Product Costing Material Ledger

Product Costing & Material
Ledger
Product Costing Overview
 Acquire an overall perspective of Product Cost

Planning within R/3.
 Observe a product life cycle from the perspective of
Product Cost Planning.
 Acquire an overall perspective of product cost object
controlling within R/3.
 Understand the period oriented product cost
controlling.
 Obtain an understanding of the functions in the
material ledger.
 Analysis of product costs.
Material Ledger Overview
 Obtain an understanding of the actual costing

function in the material ledger.
 Know how to revaluate inventories of semi finished
products, and finished products with calculated
actual costs or accrue variances.
 Analysis of actual product costs.
SAP Modules - Overview
SD FI
Sales & Financial
Distribution Accounting
MM CO
Materials Controlling
Mgmt.
PP AM
Product Fixed Asset
Planning Mgmt.
QM
Quality
SAP R/3 PS
Project
Mgmt. System
PM OC
Plant Maint. Office &
Comm.
HR IS
Human Industry
Resources Solutions
CO Components
CO EC -
Operating concern (9100 – A group) Profitability
PCA
PA segment
Profitability Analysis
Profitability Analysis
CO
Overhead Cost Controlling Product Cost
Profit Center Accounting

OM
Controlling
Internal
Cost centers
orders
COarea
Controlling Production
(9100 – A group)
Internal Orders Order
Activity
types
Standard
Cost Estimate
CO
CEL Cost Element Accounting Cost Element Accounting
Financial Asset Revenues

FI Accounting
Financial Expense Company Code (9100 A Ltd, 9200 A1 Ltd)
Accounting
HR Human Materials
Materials SD Sales and
Resources
MM S&D
Management
Management Distribution
Why utilize Product Costing?
•Product Costing is the backbone of a strong standard cost

system. This is the process by which production activities
are recorded at standard values and variances from actual
costs are isolated.
•For planning purposes, the corporation wants a preliminary
target of what they think it will cost to produce X units of a
product.
•To set attainable standards by which efficiencies within the
production operations can be measured.
•To provide feedback to management on the actual
performance of the production process in relation to those
targets. Identified variances may indicate inefficiencies that
have to be investigated. Corrective action may have to be
taken.
Product Costing
Optimized Production Operations
Improve and Control

Operations
OPTIMIZED Plan & Commit Prepare Make Disposition & Process

& FIRM ends with
Resources Production Product Contain Product
SCHEDULE initial
containment
(packout)
Manage Process and

Product Documentation
Costing Methodology
Material Master
Price Control
Moving average price Standard Price

(V- Price) (S-Price)
- Adjusted with every receipt - Constant

- If at all, only to be used for raw - Recommended for all material
materials and materials procured types
externally
Costing Methodology
Price that changes in consequence of usage

and entry of invoices. Calculated by
dividing the value of material by the quantity
in stock. Automatically recalculated based
on activity.
Constant price without considering usage or

invoices. Material stock valued at the same
price over an extended period. Price
variances are posted to price difference
accounts; not affecting the standard price.
The method of valuing inventory of a

material is determined when
extending/creating the material master.
Posting Example: Moving average price 1
Procedure Stock Stock value V price
1
Begin. inventory: 100 PC at 2.00 100 200.- 2.00
2
Goods receipt: 100 PC at 3.00 200 500.- 2.50
3
Invoice receipt: 100 PC at 4.00 200 600.- 3.00
4
Goods issue: 150 PC at 3.00 50 150.- 3.00
Stock Stock
Stock Coverage GR/IR Account
1 200,- 450,- 4 3 2
300,- 300,-
2 300,- If the invoice receipt is
3 100,- for 100 units, the stock
coverage
is 200 units:
Consumption all differences ➜ stock Vendor
4 450,-
400,- 3
ok
Procedure Stock Stock Value V Price

1
2 Begin. inventory: 100 200.- 2.00
3 Goods receipt: 100 PC at 3.00 200 500.- 2.50
4 Goods issue: 150 PC at 2.50 50 125.- 2.50
Stock
Stock Shortage GR/IR account
1 200.- 3 375.- With a delayed invoice receipt 4 2

Of 100 units: 300.- 300.-
2 300.-
a shortage of 50 units
4 50.- ➜ price differences despite MAP
Price difference Consumption Vendor
4 50.- 3 375.-
400.- 4
Procedure Stock Stock Value V Price
Begin. inventory: 100 200.- 2.00

Goods receipt: 100 PC at 2.20 200 Δ 80.- 420.- 2.10
Goods receipt: 100 PC at 2.40 300 in stock 660.- 2.20
Goods issue: 200 PC at 2.20 100 220.- 2.20
Invoice receipt: 100 PC at 3.00 100 Δ 60.- 360.- 3.60
in stock
Stock Coverage
Even though all
With multiple delayed receipts between
invoice receipts: 2.- and 3.- were
Danger of Incorrect Valuation! valuated!
Characteristics of Price Control V
Moving average price
+ The stock value is adjusted each time goods are received
+ Real-time price fluctations are posted to stock
+ Price difference postings only take place in exceptional cases
- Price fluctuations cannot be adjusted to the finished products of

higher levels (S price)
- Only recommended for raw materials or goods procured externally

(real-time price for goods receipt known)
- False entries with severe consequences (compounded errors)
- Danger of incorrect valuations with delayed invoice receipt

Posting Example: Standard Price
Procedure Stock Stock Value Standard Price
1 Initial situation: 100 200.- 2.00

2 Goods receipt: 100 at 2.40 200 400.- 2.00
3 Invoice receipt: 100 at 2.20200 400.- 2.00
Stock GR/IR account
1 200.- 3 2
240.- 240.-
2 200.-
Price difference Vendor
2 40.- 20.- 3
220.- 3
Characteristics of Price Control S
Standard Price
+ All stock postings take place at the standard price
+ Prices remain constant throughout at least one period
+ Price fluctuations do not debit/credit the cost objects (e.g. orders)
➜ consistant controlling with the standard price as a bench mark
+ Calculation of the standard prices with cost component splits

+ Recommended for all material types
- Price differences cannot be subsequently adjusted to the ending
inventories or the consumed products (sales, production
withdrawals)
Period-End Closing: Valuation Problems
Finished Products
Raw Materials I
Distribution of
Price Differences?
Valuation Period
∆ Actual Prices?
Raw Materials II Ending Inventory:

Raw Materials
Costing Methodology
Valuation Method by Material:
Finished Goods Standard w/ ML
Intermediates Standard w/ ML
Raw Material Moving Average Actual
Packaging Moving Average Actual

Valuation Area
Organizational unit dividing up a company for the

purpose of valuating stocks in a standardized and
consistent manner.
• Level at which material value is managed.
• The valuation area may is defined:

