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2012-Product Costing - Analyze The Financial Entries in Make-to-Stock PDF
2012-Product Costing - Analyze The Financial Entries in Make-to-Stock PDF
Entries in Make-to-Stock
Birgit Starmanns
SAP Marketing
Agenda
Postings in Period 2
Wrap-Up
External
Internal
Invoice to Pay
Receivables Management
Manage Enterprise Risk
and Compliance
Manage Financial
Performance
Travel Management
Real Estate Lifecycle Management
Accounting
and Financial Close
Shared Services
SAP enterprise performance
management
(EPM) solutions
SAP governance, risk, and
compliance
(GRC) solutions
SAP ERP Financials
including Controlling modules
and Partner solutions
On premise
2013 SAP AG. All rights reserved.
On demand
On device
In memory
4
Financial
Accounting
Product Costing is part of
the Financial Close
On-going General
Ledger entries (sales,
manufacturing, etc.)
affect product costing
Entity close includes
month-end product
costing and valuation
processes
Financial
Close
Governance
General Ledger
Sub-Ledgers
Entity
Close
Corporate
Close
Reporting and
Disclosure
Intercompany
Reconciliation
Reporting
and Analysis
Entity Close
Management
Consolidation
Disclosure
Management
Notes
Management
Internal Controls
Master Data Governance for Financials
Make-to-Order
Multiple Product Variants
Mass-Customization
Engineer-to-Order
Customer-Specific
Design/Engineering
Product Costing
n Integration of demand (sales) and supply (manufacturing)
n
n
n
Convert to
Planned
Order
Convert to
Production
Order
Goods
Issues
Confirmation
Goods
Receipts
Settlement/
Costing Run
Engineer-toOrder
Make-toOrder
Make-toStock
Convert to
Planned
Order
Convert to
Production
Order
Goods
Issues
Confirmation
Goods
Receipts
Settlement/
Costing Run
Convert to
Planned
Order
Engineer-toOrder
Make-toOrder
Make-toStock
Convert to
Production
Order
Goods
Issues
Confirmation
Goods
Receipts
Settlement/
Costing Run
10
Convert to
Planned
Order
Engineer-toOrder
Convert to
Production
Order
Goods
Issues
Confirmation
Goods
Receipts
Settlement/
Costing Run
Make-toOrder
Make-toStock
11
Convert to
Planned
Order
Convert to
Production
Order
Goods
Issues
Confirmation
Goods
Receipts
Settlement/
Costing Run
Engineer-toOrder
Make-toOrder
Make-toStock
Work-in-Process by
Production Order
12
Plan-to-Manufacture Confirmation
Master Data (Bill of Material, Routing, Work Center)
Demand
Creation and
Planning
Convert to
Planned
Order
Engineer-toOrder
Make-toOrder
Make-toStock
Convert to
Production
Order
Goods
Issues
Confirmation
Goods
Receipts
Settlement/
Costing Run
Production
Order reporting
2013 SAP AG. All rights reserved.
13
Convert to
Planned
Order
Convert to
Production
Order
Goods
Issues
Confirmation
Goods
Receipts
Settlement/
Costing Run
Engineer-toOrder
Make-toOrder
Deliver to sales order stock. Stock value based on sales order cost
estimate, production order cost estimate, standard cost estimate
(manual), or user exit.
Make-toStock
14
Plan-to-Manufacture Settlement
Master Data (Bill of Material, Routing, Work Center)
