Stock in Transit and Actual Costing - SAP Ramp-UP - Janet Dorothy

Stock in Transit and Actual Costing

New Features in ERP 6.0 EHP5

© 2010 SAP AG. All rights reserved. / Page 2

Supply within Global Groups

Plant Group

Marketingsells to

Regional

Sales

Org

Customer

1. Central Marketing & Distribution Organization

Plant 1 Plant 2Sales

OrganizationCustomer

2. Distributed Production and Supply Chain

Semi-finished

good Finished goodProduct

Group

Group

Globalization, a history of mergers and acquisitions and fiscal rules cause

companies to separate their organization into legal entities. As a

consequence internal supply are becoming sales processes.

Auditors demand

transparency on

transfer prices

Complex

Processes

Local regulations

Additional layers of

systems

Missing local view

on contribution

Challenges

sells to sells to

sells to sells to sells to


CIO

Interests of Different Stakeholders have to be

Served in Modeling a Supply Chain

Reducing Complexity

How do I increase revenue

and profits and comply to all

regulations?

How can I get rid on all kinds

of add-on systems and

complexities?

How can I optimize the

supply chain and provide

flexibility and effectiveness?

Revenue Optimization

Compliance

Transparency

Simplification

Reduce Costs

User Satisfaction

Synergies within Group

Fast Reactions

Risk Mitigation

Group Accounting

Setting up and maintaining a supply chain involving multiple companies

of the same group requires alignment between several stakeholders

with differing objectives

Financial Reporting

How can I report the

contribution of my

organization on the overall

success?

Transparency

Local Regulations

Auditability

CFO

Optimization

VP AccountingVP Supply Chain


Use Cases

A Brazilian steel pipe company takes a customer order at their

Nigerian subsidiary. The subsidiary orders the pipes for make to

order at the headquarter which places again an order to the best

suited plant in Mexico.

A Belgian consumer products company produces a fruit mix after a

secret recipe and sells it worldwide to affiliate companies for

finishing a beverage by adding water and sugar.

A South-African mining company sells for fiscal reasons all it‟s mine

production to their marketing company in Switzerland which serves

the regional sales organization. Physical shipments will go straight

from the mine to the customer.


The Process:

• Two legally independent companies A and B supply each

other with goods. B sells the material or processes them

further.

• A and B belong to the same group

• A and B are modeled as company codes in the group‟s ERP

system in the same client

• The time to ship the goods from A to B is not negligible

Requirements

• From an accounting perspective the process behaves like a sales transaction from A to B

• Auditatibility with a full document flow for a legal sales process needs to be provided

• Paperwork for the shipment is needed

• The ownership and the accounting of the goods need to be transparent during the transit

• The process needs to be handled efficiently with potential to be automated

• A returns process for the full or partial return needs to be supported.

• The value flow shall be transparent from a group point of view. Group reporting shall show

where costs and profits arise, and what the total profitability from group perspective is.

GroupCompany

ACompany

B

Sales process

Process Details


Issues to Solve

Former Work-around approaches:

Use designated storage locations or virtual plants for transit stocks (also in SAP‟s Oil and Gas

industry add-on, TSW)

Use one-step stock transfers

Consolidate value flow in BI or add-on systems

Issues

Missing transparency on goods in transit:

Values vanish during transit times

Quantities are not accessible for planning purposes

System representation does not reflect reality

Values in reversals do not equal original values

Cost flow is broken at company code borders

No group view on actual costs

No transparency on intercompany profits

No group-wide profitability view


Features & Functions of the new SIT Concept

in a nutshell

With enhancement pack 5 of ERP 6.0 SAP

provides an integrated solution to the process

consisting of

Introducing a valuated stock in transit that either

belongs to the sending or the receiving plant

New order types and movement types and

configuration to support the process

Ability to use this new concept either for cross-

company processes or intra-company code processes

Enhancements in actual costing to connect the value

chain across company codes

Inclusion of cross-company profits (or markup) into the

cost components

Group actual costing parallel to the legal view

Company

A

Company

B

Valuated

stock in transit



Available in EHP5:

