OKEQ - Maintain CO Version
OKOS - Cost Planning for CO Orders
OKOB - Budget Profile for CO Orders
OK14 - Budget Manager
OPTK - Cost Elements Exempted from Availability Control
KANK - Number Range for CO Documents
OK11 - Number Range for Cost Planning and Budgeting
Wanted to find out why we settle production orders to a material and how this works (the background to this).
You create a production order with material so as to produce / manufacture that material in your plant.
When you produce any material you plan / estimate the price of that material initially. When you actually start producing that material you book actual cost on that production order.
So ultimately you have a planed price of the material say Rs. 100 and you have actual cost say Rs. 120 required to produce that material. This means that you have incurred a loss of Rs 20 while producing that material. So now the actual price of material is 120 but you have estimated Rs 100.
Now this Rs 20 has to be loaded on the material. This is done through the settlement against material. The difference betwwen the plan cost and the actual cost i.e. Rs 20 is transferred to the material by settlement.
The same applies in the case of price control "S" ie. repetitive manufacturing and for all the in-process materials price control is "S".
When we do the settlement it will hit the material but under a different account. If it is a loss it will hit the "price difference account - loss". If it is a gain then the amount will go to the "price difference - gain" for that material.
In the above example given, actual cost of the material is rs 120, and estimated price is rs 100, but when you see the material stock report, you will be able to see only rs 100 and not rs 120, even after settlement.
As mention, rs 20 will be taken to the price difference account, which is debit side of the p/l a/c.
This is because when you do a cost roll up to decide the standard price of the material and the price also gets updated as a standard price of the material in the accounting1 view of the material master.
Whenever a GR happens to any material it happens at the price matained in the material master so the stock will be generated at Rs 100 only.
Plan price Rs 100 and Actual Price 120 is actually the variance which should go to COPA for material varance analysis.
You have decided that you will sell that material to customer at the final price of Rs 100 and you have incurred a loss of Rs. 20 because of some reason.
You can't tell customer that you have incurred loss of Rs 20 so now purchase the matrial at Rs 120 from me. That loss will remain with you only in price difference account.
If you want to recover that loss it will be by some other mechanism and not by actully changing the price of the material or it's stock value.
KA01 - Create Primary Cost Element
KA06 - Create Secondary Element
OKO6 - Allocation Structure
OKEU - Source Structure
OKO7 - Settle Profile
SNUM - Number Range for Settlement - Object - CO_ABRECHN
OKE5 - Controlling Settings
KE59 - Create Dummy Profit Center
OKA2 - Maintain Cost Center Categories
OKEG - Maintain Time-based Fields
OKEI - Define the Time Based Fields for Activity Types
KL01 - Create Activity Types
KS01 - Maintain Cost Center
KK01 - Maintain Statistical Key Figures
KA06 - Maintain Allocation Cost Elements
KCAU - Determine Asscessment Receiver Type
KSW1 - Define Periodic Repostings
KSV1 - Defin Distribution
KSU1 - Define Assessment
KP34 - Create User Defined Planning Profiles
OKB9 - Maintain Automatic Account Assignment
Cost center are always associated with Object class OCOST - Overhead costs
- Cost Object are always associated with Object class PRODT - Production
- Reconciliation object are always be associated with PROFT - Proift and sales
- Sales document are always be associated with PRODT - Production
KALA - Activate Reconciliation Ledger
OKKP - Maintain Controlling Area
OBYB - Maintain accounts for the automatic reconciliation posting
OK13 - Determine document number range for reconciliation posting
The document number assigned in transaction KANK is dependent upon a couple of factors like the activity used to update the CO file and the number assigned within the controlling area.
Which number range to used will depend on the group which you have assigned by their CO activity.
Click the Group button to check the various CO activity that have been assigned to each group of number rangeMaterial Master Price Control 'S'. For material with price control 'S', users have to run the product cost estimate to get the latest material price. (usually for material type FERT and HALB)
OMD9 - Check Special Procurement Type
If you are costing the products in the plant they are manufactured in, you can use the special procurement key in the MRP1
view of the materials in the other plants.
Have the special procurement key refer to the production or supplying plant, and when you carry out costing in the other plants, the cost estimate in the production or supplying plant will be pulled through.
If users were requested to do settlement, a report will be required to help them to identify those production order that were TECO - technically complete or DLV - Delivered and CNF - Final Confirm.
