Table of Contents Profit Center Accounting Introduction Within SAP ECC, there are several tools available to report and plan profitability. At the company code level, there are various financial statement reporting options like using an income statement to report on periodic profitability at a legal entity basis. Profit center accounting is a tool used for […]
Copy Plant 1000 and Order type PP01 as Plant 01M1 and Order type 19PO
Define Checking control
Path: Production- Shop Floor control – operations – availability check – define checking control
Tcode: OPJK
Copy Plant 1000 and Order type PP01 as Plant 01M1 and Order type 19PO for business functions 1 and 2
Define Material Type assignment
Path: Production – Basic Data – Routing – General Data – Define Material Type assignment
Tcode: OP50
Material Type 02FG and 01SF define in FI-MM
Maintain Overall Plant Parameters
Path: Production – MRP – Plant Parameters – carry out overall maintenance of plant parameters
Tcode: OPPQ
Copy Plant 1000 to Plant 01M1
Click on Maintain – Enter plant 01M1 – Click on MRP Controllers
Click on MRP controller – New entries – Enter Plant 01M1 and save
Click on Conversion under maintain planned orders
Click Planned Order and update Production Order to 19PO
Integration between CO and PP
Check Order Type
Path: Controlling – Product Cost Controlling – Cost Object Controlling – Product Cost by Order – Manufacturing Orders – Check Order Types
Tcode: KOT2
Update your order type 19PO as below
Update Settlement Profile
Update Object Class: Production
Residence Time: 6
Define Cost Accounting relevant default values for order type
Path: Controlling – Product Cost Controlling – Cost Object Controlling – Product Cost by Order – Manufacturing Orders
Update as below:
RA Key: MK14
Costing Variant Plan: 19P
Costing Variant Actual: 19A
End User Steps
Create Finished Goods Material Master
Tcode: MM01
Basic Data 1 and 2 view
Required for all material types
Fields: Base Unit of Measure, Material Group, X-Plant Status, Prod Hierarchy
MRP 1 View (Material Requirement Planning)
MRP Type: ND (No Planning)
Procurement Type: X (Both Internal and External)
Storage Location: FG
Availability Check: KP (No Check)
MRP 2 View
Back flush:
Always Back flush
Work Center decides
Accounting 1
Valuation Class: Determine GL account posted
Price Control
S: Standard cost. Used for FG
V: Moving average price. Used for Raw Material
Price Unit: Cost per Unit ( Units specified here)
Costing 1
With Qty Structure: Selected for material costed with BOM + Routing
Material Origin: Select to display Material Number in controlling reports
Variance Key: Specify the one created earlier.
Costing Lot size
Costing 2
Future Price: Current market price
Current Price: Current Release Price
Create Raw Material Master
Tcode: MM01
Material MK14PORMX created
Create MK14PORMY. Same as MK14PORMX
Material MK14PORMY created
Finished Goods
Raw material
MK14POFGX
MK14PORMX
MK14PORMY
Create BOM
Tcode: CS01 / CS02 / CS03
Create Finished Goods BOM (Bill of Material)
Above BOM => need 2 kg and 3 Kg of Raw material X and Y to manufacture 1 Kg of FG
Routing
Routing
Setup Activity
Machine Activity
Labor Activity
Work Center
Operation 10
1
2
3
WC 1
Operation 20
1
2
WC 2
Routing is a list of Operations performed on Raw material to convert it into FG. These operations are performed at locations called work centers.
Create Work Center
Tcode: CR01
To hide Person responsible field, go to OPFA – Basic Data - P3000-VERAN – Hide
SAP Default
Below screen appears when press enter on earlier screen
Cost center to which operational costs would be booked.