New Concept for Stock In-Transit (SIT)

Sender Receiver

Sender„s

Stock

In plant In transit In plantIn transit

Outbound

Delivery

Purchase

Order

Receiver„s

Stock

Sender„s

Stock

Receiver„s

Stock

Sender„s

Transit Stock1

Sender„s

Stock

Receiver„s

Stock

Sender„s

Transit Stock2 Receiver„s

Transit Stock

Sender„s

Stock

Receiver„s

Stock

Receiver„s

Transit Stock 3

Immediate Transfer

(1-step scenario)

Goods stay in sender‟s

ownership during transfer

Ownership changes

during the transfer, e.g.

upon arrival in the port

of destination

Ownership changes

when leaving the sender

0

Available

in EHP5!


Company Code 1000

EHP5: Cross-Company-Code Material Transfer with

SIT (Detail View)

Create Billing document

(with ref. to outb. delivery)

In-Transit Stock

(Plant 1000)

Create Outbound Delivery

(From Plant 1000 to 0001)Create Purchase Order

Perform Goods Issue

(VL02N: 681)

Perform Goods Receipt with

reference to Outbound Delivery

(MIGO: 109)

In-Transit Stock

(Plant 0001)

Company Code 0001

Perform POD

(VLPOD: 685 + 107)

Create Invoice

(automatically or manually)

Plant 1000 Plant 0001

Perform Goods Issue

(VL02N: 681)

Perform Goods Issue

(VL02N: 683 + 107)

In-Transit Stock

In-Transit Stock



(VLPOD: 685 + 101)



(MIGO: 109)

1

2

3


EHP5: Intra-Company-Code Material Transfer with

SIT (Detail View)

In-Transit Stock

(Plant 1000)


(From Plant 1000 to 0001)Create Purchase Order

Perform Goods Issue

(VL02N: 68A)



(MIGO: 109)

In-Transit Stock

(Plant 0001)

Company Code 1000

Perform POD

(VLPOD: 68E)


Perform Goods Issue

(VL02N: 68A)

Perform Goods Issue

(VL02N: 68C)

In-Transit Stock

In-Transit Stock



(VLPOD: 68i)



(MIGO: 109)

1

2

3


Example Process(1/3): Cross-Company Code

transfer from Issuing SIT Receiving SIT

Outbound Side (Posting to issuing SIT):

Ownership Transfer (with Transaction VLPOD):

Quantity differences

can be maintained

here

VL02N: Goods Issue

with Mvt Type 681




Result of VLPOD:

The material is issued from the SIT of the

sending plant and received into the SIT of the

receiving plant ( 2 movements!)




Inbound Side (receiving SIT to receiving plant / transaction MIGO):

Document Flow of the scenario:


Customizing Overview

- Choose 2-step procedure per plant/plant combination:

Materials ManagementPurchasingPurchase Order Setup stock transport order

-Set up delivery type determination based on PO Document type and Supplying Plant:

Materials ManagementPurchasingPurchase Order Setup stock transport order

-Find the suitable item category per delivery type:

Logistics ExecutionShippingDeliveries

- Find the suitable schedule line category per item category: Sales and Distribution

Sales Sales Documents Schedule Lines Assign Schedule Line Categories

-The schedule line category contains the

movement type which is used for the goods

movement with reference to the delivery, e.g.:

These fields decide who owns

the transit stock and how the

ownership transfer is executed.


EHP5 Example: Cross-Company Code Return

and Cancellation Processes

r0

r1

r2

Sender Company Code Receiver Company Code

Sender„s

Free Stock

In plant In transit In plantIn transit

Receiver„s

Free Stock

Sender„s

Free Stock

Receiver„s

Free Stock

Sender„s

Transit Stock

Sender„s

Free Stock

Receiver‟s

Free Stock

Receiver„s

Transit Stock

Outbound

Delivery

Purchase

Order

Complete or partial return

(1-step scenario!)