Month End Closing, Settle Production Order by batch - CO88
Received Quantity-> transaction CO03 - click Goto -> Goods Movement - total all the posting for movement type 101
ACTUAL FACTORY OUTPUT = CURRENT MOVING AVERAGE COST * PLAN QTY
(ACTUAL VALUE OF INVENTORY AS AT RECEIVING DATE)
ACTUAL FACTORY OUTPUT = ACTUAL COST OF PRODUCTION = ACTUAL INVENTORY VALUE
ONCE THE JOB IS CLOSED, THE SYSTEM WILL UPDATE THE INVENTORY TO REFLECT THE ACTUAL COST OF INVENTORY DURING MONTH END CLOSING.
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Example 1
STOCK BALANCE AT Month End - MM03
STOCK VALUE AT Month End - MM03
DIFFENCE BETWEEN ACTUAL AND RECEIVED QUANTITY = Actual Value in Cost Analysis Job A - Value of Received Quantity
RECEIVED QTY FOR JOB A = Goods Movement - total all the posting for movement type 101
THE ACTUAL DIFFENCE UPDATED TO INVENTORY =
PERCENTAGE OF STOCK (STOCK QUANTITY / RECEIVED QTY * DIFFERENCE )
STOCK BALANCE AT Month End / RECEIVED QTY FOR JOB A * DIFFENCE BETWEEN ACTUAL & PLAN
= Inventory Amount A (Accounting Document - Inventory)
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STOCK BALANCE AT Month End - MM03
STOCK VALUE AT Month End - MM03
DIFFENCE BETWEEN ACTUAL AND RECEIVED QUANTITY = Actual Value in Cost Analysis Job A - Value of Received Quantity
RECEIVED QTY FOR JOB A = Goods Movement - total all the posting for movement type 101
THE ACTUAL DIFFENCE UPDATED TO INVENTORY =
PERCENTAGE OF STOCK (STOCK QUANTITY / RECEIVED QTY * DIFFERENCE )
STOCK BALANCE AT Month End / RECEIVED QTY FOR JOB B * DIFFENCE BETWEEN ACTUAL & PLAN
= Inventory Amount B (Accounting Document - Inventory)
THEREFORE THE TOTAL VALUE OF INVENTORY ADDED TO THIS PART =
JOB A Inventory Amount + JOB B Inventory Amount + STOCK VALUE = Total Value of Inventory
UNIT COST = Total Value of Inventory / Stock Balance at Month End
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Example 2
IF RECEIVED STOCK IS NOT TRANSFER OUT (THAT IS TOTAL RECEIVED IS STILL IN STORE)
JOB VALUE WERE TO BE DIVIDED BY TO TOTAL RECEIVED QTY
JOB A = Actual Value in Cost Analysis Job A / Actual Quantity in Cost Analysis Job A = Job A Unit Price
JOB A = Actual Value in Cost Analysis Job B / Actual Quantity in Cost Analysis Job B = Job B Unit Price
TOTAL STOCK
QUANTITY = Actual Quantity in Cost Analysis A + Actual Quantity in Cost Analysis B + STOCK BALANCE AT Month End = Total QUANTITY
VALUE = Actual Value in Cost Analysis A + Actual Value in Cost Analysis B + STOCK VALUE AT Month End = Total VALUE
IF RECEIVED STOCK IS NOT TRANSFER OUT, THE NEW
UNIT COST = XXXXX will be lower -> Total VALUE / Total QUANTITY
HOWEVER, BECAUSE THERE IS LESS STOCK THAN JOB QUANTITY, THE EXTRA COST INCURRED BY EACH JOB ARE ACCUMULATED AND BEAR BY THE REMAINING PART IN STORE RESULTING IN HIGHER MOVING AVERAGE COST.
To conclude, if you are using control 'V' for your finished goods (FERT) and your production orders involve numerous process, it would be advisable (only a suggestion) to train your people to do a settlement once the production orders have been fully received into store (System status DLV, TECO). This will helps to control the moving average price from wide fluctuations as the moving average price is update before any goods is issue out to customers. If you happened to found any errors after settlement during the same period, you still can do a settlement reverse. However, if the settlement period is different, any error have to be done using the manual journal entries.
How SAP calculate the Moving Average Price Change after settlement?
