Professional Documents
Culture Documents
Practical Guide To SAP Material Ledger
Practical Guide To SAP Material Ledger
Fonseca
Tips
Tips highlight information concerning more details about the subject being
described and/or additional background information.
Examples
Examples help illustrate a topic better by relating it to real world
scenarios.
Attention
Attention notices draw attention to information that you should be
aware of when you go through the examples from this book on
your own.
Finally, a note concerning the copyright: all screenshots printed in this book are
the copyright of SAP SE. All rights are reserved by SAP SE. Copyright pertains to
all SAP images in this publication. For simplification, we will not mention this
specifically underneath every screenshot.
1 Introduction to SAP Material
Ledger
SAP Material Ledger is a powerful tool for cost management. It is a
component of the SAP Product Cost Controlling module that manages
inventory at actual cost and in multiple currencies and valuations. SAP
Material Ledger leverages a full absorption costing method by which all
manufacturing costs are absorbed by the units produced. The unit cost of a
product typically includes materials, direct labor, and both fixed and
variable manufacturing overhead.
Companies use SAP Material Ledger to manage their inventory in both standard
cost and actual cost. Standard cost is an estimated or predetermined cost that
represents the total cost of performing an operation or producing a good or
service under normal conditions. In a standard cost system, the standard cost is
used throughout the month to value any material movement transactions. At the
end of the month, SAP Material Ledger then calculates the actual costs for the
period, taking into account all material movements and invoices associated with
the raw materials, actual costs of the confirmations to the production orders, and
any price difference. This actual periodic cost is an actual weighted moving
average that is available through SAP Material Ledger.
SAP Material Ledger has been available for many years. It was developed
primarily to meet the needs of companies in Asia, South America, and Russia
where there is a legal requirement to value the inventory at actual cost at the end
of each month. SAP Material Ledger has extensively evolved since its initial
version and even companies with no legal requirement to have their inventory
valued at actual cost have been implementing SAP Material Ledger, given that it
is extremely helpful to manage costs in a manufacturing or process industry
environment.
Many people approach me and ask which product costing methodology my clients
use. When I answer, “Actual costing with SAP Material Ledger,” many are
surprised and ask, “How is that possible? They must take weeks to complete their
month-end close. I have heard that SAP Material Ledger is very complicated and
onerous to manage.”
With this book, you will learn that SAP Material Ledger is not as intricate as it
seems. This quick reference is a practical and simplified guide on how to design,
configure, implement, and use SAP Material Ledger efficiently. Practical examples
of integrated processes from making, buying, and selling to month-end closing
steps provide an effective reference guide to build or increase your knowledge of
actual costing with SAP Material Ledger while making your day-to-day material
ledger tasks clear and comprehensible. Each process is discussed within the
context of its execution across various functional areas in SAP. You will also find
several hints and tips throughout the book on how the price differences in G/L
accounts are set and how to reconcile such G/L accounts after the material ledger
periodic actual costing process. There are also insights on important checkpoints
during the month and closing actual costs at the end of the month. You will see
that monitoring material transactions regularly will greatly minimize issues in the
closing with SAP Material Ledger.
The main purpose of this book is to help you become familiar with or improve your
knowledge of SAP Material Ledger by using simple non-convoluted language
through step-by-step instructions on how to design, configure, and use SAP
Actual Costing with SAP Material Ledger effectively.
The book is divided into ten chapters. Each chapter provides details on how the
business process relates to and integrates with SAP Material Ledger and other
modules and functional areas of the organization. Throughout the book, you will
find a brief context of each subject and practical examples of day-to-day activities
reflected in product cost and which help you gain a better understanding of SAP
Material Ledger.
1.1 Overview: What is SAP Material Ledger?
The name SAP Material Ledger leads people to think this function resides under
the materials management module (MM). In fact, SAP Material Ledger is a
component of the product cost controlling (CO-PC) sub-module of SAP
Controlling (CO) and it is a subsidiary ledger for materials.
SAP CO is the management accounting module in SAP that contains several sub-
modules for cost center accounting, overhead accounting, product cost
controlling, and profitability analysis.
Finance and accounting pertain to the financial accounting (FI) module.
Product costing is a very complex process in any industry and is used to manage
costs related to a manufacturing process. In SAP, product costing integrates with
many other modules and supplies basic information for business processes used
by various other SAP functional areas such as valuation of goods in materials
management (MM), costs to determine price in sales and distribution (SD) pricing
procedures, and ultimately it sets the standards to measure production efficiency
in manufacturing orders in the production planning (PP) module.
Product costing is comprised of the following tools in SAP:
Costs are planned for the materials and cost objects in cost accounting.
If a company is not using SAP Material Ledger, normally the valuation is done in a
single currency, which is the company code currency. SAP Material Ledger
enables the valuation in two additional currencies for group valuation flow and
reporting. Typically, if the company operates in many different countries, then the
second currency or valuation is set as group currency so that it can easily
consolidate the information in a single currency across different regions, i.e., U.S.
dollars. The third currency (profit center valuation) is commonly used in
multinational corporations to represent the transfer price for valuation of inter-
company transactions across different locations and regions. This combination of
currency and valuation is called a valuation approach.
In an actual costing environment, all goods movements within a period are valued
at standard cost, which is called preliminary valuation. At the same time, price and
exchange rates differences are collected in SAP Material Ledger. Any material
movement originated during a goods receipt or invoice receipt of a product is
recorded in SAP Material Ledger. Business transactions relevant for valuation are
translated using historical exchange rates, directly at time of posting.
Currency amounts that come from stock valuation, invoice verification, material
cost estimates, and order settlement are translated into the other currencies in the
respective areas and updated in SAP Material Ledger as shown below.
Note that the translation procedure mentioned above could cause some
discrepancies on the price of a material from one currency to another over a
period of time. You define how you would like translations to occur in the financial
accounting configuration and you can choose whether translations should be
made starting from the transaction currency (currency in which an individual
document is generated in the system) or from the company code currency. The
exchange rate type to be used can also be determined in this configuration,
typically the average rate is used.
Although moving average price reflects the most up-to-date data, it can cause
other valuation problems when there is a stock shortage or the stock level is too
low for the price difference to be posted, which can lead to unrealistic price as the
remaining inventory is adjusted with the total invoice price difference.
Whenever there is a stock shortage, the system cannot allocate the variance
(which can be positive or negative), and it remains on the purchase price
difference account in the G/L as the system cannot allocate it to the inventory.
When working with moving average price, the timing on which the transaction
occurs is critical. For an adequate valuation of the transaction at actual cost, there
is a high dependency on the time at which the goods receipt and invoice receipt
are posted and a material is issued from inventory.
The same principle applies for variances related to a settlement of a
manufacturing order.
As mentioned earlier, when using SAP Material Ledger, materials with standard
price control will be adjusted to an actual weighted moving average price at month
end, which becomes your periodic unit price (PUP). PUP is discussed in detail
during the actual costing closing in Section 5.4.
In an SAP Material Ledger environment, typically all raw materials, semifinished
products, or packaging materials used in a multilevel production structure, such as
materials used in a manufacturing process (components of a Bill of Materials) are
set as standard price (price control S). Maintenance, repairs, and operations
(MRO) materials are set as moving average price (price control V) as they are not
used in a manufacturing process and therefore not relevant for standard cost
valuation.
These definitions and related settings are extremely important to prevent
over/under absorption balances on cost centers after the month-end closing. As
you will see in Section 5.4, SAP Material Ledger revalues the consumption of
materials at month end when there is a price difference to be allocated.
Revaluation of consumption is done using the original cost element or an alternate
account, as you will see in the configuration Section 3.11.1.
Below is an example of the impact of a material with standard price control and
price determination 3 being consumed to a manufacturing cost center.
If you are using, or intend to implement SAP Material Ledger, make sure you have
the right price control design in place and try not to include materials with
standard price consumed to a cost center or to a non-manufacturing cost object to
avoid rework at month end. Materials with a standard price should always be used
in a production process along with an appropriate cost object such as production
order, process order, sales order stock, etc., so that all price differences and
revaluations of consumption are fully absorbed automatically by the system,
preventing any additional manual clearing process.
2.3 Material price determination setup
The material price determination indicates how the valuation of a material should
occur after each business transaction for a material relevant for valuation. If SAP
Material Ledger is active, this field has to be set up in the material master using
an appropriate combination of price control and material price determination.
If SAP Material Ledger is activated for a valuation area, the accounting 1 view
looks slightly different than the regular screen without a material ledger. Additional
fields become available when using SAP Material Ledger or split valuation.
The following two price indicator options are available in the material master
(accounting 1 view) for price determination. Accounting 1 view contains current
valuation data of a material.
Transaction-based (2)
If you select this option, you can keep your inventory price control indicator as V
(moving average) or S (standard price). If the material has price control S, the
moving average is calculated for information purposes only, it is not used for
valuation as the price control is standard. Materials with the transaction-based
indicator option are not considered later in a multilevel actual costing.
Single/Multilevel (3)
If you choose this option, the price control has to be S (standard price). A moving
average (period unit price) is calculated at month end. Single/Multilevel price
determination allows you to calculate single and multilevel price differences and
carry them over through a multiple level manufactured production structure.
An appropriate combination of price control and price determination for a
multilevel actual costing is shown in Table 2.1.
Profit center valuation can be used to manage transfer pricing for inter-company
transactions (internal transfers of goods between profit centers valued with a
specific price for management purposes).
In the example used throughout this book, you will be using the group
currency/group valuation approach from example in the Figure 2.1.
2.5 Price differences
Before learning the SAP Material Ledger configuration, it is important to know the
definitions of the various price differences in SAP when using the standard cost
valuation method approach.
A comprehensive understanding of the concepts of these differences will help you
grasp SAP Material Ledger quickly while building your knowledge in both standard
and actual costing processes in SAP.
