Transaction CK40N is used to execute costing runs, analyze results, and mark and release costs. COST estimates can be created individually in transaction CK11N, but the annual costing process is done in mass using the costing run transaction. The costing run must be created using a costing variant, costing version, controlling area, company code, and transfer control. Therefore, a costing run can only be created for one company code at a time.
The costing run is also created for a particular date range. The end of the date range must be the end of a month. For example, you cannot create a cost estimate that is valid from January 1st to January 15th. The cost estimate must be effective for an entire period. You could recost the material on January 15th and re-release the cost if it needs to be updated. It is typically best to cost materials through the end of the year and then do another costing run or cost estimate if needed before the end of the year (Figure 4.46).
Figure 4.46: Costing run a transaction
The costing run contains six steps. Each step requires you to enter parameters, save, and then execute (see Table 4.1). After executing each step, it is important to review the error log and resolve any errors. Once resolving errors in a given step, you must re-execute each step from the beginning to see the effect. If the results do not update after executing, you can press the refresh button. You have the option to execute any step in the background when processing a large number of materials or, if you prefer, to execute a step at a given date and time.
Table 4.1: Costing run process steps
In the selection step of the costing run, selection parameters are entered to indicate which materials should be costed. You can use many different selection options to choose which materials should or should not be costed. Additional fields are available if you click the dynamic selections button next to variant attributes. You could instead indicate a previous costing run or a selection list in order to determine which materials should be costed.
There are two checkboxes to indicate if configured materials only should be costed, or if the system should always recost materials. Always recost material will have the system ignore transfer control so that all materials are costed in the costing run, even if they are set up for transfer control from another plant.
In each parameter step, you are given processing options. You can elect to run the steps in the background, meaning that they process in a background job and can be scheduled or run immediately. If scheduled to run in the background, when you execute, a popup box will allow you to choose when and how the job should run. You can also select to print the log from each step if desired.
Once your parameters have been selected, save and use the green arrow to return to the previous screen. Then execute the parameter step (see Figure 4.47).
Figure 4.47: Costing run selection parameters
Structure explosion step
In the structure explosion step, the selected materials from the selection step are exploded to pick up component materials from BOM’s. Component materials are gathered from produced material BOM’s. A bill of materials (BOM) should be created for each internally produced material. Component materials are added to the number of materials to be costed.
In the structure explosion parameter step, you can elect to run steps in background, meaning that they process in a background job and can be scheduled or run immediately. If scheduled to run in the background, when you execute, a popup box will allow you to choose when and how the job should run. You can also select to print the log from each step if desired.
Once your parameters have been selected, save and use the green arrow to return to the previous screen. Then execute the selection step (see Figure 4.48).
Figure 4.48: Costing run structure explosion parameters
In the costing step, finished good materials selected from the previous step are costed based on their primary BOM and routing or master recipe specified in production version 1. Unless indicated otherwise in the material master costing 1 view, the BOM and routing or master recipe from production version 1 are always used for costing. Therefore, the most common standard production scenario should be created as production version 1. Any changes in the primary scenario should be made prior to costing materials.
Bills of Materials (also known as BOMs) are created in transaction CS01, changed in transaction CS02, and displayed in transaction CS03. See Figure 4.49 for an example of a BOM header and item detail. The BOM head contains the base quantity, validity data, text information, and administrative data. The base quantity represents the quantity to which the BOM component quantity refers. You can think of the base quantity as a denominator for component quantities on a BOM.
The base quantity should be the smallest unit that can be produced. For example, if we use the example product of shampoo bottles, the finished good material for the shampoo bottle should represent the packaged box of nine shampoo bottles. The base quantity should be the size one packaged container of shampoo: 1 ea. If nine bottles are packed in a box, the base quantity should be one each representing the nine packaged bottled.
Figure 4.49: Bill of material (BOM) header
The components would include chemicals and fragrances to produce nine bottles, nine plastic bottles, nine bottle lids, and the box in which the nine bottles are packaged. If the same shampoo bottles are also packaged in a different configuration of 12 bottles –, that should be a different finished good material master because the BOM (and therefore the cost) will be slightly different. The routing may be identical, but the BOM components would be ingredients, bottles, and lids for 12 bottles instead of 9, and one box for all 12 bottles. The base quantity would still be one each (representing 12 packaged bottles). See Figure 4.50 for an example.