Similarly create work center 2 and WK Center 3: MK14WC2
Work center MK14WC2 in plant 01M1 was created
Create Routing
Tcode: CA01
Click Operations tab and enter below data
Control Key PP01: SAP standard for In House Production. Populated from work center
Base Unit 1: Quantity of finished goods (MK14POFGX) that will be produced by applying these operations in the work center
MK14WC1: Work Center 1. Will perform 1 hour of Setup activity, 2 hour of Machine activity and 3 hours of labor to produce one unit of FG
Similarly, for MK14WC2 and MK14WC3
Routing was saved with group 50001604 and material MK14POFGX.
Create Standard Cost
Tcode: CK11N
BOM : CS01
FGX
Kg
RMX
2
RMY
3
Routing: CA01
Setup Activity
M/C Activity
Labor Activity
Work Center
Operation 10
1
2
3
WC 1
Operation 20
1
2
WC 2
Std Cost Estimation
Raw Material
Kg
Avg Price
Total
RMX
2
300
600
RMY
3
400
1200
Total Price RMX +RMY
1800
Operation 10 (Price from KSBT)
Hours
Rate/Hr/EUR
Total
Setup
1
470
470
Machine
2
294
588
Labor
3
285
855
Total Price OP 10
1913
Operation 20
Setup
-
Machine
1
294
294
Labor
2
285
570
Total Price OP 20
864
OH (Valuation variant : OKKN)
MOH
10%
1800
180
AOH
15%
2777
417
Total OH Price / Kg
597
Standard Cost Estimation for 1 Kg
5174
Create Standard Cost Estimate
Tcode: CK11N
Select for detailed itemized view
Itemized Product Cost
Calculated Value in the excel
BOM : CS01
FGX
Kg
RMX
2
RMY
3
Routing: CA01
Setup Activity
M/C Activity
Labor Activity
Work Center
Operation 10
1
2
3
WC 1
Operation 20
1
2
WC 2
Std Cost Estimation
Raw Material
Kg
Avg Price
Total
RMX
2
300
600
RMY
3
400
1200
Total Price RMX +RMY
1800
Operation 10 (Price from KSBT)
Hours
Rate/Hr/EUR
Total
Setup
1
470
470
Machine
2
294
588
Labor
3
285
855
Total Price OP 10
1913
Operation 20
Setup
-
Machine
1
294
294
Labor
2
285
570
Total Price OP 20
864
OH (Valuation variant : OKKN)
MOH
10%
1800
180
AOH
15%
2777
417
Total OH Price / Kg
597
Standard Cost Estimation for 1 Kg
5174
If error add below entries in OBYC – GBB
KSBT
Per Unit price match
330101
Set Up activity cost
470
330102
Machine activity cost
294
330103
Labor activity cost
285
Prl: 1 : Planned Price
Prl 5: Actual Price
OKTZ ( Cost Component Structure to check errors)
If error in log don’t save. Material can be re costed. It cannot be re costed after saving
Mark and Release Standard Cost Estimation
Transaction code: CK24
Mark
Standard cost updated as future price in costing tab 2
Release
Future price now becomes current price in costing tab 2
Standard cost updated as standard cost in accounting tab 1 in MM02
May have to close MM period in MMPV
Display Standard cost with cost component structure
Transaction Code: CK13N
Standard Cost Report: S_P99_41000111
Standard Cost Report: S_P99_41000111
Product Costing Tables
s.no.