Return from transit stockRejected or

not

delivered

Return from receiver

via transit stock


Company Code 1000

EHP5 Example: Cross-Company Code Return and

Cancellation Processes (Detail View)

Create Returns Delivery Create Returns PO Item

Post GR

(VL02N: 693 + 167)

Company Code 0001

Perform goods movements

(VL02N: 161+675)


In-Transit Stock Post Goods Movement

(MIGO: 109 169)

Goods Receipt is posted

automaticallyr0

r1

r2

Cancel Goods Issue

VL09: 682 (full return)

MIGO: 417 (for partial returns

MIGO: 555 (Scrapping)

In-Transit Stock


EHP5 Example: Business with External

Customers

Process variants using stock in transit

Sender Company Code External Customer

In plant In transit Delivery address

Purchase

Order

Customer4 Sender„s

Free Stock

Sender„s

Transit Stock

r4

Goods stay in sender‟s

ownership and control

during transfer to an

external customer

CustomerSender„s

Free Stock

Sender„s

Transit Stock

Returning goods are in

sender‟s ownership and

control and will keep the

original values

Rejected or

not

delivered

The enhancement helps also in business with external customers to keep sold goods

in the books until they are finally arrived at the customers and keep control over

returns

687 601 T

688

Sales Order

Outbound

Delivery


Company Code 1000

EHP5 Example: Sales Process with Stock In

Transit

Create Billing document

Create Sales Order Create Purchase Order

Receive Invoice

Plant 1000Customer


Perform Goods Issue

(VL02N: 687)

In-Transit Stock Perform Goods Receipt +

send Proof of Delivery

Maintain Proof of Delivery

(VLPOD: Goods Issue 601)


External Vendor or

different ERP-System

ERP 6.0 Working Example: Stock transfer at Vendor

location

Sales Order Purchase Order

Outbound Delivery / ASN

User-Exit: Post Goods

Receipt 107 in Background

ERP 6.0

Inbound DeliveryDESADV idoc

Goods Receipt with reference

to Inboud Delivery (109) with

VL32N

Post Goods Receipt

(MIGO: 107)

In-Transit Stock


Solution Properties

Valuated Stock in Transit

The Solution has following properties:

Stock in Transit (SIT) is valuated

SIT valuation will be stable and separated from the unrestricted stock and postings can be on

separate G/L accounts. Returns out of SIT will be posted with the original material value

New Movement types for transfers between free stock and SIT and between SIT„s

Ownership transfer may be triggered by proof of delivery

Usage of SIT configured by purchasing document type and plant-to-plant combination

Only one purchase order and one outbound delivery is necessary to control the multi-step

process (by using the SPED functionality inbound deliveries can be used as well)

Stock overview and other reports will show SIT as separate stock type

Solution supports:

Handling Units

Batches

Sales order Assignments

Standard or moving average price

Serial numbers

Costing, cost object controlling and actual costing

SPED functionality (automatically creating inbound deliveries from outbound deliveries)



Motivation

Group

Company

ACompany

B

CostsRaw Mat. 20

Energy 25

Labour 15

Production 40

CostsRaw Mat. 100

Energy 0

Labour 0

Production 0

Sales process

Actual costing provides no visibility into

cost structure after intercompany sales

The enhanced Solution shall keep the

cost transparency through intra-

company sales and add freight

costs and cross-company profits to

the costs from the selling company

code from a group point of view

Issue Requirement


Sales Process

without enhanced Cross-Company Actual Costing

Plant Group

Marketing

Regional

Sales

Org

Customer

Costs

Raw Mat.

Energy

Labour

Production

Maintenance

Freight

Marketing

Duties

Intercompany profit

Sales Costs

Costs

Raw Mat.

Energy

Labour

Production

Maintenance

Freight

Marketing

Duties

Intercompany profit

Sales Costs

Costs

Raw Mat.

Energy

Labour

Production

Maintenance

Freight

Marketing

Duties

Intercompany profit

Sales Costs

Revenues

Costs

Raw Mat.

