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 month--> Production budget--> Material 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
At COGM level or At COGM +Admin level
Raw
material standard cost
For each product –we find out materials
required
For BILFG1 We
required BILRM1
BILRM2
MM Module
:Material Master
Accounting view –moving average price
BIL RM1 75
BILRM2 125
PP
Module: Bill of Material (BOM)
To produce BILFG1 what materials are
required and how much quantity
BILRM1 1Kg
BILRM2 1Kg
Raw 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 D
Raw 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 300000
Salaries 100000
Power 320000
-------
Planned cost 720000
=====
Planned hours available
Machines 100
working for 3 shifts (24 Hours )
No.of days 30
Days
100*30*24=72000
Machine hour rate 720000/72000=10 Rs
(Activity type)
To Produce BILFG1
Hours required 5Hrs
Production cost 10*5=50
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 Cost
BILFG1 999
Kgs 1
BILFG2 1 Kg 999
------ -----
1000 1000 720000
If we allocate cost based on production
BILFG1 720000*999/1000=719280
BILFG2 720000*1/1000= 720
--------
720000
======
If we allocate cost based on hours required
BILFG1 720000*1/1000 =720
BILFG2 720000*999/1000 =719280
-----------
720000
========
ACTIVITY
BASED COSTING
Co
–Consultants job:
- Creation of 2 secondary cost elements (Use Tr.code is KA06)
A)
RM overhead rate
B)
Activity allocation
Give the cost
element 1200000
Valid from
01.04.2008 to 31.12.9999
Enter
Give the name and
description :RM Overhead rate
Cost element category
: Select 41
overhead rates
Save
Cost element :1200001
Enter
Name and
description :Activity
allocation
Cost element
category :select 43
Interval activity allocation
Save
Creation
of activity type –Machine hour:
Path :Accounting –Controlling –cost Center accounting
–Master data –Activity type-Individual processing –create (Transaction code
KL01)
Activity type :BIL
Valid from :01.04.2008 to
31.12.9999
Enter
Give the Name
& Description :Machine hour
Activity unit :select H
Cost center
categories :Select * (All cost
center categories)
Active type
category :select 1 (Manual
entry , Manual allocation)
Allocation cost
element :1200001
Save
Creation
of cost centers: (Tr.code is KS01)
Give the cost
center :Dept G
Valid from : 01.04.2008 to
31.12.9999
Reference cost
center :Dept A
Controlling area :BIL
Enter
Change the name to
Dept G
Change the
description to cost center : Dept G
Person responsible
: MrG
Other things are
common
Select save button
Cost center :Dept H
Reference cost
center :Dept A
Controlling area :BIL
Enter
Change the name to
Dept H
Change the
description to cost center: Dept H
Change person
responsible to Mr. H
Cost center
category: select 9( Allocation cost center)
Save
Create
of cost center group (Tr code is KSH1)
Give the cost
center group: BILPROD
Enter
Description: BIL
Production cost center group
Select insert cost
center button
Select cost center
Dept G
Save
Define
overhead keys:
Path :SPRO-Controlling –Product cost controlling
–Product cost planning basic settings for material costing - overheads-Define
overhead keys
Select new entries
Overhead key :BIL1
Description :BIL Overhead key
Save
Press enter to
save in your request
Define
overhead groups
Same path
Select new entries
button
Valuation area :BILP
Overhead group :BIL1
Overhead key :BIL1
Name of overhead
group :BIL over head group
Save
Press enter to
save in your request
Note:
Overhead rate will
be given to overhead key
Overhead key will
be assigned to overhead group
Overhead group
will be specified in material master
Define
calculation basis
Path :SPRO-Controlling- Product cost controlling –Product cost planning-Basic
setting for material costing –Over head –costing sheet components –Define
calculation bases
Select new entries
button
Base :D1 (Text filed)
Name :Raw materials
Base :D2
Name :Production cost
Save
Press enter to
save in your request
Select D1 double
click on details folder
Controlling area :BIL
Enter
Select new entries
button
From cost element :400000
To cost element :400099 RM consumption
Save
Select back arrow
two times
Select base D2
Production cost
Double click on
details folder
Controlling area :BIL
Enter
Select new entries
button
From cost element :400100
To cost element :400299 Personnel & Manufacturing
group
From cost element :400500
To cost element :400599 Depreciation a/c
From cost element :1200001 Activity allocation
To cost element :1200001
Save
Define
percentage overhead rates:
Same path
Select new entries
button
Overhead rate :D3
Name :RM overhead rate
Dependency :Select D010 Overhead
type/Overhead key
Save
Press enter to
save in your request
Select D3
Double click on
details folder
Ignore the warning
message press enter
Select new entries
button
Valid
from To
Controlling area Overhead type Overhead key Percentage
01.04.2008 31.03.2009 BIL Select
2 BIL1 5
(Planned overhead rate) RM key
01.04.2008
31.03.2009 BIL 1 (Actual overhead rate) BIL1 10
Select save button or Ctrl+S
Press enter to save in your request
Define
Credits
Same path
Select new entries
button
Credit :D4
Name :BIL RM credit key
Save
Press enter to
save in your request
Select :D4
Double click on
details folder
Controlling area :BIL
Enter
Select new entries
button
Valid to :31.03.2009
Cost element :1200000 RM overhead rate
Fixed percentage :100%
Cost center :Dept H (Allocation cost
center)
Save
Actual over head
rate 10%
Credit key D4
-1100000 Cost Dept.