Tables
Description
1
KEKO
Product Costing - Header Data
2
CKIS
Items Unit Costing/Itemization Product Costing
Product Costing – Actual Cost
We have calculated standard / estimated cost of FG. Now we will create a Production Order and calculate actual cost of FG. Difference between actual cost and Standard / estimated cost will be the variance
Create Production Order: CO01
Now click Cost Order button. This will calculate the Planned cost of the Production Order. Standard cost is always for 1 unit. Planned cost is for the total production order unit (3 kg in this case). Thus, FC per unit differ between standard cost and planned cost
Click Goto – Cost – Itemization to view the planned cost
Planned cost Material = 2 Kg (BOM) * 3 Kg (Prod Order) = 1800
Planned cost Material OH = 10% OF 1800 (Costing Sheet) = 180
Planned cost activity OH = 15% of total activity cost (268) = 35
COGM / COGS = 3 (Prod Order Qty) * Standard Cost (753.23) = 2259
Create Purchase Order for Raw Material: ME21N
Standard PO (SAP) created under the number 4500043447
Raw Material Receipt from Vendor: MIGO
MIGO - Display
Issue Raw Material to Production Order: MIGO
Raw Material Issued to Production at Moving average price. Check in MM03
Moving average Price MM03
Go to Operations and confirm actual hours spent on converting Raw Material to FG: CO11N
Display Standard cost estimate: CK13N
We have calculated Standard cost / Estimated cost of the finished product. Now we will manufacture finished good and calculate its actual cost. Then find variances between standard cost and actual cost
Steps to manufacture finished goods, find actual cost and month end product costing activities
Create Production Order to manufacture FG: CO01
When Production is saved Planned cost of FG is calculated in the production order. Now standard cost is always for 1 kg of material. Planned cost is for the total Production order material which can be 2 kg or more. There is difference between Standard cost and Planned cost due to fixed cost being same in both
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Table of Contents Product Costing Concepts Find Cost which are part of Product Cost (COGM) Find optimum Lot size for manufacturing the product Find Product cost for each manufacturing location / Plant In Product costing we estimate the product cost. Product cost estimate is also known as standard product cost Various techniques used to calculate
Table of Contents Report Painter Create Own Layout using Report Painter Create Planning Layout: KP65 Click Create – Click Lead Column-Select Cost Center- Click Lead column – Select Characteristic Value and Name Second Lead column – Click New Lead column- Select Cost Element Total Plan Cost Column : Values are not entered in Lead column.
Controlling modules provide information to management for planning, reporting and monitoring of business operations. Controlling and Finance are independent modules in SAP. Data flows between Finance and Controlling module on real time basis. Cost Element provides the integration point between Controlling and Finance. A cost element can be an expense or revenue item. Below are the components of Controlling :
Cost Element Accounting
Cost Center Accounting
Internal Orders
Product Costing
Profit Center Accounting
CO-PA (Controlling and Profitability analysis)
Activity Based Costing
Cost Center
A cost center can be a department like Administration department, Finance Department, Marketing department etc.
A cost center collects and redistribute cost to other departments. Each cost center has a planned cost, Actual cost and their Variance
Key benefits of Cost Center Accounting:
Managers can set budget for the cost centers
Cost Planning for the Cost Centers
Cost Centers collect cost and then this cost can be redistributed to other cost centers on specified rules. For e.g. Maintenance Cost center cost can be distributed to Production, administration and other cost centers who used services of maintenance cost center
Standard Cost
A standard cost is the estimated cost to produce a product
Standard cost is fixed for a period
Standard cost for a product is calculated in transaction CK40N
Planned Cost
A planned cost is the estimated cost for completion of a job order. A standard cost is for one unit of product, whereas planned cost is for a job order.
Planned cost for a production order is calculated in CO01
Actual cost for completion of Production order is calculated in CO01 / CO02
Organization Structure
Controlling Area
The controlling area is an organizational unit in Accounting used to subdivide the business organization from a cost accounting standpoint.
It records and analyze cost element, cost center accounting, internal order, manufacturing related activities (Product costing), and internal unit activities in Profit center accounting
Can assign n number of company codes to a controlling area if below conditions are satisfied
Chart of accounts is same between company codes and controlling area
Fiscal year between companies codes have same number of posting periods (other than special posting periods)
Start and end period is same (Jan-Dec, Apr-Mar) for all fiscal years
Start and end date is same for all fiscal years
Operating Concern
Can assign one or more controlling area to one operating concern
Leading and Non-Leading Ledger
Only leading ledger integrates with controlling area.