Demand
Creation and
Planning
Convert to
Planned
Order
Convert to
Production
Order
Goods
Issues
Confirmation
Goods
Receipts
Settlement/
Costing Run
Engineer-toOrder
Make-to-Order
Make-to-Stock
Variances
and Scrap
2013 SAP AG. All rights reserved.
15
Convert to
Planned
Order
Convert to
Production
Order
Goods
Issues
Confirmation
Goods
Receipts
Settlement/
Costing Run
Costing Run
Determine price differences for each raw material (via purchasing) and
each manufactured product, and assign differences to inventory and
cost of goods sold
Alternative
Valuation Run
Material price
analysis
via material ledger
16
MTS
(Repetitive)
MTS
(Process)
MTO
(Valuated)
ETO
(Valuated)
Characterized
by
Standard product,
production by
period
Standard
product,
continuous
production
Standard
product/coproduct, batch
production
Product with
selectable options
by the customer
Product engineered
for customer needs
Standard cost
Standard BOM
and routing
Standard BOM
and routing
Use of variant
configuration
Cost object
Production order
Product cost
collector and cost
object hierarchy
Process order
Production order
created by sales
order item
Project (WBS
elements, networks)
created by sales order
item
Work in
process (WIP)
Debits (resources)
minus credits
(finished goods),
balance is WIP
Backflushing
(debits and
credits posted
simultaneously),
no WIP balance
Debits
(resources)
minus credits
(finished goods),
balance is WIP
Debits (resources)
minus credits
(finished goods),
balance is WIP
Results analysis
calculation (methods
include percent
complete, earned
value)
Finished
goods
received into
Unrestricted
inventory
Unrestricted
inventory
Unrestricted
inventory
17
Components
In the Bill of Material
Tasks
In the Routing
Overhead
Rates
Back Panel
$25
Setup Hours
1h @ $20
Material OH
25%
Front Panel
$25
Labor Hours
3h @ $20
Labor OH
25%
Internal Drive
$70
Machine Hours
4h @ $25
Machine OH
75%
Admin OH
25%
Total
Standard Cost: $500
2013 SAP AG. All rights reserved.
Make-to-Stock
Sample Scenario
Make-to-stock scenario
One production order
Four overhead cost
centers
Assumes standard cost in
place for product
What is covered?
Financials postings of each
manufacturing step
FI postings
Balance sheet
P&L
CO postings
Cost elements
Controlling objects
2013 SAP AG. All rights reserved.
20
21
P&L
(Primary
Cost Elements)
Controlling Objects (CO)
22
Value Flow
Product Costs in Period 1
E. Finished goods are received into inventory from the production order (Period 2
only)
General Ledger Accounts (FI)
Balance Sheet/Profit and Loss Statement
Secondary Cost Elements
Tracking Transfers Between Controlling (CO) Objects
Controlling Objects (CO)
2013 SAP AG. All rights reserved.
Cost Centers/Production Orders for Make-to-Stock
24
B/S
Direct
postings
A/P
211000
A-1
800
90100
Cost Center
A-1
Salary Exp
610000
800
Utilities CCtr
90100
800
25
30270
30260
A-2
90100
Cost Center
Allocations
from
cost centers
30250
Overhead
P&L
(Primary
Cost Elements)
Secondary Cost Elements (CO)
Utilities CCtr
90100
A-2
800
Mat'l OH
CCtr
30250
A-2 200
Mach OH
Labor OH
Mfg Admin
CCtr
CCtr
OH CCtr
30260
30270
30280
A-2 200
A-2 200
A-2 200
A-2
A-2
Utilities
Assessment
810000
800
800
26
A-3
Direct
postings
30100
Production
Cost Center
A-3
A/P
211000
1000
Salary Exp
610000
1000
Production
CCtr
30100
A-3 1000
27
Issue
Raw Material
to Order
B
Production
Order
Production
Order
xxxxxxxxx
B
120
Raw
Material
28
30100
Production
Cost Center
B/S
C-1
Activity
(Setup)
confirmation
P&L
(Primary
Cost Elements)
Production
Order
Production
CCtr
30100
C-1
20
Production
Order
xxxxxxxxx
C-1
20
Setup
hours
Setup
Hours
802000
C-1 20
C-1
20
29
30100
Production
Cost Center
B/S
C-2
Activity
(Labor)
confirmation
Production
Order
P&L
(Primary
Cost Elements)
Production
CCtr
30100
C-2
40
Production
Order
xxxxxxxxx
C-2
40
Labor
hours
Labor
Hours
801000
C-2 40
C-2
40
30
30100
Production
Cost Center
B/S
C-3
Activity
(Machine)
confirmation
Production
Order
Production
CCtr
30100
C-3
60
Production
Order
xxxxxxxxx