Energy

Labour

Production

Maintenance

Freight

Marketing

Duties

Intercompany profit

Sales Costs

Profit

In SAP standard an internal sales process cuts the value flow for

actal costs. Costs will only be transparent for the last step in

the chain. Costs from previous steps will appear as raw

material costs only

Before the enhancement, a sales process does not transmit the internal cost

knowledge from a vendor to a purchaser. At the receiver the goods appear as

purchased raw materials.


Sales Process

with enhanced Cross-Company Actual Costing

Plant Group

Marketing

Regional

Sales

Org

Customer

Costs

Raw Mat.

Energy

Labour

Production

Maintenance

Freight

Marketing

Duties

Intercompany profit

Sales Costs

Costs

Raw Mat.

Energy

Labour

Production

Maintenance

Freight

Marketing

Duties

Intercompany profit Plant

Sales Costs

Revenues

CostsEnergy

Labour

Production

Maintenance

Freight

Marketing

Duties


Sales Costs

Intercompany profit Marketing

Profit

Profitability Analysis will make cost and profit contributions from

the whole chain transparent.

Actual costs of the month in production, marketing and sales will

be compared with actual revenues

Costs

Raw Mat.

Energy

Labour

Production

Maintenance

Freight

Marketing

Duties


Sales Costs

Intercompany profit Marketing

After the enhancement, the full cost information is collected along the group-

internal supply chain and can be compared with the revenues achieved.


Valuation View: Legal Valuation

Company Code Valuation (legal valuation)

In legal view the transfer is valuated like a sales process. The costs at the receiver will reflect the PO value

initially and finally the invoice value

The difference between the cost at the sender site and the invoiced price is shown a „markup‟ or intra-

company profit within the cost components*

Freight costs and other planned delivery costs will be added at the receiver

Cost information from the sender will be „collapsed‟ (Option 1)

It can be chosen in configuration to transmit all cost split information from sender to receiver and keep them

in the receiver‟s cost component split (Option 2)

CoCd A / Plnt 1

Total cost 1000

Materials 500

Labor 400

Overhead 100

Freight

CC Markup 0

Sold to

Shipper

CoCd B / Plnt 2

Total cost 1200

Materials 1100

Labor 0

Overhead 0

Freight 100

CC Markup 100

Invoice

1100,-

Freight

invoice

100,-

Option 1

CoCd B / Plnt 2

Total cost 1200

Materials 600

Labor 400

Overhead 100

Freight 100

CC Markup 100

Option 2

* Via a BADI implementation it can be achieved to split markups (e.g.

into contributions from different parts of the organization )


Sales Process in Legal View

5 kg are

purchased

from plant

1000 via a

transit stock

6 kg are

purchased

from plant

2000 directly

The group-

internal PO is

an own

process

No price

differences are

rolled up in

legal view


Cost Component Split in Legal View

1,051,05

11,34 11,34

1000 Hamburg Sells to

Cost

Components

from actual

costing

26,82 12,82 14,00

0,00 0,00

Cost

Components

from Purchase

process

2,42


Intercompany Profit


Valuation View: Group Valuation

Group Valuation

In group view the transfer is valuated like a plant-to-plant transfer. The costs at the receiver

will reflect the costs at the sender plant

No Intercompany Profit is shown. The PO and invoice values play no role for material

valuation

Freight costs and other planned delivery costs will be added at the receiver

Cost information from the sender will be kept

Note: Internal invoice needs to be created via EDI-interface and not manually in MIRO