- by plant
Product Cost Flow
MAT Manufacturing Cost MM: RM

Cost Cost Cost
Center X Center 1 Center2
CO-
CCA BOM
CO-
Cost Cost PC
Center Y Center 3
Routing
Act1
Production
Production
Cost Center
Act2 orders
VAR.
VAR..
.
CO-
PA Cost F. Goods
VAR...
Object Inventor
y
Product Cost Flow
Plant Cost
View Sales & Mktg. View
Mfg. Cost Center
Process Order PA
Utilities
BOM Product Unit Cost (Profitability Analysis)
Salaries (Cost Component View) (SAP Value Fields)
Supplies Raw Mat’l 1 Cost of Goods Sold
Maintenance Raw Mat’l 2 Cost of Goods Mfg.
Depreciation Pkg Mat’l Raw Mat’l 1 Costs
Raw Mat’l 1 & 2 Costs
Training Raw Mat’l 2 Costs
Pkg. Mat’l Costs
Routing Pkg. Mat’l Costs
Direct (Activity Types)
Conversion Routing
Mach. Hrs.
Insur. & Taxes or Mach. Hr. Costs
Costs to Produce
Laboratory/QC lbs. Lab Tests Costs
Product testing costs
Waste Treatment Produced Mach. Setup Costs
Change Over costs
Shops & Stores Lab tests (setup costs)
General Services Setup Hrs. Fixed & Variable Cost Fixed & Variable Cost
Indirect Three Views Available:
Conversion 1. Cost Component
Total Product Cost 2. Cost Element
3. Cost Itemization
Product Costing At A Grp
Product Cost Planning

Quantity
structure
in PP Adjust costing
created master data/
parameters
Activity
type
planning Execute costing
completed
run
Overhead Not OK
cost
planning
completed
Standard
Review
Yes for
Plan prices Cost
Approval
of raw Calculated
materials
were
entered
OK
Automatic Standard
Mark Standard Release price hase
Cost Estimate of been
Standard Price released
Product Costing At Sabic
Product Cost Allocation - Simultaneous Costing
Cost
estimate
has been
released
Manufacturi
ng order
has been
released
Product cost
Simultaneous
are
Costing
Yes
Cost object allocated
has been
created
Period End Closing Product Costing
Product Revaluation
cost are activity types at
allocated actual prices
Calculation of
WIP
Yes
Periodic
Varaiance
calculation
PE Product
Settle cost
Costing has
object
been done
Material Ledger/Actual Costing
GL Postings
Material
M,aster
Revaluate Updates
Stock
Allocation of
MM Goods Follow up Costs
Material Price Price Update in
Movements to Finished/Semi
Determination Finished
Actual Costing
Recorded
Products
Provisional GL Postings &
Posting Reversal
Material
M,aster
Updates
Product Cost Planning: Overview
Functions of Product Cost Planning:

 Product Cost Planning with reference to cost object
 Product cost planning with quantity structure – with structures
provided by PP (Production Planning) module
 Determination of the cost of goods manufactured
 Product Cost Planning supplies information for other
modules:
 Update of prices in a material master
 Update of the cost of good sold with the detailed structure of
cost component (grouped cost elements)
 Standard (material) cost estimate as the base for calculation
of production variances
Product Costing: Overview
Create Cost estimate with quantity structure
Standard
StandardCost
Cost Estimate
Estimate Mark cost estimate with quantity structure
(once
(onceaayear)
year)
Release cost estimate with quantity structure
Prepare
Prepare Product
Product Cost
Cost
Create Cost Object
Collector
Collector Preliminary Costing
Post Materials Costs
Production
ProductionCosts
Costs Debit Secondary cost
Receive
ReceiveFinished
FinishedStocks
Stocks Credit Production Output
WIP Calculation
Month
Month End
EndClosing
Closing Variance Calculation
Settlement
What is a Product Cost Estimate?
A tool for planning costs and establishing prices for

materials. It is used to calculate the cost of goods sold for
each product unit.
Cost Estimate With Quantity Structure

Utilizes a Bill of Material (BOM) and routing, I.e. Master Recipe for
costing purposes. Integrated with Production Planning (PP).
Cost Estimate WITHOUT Quantity Structure

Utilizes a material master data and activity types entered manually into cost
estimate.
Additive
You use additive costing to enable you to manually add costs that cannot
be calculated by the system to a material cost estimate.
Cost estimate
with quantity
structure
Report
Quantity
structure Material costs
Cost estimate Production costs
Costing without qty
variant structure Overhead
Valuation Price update

Simulation Modified Current
Costing Std Cost Est. Cost Est.
Start of Start of
Year 1 Year 2
Time
New Technical Ad hoc
product change
Standard Cost Standard Cost

Estimate Estimate
Inventory Cost Inventory Cost

Estimate Estimate
Create Cost estimate with quantity

structure
Standard
StandardCost
Cost Estimate
Estimate
(once
(onceaayear)
year) Mark cost estimate with quantity structure
Release cost estimate with quantity structure

Material cost estimates with q. s.
Quantity Valuatio
Structure n
Purchase price
BOM Routing
Activity Type Price

Overhead
Costing Standard
Standard Cost
Cost
Costing Estimate
Estimate
for:
Results
Usedfor:
Items Cost Values
Elements Stock
Stock Valuation
Valuation
Used
M Material 400000 Raw materials 600 000 SAR Profit
Profit &
& Loss
Loss
E Activity 943201 Production hours 610 000 SAR Statement
Statement
E Activity 943901 UT: Cooling Var. 612 000 SAR
G Overhead … … SAR
Material cost estimates with q. s.
Product W Costing structure - Total

Internal External
Material Overheads
Activity Activity
W
W Costing structure – Upper level
Z1
Z1 Z
Z 22 Internal External
- Overheads
Activity Activity
S1
S1 S2
S2 S3
S3
Costing structure – Lower level
Internal External
Material Overheads
Activity Activity
Product Z Costing structure - Total

Internal External
Material Overheads
Activity Activity
Product S Costing structure - Total
Material - - -
Costing Variant
Costing Variant
Quantity Structure Valuation

Determination Variant
Quantities Prices
Cost of Goods
Manufactured
Costing Variant
Strategy for Determination of :

Costing Sheet transfer of - Bills of Material
the existing - Routing
cost estimates
Determination of: Defaulted dates for

COSTING
- prices update costing
VARIANT
in material master
Valuation control for:

- materials
- internal activities
- external activities
- subcontracting
- overheads via
costing sheet
Quantity Structure for Product Cost
Planning
- Quantity Structure for Product Cost Planning
- Master Data
+ Material Master
+ Bills of Material
+ Work Centers / Resources
+ Routings
+ Master Recipe
+ Production Version
+ Procurement Alternatives / Mix Ratios