C-3
60
Machine hours
P&L
(Primary
Cost Elements)
Secondary Cost Elements (CO)
Machine
Hours
800000
C-3 60
C-3
60
31
A-1
Direct
Postings
A-2
90100
Cost Center
Allocations
from
Cost Centers
30250
Overhead
A-3
Direct
postings
30100
Production
Cost Center
C-1
Raw Materials
Inventory
Issue
raw material
to order
Activity
(Setup)
confirmation
C-2
C-3
Activity
Activity
(Labor)
(Machine)
confirmation confirmation
Production Order
32
Value Flow
Month-End Postings for Period 1
34
30250
Overhead
B/S
Material
OH Allocation
F-1
P&L
(Primary
Cost Elements)
Production
Order
Mat'l OH
CCtr
30250
F-1
30
F-1
30
Material
OH
Material
OH
840000
F-1 30
F-1
30
35
30260
Overhead
B/S
F-2
Machine
OH Allocation
Production
Order
45
Production
Order
xxxxxxxxx
F-2
45
Machine
OH
P&L
(Primary
Cost Elements)
Secondary Cost Elements (CO)
Machine
OH
841000
F-2 45
F-2
45
36
30270
Overhead
B/S
F-3
Labor
OH Allocation
Production
Order
Labor
OH CCtr
30270
F-3
15
Production
Order
xxxxxxxxx
F-3
15
Labor OH
P&L
(Primary
Cost Elements)
Secondary Cost Elements (CO)
Labor
OH
842000
F-3 15
F-3
15
37
30280
Overhead
B/S
F-4
Admin
OH Allocation
P&L
(Primary
Cost Elements)
Production
Order
Production
Order
xxxxxxxxx
Mfg Admin
OH CCtr
30280
F-4
60
F-4
60
Admin
OH
Admin
OH
843000
F-4 60
F-4
60
38
Production Order
Calculate
WIP
G-1
Work-in-Process
G-1
Production Order
xxxxxxxxx
120
Raw material
20
Setup hours
40
Labor hours
60
Machine hours
30
Material OH
45
Machine OH
15
Labor OH
60
Admin OH
RA - Valuated
820000
390
RA - Material
822000
120
RA - Labor
824000
G-1
40
RA - Calculated
821000
G-1
G-1
RA - Machine
823000
60
G-1
RA - Setup
825000
20
G-1
RA - OH
Material
826000
30
RA - OH
Machine
827000
G-1
45
G-1
RA - OH
Labor
828000
15
RA - OH
Admin
829000
60
G-1
39
Production Order
Calculate
WIP
G1
WIP Inventory
138000
390
G-1
Work-in-Process
G1
WIP Offset
511000
390
40
S-1
S-1
OHCCtr Vars
533000
170
S-1
OHCCtr Offset
519700
170
Mat'l OH CCtr
30250
170
41
S-1
S-2
OHCCtr Vars
533000
155
S-2
OHCCtr Offset
519700
155
Mach OH CCtr
30260
155
42
S-1
S-3
OHCCtr Vars
533000
185
S-3
185
Labor OH CCtr
30270
185
43
S-1
S-4
OHCCtr Vars
533000
140
S-4
OHCCtr Offset
519700
140
Mfg Admin OH
CCtr
30280
140
44
S-5
Cost Center
Variances
S-5
S-5
ProdCCtr Vars
532000
880
ProdCCtr Offset
519600
880
Production
CCtr
30100
880
45
A-1
A-2
Direct
postings
90100
Cost Center
30250
Overhead
Allocations
from
cost centers
Cost center
variances
Direct
postings
F-3
F-2
F-1
Raw Materials
Inventory
Admin OH allocation
Machine OH allocation
Labor OH allocation
Material OH allocation
S-5
30100
Production
Cost Center
C-1
C-2
C-3
Activity
Activity
Activity
(Setup)
(Labor)
(Machine)
confirmation confirmation confirmation
B
Issue
raw material
to order
Production Order
Calculate
WIP
G-1
2013 SAP AG. All rights reserved.
S-3
S-2
S-1
A-3
F-4
S-4
Work-in-Process
46
Period 1 B
Raw Mat'l
Inv.
131000
120
A-1
A-3
A/P
211000
800
1000
G1
WIP
Inventory
138000
390
P&L
Salary Exp
610000
Period 1 A-1 800
A-3 1000
ProdCCtr
Offset
519600
Period 1 S-5
880
ProdCCtr
Vars
532000*
S-5 880
Raw Mat'l
Consum
510000
120
S-1
S-2
S-3
S-4
WIP Offset
511000*
G1
390
OHCCtr
Offset
519700
170
155
185
140
S-1
S-2
S-3
S-4
OHCCtr
Vars
533000*
170
155
185
140
* Not a cost element
47
Period 1 A-1
A-2
Utilities
CCtr
90100
800
800
Period 1
A-3
C-1
C-2
C-3
S-5
Mat'l OH CCtr
30250
A-2 200
A-2
F-1
30
F-2
S-1
170
S-2
Production CCtr
30100
1000
20
40
60
880
Mach OH
CCtr
30260
200
45
155
B
C-1
C-2
C-3
F-1
F-2
F-3
F-4
Labor OH
CCtr
30270
A-2 200
F-3
15
S-3
185
Production
Order
xxxxxxxxx
120
20
40
60
30
45
15
60
Mfg Admin
OH CCtr
30280
A-2 200
F-4
60
S-4
140
Raw material
Setup hours
Labor hours
Machine hours
Material OH
Machine OH
Labor OH
Admin OH
48
Value Flow
Postings for Period 2
E. Finished goods are received into inventory from the production order (Period 2
only)
General Ledger Accounts (FI)
Balance Sheet/Profit and Loss Statement
Secondary Cost Elements
Tracking Transfers Between Controlling (CO) Objects
Controlling Objects (CO)