Copy down the latest moving average price of the material, (MM03 - the Costing View) and quantity on hand (MM03 - Plant/storage location stock view). Amount Stock on hand = quantity on hand * moving average price
transaction KO88
KAH2 - Change cost element group
Version 3.x
Prior to creating any cost centers in your controlling area, you must first complete the standard hierarchy as it is the central cost center hierarchy and acts as the one repository for all the cost centers.
KSH2 - Standard Hierarchy
Enter your Company Code which is the highest node
Click Lower Level (insert cost center group)
Then click Insert Cost Center
A sample hierarchy :-
0001
Cost Center Group 1
Cost Center 1
Cost Center Group 2
Cost Center 2
4.6x
An imputed cost element is a primary cost element and requires a G/L account prior to its creation.
KSAZ - Create the Manual Overhead Costing Sheet for Imputed Cost Calculation
Maintain the Base Calculation - Environment -> Bases
Maintain the Overhead Surcharge - Environment -> Overhead Rates
Maintain the Credit Calculations - Environment -> Credits
A Primary Cost element is used to transfer cost from FI to CO. It is the cost carrier from FI to CO. It has to have a corresponding Gl a/c in FI. Every cost related txn will be carried over to CO by Primary Cost element ONLY.
A Primary cost elements can be directly posted and it is linked to a G/L account and must first be created in the FI Chart of Accounts.
A Secondary Cost element is used only in txn which are within CO only. There is no Txn effect in FI. It can be allocation, Distribution Reposting etc within CO ONLY. These data does not flow to FI.
A Secondary cost elements cannot be directly posted. An example will be the Cost Center. Secondary cost elements can only be created in Controlling.
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Cost element accounting records and groups the costs incurred. Cost elements are assigned to a commitment item in Funds Management. Many cost elements can be assigned to one CI. To simplify valuations, planning and cost allocations you can
combine cost elements into groups (for example, separate groups for salaries and bonuses). By combining cost element groups according to their intended purposes, you can create cost element hierarchies. This is valuable.
Cost elements describe the origin of costs. Cost element classifies the organizations valuated consumption of production factors within a controlling area. A cost element corresponds to a cost relevant item in the chart of accounts. Cost elements are defined as either primary or secondary
Every Profit and Loss GL account that needs to be controlled has to be defined as a cost element in SAP. Just as in FI General Ledger Accounts exist, in Controlling we have Cost element. Each FI General Ledger Account which is a Profit and Loss Account is also created as a Cost element in SAP
Primary Cost Elements are those which are created from FI general Ledger Accounts and impact the financial accounts eg. Travelling expenses,consumption account infact any Profit and Loss GL account. Primary (Direct Expenses) cost elements arise through the consumption of productions factors that are sourced externally.
Secondary Cost Elements are those which are created only in controlling and does not affect the financials of the company. It is used for internal reporting only. The postings to these accounts do not affect the Profit or Loss of the company.
Secondary (settlement / apportionment from dept to dept) cost elements arise through the consumption of production factors that are provided internally i.e., by the enterprise itself.
Secondary cost elements are posted indirectly.
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KA06 - Create Primary or Secondary Cost elements
If you maintain multiple controlling areas, remember to set the CO Area via Extras -> Set Controlling Area
Actual transaction data is posted only in Version 0.
You can maintain numerous planning versions and all versions are controlling area independent.
OKEQ - Maintain CO Versions
Start by setting the default controlling area Extra -> Set CO Area
There are a total of 6 settings :-
1. General version definition
2. Settings in operation concern
3. Settings for Profit Center Accounting
4. Settings in Controlling Area
5. Settings for Fiscal Year
6. Strategic Activity Based Costing : Delta Version
Maintain Operating Concern
If you intend to implement either the account-based or costing based Profitability Analysis, you need to configure an operaating concern. It is the main organizational unit within CO-PA.
Refer to transaction KEP8 to maintain the operating concern.
Maintaining the Controlling Area
OX06 - Maintain Controlling Area
The cost accounting environment where costs and revenues are managed.
The link between FI and CO is established throught the assignment of company codes to a controlling area.
A controlling area can have multiple company code assignments. However, a company code can be assigned to only one controlling area.
OKKP - Activate the Controlling Area
Assignment of Controlling Area
Here you define which are the components you want to activate :-