Quantity Structure for Product Cost
Planning
 Material master data  Master Recipe
 Accounting views  Recipe header
 Costing views  Operations
 MRP views  Materials list
 BOM - Bill of Material  Work Centers / Resources

 BOM type & identification  Basic data
 BOM header  Costing
 Material data  …
 Routing - tasks list  Production Version

 Routing type & identification  Validity Period
 Routing header  Production line
 Operation data
Quantity Structure: Material Master
Data
Material Master Data:
 Material Master Data is an object in SAP R/3 that
consists all relevant data for raw materials, semi-
finished and finished products divided into views.
 Views: -Valuation class
 Purchasing -Price control
-Price determination
 Storage
-Price
 Sales -Stock
 Accounting -Value of the stock
-…
 Costing
 MRP -Plan price
 … -Cost estimate results
-Periodic unit price
-…
Material cost estimates - quantity
struc.
Product cost planning with quantity structure:
 Materials
USE:
 Cost Centers / Activity Types
- for the products (materials) in the system
 Primary Costs without PP module
- in case of external MRP system
- to update standard price
Quantity * material price = Quantity * activity price = Cost of goods manufactured

cost of goods manufactured cost of goods manufactured due to the manually entered
due to the consumption of due to the internal activities cost elements or
raw materials. during the production mathematical operation.
process.
Costing Variant
Strategy for transfer of

Costing Sheet the existing cost estimates
Determination of: Defaulted dates for

COSTING
- prices update costing
VARIANT
in material master
Valuation control for:

- materials
- internal activities
- external activities
- subcontracting
- overheads via
costing sheet
Quantity Structure: Production Version
 Quantity structure determination for cost estimate

 Validity period definition
Product <FERT or HALB >
Routing Bill of Material

• Group • Usage Product Cost
• Group counter • Alternative
Estimate
Production Version
• ID,
• Production line,
• Validity period.
Quantity Structure: Procurement
Alternatives
 Quantity structure determination for mixed cost estimate.
Quantity Structure: Mixing Ratios
 Quantity structure determination for mixed cost estimate

 Validity period for mixing structure
Mixed Product
Cost Estimate
Costing vs. Quantity Structure
RAW MATERIALS BILLS

OF
MATERIAL
PRODUCT
COST
ESTIMATE
ROUTING
Electricity SERVICE
COST CENTER
WORK CENTER /
Consumables RESOURCE
Maintenance
Labor Utilities Overhead PRODUCTION

ACTIVITY TYPES COST
CENTER
Depreciation
Costing Structure
- Costing Structure for Product Cost Planning
- Master Data
+ Materials
+ Cost Centers
+ Activity Types
+ Cost Elements
+ Cost Component Structure

Costing Structure for Product Cost
Planning
 Material master data  Cost Elements
 Accounting views  Validity period
 Costing views  Category
 Cost Centers
 Validity period
 Category
 Functional area
 Activity Types
 Validity period
 Activity unit
 Allocation cost element
Costing Structure: Material Master
Data
Material Master Data:
 Material Master Data is an object in SAP R/3 that
consists all relevant data for raw materials, semi-
finished and finished products divided into views.
 Views: -Valuation class
 Purchasing -Price control
-Price determination
 Storage
-Price
 Sales -Stock
 Accounting -Value of the stock
-…
 Costing
 MRP -Plan price
 … -Cost estimate results
-Periodic unit price
-…
Costing Structure
A cost centers is an organizational unit within a controlling

area that represents a clearly delimited area of
responsibility where costs are monitored against a plan.
Cost Center They represent a defined location of cost incurrence.
Items in a chart of accounts that are relevant to cost, are

referred to as cost elements. They are used for entering all
costs within the entire cost accounting system.
Cost Secondary costs elements are used exclusively in CO to

Elements identify internal cost flows such as assessments or
settlements. They do not have corresponding general
ledger accounts in FI and are defined in CO only.
Planning Overview
Company
General
Service
C. Center
Executive Admin. Maintena Prod.

Management C. Center nce Support
Production
C. Center
Product
Projects Cost
COGS Estimate
Profitability Segment
Costing Structure
Activity types define the type of activity that can be provided

by a cost center (work activity, production hours, and so on).
Activity Type
Activity Price Calculation
Cost center:
Planned costs: 84,000
Machine
Cost center
1PDH01 Plan activity qty: 100 h
Planned costs: 100 h

2 Calculated
430000 (salaries) 44,000
Price: 840
440000 (miscl.) 10,000
473120 (telephone) 30,000
1
Activity Price
: Calculation
Apportionment of cost center costs
to activity types according to
particular criteria
Costing Structure
Planning 3 Cost Splitting
1203000 Product
1. Assign CC 1203004 to Splitting
Utilities (Common) Structure U4 Steam service Cost Estimate
2. Perform cost splitting
2
1203000 Product
Di rigi
22000057 - TEG
st
O
rib al
ut CE
io
Steam service
n
94 ca ity
Ro via 54 n
n
…..
39 tio
lo v
1203004
Al cti
A
1UTSTF Steam - fixed
g
in
5
ut
1UTSTV Steam – var.
….. 943954 UT: Steam fix
Product
22000058 - LLDPE
….. Activity Types Used:

1 1UTSTF Steam - fixed
4 Planned Price Calculation
Primary costs planning on all Prices for 1UTSTF are
Cost Centers. calculated.
Cost Component Structure
Valuatio
n
Purchase price
Activity Type Price x Quantity
Overhead
Costing Standard
Standard Cost
Cost
Costing Estimate
Estimate
for:
CostResults
Usedfor:
ID Values
Component Fixed & Variable Stock
Stock Valuation
Valuation
Used
101 Raw Materials 600 000 SAR Profit
Profit &
& Loss
Loss
110 Catalyst 0 SAR Statement
Statement
111 Chemicals 0 SAR
… … … SAR
Cost Component Structure
CO- CO- Product Cost Planning
OM PC
Primary cost elements Z9

A Grp-Primary
Raw Materials Raw Materials
Cost Centers
Utilities Utilities
Personnel Exp. Internal Personnel Exp.

