03 Product Costing Configuration

sap.rashid@yahoo.
com Product Costing Notes
Cost Center Planning
2 % overhead charged to product on Raw

material and Activity Cost
Research & Providing Machine Setup and Calibration.

Development
1. Machine Setup requires 1 Hour
2. Machine Calibration required for every 200
units, it requires 45 minutes to do calibration
Packing Production Production

Support
Separate Packing is required based on the

dangerous profile.
Quality
Packing prices determined by packing
Control
department are applied to products
If Final product is dangerous then 2 minutes required

for inspection of BOM Components else NO QC
1. Create Cost Centers: KS01
KS01 KSH1
Cost Center CC_NO CC_GROUP
Production 1000 1000
Production Support 2000 2000
Quality Control 3000 3000
Research & Development 4000
Packing Department
Trainer : M .Rashid
sap.rashid@yahoo.com Product Costing Notes
2. Create Secondary Cost Elements and Activity
Cost Center
Production
Production Quality Packing
Support
Machine
Quality
Labour Machine Setup & Packing
Control
Calibration
KL01 KA06
Cost
Secondary Cost Elements Activity
Elements
Labour 43000 943000
machine 43001 943001
Machine Setup & Calibration 43002 943002
Quality Control 43004 943004
Research & Development 941000
Packing 43005 943005
Trainer : M .Rashid
3. Create GL Accounts & Cost Elements
GL Accounts & Cost Elements FS00 KAH1

Depreciation 400700 400700
Power 400701 400701
Repairs & Maintenance 400703 400703
Salaries 400704 400704
Staff Welfare Expenses 400705 400705
Travelling Expenses 400706 400706
medical Expenses 400707 400707
4. Cost Center Planning
Total Planned Costs (KP06)

𝑃𝑙𝑎𝑛𝑛𝑒𝑑 𝐴𝑐𝑡𝑖𝑣𝑖𝑡𝑦 𝑃𝑟𝑖𝑐𝑒(𝐾𝑆𝑃𝐼) =
Total Planned Activity (KP26)
 For planning using average price

 For actual using Periodic Price
Trainer : M .Rashid
5. Create Work Center – CR01
Production Cost
Center
Month End Activities
Work Center
Machine Setup & Calibration
Quality Control
Labour Machine
Research & Development
Packing
Production Team Should Confirm this operation from CO11N
6. Create Bill of Material – CS01
Raw Material
RM-1000 5
RM-2000 8
7. Create Routing – CA01
Labour 3
Machine 4
Trainer : M .Rashid
8. Define Cost Component Structure OKTZ

SAP IMG-->Controlling-->Product Cost Controlling-->Product Cost Planning-->Basic Settings for
Material Costing-->Define Cost Component Structure
10 Raw Material 400000

20 Labour 943000
30 Machine 943001
40 Research & Development 941000
50 Setup & Calibration 943002

60 Quality Check 943004
70 Packing 943005
**** Activate Cost Component Structure
9. Define Costing Variant – OKTZ
Standard Costing
Variant
PPC1 – (CO11N / PPP1 – Production PPP2 – Production

CK40N) Order Planned Cost Order Actual Cost
Trainer : M .Rashid
Costing Type :
 It specifies purpose of the costing.
 Controls whether to update or not material master
 If master master is updated , which field need to be updated
Valuation Variant: It specifies the sequence of price search strategy for
 material ,
 activites,
 sub contract material ,
 external operation and
 which costing sheed to be used for overhead calculation.
********We need to create cositng variant for plant
Trainer : M .Rashid
Date Controls:
 Costing Date From / To is for validity of the Cost Estimate
 Quanity Structur Date: This field deterimines which date BOM & ROUTING need to be selected
for cost estimate .
 Valuation Date : This field deterimined which date prices to be selected for MATERIAL i.e
Components and activities mention in routing for cost estimate.
Quantity Structure Control: it specifies which BOM & ROUTING to be selected for cost estimate.
Click on Course Link:
SAP FICO Product Cost by Order Simplified for Beginner
Trainer : M .Rashid
Transfer Control : it Controls how the exisitg cost estimate to be used in cositng other product cost
estimate.
Example: we have two semi finished product X, Y . It already released the cost estiamte. At later point of
time we are using Product X to manufacture a new product called “Z”.
While doing cost estimate for the Product “Z” if we don’t specify the Transfer Controls then systme will
do the costing again for the Product X as well .
To avoid the cositng for already costed material , we have to use TRANSFER CONTROL .
It will transfer the existing cost estiamte to the new product as it is without costing it again during NEW
PRODUCT Cost Estimate.
Trainer : M .Rashid
End-User Activities:
Costing Steps:
1. Execute Cost estimate – CK11N / CK40N
This step do the required calculation and save the cost estimate in below tables
KEKO - Product Costing - Header Data.

