SAP Product Costing

Description

A warm welcome to the SAP Product Costing (CO-PC) course by Uplatz.

SAP Product Costing (CO-PC) is a module provided by SAP and is used for planning costs and establishing material prices. It helps in estimating the cost of goods sold manufactured and COGS of each for each product unit.

SAP Product Costing has two different types of material costing processes viz.

1) Material cost estimate with quantity structure

2) Material cost estimate without quantity structure

Material cost estimate with quantity structure works in combination of BOM (Bill of Material) and Routing assigned to it.

SAP CO Product Costing module is used to find the value of internal cost of products. It is also used for profitability and management accounting for production.

While configuring Product Costing, it involves two areas for setting −

• Product Cost Planning

• Cost Object Controlling

The basics of Product Costing is Cost Center Planning. The goal of cost center planning is to plan total dollars and quantities in each Cost Center in a Plant.

SAP CO-PC is one of the most important SAP components for the manufacturing companies. The main purpose of SAP CO Product Costing or CO-PC is to calculate and show costs appearing during production process. When costing with quantity structure is performed, the system uses master data from Logistics. Product cost planning function costs individual products precisely and provides various, flexible and quick analysis options.

In principle, the data for CO-PC are obtained from the PP module, through Bill of Materials and Master recipes.

There are three necessary preconditions for good and reliable operation of the CO-PC module:

• Properly defined master data structure (BOMs, Resources and Master Recipes)

• Correctly defined CO structure (Cost centers and Profit centers)

• Correctly defined structural parameters related to the way of monitoring costs

The following PP master data is necessary for Product Costing:

• PP parameters in Material Master Data

• PP Resources

• Master Recipes with Bill of Materials

The following FI-CO master data is necessary for Product Costing:

• FI-CO parameters in Material Master Data

• Activity Types

• Primary Cost Elements

• Secondary Cost Elements

Structural parameters required for Product Costing define a method of calculating and analyzing production costs. There are nine major structural parameters:

• Cost Components Structure

• Production Overhead Costing Sheet

• Costing Type

• Costing Variant

• Valuation Variant

• WIP costs

• Production Variances

• Cost Categories (Plan, Actual, Target)

• Settlement Profile

CO-PC module covers an area of management of production costs, which technically covers three areas of work:

• CO-PC-PCP - Product Cost Planning

• CO-PC-OBJ - Cost object Controlling

• CO-PC-IS - Product Cost Info System

Estimated cost of production is done prior to the start of production and as a result is a cost of making products and semi-finished products. The price comes on the basis of product structure, price of materials, the cost of activities and correct overhead keys, and cost analysis is done using the Cost components structure. The calculated price can be released to material master once per month. The difference compared to the previous price is posted to the special FI account.

Cost of PP orders are displayed as planned, actual and target costs:

• Planned costs are calculated when a PP order is created

• Actual costs are the result of the posting of materials and activities

• Target costs are calculated as part of period closing procedure and represent normative costs for the actual quantity produced.

Reconciliation and Reporting

During the period closing, the system calculates the Variances or WIP (Work in Progress), depending on whether the PP orders are completed or not. The Product Cost info system contains two types of production reports:

• Reports on current costs of PP orders

• Drill-down reports based on specific data collection process after PP orders are completed

Reports on current costs include data on the basis of production posting

• The value of the quantities produced

• The value of the consumed materials

• Production Variances

Drill-down reports are based on a hierarchical basis. For them it is necessary to use specific tools for collecting data from PP orders after the completion of the closing period procedure. The collected data are analyzed on the basis of pre-defined data hierarchy.

Integration of SAP Product Costing with other SAP modules

SAP Product Costing is integrated closely with various SAP modules:

• Materials Management (MM) module for material master record / purchase info record

• Production Planning (PP) module for Bill of material (BOM), routing and work center

• Cost Center Accounting (CO) module as information of cost centers, its linkage of work center, activity types and activity wise cost centers help in determining conversion costs associated with manufacturing process

In a similar manner, the output and results obtained from Product Costing can also provide useful information for various SAP modules:

• Material Management (MM) module for material and stock valuation

• Sales and Distribution (SD) module

• Cost object controlling for calculating variances and WIP

Uplatz provides this detailed level training on SAP Product Costing (CO-PC) module covering the concepts and their application in SAP system including comprehensive explanation of the necessary configuration and management steps.

SAP Product Costing - Course Syllabus

1. Cost Component Structure

2. Costing Types

3. Define Costing Type

4. Cost Object Controlling

5. Working with the Controlling Area

6. Defining Assignments

7. Working with the Settlement Profile

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