Double click on ACTIVATE MATERIAL LEDGER (as shown in Figure 3.1) to configure the
activation of SAP Material Ledger.
Figure 3.2 shows the configuration screen for the Activation of Material Ledger.
Figure 3.2: Activation of SAP Material Ledger configuration
Select the ML ACT checkbox. In the PRICE DETER field, specify the material price
determination type to be used when creating material in the plant you are
activating. Set it to 3 (Single level and multilevel price determination). This can be
changed to 2 for those materials that will be set up as price-control moving
average (V) while creating the material master accounting 1 view.
You can also make the price determination binding in the valuation area when
material is created. If you set this field, all materials in the valuation area cannot
have the price determination changed. Do not set this indicator if you want to
change the price determination at any future time.
Once you save the configuration, a warning message (see Figure 3.3) comes up
to remind you that live data must be converted to the material ledger (required
only if you are in a live system).
The configuration shown in Figure 3.2 indicates the valuation area will be using
SAP Material Ledger. Once this is defined, you must complete the production
start-up step before you create a new material master record (new SAP
implementations). If you are activating SAP Material Ledger in a live system, then
you must convert the data to SAP Material Ledger. Refer to Section 3.14 for the
production start-up steps.
Before activating SAP Material Ledger, you should also check some relevant
settings such as currencies and account determination to ensure there is nothing
missing.
By selecting the option Check Material Ledger Settings (see Figure 3.4), you will
be able to review the material ledger settings. It is important to run this step once
you complete the SAP Material Ledger configuration and before the start-up step.
Please refer to Section 3.14 for an example of CKM9 for plant M110 before the
production start-up of material ledger.
3.2 Assign currency types to SAP Material Ledger type
Next, create SAP Material Ledger types to define the currencies to be available.
You can define up to three currency types to each material ledger type. Valuation
areas and plants that belong to the same company code should use the same
material ledger type.
Make sure that the currency setting in financial accounting and in SAP Material
Ledger are correct before the SAP Material Ledger production start-up. You
cannot change the currencies, currency types, or material ledger types after
production start-up.
To keep information consistent across MM, FI, and CO, the SAP recommendation
is to use group currency as the controlling area currency. However, the company
code currency can also be used.
The configuration can be accessed through transaction code OMX2 or the IMG
menu path: CONTROLLING • PRODUCT COST CONTROLLING • ACTUAL COSTING/MATERIAL
LEDGER • ASSIGN CURRENCY TYPES TO MATERIAL LEDGER TYPE.
In your example (see Figure 3.5), use a combination of currency types from FI
and CO. If you don’t want the currency types taken from FI and CO, then set the
Manual indicator and specify the currency types under Define individual
characteristics. Manual currency type must contain the currency type 10
(company code currency).
Figure 3.7: Assignment of currency type and valuation view of a valuation profile
You assign the currency type and valuation view to the valuation profile you want
to represent scenarios for group valuation or transfer prices to the respective
controlling area. You must ensure that the controlling area currency of the affected
controlling area corresponds to either the group currency (currency type 30) or the
company code currency (currency type 10).
In the example, enter Group Valuation, in addition to the Legal valuation, which is
mandatory.
3.5 Assignment of currency and valuation profile to controlling area
The next step is to assign the CURRENCY AND VALUATIONS profile created above to
the CONTROLLING AREA . See (Figure 3.8)
This configuration can be accessed through the IMG path: CONTROLLING • GENERAL
CONTROLLING • MULTIPLE VALUATION APPROACHES/TRANSFER PRICES • BASIC SETTINGS •
ASSIGN CURRENCY AND VALUATION PROFILE TO CONTROLLING AREA.
Figure 3.8: Assign a currency and valuation profile to the controlling area
In this step, you assign the currency and valuation profile to the controlling area
indicating that you want to use different valuation scenarios. These settings
enable you to create actual versions for your valuation views.
The controlling area currency has to be either the group currency (currency type
30) or the company code currency (currency type 10).
3.6 Create version for group valuation
Version allows you to have independent sets of planning and actual data to
manage alternative planning scenarios with different assumptions.
Define additional versions for group valuation with the attributes as shown in
Figure 3.9.
The configuration for version for group valuation can be accessed through
transaction code OKEQ or following the IMG menu path: CONTROLLING • GENERAL
CONTROLLING • MULTIPLE VALUATION APPROACHES/TRANSFER PRICES • BASIC SETTINGS •
CREATE VERSIONS FOR VALUATION METHODS.
Figure 3.14 shows the activation log results. Activation was carried out without
errors.
Figure 3.15: Maintain number ranges for SAP Material Ledger documents—selection screen
When you click on MAINTAIN NUMBER RANGES FOR MATERIAL LEDGER DOCUMENTS, three
different options appear:
Number Ranges for Material Ledger Documents
Maintain Financial Accounting Document Types
Accounting Document Number Ranges
Double click NUMBER RANGE FOR MATERIAL LEDGER DOCUMENTS (Figure 3.15).
A new screen (Figure 3.16) pops up. Click the GROUPS button or press “F6”.
Figure 3.16: Maintain number range for SAP Material Ledger documents
Update the number range and description of the group number range as shown in
Figure 3.17.
Figure 3.17: Assign SAP Material Ledger grouping to a number range
To display all material ledger number range intervals as shown in Figure 3.18, go
back to the first screen (Figure 3.15) and select the option Intervals.
The document type ML (material ledger) and number range that begins with 47
are reserved for material ledger documents in FI. Review the configuration to
ensure the document type is properly maintained in FI.
Go back to the step shown in Figure 3.15 and now select Maintain Financial
Accounting Document Types as shown in Figure 3.19.
Here you can check whether the ML document is maintained with the appropriate
number range 47 (Figure 3.20).
Figure 3.20: Review ML document type in FI
The next step is to check whether the number range 47 has been maintained for
your company code. Go back again to step shown in Figure 3.15 and choose the
third step Accounting Document Number Ranges. A new screen appears where you
can enter the company code (Figure 3.21).
Figure 3.21: Update number range 47 for ML documents in FI
Enter the company code and click on the INTERVALS button. Update the number
range from 4700000000 to 4799999999 and save it.
3.10 Configure dynamic price changes
This is an interesting piece of configuration and it can be used for two different
purposes:
For example, movement type 601, which is a sales movement type, if you want to
revalue the G/L account only, then you assign the movement type to group CF.
For movement types where you would like to also revalue the cost object, then set
it to CC.
To determine the movement type groups for material ledger use transaction code
OMX7 or the IMG menu path: CONTROLLING • PRODUCT COST CONTROLLING • ACTUAL
COSTING/MATERIAL LEDGER • MATERIAL UPDATE • DEFINE MOVEMENT TYPE GROUPS OF
MATERIAL LEDGER. See Figure 3.23.
This configuration can be accessed through transaction code OMX0 or via IMG
menu path: CONTROLLING • PRODUCT COST CONTROLLING • ACTUAL COSTING/MATERIAL
LEDGER • MATERIAL UPDATE • DEFINE MOVEMENT TYPE GROUPS OF MATERIAL LEDGER.
(Figure 3.24 and Figure 3.25).
Highlight material update structure 0001 and click on MAINTAIN MATERIAL UPDATE
STRUCTURE to assign specific procurement categories and consumption types to a
specific category for a single level (see Figure 3.27).
Figure 3.27 shows the standard SAP settings. Typically, procurement categories
(process categories that begin with B) are activities related to goods receipts (for
example, purchase orders, production, subcontracting, and stock transfers) and
consumption types (process categories that begin with V) are activities associated
to withdrawals (for example, consumption to a production orders and cost
centers).
A number of additional process categories are available to be added to the
standard categories, if you want a further breakdown of the process categories,
for example, purchase order, production, subcontracting, etc.
In order to have multilevel price determination, the indicator ACTUAL COSTING must
be set. This will ensure that the actual quantity structure is updated.
The next field (after actual costing—Figure 3.29) is to indicate how the activity
type revaluation should take place. The following options are available.
Changes in stock
Invoice verification execution
Order settlements
Price changes
Material debits and credits
Goods Receipts/Invoice Receipts (GR/IR) account maintenance
Single-level material price determination
Multilevel material price determination
Closing entries
The activation of the actual cost component split configuration is through IMG
menu path: CONTROLLING • PRODUCT COST CONTROLLING • ACTUAL COSTING/MATERIAL
LEDGER • ACTUAL COSTING • ACTIVATE ACTUAL COST COMPONENT SPLIT.
Select the field Actual Cost Comp Split Active, as shown in Figure 3.32 for your
valuation area to activate the actual cost component split.
The actual cost component split functionality can only be activated if the material
ledger and actual costing are active.
Note that the actual cost component split activation can only be done at the
beginning of a period as a cost component split cannot be created for posted
transactions.
If you are already using the material ledger and want to activate the actual cost
component split afterwards, you have to set the indicator for activation of the
actual cost component split as shown in Figure 3.32 and then execute the report
MLCCS_STARTUP to create the data for the actual cost component split.
The actual cost component split can also be used in profitability analysis (COPA)
to revalue the cost of goods sold. Please refer to Section 3.15.4 for the
configuration details.
Account grouping
Account grouping is used only for offsetting entries, such as consignment
liabilities and price differences. There is an additional key called the account
modification key which is assigned to each transaction event key which provides a
further breakdown of the posting transactions, such as: physical inventory
adjustments, consumption account to a cost object, goods issue to sales, etc. An
account grouping is assigned to each movement type in inventory management
which uses the posting transaction offsetting entry for inventory posting. G/L
accounts must be assigned for every account modification key (grouping code).
For example, transaction key event GBB contains account modification keys BSA,
INV, VBR, and VAX.
Valuation class
The valuation class allows you to define automatic account determination that is
dependent on the material. For example: you post a goods receipt of a raw
material to a different stock account than if the goods receipt were for finished
goods, even though the original transaction entered is the same for both
materials.