KEPH - Product Costing: Cost Components for Cost of Goods Mfd.
CKIS - Items Unit Costing/Itemization Product Costing.
2. Marking Cost Estimate – CK24 / CK40N
we can do marking “n” number of times

when we do the marking it will update the material master in “Costing Tab 2 ” as future Cost
3. Releasing Cost Estimate – CK24 / CK40N
 We have one cost estimate for one period. Here period means month
 If we want to release the second cost estimate for the same period then we have to
reorganize (TCODE: CKR1) the release cost estimate, without reorganize (delete)
releasing another cost estimate for the same period is not possible.
 When we release the cost estimate it will move the price from future to Current Price in
“Costing Tab 2”. It will become the active price for the product.
 If price is different then the price already exists in material as current then system will
do the revaluation of the inventory if inventory available and post the entries in FI for
revaluation as well.
Trainer : M .Rashid
Trainer : M .Rashid
Costing Sheet Configuration
Steps:
1. Define Calculation Bases
2. Define Overhead Keys
3. Define Overhead Groups
4. Define Percentage Overhead Rates
5. Define Credits
6. Define Costing Sheets
7. Update Material Master – MM02
8. Update Costing Variant OKKN
1. Define Calculation Bases
SAP IMG-->Controlling-->Product Cost Controlling-->Product Cost Planning-->Basic Settings for Material

Costing-->Overhead-->Costing Sheet: Components-->Define Calculation Bases
Click on “New Entries”
Base =
Name =
Select base and click on “Details”
Controlling Area = Press Enter
Cost Elements
400000 – RM Consumption
943000
943001
2. Define Overhead Keys

Costing-->Overhead-->Define Overhead Keys
Overhead Keys =
Description = Click on Save
Trainer : M .Rashid
3. Define Overhead Groups

Costing-->Overhead-->Define Overhead Groups
Valuation Area =
Overhead Group =
Overhead Key =
Description = Click on Save
4. Define Percentage Overhead Rates

Costing-->Overhead-->Costing Sheet: Components-->Define Percentage Overhead Rates
Overhead Rate
Name =
Dependency =
Select “Overhead Key “ and click on details
01.01.2021 31.12.2021 1200 1 2%

01.01.2021 31.12.2021 1200 2 2%
Click on Save
5. Define Credits

Costing-->Overhead-->Costing Sheet: Components-->Define Credits
Credit =
Name =
Trainer : M .Rashid
Select the line and click on “details “
Valid to Cost Element OrgGrp Fxd % Cost Center

31.12.9999 *
Click on Save
6. Define Costing Sheets

Costing-->Overhead-->Define Costing Sheets
7. Update Material Master – MM02
Trainer : M .Rashid
8. Update Costing Variant - OKKN
9. Simulate Cost Estimate - CK11N
Trainer : M .Rashid
Template Allocation
Machine Setup & Calibration:
Machine Setup 1
Machine Calibration 3
Machine Setup Before starting production, machine setup is required. It will take 1 hour time for this task
Machine Calibration Calibration is required for every 200 units, it will take 45 minutes for each calibration
Analysis:
Machine Setup is a fixed cost irrespective of the production lot size it is required.
Machine Calibration Calculations:
Lot Size 1000

Less: First 200 units 200
Balance Units 800
No of Calibrations 800/200
4
units
Time for each Calibration 45 Minutes
Total Time for 4 Calibrations -

180 Minutes
4*45
Time in Hours 180 / 60 3 Hours
Trainer : M .Rashid
Sap Template Formula
Setup &
Calibration
Plan Actual
Cost Estimate Production Order

Plan Cost
1. Create Main Template CPT1

Costing-->Templates-->Maintain Templates
Double Click on “Create Template”
Controlling Area = 1200 Press Enter
Template = MFG1200
Environment = 001 Press Enter
Trainer : M .Rashid
2. Assign Templates - KTPF

Costing-->Templates-->Assign Templates
Click on Create “New Entries”
Controlling Area 1200

Costing Sheet U00000
OH Key
Environment 001
Template MFG1200
Click on Save
3. Create Template for Setup & Calibration CPT1

Template = SETUP_CAL
4. Assign Template in Main Template CPT2

Trainer : M .Rashid
Cost Estimate Simulation:
Quality Control for Components:
Dangerous Goods Time required for Quality Check is 20 Seconds
Trainer : M .Rashid
BOM Components for 1000 lot size
Bom Items Qty

RM-1000 5
RM-2000 8
Total Component Qty for 1 FG A 13
Costing lot size B 1000
A*B 13000
No of Components checked per hour
QC Time for components 20 Seconds