CoCd A, Plnt 1

Total cost 1000

Materials 500

Labor 400

Overhead 100

Freight

CC Markup 0

transfer

Shipper

CoCd B, Plnt 2

Total cost 1100

Materials 500

Labor 400

Overhead 100

Freight 100

CC Markup 0

Freight

invoice

100,-

After period end, price differences

from the sending plant will be

transferred to the receiving plant in

multi-level settlement, only in group

valuation


Sales Process in Group View

Price differences from the

source plant are rolled up

and update the price and

cost component split in the

receiving plant


Complete Picture

Multiple Steps in Parallel Valuation

Production

legal group

Total cost 1000 1000

Materials 500 500

Labor 400 400

Overhead 100 100

Freight

CC Markup 0 0

Sold to

Shipper

Marketing

legal group


Materials 1100 500

Labor 0 400

Overhead 0 100

Freight 100 100

CC Markup 100 0

Invoice

1100,-

Freight

invoice

100,-

Regional Sales

legal group


Materials 1300 500

Labor 0 400

Overhead 0 100

Freight 50 150

CC Markup 200 0

Sold to

Invoice

1300,-

Freight

invoice

50,-


Period End: Revaluation at Actual Costs

At month-end the costs of production will be re-determined in the production plant. As

the group-internal sales is a multi-level process, costs will be adjusted throughout the

supply chain in group view

Production

legal group


Materials 500 50

Labor 400 400

Overhead 100 100

Freight

CC Markup 0 0

Marketing

legal group


Materials 1100 500

Labor 0 400

Overhead 0 100

Freight 100 100

CC Markup 100 0

Regional Sales

legal group


Materials 1300 500

Labor 0 400

Overhead 0 100

Freight 50 150

CC Markup 200 0

In the example we assume that the raw

materials used for the production were

procured 10% more expensive than

planned

10501050

550 550

The price difference reaches the last

member in the chain.

Costs in group view will be adjusted

1200

550

150

1150

550

50

Invoice 1100

Freight

Invoice 100

Invoice 1300

Freight

Invoice 50

Markup in legal view will be

adjusted


Complete Picture

Multiple Steps in Parallel Valuation (only legal valuation)

Production

Opt 1 Opt 2


Materials 500 500

Labor 400 400

Overhead 100 100

Freight

CC Markup 0 0

Sold to

Shipper

Marketing

Opt 1 Opt 2


Materials 1100 600

Labor 0 400

Overhead 0 100

Freight 100 100

CC Markup 100 100

Invoice

1100,-

Freight

invoice

100,-

Regional Sales

Opt 1l Opt 2


Materials 1300 700

Labor 0 400

Overhead 0 100

Freight 50 150

CC Markup 200 200

Sold to

Invoice

1300,-

Freight

invoice

50,-


Period End: Revaluation at Actual Costs

(only legal valuation)

At month-end the costs of production will be re-determined in the production plant. As

the group-internal sales is a multi-level process, costs will be adjusted throughout the

supply chain . In the legal view the costs will always reflect the invoiced price of the

sender.

Production

Opt 1 Opt 2


Mat. Comp.1 500 500

Mat. Comp.2 0 0

Mat. Comp.3 0 0

Labor 400 400

Overhead 100 100

Freight

CC Markup 0 0

Marketing

Opt 1 Opt 2


Mat. Comp.1 0 500

Mat. Comp.2 1100 100

Mat. Comp.3 0 0

Labor 0 400

Overhead 0 100

Freight 100 100

CC Markup 100 100

Regional Sales

Opt 1 Opt 2


Mat. Comp.1 0 500

Mat. Comp.2 0 100

Mat. Comp.3 1300 100

Labor 0 400

Overhead 0 100

Freight 50 150

CC Markup 200 200

Invoice 1100

Freight

Invoice 100

Invoice 1300

Freight

Invoice 50

In the example we assume that the raw

materials used for the production were

procured more expensive than planned

and labor caused less costs

10501050

560 560

390 390

560

50

In option 1 the split is

collapsed to the material cost

component

In option 2 also the split will

reflect the split at the sender

390

50

1100

The price difference reaches the last

member in the chain.

Actual costs, markup and actual cost

component split were updated

560

150

390

150


Internal invoices

Treatment of invoice in the scenario

Invoices for delivery costs

Delivery costs such as freight or duties can be manually entered with MIRO. They may

come from the sending plant or a 3rd party service provider. When the invoice refers to

planned delivery costs with a specific condition type in the price conditions, it can be

defined in account determination and cost component assignment that delivery costs are

collected in a designated cost component.