Figure 4.50: Bill of material (BOM) component details
A routing, rate routing, or master recipe is also created to indicate the processes required to produce a material. The routing, rate routing, or master recipe contains operations, or steps, that represent activity quantities per a base quantity.
Routings are used in discrete manufacturing, which is a type of make-to-order production. Discrete manufacturing uses production orders to collect costs (see Figure 4.51 and Figure 4.52). Discrete manufacturing is often used when:
Products change frequently.
Products have complex routings.
Semi-finished products are put into interim storage.
Completion confirmation (backflush) is used for individual operations or orders.
Costs are reviewed on an order basis.
Figure 4.51: Discrete routing production example
Figure 4.52: Routing operation details
Rate routings are used in repetitive manufacturing, which is another type of make-to-stock production. Repetitive manufacturing uses planned orders based on a run schedule instead of planned orders, and product cost collectors to collect costs (see Figure 4.53 and Figure 4.54).
Repetitive manufacturing is the simplest type of production in SAP and the supporting data in rate routings is also very basic. Repetitive manufacturing is often used when:
Products are produced for a long period of time with alteration.
Products have simple routings.
Semi-finished products do not have interim storage.
Costs are reviewed on a period basis.
Figure 4.53: Repetitive routing production example
Figure 4.54: Rate routing
Repetitive manufacturing preliminary costing
If repetitive manufacturing is relevant in your company, you will also need to give a preliminary cost estimate to product cost collectors in addition to costing the material in a costing run. In the section Price Update, we will discuss product cost collectors.
Master recipes are used in process manufacturing (see Figure 4.55). Process manufacturing uses process orders to collect costs. Process manufacturing is commonly used in the chemical, pharmaceutical, and food and beverage industries. Process manufacturing is used in these types of production scenarios:
Continuous production: Products are manufactured in a continuous process, the ingredients are continuously added, and the production line is completely utilized by the order.
Discontinuous production: Products are products discontinuously, ingredients are prepared and staged in precise quantities, and several products are manufactured on the same production line.
Regulated production: Legal requirements or quality requirements drive the need for highly controlled master recipes.
Process-oriented filling: Bulk produced materials are stored in containers until filled.
Figure 4.55: Master recipe
Component materials are costed based on costing variant and valuation variant configuration. This configuration is detailed in SAP CO COSTING RUN EXECUTION.
In the costing run parameter step, you can elect to repeat only cost estimate with errors and show the log by costing levels. By electing to repeat cost estimates with errors only, you are requesting to only recost the materials in this step that previously had an error last time you ran this step. This can be selected when you have already run the costing step in this costing run and want to rerun each step again, after resolving errors. Remember that you should always start back at the selection execute step and reprocess through each step after resolving errors. The log by costing level option is helpful if you are costing a large number of materials and the error log is too large to easily review. The costing levels are the sequence in which materials are costed.
Since the costing step requires a large amount of system processing, you have the option to select parallel processing so multiple servers process the data in parallel. You should work with your Basis system administrators to confirm if parallel processing is required and which servers should be used.
Like each parameter step, you can elect to run steps in the background, meaning that they process in a background job and can be scheduled or run immediately. If scheduled to run in the background, when you execute, a popup box will allow you to choose when and how the job should run. You can also select to print the log from each step if desired.
Once your parameters have been selected, save and use the green arrow to return to the previous screen. Then execute the costing step (see Figure 4.56).
Figure 4.56: Costing run costing parameters
You can analyze the costing results using the available reports in the analysis parameters. Analysis reports show you the cost estimate result for each material in the costing. The results include purchased materials, produced materials, and any supplies that were selected in the first step of the costing run.
There are five reports that can be selected for analyzing the costing run. The first report is the most standard and basic report. Double click on the report you would like (see Figure 4.57).
Figure 4.57: Costing run analysis reports
Then save the analysis parameters and green arrow back (see Figure 4.58).
Figure 4.58: Costing run analysis parameters
Next, execute the analysis step to review the analysis report (see Figure 4.59).