For 1 Minutes 60 / 20 3 Components
For 1 Hours 60*3 180 Components
13000 /
Total time for 1000 lot size 72.22
180
OrderYieldConfirmed
* TotalOfBomItems(
FlexibleFunction = '$2' )
/ 60
/ OrderTotalQuantity
TotalOfBomItems( FlexibleFunction = '$1' )

/ 180
Plan time formula = Total of bom items/180

/
Actual time formula = OrderYiedConfirmed ∗
Trainer : M .Rashid

Template = Quality

3. Simulate Cost Estimate – CK11N
Trainer : M .Rashid
Packing:
Actual packing cost should be calculated only when production order is fully delivered .
Packing
Plan Actual
Cost Estimate Production Order Plan

Cost Floor( OrderTotalQuantity
/ ( 10
/ MaterialNetWeight
) )
Floor( OrderTotalQuantity
/ ( 10
/ MaterialNetWeight
) )
OrderShipped checks the Production Order Status equal to “ DLV “ or not.
Trainer : M .Rashid
1. Create Business Process – CP01
Business Process = BP120001 Click on “Organization” Tab
Valid From = Plant =
Valid To =
Name = Normal Packing Click on “Allocation” Tab
Description = Unit of measurement = HR
Person Responsible = Allocation category =
Hierarchy Area = Allocation cost elem =
Act. price indicator =
Click on Save
2. Create Business Process – CP01
Business Process = BP120002 Click on “Organization” Tab
Valid From = Plant =
Valid To =
Name = Dangerous Packing Click on “Allocation” Tab
Description = Unit of measurement = HR
Person Responsible = Allocation category =
Hierarchy Area = Allocation cost elem =
Act. price indicator =
Click on Save
Trainer : M .Rashid
sap.rashid@yahoo.com Product Costing
3. Maintain Plan Price for the Business Process – CP26

Template = Quality

6. Execute Standard Cost Estimate – CK11N
Trainer : M .Rashid
7. Mark the Standard Cost Estimate – CK24
8. Release the Standard Cost Estimate – CK24
Trainer : M .Rashid
FG-2000
1. Update Material Master MM01

a. DG Profile
b. Net Weight
c. Overhead Group
2. Create BOM CS01
3. Create Routing CA01
4. Execute Standard Cost Estimate CK11N
5. Mark / Release CK24
FG-1000
1. Delete / Reorganize standard Cost estimate CKR1

2. Execute Standard Cost Estimate CK11N
3. Mark / Release CK24
Trainer : M .Rashid

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sap.rashid@yahoo.

com Product Costing Notes

Cost Center Planning

2 % overhead charged to product on Raw

Research & Providing Machine Setup and Calibration.

Packing Production Production

Separate Packing is required based on the

If Final product is dangerous then 2 minutes required

1. Create Cost Centers: KS01

2. Create Secondary Cost Elements and Activity

3. Create GL Accounts & Cost Elements

GL Accounts & Cost Elements FS00 KAH1

4. Cost Center Planning

Total Planned Costs (KP06)

 For planning using average price

5. Create Work Center – CR01

Production Team Should Confirm this operation from CO11N

6. Create Bill of Material – CS01

7. Create Routing – CA01

8. Define Cost Component Structure OKTZ

10 Raw Material 400000

40 Research & Development 941000

50 Setup & Calibration 943002

**** Activate Cost Component Structure

9. Define Costing Variant – OKTZ

PPC1 – (CO11N / PPP1 – Production PPP2 – Production

 It specifies purpose of the costing.

 Controls whether to update or not material master

 If master master is updated , which field need to be updated

Valuation Variant: It specifies the sequence of price search strategy for

********We need to create cositng variant for plant

 Costing Date From / To is for validity of the Cost Estimate

Click on Course Link:

SAP FICO Product Cost by Order Simplified for Beginner

KEKO - Product Costing - Header Data.

2. Marking Cost Estimate – CK24 / CK40N

we can do marking “n” number of times

3. Releasing Cost Estimate – CK24 / CK40N

Click on Course Link:

SAP FICO Product Cost by Order Simplified for Beginner

Costing Sheet Configuration

1. Define Calculation Bases

SAP IMG-->Controlling-->Product Cost Controlling-->Product Cost Planning-->Basic Settings for Material

Click on “New Entries”

Select base and click on “Details”

Controlling Area = Press Enter

Click on “New Entries”

2. Define Overhead Keys

SAP IMG-->Controlling-->Product Cost Controlling-->Product Cost Planning-->Basic Settings for Material

Click on “New Entries”

Description = Click on Save

3. Define Overhead Groups

SAP IMG-->Controlling-->Product Cost Controlling-->Product Cost Planning-->Basic Settings for Material

Click on “New Entries”

Description = Click on Save

4. Define Percentage Overhead Rates

SAP IMG-->Controlling-->Product Cost Controlling-->Product Cost Planning-->Basic Settings for Material

Click on “New Entries”