- RM1 Purchase/Receipt
(Freight including)
Inventory RM
local DR 600000
To GR/IR clearing RM local 600000
- Loading & Unloading charges
Loading &
Unloading charges Dr 7000 Dept H
To Bank 7000
- RM 2 Purchase
Inventory RM
local DR 300000
To GR/IR clearing RM local 300000
- Loading &
Unloading charges for RM 2
Lodging & unloading charges DR 3000
To Bank 3000
- RM Consumption for production Order 1-RM1 and RM2
RM consumption
local DR 40000 Order 1
RM Consumption
local DR 20000 Order 1
To Inventory RM local 40000
To Inventories RM local 20000
- RM consumption for
production order 2 RM-1 and RM2
RM consumption
local DR 10000 Order 2
RM Consumption
local DR 30000 Order 2
To inventory RM local 10000
To Inventory RM local 30000
In the month end
RM material consumption 100000
Lodging &
Unloading charges 10000
% on consumption
10% actual
overhead rate
Cost
center Dept H
(Allocation
cost center)
Loading &
Unloading for RM1 7000 DR Order 1 6000 DR
Loading & Unloading
for RM2 3000 DR Order 2 4000CR
H Value will be
zero
Order
1 Order2
RM Consumption 60000 40000
RM overhead rate 6000 4000
(Actual 10%) ----- -----
66000 44000
===== =====
Indirectly we
are allocating cost center Dept H values to production orders based on the
consumption values.
Define costing sheets:
Path :Up to
overhead the path is same- Define costing sheets
Select new entries button
Costing sheet :BIL
Description :BIL
Costing Sheet
Save
Press enter to save in your request
Select :BIL
Double click on costing sheet rows folder
Select new entries button
Row Base Overhead Description
10 D1 Raw
materials
20 400000-400099
D3 RM Overhead rate
From :10
To Row :10
Credit :D4
Row :30
Base :D2
Description
:Product cost
Row :40
Description
: Cost goods manufacturer
From
: 10
To
row : 30
Save
Assign
costing sheet to plant :
Path
:SPRO-Controlling –Product cost controlling –Product cost planning –Material
cost 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
cost
What 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
folder
For cost component structure 01 select
active check box
Save
For cost component structure assignment structure 02 also for
cost component
Note: The above procedure is to be followed
to 02 also
PP
CONSULTANT JOB:
Define
MRP controller
Path :SPRO-Production –material requirements Planning
–Master data-Define –MRP controllers
Select new entries button
Plant :BILP
MRP controller :Mr.A
Save
Press enter to save in your request
Notes:
Define
floats (Scheduling margin key)
Floats –Buffer days or grace days
2
days grace days
Production order creation 08.12.2008 10.12.2008
Production order release 10.12.2008 12.12.2008
Production start date 11.12.2008 13.12.2008
Production end date 15.12.2008 17.12.2008
Path :SPRO-Production –Material requirements planning
–Planning –Scheduling and capacity parameters –Define floats (Scheduling margin
key)
Select new entries
button
Plant :BILP
Margin key :BIL
Opening period :2 days
Float before
production :2 days
Float after
production :2
days
Release period :2 days
Save
Press enter to save
in your request
Define
production scheduler
Path :SPRO-Production-Shop floor control- Master
data-Define production scheduler
Select new entries button
Plant :BILP
Production scheduler :B
Description :Mr.B
Save
Press 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 button
Plant :BILP
Responsible person : Mr.C
Person responsible for work center :Mr.C
Save
Press 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 button
Cost center group select :BILPROD
Execute
Select save button
Ignore the message press enter
MM
END USER AREA
Creation of material master (MM01)
A) Raw material 2
B) 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
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 institution use
today’s date
Costing date to :31.12.9999
Quantity structure
date :08.12.2008
Valuation date :08.12.2008
Enter
Cost
sheet
Raw materials
BIL RM1 1
Kg 75
BILRM2 1Kg 150 225
RM overhead cost -5% 11
Production costs 5*10 50
Machine hours 5 Hrs
Machine hour rate 10Rs -----
286
From the menu select Costs –>Display
cost components
Select save button or Ctrl+S
Enter
Marking
and releasing
Display
material master
Path :Logistics –Materials management –Material master-Material
–Display –Display current (MM03)
Material :BILFG1
Press select views button
Select costing 2 view
Enter
Plant :BILP
Enter
A) Marking
and releasing
Display
material master
1.
Making updates future price in live environment on 21st February
create estimate for March and store in the System.
2. Realizing updates current price on 1st
of March release stock valuation will be at the new rate from 1st of
March
B)
Marking and releasing :
Path :Accounting –Controlling –Product cost controlling
–Product cost planning –material costing –Price update (CK24)
Posting period :9
Fiscal year :2008
Company code :BIL
Plant :BILP
Material :BILFG1
Select test run
check box
Select marking
allowance button
Select company
code :BIL
Costing variant :select PPC1
(Standard
cost estimate for materials)
Save
Select back arrow
Deselect test run
check box
Execute
Select material :BILFG1
Select costing to
tab
Select back arrow
two times
Select release
button
Execute
Select material :BILFG1
Select costing to
tab
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