Figure 4.59: Costing run analysis report
You can double click on a material’s cost estimate result in the analysis reports to go to transaction CK13N for further detail of the cost.
Marking costs is a preliminary step prior to releasing costs. Marked costs are indicated as future costs in the costing 2 material master view. They are costs with desired results that are planned to be released at some point in the future.
In the marking step parameters, first click on the lock to authorize marking for a company code, costing variant, and period. Click the company code you are costing, enter the costing variant and costing variant, then click save. The radio button next to the company code will now turn from red to green, indicating that marking is now authorized (see Figure 4.60).
Figure 4.60: Costing run marking authorization
Marking authorization restriction
You will notice in this screen that only one costing variant can be allowed for marking per period, per company code. This restriction ensures that the same valuation method for standard costs is used for an entire period. In Mark /Release individual material of this field, we will discuss the option to release prices to other material master fields. This does not require you to mark a cost prior to releasing, so this restriction only applies to costing variants that indicate they can update prices to the standard price field.
Next, green arrow back and click on the marking parameters button. You can opt to mark costs in test run before processing for real. You can also choose the indicator to see a list output after marking. This list will indicate if materials were successfully marked or not. As with the costing step, you can choose to run the marking step in parallel processing or background processing (see Figure 4.61).
Figure 4.61: Costing run marking parameters
Once parameters are saved and marking is executed, marked costs appear as future standard cost estimates in the material master COSTING 2 VIEW (see Figure 4.62).
Figure 4.62: Material master costing 2 view future price
After executing marking, you release the costing results. Once released, costs are valid for the given date range and appear as current standard cost estimates in the material master.
Note that you must recalculate and release costs to reflect changes in production data like BOMs, routings, master recipes, production versions, etc.
The same release parameters exist as the parameters in the marking step (see Figure 4.63).
Figure 4.63: Costing run release parameters
Save parameters, then a green arrow back and execute the release step (see Figure 4.64).
Figure 4.64: Costing run release results
When costs are released, material inventory is revalued at the new price. This results in a price change document that can be displayed in transaction CKMPCD. If the new cost is different from the old cost and there is inventory there is an associated accounting document created that can be displayed in transaction FB03. In Figure 4.65, there was no value change because the previous cost was the same as the new cost.
Figure 4.65: Price change document
In the material master costing 2 view, you can see that the costing run result moved from the future price field to the current price field (see Figure 4.66).
Figure 4.66: Material master costing 2 view current price
Cost individual material
In order to cost materials that are created out of the normal costing process, you can use transaction CK11N to cost individual materials. In CK11N, you have the option to cost an individual material at a time, which may be desired when particular products are added to SAP in small quantities.
Costing in CK11N is different from costing in CK40N because component materials are not given a cost along with the specified produced material. You must cost, mark and release each component cost first, then cost the finished good. You do not need to cost component if they already have a current cost estimate or the cost estimate would just pick up the standard price or moving average price anyway.
On the initial screen of CK11N, enter material, plant, costing variant and costing version. You can enter a costing lot size if you prefer a different costing lot size than what is specified in the material master costing 1 view. Keep in mind that the costing lot size specified must be greater than or equal to the price unit of the material. After entering all details, enter through to the date screen (see Figure 4.67).
Figure 4.67: Individual cost estimate costing data screen
When costing a material, you can choose a date range (typically one month or one year) depending on when you plan to release costs. These dates are specified in the costing date from and costing date two fields. The quantity structure and valuation dates pick up master data from that date. Generally, you should enter all dates as the date you plan to release costs, except for the ‘to’ costing date. The ‘to’ costing date should be 12/31/20XX.
You can configure the dates tab to populate the dates based on particular rules in the costing variant configuration transaction OKKN. For example, you can specify the costing date from, quantity structure date, and valuation date to populate with the current date. You could also configure the dates to populate the first day of the next period. If you change the defaulted date and want to revert back, you can click the default values button.
After entering dates, enter through to the next screen, or click on the quantity structure tab (see Figure 4.68).
Figure 4.68: Individual cost estimate dates tab
The quantity structure tab allows you to specify a different quantity structure (BOM, routing, master recipe, or production version) to use in the cost estimate. Unless otherwise specified, the cost estimate will use the primary BOM and routing or master recipe from production version 1. You can specific a different quantity structure on the costing 1 view of the material master, or enter the preferred quantity structure on this tab in CK11N. This is typically used if you are testing a different quantity structure to see the costing result.