Non-Leading ledger does not integrate with controlling area
Create Controlling Area
Transaction code to set controlling area: OKKS
Transaction code to create Controlling area: OKKP
CoCd->CO Area : Cross company code is used when multiple company codes use same controlling area
Currency type: 20- controlling area currency, 30 - Group currency. Only these two currency types should be used for cross company codes
Chart of accounts: Use operating chart of accounts of the companies
Fiscal year variant: Use company code Fiscal year variant
Cost Center Standard hierarchy: This field is mandatory. Value defined here is the highest node in cost center hierarchy
Assign Controlling area to Company codes
Activate below components
Cost center
Select Activity type: This allows analyze of labor activity
Order management; Production order, Process order, Service order
Commitment Management
Profitability analysis is implemented when CO-PA is activated
Profit Center accounting: Required to activate for classic GL. Not required for new GL as part of finance
Projects
Cost Objects
Variance
All currencies
Company code validation: Applies only to cross-company-code cost controlling and to postings from external accounting. E.g.: A procurement order made for a cost center in another company code is possible only if the indicator is inactive.
Number Range
Transaction Code: KANK
In Finance Document types are assigned to number ranges
In controlling CO document are saved are Business transaction types
E.g., of Business Transaction types are
KAUS: Calculate Scrap
KAMV: Manual cost allocation
CO number range is assigned to business transaction type
Procedure: Click the create button. Now create the Group say Primary posting and create number range for this group say 1 to 199999. Now come back to the previous screen. Select the unassigned business transaction. Click button Element, select the group created earlier. This business transaction get assigned to the group and get’s the number range of the group
Group
Number Range
Primary
100000-200000
Secondary
200001-400000
Planning
400001-600000
Controlling Versions
Controlling data is stored in versions
Default version is zero. Version zero is used for both actual and planning. Other versions are used only for planning
Select General version – Select version 0 – Controlling area settings – Select year to be activated – Settings for each fiscal year
Click Price calculation
Plan Method : Average Price
Actual Method : Period Price
Cost Element Accounting
Cost elements are cost carrier between cost objects. A cost element can be represent either as cost or revenue. There are two types of cost elements, Primary and Secondary
Primary Cost Element
Main integration between FI and CO. Values flow from FI to CO through primary CE
All income and expense accounts can be created as a primary CE
GL accounts for WIP and production variance are not created as primary CE. These are calculated in CO. They flow from CO to FI
Secondary Cost Element
These are not represented by GL accounts
They exist only in controlling
They are used for below purpose
Transfer cost between cost objects
Apply direct / Indirect OH to product cost
Transfer values from cost center to CO-PA
Cost Element Categories
Cost element categories classify primary and secondary cost elements. They determine the transactions with which you can use the cost element, such as internal settlement or allocation. The cost element category determines whether you can post to a cost element directly or indirectly:
Direct posting: You post a fixed amount to an account by specifying the account number. You can post directly to all primary cost elements.
Indirect posting: The account is determined automatically at the time of posting. Indirect posting is only possible for secondary cost elements.
Various Cost Element Categories:
01 Primary Cost Element : These are used for expense GL accounts other than sales deductions
12 Sales deductions : This cost comes from Sales and Distribution (VKOA). This cost flows to CO-PA. Category 01 cannot transfer cost from SD to COPA
22 External Settlement
Move cost from CO to FI
Transfer Internal order cost from CO to FI
11 Revenue : These are used for Sales / Revenue GL accounts
21 Internal settlement : Used to settle Service order to cost objects ( Cost center, Internal order, Production Orders, Sales Order)
31 WIP / RA
Used in Product costing. Required for calculation of WIP (Work In Progress) / RA (Result Analysis)
For WIP there are two accounts. WIP B/S account and WIP P/L account
Period 6 WIP BS account is DR and WIP P/L account is Credited. Period 7 (Next period) beginning WIP P/L account is DR and WIP BS account is CR.
