Costing Views in SAP CO Product Costing
Costing 1 view
The Costing 1 view contains many fields relevant to cost estimates, including general data and quantity structure data (see Figure 3.8).
Figure 3.8: Material master costing 1 view
Do not cost
The checkbox Do Not Cost can be flagged to indicate a material is not relevant for costing because it is obsolete or discontinued.
Origin groups can be indicated on a material to further divide cost elements within a standard cost, so you can assign them to a separate cost component. A cost component is a group of similar cost elements like material, overhead, and labor. Origin groups can be used in a variety of ways throughout the system include costing sheets and unit cost estimates.
Origin groups are configured in transaction OKZ1 or through the IMG menu path CONTROLLING • PRODUCT COST CONTROLLING • PRODUCT COST PLANNING • BASIC SETTINGS FOR MATERIAL COSTING • DEFINE ORIGIN GROUPS.
Origin group example
If you have a particular portion of a cost of a component that you want to show separated, you can indicate an origin group on the material master so that material shows as a separate line item in the cost itemization. This is helpful when the cost of that component is of greater importance than other components.
Overhead group can be used to indicate the amount of overhead costs to apply based on configuration in a costing sheet. There are some costs that are not included with BOMs and routings and need to be added as overhead costs. A costing sheet is an option for adding in overhead costs and overhead groups can be used to indicate which part of the costing sheet is relevant.
You can apply an overhead rate as a percentage or a rate per a unit of measure in a costing sheet. Overhead rates can be applied across all materials in a plant, in which case an overhead group would not be required.
Overhead group example
For example, you may choose to add electricity as an overhead cost on top of the production cost of a material because it does not account for in the BOM or routing. By using different overhead groups, you could indicate that different production lines have varying electricity costs.
Plant-specific material status
The plant-specific material status and valid from fields are also on the MRP 1 view. The plant-specific material status can be used to block a material for a particular plant that is unusable for certain functions in the system. Typically this field is used to indicate a material master is still being edited, or the material is discontinued or obsolete.
SAP standard plant-specific material statuses:
01: Blocked for procurement/warehouse
02: Blocked for task list/BOM
The configuration for plant-specific material statuses can be accessed through transaction OMS4, or by following the IMG menu pathCONTROLLING • PRODUCT COST CONTROLLING • PRODUCT COST PLANNING • MATERIAL COST ESTIMATE WITH QUANTITY STRUCTURE • SETTINGS FOR QUANTITY STRUCTURE CONTROL • MATERIAL DATA • CHECK MATERIAL STATUS.
The ‘Valid From’ date field indicated when the plant-specific material status is valid. This field could be helpful if a material is set to become obsolete or discontinued as of a particular date.
With quantity structure
The checkbox With Quantity Structure should be selected for materials that should be costed with quantity structure (BOM and routing). As a default, this checkbox should be selected for all materials. You do not need to deselect this checkbox if a material is produced and therefore, does not have a BOM and routing.
If the checkbox is deselected a warning will appear, but a cost estimate will still be created using quantity structure in transaction CK11N to create an individual cost estimate. In transaction CK40N, the material will be costed ignoring the quantity structure and the system will search for an appropriate price using the valuation variant configuration.
Keep with quantity structure selected for all materials
I recommend that you keep ‘With Quantity Structure’ selected for all materials unless you are using a unit costing, which means costing without quantity structure. This checkbox could be useful if you are developing a BOM and routing for this material and are not ready to cost the material using quantity structure.
Material origin should be selected for all components which you wish to see the material number in controlling reports. As a general rule, the material origin checkbox can be selected for all materials because it gives you greater visibility to costs.
Material origin program
You can run program RKHKMAT0 in transaction SA38 to set the material origin indicator on materials already created. This program can also be used to remove the material origin indicator if desired.
It is important to indicate a variance key in order to calculate variances on manufacturing orders or product cost collectors. The configuration within the variance key decides if production variances are calculated after the scrap value is subtracted from actual costs. Generally, one variance key is appropriate for all materials within a plant and all materials should receive a variance key.
A profit center can be indicated on a material in order to flow material postings to the profit center accounting ledger. Profit centers are typically created for revenue generating areas within a company. You can also indicate a profit center on the Sales, MRP, and Plant Data material master views which will default to the Costing 1 view.
Quantity structure data
Costing-specific quantity structure fields can be used to indicate different field settings that costing would like to elect instead of the fields designated by production personnel.
Alternative BOM refers to a particular BOM that should be used for costing. There are often multiple BOMs created to indicate various combinations of component materials that can be used to produce a finished or semi-finished good.
BOM usage indicates if the selected BOM is a production, engineering/design, or costing BOM. Some companies elect to maintain costing BOMs separately from production BOMs in order to have more control within product costing over the components used for cost estimates. This is a substantial undertaking and I do not recommend it, however the option is available.
