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Product Cost Planing

Costing and Simulation with Base Planning Objects


Material Cost Estimates for Order-Related Production
Material Cost Estimates for Process Manufacturing
Material Cost Estimates for Repetitive Manufacturing
Material Cost Estimates for Sales-Order-Related Manufacturing

Cost Object Controlling


Cost Object Controlling in Order-Related Manufacturing
Repetitive Manufacturing with Run Schedules and Reporting
Process Industry and Co-Products
Product Costing for a Sales Order
Sales Order Controlling Using Unvaluated Sales Order Stock
Product Costing by Period for an Individual Material

Information System
Product Costing Information System
Order-Related Production Information System

Costing and Simulation with Base Planning


Objects
Base object costing is a tool for cost planning and price calculation. It uses the functions of unit
costing.
Base object costing lets you calculate product costs without reference to BOMs and routings. This
IDES demo shows how you can also use base object costing as a tool for simulating cost
estimates.

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to see more information about this demo.

Process Chain

Choose
below:

to see the data used during this demo. Then select the first of the processes listed

Simulating the Effects of a Material Change in a Base Object Cost Estimate


Exploding a Base Planning Object

Material Cost Estimates for Order-Related


Production
Purpose of the Standard Cost Estimate

Purpose of the Modified Standrad Cost Estimate


Purpose of the Current Cost Estimate
Purpose of the Inventory Cost Estimate
Material cost estimates are used to plan costs and to price materials. They determine the cost of
goods manufactured (COGM) and cost of sales (COS) for each product unit.

Material cost estimates can be created at various times during a fiscal year.

At the start of a fiscal year or accounting period


During the fiscal year
Before preparing the financial statements

The purpose of the costing varies according to the time at which it is performed. The standard
system contains costing variants:

for Standard Cost Estimates (PPC1)


for Modified Standard Cost Estimates (PPC2)
for Actual Costing (PPC3)

The IDES System contains additional costing variants:

for Inventory Costing (DPC4 and DPC5)


Cost estimates that also reflect sales and administration costs:

for standard cost estimates, the costing variant DPC1


for modified standard cost estimates, the costing variant DPC2
for actual cost estimates, the costing variant DPC3

The following process chain shows how multiple materials can be costed in a single costing run.
This demo uses costing variant PPC1.

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to see more information about this demo.

Process Chain
Choose

to see the data used during this demo.

Checking the Material Master Record


Checking the Bill of Materials
Checking the Routing
Checking the Costing Run
Selecting Materials for the Costing Run
Exploding the BOM for the Costing Run
Executing Costing
Selecting and Releasing the Cost Estimate

Purpose of the Standard Cost Estimate


You normally create a standard cost estimate at the beginning of the fiscal year or new season.
The standard cost estimate then remains valid for the entire year or season.
The standard cost estimate calculates a standard price for materials with standard price control
(price control indicator S) for the entire year or season.
If you mark a standard cost estimate, the system transfers the price calculated in that standard
cost estimate into the costing details screen of the materials master record as the future standard
price. This price can then be used for internal material valuation. For example, it can be used to
valuate a material component in the cost estimate.
If you release a standard cost estimate, the system transfers the price calculated in that standard
cost estimate into the materials master record as the standard price. This price is then active for
Financial Accounting and is used to valuate the material until the next time a standard cost
estimate for the material is released.
During the period of validity of the standard cost estimate, all movements of products made inhouse in Logistics are valuated with the standard price (in other words, with the results of the
standard cost estimate). For example, if a material with standard price control is delivered to
inventory, the inventory for this material is valued with the standard price calculated in the
standard cost estimate.
You can also use the results of the standard cost estimate to calculate the following data for each
production order or run schedule header at the end of the posting period:
Variances
Scrap
Work in process

Following the SAP philosophy, you should not change the standard cost estimate during this
period. The cost estimate results remain constant and do not take into account price fluctuations
and changes to the production structure during the planning period.

Purpose of the Modified Standard Cost


Estimate
You can use a modified standard cost estimate to calculate the cost of goods manufactured of a
material during the fiscal year. It can be created if the basic data of the cost estimate have been
changed within the planning period. In the modified standard cost estimate, the current quantity
structure is valued with the same prices as in the standard cost estimate.
You can compare the results of the modified standard cost estimate with those of the standard
cost estimate in the information system, in order to establish how the changes in the production
structure affect the costs.
For short-term planning, the modified standard cost estimate can be used instead of the standard
cost estimate. The latter still serves as the basis for result control and variance calculation.
You can transfer the results of the modified standard cost estimate into the material master record
as the planned price (planned prices 1, 2, and 3). This planned price is thus active for the internal
material valuation of the material in product costing.

Purpose of the Current Cost Estimate


You can use the current cost estimate to calculate the cost of goods manufactured of a material
during the fiscal year. The current cost estimate can be utilized in order to make certain decisions,
such as when you have to decide between in-house production and externally-procured
materials. You can create a current cost estimate at any time. You valuate the current quantity
structure with the current prices.
You can compare the results of the current cost estimate with those of the modified standard cost
estimate in the information system, so as to see how the costs have been affected by price
changes.
You can transfer the results of the current cost estimate into the material master record as the
planned price (planned prices 1, 2, and 3). This planned price can be used to valuate the material
in product costing.

Purpose of the Inventory Cost Estimate


You can use the inventory cost estimate to calculate valuation bases for tax-based and
commercial inventory valuation.
You can carry out inventory costing shortly before the balance sheet is prepared in order to
valuate the materials in stock for the tax balance sheet and the commercial balance sheet.
The inventory cost estimate includes the following data:
Material prices whose value is adjusted according to the lowest value principle in Materials
Management (MM)
Activity prices for internal activities that are planned or calculated in Controlling (CO) according
to the recognition-of-loss principle

Material Valuation
The value of material stocks are adjusted at year-end closing according to the lowest value
principle. This method valuates the existing inventories as conservatively as possible using the
recognition-of-loss principle. A valuation price can be calculated in the following ways in the
Materials Management (MM) Module:
Determination of lowest value according to current market prices
Determination of lowest value according to movement rate
Determination of lowest value according to range of coverage
If the current market price is higher than the procurement price, a profit is expected. However, this
profit can only be reflected in the balance sheet if it is actually realized. The material continues to
be valuated with the procurement price.
If the current market price is lower than the procurement price, the planned loss must go into the
balance sheet. The material is valuated with the market price.
Materials can also be checked for movement rate and range of coverage from the R/3 System. If
the movement rate is low or the range of coverage is high, the value of the material is adjusted
because it is assumed that the material is no longer needed in the future.
You can transfer the results of the inventory cost estimate into the accounting view of the material
master record as the commercial price or tax-based price.

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