41 Indirect OH
FI cost is of two types direct cost and indirect cost. Direct cost like material is traceable to the product. Indirect cost like administrative expenses are not directly traceable to the product. Client can provide a % of material cost, say 10%, which can be assigned as Indirect OH to the product
42 Assessment CE Category
Used to transfer values from Cost center to CO-PA. E.g. transfer marketing department cost to COPA
Transfer cost from one cost center to another cost center
43 Activity Cost Element (Direct OH)
Used to transfer Cost center cost to product based on time spent on job. E.g. Labor activity cost, Assembling cost
Codification
Primary Cost Element
Create Primary Cost Element : KA01/KA02 /KA03 in CO
Create Primary CE automatically in Controlling : OKB2-OKB3-SM35
Create Primary CE in FI : FS00
Secondary Cost Element
Create Secondary Cost Element in Controlling : KA06
List / Display Cost Element: KA23
Primary Cost Element
Secondary CE
Name
CE Category
942000
canteen assessment cost element (distribution is based on number of employees)
42 : Assessment
941000
material indirect overheads cost element (depreciation based on % of material cost)
41 : OH
943000
production dept depreciation direct overheads cost element (for depreciation based on machine hour rate)
43 :
activity allocation/machine hr.
943001
employee cost or labor direct OH cost element (for salaries & canteen dept's distributed cost of production department costs based on labor hour rate)
43 : activity allocation/labor hr.
942001
material assessment OH cost element (based on revenues ratio)
42 : Assessment
942002
marketing assessment OH cost element (based on revenues ratio) (All these are secondary cost elements)
42 : Assessment
Cost Element Numbering rules can be similar to one shown below:
9: Starting Number
41 / 42/43: CE Category
000/002: Sequence number
Cost Element Group
Cost Element Group is an organizational unit storing a group of cost elements. Any number of cost element groups can be defined as part of master data maintenance for valuation, planning and allocation purposes in Cost Element Accounting or Cost Center Accounting. It is used for reporting purpose
Transaction Code : KAH1 / KAH2 / KAH3
Menu Path : Accounting – Controlling – Cost Center Accounting – Master Data – Cost Element Group – KAH1-Create
Total CEG
Primary CE
Material
Employee
Administration
Selling
Secondary CE
Assessment CE
Indirect OH
WIP
Direct OH
Cost Center Accounting
Cost center
Cost centers are responsibility areas for costs within organization and used to capture actual costs of an organization. Costs can be captured as per department wise, area wise, responsibility person wise, etc. Assigning the costs to cost centers determines where the costs are incurred within the organization
Cost center helps to compare actual expenditure against plan expenditure
A cost center represents where cost occurs like location, department, responsibility center
Each cost can be linked to a work center from where cost comes to cost center
Activities like machine activity, cleaning activity etc. are performed in cost center
Overhead
Overhead cost refers to cost that cannot be directly assigned to production of goods and services of a company. Overhead cost can be Direct or Indirect overhead cost
Direct OH: This is allocated to the product based on activity
Indirect OH
Non activity related overhead cost: It is allocated to product in costing sheet. For e.g. 20% of material cost
Cost Center accounting include below topic
Cost Center standard hierarchy
Cost Center category
Master data
Cost Center
SKF
Activity Type
Planning
Price Calculation
Allocation Methods
Cost Center budget
Actual Posting
Reports
Cost Center Standard hierarchy
Cost center hierarchy consists of groups of cost centers in a tree structure within a controlling area. Cost centers can be grouped together to provide summary cost information. A cost center hierarchy consists of nodes and sub-nodes that cost centers are attached to. A cost center hierarchy comprises all cost centers for a given period and therefore, represents the entire enterprise. This hierarchy is known as the standard hierarchy.