This is achieved by assigning different valuation classes to the materials and by
associating different G/L accounts to the posting transaction for every valuation
class.
The automatic account determination configuration is done through transaction
OBYC or using the IMG menu path: MATERIALS MANAGEMENT • VALUATION AND
ACCOUNT ASSIGNMENT • ACCOUNT DETERMINATION • ACCOUNT DETERMINATION WITHOUT
WIZARD • CONFIGURE AUTOMATIC POSTINGS.
You can go straight to CONFIGURE AUTOMATIC POSTINGS if you have already done the
other prerequisite settings, such as grouping codes, valuation classes, etc. See
Figure 3.34.
Figure 3.34: Automatic account determination configuration
From the screen shown in Figure 3.34, you can double click on a transaction key
event in the TRANSACTION column and a new screen will pop up where you can
select your chart of accounts (Figure 3.35).
Review the configuration for transaction event key BSX (inventory postings) from
Figure 3.34.
Enter your chart of accounts (in this scenario, use CAUS) and hit “Enter”.
Figure 3.35: OBYC (BSX)—selection of chart of accounts
Figure 3.36 shows the grouping code (valuation modification) US01, a few
different valuation classes, and the G/L account defined for each combination of
grouping code and valuation class.
You can change or add new valuation classes to the same grouping code. To
create a new entry, click on NEW ENTRIES (identified by a white sheet button).
Repeat the same steps for any of the transaction keys from OBYC table (Figure
3.34).
Figure 3.36: Automatic posting configuration (BSX)
Now that you have an understanding of how the automatic postings work, it is
time to learn about the transaction key events and account modification keys
related to the material ledger.
Table 3.2 shows a comprehensive list of the transaction keys used in conjunction
with material ledger.
Table 3.2: Material ledger related transaction keys in OBYC
3.13.6 Exchange rate differences from material ledger lower levels (KDV)
Transaction key KDV is used in the material ledger closing to settle multilevel
exchange rate differences to inventory or to write off exchange rate differences
related to revaluation of consumptions, for example, cost of goods sold.
Confirm that all currency settings are correctly configured for FI and in SAP
Material Ledger.
Confirm that the attributes of the material types in IMG Logistics—General
are correct; the only materials that will be converted to material ledger are
materials relevant for valuation. Make sure that all plants you want to activate
in SAP Material Ledger are set as active for the material ledger. The SAP
recommendation is to activate the material ledger for all plants belonging to
the same company code because the invoice verification cannot enter
invoices that contain materials from plants with active material ledgers and
other materials from plants with inactive material ledgers.
Remember that in a brand new implementation, the material ledger start-up
occurs before you start creating material master records.
Also remember that from the moment of material ledger activation in the IMG
to the end of the production start-up, you cannot perform any goods
movements in the affected plants in a testing or live system (best practice is
to do the configuration in a development system and then migrate to other
systems). It is also not possible to create material master records until the
start-up is complete.
If you are activating the material ledger in a live system, there are other aspects of
the data migration, such as open purchase orders and production orders that
should be taken into account for a proper conversion to the material ledger.
Usually, the inventory balances in second and third currency types in the sub-
ledger do not equal the same amounts in the G/L. Therefore, a reconciliation of
material sub-ledger and G/L after material ledger start-up should occur. You can
use transaction CKMADJUST or FAGL_ML_ADJUST, if you are using the new
G/L for the reconciliation of the FI accounts for the second and third currency with
the material ledger.
For more information on the required steps to activate the material ledger in a
production system, please refer to SAP OSS note 596558.
The relevant material ledger settings highlighted above can be reviewed through
transaction code CKM9 or can be accessed through the IMG menu path:
CONTROLLING • PRODUCT COST CONTROLLING • ACTUAL COSTING/MATERIAL LEDGER •
ACTIVATE VALUATION AREAS FOR MATERIAL LEDGER.
It is highly recommended that you run this transaction before the start-up so that
you can review any incomplete or incorrect settings. See Figure 3.37: Check
material ledger settings.
If you are comfortable with all material ledger settings, then proceed to the start-
up step (Figure 3.39).
If you are running in background mode, check the results in the log by going to
SYSTEM (very top menu) • OWN JOBS or enter the transaction code SMXX.
Once the processing is complete, a log report is provided for each master data
and transactional data item that requires conversion and reconciliation with FI
(Figure 3.40).
The system does the following with the SAP Material Ledger start-up:
Turns on the SAP Material Ledger active indicator in the accounting 1 view of
all the material master records of the plant
Sets the price determination indicator in the material master records to price
determination 2
For plants with existing material master records, if you want to use the
material price determination 3, you now have to change the price
determination from 2 to 3
To change the material price determination to 3, you can use transaction code
CKMM or access it through the IMG menu path: ACCOUNTING • CONTROLLING •
PRODUCT COST CONTROLLING • ACTUAL COSTING/MATERIAL LEDGER • ENVIRONMENT •
PRODUCTION STARTUP • CHANGE MATERIAL PRICE DETERMINATION.
Note that if you are activating the SAP Material Ledger in a production system,
transactional data is also converted, such as inventory values, purchase orders,
etc. Please refer to SAP OSS note 596558 for the list of steps to be executed for
the production start-up as well as the reconciliation of material sub-ledger with the
G/L procedures.
3.15 SAP Material Ledger settings in COPA
This section looks at the settings in COPA, the profitability analysis component of
the controlling module. This configuration allows you to revalue the cost of sales
at actual cost as well as transfer the actual cost component split. An example of
the periodic valuation process is shown in Chapter 7.
Note that only the specific settings for actual costing are covered. The COPA
configuration goes beyond the topics highlighted here and without the completed
configuration settings in COPA, the ML will not work.
Here you define the valuation strategy (as shown in Figure 3.42). The valuation
strategy determines which method to use to value a material cost estimate in
COPA. Select the Mat Cstg field to indicate that you want to perform material
costing valuation in COPA. Enter a value in the QTY FIELD for the cost component
of the material costing to be multiplied for the valuation. In this example, the
quantity field is ABSMG.
You may also use a costing sheet or a user exit to satisfy all your requirements.
Figure 3.42: Define cost estimate valuation strategy
Click the entry VALUATION STRATEGY and then click on ASSIGNMENT OF VALUATION
STRATEGY (Figure 3.43).
The next step is to add a combination of point of valuation and record type. Add
both the point of valuation 01 (real-time valuation of actual data) and 02 (periodic
revaluation of actual data) for the record type F (billing data). Assign the valuation
strategy M01.
This indicates the use of the material cost in COPA for standard and actual costs.
You have to define one costing key for each valuation view. Figure 3.44 shows the
costing key (ML2) for legal valuation and you are choosing to transfer both the
cost component split and total cost to COPA.
The second costing key, MG2, (shown in Figure 3.45) will be used for group
valuation. You will use the same type of valuation as MLG2 (transfer cost
component split and total cost) to be consistent with the actual cost valuation in
both views.
Figure 3.45: Costing key configuration for actual cost—group valuation
Now highlight each costing key and click VAL.FLD ALLOCATN FOR PERIODIC MOVING
AVERAGE PRICE (shown in Figure 3.46).
Assign the operating concern and the value field, which then enable the total cost
to be updated in COPA as shown in Figure 3.47. Operating concern is an
organization unit defined to perform profitability analysis of your company. It can
be costing-based (where the COPA data is stored in characteristics and value
fields) or account based (where information is available by G/L accounts).
Repeat the step for each costing key.
In this example, your total actual cost of goods sold for the legal view will be
assigned to value field VV816 (Figure 3.47), and the group valuation view is
pointed to VV817 (Figure 3.48).
As you can see in Figure 3.49, there are specific costing keys for standard cost
and now you assign the costing keys ML2 and MG2 to the point of valuation 2
(Periodic valuation at actual cost).
For illustration purposes, the example only uses material type FERT, but you
should assign all saleable material types that your company uses.
Enter your Operating concern and Cost component structure (Figure 3.50).
Enter point of valuation 02 for each cost component from your cost component
structure and the value fields to which the actual cost should be transferred to
COPA. FIELD NAME 1 column is used for the legal valuation and FIELD NAME 2 is
used for group valuation value fields.
Value fields for standard cost valuation are also set up in the same transaction for
point of valuation 01 and this has already been set for the operating concern
MD01 (Figure 3.52).
Figure 3.52: Assignment of cost component to value field—PV01
4 Integrated flow of transactional
data into SAP Material Ledger
This chapter walks you through a complete manufacturing process from the
purchase of raw materials to sales, including the material ledger,
accounting, and COPA documents for each goods movement. It also
highlights important things to watch out for throughout the month in order
to minimize issues during the actual costing closing at month end.
The following data and examples used in this chapter are for illustration purposes
only. Examples and data may not represent the correct proportion of materials
and dollar amounts as compared to a real scenario in your company.
You will find detailed explanations to how these business transactions flow to a
material ledger, the impact in the G/L, and valuation in the context of product
costing using standard and actual costing functions.
Keep in mind that before you initiate any material movement transactions in SAP,
you need to make sure you have calculated and released a standard cost for each
material with valuation, regardless of its type, i.e. finished goods, semifinished
goods, raw materials, etc.
4.1 Standard cost set-up and cost roll-up process
This section briefly explains the concept of cost roll-up. This process is not
covered in detail as the book’s main focus is the actual costing process with
material ledger.
It is important to calculate and release a standard cost for each material relevant
for valuation before any material movement transactions. This will ensure you
have the appropriate cost component breakdown to be used in further analysis
and comparison between plan and actuals.
The cost roll-up includes the cost of goods manufactured of all materials in a
multilevel production structure within the costs of the material located at the top of
the structure. The costs are automatically rolled up using the costing levels,
starting from the lowest level and then carrying results over to next highest costing
level where the cost is calculated for all materials.