Activity
Allocation
Depreciation Depreciation
Structure of primary Structure of

costs primary
costs
Create Cost estimate with quantity structure
Standard
StandardCost
Cost Estimate
Estimate
(once
(onceaayear)
year) Mark cost estimate with quantity
structure
Release cost estimate with quantity

structure
Price update
 Standard price
 Only one validated standard price per product per period,
 The price represents most desired (or most likely) costs
 Only one price per product over the year (recommended)
 Determined during costing runs for Z9P1 costing variants - standard cost
estimate is populated in appropriate valuation views
 Includes variable and fix cost elements
 Base for variances calculation; which is then posted to FI and CO-PA
 Used for stock valuation of finished goods and semi-finished products
 Stored in material master data (accounting view) in Legal, Group and Profit
Center valuation views after releasing the cost estimate
Price update
 Future price
 Future standard price
 Stored in material master data (accounting & costing view) in Legal,
Group and Profit Center valuation views after marking the cost estimate.
 Previous price
 Replaced standard price by current one due to releasing the cost
estimate
 Stored in material master data (accounting & costing view).
Price update
Material
Material Master
Master
Analysis of Costing Results
Data
Data
Standard Price
Future Current Previous
10

Marking Standard
Cost Estimate 15 10

Releasing Standard
Cost Estimate 15 10
Stock Revaluation
Price update procedures
Master & control data definition

- Material Master Data
- CO Production Order incl. Unit Costing
Product Costing
- SPC1 – SPC3 cost estimates, verification, save
- Organizational measures: marking and releasing
- Cost estimate marking
- Cost estimate release
MM & CO postings
- Various analysis available
Period-end closing tasks

- Work-in-process postings
- Inventory deviations postings
- Variances processing and analysis
- Settlement processing
Costing run
 Costing run
 You can use the costing run to process mass data. It enables you to cost, mark, and
release more than one material at the same time.
 Every processing step involved in costing with quantity structure is performed by the
costing run, from the same screen.
 Costing run consists of:

 General data (organizational units, selection criteria)
 Selected materials
 Exploded BOMs
 Costing run results
 Price update results
Costing run
Costing Run Creation
Company Code Costing

Costing variant Run
Dates
Partial selection
of materials
Selection
of
all materials BOM explosion
$ $
Execute costing run
$ $ $ $
$ $ $
Marking and releasing costing run results
Materials
(price update)
Create cost object

Prepare
PrepareCost
Cost Object
Object
Preliminary costing
Post Materials Costs
Production
ProductionCosts
Costs Debit Secondary cost
Receive
ReceiveFinished
FinishedStocks
Stocks Credit Production Output
WIP Calculation
Month
Month End
End Closing
Closing Variance Calculation
Settlement
Cost Object Controlling: Overview
Functions of Cost Object Controlling:
 Supporting make-or-buy decisions

 Determining price floors
 Performing complex cost analysis
 Determining inventory values
Cost Object Controlling Scenarios:
 Product Cost by Period

 Product Cost by Period is used for recurring periodic cost
control of products that are manufactured in the same way
over a longer period of time.
 Product Cost by Order

 Product Cost by Order is mainly used to control the costs of
individual production lots.
 Product Cost by Order or by Period

 Full settlement (by Order)
Actual costs - Actual costs -

Actual costs = Goods receipts = Goods receipts =
Work in process Work in process Variances
Time
Releasing an Partial delivery Delivered /
order Technically
completed
 Periodic settlement ( by Period)
Actual costs - Actual costs - Actual costs -

Goods receipts = Goods receipts = Goods receipts =
Work in process + Work in process + Work in process +
Variances Variances Variances
Time
Period 1 Period 2 Period 3
Functions
Funkcje Product Cost by Order Product Cost by Period
Type of settlement
FULL PERIODIC
rule
WIP calculated on base WIP calculated on base

Work-in-Process of actual costs of target costs
Variance = Actual Costs - Variance = Actual Costs -

Variances
Goods Receipts Goods Receipts - WIP
Settlement Should be periodically Must be periodically
Hierarchy of
Impossible Possible
Cost Objects
Functions of Product Costs by Period:
 Create product cost collectors.

 Create a preliminary cost estimate for product cost
collectors.
 Calculate and analyze target costs and actual costs for
product cost collectors.
 Calculate or update the work-in-process inventory and
the finished goods inventory.
 Calculate and analyze variances for each period.
 Transfer data to: Financial Accounting, Profitability
Analysis, Profit Center Accounting and Material
Ledger.
Product Costing
- Z9P1, Z9P2, Z9P3 costing run, verification, save
- Material Master Data, BOMs and Routings
- Product Cost Collectors incl. PREM costing
Production postings (backflush)

Actual Overview
Company
General
Common
Services
Executive SBU / R&T Maintena

Management Sales C. Center nce
C. Center
Production
C. Center
Overhead Product
Projects Variances Cost
Variances Collector
Profitability Segment
Create
Prepare
PrepareCost
Cost Object
Object Product Cost Collector
Preliminary costing
Objects in Cost Object Controlling
 Product cost collectors in the following production

environments:
 In order-related production (that is, when you are using

production orders) when you want to analyze the costs by
period rather than by lot
 In process manufacturing (that is, when you are using process
orders) when you want to analyze the costs by period rather
than by lot
 In repetitive manufacturing you always use product cost
collectors as the cost objects.
 Product Cost Collector
Routing Bill of Material

• Group • Usage Product Cost
• Group counter • Alternative
Collector
Production Version
• ID,
• Production line,
• Validity period.
Product PROCESS ORDER 1

Product Cost
<FERT or HALB>
Collector
PROCESS ORDER 2
Master Operation Materials Production

Recipe List/Routing List/BOM Version
Operation 10 Material X
Phase A
Material Y
Operation 20
Resource
Requirements
Preliminary costing
Product Costing
- SPC1 – SPC3 costing run, verification, save
- Product Cost Collectors with Preliminary costing (PREM)

Preliminary costing
 Costing variant PREM - preliminary costing:

 Created during product cost collector creation
 Created per each production version
 Provides split and balanced information of cost items, quantities and
prices that are planned to occur during production of a product
 Variable costs coming from BOM and routing
 Result used mainly for actual activities postings
 May be used for further analysis up to cost management requirements
 May be changed all the time in the way of changing (updating) Product
Cost Collector; i.e. different quantity structures allowed over the period
 Changes in BOMs take effect immediately, i.e. cost estimate update not
required
 Changes in routings take effect after cost estimate update
Preliminary costing
Product Cost Collector

Item Plan Actual
Caustic Soda 1.500
Ethylene 2.000
EDC 0.500
Materials 4.000
Internal activities 2.500
Overheads 1.500
Total 8.000
Simultaneous costing – actual costs
Product Costing
- Z9P1 – Z9P3 costing run, verification, save
- Product Cost Collectors with Preliminary costing (PREM)

Simultaneous costing – actual costs
Confirm order
operation
Production output &

Back Flush
Product Cost Collector
Item Plan Actual
Record consumption & Caustic Soda 1.500 1.800

output
Ethylene 2.000 2.200
Record process data & EDC 0.500 0.600

batch characteristics
Materials 4,000 4,600
Internal activities 2.500 2.800

Final Confirmation &
Back Flush Overheads 1.500
Total 8.000 7.400

Deal with Back Flush
& transaction errors
Adjust theoretical yield &

consumption to actual
Confirmation Types & Functions - Process
Orders
Confirmation types
Order header