Cost at the top of the Hierarchy is defined in transaction code OKKP
Other cost centers and Cost center group can be defined in transaction code #OKEON
Define standard hierarchy: OKEON
Cost Center Category
The Cost Center category is an indicator in the cost center master data, which specifies the category for the cost center. Examples include administration, production, or sales & distribution cost center category. Cost Center categories provide the ability to safe guard your postings to cost centers as they will prevent non-category costs being posted to the wrong cost center. Cost Center category is also used for reporting purpose
IMG Path : SPRO- CONTROLIING – Cost Center Accounting- Master data -Define Cost center category
Quantity : If selected, quantity can be entered in the cost center
Actual Revenue : If selected, actual revenue cannot be posted to cost center. If not selected the revenues are written to the cost center as statistics only.
Plan Revenue : If selected, plan revenue cannot be posted to cost center. If not selected the revenues are written to the cost center as statistics only.
Create Cost Center Group
Cost center group is a group of cost center. Used for reporting purpose
Cost center standard hierarchy highest node is created in transaction code #OKKP
Create Cost Center Groups in Transaction code OKEON
Cost center group can also be created in transaction codes# KSH1/KSH2/KSH3
Create Cost Centers
Transaction: OKEON or KS01
Transaction to change / display Cost Center: KS02 / KS03
SKF (Statistical Key Figure)
The ‘Statistical Key Figure (SKF)’ is used as the basis (tracing factor) for making allocations (assessments/distributions). They are the statistical data such as number of employees, area in square meters, etc.
Suppose that you are incurring a monthly expense of USD 5,000 in the cost center cafeteria, the cost of which needs to be allocated to other cost centers. You can achieve this by the SKF. Imagine that you want this to be allocated based on the ‘number of employees’ working in each of the other cost centers such as administrative office (100 employees) and the factory (300 employees). You will now use the number of employees as the SKF for allocating the costs.
In SKF allocation, you have the flexibility of using two different SKF Categories; namely, Total value or Fixed value. You will use fixed values in situations where the SKF does not change very often, as in the case of the number of employees etc. You will use Total values in situations where the value is expected to change every now and then, as in the case of power use or water consumption in the cost center
Transaction code to create SKF: KK01 / KK02
SKF
Description
Category
Unit
EMP
No of employees
FIX
EA
SYSTEM
No of Computer units
FIX
EA
POWER
Power charge per month
TOTAL
KW
AREA
Area per cost center
FIX
FT2
SKF Categories
Fixed : This does not change every month. E.g. no. of employees, SQFT area
Total : This is variable and changes every month. E.g. power bill
SKF Group
Group of SKF. Used for reporting purpose
Create SKF group : KBH1 / KBH2
MK21_FIX
MK21_VAR
Activity Type
Various activities are performed by cost center. E.g. of these activities are labor activity, machine activity, cleaning activity etc.
Activity type measure these activities
Activity type is the basis for allocating cost center overhead cost to Products in Product costing
Activity type are assigned to work centers. Maximum of 6 activity types can be assigned to a work center
Activity Type categories
Direct
Manual entry, manual allocation: activity recorded manually. Activity allocated manually
Manual entry, No allocation: Idle time
Indirect
Indirect determination, Indirect allocation
Indirect determination, manual entry
Price Indicator
Manual
System calculated
It could be based on capacity
Price can also be calculated based on activity units. Total cost / Total Hours. Price / Hour
Create Activity Type
Transaction code: KL01 / KL02 /KL03
For each activity type secondary cost element of category 43 is required
Create secondary CE: KA06
Sec CE
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Cost Center Manual Reposting
This is used to move actual amount and quantity from one cost center to another cost center. It is used to correct incorrect actual postings to cost centers
Controlling Business Transaction for Manual reposting is RKU1. Add to number range group in transaction code KANK
Cost Center Report# S_ALR_87013611
Run for Cost Center#3301002
Repost the Rent amount from Cost Center3301002 to Cost Center#3301001