The process continues until it reaches the costing results of the highest material in
the bill of material and the finished product cost of goods manufactured contains
the cost of each material on the BOM, including its own BOM and lower levels.
Costing results are passed on to the costing of each next level of a product and
assigned to the applicable cost component according to the cost component
structure.
For the purpose of the cost component split, it is important to define the cost
component structure and design the cost splitting structure in a way that provides
costing information in the level of detail that your company needs.
View Figure 4.1 through Figure 4.5 to see the results of the standard cost of the
product to be used in your business scenario transactions in this chapter. The
standard costing in the group valuation view (Figure 4.3) has been defined as
group currency for simplicity. However, you can define specific price conditions for
mark-up and/or mark-down to be used along with the purchase info records to
meet your own needs.
For further information on the standard cost master data and configuration
settings, please refer to Espresso Tutorials book Practical Guide to SAP CO-PC
(Product Cost Controlling)—http://www.espresso-
tutorials.com/Controlling_S0064.php
Figure 4.1 shows the standard costing results for a finished product. The value of
$75.63 will be used during the month to value any material movement transaction.
Variances to standard are captured separately in specific G/L accounts as well as
in the material ledger (shown in later sections).
Figure 4.1: Cost estimate—summary view
In Figure 4.2 you can see a different format of CK11N to review the standard
costing results.
The view displays the standard cost-by-cost component. It is important to ensure
the standard cost component split is done as it will be used to value the material
movement transactions, including the cost of goods sold. The cost component
split flows to COPA, which will allow you to review your cost of sales using the
cost component breakdown. This is a great functionality that provides detailed
information in COPA, which can be a good help to support your company when
analyzing and reporting cost of goods sold, profitability, or gross margin in COPA.
You can choose to report your cost of goods sold by nature of expenses or total,
as well as profitability by product or any other characteristics available in COPA.
Once the standard cost is released, the results are stored in the material master,
as shown in Figure 4.4. There is a specific bucket for each cost by currency type
in the ACCOUNTING 1 view. The actual cost results that will be calculated at month
end are also stored in the material master in the periodic unit price (PER. UNIT
PRICE) field. This will be explained in detail later in Section 6.3.
Figure 4.4: MM03—Current standard costing results—accounting 1 view
Figure 4.5 shows the current costing run results and specific details such as when
the standard cost was released, period, year, valuation variant, costing version,
and the standard cost itself.
Figure 4.5: MM03—Current costing run results view
4.2 Purchase of raw material
This section reviews a purchase of a raw material with a purchase price variance.
Figure 4.6 displays the results of a good receipt of a raw material purchased in the
material ledger—transaction CKM3N. The standard cost for the item is $1.00 and
the purchase price is $1.50. Therefore, there is a $0.50 price difference per unit,
which results in $15.00 of purchase price difference with 30 units.
The valuation at standard price is updated as a preliminary valuation in the
material ledger. The purchase price difference is captured in a separate column
and whenever there is an exchange rate difference, this can be also captured
separately from the PPV.
The estimated actual cost at a material throughout the month is available as a
statistical price, in this example, $1.50. This is a statistical actual cost at a certain
point in time; it does not represent the final actual costs for the month as there
could be additional variances received before month end. In this case, for
example, there could be a receipt of an invoice with additional price differences for
raw materials. For a semifinished or finished product, the periodic actual cost is
only known after the actual costing calculation where the actual cost roll-up takes
place and updates the price differences from lower-level materials. The material
ledger month-end process is covered in Section 5.4.
If you want to display all receipts for this material, you can expand the RECEIPTS
category (see Figure 4.7) and that will show all transactions categorized as
receipts for this material. Invoice receipts generally fall under the receipts
category.
From the material ledger document, you can display accounting documents, the
source document, additional details on material ledger document, or simply return
to the material price analysis. The material ledger document contains other
additional details on the material ledger update.
Next is a review of the accounting documents (see Figure 4.9).
When you click the ACCOUNTING DOCUMENT, as shown in Figure 4.8 the screen
below (Figure 4.9) will pop up and you can double click on the ACCOUNTING
DOCUMENT NUMBER to view details of the accounting entries, as shown in Figure
4.10.
As you can see in Figure 4.10, the price difference of $15.00 has been posted to
the purchase price variance account (same amount in CKM3N).
Figure 4.12 shows production order 60003765 with all consumptions (identified as
GOODS ISSUES) and internal activities (identified by CONFIRMATIONS) and delivery to
stock of the finished product (identified by GOODS RECEIPT).
It is important to note that the TOTAL ACTUAL COST column represents actual
quantities valued at standard cost, even though the production orders can be
revalued at actual cost rates at month end. For this example, there is no revaluing
of the orders as shown in the configuration step in Section 3.12.1.
Therefore, the production orders remain valued at standard cost and the products
produced in a month are updated to actuals in the material ledger. You do not lose
visibility of the information as an actual material quantity structure is available
where you can see the valuation for all different levels of the actual BOM and the
variance received from lower levels can be easily obtained. Refer to Section 6.6.2
for more detail on the actual bill of material report.
The production order functionality does not change with the use of a material
ledger. In the example shown in Figure 4.12, the balance on the order is $54.75
and the order has been completely delivered. Therefore, the balance is a
manufacturing variance.
Orders are usually debited with the costs during consumption of materials and
confirmation of activity type. When a product is delivered to inventory, the orders
are credited. The remaining balance is a variance if the orders are fully delivered.
If the order has a balance and it is still not complete, then the order will be
considered as work-in-process (WIP), which is described through the month-end
closing steps in Section 5.3.1.
4.4 Sales of finished product
This section contains a sales process example.
The sales process in SAP consists of a few different activities, such as quotation,
sales order processing, shipping, and invoicing.
In this section, the focus is on the shipping and invoicing steps.
Typically, the sales order has the condition records for cost, revenue, freight, etc.,
that are mapped to value fields in COPA and which will be updated when the
invoicing process is completed.
At the time of a goods issue that occurs during the shipping process, inventory,
material ledger, and the G/L are updated.
Similar to other scenarios discussed in this chapter, cost of goods sold are booked
at standard cost throughout the month and revalued at actual at month end.
Figure 4.13 shows CKM3N, a goods issue of a finished product to a sales order.
If you double click on the MATERIAL LEDGER DOCUMENT and then go to ACCOUNTING
DOCUMENT (Figure 4.14) you will see details of the accounting entries.
Figure 4.14: Accounting document for cost of goods sold
Note that for cost-based COPA, the COGS amount will get posted only at time of
billing, not at the time of a goods issue. See Section 4.5 for further details.
4.5 Flow of sales data into COPA
As you have activated COPA to be updated at standard and actual costs, the
goods issue of a product does not flow to COPA at the same time the accounting
document and inventory are updated. The updates into COPA take place later
when the billing document is created and posted. Therefore, both revenue and
cost of goods sold are updated into COPA at the same time.
FI and COPA will not balance until the billing document is processed. It is
important to reconcile FI and COPA to ensure there are no imbalances due to
incomplete billing documents. Whenever there is a delivery where the revenue
cannot be recognized in a certain period, it is extremely important to create
accruals of the revenue in both the G/L and COPA, so that there is no mismatch
between the two modules. COPA is typically used to report gross margin by line of
business, product hierarchy, customer, etc., therefore it should have accurate
information.
Figure 4.15 displays the billing document for the shipment done in the prior step.
From the billing document (transaction VF03), you can navigate through the
accounting document, special ledger, controlling, and profitability analysis
(COPA).
Double click on the PROFITAB. ANALYSIS document to review COPA entries, as
shown in Figure 4.15.
Figure 4.17 contains value fields updated from the sales document. As you can
see, revenue and cost of goods sold are now updated into COPA. The cost of
sales by cost component is available in both legal and group valuation views as
per your configuration settings.
Production orders
Monitoring production order variances can also minimize issues at month end and
avoid significant variances that would skew the unit cost of production or cost of
goods sold of a product.
Absorption costs
Review your absorption costs for manufacturing costs during the month. If there is
a large variance against plan and the production is running smoothly, it may
indicate issues with the activity confirmation process and not inefficiency as it may
seem. This check will prevent large activity price variances due to under or over
absorption amounts during the month end
5.2 Cost center closing process
It is expected that when you start the month-end closing process, all material
movement transactions, expenses, payroll, and accrual postings to cost centers
are finalized. Back-dated postings are not allowed to prevent issues with
additional balances coming in to objects already closed.
As you can see in Figure 5.1, the cost center has an under absorption amount of
$23,099.03, which means the cost center spent more than what was applied
through production during the month.
Since you are using actual prices with the material ledger functions, the difference
of $23,099.03 will be proportionally allocated to the products manufactured in the
month or to the material in process (WIP). The cost center will be credited with the
remaining unfavorable variance and the cost center balance will become zero.
The final posting to the manufacturing cost center only occurs when you do the
final step of the actual costing closing in the material ledger cockpit, as you will
see in Section 5.4.8.
In order to calculate the actual prices for activity types, the following two steps,
actual costing splitting and actual activity price calculation, are required.
As shown in Figure 5.2, enter the Cost center value or Cost center group,
Version, or Period to which you are closing the month, and the Fiscal Year. Run
in test mode first, review the results, and then execute in update mode.
Figure 5.3: Actual cost splitting results
Figure 5.3 shows the results of the actual cost splitting. Data is available in the
controlling area and object currency.
In order to check the amounts, do the following:
Adjust the layout to display the TARGET COSTS, ACTUAL COSTS and ACTUAL COST
BALANCE.
Compare the values with the report S_ALR_87013611 (Figure 5.1) to ensure
100% of the costs are being split correctly. Target costs represent the plan
costs, Actual costs is the total debit column and the actual cost balance
represents the over/under absorption amount from the cost center report, see
Figure 5.1.
Any discrepancy between cost splitting and the cost center report could be due to
a missing cost element in the cost splitting structure assignment in OKES or
missing cost center assignments to the cost splitting structure in OKEW. In either
case, correct the settings, re-run KSS2, and repeat the validation steps.
