Cost Management for Make-toOrder and Material-Ledger/Actual

Costing

Solution Management ERP Financials

SAP AG

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Agenda

1. Material-Ledger/Actual Costing: General overview
2. Material-Ledger/Actual Costing and MTO

© SAP AG 2009. All rights reserved. / Page 3

Benefits of Multi-Level Actual Costing

Benefits of Material Ledger
Contribution Margin with Actual Costs of Sales
Actual Values for Costs Components in Contribution Margin Accounting (Actual
Cost Component Split) available as from release 4.6C
Total Cost of Sales in PA
Production variances for unsold Stocks are activated
Variances of Finished Goods
Variances from external Procurement (Purchase Orders) and from Production
are rolled up from raw and semi finished Materials to the finished Goods
Support for procurement related decisions
- detailed reporting for procurement processes possible
Combines benefits of Moving Average and Standard Price
- stable price for controlling purposes
- actual price for valuation purposes

Can be used as a decision tool

Actual Costing as a Decision Tool (1)

What is ...
... the cheapest Source for external Procurement?

Actual Costing as a Decision Tool (1)

What is ...
... cheaper: Make or Buy?

Environment of Material Ledger

Actual Costing

Transparency

Multi-level
MultiPeriodic Material Prices

of Value Chain

Material
Ledger
Inventory Valuation

Parallel Currencies

Parallel Valuation

Valuation with Historic
Exchange Rates

Transfer prices

Group

Legal Profit Center

Product Cost Controlling: Application
Components
Product Cost Planning
Quantity Structure:
PP Master Data
BOM

Routing

Value structure
Material prices
Activity prices
Process prices
Overhead

Standard price
Material Internal OH Process

Cost Object Controlling

Actual Costing/
Material Ledger

Preliminary Costing,
Simultaneous Costing

Quantity Structure:
Material Movements

•Planned
costs
•Actual
costs

Order
Material
Internal
OH
Process
Total

$
$
$
$
...

Final costing
Period-end closing
Work in process
Scrap variances
Variances
Settlement

Standard price

Process

Price diff.

Value structure
Material movements

Material Ledger
Material settlement:
actual price
Material Internal OH Process

Actual Costing: Single Levels

Production
Level

Production
Level

External Procurement
Level

External Procurement
Level

Actual Costing: Multi-Level

Production
Level

Production
Level
Multi--Level
Multi

External Procurement
Level

External Procurement
Level

Single-Level Price Determination

Production

Single-Level Price Determination
SingleActual Material Price based on
Costs of Procurement

Production

External Procurement

External Procurement

Multi-Level Actual Costing

Production

Multi-Level Actual Costing allows
MultiInventory valuation with
actual periodic material price
Roll--up of price differences
Roll

Production

External Procurement

from raw materials to
finished materials

External Procurement

Actual Costing and Product Cost Planning

Product Cost
Planning
PP Master Data

Actual Costing with
Cost Components

Multi-Level
MultiActual Costing
Material Movements

Same cost component
structure as in planning
Routing

BOM

Cost Estimate

No Cost Estimates
necessary for Actual
Costing

Actual Quantity Structure

Optional: Primary cost
component split

Price Determination

Standard Price
with
Mat Proc Lab

Periodic Unit Price
with
Mat Proc Lab

OH

Cost Component Split

Variance Analysis

OH

Cost Component Split

Actual Costing and Profitability Analysis

Actual values in Profitability Analysis
Contribution Margin Accounting
Cost of sales split into cost components
Plan/Actual Variance analysis
Sales Quantity:
Revenues::
Revenues
Plan

Actual

1,000 pc
100,000 US$

Var. %

Var. Abs.

Raw Materials
Labor variable
Machine variable
Logistic Processes
Material Overheads

50,000
4,000
4,000
10,000
5,000

45,000
5,000
4,500
7,000
5,500

5,000
-1,000
- 500
3,000
- 500

10 %
- 25 %
- 13 %
30%
- 10 %

Contribution Margin I

27,000

33,000

6,000

22 %

Labor fix
Machine fix

10,000
7,000

10,000
7,000

0
0

0%
0%

Contribution Margin II

10,000

16,000

6,000

60 %

Controlling Levels of the Material
Process Type

Characteristics of the Controlling Levels
Procurement
alternatives

Purchase order
Plant/material
Purchasing organization/ vendor
Subcontracting

Vendor A,
Vendor B, ...

Plant/material
Purchasing organization/ vendor

...

Stock transfer
Plant/material
Issuing plant

Reposting/
material

...

Plant/material
Issuing plant/ material

Production

...

Plant/material
Production plant/ planning plant
BOM / routing

...

Production version

...

Quantity Structure: Elements

Materials
(Receipts)

Procurement Alternative

Procurement Process

Materials
(Withdrawals)

Agenda

1. Material-Ledger/Actual Costing: General overview
2. Material-Ledger/Actual Costing and MTO

© SAP AG 2009. All rights reserved. / Page 17

MTO and Material-Ledger/Actual costing

Material-Ledger functionality is only available for valuated sales order stock
ML functionality for valuated sales order stock is not available in release 4.0.
In release 4.0A and 4.0B, consider note 115323 if ML is active and valuated sales
order stock is used
For valuated sales order stock, the following ML functionality is available as from
release 4.5A
Parallel valuation
Parallel currencies
Single-level actual costing

As from release 4.6A, multi-level actual costing is available for valuated sales order
stock

Quantity Structure for MTO-production

Sales Order Stocks

Procurement Alternative

Procurement Process

Materials
(Withdrawals)

Production processes and procurement alternatives include the sales order the
Material is produced for.
The material price determination and the re-valuation of material does not take
place for the material, but for the sales order stock.

MTO production and ML: Cost Object
Controlling
The usual cost objects can be used if valuated sales order stock is used with ML
functionality
The following cost objects can be assigned to production processes:
Production orders and process orders
Product Cost Collectors

MTO & ML: Production Order

SD

SD-Order

SD-Order

COCOPA

SD-Order
Revenue
Cost of sales
Profit

COCOPC

Production order

MM

Stock
Sales Order
valuated

$

Production order

Stock
Sales Order
valuated

$

Production order

Stock
Sales Order
valuated

$

For analysis, use reports
from

CO-PA

CO-PC-ACT

CO-PC-OBJ

MTO & ML: Product Cost Collector

SD

SD-Order

SD-Order

COCOPA

SD-Order
Revenue
Cost of sales
Profit

Product
CO-CO
Cost Collector PC

MM
Stock
Sales Order
valuated

$

Stock
Sales Order
valuated

$

Stock
Sales Order
valuated

$

For analysis, use reports
from

CO-PA

CO-PC-ACT

CO-PC-OBJ

Thank you!

© SAP AG 2009. All rights reserved. / Page 23

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