Invoice for the sent material

For the legal view an invoice is necessary to close the transaction and create a accounts

payable at the receiver. If a parallel group valuation is active the invoice hase to be

ignored, because the price and the cost components to be used was already used during

goods receipt.

For technical reason the cross-company invoice for the sent material cannot be manually

entered in MIRO but has to be sent as IDOC in an EDI connection. This makes sure that

not only the sales price (in legal view) is transmitted, but also the transfer price in group

view. The setup for the scenario is described in the notes section.


Setting up inter-company billing with EDI

Note 31126 - Intercompany billing - posting to vendor account using EDI

Note 659590 - EDI: Stock transfer and cross-company sales

The price condition KW00 will pick up the value of the material in the

sending plant.

This value will be used as invoice value on the receiving side in group

valuation. By this group valuation in the receiving plant will have no

contributions of intercompany profits.

Billing Logistics Invoice

PR00

KW00

Value in Legal View

Value in Group View

Automatic Creation via EDI

https://service.sap.com/sap/support/notes/31126














Customizing: Parallel Valuation


Customizing – Setting up the cost component

split


BAdI: Control of Cross-Company Code

Transfers

ROLLUP_COST_COMP_SPLIT

Using this method you can control that the cost

component split is also transferred cross-company

code in the legal view.

REVAL_MARKUP_AT_ACTUAL_COSTS

Using this method you can control that the

intercompany profit is calculated on the plan costs

of the sender and not using the actual costs.

DISPLAY_COST_COMPONENTS

Using this method you can control in Material Price

Analysis (CKM3) that all cost components not

relevant to inventory valuation are displayed (and

not just the cost component for the intercompany

profit).

GET_MARKUP_COMPONENT

Using this method you can control that the

intercompany profit is assigned to any cost

component not relevant to inventory.

MODIFY_MARKUP

With this method, you can calculate the

intercompany profit in accordance with a separate

algorithm.


Maintain Vendor with Trading Partner

In the “Control”-tabstrip of the vendor master the receiving company code has to be

maintained in order to mark the vendor as a vendor from the same group. The field is also

used for legal consolidation

Company Code

of receiving plant


Properties of the Solution

Cross-Company actual Costing

The Solution has the following properties:

Cross-Company Sales Process is a multi-level process. Actual costs will be transmitted at

following events

Goods issue / Goods receipt

Invoice receipt (via EDI)

Period end closing

The cross-company scenario is recognized by the fields „Customer‟ and„Trading Partner‟ in the

vendor master

Freight costs and other planned delivery costs will be added to actual costs

Mixed scenarios of (internal) procurement, own production and further process steps will be

supported

Mixed scenarios of internal and external procurement is supported and will be separately

reported in procurement alternatives

Sender transit stocks are own valuation objects that can be reported and take part in the multi-

level-settlement

Split valuation, sales-order valuation, and project valuation is supported

Actual costing and parallel valuation can be activated in a live environment: no loss of data, not

a major conversion project*

Alternative Valuation Run (AVR) is supported. Also a scenario where periodic closings are

performed in smaller units and AVR closes cross-company-chains in global closing is supported



Achievements

Flexibility in supply chain modeling

Transparency on values and value flow

throughout the group

Group view on actual product and

customer profitability

Compliance and auditability in valuation

Decision support on local and group level


Release Info

The enhancements in logistics and accounting are delivered in ERP 6.0

enhancement pack 5 and included in the ERP user license

In order to use it the switch LOG_MM_SIT has to be activated in SFW5

The entry into the documentation can be started from SFW5 for switch LOG_MM_SIT

or via the help path: Business Functions (SAP Enhancement Package 5 for SAP ERP 6.0) - Business Functions in SAP ERP - Enterprise

Business Functions - Logistics – Materials Management - Cross-Company Transfer & actual costing

http://help.sap.com/erp -> SAP ERP Central Component -> Accounting -> Controlling (CO) -> Product Cost Controlling (CO-

PC) -> Actual Costing/Material-Ledger (CO-PC-ACT) -> Selected Functions -> Cross Company Transfer Processes.

