request
PP CONSULTANTS AREA
Define order type –Dependent parameters
Path :SPRO-Production –Shop floor control-Master data –Order-Define order type dependent parameters. (Tr code is OPL8)
Select plant :1000 with order type PP01
Select copy as button
Change the pant to BILP
Enter and Save
Press enter to save in your request
Define scheduling parameters for production orders
Path :Up to Shop floor control the path is same- Operations-Scheduling –Define scheduling parameters for production orders (Tr code is OPU3)
Select plant :1000 with order type PP01
Select copy as button
Change the plant to BILP
Enter and save
Press enter to save in your request
Define confirmation parameters
Path :Up to shop floor control the path is same –Operations-Confirmation-Define confirmation parameters (OPK4)
Select plant 1000 with order type PP01
Select copy as button
Change the plant to BILP
Enter and Save
Press enter to save in your request
Define checking control
Path :Up to shop floor control the path is same –Operations –Availability check –define checking control (OPJK)
Select business function :1 & 2 for order type PP01 for plant 1000
Select copy as button
Change the plant to BILP
Enter
Change the plant to BILP
Enter and save
Press enter to save in your request
END USER AREA
Creation of production order:
Path :Logistics –Production-Shop floor control-Order –Create –with material (Tr code is CO01) Give the material :BILFG1
Production plant :BILP
Planning plant :BILP
Order type :select PP01 Production order
Enter
Give the total Qty under quantities :10
Start date & end date :Today’s date
Select cost order button (Ctrl+F7)
From the menu select Goto Costs –Analysis
Select back arrow
Select release order button (Ctrl+F1)
Save
From the menu select order display note the order no.60003225
Enter
Select assignment tab
Not to the reservation no.66076
Raw material receipt by way of opening stock
Path :Logistics –Materials management –Inventory management –goods movement –Goods receipt –Other (Tr code is MBIC)
Give the movement type :561
Plant :BILP
storage location :HYD
Enter
Give the material no. :BILRM2
Quantity :100 kgs
Select save button or Ctrl+S
From the menu select other goods receipts display
Enter
Select accounting documents button
200121 Inventory RM LCL 15000 BILRM2 BIL1 BSX
100599 Stock taking 15000 BILRM2 GBB BSA BIL1
100*150
Raw material issue to production order:(Tr code is MB1A)
Select to reservation buttonGive the reservation no.66076Enter
Qty
BIL RM1 :15 BIL RM2 :15SaveFrom the menu select goods issue displayEnterSelect accounting documents buttonSelect accounting document no.
GBB VBR400000 RM consumption local 2250 BILRM2 BIL1
Qty consumed * Avg. rate (15*150)
Actual overhead calculation
Path :Accounting –Controlling –Product cost controlling –Cost object controlling –product cost by order –Period end closing –single functions –Overhead –Individual processing (Tr code is KGI2)
Give the order no. :60003225
Period :9
Fiscal year :2008
Select text check box
Select dialog display check box
Execute
Select back arrow
Deselect text run check box
Execute
Work in process calculation
Path :up to single functions the path is same –Work in process –Individual processing –Calculate (Tr code is KKAX)
Give the over no. :60003225
WIP period :9
Fiscal year :2008
Result analysis version :select 0
Select test run check box
Execute
Select back arrow
Deselect test run check box
Execute
Settlement of work in process to accounts (31.12.2008 (month end date) Path :Up to single functions the path is same –Settlement of individual processing (Tr code is K088)
Give the order no. :60003225
Settlement period :9
Fiscal year :2008
Deselect text run check box
Select check transaction date check box
Execute
Select detail lists button
Select accounting documents button
Select accounting document no.
300201 INC/DEC in stock WIP 3713 P &L Account
200123 Work in Process 3713 Balance Sheet
(Actual RM +Actual RM overheads)
To view work in process report
Path :Accounting –Controlling –Product cost controlling –Cost object controlling –Product cost by order –Information system –Reports for product cost by order –Object list –Order selection (Tr code is S_ALR_87013127)
Plant :BILPMaterial number :BILFG1From period :01 2008To Period :9 2008ExecuteSelect report call button
Confirmation of production order
Path :Logistics –Production –shop floor control –Confirmation –Enter-For operation –time ticket (Tr code is Co11N)
Give the order no. :60003225
Operation /Activity :10 kg
Confirmation type :select final confirmation
Yield to confirm :10 kg
Fro activity 2 to confirm :60 Qty
Unit :H (Hour)
Save
Production receipt
Path :Logistics –Material management –Inventory management –Goods movement –Goods receipt for order (Tr code is MB31)
Give document date :31.12.2008
Posting date :31.12.2008
Give the movement type :101 (Goods receipt for order into ware house)
Order :60003225
Plant :BILP
Storage location :HYD
Enter
Ignore the warning message press enter
Select save button or Ctrl+S
From the menu select goods receipt display
Document no.5000011861
Enter
Select accounting documents button
Select accounting document no.
200122 Inventory FG 2860 BILFG1 BSX BIL2
GBB AUF300200 INC/DEC in stocks FG 2860 BILFG1 BIL2
Qty produced * standard rate 10*286
To make production order technically complete (TECO)
Path :Logistics –Production –shop floor control –Order –Change (Tr code is CO02)
Give the order no.60003225EnterFrom the menu select functions –Restrict processing –Technically completeSave
Calculation of variances
Path :Accounting –Controlling-Product cost controlling –Cost object controlling –Product cost by order - period ending closing –single functions- Variances –Individual processing (Tr code is KKS2)
Give the order no.60003225
Select execute button
Select back arrow
Deselect text run check box
Execute
Double click on variance amount
Open one more session for order display (CO03)
Give the order no.60003225
Enter
From the menu select go to cost analysis
Calculation of work in process (KKAX)
Path :Upto single functions same path –Work in Progress –Individual processing-Calculate
Work in process for Dec
Production for Dec
To calculate WIP once again work in process will be reserved and variances will be settled to
accounts
Give the order no. :60003225
WIP to Period :9
Fiscal year :2008
Result analysis version:0
Deselect text run check box
Execute
Settlement of work in process to accounts :KO88
Give the order no. :60003225
Settlement period :9
Fiscal year :2008
Deselect test run check box
Select check transaction date check box
Execute
Select details list button
Select accounting documents button
Select accounting document no.
GBB AUA
300200 INC/DEC in stocks FG 853 BILFG1 BIL2400201 Production order diff 853 period300201 INC/DEC in stock WIP 3713 P & L debit200123 work in process 3713 –Balance sheet credit