2013 SAP AG. All rights reserved.
Cost Centers/Production Orders for Make-to-Stock
50
Production
Order
E
Finished Goods
Inventory
Receive
finished
goods into
inventory
Production
Order
xxxxxxxxx
500 Receive fin goods
51
Period 1 B
Raw Mat'l
Inv.
131000
120
Period 2 B
50
Period 1
A-1
A-3
Salary Exp
610000
800
1000
Period 2
A-1
A-3
800
1000
Period 1 G1
WIP Offset
511000*
390
S-5
ProdCCtr
Offset
519600
880
A-1
A-3
A/P
211000
800
1000
A-1
A-3
800
1000
G1
P&L
S-5
ProdCCtr
Vars
532000*
880
WIP
Inventory
138000
390
50
S-1
S-2
S-3
S-4
OHCCtr
Offset
519700
170
155
185
140
S-1
S-2
S-3
S-4
OHCCtr
Vars
533000*
170
155
185
140
* Not a cost element
52
Period 1
A-1
A-2
Period 2
A-1
A-2
Period 1
Period 2
Utilities CCtr
90100
800
800
800
800
A-3
C-1
C-2
C-3
S-5
A-3
C-2
C-3
Mat'l OH CCtr
30250
A-2
200
F-1
30
S-1
170
A-2
F-2
S-2
A-2
F-1
A-2
F-2
200
12.5
Production CCtr
30100
1000
20
40
60
880
1000
60
60
Mach OH
CCtr
30260
200
45
155
200
45
B
C-1
C-2
C-3
F-1
F-2
F-3
F-4
B
C-2
C-3
E
F-1
F-2
F-3
F-4
Labor OH
CCtr
30270
200
15
185
A-2
F-3
S-3
A-2
F-3
200
15
Production Order
xxxxxxxxx
120
20
40
60
30
45
15
60
50
60
60
12.5
45
15
42.5
A-2
F-4
S-4
A-2
F-4
Mfg Admin
OH CCtr
30280
200
60
140
200
42.5
Raw material
Setup hours
Labor hours
Machine hours
Material OH
Machine OH
Labor OH
Admin OH
Raw material
Labor hours
Machine hours
500 Receive fin goods
Material OH
Machine OH
Labor OH
Admin OH
53
Apply overhead from the manufacturing cost center to the production order
1. Apply material overhead
2. Apply machine overhead
3. Apply labor overhead
4. Apply administrative overhead
G.
S.
T.
Calculate production order variances for confirmed production order (posted at settlement)
Run settlement of production order (posts WIP, variances)
54
Production Order
Work in
Process
Cancel
RA Valuated
820000
G-2
390
G-2
WIP
G-2
RA - Material
822000
120
RA - Labor
824000
G-2
40
G-2
G-2
RA - OH
Material
826000
30
RA - OH
Labor
828000
15
RA Calculated
821000
G-2
RA - Machine
823000
60
G-2
G-2
RA - Setup
825000
20
RA - OH
Machine
827000
G-2
45
G-2
RA - OH
Admin
829000
60
55
B
C-1
C-2
C-3
F-1
F-2
F-3
F-4
B
C-2
C-3
E
F-1
F-2
F-3
F-4
Production Order
xxxxxxxxx
120
Raw material
20
Setup hours
40
Labor hours
60
Machine hours
30
Material OH
45
Machine OH
15
Labor OH
60
Admin OH
50
60
60
12.5
45
15
42.5
Raw material
Labor hours
Machine hours
500 Receive fin goods
Material OH
Machine OH
Labor OH
Admin OH
120
20
60
100
30 25%
75 75%
20 25%
75 25%
Qty - Matl
Qty - Setup
Qty - Lab
Qty - Mch
Inpt - Matl
Inpt - Mch
Inpt - Lab
Inpt - Adm
50
0
20
40
12.5
15
10
27.5
Total Std
500
Total Vars
175
56
G2
Manufacturing
variances
G2
WIP Inventory
138000
390
511000*
390
Variance
531000*
175
Production
Order
xxxxxxxxx
175 Settle variances
57
A-1
A-2
Direct
postings
90100
Cost Center
30250
Overhead
Allocations
from
cost centers
S-4
S-3
S-2
S-1
A-3
Direct
postings
F-4
F-3
F-2
F-1
Raw Materials
Inventory
Admin OH allocation
Machine OH allocation
Labor OH allocation
Material OH allocation
Activity
(Setup)
confirmation
Cost center
variances
30100
Production
Cost Center
C-1
C-2
Activity
(Labor)
confirmation
Issue
raw material
to order
C-3
Activity
(Machine)