(The documentation is currently in process of publication and might become available only during Q1 or Q2 2010)

Info on neighbored topics, already covered previously:

Transfer prices in profit center accounting: http://help.sap.com/saphelp_erp60_sp/helpdata/en/eb/13811243c411d1896f0000e8322d00/frameset.htm

Group cost estimates in product cost planning: http://help.sap.com/saphelp_erp60_sp/helpdata/en/7e/cb848443a311d189ee0000e81ddfac/frameset.htm

Actual costing / Material Ledger: http://help.sap.com/saphelp_erp60_sp/helpdata/en/a5/320e28d56c11d295c200a0c930328a/frameset.htm

Getting further info, feedback or questions to:

[email protected] / [email protected] / [email protected]

http://help.sap.com/erp

http://help.sap.com/saphelp_erp60_sp/helpdata/en/eb/13811243c411d1896f0000e8322d00/frameset.htm

http://help.sap.com/saphelp_erp60_sp/helpdata/en/7e/cb848443a311d189ee0000e81ddfac/frameset.htm


http://help.sap.com/saphelp_erp60_sp/helpdata/en/a5/320e28d56c11d295c200a0c930328a/frameset.htm



mailto:[email protected]




Note: The 3 appendix sections are not part of the presentation and not part of the cross-

company actual costing enhancement in ERP 6.0 enhancement pack 5. They are

included here to give an entry to neighbored requirements that are already covered

before (I + II) or are developed in parallel (III)


Product Cost Controlling Through a Period

Cost Planning Production Actual CostingProfitability

Analysis

Evaluating master

data

Bill of materials

Routing

Planned prices

Planned activities

Planned yield

Recording logistical

information for

controlling:

Consumptions

Yield & scrap

Purchasing & supplier

invoices

Activities & time

recording

Recalculating the

value flow using

Actual quantity

structure

Actual activity

recording

Multi-level value flow

Actual raw material

prices

Reporting Costs and

Contribution Margins

Production costs

Sales Revenues

Dimensions

Regions

Channels

Customers


External Procurement

Actual Costing Principle: Actual prices are

rolled up along the actual quantities

Production

Production

D

D

D

D

DD

Roll-up price differences Dfrom raw materials to

finished materials

External Procurement

D


External Procurement External Procurement

Production

Production

Actual Cost Component Split

D

D

D D

DD

Material

Process

Overhead

Labor

D

D

Profitability

Analysis

Material

Process

Overhead

Labor


Basis for Actual Cost Determination

Material Movements

Purchasing

Invoices

Production order settlements

Debits/Credit

Goods receipt from Production

Consumption for Production

Stock Transfers

Sales

Activities to Production

Quantity structure from actual

transactionsCollection of values from

actual transactions

ValueValue

VariancesPrice

Beginning

Inventory

Receipts

Cumulative

Inventory

Consumption

Ending Inventory


Actual Values in Profitability Analysis

Contribution Margin Accounting

Cost of Sales Split into Cost Components

Plan/Actual Variance Analysis

Profitability Analysis based on Actual Costs

Plan Actual Var. % Var. Abs.

Revenues: 100,000 US$

Sales Quantity: 1,000 pc

50,000 45,000 5,000 10 %Raw Materials4,000 5,000 -1,000 - 25 %Labor variable4,000 4,500 - 500 - 13 %Machine variable

10,000 7,000 3,000 30 %Logistic Processes5,000 5,500 - 500 - 10 %Material Overheads

6,00027,000 33,000 22 %Contribution Margin I

10,000 10,000 0 0 %Labor fix7,000 7,000 0 0 %Machine fix

10,000 16,000 6,000 60 %Contribution Margin II


Screenshots

periodic costs

The actual price, the actual

cost component split and

all price-influencing

transactions of a month are

reported by material


Valuated Quantity Structure

The actual quantity structure

with the costs for all

components and activities

throughout the supply chain is

shown by material


Profitability Analysis

Profitability Analysis brings

actual revenues and actual

costs together



Aim of Group Valuation and Transfer Pricing

Transfer prices enable organizations that divide tasks among different units to valuate

and monitor the goods and services exchanged between these units, while still

maintaining visibility to cost of goods manufactured and sold.

