Professional Documents
Culture Documents
Goals
To understand the SAP functionality of product costing along with the corresponding configuration settings. (This is part 1 of a series of multiple sessions planned) To discuss real issues reported in production system, analyze the root cause of the issue and identify potential solution approaches To identify potential areas of improvement to the design currently in place at ConAgra
Product Cost Planning Cost Object Controlling Actual Costing / Material Ledger
Information System
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Raw materials. Packaging. Labor - Direct. Direct Overhead. Indirect Overhead. External Processing. Warehousing. Inbound Frt - NFG Outbound Frt -STO FG
Accounting view:
Valuation Class (relevant to and account determination) The valuation class controls the account determination. Here, the consumption account is determined, which also appears as the primary cost element in the itemization.
3000 Raw Materials 7900 CAG Finished 7920 Semi Finisheds G.L A/c Inventory 116003 116009 116013 Consumption 511230 511210 511220
A particular material will be of the same material type and valuation class across all CAG plants and company codes
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Costing view:
To be able to cost a material, the Costing view must be maintained Cost relevancy, Bulk material With/without quantity structure Valuation category (split valuation) Origin Group: helps analysis by grouping materials into categories; cost estimates and production order costs can be sub-totalled by origin group. Examples: Meat, Pulp, Packing Materials, etc. Co-Product, Fixed Price, Apportionment Structure
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Z001
Z002
Z01 y Plant
Z02
Value Structure Prices for aterials Prices for Activities verhead Cost estimate: Standard costs
Z1
Z2
Standard Cost
Current Cost
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< ---------------------- Costing Variants --------------------------- > Variant Attributes Material Price BOM/ Routing Activity Price Frozen Standard Frozen Standard Structure at year beginning Frozen Standard Current Structure Frozen Standard Current Structure Frozen Standard Current Costs Current Price Current Structure Revised prices Simulate2 Future Price Structure as on next month Planned price for next year
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Part B1 (SEM)
Part B2 (SEM)
Part C1 (SEM)
Part C2 (SEM)
Complete Transfer: If a released cost exists for B2, then stop exploding. Take the existing released cost Blank: Explode B2 and Part C3 (purchased consider its semi fin ZSEM) current cost for cost roll of part A
Costing levels are determined automatically by the system when you create a cost estimate. Assigning the materials to costing levels ensures that costing is performed in the proper order: first raw materials and purchased parts, then semi-finished products, and finally the finished products.
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Material Cost
Total Standard Cost of purchased material
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System searches in the sequence defined in the valuation variant and stops as soon as a price is found at any level
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You can choose to mark one of the vendors as regular vendor so that only that vendors price is considered for standard cost
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Options for Surcharges 1. Overhead Group along with Costing Sheet (CAG Option) 2. Additive Costs 3. Statistical Purchase Conditions
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Overhead Group
Surcharge Calculated
Costing sheet will define the calculation base and the overhead rate. Flexible definition of calculation Base is possible. Examples: Cost element + overhead group + Overhead Rate Key Cost center + Cost Element +Activity type + Overhead Rate Key Overhead percentages can be defined for Overhead rate key by date ranges
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BoM Header
BOM usage: Examples for BOM usage: BOMs used exclusively for engineering or costing purposes. BOM status: If complex changes are made to a BOM, you can use the BOM status to control when the BOM is used, such as for a cost estimate. Area of validity: A BOM can be defined as valid for only a limited range of lot sizes, such as 1 to 1,000 units. You can then create a different BOM for lot sizes exceeding 1,000 units. Therefore, only one BOM can be used for the defined costing lot size. Alternative BOM: Alternative BOMs can describe different product structures that create a product with the same properties. For example, one alternative uses sheet metal A, while the other alternative uses sheet metal B.
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Item category: L = stock item, N = non-stock item; R = variable-size item Fixed quantity indicator: This indicates whether the quantity entered is dependent on the lot size. It applies mainly to unavoidable material loss at the start of the production process. Planned scrap: This topic is covered in detail separately Relevancy to costing indicator: If this indicator is not selected, the system ignores the BOM item in the material cost estimate. This enables you to devaluate BOM items (such as packaging materials) on a flat-rate basis for inventory or commercial purposes. Bulk material: Bulk material is usually posted as consumption at production cost centers as soon as it is procured, so it is not included in the cost estimate.
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Work Center
Cost center The standard value key enables you to define the six standard values in the operation. The system assigns a parameter key to the standard values of the operation and of the work in the network activity. This parameter key specifies the following: Formula: You can use formula parameters to which you have assigned values. You can then link these parameters with mathematical operations such as addition, subtraction, multiplication, or division. Example: Formula 2 = Standard value * Operation quantity / Base quantity
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Routing
Header Status Lot size range Task list group Usage Validity Period Base quantity Operation Line Work Center Control key Costing Relevancy indicator Material to Operation assignment
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Routing Operation
0010 0020 0030
Work Center
PC-1 Preparation PC-2 Assembly PC-3 Quality Check
Qty
2 min. 3 min. 5 min. Standard Values
Activity Type
1421 1422 Activity Usage
Routing is production-oriented bill of activitiesthat lists the operations required to manufacture a product. Each operation can contain up to six activity types and a standard value for the calculation of the activity usage. Each operation is carried out at a work center. The work center contains formulas for the calculation of activity usage. These formulas take account of the cost estimate lot size and the base quantity for the routing. Each work center is linked to a cost center. Activity prices are planned for the combination Cost Center/Activity Type.