Figure 4.69: Individual cost estimate quantity structure tab
The costs tab shows the total cost calculation in company code currency per the indicated costing lot size and unit of measure (see Figure 4.70). This tab also has a stoplight status that indicates if the material costed successfully (green), with warnings (yellow), or with errors (red). The message log should be reviewed if any errors, even green, appear.
Figure 4.70: Individual cost estimate costs tab
The lower right screen displays the itemization view of the cost estimate. The cost estimate will list every activity type (item type E) and BOM component (item type M) that is used to create the cost estimate and the consumption cost element associated with that line item. The itemized view will also show overhead secondary cost elements from costing sheets and additive costs. If origin groups are used, a separate line item will appear for each cost element and origin group combination that is relevant in the cost estimate. Subcontracted operations and purchase information records will also appear as separate line items (see Figure 4.71).
Figure 4.71: Individual cost estimate itemization
Note that you can drop down on the white text field and change the view from cost of goods manufactured to tax and commercial valuation, commercial valuation, etc. The cost itemization gives you a great deal of detail about the makeup of the cost. Depending on how large and complex your company’s BOMs and routings or master recipes are, the cost itemization may be too much detail. You can click on the blue bar graph icon to switch the cost itemization to the cost component structure. This is where you see the configured cost components that contain particular cost elements for grouping (see Figure 4.72). The cost component structure is often easier to analyze individual material costs and compare material costs.
Figure 4.72: Individual cost estimate cost component detail
You can use the magnifying glass icon to return to the itemization view of the cost estimate.
Note that there are multiple tabs in the top right section of the screen. These tabs contain valuable information that can help you troubleshoot issues and understand cost results. This knowledge is crucial to your role as a configurer, tester, or a business user of SAP Product Costing. With this type of information at your fingertips, you can be more independent in resolving issues and better understand how the system works.
The costing data tab indicates the costing variant used to calculate the cost estimate. The dates tab indicates the dates specified on the initial CK11N date screen.
The quantity structure tab identifies the source of the underlying data used for product costing. This can be helpful when determining which purchase info record, BOM, routing, master recipe, or material master price was used in calculating the cost. Figure 4.73 shows a produced product with a standard cost based on a BOM and routing.
Figure 4.73: Individual cost estimate quantity structure tab for produced material
Figure 4.74 shows a purchased product with a standard cost based on the material’s own standard price.
Figure 4.74: Individual cost estimate valuation tab for purchased material
The valuation tab indicates the configured valuation variant strategy that was used in costing the material. In conjunction with the quantity structure tab, this information is helpful in understanding the costing results and determining if they are accurate.
The history tab provides basic information about which user created the cost and on what date. If multiple people are responsible for costing in your organization, it can be helpful to see who costed a material and follow up with them on any questions about the costing results.
The left section of the screen displays the costing structure. The costing structure is a list of the BOM components used in costing produced materials. This is useful to see material numbers and descriptions since the itemized view does not contain material descriptions. The stoplights next to each material indicate if there is an issue with the component material cost that needs to be resolved. If you double click on a component material, the top right and bottom right portions of the screen will change to show you the cost estimate of the component (see Figure 4.75).
Figure 4.75: Individual cost estimate costing structure
The transaction CK11N provides many details helpful in costing materials and analyzing results. I recommend you explore the various buttons available where you can download results to Excel, add in additional information, create variants, search for data, total, subtotal, sort, and more.
Remember to save your cost result in CK11N if the result is desired. If you cost result is not desired and you make changes to master data, remember to re-run transaction CK11N to see the updated result. Next, we need to mark and release the cost estimate in order that period with the desired costing variant.
Click on the marking allowance button in CK24. If the company code is red click on the company code, enter the costing variant and hit enter. If the light is green, marking is already allowed (see Figure 4.76). Only one costing variant is allowed for marking per period per company code.
Figure 4.76: Mark individual materials
After marking standard costs, material costs need to be released in order to revalue inventory. Click the release button in the tool bar of transaction CK24. Enter the company code, plant, and/or material(s) that should be released (see Figure 4.77). You can run in test mode first, then execute for real.