 Individual
Individual order confirmation
confirmation

 Collective
Collective confirmation
confirmation
Operations

 Milestone
Milestone confirmation
confirmation
 Progress confirmation
 Order confirmation
Components
 Confirmation with reference
Components
Costs Material 20 Confirmation functions

Machine
Labor 100
50
Utility
... 
 Output
Confirmgoods receiptmovement
with goods
 Defaults for remaining time

 Backflush components
Check operation sequence
 Check delivery tolerances

 Backflush
Plant data collection interface
Confirmation status  utilities
Backflushing

 Reduce
Reduce capacity
capacity requirements
requirements
 Partial
 Partial confirmation
confirmation 
 Determine actual costs
Determine actual costs
 Final
 Final confirmation
confirmation
Back Flushing (Repetitive Orders)
Order quantity = 10 PC
Operation 30
Component XY
Required qty = 20 PC Warehouse
Back Flushing Goods issue

Operation 30
Component XY = 10 PC
Yield = 5 PC
10 PC of Component XY
to be back flushed
Final Confirmation & Technical Completion
Final confirmation Technical completion
Order header Order header
Operations
Operations Operations
Operations
Components
Components Components
Components
PRTs
PRTs PRTs
PRTs
Costs
Costs 100 20 Costs
Costs 100 20
50 50
Order status: Production

Order status:order
Production order status:
Technically
Technically
status:Delivered
Delivered
completed
completed
Settlement can be carried out

Failed Transactions and Corrections
◆ Incorrect or missing data for components and activities

prevents processing of the back flush transaction
◆ These errors must be corrected before postings can be
made for materials and activities
◆ When the errors have been eliminated, the theoretical yield
and consumption may be adjusted and the results recorded
Summary
 Non-feedstock raw materials are staged daily to the

production area for planned manufacture
 As each production quantity is confirmed, a back flush of
the proportional quantities of raw materials and utilities
consumed is recorded
 The results from the output receipts, plus material &
resource consumptions, update the stock records and
provide valuation of production according to standard cost
approach.
List of Transactions
 Simultaneous costing transactions:
 MF60 – Stage Materials

 MFBF – Back Flushes
 MF41 – Month-End Corrections
 COR6 – Confirm Orders & Back Flush
 COR2 – Reverse Confirmations
Actual costs
 CO Production Order
Step 1 – Order creation
- Maintenance of Master Data
Status - CREATED
Material is assigned to a CO
Production Order
Material
STATUS – CREATED
This status does not allow for any actual
postings
Actual costs
Step 2 – Order release
- Maintenance of Master Data
Status - RELEASED
Material
STATUS - RELEASED
This status allows for actual postings
Actual costs
Step 3 – FI postings
- Actual Postings
Status - RELEASED
CO
Order
FI Material
Outside Services
430004
430004 + 5.000,-
5.000,-
Actual costs
Step 4 – Direct activity allocation
- Actual Postings
Status - RELEASED
Order
Material
430004 + 5.000,-
943201 + 7.500,-
Cost Center / Activity
150 * 50 = 7.500,-
943201 - 7.500,- quantity * price = cost
Actual costs
Step 5 – Goods Issue to Order
- Actual Postings
Status – GOODS MOVEMENT POSTED
Raw Order CO
Materials Material
FI Consumed
400000
430004 + 5.000,-
943201 + 7.500,-
1.100,- 400000 + 1.100,-
100 * 11 = 1.100,-
Inventory
quantity * price = cost
Raw
Materials
119400
1.100,-
Actual costs
Step 6 – Goods Receipt from Order into Warehouse
- Actual Postings
Status – PARTIALLY DELIVERED
Order CO
Production Material
FI Output
462001
430004 + 5.000,- 462001 - 5.000,-
943201 + 7.500,-
5.000,- 400000 + 1.100,-
Finished
Products
119430
5.000,- 100 * 50 = 5.000,-

quantity * price = value of the goods receipts
from order
Actual costs - Summary
 The results from the output receipts, plus material &

resource consumptions, update the stock records and
provide valuation of production according to standard cost
approach.
WIP
Calculation
Month
Month End
End Closing
Closing
Variance
Calculation
Settlement
Period and year-end closing
 Period-end closing:
 Product Cost Collectors are only included in the period-end closing

process if the status of the order is not one of the following: LKD
(Locked), CLSD (Closed), DLFL (Deletion flag), DLT (Deleted).
 If you don’t enter a production process in the individual processing
mode of the period-end closing transaction, but only enter the data
for the material and plant, this period-end closing transaction will be
performed for all production processes for that material.
 Functions available in period-end closing: overhead calculation,
WIP calculation, variance calculation, settlement.
Functions
Funkcje Product Cost by Order Product Cost by Period
Type of settlement
FULL PERIODIC
rule
WIP calculated on base WIP calculated on base

Work-in-Process of actual costs of target costs
Variance = Actual Costs - Variance = Actual Costs -

Variances
Goods Receipts Goods Receipts - WIP
Settlement Should be periodically Must be periodically
Hierarchy of
Impossible Possible
Cost Objects
Step 7 – Work-in-Process Calculation
- Period-end closing
Status – RESULTS ANALYSIS CARRIED OUT
Order
Material
430004 + 5.000,- 462001 - 5.000,-

943201 + 7.500,-
400000 + 1.100,-
WIP Report:
Work-in-Process
13.600 - 5.000 = 8.600
Step 8 – Settlement
of - Period-end closing
Status – RESULTS ANALYSIS CARRIED OUT
Work In Order CO
Progress Material
FI (WIP)
462201 430004 + 5.000,- 462001 - 5.000,-
943201 + 7.500,-
8.600,- 400000 + 1.100,-
Work In
Progress
(WIP)
119460
WIP is being updated on the
order as statistical value for
8.600,-
information purposes.
 CO Production Order – new period

Step 9 – Repetition of the steps from 3 to 7
- Actual Postings
Status – PARTIALLY DELIVERED or DELIVERED
Order
Material
430004 + 5.000,- 462001 - 5.000,-

943201 + 7.500,- 462001 - 7.000,-
400000 + 1.100,-
400000 + 5.000,-
As a result of the actual

postings in the new period
there is a new balance on the
order.
 CO Production Order – period 2

Step 10 – Work-in-Process Calculation (variant 1)
Status – PARTIALLY DELIVERED
Order
Material
430004 + 5.000,- 462001 - 5.000,-

943201 + 7.500,- 462001 - 7.000,-
400000 + 1.100,-
400000 + 5.000,-
WIP Report (cumulated):
Work-in-Process
18.600 - 12.000 = 6.600
Work-in-Process
in previous period
13.600 - 5.000 = 8.600
Cumulative: 15.200
 CO Production Order – Period 2

