SAP CO "Product Costing" for CEMENT Manufacturing Process

Description

SAP Product Costing for the Cement Industry is an intricate process that's adapted to the industry's unique manufacturing steps. Let's delve deeper into the process.

SAP CO: Product Costing in Cement Manufacturing with Process Orders

For cement manufacturing, as a process industry, the costing is carried out through Process Orders (PP-PI) as opposed to discrete manufacturing where Production Orders are more suitable.

Process Flow for Cement Manufacturing:

1. Limestone Mining:

   • Extraction of limestone from quarries.

   • In SAP, this could be represented by a process order capturing the costs associated with mining activities including equipment maintenance, labor, and other overheads.

2. Limestone Crushing:

   • The extracted limestone is processed to obtain crushed limestone.

   • This process order would capture costs like machinery wear and tear, electricity, and labor costs.

3. Raw Meal Preparation:

   • Additives like clay are mixed with crushed limestone to create raw meal.

   • The process order here would account for the proportional costs of the additives, mixing and blending costs, and any associated overheads.

4. Clinker Formation:

   • The raw meal undergoes heating in a kiln, resulting in the formation of clinker.

   • Costs such as fuel for the kiln, maintenance of the kiln, and emissions controls would be accounted for in this process order.

5. Grinding:

   • The clinker is mixed with gypsum and ground to obtain cement.

   • Here, costs would include the wear and tear of grinding machinery, labor, and other overheads.

6. Packing:

   • The cement is either packed into bags or loaded in bulk, depending on the facility's capabilities.

   • Costs captured would be packaging materials, labor, and machinery maintenance.

Month End Closing Sequence in Product Costing:

1. F-02: Booking of all Financial (FI) expenses to a common cost center.

   • Captures all financial postings that affect costs.

2. CPTD: Actual template allocation for other overhead expenses.

   • Distributes overhead costs based on pre-defined templates.

3. KB31N: Entry of Statistical Key Figures (SKF) to production cost centers.

   • These figures are used as a basis to allocate costs later.

4. KSU1: Creation of Assessment Cycle and related Cost Element.

   • Helps in redistributing costs among cost centers.

5. KSU5: Running the Assessment Cycle.

   • This action redistributes the costs.

6. KSS2: Cost Splitting by activity type.

   • Allocates costs based on the activity performed.

7. KSII: Calculation of actual activity rates.

   • Determines the actual costs of activities.

8. CON2: Revaluation of process orders.

   • Updates process orders with the actual activity rates.

9. CO43: Overhead calculation.

   • Computes the overheads based on pre-defined rates or percentages.

10. KKS1: Variance calculation between planned and actual costs.

    • Identifies deviations between what was expected vs. what was incurred.

11. CO88: Settles the costs from process orders to financial accounts.

    • Finalizes the costing process by posting costs to financial accounting.

All these steps ensure accurate capturing, allocation, and finalization of costs associated with the cement manufacturing process in SAP. Implementing this in the SAP S/4 HANA or ECC environment would provide businesses with deep insights into their production costs, helping in pricing, profitability analysis, and cost control.

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