confirmation
T
Production Order
E
Finished Goods
Inventory
2013 SAP AG. All rights reserved.
Receive finished
goods into inventory
S-5
Manufacturing
variances
Calculate
WIP
G-1
G-2
Work-in-Process
Cancel
WIP
58
Period 1
Period 2
50
Period 1
A-1
A-3
Salary Exp
610000
800
1000
Period 2
A-1
A-3
800
1000
Period 1 B
Period 2 B
Raw Mat'l
Consum
510000
120
50
500
S-5
ProdCCtr
Offset
519600
880
S-5
880
A/P
211000
A-1
A-3
800
1000
G1
WIP Inventory
138000
390
A-1
A-3
800
1000
G2
390
P&L ProdCCtr
Vars
S-5
532000*
880
S-5
880
Mfg. Output
- Var
519500
S-1
S-2
S-3
S-4
OHCCtr
Offset
519700
170
155
185
140
S-1
S-2
S-3
S-4
S-1
S-2
S-3
S-4
187.5
155
185
157.5
S-1
S-2
S-3
S-4
Production
Variance
531000*
G1
500
175
175
G2
OHCCtr Vars
533000*
170
155
185
140
187.5
155
185
157.5
WIP Offset
511000*
390
390
59
* Not a cost element
A-1
A-2
Period 2
A-1
A-2
Period 1
Period 2
Utilities CCtr
90100
800
800
800
800
A-3
C-1
C-2
C-3
S-5
A-3
C-2
C-3
S-5
Mat'l OH CCtr
30250
A-2
200
F-1
30
S-1
170
A-2
F-2
S-2
A-2
F-1
S-1
A-2
F-2
S-2
200
12.5
187.5
Production CCtr
30100
1000
20
40
60
880
1000
60
60
880
Mach OH
CCtr
30260
200
45
155
200
45
155
B
C-1
C-2
C-3
F-1
F-2
F-3
F-4
B
C-2
C-3
E
F-1
F-2
F-3
F-4
T
A-2
F-3
S-3
A-2
F-3
S-3
Labor OH
CCtr
30270
200
15
185
200
Production Order
xxxxxxxxx
120
20
40
60
30
45
15
60
50
60
60
12.5
45
15
42.5
15
185
A-2
F-4
S-4
Mfg Admin
OH CCtr
30280
200
60
140
A-2
F-4
S-4
200
42.5
157.5
Raw material
Setup hours
Labor hours
Machine hours
Material OH
Machine OH
Labor OH
Admin OH
Raw material
Labor hours
Machine hours
500 Receive fin goods
Material OH
Machine OH
Labor OH
Admin OH
175 Settle variances
60
Wrap-Up
X
Finished Goods
Inventory
Sales Order
Deliver finished goods
500
500000*
X
500
62
Y: Customer Is Invoiced
General Ledger Accounts (FI)
Y
SalesOrder
Order
Sales
B/S
Invoice
Customer
A/R
121000
750
Revenue
410000*
800
Discounts
420000*
50
63
Summary Benefits
Integrated process Financial and controlling processes automatically follow with
logistics processes
Detailed analysis of production costs, WIP, and variances
Follows controlling concept of analyzing details in management accounting, not in
the G/L
64
R/3 Simplification Group, SAP Labs, Inc., Product Costing Scenarios Made Easy 3.x 4.x (Dallas,
TX: Johnson Printing Service, 1999).
Currently out of print, used copies sometimes occasionally available on Amazon.com
Janet Salmon, Controlling with SAP Practical Guide (SAP PRESS, August 2011).
Birgit Starmanns, Elizabeth Milne, and James Fisher, Accelerated Financial Closing with SAP (SAP
PRESS, expected Summer 2013).
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www.youtube.com/playlist?
list=PL4474C3D66B0F41BF
http://cfoknowledge.wordpress.com/
http://scn.sap.com/
community/epm
http://scn.sap.com/
community/erp/financials
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Thank you
Birgit Starmanns
Senior Director
SAP Marketing, Finance Solutions
SAP
3412 Hillview Avenue
Palo Alto, CA 94304
E birgit.starmanns@sap.com
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