Figure 4.77: Release individual materials
Update costs to other price fields
You may elect to use multiple costing variants in order to calculate prices for tax, commercial, or planned price fields on the material master. These fields can be found on the accounting 2 and costing 2 views of the material.
Instead of marking and releasing costs to these fields, you just update costs to these price fields using a different screen. In CK24 where you can mark and release individual material costs, you can choose the button on the toolbar to update other price fields.
This screen requires you to specify the costing run, date, costing version, costing variant, and the fields you wish to update (see Figure 4.78). If you select planned price 1, 2, or 3 fields, you must enter a date as well.
Figure 4.78: Individual material update other price fields
You can also do a CK40N costing run using a variant that is configured to update other prices, tax prices, or commercial prices. You will notice that the costing run steps change and you only have five steps instead of six. Instead of marking and releasing after costing, you simply perform a price update (see Figure 4.79).
Figure 4.79: Costing run update other price fields
Scrub cost estimate
Scrubbing a cost estimate, or reorganization, involves removing a current price, future price, previous price, or cost estimate without material reference. Scrubbing is performed in transaction CKR1. Scrubbing a cost estimate is a delicate procedure that should be done with careful consideration. It is not part of a normal costing process and should only be used in exceptions. Note that you will receive a yellow warning message at the bottom of the screen to confirm you want to scrub current cost estimates. Simply enter through this message if you wish to proceed (see Figure 4.80).
Figure 4.80: Scrub cost estimate
You should immediately re-cost a material after scrubbing the cost estimate in order to establish a new, corrected cost for inventory and production purposes.
There are situations where you want to manually update a standard or moving average price for a material without performing a cost estimate. Transaction MR21 allows you to update the standard or moving average price of a material (based on the price control) for a particular company code, plant, and valuation type (if split valued) (see Figure 4.81). This transaction is frequently used for purchased materials that are not costed with a purchase information record and conditions.
Figure 4.81: Perform price update
Price update warning for produced materials
Typically, you do not want to perform a manual price update for a produced material because this price change only affects the standard cost used to value inventory on the accounting 1 view. This price update does not update the released cost estimate on the costing 2 view that is used in production. If you have an inconsistency between your released cost estimate and the standard price used for inventory valuation, you will see inconsistencies and variances throughout production.
Note that you do have the option to change the price unit of a material in this transaction. As discussed in MATERIAL MASTERS, SAP requires that the costing lot size is greater than or equal to the price unit. If you change the price unit to be greater than the costing lot size, you will receive an error.
Product cost collectors
Product cost collectors (PCC’s) are used in repetitive manufacturing to collect costs instead of collecting costs on the planned order. Product cost collectors are used instead of planned orders because of the nature of repetitive manufacturing in SAP. Planned orders are deleted at the end of each month, so an independent cost collector is required. Product cost collectors are also used because in repetitive manufacturing, costs are analyzed as a cost per period instead of a cost per order like discrete manufacturing. Different from production orders, PCC’s are settled at month-end and the planned orders associated with the product cost collector remain open.
Many product cost collectors can exist for the same material in the same plant because PCC’s are created for each production version. PCC’s require preliminary costing prior to use in production. This preliminary cost is in addition to the released cost required on the material master.
You can use transaction KKF6N to create, change, and display PCC’s for on material in a plant. You can use transaction KKF6M to create PCC’s in mass and transaction MF30 to cost PCC’s in mass (see Figure 4.82).
Figure 4.82: Create product cost collector
If there are multiple production versions for the material, drop down on the material on the left vertical bar, and deselect all production versions except one. This allows you to see the details in the header and production process tabs.
Click on the header tab to see header details about the PCC. You can click on the yellow buttons to see orders/production versions, the cost estimate, the settlement rule, and costs (see Figure 4.83).
Figure 4.83: Display product cost collector header tab
You can select the production process tab to see more details about the BOM and rate routing specified in this PCC (see Figure 4.84).
Figure 4.84: Display product cost collector production process tab
Now that we have covered costing configuration, the costing run transaction, and various costing processes, let’s discuss the month end and year end processes involved in product costing.
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