SAP Production Costing is a Controlling module, is utilized to esteem the internal cost of materials and generation for profitability & management accounting. Because of costing's high integration with different modules, numerous individuals stay away from it because of the multifaceted nature. From different steps, it will clear that actual cost is determined through purchase prices, actual expenses, and confirmed production quantities. Actual cost is contrasted with standard cost through fluctuation investigation to settle on administration choices and decide profitability.

Overview

All through a given period, real costs are recorded in SAP as buys are made, finance is handled, bills are paid, and production occurs. At month-end, Work in Process, Variance, and Settlement are ascertained. The variance between actual cost & standard cost can bring about changes to product costing for the following time frame or year. Cost are settled and the posting time frame is closed toward the finish of the month end procedure to maintain a strategic distance from material development or bookkeeping postings in the past period. In product cost by order, actual production yield, scrap, and action amounts are entered in a production affirmation. The production costs are gathered on the production orders for audit and settlement. In production cost by period, production cost authorities are utilized to compute WIP, differences, and settlement rather than the planned orders. Before computing fluctuations and settling orders, orders must have gone through WIP figuring to figure out what part (assuming any) of a request isn't finished. You can compute work in process at target costs for Product cost collector, Production requests, and Process orders. Just requests that have a substantial outcomes examination enter and are not in status DLFL (Deletion flag) or DLT (Deleted) are incorporated into WIP figuring. SAP offers variance analysis on the info (utilization, overhead portion, real costs) side and yield (creation amount or valuation) side.

Steps for Product Costing in SAP FICO

In controlling module, Product costing is utilized to esteem the internal cost of materials and production for management accountability and accounting. Numerous individuals maintain a strategic distance from due its multifaceted nature, as integration of high cost with different modules.

The five stages in understanding Product costing in SAP FICO are:

SAP Product Costing

Step 1: Cost Center Planning

Cost focus arranging is the basic advance in understanding product costing. The principle goal of this stage is to design add up to dollars and amounts in each cost focus plant.

Requirements:

1. Company codes and plants in hierarchical structure are planned.

2. Master data revenue driven focuses, cost focuses, essential and auxiliary cost components and movement composes.

In transaction KP06, cost focus dollars are planned by Activity write and cost component. Settled and variable dollars can be entered. Client can design costs underway cost focuses which end up through distributions. In transaction KP26, the cost focus amounts are planned by Activity type. In view of the prior year's real esteems, action rate can be physically entered. Planning activity amounts in view of valuable introduced limit represents interruption is the best practice.

Step 2: Activity Rate Calculation

The fundamental point of this stage is to find the rates of every plan design in each cost focus in a plant.

Requirement:

1. Cost Center Plans are entered: Plan costs in KP06 and Plan action units in KP26.

When we design our cost focus dollars and amounts, it's a great opportunity to ascertain the activity rates which are actualized to esteem inside exercises to create product. We can likewise utilize a mixed approach and plan rates for few cost focuses and exercises and to ascertain different rates in view of the last exercises.

When we design costs for all cost focuses, we can maintain a strategic distance from the following stage of plan allotments. Utilize design evaluations and circulations to allot costs when the arranged costs obtained in overhead cost focuses. The key difference amongst appraisals and appropriations is that dispersion keeps the essential cost component (Identity) of the cost. Appraisals are secondary cost components which go about as a cost shipper to move costs. We can utilize evaluations, appropriations or mixed approach of both. The arrangement appraisals and dispersions are made in Transactions KSV7 and KSU7 and executed in KSUB and KSVB transactions.

Step 3: Quantity Structure

This progression causes you to appraise the segments of manufactured goods, cost of sold good in light of the BOM and Routing.

Requirement:

1. Master information is made:

2. Material Masters (counting MRP, Accounting and Cost sees)

3. Bill of Materials (BOM)

4. Work Centers (Cost Centers and Activity Types)

5. Routings (Product Planning) or

6. Master Recipes (Production Planning – Process Industries)

7. Production Versions

8. Production Cost Collectors (Production Planning Repetitive Manufacturing)

Quantity Structure is a key idea. It is a basic mix point amongst Finance and Logistics modules. There are a few parts of Quantity Structure specifically:

1. In a product, a material master with an unmistakable fit/frame in a plant. It contains numerous perspectives, for example, Material Resource Planning (MRP) sees, accounting perspectives and costing sees. Acquirement compose and uncommon acquisition are the two key fields in costing. The acquisition field alludes to a material which is made inside, obtained or both. While social procurement alludes to a material which is sub-contracted, obtained from another plant.

2. Bill of Materials (BOM) is made for each inside delivered material. The BOM list contains the segment materials and amounts required to create a semi-completed or completed goods. Contingent upon the value control with standard or variable normal cost of the BOM parts, the material cost of the product is calculated.

3. A work focus recognizes a machine or work region where a production procedure is performed. Notwithstanding BOM, a steering is made to show the procedures important to create a material. In production planning, a steering has arrangement of tasks which additionally incorporates work focuses and activity quantities.

4. An master formula is utilized for batch-oriented process fabricating. Rate routings and product cost gatherers are utilized as a part of tedious assembling. Product cost authorities are made for every creation variant.

Step 4: Costing Run

Costing run is utilized to cost mass volumes of materials in a specific company code. This enables client to choose materials, explode amount structure, cost, investigate, mark and release.

Requirements:

1. Material Masters (MRP, Accounting and costing sees)

2. Quantity Structure (BOM, Master Recipe or Routing and Production variants)

3. Condition types and production Information records

4. Configuration

5. CO Master Data

Step 5: Actual Cost

This is resolved through real costs, price tag and acclimated production quantity. These cost are coordinated to the standard expenses through difference investigation to recognize benefit and settle on choices on administration.

Requirement:

1. Material Masters (MRP, Costing and Accounting sees)

2. Quantity Structure (Routers/Master Recipe, BOM and Production adaptations)

3. Configuration (WIP, Variance or settlement)

4. CO Master Data (Activity composes, Actual and Primary and optional cost components)

5. Assessment/Distribution Cycles, Actual Statistical Key Figures.

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