2/4/2021 SAP e-book

Unit 3
Lesson 1
Outlining Period-End Closing for a Product
Cost Collector

LESSON OVERVIEW
This lesson explains the typical steps for period-end closing in make-to-stock (MTS)
production with the Product Cost by Period component.

Business Example:
A manufacturer produces various types of pump using the MTS production method. Sales
controlling is only carried out in Profitability Analysis (CO-PA). The popular types of pump are
produced in a continuous production process and mapped in the system with repetitive
manufacturing. A less popular pump type is to be produced solely on the basis of the lot size
with production orders and only when the stock in the warehouse drops below the reorder
point. To be able to compare the cost objects more effectively, all the production processes
must be accompanied by controlling by period. Each pump has a production version for
repetitive manufacturing and another production version for order-related production. In this
example, you will take a closer look at production for production orders. For this reason, you
require the following knowledge:
● An understanding of the steps for period-end closing in MTS production with the Product
Cost by Period component

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Outline period-end closing for a product cost collector

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2/4/2021 SAP e-book

Lesson: Outlining Period-End Closing for a Product Cost Collector

Period-End Closing for a Product Cost Collector

Figure 38: Steps in Period-End Closing

The functions in the period-end closing process for product cost collectors are as follows:
● Template allocation for automatic allocation of process costs and activity types
● Revaluation at actual prices for activity types and business processes, which could debit or
credit the cost object, based on the new price calculation
● Allocation of overhead surcharge

The components of final costing are as follows:

● Calculation of work in process (WIP) – in the Product Cost by Period component, WIP is
calculated at target cost
● The variance calculation function examines the causes of the order balance, and also
provides reasons explaining why the production process costs more than estimated

The characteristics of settlement are as follows:

● The system settles the WIP to Financial Accounting (FI) including Profit Center Accounting
in FI.
● The system settles the order balance to FI and to the Material Ledger, which is active by
default in SAP S/4HANA.

Note:
In SAP S/4HANA, you can use the Customizing activity Define Accounts for
Splitting Price Differences to refine the FI posting to show the different variance
categories on different G/L accounts. This allows you to show in your income
statement, the reasons for the production differences.

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