Group valuation and transfer prices are built into SAP ERP since R/3 4.5.

The enhancement in ERP 6.0:

Group view on actual costs

Full cost split is calculated cross-company.


Three Distinct Views of Business – Posted in

Parallel

Legal View – Allows you to represent profits optimally in the financial statements of the

company code for tax purposes and according to GAAP Standards

Group View – Allows strategic decision making by viewing data as if the group acts as

a single company code by eliminating internal profits throughout the financial

transaction flow.

Profit Center View – Allows you to view the profit of individual areas of responsibility as

if they were selling entities not part of the larger group.

You can do the Group and/or the Profit Center Views – i.e. you can do either one or

both


Parallel Valuation

Semifin.

material

Distribution

center Sales

order

Finished

product

Raw

material

Production

order

Cost center

Production order

1) Sale of Raw Material to the Production Profit Center within a Legal Entity.

2) Sale of Semi-Finished Good to Affiliated Company.

3) Use Semi-Finished Good in a production order and add value from activity in a

cost center.

4) Transfer finished product to distribution center in an Affiliated Company.

2 3 41


Parallel Valuation

Production

order

Sales

order

Cost center

Company code 1

PrCtr1 PrCtr2 PrCtr3 PrCtr4

75100

120

CCtr 20

220

240

Company code 2 Company code 3

Production

order

Semifin.

material

Raw

materialDistribution

centerFinished

product

L 120

G 90

P 140

L 120

G 90

P 140

L 70

G 70

P 75

L 70

G 70

P 75

G 70

L 70

P 70 P 240

G 90

L 220


Profit and Loss Statements

Legal Group Profit Center 3

Revenue 220 90 240

COS 120 90 140

Margin 100 0 100

Company Code 2



Benefits:

Parallel Determination of Costs of Goods Manufactured

It is now possible to transfer depreciation values from FI-AA according to two different accounting principles into Cost Center Accounting.

The depreciation costs can then be included in the activity rates for the work performed and in the costs of goods manufactured, both of which are calculated at period close.

You can update the ledger groups / accounts in FI-GL with inventory values calculated according to two different valuation methods. For example,

Where CO Version 0 represents the leading valuation (IFRS), you can calculate the actual costs using the periodic costing run and update the inventory values in the leading ledger in FI-GL.

Where the second CO Version represents the local valuation (GAAP), you can calculate the actual costs using an alternative costing run and update the inventory values in the local ledger in FI-GL.

If your leading valuation is based on standard costs and your local valuation based on actual costs then

CO Version 0 represents the leading valuation (IFRS) and is used to determine the standard costs.

The second CO Version represents the local valuation (GAAP). Here you can use the periodic costing run to update the inventory values in the local ledger in FI-GL.


Value Flow for Parallel Determination of Costs of

Goods Manufactured

ControllingUpdate of Depreciation Expenses by Cost

Center and Version

Actual CostingPeriodic Costing Run

Updates either leading valuation or local valuation*

Version 0

(legal)

(Actual rate)

Version N

(par. COGM)

(Actual rate)

Actual CostingAlternative Valuation Run

Updates local valuation if both valuations use actual costs*

Depreciation Area 01

(IFRS) Asset AccountingPerform Depreciation Run

Version 0

(legal valuation)

Ledger 0L

(IFRS)

Version N

Depreciation Area 02

(Local GAAP)

Ledger N

(Local GAAP)

(parallel COGM)

Version N

(par. COGM)

(Actual rate)

ControllingDirect Activity Allocation at standard;

Actual Rate Calculated at Period

Close

Version 0

(legal)

(Actual rate)

Version 0

(legal)

(Standard rate)

Version N

(par. COGM)

(Actual rate)OR


Thank you!

Stock in Transit and Actual Costing - SAP Ramp-UP - Janet Dorothy

Documents

periodic costing

create billing

perform goods

perform goods

receivers

senders free

cost component

price difference