Figure 5.4, Figure 5.5, and Figure 5.6 show the MD cost splitting structure in
OKES. There are three assignments for the activity types: Labor, Machine, and
Overhead.
The labor assignment (Figure 5.5) has the cost element group MD_LAB which
contains all cost elements for expenses associated to labor.
Figure 5.5: Assignment of cost element and activity type to splitting rule
The activity type range indicates the activity type that is related to labor, in
scenario M100.
In Figure 5.6, you can see the method for the splitting rules used to split the cost
of activity types. For your scenario, use activity quantity (12) for all activity types.
Enter a Cost center group, Period, and Fiscal Year and then click the EXECUTE
button.
You can see the price results in Figure 5.8.
It is highly recommended that you validate the actual rates results before
performing the material ledger closing to ensure the actual prices calculated are
correct to clear out the manufacturing cost centers. This anticipates and prevents
potential issues when closing the material ledger.
This validation can be done using a Microsoft Excel spreadsheet. You can easily
export the results to Excel by clicking the CALCULATOR button. Alternatively, you can
download the report using the other export functions available on the tool bar.
Make sure your layout has the required columns, as shown in Figure 5.8.
For this quick validation of actual rates versus cost centers, do the following:
Compare the results obtained with the cost centers. In case of differences, do
not proceed with the material ledger closing since the balances will remain on
the cost center when the material ledger posting is complete.
Expenses posted after executing the actual expenses splitting. If this is the
cause of the problem, go back to KSS2 and calculate the actual cost splitting
again and then recalculate the actual rates in KSII and re-do the validation.
A new cost center is not automatically assigned to the cost splitting structure.
When new manufacturing cost centers are created, make sure they are
assigned to the cost splitting structure (OKEW). If this is the reason for the
problem, it can be identified when validating the cost splitting in the prior step.
Figure 5.10 shows the plan and actual prices. The PRICE INDICATOR 1 is for plan and
5 for actuals values.
Figure 5.10: Activity type price report results
As explained earlier, for your scenario, the activity type revaluation occurs while
running the post-closing step in SAP Material Ledger rather than using the
revaluation process to the production orders.
The cost center revaluation is posted to G/L account 231850 as you will see in
Section 6.1.
The actual price calculation is the last step for cost center month-end closing.
Now move on to the production order closing process.
5.3 Production order closing
The production order closing steps do not differ from the regular process when
using the material ledger.
For your scenario, you are not using overhead costs with costing sheets and you
do not have co-products in your manufacturing process, therefore, only the three
steps below are required to close the production orders.
Work-in-process calculation
Variances calculation
Settlement of production orders
Figure 5.12 shows the WIP results. The WIP is calculated in both legal and group
valuation. The first order 60003765 has been completed and the status is TECO,
therefore there is no WIP for this order. The orders 60003766 and 60003767 have
cost balances, but no goods receipt has been completed yet and the status is REL
(released), which means these orders are still in process and therefore they will
be accounted for as WIP for the month.
The transaction code to calculate the variance for a single order is KKS2—
Individual Processing or KKS1—Collective Processing, or you can navigate
through menu path: ACCOUNTING • CONTROLLING • PRODUCT COST CONTROLLING • COST
OBJECT CONTROLLING • PRODUCT COST BY ORDER • PERIOD-END CLOSING • SINGLE
FUNCTIONS • VARIANCES.
You have only one order with status TECO, so run transaction KKS2 for the order
60003765. Figure 5.13 shows the variance calculation screen. Enter order
number, Period, Fiscal Year, and select Detail List.
Figure 5.13: Variance calculation for individual processing
Figure 5.14 shows the results of the variance calculation. The variance of $54.75
is the same as the production order balance in Figure 4.12. The variance is now
broken down into different variance categories that make up the total variance
amount.
Figure 5.15 shows what the collective processing transaction (KKS1) looks like.
You have to select a plant and production orders option, fill in the Period, Fiscal
Year, and then select Detail list. The recommendation is to run background
processing in a production system to optimize the processing time and minimize
performance issues.
Figure 5.15: Variance calculation collective processing
Since these two orders are still in process (not in status DLV or TECO), the
system cannot calculate the variances, Figure 5.16 shows the error messages
due to an inappropriate status.
To be able to settle the costs, all production orders must have a settlement rule to
carry the balance to FI. Settlement rules are typically created when the production
order is saved in SAP, according to predefined configuration settings.
The transaction code to settle one order is KO88 and collective processing is
CO88. The settlement rule can also be accessed through the menu path:
ACCOUNTING • CONTROLLING • PRODUCT COST CONTROLLING • COST OBJECT CONTROLLING
• PRODUCT COST BY ORDER • PERIOD-END CLOSING • SINGLE FUNCTIONS • SETTLEMENT.
Perform the settlement for plant M110 (Figure 5.17).
Select the type of orders, in your case, With Production Orders, then enter the
Period, and Fiscal Year.
Figure 5.17: Order settlement collective processing
Figure 5.18 shows production order 60003765 is 100% complete, so the balance
gets posted to a manufacturing variance account (see Figure 5.20).
Review the accounting documents to ensure all orders were settled and the G/L
entries are as expected.
From the details list screen (Figure 5.18), you can navigate to the accounting
document. Click on ACCOUNTING DOCUMENTS and a new screen will pop up with all
DOCUMENTS IN ACCOUNTING created during the settlement (Figure 5.19).
Figure 5.19: Documents in accounting after order settlement
Figure 5.20 shows the variance posted to a price difference account as mentioned
earlier in this chapter.
The same variance is posted at the same time to material ledger and can be seen
in CKM3N (Figure 5.21).
Note that the variance is updated to the price difference column in CKM3.
Figure 5.21: Material price analysis after order settlement
Figure 5.22 shows the two other production orders that are not yet completed, so
they are WIP and will be accounted for as such.
Now look at the accounting entries for the order 60003767 (Figure 5.23). As you
can see, this is posted to the WIP G/L accounts. When the order status changes
to delivered or technically complete, the WIP will be reversed.
Figure 5.23: Accounting document for a WIP order
Figure 5.25 shows the TOTAL ACTUALS and WIP by order. After the settlement is
carried out, the balances in these two columns have to agree. This indicates that
the only orders that have balances are the ones in WIP. If there is an order with
actual cost that is not in WIP, then you have to run the closing step for that order.
This is also a great report to analyze the variances after month end as it provides
the variance by category.
It can also be a useful tool during the month to monitor the order deviations, as
you can also set thresholds for the variances on the selection screen (Figure 5.24)
by clicking DEFINE EXCEPTION.
5.4 Periodic actual costing run
Now that you have completed the cost center and production order closing, which
means all costs and price manufacturing differences are captured, you can start
the actual costing and material ledger closing.
This chapter walks you through each step of the actual costing closing cockpit. It
shows how to complete the month-end process and provides an explanation of
each step along with screen shots demonstrating how to execute the actual
costing closing. There are also details on how to check the anticipated actual
costing results before you finally post the actual costing to financial accounting.
As mentioned in earlier chapters, the purpose of SAP Material Ledger is to carry
inventory values in multiple currencies and value the inventory at actual costing at
the month-end closing.
What does the actual costing material ledger closing do?
Actual costing multilevel processing determines what portion of the variance has
to be moved to the next-highest level using material consumption. The actual
BOM enables variances to be rolled up over multiple production levels all the way
to the finished product as well as variances from activity rates related to
manufacturing cost centers.
The next step is the selection step, where you select the plants that you will be
closing. This costing run is for plant M110, as shown in Figure 5.27. There could
be one or several plants assigned to the same costing run. However, it is essential
to close all plants that belong to the same company code in the same costing run
so that multilevel variances can be transferred to the receiving plant.
A costing run can have plants attached to multiple company codes, depending on
your business process. You don’t need to create a costing run for each company
code.
As you can see (Figure 5.27), plant M110 has been selected for this costing run.
Make sure you have all your plants selected and then click SAVE.
You may collapse the GENERAL DATA view and expand the PROCESS tab as shown in
Figure 5.28.
Figure 5.28: Process tab layout selection
Now that the costing run is set up, you can start running the actual costing steps
in the sequence as shown in Figure 5.29, from Selection through Post closing.
For each step on the cockpit, you first need to define the parameters and then
execute the step itself.
5.4.1 Selection
All materials for the given plant(s) that will be part of the actual costing process
are selected in this step.
A list of the plants involved indicating how many materials were selected in each
plant is displayed. For each plant, there is a hierarchical display with information
about the materials selected.
When you click PARAMETERS (Figure 5.29), a new screen will pop up (Figure 5.30)
for you to fill in some fields.
Review your costing run ID and specify the Processing option as Background
Processing. Run all steps in the background when dealing with large amounts of
data. For your example, run all steps in the foreground as there are just a few
materials attached to this plant.
Save it and click on the BACK ARROW button to move back to the main cockpit
screen.
Now you are ready to execute the first step. Click the EXECUTE button.
Figure 5.31: Actual costing run selection
To review the processing status, update the status by clicking on the REFRESH
button. When you press the REFRESH button, another screen will pop up (Figure
5.32), click DIRECT PROCESSING. Once the process is complete, a log is updated. If
there are any errors, the number of errors is displayed on the respective step.
Click on the log sheet to review the errors.
Repeat this for all subsequent steps.
Figure 5.33 shows the results of the selection process. As you can see, the status
is green (no errors found) and it gives the number of materials that will be part of
the costing run (10).
If you click on the HIERARCHY button to expand the selection on how the materials
are grouped, then you can see further details such as material type, valuation
class, material group, and division (Figure 5.34).
Figure 5.34: Actual costing: selection results—extended view
Click on the BACK ARROW button to move back to the main cockpit run screen.
Figure 5.35 shows the main cockpit screen after refreshing the status.
Save it and click on the BACK ARROW button to move back to the main cockpit
screen.
Now you are ready to execute the first step. Click the EXECUTE button.
Figure 5.37 shows the results of the step ‘Determine costing sequence.’ There are
9 materials at level 1 and one at level 2. The status is green, meaning no errors
found.
Price differences
Price differences occur when the amount posted for a material movement differs
from the standard price in the material master record. The following main
transactions can cause price differences:
Process again
Do not process
These fields control whether all material prices in the valuation area are
determined again when repeating a material price determination step or only the
prices for materials that were not processed should be determined.
Select the indicator PROCESS AGAIN if you want to re-determine all material prices.
If you want to settle only those materials that were not settled successfully in the
last material settlement, select the DO NOT PROCESS indicator. The advantage here
is that fewer materials are settled.
If you make any changes to a material during the actual costing run, then the
recommendation is to select the PROCESS AGAIN indicator to ensure the most
updated information is picked up. To avoid errors with single and multilevel price
determination for subsequent levels, SAP recommends running the
price determination with the option: materials already processed: process
again.
Parameters:
You can set a threshold percentage for a warning or error message to compare
the actual cost results against the standard cost for the period or actual cost from
the preceding period.
This is useful to avoid significant price changes for a material. This warning
message highlights the materials with large variances according to the percentage
selected.
For your example, select 10% for a warning message against the standard prices.
Save your settings and click on the BACK ARROW button to move back to the main
cockpit screen.
Before the single-level price determination step can be performed, you have to
authorize the execution of the step by clicking on the LOCK button (Figure 5.39).
Notice that when you unlock for the single level, the multilevel step is also
authorized.
Now you are ready to execute the single-level step. Click the EXECUTE button.
Figure 5.41 shows the single-level price determination log results. There are some
warning messages now and these are related to costing variances based on the
10% threshold as shown in Figure 5.40. Click the MESSAGES button to review the
warning messages.
Figure 5.41: Single-level price determination results
Materials 1567, 1573, and 1579 have exceeded the established threshold of 10%
(Figure 5.42). At this point, you should analyze the transactions posted in the
month for these items and try to identify the cause of the cost increase.
Transaction CKM3N should be used for this analysis and to review the single-level
price determination for any other material. Please see Figure 5.43.
Figure 5.42: Warning messages for price changes in single-level price determination
Similar to the single level, in the multilevel step you can also set a percentage
threshold to warn when the price variance is reached. The system will perform the
price determination, but it will issue a warning message as well.
You can also set a percentage for the overall variance to avoid a significant price
change for a material. If the new cost is above the percentage defined, the system
will issue an error message and it will not perform the price determination.
For your scenario, use 10% for the multilevel variances warning message.
Click on EDIT and then select SHOW POST PROCESSING OPTIONS. New fields appear on
the screen, as seen in Figure 5.47.
In case you need to re-run the multilevel for one or several materials without
running it for all items, you can expand the post-processing options and update
the material number and plants to be reprocessed. This function can be useful for
further analysis of errors, for example, for a specific material, but you should
always carry out the multilevel step for all materials, otherwise there could be
dependent subsequent materials not reprocessed.
Save your settings and click on the BACK ARROW button to move back to the main
cockpit screen.
Now you are ready to execute the multilevel price determination. Click the EXECUTE
button.
Figure 5.47: Multilevel price determination post-processing options
Use CKM3N to check the results of the multilevel material price determination.
Now that the multilevel price determination is performed, look at the cost of the
finished product—material 1579. Please see Figure 5.49.
Enter material number, plant, period, and fiscal year. Now click on the PRICE AND
INVENTORY VALUES button to display the standard cost and the new PUP, which is
the weighted average actual cost.
This product has the standard price of $75.63 and the actual cost calculated is
$96.46. Note that this is the PUP for this product in September and that would be
the amount you will see in your balance sheet account in FI after the post-closing
entries step occurs.
If you expand the ENDING INVENTORY portion at the bottom of the screen, you will
see the difference received from single and multilevel price determination steps. If
you DOUBLE CLICK on each entry, you will see the details of each variance that
comprises this total. This type of analysis is covered in Section 6.2.
This product has one unit sold, therefore, a portion of the total price differences
will be allocated to cost of goods sold during the ‘Revaluation of consumption’
step.
Note that the PERIOD STATUS of the material has changed to PRICE DETERMINED
(MULTILEVEL). There are three more steps (Revaluation of consumption, WIP
revaluation, and Post closing) left to be completed.
Now go back to CKMCLP again and click on the BACK ARROW button to move back
to the main cockpit screen.
Figure 5.50 shows the main cockpit screen after refreshing the status.
Save the settings and click on the BACK ARROW button to move back to the main
cockpit screen.
Now you are ready to execute the Revaluation of Consumption. Click the EXECUTE
button.
Figure 5.53 shows the Revaluation of Consumption log results.
The status is green, which means there are no errors.
The revaluation amount is going to be posted to the original G/L account as
expected. The amounts in local and group currency are available on this report.
Please note this is just the anticipated revaluation, there is no accounting posting
yet. The accounting postings only take place when the ‘Post closing’ step is
performed.
Figure 5.53: Revaluation of consumption results
Go back to CKM3N and click on the REFRESH button to update the data and reflect
the information from the revaluation that you just ran for material 1579.
If you have closed CKM3N, just enter the material, plant, period, and fiscal
year again.
Now expand the CONSUMPTION category as shown in Figure 5.54. Note that the
same amount seen in the CKMLCP report is available in CKM3N. The cost of
goods sold in account 893010 will be increased by $20.83 when you run the post-
closing step.
Go back to CKMCLP again and click on the BACK ARROW button to move back to
the main cockpit screen.
Figure 5.55 shows the costing cockpit screen after refreshing the status data.
WIP revaluation also includes the option to run the step for single or multiple
materials. Click on EDIT and then select Show extended selection. New fields
appear that need to be filled in: MATERIAL, PLANT, and VALUATION TYPE (in case your
company has materials subject to split valuation to manage particular valuation
area separately). See Figure 5.58.
Save the settings and click on the BACK ARROW button to move back to the main
cockpit screen.
Now you are ready to execute the WIP Revaluation. Click the EXECUTE button.
Figure 5.59 shows the WIP Revaluation results log.
The status is green, which means there are no errors. Both materials and
activities were successfully executed.
Figure 5.59: WIP revaluation results log
Go back to CKMCLP again and click on the BACK ARROW button to move back to
the main cockpit screen.
Figure 5.60 shows the main cockpit screen after refreshing the status data.
The transaction for the value flow monitor is CKMVFM. It can also be accessed
through the menu path: ACCOUNTING • CONTROLLING • PRODUCT COST CONTROLLING •
ACTUAL COSTING/MATERIAL LEDGER • INFORMATION SYSTEM • VALUE FLOW MONITOR.
Figure 5.61 shows the selection screen for this report.
Figure 5.61: Value flow monitor—selection screen
At the bottom of the screen (Figure 5.62), you will have to provide a name for the
extract before you run the report. For performance reasons, you must create an
extract for each run; this is a mandatory field.
Run the report for company code M100 and plant M110.
It is important to select the plants and, if possible, the material number range so
that the report can be executed faster.
You can select either the option to display all materials or the option to display
only materials with not distributed or not included differences. If there are
no open differences, the system will issue the message ‘No data selected’.
For illustration purposes, run the report with all price differences so that you can
see how the report looks. Figure 5.63 shows the report output.
You can see all materials grouped by valuation class. You can expand to see the
materials assigned to each plant. If you look at the columns to the right of each
material, you will see the breakdown of the differences allocated to cost of goods
sold, WIP, and ending inventory. If you click on VIEW for the drop-down list, you will
see that you can change the output to show the data in a different layout or only
NOT DISTRIBUTED VALUES.
If there are any non-distributed values, then check the documents that cause the
non-distributed or not included values in CKM3N. There is also drilldown
functionality on this report, so if you double click on any material item, you will go
to CKM3N so that you can do further analysis on the material movements and
price differences. This is handy, especially when reviewing items with amounts not
distributed.
In the case of not distributed values related to price differences to a goods receipt
from prior months, you can authorize the system to include the differences to the
cost of the items. You have to delete the PRICE LIMITER QUANTITY in CKMVFM. Then
you will have to repeat the material ledger steps to ensure all price differences are
now allocated accordingly.
In CKMVFM, if you highlight the MATERIAL and click the NOT DISTRIBUTED button, you
will see exactly where the undistributed values come from.
If the existing differences cannot be absorbed due to stock shortage, which
misrepresents the actual price, investigate the material movements that caused
the discrepancy using CKM3N and then determine the best way to create an
adjustment. Sometimes, you need to use MR22 to adjust those large favorable
price differences so that the system can post without any issue. If a credit price
difference is so high the inventory would become negative, the system cannot
post the closing for that item. In that situation, you may have to use MR22 to
reduce the price difference to an acceptable amount.
Note that after any material movement or price adjustments, the SAP Material
Ledger closing steps have to be carried out from the start, so that the system uses
the most updated data.
Additional information on how to analyze the non-allocated price differences and
possible causes of the issues can be found in SAP OSS Notes 908776, 744090,
and 2123418.
Further details on how to delete the price limiter quantity for not distributed
differences can be found in OSS notes 1871499 and 2207543.
You can also change the display view of CKMVFM. Figure 5.64 shows the
material list view, which is a flat ALV list and it does not have the ALV trees as
seen in Figure 5.63.
Figure 5.64: Value flow monitor—material list view
For your scenario, there is no price difference not distributed, not allocated, and
not included. There is only one material relevant to multilevel price determination
and both single-level and multilevel steps are completed, as shown in Figure 5.64,
so now the only outstanding step in the material closing example is post closing.
If you are revaluing the inventory, this activity posts the price differences and
exchange rate differences assigned to ending inventory to the material
inventory account. If you are not revaluing the inventory, then the actual
variance is posted to the account(s) assigned to LKW transaction key OBYC
as discussed in Section 3.13.15.
The activity posts the price differences and exchange rate differences that are
assigned to Revaluation of Consumption to the original P&L accounts. You
can see these amounts as well as the closing document in material price
analysis.
The system automatically changes the material price control in the previous
period from standard price S to moving average price V in the material
master and updates the periodic unit price (PUP). The price control is
changed to indicate that the PUP is already calculated and new movements
in the previous period are no longer allowed.
The preliminary valuation price (standard price) remains unchanged and can
continue to be displayed in the material master or material price analysis
(CKM3N).
Price and exchange rate differences posted to inventory accounts for the previous
period are immediately reversed on the first day of the subsequent month. Those
values become the beginning price difference for the current month. Further
details on this are mentioned in Section 6.4.
Now that you have an understanding on what the post-closing step really does, go
ahead and execute this step.
Click on CHANGE PARAMETERS for POSTING CLOSING in CKMCLP (Figure 5.65) and
update as shown in Figure 5.66.
Figure 5.65: Actual costing run—post closing
Parameters:
If you have chosen to revalue the inventory and consumption usages, make sure
to select the three fields listed below (and as shown in Figure 5.66):
REVALUATE MATERIAL
REVALUATE CONSUMPTION
SET CO ACCOUNT ASSIGNMENT
As mentioned at the beginning of this chapter, when dealing with a large volume
of data, always run this step in the background.
The recommendation is also to run the post-closing step in test mode first, before
update mode.
At the bottom of the screen (Figure 5.66), you will see the parameter NO. OF
MATERIALS IN ML DOC. This indicates how many materials one material ledger
document should contain. The program normally works with a package size of 50,
which is this default in the parameters of closing entries.
When executing the closing entry, if the error F5 727 “MAXIMUM NUMBER OF ITEMS IF
FI REACHED” occurs, you will have to reduce the number of documents per ML
document and complete the closing entries for the remaining materials. This error
occurs if the materials to be posted in a processing package generate too many
line items. The FI document must not contain more than 999 line items.
Save the settings and click on the BACK ARROW button to move back to the main
costing cockpit screen.
Similar to single-level and multilevel steps, you have to authorize the post-closing
entries before you perform this activity. Click on the LOCK button to allow the
posting entries (Figure 5.65).
Now you can proceed with the post closing. This is the last step in the actual
costing cockpit. Click the EXECUTE button.
Figure 5.67 shows the post-closing run results log.
The status is green, which means there are no errors. Both materials and
activities were successfully posted.
Figure 5.67: Post-closing results log
Click on the BACK ARROW button to move back to the main cockpit screen.
Figure 5.68 shows the main costing cockpit screen after refreshing the status.
For this scenario, use the manufacturing cost center 121001, as shown in Figure
6.1.
As you can see in Figure 6.2, cost center 121001 has been fully revalued during
the material ledger post closing. Just a few cents left over due to rounding
differences.
Figure 6.2: Cost center report—over/under absorption balance
In Figure 6.4 you can see the breakdown of the differences that comprise the total
from lower levels of $49.38, which were calculated during the multilevel price
determination. The price differences are coming from raw materials and activity
type variances. You can also review further details by double clicking on the
material or activity type.
You can also change the layout to display additional fields available in the material
ledger document.
Now move on to the CONSUMPTION category, there is just one sales transaction
(Figure 6.3)
COGS at standard price are $75.63 plus a material ledger revaluation of $20.83.
Total COGS = $75.63 + 20.83 = $96.46. This is the amount expected in the G/L
account 893010 (see Figure 6.5).
Note that the material ledger closing document type is ML, which makes it easy to
identify the material ledger entries, especially if you want to see the actual cost
delta on the COGS or inventory G/L accounts.
Figure 6.5: Accounting document for a COGS revaluation
While in CKM3N, if you click on PRICE AND INVENTORY VALUES, you will see the unit
standard cost, PUP, the actual cost, and the total inventory value at actuals (see
Figure 6.8).
Note that the price control has changed to V, which indicates the actual cost
process is complete for this period and no additional transactions are allowed for
this product. The standard cost remains unchanged as the PUP is updated in a
separate field.
A review of the closing document for this product as well as the journal entries are
found in Section 6.4.
Figure 6.8: Material price analysis—price and inventory values
6.3 Reviewing material master after material ledger close
The prices, inventory values, and price controls (shown in Figure 6.8) can also be
seen in MM03—accounting 1 view (see Figure 6.9).
Figure 6.12 shows a list of financial documents. Note that there are two
accounting documents, the first one 4700000000 is related to month-end entries
for the period you are closing, September (see Figure 6.13). The next document
4700000001 contains the reversal entries in the next period (October), see Figure
6.14.
If you double click on the FIRST ACCOUNTING DOCUMENT (Figure 6.12) it will take you to
FB03 (Display accounting documents). See Figure 6.13.
Figure 6.14 shows the accounting document that was created simultaneously with
the prior document 4700000000. These are the reversal entries in the subsequent
month (10), which are always posted on the first day of the current month
(October, in this example).
Figure 6.14: Accounting document with material ledger reversing entries
Look at CKM3N, now in period 10 (Figure 6.15). You see the price difference
reversal entry of $83.30. This becomes the beginning price difference for period
10. When the material ledger is closed for period 10, this price difference amount
is taken into account to calculate the new actual cost for this month, in addition to
the price difference that will occur throughout period 10.
Now take a look at the price difference account balances in period 9 for company
code M100.
Use transaction code FAGLB03 for this analysis (Figure 6.16).
Enter your price difference accounts, your company code, and your fiscal year,
and then click EXECUTE.
Figure 6.16: Price difference G/L accounts balance
As you can see below, the balance is zero, which means all actual
costing/material ledger entries were successfully absorbed and posted during
period 9 actual costing.
If you want to see the line item details, you can double click on the balance row
for the period in question (Figure 6.17).
When there is a leftover balance, you have to identify the material numbers and
analyze the transactions in CKM3N to see what caused the non-absorption.
Figure 6.18 shows the line items for the price difference in the G/L accounts. As
you can see, all material ledger closing entries are identified by document type
ML. The text field also provides further detail on the type of entry made (single-
level or multilevel).
Figure 6.18: Price difference accounts—line item display
6.6 Material price analysis (CKM3N)—integrated view
This section reviews some integrated functions available in CKM3N. This
functionality can be useful when analyzing a multi-level product with several
transaction movements.
You will see that you can navigate to different reports from CKM3N without having
to use different transaction codes.
In Figure 6.20 you can see the actual cost component split for the finished product
1579.
If you want to review the cost component at standard price, you can just change
the TYPE OF PRICE.
The default base quantity is costing lot size, but if you click on the drop-down list,
you can change to CURRENT INVENTORY, PRICE UNIT, or USER ENTRY and define the
quantity that you would like to display the cost component. This is a functionality
that allows you to see exactly the proportion of cost for each cost component or
group of expenses.
Actual cost and cost component are also available in group currency and group
valuation. To display them, just change the CURRENCY/VALUATION VIEW on the screen
(Figure 6.20).
Figure 6.21 shows the actual costing component split in group currency.
Figure 6.21: Actual cost component split in group currency
In CKM3N, It is also possible to display the cost component for each group of
transactions (beginning inventory, receipts, consumption, and ending inventory).
In CKM3N initial view, just change the view to the COST COMPONENT, as shown in
Figure 6.22.
If you are accessing the actual BOM directly from transaction code CKMLQS, you
have to enter material, plant, valuation type (if working with split valuation),
period, and fiscal year, and then click EXECUTE or press “F8”. See the selection
screen in Figure 6.24.
Figure 6.25 shows the report output. The report is exactly the same when
accessing through CKM3N, the only difference is that this transaction does not
show the CKM3N report on the right-hand side. You can navigate to CKM3N, by
double clicking on any item of the BOM.
Figure 6.24: CKMLQS—Actual bill of material selection screen
You are encouraged to explore the other integration functions in the CKM3N
transaction.
6.6.3 WIP at actual cost
Another great report for analysis of work in process at actual cost is transaction
COMLWIPDISP—Display of WIP for Actual Costs.
Fill in your company code and your plant(s), or you can run the report at the
company level, if you want to reconcile the total WIP from this report with FI
balances. You can also run the report for a specific material, material type,
business area, etc.
For now, run the report for plant M110, as shown in Figure 6.26.
In Figure 6.27 you see the total WIP per production order, the WIP at standard,
WIP price differences, and the accumulated amount. For subsequent months, you
can also add WIP change columns to the report.
If you want to review the price differences breakdown for a specific production
order, just highlight the ORDER or any field in the order row and click on DETAILED
REPORT WIP and the detail will be displayed at the bottom of the screen, as shown
in Figure 6.28.
Figure 6.27: WIP at actual costs report
The total WIP Cumulative of $82,717.82 shown in Figure 6.27 should balance with
the WIP G/L accounts after material ledger closing. For your case, you have only
one account and it matches the G/L balance, as you can see in Figure 6.29.
In Figure 7.2, enter your CO Area and Company Code. There could be several
company codes and controlling areas attached to the same periodic run,
depending on your business requirements.
Now click the VALUE FIELD button to select the value fields for actual cost (Figure
7.3).
Figure 7.2: Periodic valuation: selection criteria
In Figure 7.3 you see the selection of value fields to be used in the periodic
valuation as defined in the configuration step (described in Section 3.15.4) for
both the legal and group valuation.
Once all relevant value fields are selected, click EXECUTE or press “F8”. The log
output is shown in Figure 7.4.
Figure 7.3: Periodic valuation—value fields selection
For a periodic valuation executed without errors you can display the results from
this screen in a few different ways. These simulation options are useful before you
run the process in update mode.
Using KE24 to display line items
For this option, you have to click on the button DISPLAY USING LINE ITEM SIMULATION.