Step 11 – Settlement (variant 1)
Status – RESULTS ANALYSIS CARRIED
Work In Order CO
Progress
FI Material
(WIP)
119460 430004 + 5.000,- 462001 - 5.000,-
943201 + 7.500,- 462001 - 7.000,-
6.600,- 400000 + 1.100,-
400000 + 5.000,-
Work In
Progress
(WIP)
462201
As WIP is reported as
6.600,- cumulative value.
 CO Production Order – period 2

Step 12 – Calculation of Variances and Settlement (variant 2)
Status – TECHNICALLY COMPLETED
Price
Difference - Order CO
Production
FI Material
Difference
464018
430004 + 5.000,- 462001 - 5.000,-
6.600,- 943201 + 7.500,- 462001 - 7.000,-
400000 + 1.100,-
400000 + 5.000,-
Production
Output WIP WIP
462001 462201 119460 As a result of a posting the
balance of the order was
6.600,- 8.600 8.600 posted to production
Negative variance: difference account and
Actuals > Plan. cumulated WIP was
reversed.
 Variance: Integration
CO-
Standard Cost Estimate Product Cost Collector PC
Material CATALYST
Materials Labour Depreciation Quantity prod.: 10 pcs
600 1.100 300
Actual Costs
Materials 800
Labour 1.200
Material Master 400
Depreciation Target Cost Ver. 0
Accounting View 2.400
Standard Price Price 150
200
10pcs * 200 Goods Receipt - 2.000 Quantity 50
Variance 400 Structure 200
Accounting
FI Price difference
Stock
2.000 400 Profitability CO-
Analysis PA
MM Stock
Settlement Variance 400
Variance PA Assignment
Cost Element Group Value Field
Category lines
+
CO-
PC
Product cost collector
Material: MEG
Period accounting
Quantity: 10 pieces Cost of goods sold
CO-
PC Revenue
Revenue
Actual costs – Sales deductions
– Sales deductions
– Manufacturing costs by
– Overheads plus Variances Actual costs 2.400,- standard price
(Contribution margin I)
+/- Change in Stock Goods receipt -2.000,- – Variances
= Result of a period
Variances/WIP 400,-
PrCtr 1
Company Code Profitability CO-

Company Code Profit Center EC-
FI Segment
FI PA
PCA
Settlement
FI PA
-
SD
Purchasing,
PRD PRF
*
Stock
Movement,
Cost (price) GL (PL) 464017 Revenue Revenue
differences
Production PRA Price Diff -Purchasing M
St M -
Pri anda
ce rd
PRU Co or S
ndi D
Typ nt io COGS COGS
e
- *
GL (PL) 464018 Input price
PRY variance
Material Ledger PRF Production Variance
Cost (price)
Closing - Single differences Input quantity
Level (mater.ledg PRA variance
er)
Resource-usage
PRU variance
* Remaining input
GL (PL) 464019 variance
-
Price Diff - Good
PRV Issue Mixed-price Production
variance
Material Ledger Material
PRF
Variances
Closing - Multi ledger Output price
Level Level fr.low.level PRA variance
s price dif.
* Lot size-/fixed-
PRU GL (PL) 4640020 cost variance
Price Diff -Transfer Remaining
Postings variance
Scrap Adjustment
Material Ledger UMB to COGS
Closing - Gain/loss
Release Future from Price Diff -
from
Price revaluation GL (PL) 464021 Purchasing capitalising
Gains/Loss on
Inventory Revaluation Price Diff - Good Variances
Issue
Price Diff - Adjustment to
Transfer Postings COGS from
Material Ledger LKW Gains/Loss on
Inventory
Closing - Do not Accruals and
defer.acct(mat GL (BS) 119610 Inventory Revaluation
revaluate Stock erial ledger) ML Provisions Revaluation
Gross margin
Periodic Costs Product Cost Collector

Item Plan Actual
Caustic Soda 1.500 1.800
Ethylene 2.000 2.200

Process costs
EDC 0.500 0.600
Materials 4,000 4,600
Internal activities 2.500 2.800
Overheads 1.500 1.600

Revaluation
Total 8.000 9.000
% %
Overheads
Period-end closing
Process costs
Periodic
costs Revaluation
Overheads
Calculations Work-in-Process
and
analysis Scrap
Variances
Postings Settlement
FI/CO
CO-
PC
Product cost collector
Material: MEG
Period accounting
Quantity: 10 pieces Cost of goods sold
CO-
PC Revenue
Revenue
Actual costs – Sales deductions
– Sales deductions
– Manufacturing costs by
– Overheads plus Variances Actual costs 2.400,- standard price
(Contribution margin I)
+/- Change in Stock Goods receipt -2.000,- – Variances
Variances/WIP 400,-
PrCtr 1
Company Code Profitability CO-

Company Code Profit Center EC-
FI Segment
FI PA
PCA
Settlement
FI PA
-
SD
Purchasing,
PRD PRF
*
Stock
Movement,
differences
St M -
Pri anda
ce rd
PRU Co or S
ndi D
Typ nt io COGS COGS
e
- *
PRY variance
Cost (price)
er)
Resource-usage
PRU variance
* Remaining input
-
Price Diff - Good
variance
PRF
Variances
s price dif.
* Lot size-/fixed-
Postings variance
Scrap Adjustment
Closing - Gain/loss
from
Gains/Loss on
Issue
Inventory
Gross margin
Variance PA Assignment
Cost Element Group Value Field
Category lines
+
Material Ledger: Overview
Functions of Material Ledger:

 Cost accounting using actual prices
 Storing values of stock in three different valuations
(legal valuation, valuation for reporting purposes, and
profit center valuation) in multiple currencies.
Material Ledger: Overview
Functions of Material Ledger:

 Cost accounting using actual prices
 Storing values of stock in three different valuations
(legal valuation, group valuation for reporting purposes,
and profit center valuation) in multiple currencies.
What is the Material Ledger/Actual Cost
Concept?
The Material Ledger(ML) is a tool within the CO

Module that collects all transactional data for
materials whose master data is stored in the
material master. It acts as a subledger for selected
materials that captures all goods movements,
invoice values, transfers and price changes. On
the basis of this data, the material ledger
calculates and maintains the actual cost for these
materials. This actual cost can then be utilized to
valuate the material stock accounts.
Objectives of the Material Ledger
1. Actual Costing.
During the period, valuation of all goods movements is done
with the preliminary valuation price which is normally the
standard price. All variances from the preliminary valuation are
maintained in the ML. At period end, revaluation of ending
inventory can be performed with the determined actual price.
This is not mandatory. Actual prices can be calculated for
statistical purposes only.
2. Parallel currencies and/or valuations of material stocks.
All goods movements in the ledger can be maintained in 3
currencies. The values are translated into other currencies
using the historical exchange rates. Prerequisite for usage of
transfer pricing functionality.
Benefits of the Material Ledger
►Variances of Finished Goods