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Lot Size :
Routing
Op. 10 / Work Center PC-1 n Base Qty: Pieces Acty Type / Standard Value Set Up Machine Labor a Min b Min c Min
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CoCo-Product
Co-Products have significant revenue and are planned for production Leading CoProduct (primary) appears on the production order header and as a line item as well in the materials list Co-products appear with negative quantity in BoM
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ByBy-Product
Incidental output, not planned Co-Product indicator is NOT checked By-products appear with negative quantity in BoM May or may not have its own cost. If cost relevant then it reduces the cost of finished product
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Material Master Parameters: - Production version with BOM and routing entries - Production version that refers to a leading co-product If no entries were made in the material master of the co-product, the system attempts to determine the quantity structure through the quantity structure determination of the costing variant. It first attempts to determine the quantity structure via valid production versions.
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Costing of Co-Products and By-Products CoByCosts for co-products are calculated using the apportionment method Costs for by-products are calculated using the net realizable-value method. Coproducts designated as fixed-price co-products are costed in accordance with the net realizable-value method similar to by-product. The costs for fixed-price co-products and by-products are subtracted from the total costs. If a fixed-price co-product or by-product has its own cost estimate, the cost component split of the cost estimate is taken into account when the costs are deducted from the total costs. In the process, the costs in a cost component are deducted from the total costs in the cost component to which it belongs. After the costs for by-products and fixed-price co-products have been taken into account, the total costs of the production process are apportioned for all cost components to the co-products. Equivalence numbers are used for the apportionment process using apportionment structure. Each production version can have its own apportionment structure
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Using a source structure, it is possible to specify how the costs for each cost element group are apportioned. This allows to account for the fact that the material usage for the first co-product, for example, is significantly higher than that for the second co-product even though the production costs for both products are the same When a process order is created the system generates a settlement rule on the basis of the apportionment structure. The equivalences specified in the apportionment structure are transferred into the settlement rule.
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Planned Costs in dollars by cost center ___________________________________ Planned Activity by cost center and activity type Can copy scheduled activity from Logistics planning Can plan activity-independent and activity-dependent costs separately so as to split the activity price into fixed and variable components
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Subcontracting Options
Subcontracting The subcontractor receives material parts and manufactures the complete material Can keep track of components lying with vendor The subcontractor is paid an agreed price for the whole activity
External Processing The external processor performs a process step only. The material is processed externally and completed inhouse. A price is agreed for the external processing.
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Subcontracting Process
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External Processing
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Planned Scrap
Planned scrap is regarded as unavoidable scrap that is expected to occur when a material is produced. It is also included in inventory valuation. Consists of component scrap and operation scrap When a routing is scheduled, the scrap factor is determined from all operations and written to the material master as assembly scrap. Shown in the itemization screen of cost estimate
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Component Scrap
Component scrap indicates the amount of scrap expected to occur before or during the assembly of the material. Component scrap can be defined in the material master of the component as well as in the BOM line of the finished part. If it has been entered in the BOM, the value specified therein applies. Otherwise, the value in the material master record applies. Component scrap is used in MRP to determine the input quantities of the components. When the BOM is exploded, the system increases the input quantities of the components by the scrap quantity calculated. Example: Input quantity 200 units Component scrap 10 % Scrap quantity 20 units Quantity used 220 units
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Operation Scrap
Operation scrap is defined in the routing step. It is percentage of scrap occurring for the operation concerned. This scrap results in a drop in the quantity of the next operation, since the quantity to be processed is reduced by the scrap. The reduction in quantity is taken into account in the scheduling and in the cost estimate.
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Assembly Scrap
When a routing is scheduled, the scrap factor is determined from all operations and written to the material master as assembly scrap. Example: Suppose the quantity to be produced is 200 units. If you specify assembly scrap of 10%, the scrap quantity is 20 units. The actual quantity produced is then 220 units. The system increases the lot size and the quantity of input materials.
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Marking: The future planned price is set in the material master and a link to the "new" standard cost estimate established. No revaluation takes place.
Release: Release converts the future standard price to the current standard price. Inventory revaluation takes place. The previous standard price is moved the field previous and is linked to the "old" standard cost estimate.
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Item Categories: M : Material A: Co-Product Or F6 gives itemized details E: Activity (Labor/Burden) G: Costing sheet based surcharge Or F5 gives cost component wise totals
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Costing Run
Costing of several materials in a single run Background processing feature Parallel Processing feature Detailed logs
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Marking Allowance
Useful for analysis with other costs like current costs, simulated costs etc. Plan Price, Tax Price, Commercial Price (any of these 9 fields) can be updated
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Useful Transaction Codes OKEQ: Version OKTZ : Cost Comp Structure OKKN: Costing Variant OKK4: Valuation Variant OKEU: Source Structure KZS2 : Costing Sheet KP06, 7: Cost Center Planning KP26, 7: Activity Prices CS01, 2, 3 : Bill of Material C201, 2, 3 : Recipe CR01, 2, 3 : Work Center KL01, 2, 3 : Activity Type CK11N, 13N: Cost Estimate CK40N: Costing Run CK22: Allow Marking CK24: Mark and Release CKR1: Delete Cost Estimate
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Configuration Settings - Costing variant, valuation variant, costing type, transfer control, quantity control - Costing sheet - Allocation Structure for Co-Products Cost Roll Up of purchased and produced materials Cost Center Planning Activity type Pricing
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