You can just double click on the line item document or change the report layout to
display the value fields that are being updated to actual cost for your review.
As mentioned earlier in this chapter, the delta line items are also identified as 1
(periodic valuation) in the field point of valuation in COPA line items.
In case you need to reverse the periodic valuation line items, use transaction
KE27S and then post again with KE27.
Once you have performed a periodic valuation, you can display the new values in
the COPA information system, either using KE24 or KE30 (if you have your own
COPA reports).
Review the periodic valuation in KE24 for finished product 1579. See Figure 7.6.
Figure 7.6: COPA line items—periodic valuation
Note that the periodic valuation transferred the total COGS as well as the actual
cost component split as defined in the configuration settings in COPA. The
amounts posted are exactly the same as the amounts found in CKM3N (cost
component view), Figure 7.7.
Similar information is available in group currency.
You have to use the value fields for actual costs and build a summary report in
KE30, according to your company requirements.
Figure 7.7: COGS breakdown by cost component
8 SAP Material Ledger reporting
This chapter reviews some key reports in SAP Material Ledger aside from
CKM3N and the ones mentioned in Chapter 6.
8.1 Material list with price and inventory values
This is a good report for inventory balances. It provides the inventory volumes for
selected materials or valuated sales order, and project stocks for a specific period.
The materials can be grouped by material type and valuation class and you can
also define other totals and subtotals according to selected criteria. This report
contains useful information for comparison of the standard price and PUP as it
provides standard cost, unit actual cost, and variance % from actual. In addition to
standard and total inventory values, it also details price and exchange rate
differences applied to the ending inventory.
The IMG menu path for the material ledger information system is ACCOUNTING •
CONTROLLING • PRODUCT COST CONTROLLING • ACTUAL COSTING/MATERIAL LEDGER •
INFORMATION SYSTEM • OBJECT LIST.
S_P99_41000062 - PRICES AND INVENTORY VALUES
Enter a material, range, or list of values, or run the report for a PLANT.
If you click on the EXTENDED SELECTION button (plus sign button), additional fields will
become available for filtering your data such as MATERIAL TYPE, VALUATION CLASS,
etc.
You can also select the currency/valuation desired for the report as shown in the
selection screen in Figure 8.1.
Figure 8.1: Price and inventory values report—selection screen
The material ledger status for each material is also available on this report, as you
can see in Figure 8.2. In this example, all materials for plant M110 have the status
70 (closing entry completed).
Another great feature is the drilldown capability, if you double click on any item, it
will take you to CKM3N.
Figure 8.2: Price and inventory values report
8.2 Other useful material ledger reports
Some other useful material ledger reports are listed below. Note some of them
may have been mentioned during the material ledger closing:
KKML0—Execute report
KKML1—Create report
KKML2—Change report
KKML4—Create form
KKML5—Change form
KKMLV—Global variables
KKML7—Maintain key figures
The standard material ledger drilldown report function does not provide a cost
component split. You can enhance the report by using user exits to obtain the cost
component split.
There is also a standard extractor, for example, 0CO_PC_ACT_10, to pull
material ledger cost component split data to BW (business warehouse).
SAP has created several enhancements that improve the reporting capabilities in
SAP Material Ledger. Some of these extended functionalities are to be used with
SAP HANA and SAP BusinessObjects.
For further details on the new reporting capabilities in material ledger reporting,
please refer to the OSS notes below.
Actual cost component split was missing when the actual posting was made
Individual values in a cost component split are incorrect
The manual actual cost component split can be performed using transaction
CKMCCC or through the menu path: ACCOUNTING • CONTROLLING • PRODUCT COST
CONTROLLING • ACTUAL COSTING/MATERIAL LEDGER • MATERIAL LEDGER • SET PRICES.
Alternatively, you can access this function from CKM3N.
Note that the functionalities mentioned in Section 10.2 through Section 10.4
require configuration settings before you execute those transactions. If you think
these solutions could be helpful to your business, you may wish to discuss with
your SAP consultant, business analyst, or system integrator.
10.2 Distribution of usage differences (DUV)
If you use backflushing to record consumption of materials and activities to
manufacturing orders, these consumptions are posted using the planned
quantities.
Backflushing is nothing but an automatic goods issue process that posts the
goods issue when you confirm the operations of an order. This process reduces
the effort for assembly lines to pick the materials to use, however, it creates
inventory differences as the actual consumption was not reported when creating
the goods issue. At month end, a physical inventory count is carried out and the
inventory differences can be distributed to the manufacturing orders proportionally
to the usage in the month.
The system validates the material document information by looking at material
number, plant, storage location, stock type, batch, and movement type.
This function can also be useful in oil and gas companies, for example, which
handle inventory through pipeline where materials are consumed directly into
production process and normally have differences due to temperature-volume
correction factors.
The distribution of inventory differences is performed in transaction CKMDUVMAT
or accessed through menu path: ACCOUNTING • CONTROLLING • PRODUCT COST
CONTROLLING • ACTUAL COSTING/MATERIAL LEDGER • ACTUAL COSTING • DISTRIBUTION OF
USAGE VARIANCES.
10.3 Alternative valution run (AVR)
The alternative valuation run (AVR) is a costing tool similar to the actual costing
cockpit discussed in Section 5.4. The AVR is normally used in addition to the
costing run for the periodic actual costing. The main advantage of AVR is that you
can accumulate the inventory values over several periods, unlike the periodic
actual costing run that can only be performed once for each month. Multiple
alternative runs are possible for each material and period.
The AVR can be used as an alternative valuation to meet other company
requirements such as:
The alternative valuation run is only available if you have activated the actual
costing. It works similar to the actual costing run and it aggregates all receipts,
price differences, and consumptions to determine the accumulated price for the
period of the AVR costing run. SAP refers to this accumulated price as
cumulation.
AVR runs are stored separately from periodic costing data. The following reporting
and analysis tools can be used for AVR in the same way as periodic actual
costing:
Figure 10.1 shows an example on how the cumulation run works by aggregating
the periodic values into an accumulated price over multiple periods.
Figure 10.1: Alternative valuation run example (Source: SAP help portal)
You can choose to transfer the alternative valuation run results to FI and a cost
center or calculate the values for information purposes.
The transaction code to perform the alternative valuation run is CKMLCPAVR. It is
a costing cockpit similar to CKMLCP.
10.4 Business functions (enhancement packages 5 and 6)
Business functions are functionalities that SAP makes available through an
enhancement package where the clients have the option to activate them or not.
You may just activate a function which is relevant for your business.
Most of the time, companies don’t even realize they have such great
functionalities that could be very useful as part of their standard system, if
activated.
To make the most of SAP, you should know about the new financial- and
controlling-related business functions that are available with enhancement
packages 5 and 6. Note that these business functions do not have licensing
implications.
Enhancement packages are software innovations that are optionally installed on
client demand, unlike support packages which are mandatory as they contain
fixes and/or legal changes.
Typically an enhancement package contains the current enhancements as well as
content from earlier packages.
Transaction SFW5 (switch framework) shows the business functions available.
Alternatively, you may use SAP Portal to research the business functions that you
may need.
You should discuss with your system administrator if you would like to turn on
such selected business functions.
Occasionally, CO advancements or innovations can be found under logistics
because of the integrated nature of SAP ERP.
Figure 10.2: Value flow for the multiple valuation of cost of goods manufactured—source: SAP Help Portal)
Neither the intercompany process nor the periodic costing run change with the
use of the parallel valuation of cost of goods manufactured.
At the end of the month, you carry out a periodic costing run for your actual
costing (transaction CKMLCP) and an alternative valuation run (transaction
CKMLCPAVR) for the parallel COGM valuation.
You perform the parallel valuation using the same costing cockpit for the
alternative valuation run (AVR), which was discussed in Section 10.3. When
setting up the CKMLCPAVR, you must indicate that the run is for parallel costs of
good manufactured.
You can also post the results to FI to reflect the inventory values according to
different accounting principles. You should indicate that option in the settings tab
of the costing run.
AVR results are compared by material with the current material valuation. The
difference is posted to a delta stock account with transaction key BSD and the
offset account is UMD.
In order to keep the parallel valuation separate, the recommendation is to have a
G/L account other than BSX for BSD transaction key in OBYC.
Michael Esser:
Investment Project Controlling with SAP®
SAP ERP functionality for investment controlling
Concepts, roles and different scenarios
Effective planning and reporting
Stefan Eifler:
Quick Guide to SAP® CO-PA (Profitability Analysis)
Basic organizational entities and master data
Define the actual value flow
Set up a planning environment
Create your own reports
Paul Ovigele:
Reconciling SAP® CO-PA to the General Ledger
Learn the Difference between Costing-based and Accounting-based
CO-PA
Walk through Various Value Flows into CO-PA
Match the Cost-of-Sales Account with Corresponding Value Fields in
CO-PA
Tanya Duncan:
Practical Guide to SAP® CO-PC (Product Cost Controlling)
Cost Center Planning Process and Costing Run Execution
Actual Cost Analysis & Reporting
Controlling Master Data
Month End Processes in Details
Ashish Sampat:
First Steps in SAP® Controlling (CO)
Cost center and product cost planning and actual cost flow
Best practices for cost absorption using Product Cost Controlling
Month-end closing activities in SAP Controlling
Examples and screenshots based on a case study approach
Ann Cacciottolli:
First Steps in SAP® Financial Accounting (FI)
Overview of key SAP Financials functionality and SAP ERP integration
Step-by-step guide to entering transactions
SAP Financials reporting capabilities
Hands-on instruction based on examples and screenshots
Jörg Böke:
SAP® BI Analysis Office — a Practical Guide
Installation and prerequisites
Analysis Excel Pivot, Ribbon and Context Menu Explained
Enhanced reporting with API and Visual Basic (VBA)
Comparison between Analysis Office AO and BEx