Variances from external procurement (purchase orders) as well
as from production activities are rolled up from raw and semi-
finished materials to the finished goods level.
►To provide support for procurement related decisions.
Detailed reporting for procurement processes and sources
possible. Make vs.. Buy, Vendor A vs.. Vendor B. Price History.
►Combines the benefits of Moving Average and Standard Price
Stable prices used for controlling purposes (standard) and actual
prices used for valuation purposes (average).
►Easy to use display and error finding by consolidating the views.
Allows quick access to detailed views of material master,
standard costs and documents
Benefits of the Material Ledger
►Relatively simple configuration and set up
►True Cost of Sales Accounting

Purchasing and production variances for unsold stocks are
inventoried.
►Contribution Margin with Actual Costs of Sales
By utilizing multi-level settlement, actual values for your cost
component split can be attained. This can be transferred to PA
as of release 4.6C
Single Level Settlement
Production
Production
∆ Level
Production
Production
∆ Level
External
External Procurement
Procurement
Level
External
Procurement
Level
∆
Multi - Level Settlement
Production
Production
∆ Level
Production
Production
∆ Level Multi
-Level
External
Procurement
Level
External
Procurement
∆ Level
Multi - Level Settlement
Production
Production Material Valuation with
∆ Multi-Level Actual
Costing
➠ Preliminary Valuation
∆ During the Period
Production
Production
∆ ➠ Revaluation at Period
End with Actual Price
External
Procurement ∆ ∆ External
Procurement
∆ ∆
The ML updates the Material Master
The Integrated Material Ledger Display
Material Ledger Overview
Actual Costing
Revaluation of stock at
actual prices or accrual of
variances.
Material Ledger
MATERIAL STOCK
Parallel Valuations
(Transfer Prices)
Parallel Currencies  Group
Translation at historic rates  Legal
(up to three)  Profit Center
ML Overview – Parallel Currencies
Material Ledger
(Valuation Area / Plant)
• 10 Local currency
• 30 Group currency
Financial Accounting Controlling

(Company Code) (Controlling Area)
• 10 Local currency • 10 Local currency
• 30 Group currency • 30 Group currency
ML Overview – Parallel Curr. in A Grp
(1)
Material Ledger
Valuation Area (Plant) 9100
Price control
Material
Master
Price Control
Moving average price Standard Price
(V Price) (S Price)
• Changed after every receipt • Stable for long period
• Recommended for raw and • Recommended for finished
externally procured and semi-finished
materials. products.
Price control
Moving average price
 The stock value is adjusted each time are received

 Real-time price fluctuations are posted to stock
 Price difference postings only takes place in exceptional cases
 Price fluctuations can not be adjusted to the finished products of higher

levels (in case S price)
 Only recommended for raw materials or goods procured externally (real-time
price for goods receipt known)
 False entries with severe consequences (compounded errors)
 Danger of incorrect valuations with delayed invoice receipt
Price control
Standard Price
 All stock postings takes place with the standard price

 Price remains constant by at least one period
 Price fluctuations do not debit / credit the cost object
 Consistent controlling with the standard price as a bench mark
 Estimations of the standard prices with cost component split
 Recommended for all materials types
 Price differences can not be subsequently adjusted to the ending inventories

or the consumed products (very important in the Cost of Goods Sold
accounting)
Price determination control
Multiple currencies/valuations
Price control
ML can record up to 3 different
S V
V currencies / valuations. This is a
requirement for transfer price
Price determination
2 Standard Moving
Transaction based price price
3 Standard
Standard Cannot be Actual Costing
Single-/ multilevel activated
price determination price
Unit periodic manually Revaluation of stock at actual
price price
Price determination control
‘3’ ‘S’
Internal
Cost centers
orders
Orders
Level 3
Activity
types
‘S’
Internal ‘3’
Cost centers
orders
Orders
Level 2
Activity
types
‘2’ ‘V’
External Level 1
Procurement
Material Master - Price control
Material
Moving average price Master Standard Price
(V Price / 2 Activity-related) (S Price / 3 Single-/multi-
level)
Material ledger Price Control

is activated
Determination
Material Master - Parallel Currencies
SABIC AMERICA
Material Company Code: 5200
Master Valuation Area / Plant: 5200
Legal valuation
USD
Group valuation
SAR
Profit center
valuation
SAR
Material Master - Transparency
Material
Master
Actual Values Overview
 Actual data -> Actual Costing

 Overview
 Preliminary valuation price
 Actual Costing
Price differences
 Updating single-level variances
 Single-level price determination
 Multilevel price determination
Overview of differences
FI PA
-
SD
Purchasing,
PRD PRF
*
Stock
Movement,
differences
St M -
Pri anda
ce rd
PRU Co or S
ndi D
Typ nt io COGS COGS
e
- *
PRY variance
Cost (price)
er)
Resource-usage
PRU variance
* Remaining input
-
Price Diff - Good
variance
PRF
Variances
s price dif.
* Lot size-/fixed-
Postings variance
Scrap Adjustment
Closing - Gain/loss
from
Gains/Loss on
Issue
Inventory
Gross margin

 Overview
 Actual Costing
Price differences
Preliminary valuation price
‘S’
Internal
Cost centers
orders
Orders
Level 2
Activity
types
‘S’
Internal
Cost centers
orders
Orders
Level 1
Activity
types
‘V’
External
Procurement
Actual Costs Preliminary valuation


 Overview
 Actual Costing
Price differences
Actual Costing
 Price differences
 Stock transfers
(standard price in another plant)
 External procurement
se (purchase order or invoice value)
ri h
..a ug
. ro
th  Internal production
(order settlement)

 Overview
 Actual Costing
Price differences
Updating Single-Level Variances
‘S’
462001 464018
Internal Pr. .Inven.. Price diff.
.
Cost centers
orders
Orders
Activity
types
‘S’ 462001 464018

Internal
Cost centers . . .
Pr. Inven. Price diff.
orders
Orders
Activity
types
‘V’
‘V’
External
Procurement


 Overview
 Actual Costing
Price differences
Single-Level Price Determination
‘S’
119490 464017
Internal End.Inven.. Price diff.
.
Cost centers
orders
Orders
Activity
types
‘S’ 119430 464017

Internal
Cost centers . . .
End Inven. Price diff.
orders
Orders
Activity
types
‘V’ Price
differences
are not
External applicable
Procurement


 Overview
 Actual Costing
Price differences
Multilevel Price Determination
‘S’
119490 464017
Internal End.Inven.. Price diff.
.
Cost centers
orders
Orders
Activity
types
‘S’ 119490 464017

Internal
Cost centers . . .
End Inven. Price diff.
orders
Orders
Activity
types
‘V’ Price
differences
are not
External applicable
Procurement