The group field refers to a task list group, which allows you to select a particular routing. There are often multiple routings created for the same produced material because there are multiple work centers or production activities that can be used to produce a material.
The group counter indicates a particular routing within a task list group.
The task list type indicates a particular type of routing (i.e. master recipe, routing, and rate routing have different task list types). Note that task list types 3, A, E, and T are not relevant for product costing.
Task List Types:
0: Standard Network
2: Master Recipe
3: Rough–cut Planning Profile
A: General maintenance task list
E: Equipment Task List
M: Reference Rate Routing
Q: Inspection Plan
R: Rate Routing
S: Reference Operation Set
T: Task List for Functional Location
You can also choose a special procurement key for costing rather than using the special procurement key indicated on the MRP 2 view.
Special procurement dey:
20: External procurement
40: Stock transfer (procurement from alternate plant)
45: Stock transfer from plant to MRP area
50: Phantom assembly
52: Direct production / collective order
60: Phantom in planning
70: Withdrawal from alternative plant
80: Production in alternative plant
The configuration for special procurement types can be accessed through transaction OMD9, or by following the IMG menu pathCONTROLLING • PRODUCT COST CONTROLLING • PRODUCT COST PLANNING • MATERIAL COST ESTIMATE WITH QUANTITY STRUCTURE • SETTINGS FOR QUANTITY STRUCTURE CONTROL • MATERIAL DATA • CHECK SPECIAL PROCUREMENT TYPES.
The quantity structure fields are typically not maintained on the Costing 1 view, unless you have a scenario where you want to cost a material using a different BOM, routing, or production version.
Co-product, joint production, and fixed price co-product are also available checkboxes within this section on the Costing 1 view. Co-products are materials that are produced simultaneously with another product or products. You can select co-product to calculate the proportionate amount of costs based on an apportionment structure which determines how costs are distributed to co-products. The co-product field is also available on the MRP 1 view.
Joint production is the simultaneous production of multiple materials during a single production process. Joint production can be selected to assign an apportionment structure to distribute costs between joint production materials. The joint production field is also available on the MRP 1 view.
Fixed price co-product refers to a product that has a preset price and should not receive an apportionment structure. This checkbox can only be selected in conjunction with the co-product checkbox.
It is helpful to create a training document with clear instructions on how to set up accounting and costing view fields on material masters. “If, then” type statements are very helpful for users that create materials, whether they are product costing users or a centralized master data team.
Costing lot size
Costing lot size is a mandatory, plant-specific field that is used to determine the denominator during costing. Costing lot size is the lot size which you are costing and it is often used to spread fixed costs over a lot size. For example, you may want to spread fixed setup costs over your average production run size to reduce lot size variances. This field can be set greater than or equal to the price unit, but it cannot be less than the price unit.
When costing an individual material in transaction CK11N, you have the option to change the costing lot size. This can be helpful to test the effect of changing the costing lot size to spread costs over a different lot size. This option is not available in the costing run transaction CK40N.
Costing 2 view
The Costing 2 view contains cost estimate fields, price fields, and valuation data (see Figure 3.9).
Figure 3.9: Material master costing 2 view
The future price field on the Costing 2 view of a material holds the most recently marked cost estimate. A marked cost estimate is a held cost estimate that is available to be released to revalue inventory. You can continue costing materials and marking costs as many times as needed, but you can only release one cost estimate for a period. A released cost estimate is the current cost estimate used to value inventory.
A future price can be manually entered in transaction MM02 if no marked cost estimate exists. The manually entered price will be overwritten if a cost estimate is subsequently marked.
The date used in the cost estimate is indicated in the period and fiscal year fields above the future price. You can also click on the FUTURE button to view the cost estimate in transaction CK13N.
The current price field on the Costing 2 view of a material holds the current released cost estimate used to value inventory and production. A financial document is created when a cost is released and inventory is revalued and the variance is posted to a gain/loss inventory variance account.
The date used in the cost estimate is indicated in the period and fiscal year fields above the current price. You can also click on the CURRENT button to view the cost estimate in transaction CK13N.
The previous price field on the Costing 2 view of a material holds the previously released cost estimate. The date used in the cost estimate is indicated in the period and fiscal year fields above the previous price. You can also click on the previous button to view the cost estimate in transaction CK13N.
Planned price 1, 2, 3
Planned price 1, 2, 3 can be used to hold additional prices for a material with relevant dates. In the valuation variant configuration which determines the strategy for how to cost materials, you can choose these planned price fields. In other words, you can set a future price that you would like to use during your next costing run and configure the system to pick up that price. In addition, you can release costing runs to these fields if you configure the costing and valuation variant to allow price updates to fields other than the standard price field.
Planned prices can be useful for entering prices prior to the purchasing department creating a purchase information record or quotation with a vendor agreed price.