Period End Overview
 Actual Costing – Period End Closing Procedure
 Collecting price differences
On price difference accounts or in material ledger within categories
 Period closing program
Open new period in MM (transaction MMPV)
 Determining prices
Single-level, later multilevel
V price is calculated
 Making closing entry
Must be made for each period
Posting to prior period is no longer possible
Reversal if required
 With revaluation
Price differences are proportionally posted to the remaining stock -> Price indicator ‘V’
 Without revaluation
Price differences are proportionally posted to the accruals account -> Price indicator ‘S’
 Marking future price
Period End Overview – Closing Entry
(1)
With Revaluation
Material: ACT-LCD## locked
Status: Closing entry performed
Price control: V (only old periods)
V price: 26.50 SAR / 100 units
Beginning inventory (BI): 1000 PC / 250 SAR
Goods receipt/purchase order : 1000 PC / 260 SAR
Invoice receipt : 1000 PC / 280 SAR Stock value :
Consumption: 1300 PC / 325 SAR 185.5 SAR
Ending inventory: 700 PC (700 PC * 26.50/100)
Material stock (119400) GR/IR allocation Vendor

250 325 260 260 280
250
CL 10.5
Material consumption
Price difference (464017) (400002) ML accrual (119610)
10 VB 325
CL 10.5
20
Period End Overview – Closing Entry
(2)
Without Revaluation
Material: ACT-LCD## locked
Status: Closing entry performed
Price control: S
S price: 25.00 SAR / 100 units
Beginning inventory (BI): 1000 PC / 250 SAR
Goods receipt/purchase order: 1000 PC / 260 SAR
Invoice receipt: 1000 PC / 280 SAR
Consumption: 1300 PC / 325 SAR Stock value:
Ending inventory: 700 PC 175 SAR
Material stock (119400) GR/IR allocation Vendor

250 325 260 260 280
250
Material consumption
Price difference (464017) ML accrual (119610)
(400002)
10 CL 10.5 325 CL 10.5
20
Period End Overview – Periodic Unit
Price
Period opened Receipts Single- level

( beginning inventory price determination
+ Periodic
unit
- price
Variances
Cumulative inventory (prelim. valuation) + Cumulative variances

Cumulative inventory
= Periodic unit price

Information System Overview
Materials
to be Product Cost
costed Planning
Reports
Summarized Object
Object
Analysis List Comparisons
Detailed
Reports
Report Selection
 The Report Tree can be used to select Reports in the Information System. The Report
Tree is the central collection point and hierarchical outline of all Reports in an
application component.
 The standard Report Tree supplied by SAP should not be changed. A personalized Report
tree can be created to which standard Reports as well as one's own creations can be
assigned.
Report
 The Report can be used to

Report

Report

Report

Report

Report

Report

Material
Ledger
Reports
Object Detailed
List Reports
Displaying
Documents
Materials
to be Product Cost
costed Planning
Reports
Summarized Object
Object
Analysis List Comparisons
Detailed
Reports
Report Selection
 The Report Tree can be used to select Reports in the Information System. The Report
Tree is the central collection point and hierarchical outline of all Reports in an
application component.
 The standard Report Tree supplied by SAP should not be changed. A personalized Report
tree can be created to which standard Reports as well as one's own creations can be
assigned.
Material
Ledger
Reports
Object Detailed
List Reports
Displaying
Documents
Report Output Types
 Variable output areas
Graphical report-output  HTML-header
 Navigation by drag and drop and
context menu
 Various leads columns

Object List (ALV)
 Standard ALV Functions
Product Costing Information System
Overview of Reporting Tools

SAP REPORTING TOOLS
For executing existing reports and queries For creating new queries
(Human Resource Information System (HIS Ad Hoc Query
(Manager's Desktop (MDT SAP Query
Info systems in the SAP Easy Access Menu
BUSINESS INFORMATION WAREHOUSE
For executing existing queries For creating new queries
Business Explorer Browser Business Explorer Analyzer

Product Cost Planning Reporting
SAP Standard Reports
Customer report: Vehicles

:SAP report
:SAP report Employee List :Customer report
Telephone List
Distribution Channels
:SAP report Org. Units

Customer report: Buildings
:SAP report Events

Customer report: Insurance
:SAP report Birthday List
Ad Hoc Queries Custom-built Reports

Cost Object Reporting
SAP Standard Reports
Organizational management
standard reports menu path
Organizational management
standard reports
Material Ledger Reporting
 Some Standard Organizational Management Reports identified for

Sabic are:
 Structure Display/Maintenance
 Existing Organizational units
 Existing Positions
 Existing Unoccupied Positions

Product Costing Material Ledger

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Product Costing Material Ledger

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Product Costing & Material

 Acquire an overall perspective of Product Cost

 Obtain an understanding of the actual costing

Profit Center Accounting

Financial Asset Revenues

•Product Costing is the backbone of a strong standard cost

Optimized Production Operations

Improve and Control

OPTIMIZED Plan & Commit Prepare Make Disposition & Process

Manage Process and

Moving average price Standard Price

- Adjusted with every receipt - Constant

Price that changes in consequence of usage

Constant price without considering usage or

The method of valuing inventory of a

Procedure Stock Stock Value V Price

1 200.- 3 375.- With a delayed invoice receipt 4 2

Price difference Consumption Vendor

Procedure Stock Stock Value V Price

Begin. inventory: 100 200.- 2.00

Moving average price

+ The stock value is adjusted each time goods are received

+ Real-time price fluctations are posted to stock

+ Price difference postings only take place in exceptional cases

- Price fluctuations cannot be adjusted to the finished products of

- Only recommended for raw materials or goods procured externally

- False entries with severe consequences (compounded errors)

- Danger of incorrect valuations with delayed invoice receipt

Procedure Stock Stock Value Standard Price

1 Initial situation: 100 200.- 2.00

Stock GR/IR account

Price difference Vendor

+ Calculation of the standard prices with cost component splits

Raw Materials II Ending Inventory:

Valuation Method by Material:

Finished Goods Standard w/ ML

Raw Material Moving Average Actual

Packaging Moving Average Actual

Organizational unit dividing up a company for the

• The valuation area may is defined:

MAT Manufacturing Cost MM: RM

Product Cost Planning

Product Cost Allocation - Simultaneous Costing

Period End Closing Product Costing

Material Ledger/Actual Costing

Functions of Product Cost Planning:

Post Materials Costs

A tool for planning costs and establishing prices for

Cost Estimate With Quantity Structure

Cost Estimate WITHOUT Quantity Structure

Valuation Price update

Standard Cost Standard Cost

Inventory Cost Inventory Cost

Create Cost estimate with quantity

Release cost estimate with quantity structure

Activity Type Price

Product W Costing structure - Total

Product Z Costing structure - Total

Product S Costing structure - Total

Quantity Structure Valuation

Strategy for Determination of :

Determination of: Defaulted dates for

Valuation control for: