AC520 - 2005-Q2 - A4 - Cost Object Controlling for Make-To-Stock Production and Sales-Order-Related...

AC520Cost Object Controlling for

Make-to-Stock Production andSales-Order-Related Production

(Service)mySAP ERP Financials

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Participant HandbookCourse Version: 2005 Q2Course Duration: 5 Day(s)Material Number: 50075823

An SAP course - use it to learn, reference it for work

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2005/Q2 © 2005 SAP AG. All rights reserved. iii

About This Handbook AC520

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iv © 2005 SAP AG. All rights reserved. 2005/Q2

ContentsCourse Overview ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii

Course Goals .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .viiCourse Objectives ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . viii

Unit 1: Overview of the Components of Cost ObjectControlling..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Overview of the Components of Cost Object Controlling ... . . . . . . .2

Unit 2: Sales-Order-Related Production Scenarios ..... . . . . . . . . . 25Sales-Order-Related Production Scenarios .. . . . . . . . . . . . . . . . . . . . . . 26

Unit 3: Product Cost Controlling by Period...... . . . . . . . . . . . . . . . . . . 41Master Data and Preliminary Costing ... . . . . . . . . . . . . . . . . . . . . . . . . . . . 42Simultaneous Costing .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73Period-End Closing .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86Addendum: Repetitive Manufacturing and Material Valuation .120

Unit 4: Product Cost Controlling by Order..... . . . . . . . . . . . . . . . . . . . 129Master Data and Preliminary Costing ... . . . . . . . . . . . . . . . . . . . . . . . . . .131Simultaneous Costing .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .160Period-End Closing with Partially Delivered ProductionOrders .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .174

Period-End Closing with Delivered Production Orders... . . . . . . .201

Unit 5: Make-to-Order Production with Controlling by SalesOrder ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231

Master Data and Preliminary Costing ... . . . . . . . . . . . . . . . . . . . . . . . . . .233Simultaneous Costing .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .252Customizing .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .277Period-End Closing of Production Orders .. . . . . . . . . . . . . . . . . . . . . . .286Period-End Closing of the Sales Order .. . . . . . . . . . . . . . . . . . . . . . . . . .296

Unit 6: Controlling by Sales Order Without Production (Service)(optional unit) ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341

Master Data and Preliminary Costing ... . . . . . . . . . . . . . . . . . . . . . . . . . .343Simultaneous Costing .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .364Period-End Closing .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .380Customizing .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .393

2005/Q2 © 2005 SAP AG. All rights reserved. v

Contents AC520

Unit 7: Information System ...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399Information System ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .400

vi © 2005 SAP AG. All rights reserved. 2005/Q2

Course Overview� Objects of Cost Object Controlling: Product Cost by Period (such as product

cost collectors), Product Cost by Order (such as a production order or processorder), sales order, project

� Valuated sales order stock� Planning functions: Preliminary costing for cost collector, production order,

process order, sales order� Actual functions: Simultaneous costing based on goods issues from the

warehouse, purchasing, confirmations, activity allocations and deliveries� Period-end closing (template allocations, overhead costs, work in process,

variance calculation, Results Analysis, settlement) for product cost by periodor order as well as sales-order-related production (production and service)

� Information system

Target AudienceThis course is intended for the following audiences:

� Project team responsible for implementing Cost Object Controlling in SAPR/3

� Participants with knowledge of production planning and/or controlling

Course PrerequisitesRequired Knowledge

� Basic knowledge of logistical processes:

discrete manufacturing (production order), repetitive manufacturing (productcost collector), process manufacturing (process order), or sales-order-relatedproduction ( sales order as a cost object)

� AC040 (Business Processes in Management Accounting)� AC505 (Product Cost Planning)

2005/Q2 © 2005 SAP AG. All rights reserved. vii

Course Overview AC520

Course GoalsThis course will prepare you to:

� Understand controlling by period and order for make-to-stock production� Carry out Cost Object Controlling on the product and order levels� Process scenarios of controlling by sales order for make-to-order production

or service� Gain knowledge of the functions, customizing, and integration of Cost

Object Controlling

Course ObjectivesAfter completing this course, you will be able to:

� Explain how Product Cost Controlling relates to other CO components� Explain how to use Product Cost Controlling� Explain the differences between the following forms of product cost: Product

Cost by Order, Product Cost by Period, and Product Cost by Sales Order� Explain the most important terms concerning the design of a scenario in Cost

Object Controlling: controlling on product or order level, sales-order-relatedproduction with or without controlling by sales order, valuated or unvaluatedsales order stock

� Prepare the right Cost Object Controlling �design� for production processesand select the best cost object for it

� Carry out preliminary costing, simultaneous costing, and final costing inCost Object Controlling

� Carry out important transactions for allocating costs to cost objects� Carry out important transactions for period-end closing such as template

allocation, WIP calculation, Results Analysis, and settlement� Carry out important analyses in Cost Object Controlling using the

information system

SAP Software Component InformationThe information in this course pertains to the following SAP Software Componentsand releases:

� ECC 5.0

viii © 2005 SAP AG. All rights reserved. 2005/Q2

Unit 1Overview of the Components of Cost

Object Controlling

Unit OverviewThis unit deals with Product Cost Controlling in general and Cost ObjectControlling in particular. The make-to-stock-production scenarios are especiallyhighlighted, and the differences between the order view (controlling based on lotsize) and the period view (controlling by period) are discussed.

Unit ObjectivesAfter completing this unit, you will be able to:

� Describe the position and objective of �Cost Object Controlling� in theControlling module

� Explain the terms �preliminary costing, simultaneous costing, final costing�� Explain the terms �Product Cost by Order, Product Cost by Period, and

Product Cost by Sales Order�� Differentiate between product-level and order-level controlling

Unit ContentsLesson: Overview of the Components of Cost Object Controlling ... . . . . . . .2

2005/Q2 © 2005 SAP AG. All rights reserved. 1

Unit 1: Overview of the Components of Cost Object Controlling AC520

Lesson: Overview of the Components of Cost ObjectControlling

Lesson OverviewYou are in the Cost Accounting department of the IDES group. With the helpof external consultants, IDES has implemented the SAP R/3 System, includingCost Object Controlling.

We can identify the business processes in our plant that will utilize Cost ObjectControlling.

We must determine which logistical production types are used and which maindemands are made on Cost Object Controlling.

Therefore, we must know what options Cost Object Controlling in the R/3 systemoffers to map the creation process of the goods and services of our company.

Lesson ObjectivesAfter completing this lesson, you will be able to:

� Describe the position and objective of �Cost Object Controlling� in theControlling module

� Explain the terms �preliminary costing, simultaneous costing, final costing�� Explain the terms �Product Cost by Order, Product Cost by Period, and


Business ExampleYou work in a company that uses various production processes to produce goodsand services. You would like to learn about suitable mapping methods for theseproduction processes in the R/3 system.

2 © 2005 SAP AG. All rights reserved. 2005/Q2

AC520 Lesson: Overview of the Components of Cost Object Controlling

Architecture

Figure 1: CO Components

How can we reduce our overhead costs? Many companies are seeing theiroverhead costs increase dramatically. These include costs that cannot be attributeddirectly to products or services. While production areas often indicate greatprogress in controlling costs and optimizing processes, overhead costs continue toprovide little transparency. The entry and allocation of overhead costs accordingto cause are supported by the following components in Overhead Cost Controlling(CO-OM = Overhead Management).

Are our responsibility areas really working efficiently? Cost Center Accounting(CCA) examines where overhead costs are incurred within the organization. Youcan allocate the overhead costs from organizational sub-areas to the actual costcauses. You have a broad range of allocation methods, which consider quantityas well as values, to choose from. In particular, activity allocation permits thecause-based allocation of many costs in the form of activities that would normallynot be assigned to products.

How high are the costs of our organizational measures? Are they within budget?Overhead orders (OPA = Order Process Accounting) gather and control costsincurred from measures taken by the organization. You can manage budgets forthe orders and monitor their observance with the system.

How can we optimize internal processes? Optimizing business processes is notonly the goal of individual divisions, but the goal of the entire organization. Inrecent years, controlling organization-wide business processes has expanded howbusiness functions and products are monitored. The functional view of yourorganization is increased by a cross-functional, process-oriented view. CO-ABC



(ABC = Activity-Based Costing) not only enables you to improve your businessprocess performance, but also provides you with an information base for strategicdecision-making processes.

What costs are incurred within the organization? Cost Element Accounting (CEL= Cost Element Ledger) makes sure that only expenses and income that fulfillthe criteria for costs and revenue (in terms of the operative purpose, based onperiod and that can be valuated) enter CO. The reconciliation ledger facilitatesreconciliation between Controlling and Financial Accounting (FI). It displays anydifferences and can automatically create reconciliation postings if desired.

Figure 2: CO Architecture: Quantities and Values

The diagram above illustrates the flow of quantities and values between thecomponents of the R/3 System from the perspective of accounting, whichaccompanies the quantity flows in terms of a preliminary costing, a simultaneouscosting, and a final costing.

The typical quantity flows of logistics generally follow the supply chain:procurement, production, goods movements, sales, and billing.

Product cost controlling:

� Valuates material movements� Provides cost component splits for valuation in Profitability Analysis� Allocates overhead costs for the cost centers and business processes to cost

objects (such as production orders, sales orders, networks)� Determines WIP� Determines variances and their settlement in Profitability Analysis



Product Cost Controlling: BenefitsManagement Requirements Legal Requirements

� Support of cost reductionconcepts

� Support of strategicdecision-making:

� Which products� Where or how to produce

� Support of operativedecision-making:

� Pricing� Manufacturing efficiency

� Valuation of:

� Raw materials� Semi-finished goods� Finished goods

� Work in process� Reserves for imminent losses



With Product Cost Controlling, you have the following benefits:

� Valuation of manufacturing efficiency

� Set relevant standards to measure performance� Variance analyses� Reports for individual plants, product groups, products or orders

� Supports strategic decision-making

� (Primary) cost component split, cost component splits by organizationalunit

� Scrap costs, full integration of activity-based costing� Inventory valuation

� Alternative valuations - according to ((commercial) law, group, profitcenter)

� Three parallel currencies� Standard costs� Actual costs using the Actual Costing/Material Ledger (AC/ML)

component� Valuation of finished and semi-finished goods

� Standard prices provided by cost estimates� Creation of alternative cost estimates for balance sheet purposes for

closing activities� Determination and valuation of work in process at period-end closing� Period-based accrual of income with reserves for imminent losses

� In a make-to-order environment� Corresponding updates of balance sheet and profit and loss statements



Benefits of Product Cost Controlling

Figure 3: Product Cost Controlling: Components (1)

Product Cost Planning refers to the costing of goods manufactured and services.This occurs without any reference to a production order (costing is carried outindependent of any production order). If a quantity structure (bill of material androuting) is available in the PP (Production Planning) module of the R/3 system,you can carry out costing automatically based on the PP data. If there is noquantity structure, you can manually enter the costing items in a unit costing orad-hoc costing. You can also use the batch input method to transfer the quantitystructure from a remote system to the R/3 system.




In Cost Object Controlling, the costs incurred during the creation of a product orservice are collected on a cost object (such as a production or sales order). Whichcost object is used depends on your controlling requirements. It may be a salesorder, production order, process order, production cost collector, project, amongstothers. Cost Object Controlling allows for simultaneous costing (mapping andvaluation of logistical quantity flows) and final costing (period-based accrual ofincome and variance calculation). The calculated values can be settled in FinancialAccounting and Profitability Analysis.




Actual Costing is used to calculate the actual cost of goods manufactured at theend of the period. The result may be saved in the material master as a periodicaverage price for the closed period. As of Release 4.5, the quantity structure isderived dynamically from the material movements in the R/3 system. The valuesconnected with these movements are collected in the Material Ledger. Single-levelsettlement is available as of Release 4.0A, and as of Release 4.5 multi-levelsettlement, which can allocate variances over multiple procurement levels.

What Can Cost Object Controlling Do for Me?

� What actual costs did we incur in our area during the current period?� What costs were we expecting based on the quantity manufactured?� Are some product groups performing significantly better than others?� What is causing these variances?� What are the scrap costs of our new production line?� Did continuous improvements have an effect on costs?� What kind of profit is brought about by a concrete sales order?



Cost Object Controlling

Figure 6: Preliminary Costing - How Does It Work?

Product Costing uses the data in logistics to determine the foreseen materialconsumption (BOM) and the activities required (routing). This data forms thequantity structure.

Product costing valuates this quantity structure with the following information:

� Material costs� Production costs� Process costs� Overhead on the direct material and production costs� Overhead for sales and administration costs

The results are saved as a cost component split and an itemization (optional, butrecommended), and are also used by other applications.



Figure 7: Simultaneous Costing - How Does It Work?

The actual costs of the cost object result from the following processes:

� Goods movements in Materials Management� Invoice receipts in Financial Accounting� Confirmations in production (Production Planning)� Reposting and allocation of overhead in Cost Accounting

You can enter material withdrawals from the warehouse, confirmations, and goodsreceipts in separate operations.

You can use the control key of the operation to specify that a goods receipt isto be posted automatically when the operation is confirmed (normally the lastoperation). You can also assign consumable materials to an operation and specifythat a goods issue for these materials is automatically posted with the confirmation.

You can create the confirmation on the order or operation level. Confirmation onthe operation level is recommended for calculation of WIP and variances later.



Figure 8: Period-End Closing - How Does It Work?

Template allocation is a new allocation technique for activities and processes inCost Object Controlling (and also in Profitability Analysis). Essentially, it canuse all information from R/3 as a cost driver to assign overhead costs strictlyaccording to cause. Template allocation is even possible between Overhead CostControlling objects.

If an actual price calculation is performed in Overhead Cost Controlling, theactivities and processes calculated onto cost objects can be revaluated with theseactual prices.

Overhead allocation is a traditional method of calculating overhead costs of costcenters onto cost objects using surcharges on direct costs.



Figure 9: Executing Period-End Closing

Work in process can either be determined on the basis of actual costs (when usingfull settlement) or on the basis of target costs (when using periodic settlement).

Variance calculation also calculates the target costs of an order, and on the basis ofthis, the target/actual comparison. Scrap is calculated on the basis of target costs.

For objects that cannot deliver to the warehouse, a Results Analysis will beperformed instead of a WIP and variance calculation.

Settlement is the last step of period-end closing in Cost Object Controlling. Thevalues determined are settled in other components (such as FI and CO-PA) andat the same time, the appropriate line items are created (in the Material Ledgeras well).

Figure 10: Product Cost by Order



Product Cost by Order is used when the controlling focus is on concretequantities.

For this, you must use a cost object that can include an output quantity. Examplesare CO and PP production orders.

Figure 11: Example: Production Order

Costs for goods issues, confirmations and goods receipts are posted to the costobject (such as a production order).

The settlement rule has the settlement type FUL.

For period-end closing, either WIP or variances will be calculated depending onthe status of the cost object.



Figure 12: Relevance of Status in Product Cost by Order

In the Product Cost by Order component, either WIP or variances will becalculated depending on the status of the cost object:

� If the order has neither been delivered (DLV) nor technically completed(TECO), work in process (WIP) is calculated on the basis of actual costs. Thedifference between all debits and credits of the order is the size of the WIP.

� If the order has been delivered (DLV) or technically completed (TECO),any existing work in process will be cancelled and the system interprets theentire remaining order balance as variances where various variance causesare examined and represented by appropriate variance categories.

� Product Cost by Order does not realize variances until the last period ofproduction.



Figure 13: Product Cost by Period

Product Cost by Period is used when the controlling focus is not on concretequantities, but more on a successive, continuous production process.

Many cost objects only use cost by period (such as product cost collectors). Somecost objects that are normally based on lot sizes can be changed to cost by period.

Figure 14: Example: Product Cost Collector

Costs for goods issues, confirmations and goods receipts are posted to the costobject (such as a product cost collector).

The settlement rule has the settlement type PER.

For period-end closing, work in process is calculated in target costs and variancessimultaneously.



Figure 15: Periodicity in Product Cost by Period

In Product Cost by Period, work in process is calculated in target costs andvariances simultaneously:

� For repetitive manufacturing you must enter reporting point backflushes foroperations. For production and process orders controlled by period, youmust enter confirmations for the operations. The product cost collector is therecommended cost object for repetitive manufacturing.

� The system determines the target costs of the cost object based on costingthat you can specify with a valuation variant in Customizing. Based on this,work in process and scrap are calculated at target cost.

� Variances result from deducting work in progress and scrap at targetcost from the balance, where various variance causes are examined andrepresented by appropriate variance categories.

� Variances are realized by period in Product Cost by Period.



Figure 16: Product Cost by Order vs by Period

Some cost objects can only be controlled by order, while others can only becontrolled by period.

There are order-related cost objects that can be switched to cost by period inCustomizing.

Figure 17: Cost by Sales Order and Customer Project



Sales-Order-Related Production is used when the activity output does not takeplace until after a sales order has been received. With make-to-stock production,items are first manufactured to stock and sold later, while with sales-order-relatedproduction, they are first sold, and then manufactured. With �sales-order-relatedproduction with cost by sales order�, a sales order item is a cost object.

Both scenarios are possible for the production and retail of goods. However, aservice can only be mapped as sales-order-related production.

If the sales order alone does not provide all functions or options for integrationthat you desire, you can combine the sales order with other cost objects, such asprojects or networks. This is especially recommended for complex make-to-orderproduction scenarios, such as:

� Make-to-order production to customer specifications� Complex products like structures, ships, etc.� Large-scale variant manufacturing

Product Cost by Sales Order and Customer Project allow you to:

� Calculate and analyze planned costs and actual costs by sales order itemor WBS element

� Calculate and analyze planned revenue and actual revenue by sales order itemor WBS element (depending on the operating indicator of the WBS element)

� Calculate the value of your stock of finished and semi-finished products� Create reserves automatically� Transfer data to Financial Accounting (FI)� Transfer data to Profitability Analysis (CO-PA)� Transfer data to Profit Center Accounting (EC-PCA)



Figure 18: Controlling by Sales Order vs Make-to-Order Production

If a sales order is added to a Product Cost by Order or by Period, work with theobjects mapping the production does not have to change.

Instead, you can set up Customizing so that the sales order scenario offers the salesorder as an additional controlling object, but the remaining scenario is not mappedtoo differently as it is in make-to-stock production.

Figure 19: Cost by Customer Project

For especially complex scenarios, it can be advantageous to add a project. In sucha scenario, the project takes on the role of the cost object, while the sales order isattached to a billing element of the project as a purely logistical object.



You can set up Customizing so that the customer project scenario offers the projectas an additional controlling object, but the remaining scenario is not representedtoo differently as it is in make-to-stock production or Product Cost by Sales Order.

Figure 20: Order-Level Controlling

You can define the Controlling level in Cost Object Controlling.

Generally, Controlling takes place on order level. This means that each logisticalobject (such as a production order) is also a cost object.

Depending on the cost object used, cost by order or period can be carried out.

Figure 21: Product-Level Controlling



You can also specify that Controlling should take place on a higher level, that is,on product level. In this case, logistical objects (such as production orders) arenot cost objects, rather the costs are posted on a separate product cost collector(decoupling scenario). A product cost collector may exist for each product of aplant and then collects all costs, which are posted to the logistical object of therespective product. Logistical objects are not cost objects in this case!

The following can be used as Controlling levels:

� Production version� Routing/BOM combination� Product and plant

As the product cost collector only allows for Controlling by period, such a scenariocan only be realized as Controlling by period. Logistical objects can still containproduction quantities.



Lesson Summary

You should now be able to:� Describe the position and objective of �Cost Object Controlling� in the

Controlling module� Explain the terms �preliminary costing, simultaneous costing, final costing�� Explain the terms �Product Cost by Order, Product Cost by Period, and



Unit Summary AC520

Unit SummaryYou should now be able to:� Describe the position and objective of �Cost Object Controlling� in the

Controlling module� Explain the terms �preliminary costing, simultaneous costing, final costing�� Explain the terms �Product Cost by Order, Product Cost by Period, and



Unit 2Sales-Order-Related Production

Scenarios

Unit OverviewThis unit contains an overview of the features of make-to-order production.


� Describe sales order processing� Describe the value flow for sales-order-related production with and without

Product Cost by Sales Order� Explain the value flow for scenarios with valuated and unvaluated sales

order stock

Unit ContentsLesson: Sales-Order-Related Production Scenarios... . . . . . . . . . . . . . . . . . . . . . 26


Unit 2: Sales-Order-Related Production Scenarios AC520

Lesson: Sales-Order-Related Production Scenarios

Lesson Overview


� Describe sales order processing� Describe the value flow for sales-order-related production with and without


order stock

Business ExampleYou work in a company that uses various production processes to produce goodsand services. You would like to learn about suitable mapping methods for theseproduction processes in the R/3 system. In addition to manufacturing processes instock, you also create activities for sales orders directly (products or services).

Sales Order Management

Figure 22: Sales Order Management

Effective sales order processing ties all activities to customer demand with a seriesof tightly integrated processes. The �Sales Order Management� module providesyou with this integrated processing by building a series of logical processingsteps upon each other.


AC520 Lesson: Sales-Order-Related Production Scenarios

The sales process can begin with pre-sales activities and ends with customerpayment for goods received and services rendered. In Sales, each of these processsteps creates electronic documents that are linked with each other and represent adocument flow, which can be used for evaluations.

� The process can begin with pre-sales activities. Example: In response toa Request for Quotation (RFQ) from your customer, you create and senda quotation.

� Create a sales order when you receive the order from the customer. Thesystem can check availability and create delivery proposals.

� A procurement process will be triggered if the contents of the order areno longer in stock or cannot be in stock (such as materials or services notkept in stock). The system distinguishes between internal and externalprocurement. For internal procurement, the system can trigger a productionprocess, for example. For external procurement, the system can determinethe correct vendor and procurement conditions based on any data stored inPurchasing. The relevant documents are generated when carrying out theprocurement process.

� Delivery to the customer generates a delivery document.� For billing, you create a billing document. Billing is the point at which

the turnover is set in Controlling.� When the payment is received, the amounts received are posted to Financial

Accounting (FI).

The document flow of the �Sales Order Management� module makes managingand evaluating the sales order process easier.

Order Management: Pre-Sales Activities

Pre-sales activities may include:

� Mailing lists� Phone call records kept on the R/3 System� Inquiries� QuotationsIs Pre-Costing Necessary?

Sales cycles sometimes begin with a sales query, such as an inquiry or requestfor quotation. Sales queries help you enter and use important, sales-relatedinformation in the sales process for possible subsequent sales order processing.



You can also use this pre-sales information to develop sales strategies or help buildand maintain a long-term relationship with the customer.

� This data can also be very useful later, particularly for:

� Tracking lost sales� Recording pre-sales data to help negotiate large contracts� Selling to large organizations that require documentation of the entire

process

Any one of the activities listed above can begin the sales process.

Order Management: Order Processing

� Customers place orders with a customer service representative.� Standard orders normally contain:

� Customer and material information� Pricing conditions for each item� Schedule lines and delivery information� Billing information

Is Costing Information Required for Individual Items?

A sales order is an electronic document that records your customer's orders withreference to goods and services.

The sales order contains all pertinent information for processing the sales orderand for the entire sales process.

Sales and Distribution automatically proposes appropriate existing data fromrelevant master records in order to minimize errors and redundant partial processes.

You can enter a sales order with many items in a single screen, or create a complexorder using an expanded order view.

Order Management: Procurement Alternatives



Procurement Alternatives determine:

� If the product is available (availability check)� How the product will be procured:

� From stock� By replenishment activities (production order, purchase order)� Make-to-order production� Shipped from an external supplier� Shipped from another warehouse

The customer can inquire about tangible and intangible goods:

� Tangible goods can be in stock and simply withdrawn. Alternatively, theycan be produced in-house or externally procured.

� Intangible goods are by nature never in stock, but can be self-provided orexternally procured.

For goods and services that are produced in-house, the procurement process canbe mapped by a cost object that, depending on the situation, can work:

� without prepared quantity structures� with prepared quantity structures (such as BOMs and routings)� or with variant manufacturing.

For external procurement, the system can determine the correct vendor andprocurement conditions based on any data stored in Purchasing.

Corresponding documents are generated for all processing.

Order Management: Delivery

Delivery supports:

� Creating delivery documents� Creating transfer orders (picking)� Packing (if required)� Goods issue

Delivery creates a delivery document, to which certain data is transferred from thesales order, such as materials and quantities.

The delivery document is the electronic means to help you manage all the activitiesof delivery processing, including rational product selection, packing, planning andmonitoring shipments, preparing shipping papers, and posting goods issues.



Creating a transfer order includes copying information from the delivery documentto the transfer order. The transfer order is essential for controlling the movementof goods within your warehouse. The transfer order is based on a simple principle:from where to where are goods being moved in your warehouse? There is a sourcelocation and a destination location for every transfer order.

When you post goods issue, you see the automatic update to the generalledger. The expense account is debited and the stock account is credited. Bothquantity-based and value-based stocks go down; costs go up.

Order Management: Billing

Billing supports:

� Creating invoices for deliveries and services� Creating credit and debit memos on the basis of orders� cancelling business transactions� Transferring billing data to financial accounting

Billing creates a billing document using data from the sales order and the deliverydocument.

The billing document serves several important functions:

� The FI invoice document is created based on the FI billing document(result of the billing document). The billing document serves as a sourcefor Financial Accounting (FI) and helps you with the monitoring andmanagement of customer payments.

� When you create a billing document, you see the automatic update to thegeneral ledger. The customer's Accounts Receivable account is debited andcredits the Revenue account.

Order Management: Payment

� Final step of the Sales Order Management cycle� Customer Payment includes:

� Posting payments against invoices� Reconciling differences, if necessary

When you post a customer payment, you see the automatic update to the generalledger. The Cash account is debited and the customer's Accounts Receivableaccount credited.



Make-to-Order-Production

� A product and its sub-assemblies are individually manufactured for aparticular customer.

� Stocks can be managed in individual customer segments: Sales order stock.� Quantities produced for a particular sales order cannot then be used directly

to cover another sales order requirement.� Components can be procured specially for an individual sales order.

For make-to-order production (sales-order-related production, engineer-to-orderproduction), the requirement for a make-to-order material is planned using thesales order item number and thus a separate segment is created in the planning runof requirement planning. In this planning segment, the requirements and stocksof the sales order items are managed separately. Thus, various customer-specificvariants of a product can be managed using only one material number.

Starting from the sales order, single-item planning can be carried out for anylevel of the BOM structure. Therefore, it is also possible to procure assembliesand components specifically for the sales order and manage this stock individuallyfor the sales order. This is of particular importance if components can also beconfigured for the production of the individual customer product.

Make to Order: Controlling ScenariosKey Decisions

� Make-to-Order Production with or without Product Cost by Sales Order?� Do you want to maintain your sales order stock valuated or unvaluated?

Without Product Cost by Sales Order

EnvironmentsProduction controlling focused on product groupsHigh volume productionProduct cost by sales order similar to make-to-stock

Examples:

� Assemble to order� Make-to-order with packaging variants

Use this option when your production controlling is strictly focused on productsand not on the sales order itself.

This procedure fits perfectly to a make-to-stock environment or make-to-orderproduction that only requires the sales order for logistical reasons. No additionalperiod-end closing activities have to be performed for the sales order.



In such a situation, Sales Controlling is carried out by Profitability Analysis.

Figure 23: Value Flow Without Product Cost by Sales Order

The new functions for make-to-order production introduced in Release 4.0mean that the system handles make-to-order production in a similar way tomake-to-stock production. If the sales order is only important to you logistically,you can also use the sales order without the cost object property.

The sales order could have a purely logistical significance if:

� The sales order creates the independent requirement for you logistically� The sales order is required for variant configuration

A sales order cost estimate is possible in both cases. However, the estimate resultsare only updated on the cost object as plan values if it is a cost object. The resultsof sales order costing are used for:

� Sales and pricing decisions� Planned costs (only for cost objects)� Methods of Results Analysis based on the percentage of completion (only

for cost objects)

Sales order costing with quantity structure supports the cost component split andprovides a costing structure, a cost element itemization, and an itemization.

If you use a project in addition to the sales order (customer project production),use the project as the cost object. In this case, the sales order is created withoutthe cost object property.



Figure 24: With Product Cost by Sales Order

Figure 25: Value Flow With Product Cost by Sales Order

Product Cost by Sales Order is recommended if the following information isimportant for your business:

� How high is my profit margin for this particular sales order?� How can I map special sales costs?� How high is my funds commitment? Is this sales order performing well

from a costing point of view?� Where did late customer changes greatly affect my production costs?



You can also use Results Analysis to:

� Automatically create reserves for expected losses� Manually add reserves for foreseen risk� Calculate goods in transit where goods have been shipped but not yet

invoiced

Product cost by sales order is necessary if you want to work with unvaluatedsales order stock (not recommended).

Valuated or unvaluated sales order stock

Figure 26: Unvaluated vs Valuated Sales Order or Project Stock

The new R/3 functions for valuated sales order stock introduced in Release 4.0mean that the system handles make-to-order production in a similar way tomake-to-stock production.

In Release 3.0/3.1, this stock is always unvaluated. As of Release 4.0, you canchoose whether you manage this stock as unvaluated or valuated sales order stock.



Valuated Sales Order Stock

� Combined quantity and value flow� Simplified inventory determination� Assembly costs shown with multi-level make-to-order production� Variances can be determined for these production orders� Similar to make-to-stock production� Enables more controlling scenarios and the first step in logical decoupling of

CO-PC and PP

The new R/3 functions for valuated sales order stock (or project stock) introducedin Release 4.0 mean that the system handles make-to-order production in a similarway to make-to-stock production. All deliveries to sales order or project stockcredit the delivering object and form an accounting stock. All consumption fromthe sales order and project stock debit the consumer and reduce the accountingstock.

This enables you to:

� Calculate production variances of related production orders� Settle these variances to Profitability Analysis� Provide a cost component split for the cost of goods sold

Sales order costing can be used as the basis for stock valuation.

Figure 27: Combined Quantity and Value Flow for Valuated Sales Orderor Project Stock

Because the inventories assigned to sales orders and projects carry costs as well asquantities, goods movements for these inventories generate postings in FinancialAccounting. The costs of the materials can be determined by costing the salesorder or production order. The stock value can therefore be shown immediately



in Financial Accounting - a material cost estimate in the Controlling module isnot necessary. The valuated goods movements result in debits and credits to theaffected objects.

The goods receipt, including the stock value, is valuated using a predefinedvaluation strategy sequence.

The first goods receipt prompts a valuation on the basis of one of the subsequentstrategies and serves as the valuation basis from this point onwards:

� The system calculates the standard price on the basis of customer exitCOPCP002 material valuation for valuated sales order stock.

� The system calculates the standard price using a pre-designated sales ordercosting. This sales order costing can be based on a unit costing or on aproduct costing.

� The system determines the standard price using the costing for the productionorder or the planned costs for the WBS element. If there are multipleproduction orders for the same sales order item, the system uses the standardprice that results from the production order that delivers first.

Unvaluated Sales Order Stock

� The quantity flow is separate from the value flow

� The quantity flow (goods receipts, goods issues) is made via individualcustomer stock

� The value flow is made directly with the sales order item and allassigned orders

� Costs are not posted to the sales order item until order settlement or until theinvoice is received for purchased goods

� No variance calculation on assigned production orders� Cost Object Controlling by Sales Order is necessary!

As individual requirements material kept in stock is withdrawn from sales orderor project stock without being valuated, these costs are missing in the productionorders of a multi-level production process.

The value of the goods that are in sales order or project stock on a quantity basis isactivated for delivery to the customer as work in process (WIP).



Figure 28: Separate Quantity and Value Flow for Unvaluated Sales Orderor Project Stock

Therefore:

Figure 29: Key Message for Valuated Sales Order or Project Stock

With the two values of the � Valuation of Sales Order Stock� and �Product Cost bySales Order� criteria, there are theoretically, four possible combinations:



Figure 30: Decision Table

However, the combination �unvaluated sales order stock without Product Cost bySales Order� is not technically possible. Both values �with valuated sales orderstock� are to be favored from the accounting perspective due to the advantagesmentioned above.



Lesson Summary

You should now be able to:� Describe sales order processing� Describe the value flow for sales-order-related production with and without


order stock


Unit Summary AC520

Unit SummaryYou should now be able to:� Describe sales order processing� Describe the value flow for sales-order-related production with and without


order stock


Unit 3Product Cost Controlling by Period

Unit OverviewThis unit shows controlling by period using the example of order-relatedproduction with a product cost collector as the cost object (decoupling scenario).


� Create the master data for a production order and a product cost collector� Explain the Customizing for a �decoupling scenario�� Carry out preliminary costing for a product cost collector� Carry out goods movements and confirmations for the production order� Make direct postings from Financial Accounting to the product cost collector� Describe the typical steps for period-end closing in make-to-stock production

with Product Cost by Period� Calculate work in process (WIP) at target cost and explain the associated

Customizing� Carry out variance analysis� Describe the integration of period-end closing� Describe repetitive manufacturing� Assess the different strategies of material valuation

Unit ContentsLesson: Master Data and Preliminary Costing.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Exercise 1: Master Data and Preliminary Costing ... . . . . . . . . . . . . . . . . . . . 57Lesson: Simultaneous Costing... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

Exercise 2: Simultaneous Costing .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77Lesson: Period-End Closing... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

Exercise 3: Period-End Closing ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .109Lesson: Addendum: Repetitive Manufacturing and Material Valuation..120


Unit 3: Product Cost Controlling by Period AC520

Lesson: Master Data and Preliminary Costing

Lesson Overview


� Create the master data for a production order and a product cost collector� Explain the Customizing for a �decoupling scenario�� Carry out preliminary costing for a product cost collector

Business ExampleA manufacturer produces various types of pumps make-to-stock. Sales controllingis only carried out in Profitability Analysis (CO-PA).

The popular types are produced in a continuous production process and mapped inthe system with repetitive manufacturing. A less popular type should instead beonly produced based on lot size with production orders and only when the stock inthe warehouse drops below the reorder point. To be able to better compare thecost objects, all production processes should be accompanied by controlling byperiod. Each pump has a production version for repetitive manufacturing andanother production version for order-related production.

In this example, we will take a close look at the production for production orders.

A production order should be created in the master data while a product costcollector should serve as a cost object for Controlling by period.


AC520 Lesson: Master Data and Preliminary Costing

Master Data

Figure 31: Periodicity of Product Cost Collectors

To control by period, you:

� Use either a cost object that allows for controlling by period, or� Use a product cost collector that takes on the role of the cost object. The

logistical production objects (such as production orders) are not cost objects.

Postings in Materials Management, Production, and Financial Accounting resultin actual costs.

� You post confirmations, goods issues and goods receipts with referenceto the production order. You configure the orders so that these costs areassigned to the product cost collector automatically.

� You can assign other costs, such as process costs or material overhead,directly to the product cost collector. All period closing activities areperformed using the product cost collector.

Periodic actual costs from the cost object can be grouped as follows:

� Costs for products for which a goods receipt in the warehouse has been listedin the current period (�delivery to stock�).

� Costs for work in process. These are target costs for the production quantitiesthat have been confirmed for the operations but not yet delivered to stock.

� Production variances that are calculated with the following formula:Variances = actual debit - goods receipt - work in process.



Figure 32: Using Product Cost Collector

Product cost collectors are created independent of the production type. This meansthat you can collect actual costs on a product cost collector for:

� Order-related production (that is, when you use production orders).� Process manufacturing (that is, production with process orders).� Repetitive manufacturing, for which the cost object is always a product cost

collector. This also applies to KANBAN production methods.� Mass production based on sales orders when you are using valuated sales

order stocks, and in repetitive manufacturing when you are producingindividual requirements materials.

This means that the product cost collector has �two uses.� For repetitivemanufacturing, it is always used. It is also always used as a cost object whencontrolling is not to take place for logistical objects (decoupling scenario).



Figure 33: Production Order and Product Cost Collector: Process Chain

In Product Cost by Period, costs are collected and analyzed on the product costcollector. Production orders do not serve as cost objects; they are used only forlogistical processing.

In order to ensure that the costs of a manufacturing order are collected on aproduct cost collector, you must make the necessary settings for the order type ofthe manufacturing order in Customizing for Product Cost by Order under DefineDefault Values for Order Types .

You must manually create a product cost collector before you start production.When the manufacturing order is created, it is linked to the product cost collectorautomatically.

If you neglect to create a product cost collector, the costs are collected on themanufacturing order. In this case, it is only possible to link the manufacturingorder to the product cost collector as long as no actual costs have been updated tothe manufacturing order.

Note on terminology: This course often uses the term manufacturing order. Thisis an umbrella term for production order and process order.



Figure 34: Automatic Assignment of Orders to Product Cost Collectors

The production order is assigned to the product cost collector by the productionprocess. The system generates the production process automatically when theproduct cost collector is created.

Product cost collectors are linked to production orders and to the productionversions in repetitive manufacturing in the same way.

Production orders that are linked to product cost collectors receive the status PCC.



Figure 35: Controlling: Level

The production process has characteristics whose values are unique to thatproduction process. You specify which characteristics are updated for theproduction process by means of the controlling level.

There is a separate controlling level for each plant material and process category.The relevant process category in Cost Object Controlling is production.

When you create the product cost collector, you decide on which level the costsshould be collected on the product cost collector. You can choose from thefollowing levels:

� Production version� Any BOM/routing combination� Material per plant



Figure 36: Product Cost Collector and Production Process

If you are using the controlling level Production version, the product cost collectoris created for the characteristics material, production plant, planning plant, andproduction version. SAP recommends this controlling level whenever you areusing production versions. In repetitive manufacturing, you should always usethis controlling level.

If you are using the controlling level BOM/Routing, the product cost collector iscreated for the characteristics material, production plant, planning plant, BOM,and routing. BOM/Routing should only be used if the material does not have anyproduction versions. The BOM is identified by the BOM usage and the alternativeBOM. The routing is identified by the task list type and task list group.

If you are using the controlling level Production Plant/Planning Plant, the productcost collector is created for the characteristics material, production plant, andplanning plant. These product cost collectors have a number of features. Forexample, it is not possible to create a preliminary cost estimate for a product costcollector. This affects subsequent functions. Problems may arise if you makechanges to the reporting points of the production versions.



Figure 37: Product cost collectors: Default Values for Order Type

A product cost collector is an order. The order type of the product cost collectormust belong to order category 05 (product cost collector).

For product cost collectors, default rule STR (strategy for tracing factordetermination) is specified in the table Cost-Accounting-Relevant Default Valuesfor Order Types and Plants. This default rule is linked to settlement type PER(periodic). As a result, the settlement rule for the product cost collector receivessettlement type PER. Default rule STR also ensures that the values to be settledfrom a product cost collector can be distributed. This is necessary, for example,when the product cost collector collects the costs of materials that have beenassigned different valuation types (such as special batch inventories) or that arepart of a valuated sales order stock. When the product cost collector is settled, thesystem apportions the balance among the different stock in accordance with thedelivery values for the period. The settlement process generates the distributionrule automatically on the basis of the delivery values. The system createsequivalence numbers based on the delivery values, and transfers these equivalencenumbers into the dynamic distribution rule.

A results analysis key must be specified in all product cost collectors for whichyou want to calculate work in process.

For preliminary costing and simultaneous costing, enter the costing variant andvaluation variant in the order type. This defines the valuation procedure formaterials, internal activities, external activities, and business processes. It alsodetermines which overhead structure is used to calculate overhead.



Figure 38: Production Order and Production Process

If a production order is assigned to a product cost collector, the status PCC will beassigned to the production order.

A preliminary cost estimate can be generated for the production order but theresults cannot be saved to the production order as planned values.

Figure 39: Customizing: Production Order



Default rule PP2 (periodic) must be specified for the order type of the productionorder.

The costing variant and valuation variant specified in the order type for theproduction order are used for the preliminary cost estimate for the productionorder (this cost estimate is for information purposes only). If you do not want thesystem to create this cost estimate, you don't need to enter the costing variant orvaluation variant.

No results analysis key is specified in the order type because WIP is calculatedon the product cost collector.

Preliminary Costing




Figure 41: Preliminary Costing - Overview (1)

You can create a preliminary cost estimate for a product cost collector. Thepreliminary cost estimate costs the quantity structure defined by the productionprocess. If you are using the controlling level �Material by ProductionPlant/Planning Plant,� you cannot create a preliminary cost estimate for theproduct cost collector.

In repetitive manufacturing, the activity quantities determined in preliminarycosting can be used as default values for the confirmations. This requires thatyou make the appropriate setting in Customizing in the repetitive manufacturingprofile.

Target costs can be calculated on the basis of preliminary costing to:

� Valuate WIP with the WIP calculation function� Valuate the scrap variances in the variance calculation function

In repetitive manufacturing, if the reporting point structure of your routingchanges, you can update the preliminary cost estimate to convert the quantitiesconfirmed at the reporting points to the new reporting point structure.



Figure 42: Preliminary Costing - Overview (2)

The production process quantity structure is valuated as defined in the valuationvariant of the costing variant.

Figure 43: Preliminary Costing: Direct Materials Costs

To calculate direct materials costs, the input quantities of the materials determinedby the BOM are multiplied by the prices selected through the valuation variant.

The system uses the BOM of the production process.



You have already specified which costing variant and valuation variant are used bythe preliminary cost estimate in Customizing in Define Cost-Accounting-RelevantDefault Values for Order Types ands Plants.

Figure 44: Preliminary Costing: Direct Costs of Production

To calculate the direct costs of production, the system multiplies the planned setuptimes, machine times and labor times by the prices selected in accordance withthe valuation variant.

The system uses the routing of the production process.

The standard values are specified in the operations in the routing and can bedefined as either fixed or variable (lot-size-dependent) values.

� Lot-size-dependent standard values (such as labor and machine time) aremultiplied by the costing lot size and divided by the base quantity on whichthe standard values are based.

� Fixed standard values (such as setup costs) are independent of the productionquantity and are known as ordering costs. They can still indicate steppedcosts for technical reasons (such as a tool change required above a certainorder quantity). These are known as semivariable costs.

The exact algorithm is stored in formulas for the work center, which is assignedto the individual operations of the routing. The cost center and the activity typefor each operation are in turn assigned to the work center. This determines theprice of the activity.



Figure 45: Preliminary Costing: Process Costs

Template allocation is a new technique for allocating the costs of Overhead CostControlling according to cause as closely and �as comfortably as possible� (thatis, without manual effort). All objects of the Controlling are suitable for use asreceivers, especially cost objects and profitability segments of the CO-PA.

The template allocation technique allocates ABC processes and activity typesof the cost centers. In principle, all information in the system can be used asthe cause value (cost driver).

The process template is determined dynamically based on the followingparameters:

� The costing sheet for the application of overhead is selected with thevaluation variant.

� The overhead key is either entered directly in the cost object or derived fromthe overhead group from the material master (costing view 1).

� With the combination of overhead key and costing sheet, you can assigna template in Customizing.

The templates are grouped in Customizing by their usage (environment). Forexample, a template of the �material cost estimate� environment can can only beused for product costing (and PP production orders), while a template of the �salesorder� environment can only be used for sales orders.



Figure 46: Preliminary Costing: Overhead Costs

In traditional cost accounting, overhead costs are passed on to cost objects withoverhead surcharges. While these cost objects are debited, overhead cost objectsare credited in return (cost centers, orders). You can define both quantity-basedand percentage overhead rates.

Overhead is calculated using a costing sheet. The costing sheet consists of threetypes of rows:

� Base rows: Here you enter the cost elements, cost element groups, and/ororigin groups to which you want to apply overhead.

� Overhead rate rows: Here you specify the overhead rates to be used toapply overhead to the base rows.

� Credits: Here you specify which overhead cost objects (cost center, process,or internal order) you want to credit under which cost element.

If you want to apply overhead in different ways depending on the material beingmanufactured, you can use overhead keys. You then define overhead rates basedon the overhead keys that can be derived from overhead groups in Customizing.You enter these in the material master record.

In preliminary costing for the product cost collector, the system uses the costingsheet specified in the �planned� valuation variant. In simultaneous costing for theproduct cost collector, the system uses the costing sheet specified in the �actual�valuation variant. This is the costing sheet that is displayed in the product costcollector.



Exercise 1: Master Data and PreliminaryCosting

Exercise ObjectivesAfter completing this exercise, you will be able to:� Create a product cost collector and a production process� Review the cost data for a product cost collector� Analyze a preliminary cost estimate and display the customizing for the

costing variant� Create a production order, and display the control data provided by the

product cost collector and production process� Review the quantity structure (BOM, routing) allocated to the production

order� Display the Customizing settings for the product cost collector and the order

type parameters for a production order

Business ExampleThe pump assembly R-F1## is a finished product with a stable manufacturingprocess that utilizes production orders. You want to use the concept of ProductCost by Period for cost controlling.

You are a member of the controlling department, and have decided to use productcost controller as cost object. In order to do so, you create a product cost collectorfor the pump, and analyze the cost data of the cost collector. It is also necessary tocreate a production order and review the control data transferred from the productcost collector to the production order.

Although all customizing has been completed, you will need to verify the settingsfor the order types and costing variants relevant for the Product Cost by Periodscenario.

Task 1:To manage the cost object controlling for pump assembly R-F1##, a productcost collector must be created. The controlling level for the pump will be theBOM/routing level.

1. Create a product cost collector for pump assembly R-F1## in plant 1000.The order type is RM01. The product cost collector must be valid for aBOM and routing. While creating the cost collector, enter BOM usage 1,alternative 01, and search for a valid routing for material R-F1## in plant1000. Save the product cost collector. Choose Yes when asked if you want tocreate a preliminary cost estimate for the product cost collector.

Continued on next page



2. Using the display transaction for the product cost collector, display the costdata. What cost data was assigned to the cost collector? What order type isassigned to the cost collector?

Costing sheet:

Overhead key:

Results Analysis key:

Variance key:

Order Type:

Order number:

Production Process:

3. Verify the planned costing variant and the actual costing variant for theproduct cost collector. A different costing variant is specified for the plannedcosts than for the actual costs. Why is this necessary?

Planned Costing Variant:

Actual Costing Variant:

Why is this necessary?

Task 2:A preliminary cost estimate was created for your product cost collector. Reviewthe results of the cost estimate and display the customizing settings for the plannedcosting variant and order type RM01.

1. Display the preliminary cost estimate for the product cost collector. What arethe costs of goods manufactured for 10 pieces?

COGM:

2. Display the itemization report for R-F1##. Determine the calculated costsfor the assembly R-B1##.

Costs: ____________

3. Create another session. Display the current cost estimate for assemblyR-F1##. Compare the preliminary cost estimate calculated for the productcost collector for assembly R-F1## with the current standard cost estimatefor this material. How can there be differences between these two prices?

Standard: ____________




4. The planned costs were calculated using the costing variant PREM. Checkthe assignment of this costing variant to the order type RM01 in thedefault values of plant 1000. Which costing variant was assigned for thissimultaneous costing?

5. Display the customizing settings for the calculation of the planned materialcosts for the product cost collector. Which valuation variant was assigned tocalculate the planned order costs for costing variant PREM?

6. What types of costs can be updated with the costing variant?

7. What price selection strategy is selected for calculating the materialcomponents?

8. What price selection strategy is selected for calculating the production costs?

Task 3:Create a production order and analyze the connection with the production processand the product cost collector.

1. Create a production order for 10 pieces of material R-F1##, using productionplant 1000, order type PP08. Use forward scheduling and enter today's dateas the start date.

2. Check the control data for the production order. How were the costingvariants for actuals, the costing sheet and overhead key determined for theproduction order? Can they be changed for the production order?

3. What order status is related to the use of a product cost collector?




4. Locate the production process on the Control data screen. Is this productionprocess unique for this BOM and routing, or is it valid for R-F1## at plant1000 in general?

5. On the Assignment tab page, determine which profit center has been assignedto the production order. Which master record determined the profit center?

6. Select Operation Overview, and review the operations that have been selectedfor this production order. Which work center is assigned to operation 0010?What is the control key for this operation?

7. Review the material components and verify the required quantity for eachcomponent. What are the required quantities of components R-B1## andR-B2##? Is there any planned scrap for these components?

8. Release the production order.

9. Save the production order. Record the order number.

Order number ______________

Task 4:1. The use of a product cost collector is dependent on the order type selected

for the production order. Display the order type defaults for plant 1000 andorder type PP08, and review the Customizing settings.




2. Is the product cost collector indicator selected?

3. What is the default rule for the CO settlement?

4. If a product cost collector is found for a material, will the RA Key andCosting variant for order type PP08 default to the production order?



Solution 1: Master Data and PreliminaryCostingTask 1:To manage the cost object controlling for pump assembly R-F1##, a productcost collector must be created. The controlling level for the pump will be theBOM/routing level.

1. Create a product cost collector for pump assembly R-F1## in plant 1000.The order type is RM01. The product cost collector must be valid for aBOM and routing. While creating the cost collector, enter BOM usage 1,




alternative 01, and search for a valid routing for material R-F1## in plant1000. Save the product cost collector. Choose Yes when asked if you want tocreate a preliminary cost estimate for the product cost collector.

a) Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Period→ Master Data→ ProductCost Collector→ Edit (KKF6N)

Create a product cost collector for pump assembly R-F1## in plant1000. The order type is RM01. The product cost collector must bevalid for a BOM and routing. While creating the cost collector, enterBOM usage 1, alternative 01, and search for a valid routing for materialR-F1## in plant 1000. Save the product cost collector. Choose Yeswhen asked if you want to create a preliminary cost estimate for theproduct cost collector.

Enter your material R-F1##.

Plant 1000

Select Create.

Enter order type RM01.

Select BOM/routing

Enter BOM Usage 1.

Enter alternative BOM 01.

Enter task list type Routing

Search for the routing group using the material R-F1##, Plant 1000,task list type N.

Choose Confirm (Transfer data)

Save your entries.

Choose Yes when asked if you want to create a preliminary costestimate for the product cost collector.

2. Using the display transaction for the product cost collector, display the costdata. What cost data was assigned to the cost collector? What order type isassigned to the cost collector?

Costing sheet:

Overhead key:

Results Analysis key:

Variance key:

Order Type:




Order number:

Production Process:

a) The product cost collector is immediately displayed:

The following information is displayed on the Data tab:

Costing sheet: COGM

Overhead key: SAP10

Results Analysis key: FERT-P

Variance key: 000001

The following information is displayed on the Header tab:

Order Type: RM01

Order Number:

The following information is displayed on the Production Process tab:

Production Process Number:

3. Verify the planned costing variant and the actual costing variant for theproduct cost collector. A different costing variant is specified for the plannedcosts than for the actual costs. Why is this necessary?

Planned Costing Variant:

Actual Costing Variant:

Why is this necessary?

a) The costing variants are displayed on the Data tab:

Planned Costing Variant: PREMActual Costing Variant: PPP3

Caution: You must select a unique costing variant fordetermining both planned and actual costs, since the assignedcosting type initiates the update of the results of either thepreliminary cost estimate or the actual costs of the product costcollector. In addition, different material and activity pricescan be selected for preliminary costing and simultaneouscosting. Different valuations may also be selected for externalprocurement and external activities.




Task 2:A preliminary cost estimate was created for your product cost collector. Reviewthe results of the cost estimate and display the customizing settings for the plannedcosting variant and order type RM01.

1. Display the preliminary cost estimate for the product cost collector. What arethe costs of goods manufactured for 10 pieces?

COGM:

a) The cost estimate can be accessed from the Header tab: Select DisplayCost Estimate.

To display the cost for 10 pieces, change the entry for Costs based on toUser entry and enter 10 in the quantity field.

The COGM for 10 pieces is displayed:

2. Display the itemization report for R-F1##. Determine the calculated costsfor the assembly R-B1##.

Costs: ____________

a) The value for 10 pieces of R-B1## is displayed in the Itemization report.

3. Create another session. Display the current cost estimate for assemblyR-F1##. Compare the preliminary cost estimate calculated for the productcost collector for assembly R-F1## with the current standard cost estimatefor this material. How can there be differences between these two prices?




Standard: ____________

a) Create another session (System→ Create session).

Logistics→ Materials Management→ Material Master→ Material→ Display→ Display Current (MM03)

Before beginning the task, choose Add to favorites.


Select Enter.

Select view Costing 2.

Select Enter.

Enter plant 1000.

Select Enter.

The current standard is displayed under the column marked Current.

The costing variant used to calculate the standard cost estimate andthe costing variant used to calculate the product cost collector mayuse different valuation variants. However, even if the same valuationvariants are used, the prices of the component materials and activityprices may have changed between the time the standard cost estimatewas created and the time when the cost was calculated for the productcost collector. Also, the current BOM or routing (quantity structure)may be different than the quantity structure used in the standard costestimate.

In addition, if more than one procurement process is available forR-F1##, mixed costing could have been used to calculate the standard.




4. The planned costs were calculated using the costing variant PREM. Checkthe assignment of this costing variant to the order type RM01 in thedefault values of plant 1000. Which costing variant was assigned for thissimultaneous costing?

a) Tools→ Customizing→ IMG→ Execute Project (SPRO)


Choose SAP Reference IMG.

Controlling→ Product Cost Controlling→ Cost Object Controlling→ Product Cost by Period→ Product Cost Collectors→ DefineCost-Accounting-Relevant Default Values for Order Types and Plants(OKZ3)

Select plant 1000, order type RM01.

Choose Details.

The costing variant for the simultaneous costing is PPP3.

5. Display the customizing settings for the calculation of the planned materialcosts for the product cost collector. Which valuation variant was assigned tocalculate the planned order costs for costing variant PREM?

a) Return to the IMG node Product Cost Collectors and choose CheckCosting Variants for Product Cost Collectors→ Costing Variants toDetermine Activity Quantities (OKKN)

Select Costing Variant PREM.

Choose Details.

Valuation Variant Preliminary Cost Estimate (190).

6. What types of costs can be updated with the costing variant?

a) Select the Costing Type view on the Details screen.

Select the Misc. tab.

The costing type determined that the preliminary cost estimate for theproduct cost collector is updated.




7. What price selection strategy is selected for calculating the materialcomponents?

a) Select the Valuation Variant view on the Details screen.

The selection strategy is:

1. Price from purchasing info record2. Planned price 13. Standard price4. Moving average price

8. What price selection strategy is selected for calculating the production costs?


Select the Activity Types/Processes tab.

The selection strategy is:

1. Planned price as average of all fiscal year periods2. Planned price for the period

Task 3:Create a production order and analyze the connection with the production processand the product cost collector.

1. Create a production order for 10 pieces of material R-F1##, using productionplant 1000, order type PP08. Use forward scheduling and enter today's dateas the start date.

a) Logistics→ Production→ Production Control→ Order→ Create→ With Material (CO01)



Enter production plant 1000.

Enter order type PP08.

Select Enter.

Enter the quantity of 10.

Enter today�s date as the start date.

Change the scheduling type to Forwards.




2. Check the control data for the production order. How were the costingvariants for actuals, the costing sheet and overhead key determined for theproduction order? Can they be changed for the production order?

Answer: Select the Control data view.The actual costing variants, costing sheet and overhead key were assigned tothe order via the product cost collector. In this scenario, costs are not updatedto the production order, but to the product cost collector. The display of thesefields is for information only, they cannot be changed on the productionorder. Only the costing variant for planned costs can be changed.

3. What order status is related to the use of a product cost collector?

Answer: Select Status. The status PCC indicates that a product costcollector is being used.

4. Locate the production process on the Control data screen. Is this productionprocess unique for this BOM and routing, or is it valid for R-F1## at plant1000 in general?

Answer: The production process and BOM/routing are displayed on theControl data tab page. The production process is unique for this BOM androuting. This was determined when the product cost collector was created.

5. On the Assignment tab page, determine which profit center has been assignedto the production order. Which master record determined the profit center?

Answer: Select the Assignment tab.The profit center is displayed. The profit center is maintained in the materialmaster record for R-F1##.

6. Select Operation Overview, and review the operations that have been selectedfor this production order. Which work center is assigned to operation 0010?What is the control key for this operation?

Answer: Select Operation overview.Work center R-M## is assigned to operation 0010. The control key is PP01.




7. Review the material components and verify the required quantity for eachcomponent. What are the required quantities of components R-B1## andR-B2##? Is there any planned scrap for these components?

a) Select operation 0010.

Choose Components (icon in lower area of screen).

R-B1##→ 10 pieces

R-B2##→ 10 pieces

There is no planned scrap for these components. This can be confirmedby displaying the Component detail screen using the icon on the lowerleft.


a) Choose Release order .


Order number ______________

a) Select Save.

Task 4:1. The use of a product cost collector is dependent on the order type selected

for the production order. Display the order type defaults for plant 1000 andorder type PP08, and review the Customizing settings.

a) Favorites→ Tools→ Customizing→ IMG→ Execute Administration(SPRO)


Controlling→ Product Cost Controlling→ Cost Object Controlling→ Product Cost by Order→ Manufacturing Orders→ DefineCost-Accounting-Relevant Default Values for Order Types and Plants(OKZ3)

Select plant 1000, order type PP08.

Choose Details.

2. Is the product cost collector indicator selected?

Answer: Yes, the product cost collector indicator is selected.

3. What is the default rule for the CO settlement?

Answer: The default rule for CO settlement is PP2, periodic settlement.




4. If a product cost collector is found for a material, will the RA Key andCosting variant for order type PP08 default to the production order?

Answer: No, the RA key and costing variant for order type PP08 will notdefault to the production order. The settings for the product cost collectorwill be used.



Lesson Summary

You should now be able to:� Create the master data for a production order and a product cost collector� Explain the Customizing for a �decoupling scenario�� Carry out preliminary costing for a product cost collector


AC520 Lesson: Simultaneous Costing

Lesson: Simultaneous Costing

Lesson Overview


� Carry out goods movements and confirmations for the production order� Make direct postings from Financial Accounting to the product cost collector




When carrying out the production, goods issues and confirmations for theproduction order are carried out while direct postings from Financial Accountingdirectly address the product cost collector.




Figure 48: Debit of Product Cost Collector with Actual Costs



The following business transactions can result in actual costs on cost objects: G/Laccount postings in FI; goods movements in MM; repostings of primary costs;repostings of line items; internal activity allocations; repostings of internal activityallocations; direct assignment of personnel costs to cost objects by means of timesheets; process cost allocation; manual process allocation; template allocation;calculation of overhead; revaluation of activities at actual prices; confirmations inLogistics that result in activity allocations; subcontracting.

Logistical functions such as goods issues and confirmations are still performedwith reference to the manufacturing order (or, in repetitive manufacturing, withreference to the production version). The resulting costs are updated to theproduct cost collector.

You can enter goods issues, confirmations, and goods receipts independently ofeach other. You can also have activity allocations and goods issues and/or goodsreceipts generated automatically when you confirm. You make the settings thatenable this in Logistics.

You can confirm the order header or individual operations. In Product Cost byPeriod, it is recommended that you confirm operations (affects the calculation ofwork in process).

Figure 49: Credit of Product Cost Collector by Goods Receipt



The price control of the material is specified in the material master record:

� Price control indicator V: The material is valuated at the moving averageprice (output price). The moving average price changes with each goodsmovement or when orders from Cost Object Controlling are settled. Thevalue of the goods receipt is determined by the valuation variant for delivery.

� Price control indicator S: The material is valuated at the standard price. Inmake-to-stock production, this price is usually calculated in a standard costestimate for the material. In sales-order-related production with a valuatedsales order stock, the valuation price is selected using a predefined valuationstrategy and acts like a standard price.

� For materials whose price control is S, receipts into stock are valuated at thestandard price. The credit applied to the product cost collector is the quantityreceived into inventory multiplied by the standard price. For materials whoseprice control indicator is V, the receipt into inventory and the credit to theproduct cost collector is controlled by the valuation variant for delivery. Thevaluation variant for delivery determines which price field from the materialmaster is selected to value the goods receipt. When the product cost collectoris settled (for example, during the period-end closing), the postings formaterials with price control indicator S can differ from those for materialswith price control indicator V.

When the goods receipt is entered, the system automatically debits the balancesheet account account and credits the inventory change account. The product costcollector is credited using the primary cost element that corresponds to the plantactivity account (inventory change account).

For internally manufactured materials, SAP recommends valuation at the standardprice.



Exercise 2: Simultaneous Costing

Exercise ObjectivesAfter completing this exercise, you will be able to:� Analyze the actual costs of material withdrawal and the related (component

scrap)� Analyze the actual production costs for the confirmation of production

activities� Analyze the actual cost for the receipt of the finished product� Display the Customizing settings for simultaneous costing

Business ExampleThe actual costs for a production order are posted with goods receipts and issuesas well as with confirmations for operations.

For the manufacturing of the pump assembly, the components are issued manually,via inventory management. If any components are scrapped during production,additional quantities are issued to the production order. The production floorrecords the progress (products made, execution times) of a production orderby utilizing order confirmations. During the confirmation, you can change thesuggested execution times. Goods receipts can be processed either manuallythrough inventory management, or automatically during the production orderconfirmation, depending on the control key of the operation. In our case, the goodsreceipt is automatically updated with the confirmation. During the confirmation,you can enter scrap quantities.

Any changes to the suggested quantities (target quantities) cause quantity variancesfor the variance calculation that is carried out later during the period-end closing.

Task 1:Since the production order has been released to the shop floor, inventorytransactions and production confirmations can be posted against the order. Thesimultaneous costing is recorded on the assigned product cost collector.

1. Enter the goods issue for the production order. Due to material scrap thathas occurred during assembly, change the withdrawal quantity of materialR-B1## from 10 to 11. Will this quantity change be reported as a variance?




2. Enter a final confirmation for operation 10 of the production order. Entera yield of 10 pieces, and increase the labor time by a factor of 10 % toreflect the additional processing time necessary because of the scrappedcomponents. Save the confirmation.

3. Enter a partial confirmation for operation 70 of the production order.Enter a yield of 5 pieces and a scrap quantity of 1 piece. Save the partialconfirmation. Continue past the warning regarding the activity recalculationdue to the partial confirmation.

Hint: Because the operation uses control key PP99, this is amilestone confirmation with an automatic goods receipt.

Task 2:Use the Target/Actual - Comparison report to review the actual cost informationfor the product cost collector of material R-F1##.

1. Display the quantity of material R-B1## that was debited to the product costcollector. Display the activities that were debited to the product cost collector.




2. Locate the credit to the product cost collector for the goods receipt ofR-F1##. Was the cost collector credited for the confirmation of the assemblythat was reported as scrap?

3. What value was used to credit the product cost collector for the goods receiptof the pump assembly? Why?

Task 3:The actual costs for the activities were calculated using the costing variant PPP3.Review the customizing settings for the simultaneous costing of the costs for theproduct cost collector.

1. Display the assignment of this costing variant to the order type RM01 defaultvalues for plant 1000.

2. Which valuation variant is assigned to calculate the actual order costs forcosting variant PPP3?

Valuation variant:

3. What price is selected for calculating the production costs? Is this the sameprice that was used to determine planned costs (preliminary cost estimate)for the product cost collector?

Activity price selected for actual costs:

Activity price selected for planned costs:



Solution 2: Simultaneous CostingTask 1:Since the production order has been released to the shop floor, inventorytransactions and production confirmations can be posted against the order. Thesimultaneous costing is recorded on the assigned product cost collector.

1. Enter the goods issue for the production order. Due to material scrap thathas occurred during assembly, change the withdrawal quantity of materialR-B1## from 10 to 11. Will this quantity change be reported as a variance?

a) Logistics→ Production→ Production Control→ Goods Movements→ Goods Issue (MB1A)


Enter movement type 261, plant 1000, and storage location 0001.

Choose To order.

Enter the production order number.

Select Enter.

Change the withdrawal quantity for R-B1## from 10 to 11.

Save the material withdrawal.

Select Enter to continue past any warning message regarding reservedquantity.

Yes, a quantity variance will be determined for this material componentduring variance calculation.




2. Enter a final confirmation for operation 10 of the production order. Entera yield of 10 pieces, and increase the labor time by a factor of 10 % toreflect the additional processing time necessary because of the scrappedcomponents. Save the confirmation.

a) Logistics→ Production→ Production Control→ Confirmation→Enter→ For Operation→ Time Ticket (CO11N)


Enter the order number and operation 0010.

Select Enter.

Enter the confirmation type Final confirmation.

Confirm a yield of 10 pieces.

Enter a labor execution time approximately 10% greater than thedefault time.

Save the confirmation.

3. Enter a partial confirmation for operation 70 of the production order.Enter a yield of 5 pieces and a scrap quantity of 1 piece. Save the partialconfirmation. Continue past the warning regarding the activity recalculationdue to the partial confirmation.

Hint: Because the operation uses control key PP99, this is amilestone confirmation with an automatic goods receipt.

a) Favorites→ Confirmation→ Enter→ To Operation→ Time Ticket(CO11N)

Enter the order number and operation 0070.

Select Enter.

Enter the confirmation type Partial confirmation.


Enter a scrap quantity of 1 piece.


Continue past the warning messages regarding activity time calculation.




Task 2:Use the Target/Actual - Comparison report to review the actual cost informationfor the product cost collector of material R-F1##.

1. Display the quantity of material R-B1## that was debited to the product costcollector. Display the activities that were debited to the product cost collector.

a) Accounting→ Controlling→ Product Cost Controlling→ CostObject Controlling→ Product Cost by Period→ Information system→ Reports for Product Cost by Period→ Detailed Reports→ ForProduct Cost Collectors (KKBC_PKO)


Enter plant 1000.

Choose Execute.

The activity types and materials are displayed in the Origin column.

To display the actual quantities for the line items:

Choose Change layout.

From the Column Set, select Total Actual Quantity.

Select Show selected fields.

Select Transfer (Enter).

2. Locate the credit to the product cost collector for the goods receipt ofR-F1##. Was the cost collector credited for the confirmation of the assemblythat was reported as scrap?

Answer: The product cost collector was credited for the goods receiptposting of 5 pieces. The 1 piece that was reported as scrap is not credited tothe product cost collector. It will be calculated as scrap value when variancesare calculated for the product cost collector.

3. What value was used to credit the product cost collector for the goods receiptof the pump assembly? Why?

Answer: The standard cost estimate was used to valuate the goods receipt.All materials that use standard price control also credit the product costcollector with the standard price. Only materials with moving average priceuse a valuation variant to determine the cost object credit at time of goodsreceipt. This can be confirmed by displaying the accounting view of R-F1##and locating the price control (Standard) and the current standard price.




Task 3:The actual costs for the activities were calculated using the costing variant PPP3.Review the customizing settings for the simultaneous costing of the costs for theproduct cost collector.

1. Display the assignment of this costing variant to the order type RM01 defaultvalues for plant 1000.

a) Favorites→ Tools→ Customizing→ IMG→ Execute Project(SPRO)


Controlling→ Product Cost Controlling→ Cost Object Controlling→ Product Cost by Period→ Product Cost Collectors→ DefineCost-Accounting-Relevant Default Values for Order Types and Plants(OKZ3)

Select plant 1000, order type RM01.

Choose Details.

The costing variant for the simultaneous costing is PPP3.

2. Which valuation variant is assigned to calculate the actual order costs forcosting variant PPP3?

Valuation variant:

a) Return to the IMG node Product Cost Collectors, then choose

Check Costing Variants for Product Cost Collectors→ CostingVariants for Valuation of Internal Activities (OPL1)

Select Costing Variant PPP3.

Choose Details.

Valuation Variant Production Order - actual (007).

3. What price is selected for calculating the production costs? Is this the sameprice that was used to determine planned costs (preliminary cost estimate)for the product cost collector?

Activity price selected for actual costs:




Activity price selected for planned costs:



The strategy sequence for actual costs is:

1. Plan price for the period

To display the planned cost strategy, return to the IMG node and choose

Check Costing Variants for Product Cost Collectors Choose CostingVariants to Determine Activity Quantities (OKKN)

Select Costing Variant PREM.

Choose Details.

Choose Valuation Variant.


The price selection strategy sequence is:

1. Plan price as average of all fiscal year periods2. Plan price for the period

No, they do not use the same price.



Lesson Summary

You should now be able to:� Carry out goods movements and confirmations for the production order� Make direct postings from Financial Accounting to the product cost collector



Lesson: Period-End Closing

Lesson Overview


� Describe the typical steps for period-end closing in make-to-stock productionwith Product Cost by Period

� Calculate work in process (WIP) at target cost and explain the associatedCustomizing

� Carry out variance analysis� Describe the integration of period-end closing




Period-end closing is carried out completely on the cost object in Controlling; inthis scenario, on the product cost collector.


AC520 Lesson: Period-End Closing

Template Allocation, Revaluation, Overhead

Figure 50: Period-End Closing for the Product Cost Collector

Functions in the period-end closing process for product cost collectors:

� Template allocation for automatic allocation of process costs and activitytypes.

� Revaluation, at actual prices, of activity types and business processes withwhich cost objects were debited.

� Allocation of overhead.� Calculation of work in process (WIP): in Product Cost by Period, the work

in process is valuated at target cost.� Variance Calculation: the variance calculation function investigates the

causes of the order balance. This function provides answers to questionssuch as: why did the production process cost more than anticipated?

� Settlement

� The work in process is settled to Financial Accounting and ProfitCenter Accounting

� The order balance is settled to Financial Accounting and Profit CenterAccounting (also to the Material Ledger, if active)

� The variance categories are settled to Profitability Analysis

The Schedule Manager simplifies the period-end closing process. It is addressedextensively in course AC690.



Figure 51: Template Allocation

Template allocation is a new technique for passing on the costs of the OverheadCost Controlling to cause as closely and �as comfortably as possible� (that is,without manual effort). All objects of the Controlling are suitable for use asreceivers, especially cost objects and profitability segments of the CO-PA.

� The template allocation technique allocates ABC processes and activitytypes of the cost centers. In principle, all information in the system can beused as the cause value (cost driver).

� The process template is determined dynamically based on the followingparameters:


� The overhead key is either entered directly in the cost object or derivedfrom the overhead group from the material master (costing view 1).

� With the combination of overhead key and costing sheet, you canassign a template in Customizing.

For the previous example, you must define a template in which you use thefunction ORDER_TARGET_PROCESS_QUANTITY to calculate the actualprocess quantity. In this function, the target costs of the process are calculated onthe basis of the current standard costs.



Figure 52: Revaluation at Actual Prices (1)

You can determine the actual prices for activity types and business processes at theend of the period. The actual prices are the actual costs divided by the activity andprocess quantities consumed.

You control whether revaluation at actual prices is possible in Customizing in theparameters for the actual version that depend on the fiscal year, as well as in themaster data of the activity type.

You calculate actual prices in Overhead Cost Controlling.

Revaluation at actual prices is performed in the period-end closing process for theproduct cost collector. The cost object is charged with the difference between theactual price and the price originally allocated to it.

You can revaluate activities and business processes at actual prices in thefollowing components:

� In Cost Object Controlling, for all cost objects (product cost collectors;production orders and process orders, sales order items (if they are being usedas cost objects), internal orders; cost object hierarchies; general cost objects)

� In the Project System (projects (WBS elements), networks, networkactivities)



Figure 53: Revaluation at Actual Prices (2)

In this example, the planned cost center cost differs from the actual cost. Theplanned price is 10.00 per hour. However, only 9 hours were allocated instead ofthe 10 that were planned in the preliminary costing. At the planned price, thisresults in 90.00 being allocated to the product cost collector.

At the end of the period, the total activity-related cost at the cost center isdetermined to be 117.00. At 9 allocated hours, this results in a target price of 13.00per hour, that is, 9 x 13.00 = 117.00 in total. The difference of 27.00 is charged tothe product cost collector with the revaluation at actual prices function.

In this example, revaluation at actual prices is illustrated using an activity type.It also applies to business processes.



Figure 54: Actual Overhead Calculation

Actual overhead calculation allocates cost objects with actual overhead.

Overhead is allocated to cost objects using quantity-based or percentage allocationrates.

You can simulate overhead allocation (test run).

The overhead calculation process generates the following postings:

� Overhead costs are charged to the cost objects (product cost collectors,manufacturing orders, or general cost objects).

� The Overhead Cost Object (cost center, order, process) is credited.

The costs are updated using the secondary cost elements specified in the creditrows in the costing sheet.

Actual overhead calculation uses the costing sheet entered in the product costcollector.



Work in Process

Figure 55: Work in Process (WIP) at Target Cost

Calculating the WIP means valuating the unfinished goods (work in process).

In Product Cost by Period, work in process is valuated at target cost. The operationquantities confirmed for the manufacturing orders or production versions arevaluated at the target cost of the operation provided that the quantities are notscrap and no goods receipt has been entered.

In Customizing, you can use a valuation variant to define which cost estimateshould be used to calculate the target costs for the valuation of the work inprocess and the scrap. If you are using a product cost collector, in many cases itis appropriate to calculate the target costs using the preliminary costing for theproduct cost collector.

The difference between the work in process in the current period and the work inprocess in the previous period corresponds to the inventory change of unfinishedgoods and is transferred to financial accounting when you settle.



Figure 56: Customizing: Work in Process at Target Cost

You can specify a valuation variant to select the cost estimate for the valuationof work in process and scrap variances at target cost.

Target costs can be calculated on the basis of:

� Planned costs (that is, the costs calculated in preliminary costing for themanufacturing order or for the product cost collector).

� An alternative material cost estimate (such as a modified standard costestimate or a current cost estimate). You specify the costing variant and thecosting version so that the system can identify the cost estimate.

� The current standard cost estimate.

You assign a valuation variant for work in process and scrap to a combination ofcontrolling area, Results Analysis version, and Results Analysis key.

The only Results Analysis keys that are relevant are those used for the calculationof work in process at target cost.



Figure 57: Customizing: Assignment Table

You assign the following cost elements to line IDs:

� All cost elements with which an order is debited and credited.� With work in process at target cost, all cost elements in the costing used for

the calculation of target costs for the valuation of work in process (suchas all cost elements listed in the preliminary cost estimate for the productcost collector).

� For valuation-relevant costs (such as direct materials costs), you mustcreate line IDs of category �K� (costs).

� If you want no work in process to be created for entire line IDs (forexample, because the costs are accrued), you must assign these line IDsto category �N� (not included).

The line IDs break down the costs incurred for the order into direct materials costs,direct production costs, material overhead, and so on. These groups can be basedon the structure of the cost of goods manufactured in the cost component structure(cost component split), for example. You can specify a percentage that cannot becapitalized separately for each line ID.

You can mask your entries. The entry 00004+++++ includes the cost elementsfrom 400000 to 499999. If you want particular cost elements to be treatedseparately, enter them unmasked (example: 0000415000).



Figure 58: Customizing: Update Table

In this step, you specify with a Results Analysis category how the ResultsAnalysis is handled and which Results Analysis cost elements of type 31 theResults Analysis is saved under on the cost object.

� For valuation-relevant costs (such as direct materials costs), you must createline IDs of category �K� (costs).

� If you want no work in process to be created for an entire line ID (forexample, because the costs are accrued), you must assign this line ID tocategory �N� (not included).

Figure 59: Customizing: Posting Rules Table



In this step, you specify to which G/L accounts in Financial Accounting work inprocess is settled. The assignment is carried out:

� By Results Analysis category: in many cases, it will be sufficient to generatea posting rule for work in process with a requirement to capitalize (categoryWIPR).

� By Results Analysis cost element.

You assign a balance sheet account and an account of the income statement toeach Results Analysis category (such as each Results Analysis cost element).You cannot create cost elements in CO for the G/L accounts that you specify inthe posting rules.

When the work in process is settled, a posting document is generated in FI. Whenthe system capitalizes the work in process, it debits Unfinished Goods Inventory(WIP) (balance sheet account) and credits Changes in Unfinished Goods Inventory(WIP) (income statement account).

If you have specified a profit center in the product cost collector, data is alsotransferred to Profit Center Accounting.

Variance Calculation

Figure 60: Variance Calculation: Target Version



As of Release 4.5, you can deduct the scrap variances from the actual costs forthe calculation of control costs. The scrap variation is calculated by valuating theunplanned scrap quantities with the target costs minus the planned scrap costs.The unplanned scrap quantity is the difference between the actual scrap quantityof the operation and its target scrap quantity.

In variance calculation, target cost versions are used mainly to control the typeof variance (total variance, production variance, or planning variance). Theycan also be used to valuate the scrap variances. The standard system uses thefollowing target cost versions:

� Target cost version 0 (total variance). The total variance equals the orderbalance. For this version, choose actual costs as the control costs andstandard cost estimate as the target costs.

� Target cost version 1 (production variance). For this version, choose actualcosts as the control costs and planned costs as the target costs.

� Target cost version 2 (planning variance). With target cost version 2, thecosts in the preliminary order cost estimate are interpreted as control costs.For this version, choose planned costs as the control costs and currentstandard cost estimate as the target costs. You cannot calculate planningvariances for product cost collectors.

� Target cost version 3 (production variance of the period). You comparethe planned costs of the period calculated on the basis of an alternativematerial cost estimate (such as a modified standard cost estimate) with theactual costs of the period on the basis of the yield delivered to inventory inthe period. The base quantity for variance calculation is the yield. For thisversion, choose actual costs as the control costs and alternative material costestimate as the target costs.

In Product Cost by Period, WIP and scrap variances are always deducted from theactual costs.



Figure 61: Variance Calculation: Variance Categories

Examples for variance categories:

Input price variances:Raw material 1 was valuated at 10 in the standard cost estimate. When thematerial was withdrawn from inventory, however, the goods movement wasvaluated at 11 (the price control specifies that valuation is at the movingaverage price). This results in a price variance of 1.

Input quantity variance:Machine time of 15 minutes was planned, but 17 minutes were confirmed.The activity price for the machine time is 5 per minute. This results in aquantity variance of 10.

Resource-usage variance:Raw material 2 is used instead of raw material 1. The costs for both rawmaterials are reported as resource-usage variances.

Remaining input variance:Because the price for material 1 changed, the material overhead is higherthan planned. The difference between the planned and actual materialoverhead expense is reported as a remaining input variance.

Mixed-price variance:If the standard price of a material was costed using multiple procurementalternatives (mixed cost estimate), a later production without variances willstill have a difference to the standard price. This is the mixed-price variance.



Lot size variance:If another quantity was used for production than previously generated in theproduct costing, the fixed costs are adjusted proportionally with anotherquantity, that is, the fixed costs per piece change. This is the lot size variance.

Output price variance:The material is transferred to inventory at a price other than the standardprice (such as a moving average price). The difference is determined as anoutput price variance.

Remaining variance:If the system cannot determine the target costs, it will determine onlyremaining variances.

Figure 62: Addendum: Assembly Scrap and Operation Scrap



Figure 63: Addendum: Planned Scrap

The planned scrap rate reflects the planned material requirements and the plannedinternal activities, and is included in the standard cost estimate of the material.

Component scrap refers to materials that are faulty before they enter theproduction process. Component scrap increases the quantity of input materials.Planned component scrap is taken into account in the standard cost estimate andtherefore affects the standard price. Variances in the actuals are considered inputquantity variances.

Planned operation scrap is the scrap that is expected to be incurred in an operation.

Assembly scrap can be calculated by the system on the basis of the operationscrap. Assembly scrap increases the planned order quantity and also the quantityof the input materials. For example, if the assembly scrap for a material is 56.25%and you create a production order for the material with a planned order quantity of100 units, the system increases the planned order quantity to 156.25.

If you do not want the assembly scrap to affect the input quantities of certaininput materials, set the Net indicator in the BOM for these materials and enter theoperation scrap in the BOM.



Figure 64: Variance Calculation: Scrap Variance (1)

The scrap variance is the value of the scrap variance quantity. The scrap variancequantity is the difference between the target scrap quantity (planned scrap quantityconverted to yield) and the actual scrap quantity (confirmed scrap quantity).

The scrap variance quantity is valuated at target cost less planned scrap cost.

The following formula calculates the target scrap quantity: 850 units = 80%(yield), 20% scrap = x

Therefore: (850 x 0.2) 0.8 = 212.5.



Figure 65: Variance Calculation: Scrap Variance (2)

Figure 66: Variance Calculation: Lot Size Variance

Lot size variances can be calculated for all target cost versions that reportvariances on the output side.

Lot size variances are calculated in the following formula:

Lot size variance = Lot size-independent target costs x (1 � Control quantity/ Planned quantity).

Lot size variances are only calculated if the planned quantity does not equal theconfirmed quantity (the delivered quantity).

In this example, the costs that are independent of lot size (such as the setup andteardown costs) are 40.00 per unit.



Example: The standard price for one finished product as calculated in thestandard cost estimate is 120.00.The costs for 10 units of finished product delivered to inventory in the periodwere updated to the product cost collector. The actual cost is 840.00. Thegoods receipts are valuated at 1,200.00 (quantity delivered to inventorymultiplied by the standard price as calculated in the standard cost estimate).The target costs, however, are 10 x 40.00 for material, 10 x 40.00 for internalactivities, and 1 x 40.00 for setup = 840.00. The difference between thetarget cost and the credit is the lot size variance.

Figure 67: Variance Calculation: Mixed-Price Variance

If you want to perform mixed costing in Product Cost Planning, you must createa procurement alternative for each production version and then define a mixingratio. The mixed cost estimate calculates a mixed price. This price can be writtento the material master as the standard price.

Mixed-price variances arise when the system updates the mixed price as thestandard price in the material master and valuates the stock with it. Themixed-price variance results from the difference between the target credit (actualquantity x standard cost of procurement alternative) determined in the variancecalculation process and the actual credit posted at the time of the goods receipt(actual quantity x standard price).

If you have not activated the field mixed-price variance in the variance variant,mixed-price variances are reported as output price variances.



Figure 68: Customizing for Variance Calculation

You always enter the valuation variant for scrap in target cost version 0. Evenif you calculate variances in a different target cost version (such as target costversion 1), the scrap variance may be valuated with the valuation variant specifiedin target cost version 0.

You normally use the same valuation variant for the valuation of work in processat target cost and for the valuation of scrap variances.

In the variance variant, you specify which variance categories you want the systemto report. You link the variance variant to the target cost version.

Variances can only be calculated on a cost object if you have stored a variancekey in its master record. You specify the variance key in the costing view of thematerial master record; it is transferred from there into the product cost collector(in Product Cost by Order, it is transferred into the manufacturing order). You canspecify the variance key as a plant-based default value in Customizing for ProductCost by Period or Product Cost by Order. The variance key is then transferredinto all material master records created in the plant in question.



Settlement

Figure 69: Settlement

If the price control indicator is set to S, settlement debits the price differenceaccount and credits the inventory change account. The value of the total varianceis posted.

If the price control indicator is set to V, settlement debits the inventory accountand credits the inventory change account.

Settlement also transfers the work in process to Financial Accounting.

The value of the total variance and the work in process can also be transferredto Profit Center Accounting.

The value of the total variance is also updated in theMaterial Ledger (if active).

You can settle the variance categories to Costing-Based Profitability Analysis(CO-PA). The only variances that are relevant for settlement to ProfitabilityAnalysis are those calculated on the basis of target cost version 0. The value fieldsare assigned to the variances for each category and cost element.

If the price difference account has a corresponding cost element, the pricedifference is settled to Account-Based Profitability Analysis in a similar way asto Financial Accounting.



Figure 70: Customizing: Settlement Profile

The settlement profile for a product cost collector must allow settlement to amaterial. If you want to settle variances to Profitability Analysis, the Variancesindicator must be selected and settlement to a profitability segment must beallowed.

The settlement profile is defaulted through the order type of the product costcollector.

The settlement profile also has fields for the allocation structure and the PAtransfer structure. These structures control settlement to costing-based ProfitabilityAnalysis.

In the settlement structure, you indicate whether you want to settle with sourcecost elements or with settlement cost elements.



Figure 71: Customizing: PA Transfer Structure

In the PA transfer structure, you specify which variance category and cost elementgroups are assigned to which value fields in Profitability Analysis.

Values and quantities must be transferred into different value fields. The valuescan either be differentiated by the fixed/variable indicator or transferred as a sum(Fixed/variable indicator = 3).



Exercise 3: Period-End Closing

Exercise ObjectivesAfter completing this exercise, you will be able to:� Allocate process costs to the product cost collector using the allocation

template and review the customizing settings for the template� Allocate overhead costs to the product cost collector and review the

customizing settings for the costing sheet� Calculate WIP at target cost for the product cost collector and explain the

customizing settings� Execute variance analysis for the product cost collector and analyze the result� Analyze the target cost for unplanned scrap of the finished product� Execute settlement of the WIP balance and the variances to FI and PA

Business ExampleAt the end of the period, all cost objects are processed in period-end closing,which consists of the typical steps as follows: template allocation, revaluation ofactivity and business process allocation at actual prices, WIP calculation, variancecalculation and cost object settlement.

Your controlling department has decided to use ABC to allocate order processingcosts. Indirect warehousing costs are allocated to the product cost collector usingthe costing sheet. After allocation of all actual costs of the current period to theproduct cost collector, WIP must be calculated at target cost and transferred toFinancial Accounting. For the subsequent variance calculation, period variancesare calculated according to cause (variance categories), stored for the order andwhen settled later, transferred to Financial Accounting (as a lump sum) andProfitability Analysis (in detail).

Task 1:Complete the process cost allocation for the product cost collector for materialR-F1##.

1. Using the individual processing transaction for Business Process CostAllocation, apply the actual process cost to the production order for version 0of the current period.




2. From the detailed list display, determine the value of the process costallocation. What is the total cost and quantity for process 300900?

3. Check the configuration settings for the determination of the processtemplate. What process template is selected for the product cost collector?

Task 2:

1. The performance of period-end closing activities, such as revaluation ofactivities, which have already been posted, is improved by using product costcollectors. This is because the number of cost objects is less than productcosts per order.Determine whether this statement is true or false.□ True□ False

2. The revaluation of activity prices can be used to support the valuationstrategy of Actual activity price of previous period.Determine whether this statement is true or false.□ True□ False

3. The revaluation of actual prices follows the allocation of process costs andoverhead costs.Determine whether this statement is true or false.□ True□ False




Task 3:Calculate the overhead costs for the product cost collector for R-F1##.

1. Using the individual processing transaction, calculate the overhead costs forthe current period to the product cost collector.

2. From the detailed list display, determine the value of the overheadcalculation. What are the total overhead costs? What cost center has beencredited for the overhead allocation?

3. Display the configuration settings for the determination of the overheadcosting sheet. What costing sheet is assigned to the valuation variant foractual costs, valuation variant 007?

Task 4:Calculate WIP for your product cost collector.

1. Using the individual processing transaction, calculate (WIP) value for yourproduct cost collector, using the current period and Results Analysis version0.

2. From the product cost collector WIP display access the detailed report byselecting WIP Explanation.

3. The report dynamically explodes the costing details for operation 0010. Thisshould reflect the quantities confirmed for the previous transactions. A yieldof ten pumps was confirmed for operation 0010. Then, a yield of 5 pieceswere confirmed for operation 0070 where 1 piece was also reported as scrap.This leaves a remaining WIP quantity of 4 pieces for operation 0010.

4. Remain in the WIP explanation report. Using a different session, display thepreliminary cost estimate for the product cost collector. Change the costingdisplay to 4 pieces to match the WIP quantity.




5. Go to the Itemization report. Change the display variant to view the costsby operations (grouped). Explode the summation rows for operation 0010.Compare the costs of the preliminary cost estimate with the calculated WIPcosts. They should be identical to include the process and overhead costs.

6. Leave the preliminary cost estimate for the product cost collector, anddisplay the actual costs for the product cost collector. Continue to display theWIP explanation report in the other session. Compare the calculated totalWIP amount with the remaining balance for your production order. Are theythe same value? Can you explain this?



Solution 3: Period-End ClosingTask 1:Complete the process cost allocation for the product cost collector for materialR-F1##.


a) Post the process costs.

Accounting→ Controlling→ Product Cost Controlling→ CostObject Controlling→ Product Cost by Order→ Period-End Closing→ Single Functions: Product Cost Collectors→ Template Allocation→ Individual Processing (CPTE)

Enter your material number.

Plant: 1000

Version: 0

Period: current month

Fiscal year: current fiscal year

Deselect Test Run.

Select Detail Lists.

Choose Execute.

2. From the detailed list display, determine the value of the process costallocation. What is the total cost and quantity for process 300900?

Answer: Select the order number.Select Goto→ Period screenThe allocated fixed and variable costs of process 300900 are displayed.




3. Check the configuration settings for the determination of the processtemplate. What process template is selected for the product cost collector?

Answer: Favorites→ Tools→ Customizing→ IMG→ Execute Project(SPRO)Choose SAP Reference IMG.Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Period→ Basic settings for Product Costby Period→ Templates→ Assign Templates to Cost Objects (KTPF)The process template COPC-10 is assigned to Controlling area 1000, costingsheet COGM, OH key SAP10, and Environment 010.

Task 2:

1. The performance of period-end closing activities, such as revaluation ofactivities, which have already been posted, is improved by using product costcollectors. This is because the number of cost objects is less than productcosts per order.

Answer: True

2. The revaluation of activity prices can be used to support the valuationstrategy of Actual activity price of previous period.

Answer: True

3. The revaluation of actual prices follows the allocation of process costs andoverhead costs.

Answer: False




Task 3:Calculate the overhead costs for the product cost collector for R-F1##.

1. Using the individual processing transaction, calculate the overhead costs forthe current period to the product cost collector.

a) Accounting→ Controlling→ Product Cost Controlling→ CostObject Controlling→ Product Cost by Period→ Period-End Closing→ Single Functions: Product Cost Collector → Overhead→Individual Processing (CO42)


Plant: 1000


Fiscal year: current year

Deselect Test Run.


Choose Execute.

2. From the detailed list display, determine the value of the overheadcalculation. What are the total overhead costs? What cost center has beencredited for the overhead allocation?

Answer: From the Basic List, select Next List Level.The value of the overhead is displayed.The cost center 4130 is credited as the sender.




3. Display the configuration settings for the determination of the overheadcosting sheet. What costing sheet is assigned to the valuation variant foractual costs, valuation variant 007?

Answer: Favorites→ Tools→ Customizing→ IMG→ Execute Project(SPRO)Choose SAP Reference IMG.Controlling→ Product Cost Controlling→ Cost Object Controlling→Product Cost by Period→ Product Cost Collectors→ Check CostingVariants for Product Cost Collectors→ Costing Variants for Valuation ofInternal Activities (OPL1)Select Costing Variant PPP3.Choose Details.Choose Valuation Variant.Select the Overhead tab.The costing sheet Costs of Goods Manufactured (COGM) is assigned tothis valuation variant.

Task 4:Calculate WIP for your product cost collector.

1. Using the individual processing transaction, calculate (WIP) value for yourproduct cost collector, using the current period and Results Analysis version0.

a) Accounting→ Controlling→ Product Cost Controlling→ CostObject Controlling→ Product Cost by Period→ Period-End Closing→ Single Functions: Product Cost Collectors→Work in Process→Calculate (KKAS)


Plant 1000

WIP to Period: current month

Fiscal year: current year

Results Analysis version 0

Deselect Test Run.

Choose Execute.




2. From the product cost collector WIP display access the detailed report byselecting WIP Explanation.

a) Choose the product cost collector.

Select WIP Explanation.

3. The report dynamically explodes the costing details for operation 0010. Thisshould reflect the quantities confirmed for the previous transactions. A yieldof ten pumps was confirmed for operation 0010. Then, a yield of 5 pieceswere confirmed for operation 0070 where 1 piece was also reported as scrap.This leaves a remaining WIP quantity of 4 pieces for operation 0010.

a)

4. Remain in the WIP explanation report. Using a different session, display thepreliminary cost estimate for the product cost collector. Change the costingdisplay to 4 pieces to match the WIP quantity.

a) Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Period→ Master Data→ ProductCost Collector→ Edit (KKF6N)


Enter plant 1000.


Select the Header tab.

Select Display Cost Estimate.

In Costs Based On select User Entry and enter 4 pieces.

5. Go to the Itemization report. Change the display variant to view the costsby operations (grouped). Explode the summation rows for operation 0010.Compare the costs of the preliminary cost estimate with the calculated WIPcosts. They should be identical to include the process and overhead costs.

a) Select the Itemization report. To review itemization by operation,choose Select Layout.

Select Operations (Grouped).

The operation subtotal is displayed. In addition, the overhead cost(which is not assigned to a specific operation) has been included inthe WIP calculation.




6. Leave the preliminary cost estimate for the product cost collector, anddisplay the actual costs for the product cost collector. Continue to display theWIP explanation report in the other session. Compare the calculated totalWIP amount with the remaining balance for your production order. Are theythe same value? Can you explain this?

Answer: Display the Planned/Actual Cost Report.Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Period→ Information System→ Reports forProduct Cost by Period→ Detailed Reports→ For Product Cost Collectors(KKBC_PKO)Enter your material R-F1##.Enter plant 1000.Choose Execute.The balance is displayed on the bottom of the report.No, the remaining order balance is not the same as the calculated WIP attarget cost.With Product Cost by Period, WIP is calculated by using the actual remainingquantity at the planned cost.For this product cost collector, a quantity of 10 pieces was confirmed foroperation 0100. Then, 5 pieces were confirmed and 1 additional piece wasreported as scrap. This leaves a remaining WIP quantity of 4 pieces.



Lesson Summary

You should now be able to:� Describe the typical steps for period-end closing in make-to-stock production


Customizing� Carry out variance analysis� Describe the integration of period-end closing



Lesson: Addendum: Repetitive Manufacturing andMaterial Valuation

Lesson Overview


� Describe repetitive manufacturing� Assess the different strategies of material valuation

Business ExampleA manufacturer produces various types of make-to-stock pumps. Sales controllingis only carried out in Profitability Analysis (CO-PA).

The popular types are produced in a continuous production process and mapped inthe system with repetitive manufacturing. A less popular type should instead beonly produced based on lot size with production orders and only when the stock inthe warehouse drops below the reorder point.

You want to examine the representation of the production using �RepetitiveManufacturing� and the difference between �S� and �V� price-controlled material.

Repetitive Manufacturing

Figure 72: Repetitive Manufacturing


AC520 Lesson: Addendum: Repetitive Manufacturing and Material Valuation

Repetitive manufacturing refers to production planning and control without theuse of production orders.

The planned requirements for repetitive manufacturing are normally createdautomatically by material requirements planning (MRP), although they can alsobe created manually. Production planning and control uses the planned ordersfor capacity planning and scheduling.

The goals of repetitive manufacturing are as follows:

� Creation and revision of production quantities on a period and quantity basis(reduction in individual lot and order-specific processing)

� Reduction in production control and simpler backflushing tools (with theoption of using the full scope of the PP functionality)

Figure 73: Repetitive Manufacturing: Characteristics Relevant to CostObject Controlling

Cost object controlling is carried out for the controlling level of the material.With repetitive manufacturing, the controlling level is normally the productionversion or material.

The production version(s) are created in the material master record. You requirea BOM and a routing.

Costs are recorded on a product cost collector.



Figure 74: Repetitive Manufacturing Profile

Specific master data is required for Repetitive Manufacturing. This includes therepetitive manufacturing profile and the product cost collector.

The repetitive manufacturing profile in the master data of the MRP viewdetermines whether

� Activities are backflushed� Reporting points are used� A goods receipt is automatically posted after the last reporting point has

been confirmed

If you do not want to post any activities through reporting point confirmations,you can enter an internal activity allocation in the Controlling module and specifythe product cost collector for the material (and production version, if necessary).In addition, you can assign the product cost collector to a cost object hierarchy,and post the activities to the relevant cost object node. During period-end closing,the activity costs posted to the cost objects of the hierarchy can be distributed tothe assigned product cost collectors.

If you want to calculate work in process and scrap during period-end closing, youmust record backflush quantities at the reporting points.

If the activities are to be backflushed, you define in the repetitive manufacturingprofile whether the standard cost estimate for the material or the preliminary costestimate for the product cost collector should be used to determine the activityquantities for the backflush. The price is determined by the �Actual� valuationvariant for the product cost collector.



Material ValuationAddendum: Material Valuation: Overview (1)

� Valuation at Standard Price (S price)

� The standard price remains constant for one or more periods, often upto a year or longer.

� The standard price is normally calculated in a standard cost estimatefor the material.

� The total inventory value is the total inventory quantity multiplied bythe standard price.

� The price control field for the material is set to �S�.

The standard price remains valid for at least one period. The period is defined inMaterials Management (MM).

Addendum: Material Valuation: Overview (2)

� Valuation at the Moving Average Price (V price)

� For externally procured materials, the moving average price isrecalculated after every goods receipt and invoice receipt.

� For internally manufactured materials, the moving average price isrecalculated after every goods movement and each time an order issettled.

� The moving average price is the total inventory value of the materialdivided by the total quantity in inventory.

� The price control field for the material is set to �V�.� Valuation at the Periodic Output Price.

� The periodic output price is recalculated each time a period is closed.� The price control field for the material is set to �S�.

For internally manufactured materials, you can define a valuation variant for thevaluation of the goods receipts.



Addendum: Valuation of Materials at Standard PriceAdvantages Disadvantages

� Standard cost accounting� Analysis of the effects of changes

in the production scenarios� Allocation of variance categories

to costing-based ProfitabilityAnalysis (CO-PA)

� Inventories are valuedconsistently with plannedcosts

� Products with widely fluctuatingpurchase prices or frequentchanges in the production processshould often be valuated at actualcost

Therefore:Valuation at standard price is recommended for materials manufacturedin-house.

If the price control indicator is set to �S� (standard price) in the material masterrecord, a price difference account is debited with the total variance of the productcost collector for the period.

The material is not revaluated when the variances for the product cost collector aresettled to FI. During settlement, the system calculates a new statistical movingaverage price and transfers this statistical value to the accounting view of thematerial master record.

Settlement results in the following posting in FI: The price difference account isdebited and the inventory change account is credited (Goods Inventory Change).



Addendum: Valuation of Materials at Moving Average PriceAdvantages Disadvantages

� Variances caused by differentpurchase prices of externallyprocured materials are includedin inventory valuation.

� Variances arising during theproduction of materials areincluded in inventory valuation.

� If material movements and ordersettlements overlap, the movingaverage price may be incorrect.

� Variances are not rolled upthrough the production structure.

� It is not possible to settle variancecategories to CO-PA.

Therefore:Valuation at moving average price is not recommended for materialsmanufactured in-house.

If the price control indicator is set to V in the material master record, the inventoryaccount for the material is debited with the total variance of the product costcollector for the period.

The moving average price is re-calculated during settlement, updated in theaccounting view of the material master record and the inventory revaluedaccordingly. The corresponding revaluation document is generated in FI.

The following posting is made in FI:

� The inventory account is debited and the inventory change account iscredited.

If the inventory quantity is equal to or greater than the quantity produced by theorder, the full order balance is posted to the inventory account.

If no goods were received into inventory during the period, the actual costs aresettled to the price difference account. If the inventory quantity is less than thequantity received into inventory from the order, the system settles the difference tothe price difference account.

For information on the effects of the moving average price on internallymanufactured materials, see the documentation in Cost Object Controlling.



Lesson Summary

You should now be able to:� Describe repetitive manufacturing� Assess the different strategies of material valuation


AC520 Unit Summary

Unit SummaryYou should now be able to:� Create the master data for a production order and a product cost collector� Explain the Customizing for a �decoupling scenario�� Carry out preliminary costing for a product cost collector� Carry out goods movements and confirmations for the production order� Make direct postings from Financial Accounting to the product cost collector� Describe the typical steps for period-end closing in make-to-stock production


Customizing� Carry out variance analysis� Describe the integration of period-end closing� Describe repetitive manufacturing� Assess the different strategies of material valuation


Unit Summary AC520


Unit 4Product Cost Controlling by Order

Unit OverviewThis unit shows controlling by order using the example of make-to-stockproduction based on lot size in the process industry.


� Describe the features of Product Cost by Order� Describe the features of Cost Object Controlling for joint production� Explain process manufacturing master data� Perform goods movements transactions and confirmations for the process

order� Explain period-end closing with partially delivered production orders� Explain WIP at actual cost� Explain period-end closing with delivered production orders� Explain the differences between the controlling methods of Product Cost by

Order and Product Cost by Period

Unit ContentsLesson: Master Data and Preliminary Costing.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .131

Exercise 4: Master Data and Preliminary Costing ... . . . . . . . . . . . . . . . . . .143Exercise 5: Alternative: Master Data and Preliminary Costing... . . . .153

Lesson: Simultaneous Costing... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .160Exercise 6: Simultaneous Costing .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .163Exercise 7: Alternative: Simultaneous Costing.. . . . . . . . . . . . . . . . . . . . . . . .169

Lesson: Period-End Closing with Partially Delivered Production Orders 174Exercise 8: Period-End Closing with Partially Delivered ProductionOrders... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .181Exercise 9: Alternative: Period-End Closing with Partially DeliveredProduction Orders .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .193

Lesson: Period-End Closing with Delivered Production Orders ... . . . . . . .201Exercise 10: Period-End Closing with Delivered Production Orders 209


Unit 4: Product Cost Controlling by Order AC520

Exercise 11: Alternative: Period-End Closing with Delivered ProductionOrders.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .221




Lesson Overview� Master Data

� Production orders� Process orders

� Preliminary Costing


� Describe the features of Product Cost by Order� Describe the features of Cost Object Controlling for joint production� Explain process manufacturing master data

Business ExampleThe production type is make-to-stock. Sales Controlling is performed only inProfitability Analysis (CO-PA).

Fertilizer is produced in a process manufacturing environment.

Fertilizer manufacturing also produces side products, which are to be mapped asco-products.

Raw materials and machine time are consumed. Additional costs are incurred byquality control checks and waste removal.

The procedures for Product Cost by Order are the same regardless of whether amanufacturer uses process orders or production orders. In this scenario, we willuse a process order to demonstrate Product Cost by Order.



A fertilizer manufacturer wants to measure and analyze his process costs with theSAP System. The fertilizer produced is not make-to-order.

� The manufacturer carries out standard cost estimates at the beginning ofthe fiscal year. These cost estimates use the information in the recipe. Thestandard cost estimate calculates the standard price for the fertilizer. Allgoods issues and goods receipts associated with the joint production ofthe fertilizer and acid are valuated at the standard price. In requirementsplanning, the manufacturer creates a planned order for 1000 kilograms. Themanufacturer then converts this order into a process order. The informationin the process order is then used to calculate the planned costs for thefertilizer and acid. The manufacturer determines the variances for each itemby comparing the preliminary cost estimate (planned costs for the order) withthe standard cost estimate (planned costs for the material). The manufacturerenters the actual costs for the materials, activities, and overhead withreference to the process order. When fertilizer and acid are received in thewarehouse, the order is debited at the standard price.

Variance analysis: After the last goods receipt, the manufacturer comparesthe actual cost of the order with the standard cost estimate and the preliminarycost estimate for each order item. The difference between the actual costs andthe debit value at goods receipt is settled in stock and Profitability Analysis.

If the process order has not been delivered by the end of the period, themanufacturer can calculate WIP for the sales order items.

Master Data

Figure 75: Production Order



If you use production orders, the system transfers a routing and a BOM to themaster data of the order header. You can specify the following parameters inCustomizing for Production according to order type:

� Which Selection ID is used to select the routing.� Which BOM usage is used to select the BOM.

Costing relevancy is specified in the routing according to operation, which you cancheck using the operation control key and the operation details screen. You canalso work without a routing. In this case, an operation is generated automaticallywhen you create an order. You can manually assign material components andproduction resources to this operation.

Costing relevancy is specified in the BOM according to BOM item, which youcan check in the BOM item details screen. You can also work without a BOM byassigning the required components to the operations manually.

The BOM and routing can also be selected using a production version.

The control data for Cost Object Controlling (such as costing variants, ResultsAnalysis keys, and variance keys) are located in the order header on the Controldata tab.

Figure 76: Process Order

If you are manufacturing on the basis of process orders, the system uses aMasterRecipe and the relevantMaterials List in accordance with the parameters for theorder type specified in Customizing for Production Planning - Process Industries.

The master recipe contains operations and phases. Operations consolidate severalphases and are each executed on a primary resource. A Phase is a self-containedwork step that describes one part of the production process in detail. It uses



the primary resource of the overall operation. Operations and phases can usesecondary resources in addition to the primary resource. Resources are linked tocost centers and use their activity types. The sequence of steps in the productionprocess is defined by the sequence of phases.

For each operation or phase, you plan one or more materials required for theexecution of that step.

In process manufacturing only the phases and not the operations are relevant tocosting. A phase contains standard values for activities. These standard valuesare used to determine dates, capacity requirements, and costs. The �Relevant tocosting� indicator must be selected for the phase.

If the materials list contains co-products, you can add additional co-products. Youcannot, however, delete co-products from the materials list. To check whether amaterial component is relevant to costing, go from the materials list to the detailsscreen of the material.

For process manufacturing without joint production, the costs are updated to theorder header.

Figure 77: Material Flow in the Process Industry



The illustration shows the following:

� Input materials (raw materials and semi-finished products) used in themanufacturing process. These materials debit the manufacturing order whenthey are withdrawn from inventory (goods issue posting).

� Intra material (material type INTR), which is temporary and exists onlybetween production phases, within the production process. Intra materialsappear in the material list as items of category �M�, but are not costed. If theprocess is interrupted because of a malfunction, however, an intra materialmay have to be put into inventory. In this case, it is valuated with a pricein the material master that is selected using the valuation variant for thevaluation of goods received.

� Remaining materials, which are produced during the manufacturingprocess. Remaining materials are depicted as by-products.

� The use of a catalyst added during the manufacturing process, but laterwithdrawn again. The catalyst is a Circulating Material. You can specifyin the material list whether the costs for a circulating material should betaken into account. The system selects a price for the circulating materialfrom the material master record. If the circulating material is flagged asrelevant to costing, the material costs appear in the itemization twice: oncewith a plus sign and once with a minus sign. The balance represents thematerial usage costs.

The production of one or more products simultaneously: If more than oneproduct is produced during a manufacturing process, such products are calledCo-products.

Figure 78: Definition of Co-Product



Joint production produces several products during one manufacturing process.Standard costs, planned costs, and actual costs for individual co-products(also called joint products) in the process are usually calculated using a costapportionment structure that is specified in the material master.

A co-product is a basic material produced by a joint process along with other basicmaterials. If a material is a co-product, you select the Co-product indicator in theMRP view or costing view of the material master record.

In the materials list, all co-products (both leading co-products and non-leadingco-products) are items with a negative quantity. Leading co-products are calledprimary products. For primary products, you also select the Co-product indicatorin the BOM.

Material master records can be created for process materials as well. Aprocess material represents the production process of several co-products. Anapportionment structure is specified in the material master record for the primaryproduct or process material. From a logistical point of view, the use of processmaterials is not recommended.

Special feature: Fixed-price co-products: You can flag a co-product in thematerial master as being a fixed-price co-product. For detailed information onfixed-price co-products, see the documentation for Product Cost Planning.

Figure 79: Definition of By-Products

Remaining materials are depicted as by-products. A by-product is manufacturedautomatically during the production of another product. You enter a by-productwith a negative quantity in the materials list of a primary product or processmaterial. For by-products, you do not select the Co-product indicator in thematerial master record or in the BOM.



If the by-product is flagged as relevant to costing, the costs of the co-productsare subtracted from the manufacturing costs using the net realizable-valuemethod. For example, the manufacturing cost of the primary product or the otherco-products amounts to the total cost of the production process less the costs forthe by-products.

In Product Cost Planning, the manufacturing costs of a by-product can becalculated in two ways:

� Using a price from the material master� The by-product can be manufactured using an alternative production

structure, and a corresponding cost estimate for the by-product alreadyexists. In this case, the cost components of the cost component split of theby-product are subtracted.

In the actuals, the order header is credited when a by-product is placed into theinventory. This reduces the total cost of the production process.

Figure 80: Process Order with Co-Products

In most cases, co-products are manufactured on the basis of process orders.However, joint production can also be carried out on the basis of productionorders. This example uses process orders.

The system recognizes joint production from the material master record. For eachco-product (including the primary product), the system generates an order itemand turns on the MultItems indicator.

The planned quantities and the quantities received into inventory of the productsmanufactured are updated to the order item.



The following events take place in Cost Object Controlling:

� The planned costs of the manufacturing order are calculated using thequantity structure specified in the manufacturing order. These costs aredistributed to the co-products using the apportionment structure.

� The actual costs are collected on the header of the manufacturing order. Atthe end of the period, the actual costs on the order header are distributed to theorder items using the apportionment structure. Work in process and variancesare determined at the level of the order item. The order items are then settled.

You maintain the apportionment structure in the material master or in the processorder.

Preliminary Costing

Figure 81: Process Order with Joint Production: Process Chain



Figure 82: Preliminary Cost Estimate: Overview

The system valuates the planned quantities of the material components usingthe materials list.

The system determines the planned activity quantities using the master recipe.

To valuate the planned material components, activities, and business processes, thesystem uses the planned valuation variant specified in the default values for theorder type/plant. Overhead costs are calculated using the costing sheet specified inthe "planned" valuation variant. If template allocation is being used, the templateis selected using the costing sheet and the overhead key.

The planned costs are updated to the manufacturing order.



Figure 83: Result of Preliminary Cost Estimate for Joint Production

A preliminary cost estimate is normally generated for the process order when itis saved or released, in accordance with the Customizing settings in the defaultvalues for the order type and plant.

The order costs are calculated for the order header and distributed to theco-products on the basis of equivalence numbers. The equivalence numbers arespecified in an apportionment structure.

When a process order is created, the system automatically generates the following:

� On the basis of the apportionment structure, the system generates asettlement rule which settles the total order cost to the co-products (theorder items). The costs are settled to the order items both in the preliminarycost estimate and in the actuals.

� The system generates a settlement rule for each item, in accordance withthe default rule. These settlement rules control the settlement of the itemsto the respective material.



Figure 84: Co-Products: Cost Apportionment Procedure

An apportionment structure is used to apportion the costs to the primaryproducts and co-products. The apportionment structure is specified in theproduction version or in the material master record of the leading co-product. Itcan also be specified directly in the process order.

In Product Cost Planning, costs are assigned to the co-products by cost componentso that the cost component split can also be used in the costing-based ProfitabilityAnalysis (CO-PA) for valuation purposes.

In the preliminary cost estimate for the process order, the planned costs aredistributed (settled) to the co-products.

Use a source structure for maintaining different equivalence numbers dependingon the posted cost elements. You assign cost element intervals to the items of thesource structure. For settlement, you can assign different equivalence numbersto each source assignment. Example: You can distribute the material costs to theco-products at a ratio of 3:2 but the overhead costs at 1:1.



Figure 85: Process Order Customizing

Process orders are orders of order type 40 (process order).

Process orders are usually analyzed by lot size. That is, variances are notdetermined until the order has the status delivered or technically completed.To do this, specify the default rule PP1 (Production Material Full Settlement)in the �Cost-Accounting-Relevant Default Values for Order Types and Plants�table. This ensures that settlement type FUL (full settlement) is specified in thesettlement rule for process orders of the relevant order type.

A Results Analysis key must be specified for all manufacturing orders for whichyou want to determine work in process (WIP). Use a Results Analysis key, whichwas defined for WIP calculation at actual cost.

For preliminary costing and simultaneous costing, enter the costing variant andvaluation variant in the order type. This defines the valuation procedure formaterials, internal activities, external activities, and business processes. It alsodetermines which overhead structure is used to calculate overhead.

If you want to analyze product costs by lot, collect the costs directly on the processorder. In this case, do not select the �Product cost collector� indicator.

The default values for the order type/plant are transferred to the process orderwhen it is created.

The same procedure is used with production orders.




Exercise ObjectivesAfter completing this exercise, you will be able to:� Display the joint production master data for a co-product� Create a process order and explain the control data of the process order� Display the settlement parameters for a joint production order� Explain the settlement rule for the settlement type FULL� Analyze preliminary costing for a joint production

Business ExampleSome products manufactured by your company are to be handled using theProduct Cost by Order controlling method. This allows controlling to focus onthe total manufactured quantity of the order, and supports cost analysis at theproduction or process order level.

Some of the production processes in your company yield co-products in additionto the intended manufactured product. You have been asked to calculate the costsof the joint production. Accounting procedures for joint production are onlyavailable when the Product Cost by Order method is utilized. Therefore, youdecide to use the process order for Product Cost by Order control.

Task 1:Engineering has provided you with a master recipe for fertilizer that includesco-products. The production process and the materials are supplied by plant 1100.Before you create a process order, verify the material master.

Favorites→Material Master→Material→ Display→ Display Current (MM03)

1. From the costing view of the material master record, verify that the leadingco-product, T-FF1## in plant 1100, has been identified as a co-product.

2. What co-product has been assigned to T-FF1##? What is the apportionmentof costs for T-FF1## and this co-product?

Co-product T-FF1## T-FF3##Material CostsProduction CostsOther Costs




3. Check the master recipe for material T-FF1##, plant 1100, productionversion 0001.

If you see that a classification has been entered for the resource in operation200, (check mark in the Classification column): go to the details screen ofoperation 200 by double-clicking the operation number. Then branch to theResource Selection Criteria by clicking the symbol behind the resourcename. Select class REAK_00 and delete it. Then save the recipe.

Task 2:Create a process order for the production of the fertilizer, and analyze the masterdata of the process order.

Logistics→ Production - Process→ Process Order→ Process Order→ Create→ With Material (COR1)

Before continuing, choose Add to favorites.

1. Create a process order for 1000 liters of material T-FF1##. Enter productionplant 1100 and order type PI01. Use forwards scheduling and enter today�sdate as the start date. Select Enter.

2. Display theMaterial list and check whether the co-product indicator is activefor material T-FF3##. If this indicator is not selected, will this material bemanaged as a co-product or by-product?

Is the indicator selected?

If not, will the material be managed as a co-product or by-product?

3. From the process order header, display the settlement rule. Which receiversare entered? Why?

Receivers:

Why?:

4. Which settlement type is entered? What are the consequences of this forsettlement?

Settlement type:

Consequences:

5. Display the Control data for the process order. What costing variants areentered for the preliminary costing and simultaneous costing? How were thecosting variants determined? Planned costing variant:

Actual costing variant:

Determined by:




6. Which costing sheet was assigned to the process order? How was the costingsheet determined?

Costing sheet:

Determined by:

7. Which overhead key is assigned to the process order? How is the overheadkey determined?

Overhead key:

Determined by:

8. Will the planned costs be calculated automatically when the order is saved?Determine whether this statement is true or false.□ True□ False

9. Release the process order. If you receive an error message stating that releaseis not possible, examine the error message closely. If material T-RF2##requires batch determination, branch to the Material List. Here, changethe requirement quantity for the first entry (without batch) to 0 KAI, thesecond entry (with batch) to 30 KAI. When prompted by the system, havethe quantities calculated again. Now you can release the process order.

10. Save the process order. Record the order number. If prompted to assigna batch number to the co-products, enter A## for T-FF3## and B## forT-FF3##.

Process order no.:

Task 3:Generate an Order Costs Report in the information system of Product Cost byOrder. Examine the calculated costs generated for the process order and check theapportionment of the planned costs for the co-products.

Accounting → Controlling → Product Cost Controlling → Cost ObjectControlling→ Product Cost by Order→ Information System→ Reports forProduct Cost by Order→ Detailed Reports→ For Orders (KKBC_ORD)

Settings→ Order Items→ On/Off

Select Layouts and select layout 1SAP02 (cost trend).

Enter your order number.

Choose Execute.

1. The total planned costs for T-RF1## are displayed.




Total planned costs:

2. Execute the report again, but only for order item 2, T-FF3##. Whatapportionment to co-product T-FF3## was posted for component T-RF1##?

Apportionment to T-FF3##:

3. Is this consistent with the apportionment of material costs defined in thesettlement rule of the process order?Determine whether this statement is true or false.□ True□ False



Solution 4: Master Data and PreliminaryCostingTask 1:Engineering has provided you with a master recipe for fertilizer that includesco-products. The production process and the materials are supplied by plant 1100.Before you create a process order, verify the material master.

Favorites→Material Master→Material→ Display→ Display Current (MM03)

1. From the costing view of the material master record, verify that the leadingco-product, T-FF1## in plant 1100, has been identified as a co-product.

a) Enter T-FF1## .

Select Enter.

Select view Costing 1.

Select Enter.

Enter plant 1100.

Select Enter.

The Co-product indicator is selected.

2. What co-product has been assigned to T-FF1##? What is the apportionmentof costs for T-FF1## and this co-product?

Co-product T-FF1## T-FF3##Material CostsProduction CostsOther Costs

a) From the Costing 1 view, select Joint production. Select apportionmentstructure 0001, and select Equivalence Numbers.

b) The equivalence numbers are displayed on the Equivalence numbersdialog box.

Hint: If the display of the equivalence numbers only showsequivalence values for materials, use the scroll bar on the righthand side of the dialogue box to see the other equivalencenumbers.




3. Check the master recipe for material T-FF1##, plant 1100, productionversion 0001.

If you see that a classification has been entered for the resource in operation200, (check mark in the Classification column): go to the details screen ofoperation 200 by double-clicking the operation number. Then branch to theResource Selection Criteria by clicking the symbol behind the resourcename. Select class REAK_00 and delete it. Then save the recipe.

a) Check the master recipe.

Logistics→ Production - Process→ Master Data→ Master Recipes→ Recipe and Material List→ Change

Material T-FF1##, Plant 1100, Production version 0001

If you see that a classification has been entered for the resource inoperation 200, (check mark in the Classification column): go tothe details screen of operation 200 by double-clicking the operationnumber. Then branch to the Resource Selection Criteria by clickingthe symbol behind the resource name. Select class REAK_00 anddelete it. Then save the recipe.

Task 2:Create a process order for the production of the fertilizer, and analyze the masterdata of the process order.

Logistics→ Production - Process→ Process Order→ Process Order→ Create→ With Material (COR1)


1. Create a process order for 1000 liters of material T-FF1##. Enter productionplant 1100 and order type PI01. Use forwards scheduling and enter today�sdate as the start date. Select Enter.

a) Create a process order for 1000 liters of material T-FF1##. Useforwards scheduling and enter today�s date as the start date.

Enter material T-FF1##.


Enter process order type PI01.

Select Enter.


Enter today’s date as the start date.





2. Display theMaterial list and check whether the co-product indicator is activefor material T-FF3##. If this indicator is not selected, will this material bemanaged as a co-product or by-product?

Is the indicator selected?

If not, will the material be managed as a co-product or by-product?

a) Display the Material list and check whether the co-product indicator isactive for material T-FF3##. If this indicator is not selected, will thismaterial be managed as a co-product or by-product?

Select Goto→ Material List

Double-click item 0040.

The co-product indicator is selected for T-FF3##.

If this is not selected, the material will be managed as a by-product.

3. From the process order header, display the settlement rule. Which receiversare entered? Why?

Receivers:

Why?:

a) From the process order header, display the settlement rule. Whichreceivers are entered?

Goto→ Header

Header→ Settlement rule

Both T-FF1## and T-FF3## are entered as receivers.

This is due to the apportionment rule found in the material masterfor T-FF1##.


Settlement type:

Consequences:

a) The settlement type is FUL = full settlement. This means that you canonly calculate variances and settle the order when the status is either�delivered (final)� or �technically complete�. As a rule, settlement typeFUL is used for the controlling method Product Cost by Order.

5. Display the Control data for the process order. What costing variants areentered for the preliminary costing and simultaneous costing? How were thecosting variants determined? Planned costing variant:

Actual costing variant:Continued on next page



Determined by:

a) Exit the settlement rule by selecting the green arrow to go back.

Select the Control data view.

Planned costing variant: PPP1

Actual costing variant: PPP2

This was determined by the order type/plant default values.


Costing sheet:

Determined by:

a) Costing sheet: COGM

The name of the costing sheet is provided on the Control data tab page.The costing sheet was determined by the valuation variant assigned tothe costing variant.


Overhead key:

Determined by:

a) Overhead key: SAP11

The overhead key is determined from the overhead group, assigned tothe material T-FF1## in the costing view of the material master.

8. Will the planned costs be calculated automatically when the order is saved?

Answer: True

The planned costs are calculated automatically when the order is saved. Thisis determined by the planned cost calculation setting: Determine plannedcosts when saving.

9. Release the process order. If you receive an error message stating that releaseis not possible, examine the error message closely. If material T-RF2##requires batch determination, branch to the Material List. Here, change




the requirement quantity for the first entry (without batch) to 0 KAI, thesecond entry (with batch) to 30 KAI. When prompted by the system, havethe quantities calculated again. Now you can release the process order.

a) Release the process order.

Select Release.

If you receive an error message stating that release is not possible,examine the error message closely.

Goto→ Logs→ On Release

If material T-RF2## requires batch determination, branch to theMaterial List. Here, change the requirement quantity for the first entry(without batch) to 0 KGW, the second entry (with batch) to 30 KGW.When prompted by the system, have the quantities calculated again.Now you can release the process order.

10. Save the process order. Record the order number. If prompted to assigna batch number to the co-products, enter A## for T-FF3## and B## forT-FF3##.

Process order no.:

a) Save the process order. Record the order number. If prompted toassign a batch number to the co-products, enter A## for T-FF3## andB## for T-FF3##.

Select Save.

Task 3:Generate an Order Costs Report in the information system of Product Cost byOrder. Examine the calculated costs generated for the process order and check theapportionment of the planned costs for the co-products.





Choose Execute.

1. The total planned costs for T-RF1## are displayed.




Total planned costs:

a) The total planned costs for T-RF1## are displayed.

The total planned costs for T-RF1## are displayed.

2. Execute the report again, but only for order item 2, T-FF3##. Whatapportionment to co-product T-FF3## was posted for component T-RF1##?

Apportionment to T-FF3##:

a) The total planned costs for T-RF1## are displayed.

3. Is this consistent with the apportionment of material costs defined in thesettlement rule of the process order?

Answer: True

Yes, this is consistent with the apportionment structure found in thesettlement rule for the process order.



Exercise 5: Alternative: Master Data andPreliminary Costing

Exercise ObjectivesAfter completing this exercise, you will be able to:� Create a production order and analyze the control data of the production order� Explain the settlement parameters of a production order� Explain the settlement rule for the settlement type FULL� Analyze preliminary costing for a production order

Business ExampleEngineering has requested that a prototype be manufactured for pump R-F1##.Although a product cost collector exists for this pump, the prototype process isbest suited to the Product Cost by Order method in order to provide better costanalysis for this prototype.

Task 1:You already have a BOM for the new pump to be built as a prototype. Theproduction process is supplied by plant 1000. Create a production order forthe production of the pump, and analyze the master data used by cost objectcontrolling.

Logistics→ Production→ Production Control→ Order→ Create→ WithMaterial (CO01)

1. Create a production order for 10 pieces of material R-F1## in plant 1000.Use order type PP01 and forward scheduling, and enter today's date as thestart date.

2. Select Component overview and set the backflush flag for each component.

3. To which operation are the material components assigned?

4. Change the control key assigned to operation 70 from PP97 to PP98. Whatfunctions does the control key PP98 perform?

5. From the production order header, display the settlement rule. Whichreceivers are entered?


7. Display the Control data for the production order. What costing variants areentered for the preliminary costing and simultaneous costing? How were thecosting variants determined?






10. Will the planned costs be calculated automatically when the order is saved?Determine whether this statement is true or false.□ True□ False



Task 2:Using the Order Cost report from the Product Cost by Order information system,review the calculation of the planned costs for the production order and verify theplanned distribution of costs for the co-products.



Choose Execute.

Choose Select layout and select layout 1SAP02 (cost trend).

1. Determine the total planned credit for R-F1##.

The total planned credit for R-F1## is _________________.

2. Is there a planned variance for this order? If there is a planned variancerecord the amount.

The planned variance is _____________.



Solution 5: Alternative: Master Data andPreliminary CostingTask 1:You already have a BOM for the new pump to be built as a prototype. Theproduction process is supplied by plant 1000. Create a production order forthe production of the pump, and analyze the master data used by cost objectcontrolling.

Logistics→ Production→ Production Control→ Order→ Create→ WithMaterial (CO01)

1. Create a production order for 10 pieces of material R-F1## in plant 1000.Use order type PP01 and forward scheduling, and enter today's date as thestart date.

a) Enter your material R-F1##.


Enter order type PP01.

Select Enter.


Enter today’s date as the start date.


2. Select Component overview and set the backflush flag for each component.

a) Select Component overview.

Expand the columns with the column heading �B�� to determine whichcolumn is the backflush indicator.

Set the backflush indicator for each component.

3. To which operation are the material components assigned?

a) Select Operation overview.

Choose the first operation and select the Components for operationbutton at the bottom of the screen.

The material components are assigned to the first operation.




4. Change the control key assigned to operation 70 from PP97 to PP98. Whatfunctions does the control key PP98 perform?

a) Return to Operation overview.

Replace the control key for operation 0070 with control key PP98. Oncethe change is made, place you cursor on the PP98 control key assignedto operation 70 and choose the drop down icon or function key F4.

Control Key PP98 performs scheduling, capacity requirements,costing, print time tickets, print, print confirmation, and is a milestoneconfirmation for this operation.

Automatic goods receipt will not be performed.

Choose Continue.

5. From the production order header, display the settlement rule. Whichreceivers are entered?

a) Goto→ Header


Material R-F1## is entered as the receiver.


a) The settlement type is FUL = full settlement. This means that you canonly calculate variances and settle the order when the status is eitherdelivered (final) or technically complete. As a rule, settlement typeFUL is used for the controlling method Product Cost by Order.

7. Display the Control data for the production order. What costing variants areentered for the preliminary costing and simultaneous costing? How were thecosting variants determined?

a) Exit the settlement rule by selecting the green arrow to go back.

Select the Control data view.

Planned costing variant: PPP1

Actual costing variant: PPP2

This was determined by the order type/plant default values.





a) Costing sheet: COGM

The name of the costing sheet is provided on the Control data tab page.The costing sheet was determined by the valuation variant assigned tothe costing variant.


a) Overhead key: SAP10

The overhead key is determined from the overhead group assigned tothe material R-F1## in the costing view of the material master.

10. Will the planned costs be calculated automatically when the order is saved?

Answer: True

The planned costs are calculated automatically when the order is saved. Thisis determined by the planned cost calculation setting: Determine plannedcosts when saving.


a) Select Release.


a) Select Save.

Task 2:Using the Order Cost report from the Product Cost by Order information system,review the calculation of the planned costs for the production order and verify theplanned distribution of costs for the co-products.



Choose Execute.

Choose Select layout and select layout 1SAP02 (cost trend).

1. Determine the total planned credit for R-F1##.

The total planned credit for R-F1## is _________________.

a) The total planned credit for R-F1## is _________________.




2. Is there a planned variance for this order? If there is a planned variancerecord the amount.

The planned variance is _____________.

a) The planned variance is _____________.



Lesson Summary

You should now be able to:� Describe the features of Product Cost by Order� Describe the features of Cost Object Controlling for joint production� Explain process manufacturing master data




Lesson Overview


� Perform goods movements transactions and confirmations for the processorder







� The manufacturer enters the actual costs for the materials, activities, andoverhead with reference to the process order. When fertilizer and acid arereceived in the warehouse, the order is debited at the standard price.



Figure 86: Process Order: Process Chain

Figure 87: Process Order: Simultaneous Costing



Process orders usually are charged with actual costs through confirmations inLogistics.

� Cost objects can be charged by internal activity allocations. These occur� automatically in confirmations. The cost objects are charged with secondary

costs.

Cost objects can be charged through material withdrawals. When the confirmation

is entered, the cost objects are charged automatically (material backflushes, goodsissues) with primary costs.

In addition, the goods receipt can be posted automatically when the confirmationis entered.

Actual costs are charged to the order header as they are incurred. When a goodsreceipt for a co-product is posted, the order item is credited accordingly.

To see the actual costs for each co-product, you must perform the PreliminarySettlement for Co-Products, Rework function in the period-end closing process.

Additional remarks on logistical processing: If you are using milestoneconfirmations, you must confirm the milestones in the specified sequence.Operations that are not milestones are automatically confirmed when the milestoneis confirmed. You specify which operations are milestones in the routing with thecontrol key of the operation.




Exercise ObjectivesAfter completing this exercise, you will be able to:� Analyze the actual costs for the process order and order items

Business ExampleIn preparation, several goods receipts and goods issues need to be posted andconfirmation entered for the process order.

Task 1:When the process order has been released to the shop floor, stock issues andreceipts and production confirmations can be posted for the order. Simultaneouscosting will occur on the process order.

1. Enter a final confirmation for operation/phase 230 of the process order. Entera yield of 1000 liters and save the confirmation.

2. Enter a partial confirmation for 400 liters for operation/phase 330 of theprocess order. Change the default amount to 15 minutes.

3. Use movement type 101 to post a goods receipt of 400 liters of fertilizer(T-FF1##) and 3 liters of sulfuric acid.

Hint: Select Next Screen to continue past the classification screenfor the batch specifications for both materials (T-FF1## andT-FF3##). Enter 1 g/ccm for the density and 90% for the activeingredient content. To continue past the warning messages regardingthe deficit quantity, select Enter.




Task 2:Use the actual cost report to review the posted amounts for the goods movementsand confirmations.

Accounting → Controlling → Product Cost Controlling → Cost ObjectControlling→ Product Cost by Order→ Information System→ Reports forProduct Cost by Order→ Detailed Reports→ For Orders (KKB6_ORD)


Select Layout and select layout 1SAP02 (cost trend).


1. To display the actual costs for the sulfuric acid T-FF3##, use the cost reportand enter the process order number. Next, change the Settings to OrderItems On/Off, enter order item 2, and execute the report. Display the costreport and determine the value used to credit the process order for the goodsreceipt for the sulfuric acid T-FF3##.

T-FF3##:

2. Execute the actual cost report again and display the costs for the fertilizer,order item 1. Determine the value used to credit the process order for thegoods receipt for the fertilizer T-FF1##.

T-FF1##:

3. To display the actual costs for all items in the order, open the actual costsreport for all order items. Record the order balance.

Order balance:

4. Use the cost trend layout to execute the report again. Determine whetheractual costs are distributed to T-FF1##.

Answer:



Solution 6: Simultaneous CostingTask 1:When the process order has been released to the shop floor, stock issues andreceipts and production confirmations can be posted for the order. Simultaneouscosting will occur on the process order.

1. Enter a final confirmation for operation/phase 230 of the process order. Entera yield of 1000 liters and save the confirmation.

a) Logistics→ Production - Process→ Process Order→ Confirmation→ Enter for Phase→ Time ticket (COR6N)


Enter the process order number and operation 230.

Select Enter.


Confirm a yield of 1000 liters.


2. Enter a partial confirmation for 400 liters for operation/phase 330 of theprocess order. Change the default amount to 15 minutes.

a) Favorites→ Confirmation→ Enter for Phase→ Time Ticket (COR6N)


Select Enter.







3. Use movement type 101 to post a goods receipt of 400 liters of fertilizer(T-FF1##) and 3 liters of sulfuric acid.

Hint: Select Next Screen to continue past the classification screenfor the batch specifications for both materials (T-FF1## andT-FF3##). Enter 1 g/ccm for the density and 90% for the activeingredient content. To continue past the warning messages regardingthe deficit quantity, select Enter.

a) Logistics→ Production - Process→ Process order→ Environment→Material Movement→ Post Material to Stock (MB31)


Enter the movement type 101, plant 1100, and storage location 0001.

Choose To Order.

Enter the process order number. Select Enter.

Change the goods receipt quantity for T-FF1## from 1000 to 400liters, and change the goods receipt quantity for T-FF3## to 3 liters.

Choose Adopt.

Save the goods receipt.




Select Layout and select layout 1SAP02 (cost trend).


1. To display the actual costs for the sulfuric acid T-FF3##, use the cost reportand enter the process order number. Next, change the Settings to OrderItems On/Off, enter order item 2, and execute the report. Display the costreport and determine the value used to credit the process order for the goodsreceipt for the sulfuric acid T-FF3##.




T-FF3##:

a) To display the actual costs for the sulfuric acid T-FF3##, enter orderitem 2 and execute the report. Determine the value used to credit theprocess order for the goods receipt for the sulfuric acid T-FF3##.

Enter order item 2.

Choose Execute.

The value for the credit is displayed as goods receipt.

2. Execute the actual cost report again and display the costs for the fertilizer,order item 1. Determine the value used to credit the process order for thegoods receipt for the fertilizer T-FF1##.

T-FF1##:

a) Enter order item 1.

Choose Execute.

The value for the credit is displayed as goods receipt.

3. To display the actual costs for all items in the order, open the actual costsreport for all order items. Record the order balance.

Order balance:

a) Enter order item *.

Choose Execute.

Record the order balance.

4. Use the cost trend layout to execute the report again. Determine whetheractual costs are distributed to T-FF1##.

Answer:

a) Choose Select Layout.

Choose Layout 1SAP02.

Choose order item 1.

There are no actual costs listed for the activities, overheads, ormaterials. These costs have not yet been distributed to the co-products.



Exercise 7: Alternative: SimultaneousCosting

Exercise ObjectivesAfter completing this exercise, you will be able to:� Enter goods movements and confirmations for the production order� Analyze the actual costs for the production order

Business ExampleWhile the production process is proceeding, several goods receipts, goods issuesand order confirmations must be posted for the production order.

Task 1:When the production order has been released, inventory transactions andconfirmations of production activities can be posted for the production order.Simultaneous costing is carried out for the production order.

1. Enter a final confirmation for operation 10 of the production order. Enter ayield of 10 units and increase the number of components used for componentR-B1##. Save the confirmation.

2. Will this confirmation cause a goods movement for components?

3. Enter a partial confirmation of 5 units for operation 70 of the productionorder.

4. Use movement type 101 to post a goods receipt for the 5 pumps.





Choose Execute.

1. What actual costs have been posted for the production order?

Goods Issues _______________




Confirmations _______________

Goods Receipts _______________



Solution 7: Alternative: SimultaneousCostingTask 1:When the production order has been released, inventory transactions andconfirmations of production activities can be posted for the production order.Simultaneous costing is carried out for the production order.

1. Enter a final confirmation for operation 10 of the production order. Enter ayield of 10 units and increase the number of components used for componentR-B1##. Save the confirmation.

a) Logistics→ Production→ Production Control→ Confirmation→Enter→ For Operation→ Time Ticket (CO11N)


Select Enter.


Confirm a yield of 10 units.

2. Will this confirmation cause a goods movement for components?

a) Select the Goods movements overview and increase the quantity forcomponent R-B1## by 1 unit.

Yes, there is a goods movement because the indicator was set in theorder and, as a result of the components assigned to operation 10, agoods issue posting will be performed when the confirmation is saved.


3. Enter a partial confirmation of 5 units for operation 70 of the productionorder.

a) Favorites→ Production Order→ Confirmation→ Enter→ ForOperation→ Time Ticket (CO11N)

Enter your order number and operation 70.

Select Enter.


Confirm a yield of 5 units.






a) Logistics→ Production→ Production Control→ Goods Movements→ Goods Receipt.


Choose To Order.


Select Enter.

Change the goods receipt quantity for R-F1## to 5 units.


To continue past the warning messages regarding the deficit quantity,select Enter.





Choose Execute.

1. What actual costs have been posted for the production order?

Goods Issues _______________



a) Goods Issues _______________





Lesson Summary

You should now be able to:� Perform goods movements transactions and confirmations for the process

order



Lesson: Period-End Closing with Partially DeliveredProduction Orders

Lesson Overview


� Explain period-end closing with partially delivered production orders� Explain WIP at actual cost







If the process order has not been delivered by the end of the period, themanufacturer can calculate WIP for the sales order items.


AC520 Lesson: Period-End Closing with Partially Delivered Production Orders

Preliminary Settlement of Co-Products


In Release 4.5, the period-end closing activities for co-product orders wereenhanced to enable integrated cost controlling for individual co-products.

Once the period costs have been allocated to the order header, the costs arecalculated from the order header to the order items.

WIP calculation, variance calculation, and settlement are then performed at theorder item level.



Figure 89: Period-End Closing with Co-Products

Functions in the period-end closing of Product Cost by Order:

� Template allocation� Revaluation of activity types and business processes at actual prices� Allocation of overhead� Preliminary settlement of co-products, rework� Calculation of work in process (WIP): in Product Cost by Order, the system

valuates work in process at actual cost� Variance calculation� Settlement

� Work in process is settled to Financial Accounting (FI) and ProfitCenter Accounting (EC-PCA).

� The order balance is settled to FI, Actual Costing/Material Ledger(CO-PC-ACT) and EC-PCA.

� The variance categories are settled to Profitability Analysis (CO-PA).� The Schedule Manager supports efficient execution of the period-end

closing process. It is addressed extensively in course AC690.



Figure 90: Preliminary Settlement of Co-Products

In period-end closing, the actual costs collected on the order header are calculatedto the individual order items. This charges each co-product with its share of theactual costs. When it settles the actual costs, the system uses the equivalencenumbers defined in the apportionment structure. In some cases it may also use thesource structure. To settle the actual costs, use the Preliminary Settlement forCo-Products, Rework function. The costs are settled for the co-products using theoriginal cost elements.

You make the necessary settings in Customizing for Product Cost by Order toensure that:

� Settlement to an order item is allowed (you make this setting in the settlementprofile)

� Either proportional settlement (indicator Equivalence Number) or percentagesettlement (indicator %-Settlement) is allowed (you make this setting inthe settlement profile)

� The allocation structure contains all cost elements with which the orderheader can be debited

Actual costs must be settled in the order items before you can calculate WIP andvariances or settle the order.

If you have not specified an apportionment structure in the material master recordor in the production version, you must enter equivalence numbers for calculationin the settlement rule of the order header. In this case you cannot use a sourcestructure.



Work in Process

Figure 91: WIP Calculation for Co-Products

Work in process (WIP) for co-products is always valuated at actual cost. TheWIP is valuated using the actual costs posted to the order item less the creditsfrom goods receipts.

Valuating WIP at target cost requires that the order item has a settlement rule withsettlement type FUL (full settlement). Settlement type FUL is derived from defaultrule PP1 (Production Material Full Settlement) which is specified in the order type.If a manufacturing order including co-products uses settlement type PER (defaultrule PP2), no work in process can be determined for it. If you are using a costobject hierarchy with co-products, you cannot form any work in process becauseonly periodic manufacturing orders can be assigned to a cost object hierarchy.

The calculation of work in process depends on the status of the manufacturingorder. The system continues to calculate work in process for the co-products untilthe header of the manufacturing order has the status DLV (delivered) or TECO(technically completed). The manufacturing order receives the status DLV onlywhen all order items have been delivered. When the order has the status DLV andTECO, the WIP calculation function cancels any WIP from the previous period.To see whether particular order items have been delivered, access the material listfrom the process order. From the materials list, access the detail view and lookat the indicator Delivery Completed (final delivery).



Figure 92: Settlement of Work in Process

When you settle the work in process, it is transferred to Financial Accounting (FI).

� If the debit of the order item is greater than the credit, the system debitsUnfinished Goods Inventory and creditsUnfinished Goods Inventory Change.

� If the debit of the order item is less than the credit, the system debits Expensefor Reserves for Unrealized Costs and credits Reserves for Unrealized Costs.This expense posting corresponds to a value adjustment for finished productsthat have already been capitalized in FI.



Exercise 8: Period-End Closing withPartially Delivered Production Orders

Exercise ObjectivesAfter completing this exercise, you will be able to:� Analyze the actual costs for the process order and order items� Allocate process costs and overhead costs to the process order� Distribute the actual costs from the process order to the order items

(co-products)� Use actual costs to calculate WIP for the co-products� Review the settings for the WIP calculation� Settle the WIP to Financial Accounting

Business ExampleBecause the process order is not completed by the end of the period, it is necessaryto calculate the actual WIP value and settle the amounts for information purposesto Financial Accounting. In addition, process costs and overhead rates must beallocated to the order prior to the WIP calculation.

You have been asked to perform the period-end closing tasks for your processorder. Because this is a joint production order, you will need to distribute theactual costs from the order header to the order items. This is necessary to supportthe calculation of WIP for the individual order items.

Task 1:Use the single functions to allocate process costs and overhead rates to yourprocess order.

1. Use the Template Allocation to allocate the process costs to the process orderfor version 0 of the current period.

2. Allocate the overhead rates for the current period to the process order.




Task 2:If using joint production, it is possible to calculate WIP and variances for eachco-product separately. However this calculation can be performed only if theactual costs from the process order header are distributed to the co-products(order items).

Accounting → Controlling → Product Cost Controlling → Cost ObjectControlling→ Product Cost by Order→ Period-End Closing→ Single Functions→ Preliminary Settlement for Co-Products, Rework→ Individual Processing(CO8B)


1. Use the individual processing to distribute the actual costs to the co-productsfor your process order for the current period. Remain in the PreliminarySettlement Results screen.

2. Select the Detail list for the actual settlement and display the senders. Theindividual cost elements that debited the process order are listed as thesenders. Next, access the receivers. The settlement receivers should listthe order items (co-products) as the receivers for each individual sendingcost element. Is the value split according to the apportionment defined inthe process order?

3. Display the cost accounting document from the list of accounting documents.Expand the document detail and note that each actual line item posted to theorder was settled to the two individual process order items, the co-productsT-FF1## and T-FF3##.

4. Return to the cost report. Review the posted actual costs that were changedby the distribution to the co-products.

Task 3:Calculate work in process for your process order.

1. Use transaction Individual Processing to calculate the WIP value of yourprocess order. Use Results Analysis version 0 for the current period.

2. Create another session and display the cost report. Enter * for the orderitem. Execute the report. Record the order balance. Compare the calculatedtotal WIP amount with the remaining balance for your process. Are theythe same value?

(circle one) Yes or No




3. Is it a requirement to value WIP using only actual costs when jointproduction is used?Determine whether this statement is true or false.□ True□ False

4. Record the WIP for T-FF1## and T-FF3##.

T-FF1##:

T-FF3##:

5. Access the WIP report and record the WIP value for each cost element forT-FF1##.

672111 (WIP direct costs):

672121 (WIP overhead):

672131 (WIP production costs):

6. Review the settings for the WIP categories. What cost elements are assignedto the following WIP categories for Controlling area 1000, Results Analysisversion 0:

EK (direct costs):

FK (production costs):

GK (overhead costs):

7. Display the actual report for T-FF1##. What are the subtotals of actualcosts for the following WIP categories? What is the WIP balance for eachof these categories?

Actual costs EK: ____________

(400000 � 499999; 820000 � 894999; 896000 � 899999)

Actual costs FK: ____________

(600000 � 654999; 656000 � 699999)

Actual costs GK: ____________

(655100 � 655199)

Total Actual costs: ____________

Order balance: ____________

To display the WIP balances, change to Work in Process layout 1SAP03.

The system allocates the remaining order balance to the WIP categories bydividing the total costs by the actual costs per category. This determines thepercentage of the remaining costs that should be allocated to each category.




Example:

Actual costs EK 8000 80% of Total

Actual costs FK 2000 20% of Total

Total costs 10000 100%

Remaining order balance after a partial delivery: 4000

Calculated WIP for each order category:

WIP category EK 3200

WIP category FK 800

Task 4:Once the WIP has been calculated, the WIP balance must be posted to FinancialAccounting for period-end closing. This is accomplished using the settlementtransaction.

Accounting → Controlling → Product Cost Controlling → Cost ObjectControlling→ Product Cost by Order→ Period-End Closing→ Single Functions→ Settlement→ Individual Processing (KO88)

Before continuing, select Add to Favorites

1. Use the individual processing transaction to settle the calculated WIP costsfor your process order to financial accounting for the current period.

2. In the Actual Settlement Detail List, note that each order item is a sender.

3. Display the accounting documents for the posting to FI. Why is there noControlling document listed?

Answer:



Solution 8: Period-End Closing withPartially Delivered Production OrdersTask 1:Use the single functions to allocate process costs and overhead rates to yourprocess order.

1. Use the Template Allocation to allocate the process costs to the process orderfor version 0 of the current period.

a) Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Order→ Period-End Closing→ SingleFunctions→ Template Allocation→ Individual Processing (CPTA)



Version: 0


Fiscal Year: current fiscal year

Deselect Test Run.


Choose Execute.

2. Allocate the overhead rates for the current period to the process order.

a) Accounting→ Controlling→ Product Cost Controlling→ CostObject Controlling→ Product Cost by Order→ Period-End Closing→ Single Functions→ Overhead→ Individual Processing (CPTA)





Deselect Test Run.

Choose Execute.




Task 2:If using joint production, it is possible to calculate WIP and variances for eachco-product separately. However this calculation can be performed only if theactual costs from the process order header are distributed to the co-products(order items).

Accounting → Controlling → Product Cost Controlling → Cost ObjectControlling→ Product Cost by Order→ Period-End Closing→ Single Functions→ Preliminary Settlement for Co-Products, Rework→ Individual Processing(CO8B)


1. Use the individual processing to distribute the actual costs to the co-productsfor your process order for the current period. Remain in the PreliminarySettlement Results screen.

a) Enter your order number.

Settlement period: current month

Posting period: current month


Deselect Test Run.

Choose Execute.

2. Select the Detail list for the actual settlement and display the senders. Theindividual cost elements that debited the process order are listed as thesenders. Next, access the receivers. The settlement receivers should listthe order items (co-products) as the receivers for each individual sendingcost element. Is the value split according to the apportionment defined inthe process order?

a) Select Detail Lists.

The order number and order items are displayed.

Select the order number.

Select Sender.

The individual cost elements that debited the process order aredisplayed.

Select the green arrow twice to return to the Detail list.

Choose Receiver.

The order items are displayed and listed by assignment.

Yes, the value is split according to the apportionment structure.




3. Display the cost accounting document from the list of accounting documents.Expand the document detail and note that each actual line item posted to theorder was settled to the two individual process order items, the co-productsT-FF1## and T-FF3##.

a) Select the green arrow twice to return to the detail list.

Select Accounting documents.

Choose Controlling document.

Expand the document line.

4. Return to the cost report. Review the posted actual costs that were changedby the distribution to the co-products.

a) Accounting→ Controlling→ Product Cost Controlling→ CostObject Controlling→ Product Cost by Order→ Information System→ Reports for Product Cost by Order→ Detailed Reports→ ForOrders (KKB6_ORD)



Enter your order number and order item 1.

Choose Execute.

The individual order items now have actual costs.




Task 3:Calculate work in process for your process order.


a) Accounting→ Controlling→ Product Cost Controlling→ CostObject Controlling→ Product Cost by Order→ Period-End Closing→ Single Functions→ Work in Process→ Individual Processing→Calculate (KKAX)

Before continuing, select Add to Favorites.





Deselect Test Run

Choose Execute.

2. Create another session and display the cost report. Enter * for the orderitem. Execute the report. Record the order balance. Compare the calculatedtotal WIP amount with the remaining balance for your process. Are theythe same value?

(circle one) Yes or No

a) Accounting→ Controlling→ Product Cost Controlling→ CostObject Controlling→ Product Cost by Order→ Information System→ Reports for Product Cost by Order→ Detailed Reports→ ForOrders (KKBC_ORD)



Enter order item *.

Choose Execute.

Yes, the calculated WIP and the actual order balance are the same value.

3. Is it a requirement to value WIP using only actual costs when jointproduction is used?

Answer: True

It is a requirement to valuate WIP using only actual costs when jointproduction is used.




4. Record the WIP for T-FF1## and T-FF3##.

T-FF1##:

T-FF3##:

a) The WIP for each item is listed in theWork in Process object list.

5. Access the WIP report and record the WIP value for each cost element forT-FF1##.

672111 (WIP direct costs):

672121 (WIP overhead):

672131 (WIP production costs):

a) Analyze the WIP amounts in the WIP report for T-FF1##.

From the WIP object list, choose

Goto→ WIP Report


EK (direct costs):

FK (production costs):

GK (overhead costs):

a) Favorites→ Tools→ Customizing→ IMG→ Execute Project (SPRO)


Controlling→ Product Cost Controlling→ Cost Object Controlling→ Product Cost by Order→ Period-End Closing→ Work in Process→ Define Assignment (OKGB)

EK (direct costs): 400000 � 499999; 820000 � 894999; 896000- 899999FK (production costs): 600000 � 654999; 656000 � 699999GK (overhead costs): 655100 � 655199

7. Display the actual report for T-FF1##. What are the subtotals of actualcosts for the following WIP categories? What is the WIP balance for eachof these categories?


(400000 � 499999; 820000 � 894999; 896000 � 899999)





(600000 � 654999; 656000 � 699999)


(655100 � 655199)




The system allocates the remaining order balance to the WIP categories bydividing the total costs by the actual costs per category. This determines thepercentage of the remaining costs that should be allocated to each category.

Example:










WIP category FK 800




Enter order item 1.

Choose Execute.


(400000 � 499999; 820000 � 894999; 896000 � 899999)


(600000 � 654999; 656000 � 699999)


(655100 � 655199)




Select Select Layout and select layout 1SAP03 (Work in Process).

The system allocates the remaining order balance to the WIP categoriesby dividing the total costs by the actual costs per category. Thisdetermines the percentage of the remaining costs that should beallocated to each category.

Example:







WIP category FK 800






Before continuing, select Add to Favorites

1. Use the individual processing transaction to settle the calculated WIP costsfor your process order to financial accounting for the current period.





Deselect Test Run.

Choose Execute.

2. In the Actual Settlement Detail List, note that each order item is a sender.

a) Choose Detail lists.

If necessary, choose Goto→ Detail list of RA data for FI.


Answer:

a) The WIP accrual to FI does not credit the process order. The WIPbalances are stored in RA cost elements, which will not update thecontrolling object. This can be verified by displaying the sender andreceiver for the settlement.

Select one of the process order items.


From the list of accounting documents, choose Accounting document.This is the WIP accrual posting in FI.

893000 Work in Process

793000 WIP



Exercise 9: Alternative: Period-EndClosing with Partially DeliveredProduction Orders

Exercise ObjectivesAfter completing this exercise, you will be able to:� Carry out period-end closing activities� Calculate WIP at actual cost� Settle WIP in Financial Accounting and Profit Center Accounting

Business ExampleYour order has not been completed by period end. To display profit according tothe correct period, calculate WIP during period-end closing and activate it.

Task 1:Complete the process and overhead cost allocation for the production order.


2. Using the individual processing transaction for Overhead Calculation, applythe overhead costs to the production order for the current period.

Task 2:

1. Return to the cost report. Execute the report again, and review the affect ofthe Template and Overhead transaction.

Task 3:The calculation of work in process is necessary to determine the current orderbalance for the production order for R-F1##.

1. Using the individual processing transaction, calculate the work in process(WIP) value of your production order, using Results Analysis version 0for the current period.




2. Create another session and display the cost report for your production order.Enter your order number. Execute the report. Record the order balance.Compare the calculated total WIP amount with the remaining balance foryour production order. Are they the same value?

3. Access the WIP report and record the WIP value for each cost element forR-F1##.


5. Display the configuration of the WIP update. What cost elements areassigned to the line item ID�s?

ControllingArea

ResultsAnalysisversion:

ResultsAnalysisKey

Line ID CostElement

1000 0 FERT EK1000 0 FERT FK1000 0 FERT OH

6. Display the actual report for R-F1##. What are the subtotals of actual costsfor the following WIP categories?



1. Using the individual processing transaction, settle the calculated WIP foryour production order to financial accounting for the current period.




Solution 9: Alternative: Period-EndClosing with Partially DeliveredProduction OrdersTask 1:Complete the process and overhead cost allocation for the production order.


a) Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Order→ Period-End Closing→ SingleFunctions→ Template Allocation→ Individual Processing (CPTA)



Version: 0



Deselect Test Run.


Choose Execute.

2. Using the individual processing transaction for Overhead Calculation, applythe overhead costs to the production order for the current period.

a) Accounting→ Controlling→ Product Cost Controlling→ CostObject Controlling→ Product Cost by Order→ Period-End Closing→ Single Functions→ Overhead→ Individual Processing (KG12)





Deselect Test Run.

Choose Execute.




Task 2:

1. Return to the cost report. Execute the report again, and review the affect ofthe Template and Overhead transaction.



Choose Execute.

Choose Select layout and select layout 1SAP02 (Cost Trend).

Task 3:The calculation of work in process is necessary to determine the current orderbalance for the production order for R-F1##.


a) Accounting→ Controlling→ Product Cost Controlling→ CostObject Controlling→ Product Cost by Order→ Period-End Closing→ Single Functions→ Work in Process→ Individual Processing→Calculate (KKAX)






Deselect Test Run.

Choose Execute.

Create another session and display the cost report for your productionorder. Enter your order number. Execute the report. Record the orderbalance. Compare the calculated total WIP amount with the remainingbalance for your production order. Are they the same value?




2. Create another session and display the cost report for your production order.Enter your order number. Execute the report. Record the order balance.Compare the calculated total WIP amount with the remaining balance foryour production order. Are they the same value?



Choose Execute.

Yes, the calculated WIP and the actual order balance are the same value.

3. Access the WIP report and record the WIP value for each cost element forR-F1##.

a) From the WIP object list, choose

Goto→ WIP Report




Controlling→ Product Cost Controlling→ Cost Object Controlling→ Product Cost by Order→ Period-End Closing→ Work in Process→ Define Assignment (OKGB)

EK (direct costs): 400000 � 499999; 820000 � 894999; 896000 -899999

FK (production costs): 600000 � 654999; 656000 � 699999

GK (overhead costs): 655100 � 655199

5. Display the configuration of the WIP update. What cost elements areassigned to the line item ID�s?




ControllingArea

ResultsAnalysisversion:

ResultsAnalysisKey

Line ID CostElement

1000 0 FERT EK 6721111000 0 FERT FK 6721311000 0 FERT OH 672121



Controlling→ Product Cost Controlling→ Cost Object Controlling→Product Cost by Order→ Period-End Closing→ Work in Process→Define Update (OKGA)

6. Display the actual report for R-F1##. What are the subtotals of actual costsfor the following WIP categories?



Choose Execute.



(400000 � 499999; 820000 � 894999; 896000 � 899999)


(600000 � 654999; 656000 � 699999)


(655100 � 655199)






1. Using the individual processing transaction, settle the calculated WIP foryour production order to financial accounting for the current period.


Settlement period: current period

Posting period: current period


Deselect Test Run.

Choose Execute.


a) The WIP accrual to FI does not credit the process order. The WIPbalances are stored in RA cost elements, which will not update thecontrolling object. This can be verified by displaying the sender andreceiver for the settlement.



From the list of accounting documents, choose Accounting document.This is the WIP accrual posting in FI.

893000 Work in Process

793000 WIP



Lesson Summary

You should now be able to:� Explain period-end closing with partially delivered production orders� Explain WIP at actual cost


AC520 Lesson: Period-End Closing with Delivered Production Orders

Lesson: Period-End Closing with Delivered ProductionOrders

Lesson Overview


� Explain period-end closing with delivered production orders� Explain the differences between the controlling methods of Product Cost by








� After the last goods receipt into the inventory, the manufacturer compares theactual cost of the order with the standard cost estimate and the preliminarycost estimate for each order item. The difference between the actual costsof the order item and the debit value at goods receipt are the variances thatare examined exactly in terms of resources in the variance analysis and aresettled in the inventory and Profitability Analysis. The variances are settledto FI as a sum, but separated by variance category to the costing-basedProfitability Analysis.



Variance Calculation and Settlement


Figure 94: Variance Calculation for Co-Products

In the case of manufacturing orders that have co-products and whose order itemhas settlement type FUL, variances can only be calculated when all order itemshave been delivered (that is, when the delivery completed indicator is set for all



order items and the status DLV is set for the order). For manufacturing orderswithout co-products for whose order item the settlement type is FUL, variancescan only be calculated after the status DLV has been set for the order.

For manufacturing orders that have co-products for whose order item thesettlement type is PER, the order balance is always interpreted as a variance(regardless of the status). No work in process is calculated for these manufacturingorders. For manufacturing orders without co-products that have the settlement typePER, variances and work in process are calculated using the target cost calculation.

No scrap variances can be calculated for co-products. You should therefore use avariance key for which the Scrap indicator is not selected.

Figure 95: Settlement of Co-Products

The following takes place when the order has been delivered and settled:

� Work in process (WIP) posted in a previous period is cancelled.� The order balance is reduced to zero by transferring to FI the difference

between the cost of the order and the value of the delivery to stock. If theprice control indicator is set to S, the system debits Price Differences andcredits Finished Goods Inventory Change. The assigned profit center isalso updated.

� The accrual data is also updated in the Material Ledger (if active).� The total variance is transferred to profitability segments in Profitability

Analysis (CO-PA). You can transfer the variances separately by variancecategory and cost element to value fields in CO-PA.



Controlling View ComparisonComparison of Controlling by Product Cost Collector vs Production Order

� The difference is in the usage of:

� Product cost collectors

and

� Production orders

Figure 96: Comparison Between Full Settlement and Periodic Settlement

Every production order can use one of the two costing methods: Product Costby Order or Product Cost by Period. This is specified in Customizing in the�Cost-Accounting-Relevant Default Values for Order Types and Plants� table.

� If Product Cost by Period is used with a product cost collector, the productcost collector order type will use the default rule STR. The manufacturingorder type utilizes the default rule PP2 (periodic settlement). The �Productcost collector� indicator is set there as well.

� If Product Cost by Period is used without the product cost collector, theorder type of the manufacturing order will use the default rule PP2 (periodic).The �Product Cost Collector� indicator is not selected. This Controllingmethod is possible, however it is not recommended by SAP.

� If Product Cost by Order is used, the order type of the manufacturing orderwill use the default rule PP1 (full settlement). The �Product Cost Collector�indicator is not selected.

If you automatically post the determined WIP to Financial Accounting with thesettlement, the WIP settlement must be carried out in every period.



Figure 97: Final Costing in Product Cost by Period

When using periodic settlement, WIP and variances are shown for each periodat the same time.

Figure 98: Status-Based Final Costing in Product Cost by Order with FullSettlement

If full settlement is used, the work in process and the variances are calculatedbased on the status of the order. If the order has the status Released, Partiallyreleased, or Partial delivery, work in progress is calculated. If the order has the



status Delivered or Technically Complete, the remaining WIP balance from theprevious period will be cancelled, and Variances will be calculated. AWIP balanceand variances calculation cannot occur at the same time in the same period.

Cost Object Controlling using Product Cost CollectorsAdvantages: Disadvantages:

� Lean cost management� Controlling concentrates itself

more on the product or productionas a process, and less on thelogical type of production.

� The reduced number of costobjects improves the period-endclosing process.

� Variances are recognized in theperiod in which they occur.

� It is not obvious whether the costsare assigned to the productionorder according to the cause.

� Not recommended if theproduction involves significantset-up costs, if there is a largevariability in lot size, or if theBOM and routing are not stable.

� Not available if WIP andvariance analysis is required atthe co-product level or whenusing collective orders.

Product cost collectors can be used in the following production environments:

� In repetitive manufacturing: mandatory use of product cost collectors� In order-related production: optional� In process manufacturing: optional

The definition of the controlling process to be used is determined by the selectionof an order type and the settings stored for it in Customizing. Even if you use aproduct cost collection, you do not need to change the logistical processes.



Product Cost by Order Using PP Production OrdersAdvantages: Disadvantages:

� Large degree of responsibility onthe level of the production order.

� Full settlement providesproduction order level varianceanalysis, best suited for complexproduction environments andorders with high set-up costs andvarying lot sizes.

� Many cost objects must beprocess for the period-endclosing.

� When using Full settlement,variances cannot be analyzeduntil the production order iscompleted.

Production orders can be used as cost objects in the following productionenvironments:

� In order-related production: optional� In process manufacturing: optional� Co-product manufacturing using either production or process orders,

whenever WIP and Variance calculation at the co-product level is necessary:mandatory.

Production environments can use both Controlling methods in parallel, even forthe same material. Whenever applicable, the Product Cost by Period methodwould be recommended, thereby reducing the number of cost objects to bemanaged, and improving processing time for period-end closing. If however, aparticular product does not fit the Product Cost by Period situation, then chooseto control that product at the production order level.

Key MessageTo measure the efficiency of your production environment, collect costs

at the required level.If you only evaluate your products after period-end closing by summarizing

all of the production orders to the product level, select Product Cost by Period.Do not collect data that you do not need!

Products that are always produced with their own BOMs and routings are bestsuited for product cost collectors.



Products that either require high numbers of engineering change or have highsetup costs for varying production quantities as well as co-products are best suitedfor Product Cost by Order on the production order level.



Exercise 10: Period-End Closing withDelivered Production Orders

Exercise ObjectivesAfter completing this exercise, you will be able to:� Cancel the WIP at the completion of the order� Execute variance analysis for the process order and analyze the result� Settle WIP (amount = zero) and variance amounts to Financial Accounting

and Profitability Analysis� Analyze the accounting documents created during settlement� Check the settings for the variance settlement to Profitability Analysis

Business ExampleThe process order had not been settled by the close of the previous period. So thatWIP balances were generated for the order items and transferred to FinancialAccounting. The process order has now been completed, so the remaining WIPbalances need to be cancelled using WIP calculation, and settled to FinancialAccounting. In addition, since the order uses the full settlement rule (FUL),variances can now be calculated and transferred to Profitability Analysis.

Final confirmation of the process order and posting final delivery of theco-products are prerequisite for the period-end closing activities.

Task 1:Post the final confirmation and the goods receipt for your process order. This willcause additional postings of actual costs to the order.

1. Create the final confirmation for the process order. The remaining 600 litershave been manufactured. The last phase required an additional processingtime of 1 hour. Change the duration to reflect the additional hour. Whenentering the confirmation, select the Final confirmation indicator. Save theconfirmation.

2. Post a goods receipt for the remaining delivery of 600 liters of fertilizer(T-FF1##) and the remaining sulfuric acid (T-FF3##) with movementtype 101. Continue past the warning messages regarding batch numbers.Select Next Screen to continue past the classification screen for the batchspecifications for both materials, T-FF1## and T-FF3##.

3. Display the cost report for the order. Why are the actual costs for cost element620000 (cost center 4250, activity type 1420) higher than the planned costs?

Answer:




Task 2:Again it is necessary to execute the distribution of actual costs for co-productsprior to calculating either the WIP or variances for period-end.

Favorites→ Preliminary Settlement for Co-Products, Rework→ IndividualProcessing (CO8B)

1. Preliminary settlement of an order is normally executed only once per period.Reverse the previous preliminary settlement for the process order.

2. Execute the individual processing of all actual costs to the co-products ofyour process order.

3. Return to the Plan/Actual Comparison report and review the consequencesof the distribution. How was the additional cost of the additional 1 hour ofproduction time distributed?

Task 3:Since the order has the status final delivery, WIP must be calculated again in orderto cancel the remaining WIP balance.


2. Compare the calculated total WIP amount with the remaining balance foryour process order. The WIP balance should be zero. The remaining balanceon the process order will be considered production variance. Choose thelayout 1SAP03 to display the WIP balance.

Task 4:The production order should now have the status Delivery completed and Finallyconfirmed. Since the settlement type for the order is FUL, variance calculationcan be executed.

Accounting → Controlling → Product Cost Controlling → Cost ObjectControlling→ Product Cost by Order→ Period-End Closing→ Single Functions→ Variances→ Individual Processing (KKS2)

1. Using the individual processing transaction, execute variance analysis foryour process order. Calculate the variances for all target cost versions forthe current period. Remain in the variance analysis detailed list displayto answer the following question.

2. Select cost elements for item 1 and display the variance report. What causedthe variance for cost element 620000? Display the cost element report foritem 2. Do both products indicate a variance for the processing duration?




Task 5:After variances have been calculated, the variance categories can be settled to PAand the process order variance can be settled to FI. In addition, the WIP balancewill be cancelled in FI.

Favorites→ Single Functions→ Settlement→ Individual Processing (KO88)

1. Execute settlement for the process order. Use the current period and year.

2. Display the detail list for the settlement. The senders for productionvariances and the cancellation of WIP are listed on separate screens.

Access the settlement of the variances by selecting the receiver line for thematerial T-FF1##. The system displays a list of the variance amounts forPA by variance categories and for FI by material.

Select the accounting documents, and select the entry for Accountingdocument. For which cost elements were postings made?

3. Return to the list of accounting documents, and access the ProfitabilityAnalysis document. Check settlement to the value fields according tovariance category. To which value field was the variance settled?

4. In Customizing, display the assignment of the value field for the resourceusage variance category using PA transfer structure E1.



Solution 10: Period-End Closing withDelivered Production OrdersTask 1:Post the final confirmation and the goods receipt for your process order. This willcause additional postings of actual costs to the order.

1. Create the final confirmation for the process order. The remaining 600 litershave been manufactured. The last phase required an additional processingtime of 1 hour. Change the duration to reflect the additional hour. Whenentering the confirmation, select the Final confirmation indicator. Save theconfirmation.

a) Favorites→ Process Order→ Confirmation→ Enter for Phase→Time Ticket(COR6)


Select Enter.



Confirm a duration of 1 additional hour.





2. Post a goods receipt for the remaining delivery of 600 liters of fertilizer(T-FF1##) and the remaining sulfuric acid (T-FF3##) with movementtype 101. Continue past the warning messages regarding batch numbers.Select Next Screen to continue past the classification screen for the batchspecifications for both materials, T-FF1## and T-FF3##.

a) Favorites→ Process Order→ Environment→Material Movement→Post Material to Stock (MB31)


Choose To Order.

Enter the process order number.

Select Enter.

Confirm the remaining quantities for T-FF1## and T-FF3##.


Select Enter (twice) to continue past each warning message regardingthe batch number.

Select Next Screen to continue past the classification screen for thebatch specifications for both materials (T-FF1## and T-FF3##).

3. Display the cost report for the order. Why are the actual costs for cost element620000 (cost center 4250, activity type 1420) higher than the planned costs?

Answer:



Select the Layouts icon and select layout 1SAP02 (cost trend).


Choose Execute.

The actual costs are higher than the planned costs due to the additional1 hour of production that was confirmed for operation 330.




Task 2:Again it is necessary to execute the distribution of actual costs for co-productsprior to calculating either the WIP or variances for period-end.

Favorites→ Preliminary Settlement for Co-Products, Rework→ IndividualProcessing (CO8B)

1. Preliminary settlement of an order is normally executed only once per period.Reverse the previous preliminary settlement for the process order.





Deselect Test Run.

Preliminary Settlement→ Reverse

2. Execute the individual processing of all actual costs to the co-products ofyour process order.





Deselect Test Run.

Choose Execute.




3. Return to the Plan/Actual Comparison report and review the consequencesof the distribution. How was the additional cost of the additional 1 hour ofproduction time distributed?



Enter order item * .

Choose Execute.

To see the cost elements, choose Change Layout.

From the right hand side of the dialogue box choose the Cost Elementfield. Choose Show Selected Fields icon.

Move the field Cost Element so that it is the second field in the displaylist.

Notice the credit entries listed by order item for each cost element.

The costs of the additional production hour were split according to theapportionment structure for equivalence numbers 5:3.



a) Favorites→ Work in Process→ Individual Processing→ Calculate(KKAX)





Deselect Test Run.

Choose Execute.




2. Compare the calculated total WIP amount with the remaining balance foryour process order. The WIP balance should be zero. The remaining balanceon the process order will be considered production variance. Choose thelayout 1SAP03 to display the WIP balance.




Enter order item * .

Choose Execute.

To confirm the WIP balance, select the Layouts icon and select layout1SAP02 (cost trend).

The generated WIP balance should be zero. However, there is still anorder balance resulting from the variance generated by the confirmationof operation 330.

Task 4:The production order should now have the status Delivery completed and Finallyconfirmed. Since the settlement type for the order is FUL, variance calculationcan be executed.


1. Using the individual processing transaction, execute variance analysis foryour process order. Calculate the variances for all target cost versions forthe current period. Remain in the variance analysis detailed list displayto answer the following question.




Choose All target cost versions.

Deselect Test Run.

Select Detail list.

Choose Execute.




2. Select cost elements for item 1 and display the variance report. What causedthe variance for cost element 620000? Display the cost element report foritem 2. Do both products indicate a variance for the processing duration?

a) Select the order item.

Choose Cost Elements.

The cost element variance report is displayed.

The variance for cost element 620000 was caused by the additionalproduction hour that was confirmed for operation 330.

Display the cost element report for T-FF3##.

Select the second order item.



Yes, both products indicate a variance for the processing duration.

Task 5:After variances have been calculated, the variance categories can be settled to PAand the process order variance can be settled to FI. In addition, the WIP balancewill be cancelled in FI.


1. Execute settlement for the process order. Use the current period and year.





Deselect Test Run.

Choose Execute.


Access the settlement of the variances by selecting the receiver line for thematerial T-FF1##. The system displays a list of the variance amounts forPA by variance categories and for FI by material.






Select Goto→ Detail list of settled values

Select the first order item.

Choose Receiver.

The variance amounts for PA are listed by variance categories, and thevariance amount for FI is listed by material.

Use the green arrow back and return to the detail list.


Select the entry for Accounting document.

895000 Factory output of production231500 Expenses from Price Differences893000 Work in Process793000 WIP


a) Select Profitability Analysis.

Select the Value fields tab.

Use the Next page icon in the PA document until the value field for thevariance is visible.







Controlling→ Product Cost Controlling→ Cost Object Controlling→ Product Cost by Order→ Period-End Closing→ Settlement→Create PA Transfer Structure (KEI1)

Select PA transfer structure E1.

Confirm the dialogue box for the Operating Concern IDEA.

Select Assignment lines.

Select Assignment 40 (resource usage variance).

Select Value fields.

The value field VV330 is displayed.



Exercise 11: Alternative: Period-EndClosing with Delivered Production Orders

Exercise ObjectivesAfter completing this exercise, you will be able to:� Cancel the WIP at the completion of the order� Execute variance analysis for the production order and analyze the result.� Settle WIP (amount = zero) and variance amounts to Financial Accounting

and Profitability Analysis� Analyze the accounting documents created during settlement� Review the Customizing settings for the PA transfer structure

Business ExampleThe production order had not been settled by the close of the previous period. Sothat WIP balances were generated for the order items and transferred to FinancialAccounting. The production order has now been completed, so the remaining WIPbalances need to be cancelled using WIP calculation, and settled to FinancialAccounting. In addition, since the order uses the full settlement rule (FUL),variances can now be calculated and transferred to Profitability Analysis.

Final confirmation of the process order and posting final delivery of theco-products are prerequisite for the period-end closing activities.

Task 1:Post the final confirmation and the goods receipt for your production order. Thiswill cause additional postings of actual costs to the order.

1. Create the final confirmation for the production order. The remaining 5pieces have been manufactured. The last phase required an additionalprocessing time of 1 hour. Change the duration to reflect the additional hour.When entering the confirmation, select the Final confirmation indicator.Save the confirmation.


3. Display the cost report for the order. What are the material and laborvariances?






2. Compare the calculated total WIP amount with the remaining balance foryour production order. The WIP balance should be zero. The remainingbalance includes balances from production variance.

Task 3:The production now has the status Delivery completed and Final confirmation.Since the settlement type for the order is FUL, variance calculation can beexecuted.


1. Using the individual processing transaction, execute variance analysis foryour production order. Calculate the variances for all target cost versionsfor the current period. Remain in the variance analysis detailed list displayto answer the following question.

2. Select Cost Elements and display the variance report. What caused thevariance for cost element 620000?

Task 4:After variances have been calculated, the variance categories can be settled toPA and the production order variance can be settled to FI. In addition, the WIPbalance will be cancelled in FI.


1. Execute settlement for the production order. Use the current period and year.






Solution 11: Alternative: Period-EndClosing with Delivered Production OrdersTask 1:Post the final confirmation and the goods receipt for your production order. Thiswill cause additional postings of actual costs to the order.

1. Create the final confirmation for the production order. The remaining 5pieces have been manufactured. The last phase required an additionalprocessing time of 1 hour. Change the duration to reflect the additional hour.When entering the confirmation, select the Final confirmation indicator.Save the confirmation.

a) Favorites→ Confirmation→ Enter→ For Operation→ Time Ticket(CO11N)

Enter your order number and operation 70.

Select Enter.



Confirm a duration of 1 additional hour.



a) Favorites→ Production→ Production Control→ Goods Movements→ Goods Receipt (MB31)


Choose To Order.


Select Enter.

Confirm the remaining quantities for R-F1##.





3. Display the cost report for the order. What are the material and laborvariances?



Choose Execute.

Choose Select layout and select layout 1SAP02 (Cost Trend).

The material variance is ______________ caused by the good issue of1 additional goods issue R-B1##. The labor variance is __________caused by the additional 1 hour of duration that was confirmed atoperation 70.



a) Favorites→ Work in Process→ Individual Processing→ Calculate(KKAX)


WIP to Period: current period



Deselect Test Run.

Choose Execute.




2. Compare the calculated total WIP amount with the remaining balance foryour production order. The WIP balance should be zero. The remainingbalance includes balances from production variance.



Choose Execute.


The generated WIP balance should be zero. However, there is still anorder balance resulting from the variances generated by the materialand labor variance from the production confirmations.

Task 3:The production now has the status Delivery completed and Final confirmation.Since the settlement type for the order is FUL, variance calculation can beexecuted.


1. Using the individual processing transaction, execute variance analysis foryour production order. Calculate the variances for all target cost versionsfor the current period. Remain in the variance analysis detailed list displayto answer the following question.




Choose All target cost versions.

Deselect Test Run.

Select Detail list.

Choose Execute.




2. Select Cost Elements and display the variance report. What caused thevariance for cost element 620000?

a) Select the order.



The variance for cost element 620000 was caused by the additionalproduction hour that was confirmed for operation 70.

Task 4:After variances have been calculated, the variance categories can be settled toPA and the production order variance can be settled to FI. In addition, the WIPbalance will be cancelled in FI.


1. Execute settlement for the production order. Use the current period and year.





Deselect Test Run.

Choose Execute.






Access the settlement of the variances by selecting the receiver line forthe material R-F1##. The system displays a list of variance amounts forPA by Variance category and for FI by material.


Choose Receiver.

The variance amounts for PA are listed by variance categories, and thevariance amount for FI is listed by material.

Use the green arrow back and return to the detail list.


Select the entry for Accounting document.

895000 Factory output of production231500 Expense price differences893000 Work in Process793000 WIP


a) Select Profitability Analysis.

Select the Value fields tab.

Use the Next page icon in the PA document until the value field for thevariance is visible.







Controlling→ Product Cost Controlling→ Cost Object Controlling→ Product Cost by Order→ Period-End Closing→ Settlement→Create PA Transfer Structure (KEI1)

Select PA transfer structure E1.

Select Assignment lines.

Select Assignment 40 (Resource usage variance).

Select Value fields.

The value field VV30 is displayed.



Lesson Summary

You should now be able to:� Explain period-end closing with delivered production orders� Explain the differences between the controlling methods of Product Cost by



Unit Summary AC520

Unit SummaryYou should now be able to:� Describe the features of Product Cost by Order� Describe the features of Cost Object Controlling for joint production� Explain process manufacturing master data� Perform goods movements transactions and confirmations for the process

order� Explain period-end closing with partially delivered production orders� Explain WIP at actual cost� Explain period-end closing with delivered production orders� Explain the differences between the controlling methods of Product Cost by



Unit 5Make-to-Order Production with

Controlling by Sales Order

Unit OverviewThis unit shows controlling by sales order in a scenario with multi-levelprocurement of individual required materials. Some procurement levels aredisplayed by a production order based on lot size before the finished product isdelivered to the customer and billed.


� Use a sales order as a cost object� Conduct preliminary costing for a sales order� Analyze the control data of the sales order item� Understand the quantity and value flow in make-to-order production with

sales order controlling using discrete manufacturing� Create a purchase order and post the goods receipt� Explain goods movements on the valuated sales order stock� Analyze the relevant accounting and controlling documents� Give an overview of the sales order period-end closing� Explain requirements types and how requirements classes are determined� Explain entries in the requirements class and the account assignment category� Create statistical cost elements for balance sheet accounts� Execute period-end closing for partially delivered production orders� Execute period-end closing for fully delivered production orders� Explain the integration aspects of production order settlement� Explain the typical activities for period-end closing of a sales order with

sales order controlling� Understand the difference between the revenue-based and cost-based

valuation methods in Results Analysis� Understand when stock or reserves are formed and cancelled during Results

Analysis


Unit 5: Make-to-Order Production with Controlling by Sales Order AC520

� Explain where the values of the sales order are settled


Exercise 12: Master Data and Preliminary Costing .. . . . . . . . . . . . . . . . . . .245Lesson: Simultaneous Costing... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .252

Exercise 13: Simultaneous Costing.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .263Lesson: Customizing ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .277Lesson: Period-End Closing of Production Orders .. . . . . . . . . . . . . . . . . . . . . . . .286Lesson: Period-End Closing of the Sales Order .. . . . . . . . . . . . . . . . . . . . . . . . . . .296

Exercise 14: Period-End Closing of the Sales Order ... . . . . . . . . . . . . . . .321




Lesson Overview


� Use a sales order as a cost object� Conduct preliminary costing for a sales order� Analyze the control data of the sales order item

Business ExampleA customer has ordered a product (pump R-F1##) from you. This product isnot in stock, but is manufactured made-to-order. The final product consists ofcomponents, which must first be acquired in a multi-level procurement process.A semi-finished product is specially manufactured, a raw material speciallypurchased.

Master Data

Figure 99: Make-to-Order Production with Product Cost by Sales Order



Product Cost by Sales Order is recommended if the following information isessential to your business:

� How high is my profit margin with this special sales order?� How can I map special sales costs?� How high is my funds commitment? Is this sales order performing well

from a costing point of view?� Where did late customer changes affect my production costs heavily?

In this scenario you have the ability to:

� Assign special direct costs of sales and distribution to the sales documentitem

� Allocate process costs to the sales document item� Allocate sales overhead to the sales document item

You can also use Results Analysis to:

� Create reserves for expected losses automatically� Add reserves for foreseeable risks manually� Calculate Goods in Transit when goods have already been shipped but not

yet invoiced

Figure 100: Discrete Manufacturing

Frequent changes to the product to be manufactured are characteristic of discretemanufacturing. The products are typically manufactured in individually definedlots with shifting work center sequences. Costs are calculated on the basis oforders and individual lots. In repetitive manufacturing, products are changedless frequently and are not manufactured in individual lots. Instead, a product ismanufactured for a particular time period at a particular rate, and yields counted atthe end of a period at the latest.



In discrete manufacturing, production involves several operative processes, andoperations can be assigned to different work centers. The sequence of workcenters is determined in routings, which can often be very complex. There can bewait times between the different operative processes. Semi-finished products arefrequently placed in interim storage prior to further processing.

In discrete manufacturing, component materials are staged with specific referenceto the individual production lots. Confirmations of the various steps and processesdocument the production progress and serve to fine-tune control.

Figure 101: Product Cost by Sales Order

Product Cost by Sales Order (in short: Sales Order Controlling) is recommendedfor complex scenarios in make-to-order production in the following situations:

� Manufacturing in-house with reference to a sales order� Purchasing products with reference to a sales order and reselling them to

your customers� Providing services with reference to a sales order

Sales Order Controlling allows you to:

� Calculate and analyze planned costs and actual costs by sales order item� Calculate and analyze planned revenues and actual revenues by sales order

item� Calculate the value of your inventory of finished and semi-finished products� Create reserves automatically� Transfer data to Financial Accounting (FI)� Transfer data to Profitability Analysis (CO-PA)� Transfer data to Profit Center Accounting (EC-PCA)



Figure 102: Additional Key Feature of Sales Order Controlling

You can create a production order for a sales order if, for example, a product ismanufactured using BOMs and routings.

Figure 103: Controlling by Sales Order vs Make-to-Order Production

The slide shows the relationship between Controlling by Sales Order, Controllingby Order and Controlling by Period.



Complex make-to-order production could involve order-specific changes orcomplete product redesign. The costs and revenues of such products must beplanned and monitored in detail.

Different methods are available for complex make-to-order production:

� Tracking costs directly on the sales order item (make-to-order) or� Using projects for complex production, such as in plant engineering

(engineer-to-order).

The inventories assigned to sales orders or projects are valuated in both cases. Thecosts of a sales order or a WBS element are not generated with the goods receipt foran order or a production order, as is the case for unvaluated inventories, but onlywith material utilization for, for example, a production order or collective order.

Preliminary Costing

Figure 104: Sales Order Controlling: Planning Options

You can plan sales order costs with product costing or unit costing, depending onwhether you are using a logistical quantity structure (BOM, routing). You canpre-define the costing method in Customizing or at the beginning of the costing.

If you decide to use unit costing, the system will not save a cost component split.This also applies when product costing is post processed with unit costing. In suchcases, the system cannot transfer a cost component split to CO-PA.

Costing results are updated as plan values to the sales order item.



Figure 105: Product Cost Planning Sales Order

Costing details (e.g. unit costing) are contained in sales order costing. The costobject displays only the cost of goods sold on cost element levels.

Figure 106: Product Cost Planning Sales Order: Overhead

Overheads for sales and administration are calculated using the pricing procedureof the requirement class.

Overheads for materials and production costs are calculated using the pricingprocedure of the valuation variant of the costing variant.



Figure 107: Costing Sales Order BOM (1)

You can cost the sub-assemblies before the sales order BOM is complete. Thiscosting can be used to value the inventory for these sub-assemblies.

With the following menu path you can cost a sub-assembly:

Accounting→ Controlling→ Cost Object Controlling→ Product Cost by SalesOrder→ Master Data/Planning→ Create

You can only use this function with valuated sales order stock.

Figure 108: Costing Sales Order BOM (2)

You can transfer the planned costs, which are already calculated for thesub-assemblies, into the sales order cost estimate for the finished good. Thisimproves performance significantly.



Figure 109: Exploding Requirements

An indicator determines whether the following requirements are allowed for thedependent requirements of the material:

� In �Individual requirements�, requirement quantities of the dependentmaterial are listed individually.

� In �Collective Requirements�, the requirement quantities of the dependentmaterial are listed collectively.

The individual/collective requirement indicator also applies to all lower levelBOM components.

For each in-house component with individual requirements, a separate order withexact lot sizes is created (that is, orders created for different sales orders cannotbe grouped together).

You can maintain this indicator in the following places:

� In the material master record� In Customizing under Basic Data, under Define explosion types in IMG (for

the explosion type of the BOM item).

The setting for the explosion type overrides that in the material master record.



Figure 110: Plan Revenue

Pricing is carried out in the module �Sales and Distribution (Sales OrderManagement)�, and generates the sales price in a price determination schema,based on pre-defined prices and costing results. This takes into considerationdiverse specifics (such as article- or customer-specific surcharges and discounts,scaled calculations). The price determination schema operates on the basis ofso-called �Conditions�.

Figure 111: Pricing Procedure



The pricing procedure lists all condition types permitted in pricing.

You determine how the system is to use conditions by specifying requirementsfor each condition.

The sequence in which the system accesses conditions in the business document isalso determined here.

The reference level provides a method with which to specify a different basis forthe condition type calculation and for grouping conditions for subtotals.

The pricing procedure can contain any number of subtotals between gross andnet price.

You can mark a condition types as follows:

� Mandatory condition� Manually entered condition� For statistical purposes only

Figure 112: Transferring Costing Data to Pricing

The definition of the condition type per requirement class allows you to determinedifferent condition types for the different items of a SD order (= sales order).For example, you could carry out pricing for one item on the basis of a pricingprocedure, while forwarding the value of the sales order pricing of another item inthe same document only for statistical purposes. The sales order costing refersto the to the sales order item.

If you do not store a condition type in the requirements class, the condition type isdetermined via the sales document type. In this case, the condition type is validfor all sales document items of the sales document.



In the standard version of the SD system, two condition types are provided forthe cost transfer of order items:

� EK01: If you choose this condition type, the result of the sales order costingis first printed to the pricing screen for the item. The value can be used as thebasis for price calculation.

� EK02: If you choose this condition type, the result of the sales order costingis simply a statistical value, which you can compare with the price.

Figure 113: Assembly Type 2

As of release 4.5, you can use the requirement class to control which preliminarycosting is to be taken over by the SD condition of the sales order item in assemblytype 2 (�production order, network or service (statistical processing)�):

� Preliminary costing of the production order or� Planned costs of the sales order costing




Exercise ObjectivesAfter completing this exercise, you will be able to:� Use a sales order as a cost object� Conduct preliminary costing for a sales order� Analyze the control data of the sales order item

Business ExampleThe finished product R-F1## is produced in plant 1000. R-F1## is produced withindividually required materials. Verify the existing master data for control of theseindividually required materials. After you have confirmed that all master data andcustomizing data is correct, create a sales order for material R-F1##.

Task 1:Start by creating a sales order for the finished good R-F1##.

1. Create a sales order for the material R-F1##:

Enter the following data:

Order type: OR (standard order)Sales Organization: 1000

Distribution Channel: 10

Division: 00

Sold-to party: 1171

Purchase order number: 44##

Material: R-F1##

Order Quantity: 10 pieces

Choose: Enter

Accept the proposed delivery date.

2. Check the following control data of the sales order item.

What item category does the item have?

_________________________________________________________




What Results Analysis key and costing sheet were transferred to the salesorder? How were the defaults for the costing sheet and Results Analysis keycalculated for the sales order item?

_________________________________________________________

What requirements type was determined for the sales order item?

_________________________________________________________

3. Save your sales order and note the sales order number.

_________________________________________________________

Task 2:Check the BOM (listed below) for R-F1##. Answer the following questions bychecking the material master settings for the individual/collective requirementsindicator for the BOM components.

1. Which assemblies will be produced specifically for the sales orderrequirement?

________________________________________________________

2. Which materials will be issued from anonymous stock?

_________________________________________________________

3. Change the individual/collective requirements indicator for material R-T4##so that this component will be purchased specifically for the sales order.

_________________________________________________________

Figure 114: BOM for Product R-F1##



Solution 12: Master Data and PreliminaryCostingTask 1:Start by creating a sales order for the finished good R-F1##.

1. Create a sales order for the material R-F1##:


Order type: OR (standard order)Sales Organization: 1000

Distribution Channel: 10

Division: 00

Sold-to party: 1171

Purchase order number: 44##

Material: R-F1##

Order Quantity: 10 pieces

Choose: Enter

Accept the proposed delivery date.

a) Menu path:

Logistics→ Sales and Distribution→ Sales→ Order→ Create

b) Accept the delivery date proposal by selecting Delivery Proposal.

2. Check the following control data of the sales order item.

What item category does the item have?

_________________________________________________________

What Results Analysis key and costing sheet were transferred to the salesorder? How were the defaults for the costing sheet and Results Analysis keycalculated for the sales order item?

_________________________________________________________

What requirements type was determined for the sales order item?




_________________________________________________________

a) What item category does the item have?

(Sales tab)

TAN

(Standard item)_________________________________________

b) What Results Analysis key and costing sheet were transferred to thesales order? How were the defaults for the costing sheet and ResultsAnalysis key calculated for the sales order item?

To check the Results Analysis key and the costing sheet, which areassigned through the requirements class, select the following menupath:

Goto→ Item→ Account assignment

Results Analysis key: SDOR1

Costing sheet: COGS1

c) What requirements type was determined for the sales order item?

(In the Sales overview, select the Procurement tab.)

ZZ2 (Make-to-Order Production with Sales Order Controlling)

3. Save your sales order and note the sales order number.

_________________________________________________________

a)

Task 2:Check the BOM (listed below) for R-F1##. Answer the following questions bychecking the material master settings for the individual/collective requirementsindicator for the BOM components.

1. Which assemblies will be produced specifically for the sales orderrequirement?




________________________________________________________

a) Menu path:

Logistics→ Production→ Master Data→ Material Master→Material→ Display→ Display Current

Material number

Select Enter. SelectMRP 4 in the dialog box.

Select Enter. In the dialog box, enter the following:

Plant : 1000

Choose: Enter

From the MRP4 view in the material master, determine the entry forindividual/collective requirements for each sub-assembly.

(Material: R-B1##, R-B2##, R-B3##, R-B4##).

As the indicator for R-B3## is not selected, the setting of the nexthighest assembly level is used.

2. Which materials will be issued from anonymous stock?

_________________________________________________________

a) The collective requirements indicator is selected for R-B1##, R-B2##and R-B4##. This determines that these sub-assemblies will be issuedfrom anonymous stock to the production order for R-F1##.

3. Change the individual/collective requirements indicator for material R-T4##so that this component will be purchased specifically for the sales order.

_________________________________________________________




Figure 115: BOM for Product R-F1##

a) Ensure that the individual/collective requirements indicator for thematerial R-T4## is not selected (or set to 1). R-T4## will then followthe same control set for R-B3##. MRP will generate a purchaserequisition for R-T4## to cover the individual requirement for R-F1##.



Lesson Summary

You should now be able to:� Use a sales order as a cost object� Conduct preliminary costing for a sales order� Analyze the control data of the sales order item




Lesson Overview


� Understand the quantity and value flow in make-to-order production withsales order controlling using discrete manufacturing

� Create a purchase order and post the goods receipt� Explain goods movements on the valuated sales order stock� Analyze the relevant accounting and controlling documents� Give an overview of the sales order period-end closing

Business ExampleA customer has ordered a product (pump R-F100) from you. This product isnot in stock, but is manufactured make-to-order. The final product consists ofcomponents, which must first be acquired in a multi-level procurement process.A semi-finished product is specially manufactured, a raw material speciallypurchased.

Valuated Sales Order Stock

Figure 116: Example: Valuated Sales Order Stock



Figure 117: Sales Order Controlling: Planning

If a logistical quantity structure (BOM, routing) is present, you can calculate theplanned costs of the sales order using product costing, otherwise, use unit costing.

Figure 118: Material Requirements Planning

With multi-level MRP (Material Requirement Planning), the independent anddependent requirements are calculated for the sales order.

The example used in the course creates 2 production orders and 1 purchase order.In addition, preliminary costings can be optionally run on the production orders.



Using the valuated sales order stock causes all goods movements from or to thisstock to correspondingly debit or credit the consumer or supplier.

Figure 119: Goods Receipt/Invoice Receipt for Raw Material

The goods receipt for the ordered material forms the stock. If price differencesoccur after later consumption, (such as during the invoice receipt), they are postedto the price difference account. With the valuation class in the material master(Accounting View 1), you can specify whether other accounts should be used forcustomer or project stock than for make-to-stock inventory.

If the inventory account is controlled as a statistical cost element (type 90), thesales order and project stock can be displayed in the sales order report as �Fundscommitment�.

Financial Accounting generates the usual posting record for goods receipts, butwith special accounts for the sales order or project stock where applicable.



Figure 120: Goods Issue Raw Material

For valuated sales order stock, the goods issue of the individual requirementsraw material debits the production order with a consumption posting. The stockis reduced correspondingly. Financial Accounting generates the usual postingrecord for goods issues, but with special accounts for the sales order or projectstock where applicable.

Figure 121: Goods Receipt Semi-Finished Material



During goods issue of the semi-finished product, the production order is creditedand a new sales order/project stock formed.

Figure 122: Goods Issue: Components of the Finished Good

The goods issue for the semi-finished individual requirements product debits theproduction order with the value in the sales order stock. The sales order/projectstock is reduced accordingly.

Goods issued for a collective requirements component of the finished product alsodebits the product order. In this case, however, the valuation is determined by thematerial master. If the price control indicator of the material is set to �S�, theproduction order is debited with the standard price; if the price control indicator isset to �V�, the production order is debited with the current moving average price.



Figure 123: Goods Receipt Finished Good

During goods issue of the finished product in sales order/project stock, theproduction order is credited and a new sales order/project stock formed. The valueis determined by the valuation strategy, that is the value in the sales order costing.

Figure 124: Delivery to Customer



The sales order item is debited at the time of delivery of the product to thecustomer. The cost of sales is transferred to Financial Accounting with the goodsissue posting. The sales order/project stock is reduced accordingly.

Results Analysis and Settlement (Overview)

Figure 125: Results Analysis/Settlement (1)

You can use Results Analysis to calculate the stock of �work in process�. You canactivate the costs that indicate relevant options by means of settlement to FinancialAccounting. Results Analysis is recommended when costs do not yet have anyrespective revenues and a period-based accrual of income is therefore to occur.

Figure 126: Invoices



Billing invoices the customer for the goods and services delivered for a salesorder. In Sales and Distribution, you create an invoice (billing document) onthe basis of a reference document. Invoicing (billing) posts the actual revenuesto the sales order.

The price can be calculated in the following ways:

� Using pricing on the basis of conditions (such as material or customer) or� On the basis of the incurred costs if you want to use resource-related billing

When you generate a billing document, the system proposes a billing typedepending on the sample document. The billing type determines the following:

� Which pricing procedure is used for account determination for FinancialAccounting

� Whether the invoices are passed immediately to Financial Accounting


If you no longer wish to map stock or reserves, change the status of the sales orderitem. �Final billing� informs the system that no further revenues are expected,�Technically completed� informs the system that no further costs are expected.In this case, the system does not create further stock and reserves and cancelsexisting stock and reserves on the costs and revenues side.



Figure 128: Settlement of Variances to Profitability Analysis

As manufacturing orders contain the full actual costs of manufacturing a material,you can calculate variances on the level of production orders and settle them toProfitability Analysis (CO-PA).

Figure 129: Settlement of Price Differences to the Sales Order Item



In complex MTO-scenarios, it might make sense to collect the total productioncosts including price differences on the level of the sales order item. In this case,you can define the price difference account as a cost element and post the value tothe sales order item when settlement to FI takes place.

In this case, make sure that variance categories are not settled from productionorder to CO-PA.




Exercise ObjectivesAfter completing this exercise, you will be able to:� Understand the quantity and value flow in make-to-order production with

sales order controlling using discrete manufacturing� Create a purchase order and post the goods receipt� Explain goods movements on the valuated sales order stock� Analyze the relevant accounting and controlling documents

Business ExampleThe finished product R-F1## is produced specifically for the customer in plant1000. For this exercise, you will execute material planning requirements for thesales order and analyze the arising planned orders and purchase requisitions.You will then create production orders and a purchase order and complete thenecessary postings (goods issues, goods receipts, confirmations) to produce theproduct R-F1##. At the end of the exercise, you will create a partial delivery tothe customer.

Task 1:

1. Execute material requirements planning for your sales order. Save the resultsfor all components.

Task 2:Display the stock/requirements list for R-T4##, plant 1000 and view the planningresults. A purchase requisition was created to cover the sales order requirement.

Menu path:

Logistics→ Production→ MRP→ Evaluations→ Stock/Requirements List

Enter material R-T4##, plant 1000, and select Enter.

1. Convert the purchase requisition into a purchase order. Use the purchasingorganization 1000, vendor 1000, purchasing group 010 and company code1000. The price is 25 EUR.

2. Save your purchase order and record the purchase order number. If thepop-up PO of today already exists appears, proceed by selecting Newpurchase order.

________________________________________________________




3. Go to the information system for Sales Order Controlling and displaythe funds commitment report for your sales order. Check whether thecommitment for the purchase order was updated on the corresponding salesorder item.

Task 3:From inventory management, process goods receipt for the material R-T4## andreview the valuated special stock report.

1. Process the goods receipt:

Menu path:

Logistics→ Materials Management→ Inventory Management→ GoodsMovement→ Goods Receipt→ For Purchase Order→ PO Number Known

Now enter the following data:

Purchase Order: your purchase ordernumber

Choose: Enter

Set the OK indicator for the purchase order item.

Select: Save

2. In the valuated special stock report, determine if the material R-T4## isshown as valuated special stock.

Task 4:Display the stock/requirements list for R-B3##, plant 1000 and view the planningresults.

Menu path:


Enter material R-B3##, plant 1000, and select Enter.

1. The list displays the planned order created to fulfill the dependentrequirement of your sales order. Convert this planned order to a productionorder.

2. Display the assignments for the production order. Is the production orderassigned to the sales order?

___________________________________________________

___________________________________________________




3. Display the assignments for the production order. What is the settlementreceiver?

___________________________________________________

___________________________________________________


5. Save the production order and note the production order number.

_______________________________________________________

Task 5:Proceed with the manufacturing of material R-B3##.

1. Issue material R-T4## to the production order for R-B3##. Use movementtype 261, plant 1000, storage location 0001. Does the operation create anaccounting document?

______________________________________________________

______________________________________________________

______________________________________________________

2. Return to the production control menu. Enter the production confirmation(time-ticket based) for the last operation, confirm a quantity of 10and increase the proposed activity quantity to 2 hours. Save the finalconfirmation.

3. Branch to the information system and check the actual costs for theproduction order. Was the production order credited for the goods receipt ofR-B3##? How was the value of the goods receipt determined?

______________________________________________________

______________________________________________________

______________________________________________________

Task 6:Return to the stock/requirements list for R-F1##. When MRP was executed foryour sales order, a planned order was created for R-F1##.

Menu path:


Enter material R-F1##, plant 1000, and select Enter.

1. Convert this planned order to a production order.




2. Release and save the production order. Write down the production order num-ber. _______________________________________________________

Task 7:Proceed with the manufacturing of material R-F1##.

1. Issue the material for the production order for R-F1##. Use movement type261, plant 1000, and storage location 0001.

2. Return to the production control menu. Enter a partial confirmation of only5 pieces for the production order for R-F1##. Confirm a quantity of 5 andsave the partial confirmation.

3. Go back to the stock overview for material R-F1##. Is the goods receiptfor the production confirmation of 5 pieces displayed as sales order stock?What is the total stock quantity and stock value for the valuated sales orderstock of R-F1##?

Task 8:5 of the ordered 10 pumps are now available for delivery.

1. Create a delivery for the 5 pumps.


Shipping point: 1000

Delivery date: today’s date plus 10days

Order: your sales order number

Note the delivery number.

______________________________________________________

Hint: If you cannot enter a pick quantity, you must create a transferorder. This is done as follows:

In the menu above select Subsequent Functions→ Create TransferOrder Enter: Warehouse number 010, plant 1000, operation �In thebackground� and �Copy pick quantity� 2. You can save your data byselecting Enter, or select �Save Yes� when prompted.

2. Display the goods issue document and determine if any financial accountingor cost accounting documents were created for the goods issue.



Solution 13: Simultaneous CostingTask 1:

1. Execute material requirements planning for your sales order. Save the resultsfor all components.

a) Menu path:

Logistics→ Production→ MRP→ Planning→ Single-Item, SalesOrder

Enter your sales order number and item 10. Select Enter twice. Savethe MRP result for R-F1##. If the window Next Stopping Point appears,select Proceed without stopping, and then Continue.

Task 2:Display the stock/requirements list for R-T4##, plant 1000 and view the planningresults. A purchase requisition was created to cover the sales order requirement.

Menu path:


Enter material R-T4##, plant 1000, and select Enter.

1. Convert the purchase requisition into a purchase order. Use the purchasingorganization 1000, vendor 1000, purchasing group 010 and company code1000. The price is 25 EUR.

a) To convert the purchase requisition into a purchase order: double-clickthe purchase requisition, and select Purchase order (Convert purchaserequisition to purchase order).

Enter the vendor and purchasing organization, and select Enter. Fromthe selection screen, select the purchase requisition, and press Adopt.

If the pop-up PO of today already exists appears, proceed by selectingNew purchase order.

If necessary, enter a price of 25 EUR.

2. Save your purchase order and record the purchase order number. If thepop-up PO of today already exists appears, proceed by selecting Newpurchase order.

________________________________________________________

a)




3. Go to the information system for Sales Order Controlling and displaythe funds commitment report for your sales order. Check whether thecommitment for the purchase order was updated on the corresponding salesorder item.

a) Menu path:

Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Sales Order→ Information System→ Reports for Product Cost by Sales Order→ Detailed Reports→For Sales Order


Sales order: your sales ordernumber

Item: 10

Select: Execute

Go to the Funds commitment layout.

Yes, the commitment was updated on the sales order item.

Task 3:From inventory management, process goods receipt for the material R-T4## andreview the valuated special stock report.

1. Process the goods receipt:

Menu path:

Logistics→ Materials Management→ Inventory Management→ GoodsMovement→ Goods Receipt→ For Purchase Order→ PO Number Known

Now enter the following data:

Purchase Order: your purchase ordernumber

Choose: Enter

Set the OK indicator for the purchase order item.




Select: Save

a) Menu path:

Logistics→ Materials Management→ Inventory Management→Goods Movement→ Goods Receipt→ For Purchase Order→ PONumber Known

Enter your purchase order number and set the OK indicator for thepurchase order item.

2. In the valuated special stock report, determine if the material R-T4## isshown as valuated special stock.

a) Menu path:

Logistics→ Materials Management→ Inventory Management→Environment→ Stock→ Valuated Special Stock


Material: R-T4##

Choose: Execute

Yes, R-T4## is displayed as valuated sales order stock.

Task 4:Display the stock/requirements list for R-B3##, plant 1000 and view the planningresults.

Menu path:


Enter material R-B3##, plant 1000, and select Enter.

1. The list displays the planned order created to fulfill the dependentrequirement of your sales order. Convert this planned order to a productionorder.

a) To convert the planned order: double-click the planned order, andselect Prod.ord (Convert planned order to production order).

2. Display the assignments for the production order. Is the production orderassigned to the sales order?

___________________________________________________




___________________________________________________

a) Select the Assignment tab.

The production order is assigned to the sales order item for materialR-F1##.

3. Display the assignments for the production order. What is the settlementreceiver?

___________________________________________________

___________________________________________________

a) Menu path:


Settlement Rule: 100 % to material


a) To release the production order:

Select the following in the production order header:

Functions→ Release

5. Save the production order and note the production order number.

_______________________________________________________

a) (Select Refresh in the stock/requirements list to record the productionorder number).

Task 5:Proceed with the manufacturing of material R-B3##.

1. Issue material R-T4## to the production order for R-B3##. Use movementtype 261, plant 1000, storage location 0001. Does the operation create anaccounting document?

______________________________________________________

______________________________________________________




______________________________________________________

a) Menu path:

Logistics→ Materials Management→ Inventory Management→Goods Movement→ Goods Issue

Enter movement type 261, plant 1000, storage location 0001. Select ToOrder and enter your production order number for R-B3## in the dialogbox that appears. Select Continue and save the goods issue document.

Yes, an accounting document is created. To display the accountingdocument:

Menu path:

Goods issue→ Display

Enter the material document number. Select Enter. Select AccountingDocuments.

2. Return to the production control menu. Enter the production confirmation(time-ticket based) for the last operation, confirm a quantity of 10and increase the proposed activity quantity to 2 hours. Save the finalconfirmation.

a) Menu path:

Logistics→ Production→ Production Control→ Confirmation→Enter→ For Operation→ Time Ticket


Order: your production ordernumber

Operation: 0070

Confirmation type: Final confirmation

Select: Enter

Increase the proposed activity quantity to 2 hours and save theconfirmation.

3. Branch to the information system and check the actual costs for theproduction order. Was the production order credited for the goods receipt ofR-B3##? How was the value of the goods receipt determined?

______________________________________________________

______________________________________________________




______________________________________________________

a) Menu path:



Order: your production ordernumber

Select: Execute

Select the Plan/Actual Comparison layout.

Yes, the production order was credited for the goods receipt of R-B3##.The value was determined from the sales order costing for R-B3##.This can be verified by displaying the cost estimate for the sales orderitem.

Task 6:Return to the stock/requirements list for R-F1##. When MRP was executed foryour sales order, a planned order was created for R-F1##.

Menu path:


Enter material R-F1##, plant 1000, and select Enter.

1. Convert this planned order to a production order.

a) To convert the planned order: double-click the planned order, andselect Prod.ord (Convert planned order to production order).

2. Release and save the production order. Write down the production order num-ber. _______________________________________________________

a) To release the production order: Select the following in the productionorder header:

Functions→ Release

Save

(Select Refresh in the stock/requirements list to record the productionorder number).




Task 7:Proceed with the manufacturing of material R-F1##.

1. Issue the material for the production order for R-F1##. Use movement type261, plant 1000, and storage location 0001.

a) Logistics→ Materials Management→ Inventory Management→Goods Movement→ Goods Issue

Enter movement type 261, plant 1000, storage location 0001. Select ToOrder and enter your production order number for R-F1## in the dialogbox that appears. Select Continue and save the goods issue document.

(To view all materials, select Page Down on your keyboard).

2. Return to the production control menu. Enter a partial confirmation of only5 pieces for the production order for R-F1##. Confirm a quantity of 5 andsave the partial confirmation.

a) Menu path:

Logistics→ Production→ Production Control→ Confirmation→Enter→ For Order

Enter the order number, then select Enter. Enter a quantity of 5 andcheck the partial confirmation. Save the confirmation.

3. Go back to the stock overview for material R-F1##. Is the goods receiptfor the production confirmation of 5 pieces displayed as sales order stock?What is the total stock quantity and stock value for the valuated sales orderstock of R-F1##?

a) Menu path:

Logistics→ Materials Management→ Inventory Management→Environment→ Stock→ Valuated Special Stock


Material: R-F1##

Sales Document: your sales ordernumber

Sales Document Item: 0010

Select: Execute

Yes, the 5 pieces of R-F1## are displayed as sales order stock.




Task 8:5 of the ordered 10 pumps are now available for delivery.

1. Create a delivery for the 5 pumps.



Delivery date: today’s date plus 10days



______________________________________________________

Hint: If you cannot enter a pick quantity, you must create a transferorder. This is done as follows:

In the menu above select Subsequent Functions→ Create TransferOrder Enter: Warehouse number 010, plant 1000, operation �In thebackground� and �Copy pick quantity� 2. You can save your data byselecting Enter, or select �Save Yes� when prompted.

a) Menu path:

Logistics→ Sales and Distribution→ Sales→ Order→ SubsequentFunctions→ Outbound Delivery



Selection date: today’s date plus 10days

Order: your sales ordernumber

Select: Enter

Proceed with the steps for picking.

Select the Picking tab.





Storage location: 0002

Pick quantity: 5

Delivery quantity: 5

Post the goods issue.


______________________________________________________

Hint: If you cannot enter a pick quantity, you must create atransfer order. This is done as follows:

In the menu above select Subsequent Functions→ CreateTransfer Order Enter: Warehouse number 010, plant 1000,operation �In the background� and �Copy pick quantity� 2.You can save your data by pressing return or select �Save:Yes� when prompted.

2. Display the goods issue document and determine if any financial accountingor cost accounting documents were created for the goods issue.

a) From delivery processing, select: Delivery → display, thenEnvironment→ Document Flow. Select the line GD goods issues, thendisplay Environment→ Document. Select Accounting Documents.

Accounting documents were created for the goods issue. The value isbased on the inventory costing, which was determined by the salesorder costing.



Lesson Summary

You should now be able to:� Understand the quantity and value flow in make-to-order production with

sales order controlling using discrete manufacturing� Create a purchase order and post the goods receipt� Explain goods movements on the valuated sales order stock� Analyze the relevant accounting and controlling documents� Give an overview of the sales order period-end closing


AC520 Lesson: Customizing

Lesson: Customizing

Lesson Overview


� Explain requirements types and how requirements classes are determined� Explain entries in the requirements class and the account assignment category� Create statistical cost elements for balance sheet accounts

Business ExampleA customer has ordered a product (pump R-F100) from you. This product isnot in stock, but is manufactured make-to-order. The final product consists ofcomponents, which must first be acquired in a multi-level procurement process.A semi-finished product is specially manufactured, a raw material speciallypurchased. The appropriate settings must be made in Customizing.

Customizing the Scenario

Figure 130: Sales Document Structure

A sales document consists of a header and as many items as necessary. The itemscontain important information for processing the sales process, such as conditions,texts, partners.



Each item contains one or more schedule lines. The first schedule line containsthe requested delivery date. If the order quantity cannot be confirmed for therequested delivery date, the system proposes delivery dates and confirmedquantities in the following lines.

Figure 131: Item Categories

Each item is controlled by an item category. Using the item category, the systemcan process the same material for diverse sales document types differently.

Figure 132: Item Category Determination

The item category is derived by Customizing from the sales document type andthe item category group in the material master record (view �Basic Data� and�Sales 2�).



Figure 133: Requirements Class Determination (1)

Mapping the scenario of the sales order production is controlled mainly by meansof the requirements class , which is found by requirements type. The requirementstype can be derived in two ways, as derived from the table �Check Control ofrequirements type Determination�.

From material master data only:

1. With this method, the system attempts to find a requirements type using thestrategy group in the material master.

2. If the strategy group has not been maintained, the system will determine therequirements type using the MRP group.

3. If the MRP group has not been defined either, the system uses the materialtype to access the relevant control tables.



Figure 134: Requirements Class Determination (2)

From a combination of data from the material master record and the salesdocument:

1. The system attempts to derive the requirements type from the MRP type inthe material master record and the item category in the sales document. If norequirements type is found here, the system attempts to find a requirementstype with the aid of the item category and the MRP area type.

2. If this is not possible, the system finally tries to find a requirements typewith the item category only.

3. If this last attempt fails, the system declares the transaction as not relevantfor the availability check or transfer of requirements.



Figure 135: Customizing: Requirements Class (1)

To be able to collect costs on a sales order item, you must select a requirementsclass that specifies an account assignment category that allows costs and revenuesto be collected on sales order items. Collecting costs and revenues on sales orderitems is recommended in complex make-to-order production. In the standardsystem, the corresponding account assignment category is �E� (make-to-orderproduction with controlling by sales order).

Figure 136: Account Assignment Category E

In the standard system, account assignment category �E� determines that you wantto work with controlling by sales order and separate sales order stock.

On the other hand, if you are working with a valuated sales order stock and do notwant to use the sales order item (item in an inquiry, quotation, or sales order) ascarrying costs and revenues, leave the Consumption posting field in the accountassignment category blank. This is especially recommended for mass production



on the basis of sales orders. In the standard system, the corresponding accountassignment category is �M� (make-to-order production without controlling bysales order).

In some cases, you do want to assign materials from make-to-stock production to asales order item, which carries costs and revenues. This is recommended for spareparts for a make-to-order product of the sales order stock, for example. In thiscase, enter �E� in the Consumption posting field (settlement through sales order).In the standard system, the corresponding account assignment category is �B�.


The �Valuation� indicator determines how the respective sales order stock is tobe valuated. The valuation procedure for dependent requirements of individualrequirements products is oriented by the independent requirements.



Customizing Funds Commitment

Figure 138: Valuation of Sales Order Stock

The valuation in special stock uses a pre-defined strategy sequence, which iscarried out at the time of the first goods receipt in the special stock, and producesresults, which cannot be changed.

� The system calculates the valuation price on the basis of Customer ExitCOPCP002. If this is not activated, the system generates the valuation priceusing a marked sales order cost estimate. This sales order cost estimate canbe based on a unit cost estimate or on a product cost estimate or a mixtureof the two.

� Otherwise the system determines the valuation price using the productionorder cost estimate or the planned costs for the WBS element. If there aremultiple production orders for the same sales order item, the system uses thestandard price that results from the production order that delivers first.

� If no price has been found, the system uses the standard price from thematerial master record for the valuation. The standard price in the materialmaster record may have been calculated in different ways, such as in astandard cost estimate.




If you only want to valuate the valuated sales order stock at the standard priceof the non-allocated warehouse stock, you must set the indicator �Without val.strategy�.



Lesson Summary

You should now be able to:� Explain requirements types and how requirements classes are determined� Explain entries in the requirements class and the account assignment category� Create statistical cost elements for balance sheet accounts



Lesson: Period-End Closing of Production Orders

Lesson Overview


� Execute period-end closing for partially delivered production orders� Execute period-end closing for fully delivered production orders� Explain the integration aspects of production order settlement

Business ExampleA customer has ordered a product (pump R-F100) from your company. Thisproduct is not in stock, but is manufactured make-to-order. The final productconsists of components, which must first be acquired in a multi-level procurementprocess. A semi-finished product is specially manufactured, a raw materialspecially purchased.

After you have completed most of the production, you want to execute period-endclosing for your production orders. The order for the semi-finished productalready has the �Delivery Completed� status, whereas the other one does not.


AC520 Lesson: Period-End Closing of Production Orders

Overview

Figure 140: Period-End Closing

For valuated sales order stock, the period-end closing process for productionorders assigned to a sales order is identical to the period-end closing process formake-to-stock production. In particular, the period-end closing process includesWIP calculation and variance calculation for production orders. When you areusing sales order controlling, you can subsequently execute period-end closingfor the sales order: template allocation, overhead application, Results Analysisand settlement. In contrast, there is no period-end closing for sales orders insales-order-related production without sales order controlling.



Template Allocation, Revaluation, Overhead

Figure 141: Process costs

This is a simplified rule for general cost allocation for production: direct costsfrom other modules (such as Financial Accounting) are assigned directly to costobjects, and overhead costs are assigned to cost centers according to cause.Traditionally, overhead costs are then allocated through various methods (activityallocation, overhead) from the cost centers to the cost objects. When usingactivity-based costing, overhead costs are first assigned from the cost centers,where they are passed on to the cost items, primarily using the template allocationtechnique. Template allocation is a new technique for passing on Overhead CostControlling costs (activity types and processes) according to cause if possible, yetalso �as comfortably as possible� (that is, without manual effort). All objectsof the Controlling are suitable for use as receivers, especially cost objects andprofitability segments of the CO-PA.

� The template allocation technique allocates ABC processes and activitytypes of the cost centers. In principle, all information in the system can beused as the cause value (cost driver).

� The process template is determined dynamically based on the followingparameters:


� The overhead key is either entered directly in the cost object or derivedfrom the overhead group from the material master (costing view 1).

� With the combination of overhead key and costing sheet, you canassign a template in Customizing.



Figure 142: Overhead Cost Allocation using Surcharges

Another method with which to allocate overhead is provided when overhead isapplied to cost objects, which then credit overhead cost objects (cost centers,internal orders). You can define overheads in a costing sheet, which you thenassign to the cost object. The system calculates the amount as a percentageoverhead onto certain consumption cost elements or as an amount dependent on aspecific consumption quantity.

Figure 143: Overhead Costs vs Process Costs



Instead of applying overhead to cost objects, which can hardly be analyzedwithout referring to Customizing, template allocation of processes and activitytypes offers informative and transparent overhead allocation without requiringmuch manual effort when executing period-end closing. Course AC420 providesfurther information on template allocation with processes and activity types.

Work in Process

Figure 144: WIP Calculation in Product Controlling by Order

When controlling by order, period-end closing orients itself to the cost objectstatus. If the cost object does not have the status �Delivery Completed� or�Technically Completed�, the system calculates WIP. Otherwise, the systemcalculates variances.



Figure 145: WIP (Work in Process)

If you control your product cost by order, the work in process is that part of theorder that has not yet been delivered to stock. If no goods receipt has been postedby period-end closing, the work in process is the actual costs to date. If a part ofthe order has been delivered to stock, the work in process is the difference betweenactual costs and the value of the good receipt.

The system updates the financial accounts with the work in process when theorder is settled.



Variance Calculation

Figure 146: Variance Calculation

Variance calculation is an analysis tool for closer examination of problematicdiscrepancies. Product order variances result from either:

� Too many or too few costs debited� Too many or too few costs allocated

Figure 147: Variance Categories



The system calculates variances on the basis of pre-defined variance categories:

� Input price variance: Raw material 1 was entered in the standard costestimate with 10 EUR. (The standard price was selected in accordance withthe valuation strategy). However, the goods movement was valuated with11 EUR when the material was issued from stock. (Since, in accordancewith price control, the moving average price is used for the valuation). Thisresults in a price variance of 1 EUR.

� Input quantity variance: Machine time of 15 minutes was planned. However,17 minutes were confirmed. The activity price for machine time is 5 EURper minute. This results in a quantity variance of 10 EUR.

� Resource-usage variance: Raw material 2 was used instead of raw material1. The costs for both raw material 1 and raw material 2 are reported asresource-usage variances.

� Input variance: As the material price for raw material 1 changed, the materialoverhead is higher than planned. The difference between planned and actualmaterial overheads is reported as an input variance.

� Output price variance: If delivery to stock is made at a price that is notthe standard price (such as the average moving price), the difference isreported as an output price variance. This variance category can only applyto materials processed with a moving average price.

� Remaining variance: If the system cannot calculate any target costs, it willreport only remaining variances.

Figure 148: Integration of Variances

Variances relevant to settlement are calculated based on the cost estimate usedfor valuating the delivery to stock. If collective orders exist for a sales order,the delivery of semi-finished products in the collective order is valuated usingproduction order costing. Consequently, variance calculation requires information



whether the valuation is based on a sales order costing, production order costingor standard costing of the material. You can determine additional target costversions for these variances for the information system. Provided the material isbelow the moving average price control, the variances appear only on productionorder levels.

Variance calculation is not intended for sales order items.



Lesson Summary

You should now be able to:� Execute period-end closing for partially delivered production orders� Execute period-end closing for fully delivered production orders� Explain the integration aspects of production order settlement



Lesson: Period-End Closing of the Sales Order

Lesson Overview


� Explain the typical activities for period-end closing of a sales order withsales order controlling

� Understand the difference between the revenue-based and cost-basedvaluation methods in Results Analysis

� Understand when stock or reserves are formed and cancelled during ResultsAnalysis

� Explain where the values of the sales order are settled

Business ExampleThe pump was produced specifically for the customer and delivered. Deliveryis billed.

Depending on when period-end closing is executed, different values are calculatedfor the sales order during the period-based accrual of income (Results Analysis).These results are then settled: period-based costs and revenues of the sale toProfitability Analysis, stock and reserves to Financial Accounting and ProfitCenter Accounting.

Results Analysis: Principle

Figure 149: Integration of Results Analysis (1)


AC520 Lesson: Period-End Closing of the Sales Order

Results Analysis can calculate the following values among others:

� Inventory values� Reserves for unrealized costs� Reserves for imminent loss� Reserves for complaints and commissions� Cost of sale

Figure 150: Integration of Results Analysis (2)

The results of Results Analysis are then settled to FI, CO-PA and PCA.

You can also settle the following to Financial Accounting (FI) and Profit CenterAccounting (CO-PCA):

� Inventory values� Reserves for unrealized costs� Reserves for imminent loss� Reserves for complaints and commissions� The cost of sale if you are using an unvaluated sales order stock and using

the cost-of-sales accounting method in Financial Accounting.

You can settle the following to Profitability Analysis (CO-PA):

� Cost of sale or calculated revenue� Reserves for imminent loss and complaints



Figure 151: General Approach (1)

The starting point for calculating accrual values is the calculation of a �percentageof completion� for the cost object.


The period-based costs and revenues of the sale are calculated from the percentageof completion. If these values are settled to Profitability Analysis, the profitgenerated here will differ from the profit generated in FI and PCA.




Stock and reserves are calculated in terms of the costs and revenue depending onthe constellation of data.


Then, stock and reserves are transferred to FI and PCA so that the profit generatedthere is the same as the profit in CO-PA.



Figure 155: Method-Based Results Analysis

The system can carry out Results Analysis for cost objects automatically. WhichResults Analysis method you choose depends on your business requirements.Different business objectives as well as different reporting rules for differentbusiness transactions mean that several methods can be used simultaneously. TheResults Analysis method contains the rule for calculating Results Analysis data.

Decision Criteria

� Different legal regulations in different countries determine whetherunrealized profits can or cannot be capitalized.

� For automatic creation of reserves for unrealized costs or reserves forimminent losses plan costs are necessary.

� When should the stock and reserves be cancelled?

Particularly regarding capitalizing unrealized profits, legal regulationsand the applied valuation rules differ widely between different countries,such as between North America and Germany, but also alone between theHGB (German Commercial Code) and IAS/IFRS (International AccountingStandards/International Financial Reporting Standards). This situation demandsdifferent Results Analysis methods, which can be transferred parallel to FinancialAccounting (but using different accounts).

� If you do not want to capitalize unrealized profits, use a Results Analysismethod that can be used to create work in process.

� If you want to capitalize unrealized profits, use a Results Analysis methodthat can be used to create stock from which yield (revenue in excess ofbillings) can be generated.



Some methods of creating work in process and creating revenue in excess ofbillings also allow automatic creation of reserves for unrealized costs or reservesfor imminent losses.

Example: Revenue-Based Method

Figure 156: 01: Revenue-Based Valuation Method

2 examples using the same figures but different methods to calculate accrualvalues are provided to illustrate how Results Analysis works: the revenue-basedand the cost-based method:

The revenue-based method derives the percentage of completion (POC) from therelationship between actual and planned revenue. This means that actual revenueis assessed period-based correctly. The costs relevant to profit are calculated bymultiplying the planned costs by the percentage of completion (POC): (K(pa) =C(p) x R(a) / R(p)). The corresponding stock and reserves are created:

� If the actual costs are greater than the costs relevant to profit, the systemcreates work in process

� If the actual costs are less than the costs relevant to profit, the system createsreserves for unrealized costs

If you are using the revenue-based method with profit realization, the calculatedcost of sales is zero as long as your actual revenue for the period is zero. The workin process then equals the actual costs of the period.

This method provides you with the following capabilities:

� You can create reserves for unrealized costs� You can create reserves for imminent losses� You can use milestone billing� You can report intermediate profits



Figure 157: Example: Revenue-Based Results Analysis (1)

Example:

You have planned revenue of 3,000 and costs of 2,000 for your sales order.

You have actual costs of 1,000 but no revenue. During Results Analysis, thesystem calculates the following data:

Revenue: 0Cost of sales: 0Costs to be capitalized in stock (WIP): 1.000.

No line items are generated for CO-PA by settlement. You then settle thecapitalized costs to FI and EC-PCA. On the basis of posting rules (which must bemaintained in Customizing), settlement generates the following posting: WIP -against inventory change account of 1,000. As the inventory change account issettled to the profit and loss account, actual amounts of 1,000 in profit and 1,000in losses are generated on the profit and loss account. As in CO-PA, FI and PCAdo not generate any profit.




You have actual costs of 1,000 and actual revenue of 1,200. During ResultsAnalysis, the system calculates the following data:

Revenue: 1.200Cost of sales: 800Costs to be capitalized in stock (WIP): 200

Settlement settles revenue and cost of sales to CO-PA, which consequentlygenerates a profit of 400. You then settle the capitalized costs to FI and PCA.Settlement generates the following posting: WIP account against inventory changeaccount 200. As the inventory change account is settled to the profit and lossaccount, actual revenue of 1,200 plus 200 inventory change in profit, and actualcosts of 1,000 in losses are indicated on the profit and loss account. As in CO-PA,FI and PCA generate a profit of 400.





Revenue: 3.000Cost of sales: 2.000Reserves for unrealized costs: 200

Settlement settles revenue and cost of sales to CO-PA, which consequentlygenerates a profit of 1,000. You then settle the reserves to FI and PCA. Settlementgenerates the following posting: Inventory change account against reserve 200.As the inventory change account is settled to the profit and loss account, actualrevenue of 3,000 is indicated in profit and actual costs of 1,800 plus the inventorychange of 200 is indicated in losses by the profit and loss account. As in CO-PA,FI and PCA indicate a profit of 1,000.

Example: Cost-Based Method

Figure 160: 03: Cost-Based Percentage of Completion Method



The cost-based POC method derives the percentage of completion from therelationship between actual and planned revenue. This means that actual costs areassessed period-based correctly. The POC method differs from revenue-basedResults Analysis particularly when actual costs have been incurred, but norevenue has been received. Profit-relevant revenue is calculated by multiplyingthe planned revenue by the percentage of completion (POC): (R(pa) = R(p) x C(a)/ C(p)). The corresponding stock and reserves are created:

� if the actual revenue is greater than the profit-relevant revenue, the systemcreates revenue in excess of billings,

� if the actual revenue is less than the profit-relevant revenue, the systemcreates revenue surplus.

Figure 161: Example: Cost-Based Percentage of Completion Method (1)

Example:

You have planned revenue of 3,000 and costs of 2,000 for your sales order.

You have actual costs of 1,000 but no revenue. During Results Analysis, thesystem calculates the following data:

� Costs affecting net income of the sale (cost of sale): 1.000� Revenue affecting net income: 1.500� Revenue in excess of billings: 1.500

Settlement settles revenue and cost of sales to CO-PA, which consequentlygenerates a profit of 500. You then settle the capitalized costs to FI and EC-PCA.On the basis of posting rules (which must be maintained in Customizing),settlement generates the following posting: Inventory account against inventory



change account 1,500. As the inventory change account is settled to the profit andloss account, actual amounts of 1,500 in profit and 1,000 in losses are generatedon the profit and loss account. As in CO-PA, FI and PCA generate a profit of 500.

Although no revenues have been received, profit has already been capitalized.



Costs affecting net income of the sale (cost of sale): 1.000Revenue affecting net income: 1.500Revenue in excess of billings: 300

Settlement settles revenue and cost of sales to CO-PA, which consequentlygenerates a profit of 500. You then settle the capitalized costs to FI and EC-PCA.On the basis of posting rules (which must be maintained in Customizing),settlement generates the following posting: inventory account against inventorychange account 300. As the inventory change account is settled to the profit andloss account, actual revenue of 1,200 plus 300 inventory change in profit, andactual costs of 1,000 in losses are indicated on the profit and loss account. As inCO-PA, FI and PCA generate a profit of 500.





Costs affecting net income of the sale (cost of sale): 1.800Revenue affecting net income: 2.700Revenue surplus: 300

Settlement settles revenue and cost of sales to CO-PA, which consequentlygenerates a profit of 900. You then settle the capitalized costs to FI and EC-PCA.On the basis of posting rules (which must be maintained in Customizing),settlement generates the following posting: inventory change account againstinventory account 300. As the inventory change account is settled to the profitand loss account, actual revenue of 3,000 in profit, and actual costs of 1,800 plus300 inventory change in losses are generated on the profit and loss account. As inCO-PA, FI and PCA generate a profit of 900.



Method without Planned Costs and Partial Billing

Figure 164: Method without Planned Costs and Partial Billing

�Inventory determination without planned costs and partial billing� provides afurther example. If you use this method, the calculated cost of sales is zero as longas your actual revenue is zero. The work in process is equal to the actual costsduring this time.

If the actual revenue is not zero, the calculated cost of sales is equal to the actualcosts. The work in process is canceled as soon as actual revenues are received.When you bill, it is no longer possible to activate work in process.

The cost portion in stock is canceled when it achieves status TECO.

Hint:

� You cannot create reserves.� This method is not suitable for milestone billing because such

billings result in final cancellation of work in process.� The connection between the cost of sales and revenue is as follows:

� As soon as revenue has been received, the actual costs arefully considered cost of sales. This means that the cost ofsales is neither proportional to the actual revenues, as with therevenue-based method, nor proportional to the quantity sold,as with the quantity-based method. This method provides youwith the following capabilities: you do not need plan values.



Customizing for Results Analysis

Figure 165: Method-Based Customizing

Which Results Analysis method you choose depends on your businessrequirements. A company will normally run different types of processing - andtherefore use different methods of Results Analysis - simultaneously. The ResultsAnalysis method contains the rule for calculating Results Analysis data. You candetermine how accurately the system generates accrual values in Customizing.Simply choose one of the 17 pre-defined methods in �Non-expert mode�. Furtheroptions are available in expert mode.

In make-to-order production, the sales order item goes through several stages,which are represented by different statuses and lead to different results in ResultsAnalysis. In the standard system there are three relevant system statuses:

� REL (released)� FNBL (final billing)� TECO (technically completed)

In Customizing for Sales Order Controlling under Period-End Closing→ ResultsAnalysis state:

� At which status Results Analysis can be performed� At which status the work in process is canceled (optional)� At which status the work in process and reserves are canceled (optional)



Figure 166: WIP and Reserves: Allocation to Cost Elements

Results Analysis saves the Results Analysis data for the sales order item undersecondary cost elements, which you assign in Customizing. To be able to passthe WIP and reserves to Financial Accounting, you must define posting rulesin Customizing so that G/L accounts can be assigned to these secondary costelements.

Figure 167: Results Analysis at Group Level

When you select the line identification level, Results Analysis calculates separatevalues for each line ID. Under certain conditions, this method can result in oneline ID showing work in process while another line ID shows reserves.



Figure 168: Results Analysis at Totals Level

If you select valuation at the totals level, the system calculates work in process,reserves for unrealized costs, reserves for complaints and commissions, andreserves for imminent loss for each order. These values are then distributed to lineIDs according to a method of apportionment specified in the valuation method.

The standard setting for apportionment is:

� Capitalized costs/work in process: cumulative actual costs� Reserves for unrealized costs: difference between planned costs and

cumulative actual costs� Reserves for costs of complaints and commissions: difference between

planned costs and cumulative actual costs� Reserves for imminent loss: display of credit for stock which cannot be

capitalized and stock with the option to capitalize.

If a method of apportionment cannot be used, the system looks for an alternativemethod of apportionment. The system searches in the following order:

� Apportionment numbers (according to the number defined under �Updatefor Results Analysis�)

� Cumulative actual costs� Planned costs� Apportionment numbers with apportionment numbers per line ID = 1



Figure 169: Apportionment of WIP Based on Actual Costs

Settlement

Figure 170: Settlement



Figure 171: Integration of Settlement

The results of Results Analysis are then settled to FI, CO-PA and PCA.

You can settle the following to Financial Accounting (FI) and Profit CenterAccounting (CO-PCA):

� Stock values� Reserves for unrealized costs� Reserves for imminent loss� Reserves for complaints and commissions� The cost of sale if you are using an unvaluated sales order stock and using

the cost-of-sales accounting method in Financial Accounting.

You can settle the following to Profitability Analysis (CO-PA):

� Cost of sales or calculated revenue� Reserves for imminent loss and complaints

During settlement to Profitability Analysis, the generated line item of the CO-PAcan be valuated with the cost component split of the sales order cost estimate orwith the cost component split of a standard cost estimate.



Figure 172: Maintain Settlement Rule

If CO-PA is active, the settlement rule is automatically generated for theprofitability segment when the sales order item is generated.

Figure 173: Settlement Profile

If CO-PA is inactive, you can specify in the settlement profile that the sales ordermust not be settled. If you do settle, a posting to FI in accordance with the postingrules will be made.



Figure 174: Customizing the Settlement Structure

To use the settlement structure, you must first create cost element groups thataggregate the primary and secondary cost elements used for debit postings to yourorders. In Customizing, you link the cost element group to the settlement structurewith a settlement assignment. For each settlement assignment, you stipulate byreceiver type whether the settlement will use the original posted cost elements ora designated settlement cost element.

You might use settlement cost elements:

� To identify costs allocated from orders to receiver and to describe theirpurpose, such as repairs or maintenance

� To reduce data volume by consolidating several debit cost elements underone settlement cost element



Figure 175: PA Transfer Structure

If you want to settle costs and revenue of a sales order item to a profitabilitysegment, you must define a PA transfer structure, which assigns costs and revenueto the value fields in Profitability Analysis. The PA transfer structure consistsof one or more items called PA settlement assignments. When defining the PAtransfer structure, ensure that every debit cost element is represented in thesettlement structure and can only be assigned to one settlement cost element.

If you do not carry out Results Analysis, the posted actual costs and actual revenueof the sales order item will be settled to the profitability segment. The PA transferstructure must contain all cost elements under which costs and revenue can beposted on the sales order item.

Once you have carried out Results Analysis, the Results Analysis data (valuatedactual revenue, cost of sales, and reserves for imminent loss) is settled to theprofitability segment. In this case, the PA transfer structure must contain allResults Analysis cost elements under which data used in Profitability Analysisis posted.

Figure 176: Valuation using Material Cost Estimate



In Profitability Analysis (CO-PA), you can valuate documents by reading the costof goods manufactured in the material cost estimates from Product Cost Planning.You do this by defining costing keys.

Which costing key is used for a particular document can depend on when thedocument is valuated in CO-PA, the record type, the product sold, the materialtype of that product, or any other characteristic in your operating concern.

The following steps in Customizing are necessary to set up valuation usingmaterial cost estimates in your system:

� When you maintain costing keys, you determine which cost estimates thesystem should read in Product Cost Accounting in order to valuate the datain CO-PA.

� Once you have done this, you can assign these costing keys to a product ormaterial type. Alternatively, you can use the flexible assignment functionto assign costing keys to any characteristics in your operating concern forvaluation.

� You then need to use value field assignment to determine for each operatingconcern and at each point of valuation how the cost components in the costcomponent split are to be assigned to the value fields in CO-PA. This mustbe done for each relevant cost component split.

Figure 177: Define Keys for Accessing Material Cost Estimate

Product Cost Planning is used to determine the planned cost of goods manufacturedfor a product. In Profitability Analysis (CO-PA), you can use these material costestimates to valuate the data in CO-PA. These include cost estimates with andwithout quantity structures.



With this function, you determine which cost estimates from Product CostPlanning should be used to value actual or planning data in CO-PA. You do this bydefining costing keys. A costing key is a set of access parameters which are usedin valuation to determine which data in Product Cost Planning should be read.

Normally you need at least 2 costing keys. You use one costing key to valuatea make-to-stock process with a standard cost estimate and another to value amake-to-order process with a sales order cost estimate.

Figure 178: Assign Value Fields

The steps �Assign costing keys to products� or �Assign costing keys to materialtypes� let you assign costing keys to individual products or material types. Theproduct-dependent or material-dependent access of material cost estimates inProduct Cost Accounting is not flexible enough for parallel use of make-to-stockand make-to-order scenarios. To meet this or other requirements, you candetermine the costing keys using your own "strategy" for the flexible assignmentof costing keys.

Use this strategy to determine the costing keys, generally using user-definedassignment tables. As in characteristic derivation in CO-PA, you can also workwith table lookups or your own customer enhancements when setting up thestrategy.



You can use the following methods to define a strategy:

� Table Lookup

A table lookup allows you to access individual data records in any SAP table.You can transfer the contents of individual table fields to target fields of thetype USERTEMP. The USERTEMP fields that have been filled by a tablelookup can then be used in a subsequent strategy step as source fields foran assignment rule. In our scenario we will look up the requirement typeof the sales order item to determine the process.

� User-Defined Assignment Tables

As with the pre-defined assignment tables for products and material types,these user-defined assignment tables let you assign costing keys separatelyfor each point of valuation, record type and plan version. We specify anuser-defined assignment table to assign the requirement type to a costing key.

Figure 179: Assign Value Fields

Here you can assign the components of a cost component structure from ProductCost Controlling to the value fields of your operating concern. Note that youneed to maintain separate value field assignments for each point of valuation inProfitability Analysis (CO-PA).

You can separate cost elements into fixed and variable components beforetranferring them to CO-PA. You can assign as many cost component as you wish(n:1 - relationship) to the same value field for each cost estimate. The values fromthese cost components are then added together in the value field.

If you valuate using multiple material cost estimates simultaneously, the valuesof different cost components within the same cost estimate are aggregated andthen entered in one CO-PA value field.



However, value fields that already contain data from a previous cost estimate arenot overwritten by a later cost estimate. Consequently, you should assign valuefields in Customizing so that the values of different cost estimates are entered indifferent sets of value fields.

You can assign up to six different value fields from your operating concern to eachcost component in the cost component structure. These assignments are indicatedby the value fields entered in the columns Field name 1 through Field name 6.



Exercise 14: Period-End Closing of theSales Order

Exercise ObjectivesAfter completing this exercise, you will be able to:� Explain the typical activities for period-end closing of a sales order with



Analysis� Explain where the values of the sales order are settled

Business ExampleThe pump was produced specifically for the customer and delivered. Deliveryis billed.

Depending on when period-end closing is executed, different values are calculatedfor the sales order during the period-based accrual of income (Results Analysis).These results are then settled: period-based costs and revenues of the sale toProfitability Analysis, stock and reserves to Financial Accounting and ProfitCenter Accounting.

To simulate different phases of the process, you proceed with production anddelivery of the order from the previous section and post the period-end closingactivities (especially the Results Analysis transaction) more than once.

Task:

1. Again, calculate the overhead for the sales order item.

Menu path:

Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Sales Order→ Period-End Closing→Single Functions→ Overhead





Sales Document: your sales order number(previous section)

Item: 10

Period: current period


Background Processing: deselect

Test Run: deselect

Detailed Lists: deselect

Dialog Display: select

Select: Execute

How was the costing sheet transferred into the sales order item?

___________________________________________________

2. At this point, a delivery for 5 pieces has been completed. However, no billingdocument has yet been created for the delivery. Carry out Results Analysisusing the revenue-based valuation method (Results Analysis version 0) andusing the cost-based valuation method (Results Analysis version 1). Analyzethe different results and compare them to the actual/planned comparison forthe sales order. Why are the results different for the two different methods?Save the results of the Results Analysis calculations.

Menu path:

Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Sales Order→ Period-End Closing→Single Functions→ Results Analysis→ Execute→ Individual Processing


Sales Order: your sales order number

Item: 10



Results Analysis version: 0

Full Log: select

Select: Execute

Repeat the same procedure with the cost-based method, but this time useResults Analysis version 1.




Display the logs to obtain additional information on Results Analysiscalculation and the configuration of the Results Analysis key SDOR1.


3. Create the billing document for the partial delivery of 5 pieces from theprevious section.

Menu path:

Logistics→ Sales and Distribution→ Sales→ Order→ SubsequentFunctions→ Billing Document


Document: your delivery number(previous section)

Select: Save

From the document flow, display the billing document and review thefinancial accounting document and the cost accounting document.

4. Now that billing has been completed for the 5 pieces, carry out ResultsAnalysis again using Results Analysis version 0. Is any WIP remaining?Why or why not? Have reserves been calculated?



Item: 10




Full Log: select

Select: Execute

5. Return to the Production Control menu and create the final confirmation foryour production order for R-F1##. Confirm the remaining 5 pieces.

Menu path:

Logistics→ Production→ Production Control→ Confirmation→ Enter→ For Order





Order: your production ordernumber for materialR-F1##

Select: Enter

Select Final conf. and save the production order confirmation.

6. Complete the delivery for the remaining 5 pumps for your sales order item.Create the delivery document and post the goods issue.

Menu path:






Select: Enter

Enter a picked quantity of 5.

Select Post Goods Issue.


___________________________________________________________

7. Create the billing document for the delivery.

Menu path:



Document: your delivery number

Select: Save








Item: 10




Test Run: deselect



Select: Execute

9. Now that billing is complete, execute Results Analysis using version 0. Arethere any WIP or reserves remaining? Why or why not?



Item: 10




Full Log: select

Select: Execute

10. No further costs are anticipated for the sales order item. In the sales order,set the status of the sales order item to Technically completed. What effectshould this have on Results Analysis?

Menu path:

Logistics→ Sales and Distribution→ Sales→ Order→ Change

Select Enter.

Select the sales order item, then

Goto→ Item→ Status

Select the status icon Change.




Select Technically completed and save the sales order.

11. Carry out Results Analysis with Results Analysis version 0. Check if thereare still reserves for unrealized costs. Save the Results Analysis data.



Item: 10




Full Log: select

Select: Execute

Save the Results Analysis.

12. Carry out sales order settlement. Select Detailed Lists to display the settledamounts. From the display, you can select Receiver, Sender or Accountingdocuments to review the corresponding data.

Menu path:

Accounting→ Controlling→ Cost Object Controlling→ Product Cost bySales Order→ Period-End Closing→ Single Functions→ Settlement



Item: 10




Test Run: deselect

Detailed Lists: select

Select: Execute

13. Go to the make-to-order reports, and display the order profit for the salesorder.

To view the order profit:

Menu path:




Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Sales Order→ Information System→Reports for Product Cost by Sales Order→ Detailed Reports→ For SalesOrder

Change the layout by adding the item �Profit� as a new column.



Solution 14: Period-End Closing of theSales OrderTask:


Menu path:

Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Sales Order→ Period-End Closing→Single Functions→ Overhead



Item: 10




Test Run: deselect



Select: Execute

How was the costing sheet transferred into the sales order item?

___________________________________________________

a) The costing sheet is assigned to the sales order item through therequirements class.

2. At this point, a delivery for 5 pieces has been completed. However, no billingdocument has yet been created for the delivery. Carry out Results Analysisusing the revenue-based valuation method (Results Analysis version 0) andusing the cost-based valuation method (Results Analysis version 1). Analyzethe different results and compare them to the actual/planned comparison forthe sales order. Why are the results different for the two different methods?Save the results of the Results Analysis calculations.

Menu path:




Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Sales Order→ Period-End Closing→Single Functions→ Results Analysis→ Execute→ Individual Processing



Item: 10




Full Log: select

Select: Execute

Repeat the same procedure with the cost-based method, but this time useResults Analysis version 1.



a) In a different R/3 mode, repeat the same procedure for the cost-basedmethod, using Results Analysis version 1.

The results are different because Results Analysis version 0 is arevenue-based method, and Results Analysis version 1 is a cost-basedmethod. At this point, no actual revenue has been realized using RAversion 0, therefore, the percentage of completion (POC) is 0%. All ofthe actual costs for the product are considered WIP, or stock from whichrevenue can be generated. The overhead allocation is considered costof sales (COS). The Results Analysis version 1 is a cost-based method.Using this basis for determining the POC, the calculated revenue isdetermined by multiplying the POC with the planned revenue. All ofthe actual costs, which include both product and overhead costs, areconsidered COS.


3. Create the billing document for the partial delivery of 5 pieces from theprevious section.

Menu path:







Select: Save


a) Create the billing document for the partial delivery of 5 pieces fromthe previous section.

Menu path:




Select: Save


4. Now that billing has been completed for the 5 pieces, carry out ResultsAnalysis again using Results Analysis version 0. Is any WIP remaining?Why or why not? Have reserves been calculated?



Item: 10







Full Log: select

Select: Execute

a) Carry out Results Analysis with Results Analysis version 0. Is any WIPremaining? Have reserves been calculated?


Sales Order: your sales ordernumber

Item: 10




Full Log: select

Select: Execute

Billing has been completed for 5 pieces, which means that the POC= R(a)/R(p). C(c) are then determined. At this point, C(c) > C(a), sothere is no WIP. All actual costs for both the product and overheadare considered COS.

Reserves for unrealized costs are created if the calculated costs exceedthe actual costs. (C(c) - C(a) = C(r)).

5. Return to the Production Control menu and create the final confirmation foryour production order for R-F1##. Confirm the remaining 5 pieces.

Menu path:

Logistics→ Production→ Production Control→ Confirmation→ Enter→ For Order



Select: Enter





a) Return to the Production Controlmenu and create the final confirmationfor your production order for R-F1##. Confirm the remaining 5 pieces.

Menu path:

Logistics→ Production→ Production Control→ Confirmation→Enter→ For Order



Select: Enter


6. Complete the delivery for the remaining 5 pumps for your sales order item.Create the delivery document and post the goods issue.

Menu path:






Select: Enter







___________________________________________________________

a) Complete the delivery for the remaining 5 pumps for your sales orderitem. Create the delivery document and post the goods issue.

Menu path:





Order: your sales ordernumber

Select: Enter




___________________________________________________________

7. Create the billing document for the delivery.

Menu path:




Select: Save





a) Create the billing document for the delivery.

Menu path:




Select: Save





Item: 10




Test Run: deselect



Select: Execute

a) Menu path:

Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Sales Order→ Period-End Closing→ Single Functions→ Overhead

9. Now that billing is complete, execute Results Analysis using version 0. Arethere any WIP or reserves remaining? Why or why not?






Item: 10




Full Log: select

Select: Execute

a) Menu path:

Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Sales Order→ Period-End Closing→ Single Functions→ Results Analysis→ Execute→ IndividualProcessing

b) There is no WIP remaining as WIP is cancelled after final billing. Nofurther deliveries are expected. However, reserves may remain if actualcosts are less than calculated costs.

10. No further costs are anticipated for the sales order item. In the sales order,set the status of the sales order item to Technically completed. What effectshould this have on Results Analysis?

Menu path:


Select Enter.

Select the sales order item, then







a) No further costs are anticipated for the sales order item. In the salesorder, set the status of the sales order item to Technically completed.What effect should this have on Results Analysis?

Menu path:


Select Enter.

Select the sales item, then




11. Carry out Results Analysis with Results Analysis version 0. Check if thereare still reserves for unrealized costs. Save the Results Analysis data.



Item: 10




Full Log: select

Select: Execute

Save the Results Analysis.

a) Menu path:


b) Since no further postings are expected on the sales order, you maychange the status of the sales order item to �Technically completed�.This will cancel reserves for unrealized costs.

Save the results of the Results Analysis calculations.




12. Carry out sales order settlement. Select Detailed Lists to display the settledamounts. From the display, you can select Receiver, Sender or Accountingdocuments to review the corresponding data.

Menu path:

Accounting→ Controlling→ Cost Object Controlling→ Product Cost bySales Order→ Period-End Closing→ Single Functions→ Settlement



Item: 10




Test Run: deselect


Select: Execute

a) Carry out sales order settlement. Select Detailed Lists to display thesettled amounts. From the display, you can select Receiver, Sender orAccounting documents to review the corresponding data.

Menu path:

Accounting→ Controlling→ Cost Object Controlling→ ProductCost by Sales Order→ Period-End Closing→ Single Functions→Settlement



Item: 10




Test Run: deselect


Select: Execute




13. Go to the make-to-order reports, and display the order profit for the salesorder.


Menu path:

Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Sales Order→ Information System→Reports for Product Cost by Sales Order→ Detailed Reports→ For SalesOrder


a) Go to the make-to-order reports, and display the order profit for thesales order.


Menu path:





Lesson Summary

You should now be able to:� Explain the typical activities for period-end closing of a sales order with





Unit Summary AC520

Unit SummaryYou should now be able to:� Use a sales order as a cost object� Conduct preliminary costing for a sales order� Analyze the control data of the sales order item� Understand the quantity and value flow in make-to-order production with

sales order controlling using discrete manufacturing� Create a purchase order and post the goods receipt� Explain goods movements on the valuated sales order stock� Analyze the relevant accounting and controlling documents� Give an overview of the sales order period-end closing� Explain requirements types and how requirements classes are determined� Explain entries in the requirements class and the account assignment category� Create statistical cost elements for balance sheet accounts� Execute period-end closing for partially delivered production orders� Execute period-end closing for fully delivered production orders� Explain the integration aspects of production order settlement� Explain the typical activities for period-end closing of a sales order with





Unit 6Controlling by Sales Order WithoutProduction (Service) (optional unit)

Unit OverviewThis unit shows controlling by sales order in a service scenario that works withoutlogistical quantity structures and is not integrated with production logistics.


� Explain the quantity and value flows in Controlling by sales order for aservice

� Explain unit costing for sales orders� Understand when to use resource-related billing� Explain the necessary settings in Customizing� Debit the sales order with direct activity allocations and with actual costs

using the time sheet� Use resource-related billing� Understand network confirmations� Understand Execution Services� Explain the Results Analysis for the sales order� Describe the settlement of the sales order� Explain Customizing for the requirements class� Describe Results Analysis methods� Explain Customizing for resource-related billing (DIP profile)


Exercise 15: Master Data and Preliminary Costing .. . . . . . . . . . . . . . . . . . .359Lesson: Simultaneous Costing... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .364

Exercise 16: Simultaneous Costing.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .371Lesson: Period-End Closing... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .380

Exercise 17: Period-End Closing.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .383


Unit 6: Controlling by Sales Order Without Production (Service) (optional unit) AC520

Lesson: Customizing ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .393




Lesson Overview� Controlling services or assembly with a sales order� Resource-related billing


� Explain the quantity and value flows in Controlling by sales order for aservice

� Explain unit costing for sales orders� Understand when to use resource-related billing� Explain the necessary settings in Customizing

Business ExampleA customer would like to utilize your consulting services for a few days. As this isa simply structured service, you decided to use a sales order as the cost object.

Alternative: A customer places an order with you for a professional installation ofnewly acquired turbines. As this is a simple on-site assembly, a sales order couldbe the suitable cost object. If the customer also wants the turbines themselves,the conception, consulting, and training, the total package will be more complex.As the tasks are provided by different departments of your company but shouldbe subject to a common and consistent Controlling, you would use a project inaddition to the sales order.



Master Data

Figure 180: Sales Order

In standard cases, make-to-order production assumes that the customer places anorder before we become active (first the sales process, then the service creationprocess). With the account assignment category in Customizing, you can definewhich cost objects you want to use for the account assignment of costs and anyrevenue.

Figure 181: Scenarios: Master Data and Combinations



In addition to the sales order, other cost objects and combinations of multiple costobjects are available for sales-order-related and engineer-to-order production. Asper the graphic above, the following options are available:

� 1 and 2 represents processes of make-to-order production

� For 1, the sales order item serves as the sole account assignment objectfor costs and revenue, which is useful when the provided functions ofthe sales order item suffice for representing the Cost Object Controllingscenario. If this is not the case, such as when BOMs and routings areto be processed or a detailed planning is to take place, additional costobjects can be added to the scenario. The typical account assignmentcategory is �E�.

� For 2, a network was added. The network contributes a logisticalquantity structure (such as internal activities, external activities,material) that can also be used for automatic planning (cost estimate).Scheduling and capacity monitoring are also possible. The costs canbe assigned to the sales order item as well as network operations. Thenetwork is generally settled to the sales order item. Revenue is alsoassigned to the sales order item using billing. The typical accountassignment category is �E�.

� 3 and 4 represents processes of customer project production.

� For 3, a project is created in addition to the sales order. This is useful iftypical abilities of he project are required in the Cost Object Controllingscenario: such as budgeting, availability control, PS Cash Management,Easy Cost Planning, employee assignment, division of the endeavorinto various subprojects that can represent various tasks, responsibilityareas and assignments (profit center, company code). In this scenario,the project is the leading object. That means, the sales order item isnot controlled as a cost object but assigned to a billing element of theproject. Costs and revenue are assigned to accounts on the project. Thetypical account assignment categories are �G�, �D� and �Q�.

� For 4, a network is automatically immediately created using the salesorder. A project is automatically created for this network (derived froma standard network and a standard project). This is called assemblyprocessing. This option is useful if you already know that a networkand a certain project with a certain structure will be required when thesales order item is created, without having to consider other alternativesfor procurement and representation. The typical account assignmentcategories are �D� and �Q� (with KZVBR = P).

The account assignment category D requires you to use unvaluated sales orderstock.



Figure 182: Project Controlling: Project Maintenance with Project Builder

You can use Project Builder to create or change objects of the project (projectdefinition, WBS elements, activities, activity elements, PS texts, documents,milestones, material components). You can work with detailed screens, lists, orwith graphics (hierarchy graphics, network structure graphics) (1 - 4).

You can use operative project structures (work breakdown structures, networks) orstandard structures (standard work breakdown structures, standard networks) as atemplate, in addition to manually creating project structures (7).

You can include work breakdown structures, standard work breakdown structures,and standard networks in an existing project structure (5).

When you create projects, you can copy an operative project or standard project,including all subordinate objects (WBS elements, activities, PS texts, documents,milestones, components) (6).



Figure 183: Work Breakdown Structures: Functions

Work breakdown structures are the basis for further planning steps in the project.The focus is on the planning, analysis, description, control, and monitoring ofcosts, basis dates, and the budget.

Dates, costs, and outgoing payments are often planned with activities that areassigned to WBS elements.



Figure 184: Cost Project I/00##: Project Structure

Use operative indicators to set the properties of a WBS element and to specifywhich tasks the WBS element takes on in the project execution.

� Classify WBS elements as planning elements on which you want to manuallyplan costs.

� Classify WBS elements as account assignment elements on which you wantto post actual costs.

� Classify WBS elements as billing elements on which you want to postrevenue.

The �Statistical� indicator determines whether a WBS element is only used forstatistical purposes or whether it can be debited with real costs.

In the example of the graphic above, you can plan up to level 2 of the projecthierarchy. Subordinate WBS elements starting with level 3 are purely accountassignment elements. The WBS element I/00##-1 is also a billing element.

The Sales Order as a Cost Object

A single sales order is enough for the previous example.



Figure 185: Sales Order Controlling for Services

This example shows the creation of a service such as a consultation or assemblycarried out with the customer. As the sales order item is controlled as a cost object,the costs of the service are collected directly on the sales order item.

The sales order can be billed and customer or activity-specific or condition recordscan be taken into account. You can choose various forms of billing:

� Starting from a standard price, a sales price is derived using the pricedetermination schema of the SD.

� Starting from the costing result of the sales order or project, a sales price isderived using the price determination schema of the SD.

� The sales price is found based on the actual expense in resource-relatedbilling.

The following process is represented in our example:

� Costs are charged to the order through goods issues, posting internalactivities, travel expense reporting, etc.

� Resource-related billing is run. The revenues are calculated in SD pricingon the basis of the billed line items.

� The sales order is settled to Profitability Analysis (CO-PA).

Option: Resource-Related Billing



Figure 186: Resource-Related Billing

The billing can be carried out based on planned revenue (with or without a billingplan) or based on the actual costs with a resource-related billing which generatesso-called �dynamic items� from the cost information (for example, costs formaterial and personnel). Before a billing request is created, you will be shownan overview screen containing relevant information that you can modify thatenables you to determine what the billing request should look like. You generatethe billing request from this overview screen. You can use this screen for example,to simulate prices or save the information itself. This is also where you determinewhich data the system copies to the billing request after you have finished workingwith the overview screen.

There are two aggregation levels:

Level 1: The system aggregates the data records for the overview screeninto dynamic items.Level 2: The system generates a billing request using the data from thedynamic items. If necessary, the data is reaggregated based on the assignedmaterials. Aggregation depends on the settings in the profile of the �dynamicitem processor�.

If you do not want to bill a customer for a dynamic item, you can enter yourreason (for example, warranty) in the overview screen for dynamic items as anapportionment reason. The reason will only be used for internal purposes suchas calculating profits.

You follow the same procedure as above when creating a quotation from a serviceorder.



Figure 187: Dynamic Item Processor

The dynamic item processor is a tool that the system uses to summarize data ondynamic items during resource-related quotation creation and billing (for example,line items that arise through the posting of goods movements, completionconfirmations or surcharges). Further entries are made according to use . Youcontrol the creation of dynamic items in Customizing with the profile of the�dynamic item processor� (DIP profile).

You can use the DIP profile for creating quotations and billing (bothresource-related and flat-rate).

Assignment to the DIP profile is performed in the service order header or in thesales order item. You can enter the default profile when making customizingsettings for service order types or sales document item types.

You will find the customizing settings for quotation creation and billing in theIMG under Plant Maintenance and Customer Service→Maintenance and ServiceProcessing→ Basic Settings Basic Settings→ Quotation Creation and Billingfor Service Orders.

You have the following user exits at your disposal: AD010001 (Change objectlist and its hierarchy), AD010002 (Delimit selection and/or filter data that isdetermined), AD010003 (Create user-defined DI characteristics), AD010005(Create user-defined sources), AD010006 (Menu exit: Change DI value),V46H0001 (Enter additional item data and insert a partner for the item).



Preliminary Costing

Figure 188: Sales Order Processing: Preliminary Costing

In our example, you create a sales order and chose the option of planning theendeavor on the sales order using a unit cost estimate.

In the subsequent execution of the task, post the resulting costs directly to thesales order item.

Figure 189: Planning Options with Unit Costing

You can plan the costs of a service with a unit cost estimate. You use them likespreadsheets to make costing decisions and to access information on materialcosts, internal activity prices, purchasing costs, overhead, and process costs. Forexisting cost estimates, you can refer to these and copy the relevant items intothe unit cost estimate.



Within unit costing you can calculate totals, sub-totals, and formulas formathematical operations. As the information in the cost estimate becomes out ofdate, you can use the �revaluation� function to determine the most current materialor activity prices for the items in the cost estimate.

If the unit costing includes a material item with a cost estimate, you can explodethis cost estimate to display the items that make up the material cost. Likewise, ifyou enter a base-planning object as an item, you can explode its cost estimate.

Figure 190: Item Categories in Unit Costing (1)

To support the full integration between unit costing and product costing, the newitem categories F (external service) and L (subcontracting) are available in unitcosting as of Release 4.0.

The item category P (process manual) is used if you want to include businessprocesses in a unit costing manually without using a template.



Figure 191: Item Categories in Unit Costing (2)

The item category X is created automatically when using a template to calculateprocess quantities.

The item category Y (customer exit) can be activated as enhancement KKEK0001,if customers require their own calculation logic.

Easy Cost Planning

�Easy Cost Planning (ECP)� is availably in addition to the unit cost estimatefor projects:

Figure 192: Easy Cost Planning (ECP)



As of Release 4.6C, Easy Cost Planning is available to you as a simple tool forplanning costs on WBS elements. Easy Cost Planning for the project is called fromthe Project Builder and costing items are created for the WBS planning elements.Costs are planned with Easy Cost Planning using the original cost elements.

You can define planning variants for entering costing items and use variables(characteristics) in doing so. For this, values are given (above, 100) forcharacteristics (above, �Work in hours�). The characteristic values of the planningvariants are linked with quantities, values, or actions of costing items (above,with the quantity of an internal activity).

The planned costs are in the periods of the order start dates of the WBS elements.Changes to the order start dates and revaluation causes the costs to be redistributed.

Easy Cost Planning can serve as a simple preliminary costing for projects that canbe replaced in a later phase of the project by an automatic costing, such as by thecosting of quantity structures like networks or operations. The resources plannedwith Easy Cost Planning can also serve as the basis for later actual postings ifentered with the �Execution Services� commitments and actual costs.

In Customizing for Easy Cost Planning, you can specify which plan data the COplan version should be updated in. As of SAP R/3 Enterprise Extension 2.00, youcan also enter several alternative CO plan versions for Easy Cost Planning. In thiscase, you can decide which of the alternative CO plan versions you to run the costplanning in, each time you run Easy Cost Planning.

Figure 193: Planning Variants for Easy Cost Planning



Easy Cost Planning is realized technically with a template that is embedded in aplanning variant. This kind of planning variant (costing model) is created in threesteps in Customizing:

� You can define characteristics that are available as variables in the template� An entry screen is created in HTML format for the characteristics that can be

edited and modified� Finally, the resources are stored in the template that are later planned

or allocated. The characteristics are also available for calculations likefunctions of the ABC, if active.

When Easy Cost Planning is run, the user is asked for the value of thecharacteristics. The system then plans the resources according to the template.The quantities entered or calculated are valuated with prices or rates.

Figure 194: Cost Estimate with Network

The network primarily contains operations that describe work and project steps.

Operations are linked by relationships to set a casual and temporal order.

If you plan dates and resources in the operations of the network, the systemautomatically determines the corresponding planned costs.



The planned costs are determined for the following objects:

� Activity inputs for internal processing operations (internal activity)� Primary costs for external processing and service operations (external

activity)� Primary costs for cost activities� Primary costs for material components.

Activity elements are treated as operations for the costing.

Figure 195: Planned Costs Work Breakdown Structure with Network

Caution: The previous example is based on an activity-assigned network. Theplanned and actual costs of each operation are shown on the respective operation.If the network were header assigned, the costs of the operations would only beanalyzed in total at the level of the network header.



Figure 196: Network Costing:Summary

Internal Processing Operation:If no distribution key has been maintained in the operation or work center,the costs are distributed equally over the earliest dates of the operation.The valuation is done with the price according to the valuation variant.Depending on the strategy, the system can determine the most current date.

Cost Activity:If an invoicing plan has been maintained, the values are put into periodsaccording to the invoicing plan.Otherwise, the operation value is distributed to periods according to thedistribution key in the operation. If there is no distribution key, the costs aredistributed equally over the earliest dates of the operation.

External Processing and Service Operations:If an invoicing plan has been maintained, the values are put into periodsaccording to the invoicing plan. Otherwise, the values are put into the periodof the latest operation start date.The invoicing plan has priority for the values. If there is no invoicing plan,the system determines the prices from the purchasing info record or theoperation value.

Material Components:If an invoicing plan is present, the periods and values are taken from theinvoicing plan. If no invoicing plan is present, the values are taken fromthe unit cost estimate, purchasing info record, or price from the materialmaster according to the valuation variant. In this case, the period is that ofthe requirement date of the material.




Exercise ObjectivesAfter completing this exercise, you will be able to:� Carry out quantity and value flows in Controlling by Sales Order for a service� Create a unit cost estimate for a sales order� Carry out resource-related billing� Analyze the necessary settings in Customizing


In plant S300, you offer these consulting services. You create a sales order for thisservice and can use unit costing to calculate your costs for the sales order.

Hint: Use controlling area S300 for this exercise.

Task:Start by creating a sales order for and estimating the cost of the consulting task.

1. Create a sales order for the consulting item:


Order Type: ZSP1 (SP: Service order)Sales Organization: S300

Distribution Channel: S3

Division: S3

Select: Enter


Sold-to party: 3221

Material: ISP-CONSLT

Order Quantity: 10 daysSelect: Enter




2. Create a unit cost estimate to determine the consulting costs.

Menu path:

Extras→ Costing

In the pop-up enter the following data:

Costing Variant: PCO4

Base Object: consulting

Select: Enter

Adjust the default settings. You estimate 20 hours for senior management(MANG2), and 60 hours for consulting CONS1N. You do not include anyother costs.

Select: Save

3. Save the sales order.

Make a note of the sales order number displayed in the status bar whenyou save your data.

______________________________________________________



Solution 15: Master Data and PreliminaryCostingTask:Start by creating a sales order for and estimating the cost of the consulting task.

1. Create a sales order for the consulting item:


Order Type: ZSP1 (SP: Service order)Sales Organization: S300

Distribution Channel: S3

Division: S3

Select: Enter


Sold-to party: 3221

Material: ISP-CONSLT

Order Quantity: 10 daysSelect: Enter

a) Menu path:

Logistics→ Sales and Distribution→ Sales→ Order→ Create

2. Create a unit cost estimate to determine the consulting costs.

Menu path:

Extras→ Costing




Select: Enter

Adjust the default settings. You estimate 20 hours for senior management(MANG2), and 60 hours for consulting CONS1N. You do not include anyother costs.




Select: Save

a) Create a unit cost estimate to determine the consulting costs.

Menu path:

Extras→ Costing




Select: Enter

Adjust the default settings. You estimate 20 hours for seniormanagement (MANG2), and 60 hours for consulting CONS1N. Youdo not include any other costs.

Select: Save

3. Save the sales order.

Make a note of the sales order number displayed in the status bar whenyou save your data.

______________________________________________________

a) Select: Save



Lesson Summary

You should now be able to:� Explain the quantity and value flows in Controlling by sales order for a

service� Explain unit costing for sales orders� Understand when to use resource-related billing� Explain the necessary settings in Customizing




Lesson Overview


� Debit the sales order with direct activity allocations and with actual costsusing the time sheet

� Use resource-related billing� Understand network confirmations� Understand Execution Services


After your consultant has returned, enter these services, receipts that have beenbrought back, and any material consumption that has taken place.

Allocation of Resource Usage for the Service

Figure 197: Goods Issue for Material Needed for the Service



You post the goods issue for the material needed for the service. The sales orderitem is debited with the cost of the material.

Figure 198: Allocating Internal Activities

You can use the Cross-Application Time Sheet (CATS) for the allocation of theinternal activities of your employees. You can also post the activities with adirect activity allocation. If you use routings, you can enter confirmations forthe operations.

Figure 199: CATS � Cross-Application Time Sheet



CATS is an integrated function for entering actual times that are important in theHCM, PS, PM, SM, CO, or MM-SRV areas.

You can use data entry profile to set the layouts.

Reports transfer the released (and, if necessary, approved) data to the variousapplications. The actual times can be important for various applications at thesame time. This causes multiple transfers to various applications.

Note on PP production orders:

You can use CATS to enter hours for the �Production order� receiver object (Orderfield). This entry of hours is posted on the production order as an internal activityallocation when transferred (to CO). You cannot use CATS to enter confirmationsfor yields and scrap quantities for production orders.

Figure 200: Time Sheet: Data Entry View

Time recording is carried out for one of more employees.

Flexible screen arrangement (for the initial screen, worklist, and entry section):

� Depending on the employee group (with the data entry profile)� User defined (with Table Control)



Worklist for employees by:

� Operations to which the employee is assigned with the work center ordistribution of work to employees (for PS, PM, CS)

� Operations with the pool of confirmations (for PS, PM, CS)� Objects that the employee is currently processing (with the CATS database)� Objects with user exits

Addition Options with a Project

Figure 201: Aspects of Realization for a Project

If you use a project to realize an endeavor, you can enter and evaluate other data inaddition to costs and revenue. To enter actual data, you must release the project.

Business transactions update this actual data on the project from the various areasof the SAP system, for example.

MM: Purchasing: purchase order, goods receipt of materials andservices, Inventory Management: Goods issue of reservations

SD: Sales order billingPP: Confirmation of assigned production ordersPM: Confirmation of assigned PM ordersCO: Internal activity allocation, assigned CO orders



FI: Deposits, paymentsAM: Settlement to assetsHCM:

Task recording for employees and update as an orderconfirmation or as an internal activity allocation

(Note: The CATS can also be used without HCM)

Figure 202: Integrating Costs using Account Assignment

For the business transactions displayed above, the connection to the WBS elementor operation is made using account assignment. This causes the resulting actualcosts to be posted directly to the WBS element or to the network or operation.



The account assignments correspond to the cost planning transactions. Theseare, for example:

� For purchase requisitions, purchase orders, goods receipts:

external and service operations, material components that are directlyprocured

� For material withdrawals:

stock items or primary cost planning

� For invoice postings:

primary cost planning, revenue planning, cost activities

� For activity allocation:

planning of activity inputs

� For confirmation:

internal processing operations

Figure 203: Execution Services

As of Release 4.6C, you can use Execution Services to enter commitments andactual costs for items that you have planned with Easy Cost Planning.



The following postings are possible:

� Internal activity allocation (for internal activities)� Direct process allocation (for processes)� Reservation (for material items)� Goods issue (for material components)� Purchase requisition

(for material items, external activity items, service items, variable items)

� Purchase order

(for material items, external activity items, service items, variable items)

Figure 204: Integrating Costs Through Assignment

For the business transactions displayed above, the connection to the WBS elementis made using an assignment.

This causes the resulting actual costs to remain on the order or network untilthey are settled.

In the information system, you can evaluation all assigned funds (planned costs,commitment and actual costs) with the assigned WBS element. In the informationsystem for structures, you can evaluate and interactively process the assignedorders in addition to WBS elements and operations.




Exercise ObjectivesAfter completing this exercise, you will be able to:� Debit the sales order with goods issue postings� Debit the sales order with activity allocations with and without the time sheet� Carry out a resource-related billing

Business ExampleA customer would like to be consulted by you for a few days. As this is a simplystructured service, you decided to use a sales order as the cost object.

In plant S300, you offer these consulting services. You create a sales order for thisservice and can use unit costing to calculate your costs for the sales order.

In addition, you can use the activity allocation and the Cross-Application TimeSheet (CATS) to post the actual consulting time required for the sales order item.


Task:Actual Postings

1. Employee 515991## will enter their time for activity CONS1N in theCross-Application Time Sheet. Record their time in the Cross-ApplicationTime Sheet. Remember to release your entries before saving.

Menu path:

Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Sales Order→ Actual postings→ Timesheet→ Time Data→ Enter


Data Entry Profile: ISP_SD (or CO2)

Personnel Number: 515991## (ifunavailable: 9910751)

Press Button Enter times (F5)






Sales Order Item: 10

Quantity: 5 hours each day for the lastthree days

Confirm your entries.

Select: Release view

Select the indicator next to the line with your time entries.

Select: Release

Select: Save

2. Use the CATS to approve the time entered, so that it can be transferred toaccounting. Select the time entries using your personnel number 515991##as a reference.

Menu path:

Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Sales Order→ Actual postings→ Timesheet→ Approval→ Use personnel number to make a selection

Select the posting Up to today.

Enter your Personnel number.

Execute

If no entries have to be approved, Customizing is set so that no times in theCATS required approval. Continue with the next subtask.

If there are entries that require approval:

Select your personnel number from the General Hierarchy Display. Theapproval screen appears.

Menu path:

Edit→ Select All

Choose Approve.

Save your entries.

3. Transfer the CATS to Accounting.

Menu path:

Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Sales Order→ Actual postings→ Timesheet→ Transfer→ Accounting





Personal No.: 515991##

Select: Execute

4. Enter an activity allocation for the activity MANG2 for your sales order. InExtras→ Set Controlling Area, set the controlling area to S300.

4 hours have been consumed from the sender cost center S-3310. Use thescreen variant Sales Order/Cost Object, to process this activity allocation.

5. Go to the information system for Product Cost by Sales Order and review theplanned to actual cost report for your sales order.

Menu path:

Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Sales Order→ Information System→Reports for Product Cost by Sales Order→ Detailed Reports→ For SalesOrder→ Plan/Actual Comparison



Item: 10

Select: Execute



Solution 16: Simultaneous CostingTask:Actual Postings

1. Employee 515991## will enter their time for activity CONS1N in theCross-Application Time Sheet. Record their time in the Cross-ApplicationTime Sheet. Remember to release your entries before saving.

Menu path:

Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Sales Order→ Actual postings→ Timesheet→ Time Data→ Enter



Personnel Number: 515991## (ifunavailable: 9910751)





Quantity: 5 hours each day for the lastthree days




Select: Release




Select: Save

a) Confirm the internal activity by recording the consulting time in theCross-Application Time Sheet . Remember to release your entriesbefore saving.

Menu path:

Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Sales Order→ Actual postings→Time sheet→ Time Data→ Enter



Personnel Number: 515991##





Quantity: 5 hours each day for thelast three days




Select: Release

Select: Save

2. Use the CATS to approve the time entered, so that it can be transferred toaccounting. Select the time entries using your personnel number 515991##as a reference.

Menu path:







Execute

If no entries have to be approved, Customizing is set so that no times in theCATS required approval. Continue with the next subtask.



Menu path:

Edit→ Select All

Choose Approve.

Save your entries.

a) Use the CATS to approve the time entered, so that it can be transferredto accounting. Select the time entries using your personnel number515991## as a reference.

Menu path:




Execute

If no entries have to be approved, Customizing is set so that no times inthe CATS required approval. Continue with the next subtask.



Menu path:

Edit→ Select All

Choose Approve.

Save your entries.

3. Transfer the CATS to Accounting.

Menu path:







Select: Execute

a) Transfer the CATS to Accounting.

Menu path:




Select: Execute

4. Enter an activity allocation for the activity MANG2 for your sales order. InExtras→ Set Controlling Area, set the controlling area to S300.

4 hours have been consumed from the sender cost center S-3310. Use thescreen variant Sales Order/Cost Object, to process this activity allocation.

a) Enter an activity allocation for your sales order.

Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Sales Order→ Actual postings→Activity and Business Process Allocation→ Enter

In Extras→ Set Controlling Area, set the controlling area to S300.

Document Date: today’s date

Posting Date: today’s date

Screen Variant: Sales order/costobject

Quantity: 4 hours

Sending Cost Center: S-3310

Activity Type: MANG2

RecSaleOrd (Receiver salesorder):

your sales ordernumber and item number

Save




5. Go to the information system for Product Cost by Sales Order and review theplanned to actual cost report for your sales order.

Menu path:

Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Sales Order→ Information System→Reports for Product Cost by Sales Order→ Detailed Reports→ For SalesOrder→ Plan/Actual Comparison



Item: 10

Select: Execute

a) Go to the information system for Product Cost by Sales Order andreview the planned to actual cost report for your sales order.

Menu path:

Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Sales Order→ Information System→Reports for Product Cost by Sales Order→ Detailed Reports→ ForSales Order→ Plan/Actual Comparison



Item: 10

Select: Execute



Lesson Summary

You should now be able to:� Debit the sales order with direct activity allocations and with actual costs

using the time sheet� Use resource-related billing� Understand network confirmations� Understand Execution Services



Lesson: Period-End Closing

Lesson Overview


� Explain the Results Analysis for the sales order� Describe the settlement of the sales order


After the service has been performed, we can post a resource-related Billing andthen a period-end closing on the sales order. Different results can be obtained fromthe Results Analysis depending on the time and data collection. Period-basedrevenues and the cost of sales are settled to Profitability Analysis, stock andreserves to Financial Accounting and Profit Center Accounting.

Results Analysis and Settlement


You can use the Results Analysis to calculate the costs and revenue of the costobject based on the period by various methods and to form stock and reservesif required. For sales orders, the Results Analysis is carried out for each salesorder item. For projects, it is carried out on the billing elements for the entire



project hierarchy including assigned objects. You can set exactly how it worksin Customizing. The revenues and costs of the sale are settled to ProfitabilityAnalysis, where as stock and reserves are settled to Financial Accounting andProfit Center Accounting.

Figure 206: BiIling with Resource-Related Billing

If you wish to conduce resource-related billing, create a debit memo (billingrequest) based on the CO line items.




If a sales order is given the status �Final billing�, no more revenue is expected forthat sales order item. Only debit memos and credit memos can be entered. For thisreason you can normally cancel all stock and reserves on the revenue side. Thesame is valid for the status �technically completed� on the cost side.



Exercise 17: Period-End Closing

Exercise ObjectivesAfter completing this exercise, you will be able to:� Carry out Results Analysis for the sales order� Settle the sales order

Business ExampleA customer would like to utilize your consulting servicse for a few days. As this isa simply structured service, you decided to use a sales order as the cost object.

Nachdem die Dienstleistung erbracht wurde, führen wir eine aufwandsgerechteFaktur durch und danach einen Periodenabschluß auf dem Kundenauftrag.Different results can be obtained from the Results Analysis depending on the timeand data constellation. Period-based revenues and the cost of sales are settledto Profitability Analysis, stock and reserves to Financial Accounting and ProfitCenter Accounting.


Task 1:Period-End Closing Before Billing

1. Carry out Results Analysis and review the results. Write down the COSand revenue in excess of billings.



Item: 10




Select: Execute


2. Carry out sales order settlement. To view the settled amounts, select DetailLists. Note that the amounts settled to PA reflect the COS and revenuecalculated by Results Analysis.





Sales Order: your sales order numberItem: 10





Test Run: deselect


Check trans. data: deselect

Select: Execute

Task 2:Resource-Related Billing

1. Create a debit memo request for the consulting activities.

Menu path:

Logistics→ Sales and Distribution→ Sales→ Order→ SubsequentFunctions→ Resource-Related Billing Document


Sales Document: your sales order number


Select: Save Billing Request

Confirm the prompt �Do you really want to create a billing request?� andsave your entries.

2. Create a billing document based on the debit memo request. Note that theinvoice value matches the revenue in excess of billing calculated duringResults Analysis.

Menu path:


Select: Save




3. Go to the information system for Product Cost by Sales Order and reviewthe planned to actual cost report for your sales order. Check whether therevenues for the invoices were updated on the corresponding sales order item.

Task 3:Period-End Closing after Billing.

1. Carry out Results Analysis again, review the logs, and analyze the results.Since all costs have been billed, the revenue in excess of billings shouldbe zero.



Item: 10




Select: Execute


2. Carry out sales order settlement. Display the settled amounts by doubleclicking on the sender.



Item: 10





Test Run: deselect



Select: Execute



Solution 17: Period-End ClosingTask 1:Period-End Closing Before Billing

1. Carry out Results Analysis and review the results. Write down the COSand revenue in excess of billings.



Item: 10




Select: Execute





a) Menu path:




Item: 10




Select: Execute


Select: Save

Note the debit for material ISP-CONS1N. This material was derivedfrom the configuration of the DIP profile, based on the cost elementassigned to the activity CONS1N. The sales price is established for thismaterial. The COS value reflects the cost of the consulting activity thathas been posted to the sales order. No other actual costs have beenposted to the sales order. The WIP value reflects the revenue that canbe generated based on the sales price of ISP-CONS1N. In the revenueoverview, you can see the revenue not yet billed. At this point, billinghas not been executed for this sales item.

2. Carry out sales order settlement. To view the settled amounts, select DetailLists. Note that the amounts settled to PA reflect the COS and revenuecalculated by Results Analysis.


Sales Order: your sales order numberItem: 10








Test Run: deselect



Select: Execute

a) Menu path:

Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Sales Order→ Period-End Closing→Single Functions→ Settlement

b) To view the settled amounts, select Detail Lists.

Select the settlement line, and choose either Sender, Receiver orAccounting docs to review the settlement values. The settlement valuesare displayed.

Task 2:Resource-Related Billing

1. Create a debit memo request for the consulting activities.

Menu path:



Sales Document: your sales order number






Confirm the prompt �Do you really want to create a billing request?� andsave your entries.

a) Create a debit memo request for the consulting activities.

Menu path:



Sales Document: your sales ordernumber



Confirm the prompt �Do you really want to create a billing request?�and save your entries.

2. Create a billing document based on the debit memo request. Note that theinvoice value matches the revenue in excess of billing calculated duringResults Analysis.

Menu path:


Select: Save

a) Create a billing document based on the debit memo request. Note thatthe invoice value matches the revenue in excess of billing calculatedduring Results Analysis.

Menu path:


Select: Save




3. Go to the information system for Product Cost by Sales Order and reviewthe planned to actual cost report for your sales order. Check whether therevenues for the invoices were updated on the corresponding sales order item.

a) Menu path:

Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Sales Order→ Information System→Reports for Product Cost by Sales Order→ Detailed Reports→ ForSales Order→ Plan/Actual Comparison



Item: 10

Select: Execute

The revenue has been updated to the sales order item.

Task 3:Period-End Closing after Billing.

1. Carry out Results Analysis again, review the logs, and analyze the results.Since all costs have been billed, the revenue in excess of billings shouldbe zero.



Item: 10




Select: Execute





a) Menu path:


b) Note that the WIP value in the cost overview is zero. Zero also remainsto be billed in the Revenue Overview.

2. Carry out sales order settlement. Display the settled amounts by doubleclicking on the sender.



Item: 10





Test Run: deselect



Select: Execute

a) Menu path:

Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Sales Order→ Period-End Closing→Single Functions→ Settlement

To view the settled amounts, select Detail Lists.

Select the settlement line, and choose either Sender, Receiver orAccounting docs to review the settlement values. The settlement valuesare displayed.



Lesson Summary

You should now be able to:� Explain the Results Analysis for the sales order� Describe the settlement of the sales order



Lesson: Customizing

Lesson Overview


� Explain Customizing for the requirements class� Describe Results Analysis methods� Explain Customizing for resource-related billing (DIP profile)

Business ExampleA customer would like to utilize your constulting services for a few days. As thisis a simply structured service, you decided to use a sales order as the cost object.

In Customizing, you must be sure that the scenario takes place within theboundaries that you have planned.

Account Assignment Category, Results Analysis andDIP profile

Figure 208: Customizing: Requirements Class

You can use the requirements type determination in Customizing to find therequirements class. The account assignment category defines the scenario.



Figure 209: Account Assignment Category B

The account assignment category �B� specifies that consumption postings areposted directly on the sales order item, but no separate sales order stock is kept.

Figure 210: Results Analysis: Method-Based Customizing

If you use method �14�, the cost of sales is derived from the resource-relatedbilling. For this, the following applies: all line items of cost postings that havealready been billed, are costs of the sale. Those that have not yet been billedare costs in stock (WIP). The revenues are calculated in SD pricing on the basisof the billed line items.



Figure 211: Customizing: DIP Profile

The DIP profile (the profile of the �dynamic item processor�) takes on the controlof the resource-related billing, which you can use for creating quotations as wellas billing. You decide on the type of sales documents that are to be generated(quotation, billing request and credit memo request) per usage. In addition, youcan determine if the system should perform a warranty check during billing. Allother data should be entered when you are creating a document.

Characteristics relevant to the determination of �dynamic items� are fixed for eachusage. In addition, various characteristic attributes, and the way in which theyare presented during the processing of the billing request, are defined. You candefine your own characteristics and enter values for these characteristics usingthe customer exit AD010003.

The sources define the data used to determine dynamic items (for example, theactual costs of line items or totals records, planned costs and so on). You can alsoselect the characteristic values from which �dynamic items� should be determined(that is, exclusion of other characteristic values from billing). Selection isperformed using the sets to be determined for this purpose. You can define yourown sources using the customer exit AD010005.

You can define which service materials are determined from characteristic valuesfor billing request items or quotations. The selection criteria here are also enteredin the form of sets.



Lesson Summary

You should now be able to:� Explain Customizing for the requirements class� Describe Results Analysis methods� Explain Customizing for resource-related billing (DIP profile)


AC520 Unit Summary

Unit SummaryYou should now be able to:� Explain the quantity and value flows in Controlling by sales order for a

service� Explain unit costing for sales orders� Understand when to use resource-related billing� Explain the necessary settings in Customizing� Debit the sales order with direct activity allocations and with actual costs

using the time sheet� Use resource-related billing� Understand network confirmations� Understand Execution Services� Explain the Results Analysis for the sales order� Describe the settlement of the sales order� Explain Customizing for the requirements class� Describe Results Analysis methods� Explain Customizing for resource-related billing (DIP profile)


Unit Summary AC520


Unit 7Information System

Unit OverviewThis unit explains the structure of the information system in Cost ObjectControlling and shows the options for reporting.


� Describe the structure of the information system� Use the standard reports for effective controlling� Understand the technique used by the information system� Customize the information system to suit your needs

Unit ContentsLesson: Information System... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .400

Exercise 18: Information System.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .415


Unit 7: Information System AC520

Lesson: Information System

Lesson Overview


� Describe the structure of the information system� Use the standard reports for effective controlling� Understand the technique used by the information system� Customize the information system to suit your needs

Business ExampleYou have a new employee who will be responsible for reporting.

As an orientation, you are reviewing the delivered reports and reporting tools withthis employee. You need to discuss:

� What reporting structures are available� What is the procedure for accessing a report� How standard reports are processed

Since reporting requirements are constantly changing, you will introduce yournew staff member to the functions provided for creating and maintaining reports.

You will also address special features which simplify and speed up reportprocessing, including giving some guidelines for selecting among the providedtools.


AC520 Lesson: Information System

Structure

Figure 212: Using the CO-PC Information System

What can CO-PC-IS do for me?

� What�s going on in my plant?� Can I support

� my regular decisions with periodic reporting?

� my day-to-day activities effectively?� Can I really concentrate on the critical 5%?� Do I have enough reporting flexibility to meet all my specific

requirements?� Can I get the right reports to the right places?� Can I enhance the standard reporting system with my own reports?



Figure 213: How is the Information System Structured?

The report categories subdivide the menu tree on the first level according to themost common reporting needs. For consistency and transparency, each menu treeis structured according to the same report categories.

The report category is structured according to the report contents. The detailedreports for product costs by period used Report Painter reports and Report Writerreports in earlier releases. These reports are now generated using SAP List Viewer.

Figure 214: Which Reporting Techniques are Used?

In the CO-PC information system, different reporting tools are used.

Every report tool has its own features and range of applications.



Figure 215: Online Documentation

Online documentation was restructured completely in Release 4.0 and has beenimproved continuously since then.

You can find the online documentation in the SAP Library: -> Accounting ->Controlling -> Product Cost Controlling -> Product Cost Controlling InformationSystem (CO-PC-IS).

The documentation provides you with information about the structure of theinformation system. In the report categories, you will find a description of reportsthat are standard for the component menu trees of the Information System forProduct Cost Controlling.

Context-sensitive help is not supported.

General Reporting Functions

Figure 216: Reporting Functions

Exception Reporting

Exception conditions specify whether an object deserves special notice. You canenter this information as a key figure in a line or a column. Those fields of notewill be colored so that you can quickly recognize items such as variances that areabove a certain value.



Drilldown reporting is an interactive information system that helps you evaluatethe data collected in your application. This information system is capable ofanalyzing data according to any of the characteristics that describe the data. Youcan also use key figures to categorize your data.

Download Functions

� Spreadsheet� Word processing� HTML formats

Detailed Reports: Report Painter and SAP List Viewer(ALV)

Figure 217: Detailed Reports

There is a large amount of information available for detailed reports that can beanalyzed in reports or in SAP List Viewer as individual layouts. In particular, thefollowing information is provided: planned costs, actual costs, results from ResultsAnalysis (WIP, reserves for unrealized costs, reserves for imminent loss, fundscommitment) for the sales order, but also for orders assigned to the sales order.

In earlier releases, reports were defined almost exclusively using Report Writer,a powerful reporting system based on Set technology. To save users from havingto create these sets every time they define a new report, Report Painter wasprovided as an enhancement. You can find extensive information on each of thesetools in the corresponding courses (CA705 and CA710).



SAP List Viewer

SAP List Viewer (ALV)

� Presentation tool for lists with generic functionality� Dynamic creation of display variants� Predefined standard variants� Presentation only - removed from selection� Combination of characteristics and key figures possible� View changeable in the report without a new selection

The SAP List Viewer standardizes and simplifies the use of lists in the SAP system.Each list has a standardized interface and a standardized list format available. SAPList Viewer contains features for dynamic creation of display variants.

In the standard many Report Writer reports have already been substituted by ALVreports.

SAP List Viewer is used in CO-PC for the following reports:

� Sales order selection� List of existing product cost estimates� Line items in cost estimate for product� Analysis of a costing run� Line item reports� Order selection� ...

Figure 218: SAP List Viewer: Define Display Variants (Layouts)



You can use display variants to change the format of your list.

You can choose which fields will be displayed.

You can change the sequence of fields.

You can modify the column widths to suit your needs.

There are two types of display variants:

Customer-specific display variants accessible to all users.

User-specific display variants accessible only to the user who created the displayvariant.

Figure 219: Funds Commitment



Extracts

Figure 220: Using Extracts (1)

To reduce runtimes, you can generate extracts when accessing reports. An extractis a saved file containing the report data selected at the time the extract wasgenerated.

You generate an extract when you execute a report with reference to the reportselection parameters. It is possible to generate multiple extracts if you executethe report with different selection criteria.

When you display the report data in the extract, you have the same navigation andformatting features as with online execution of the report.

If you make changes in the data structure in Customizing for the InformationSystem (especially the field selection for order selection or for the selection ofclassification characteristics), inconsistencies may arise between the current datastructure and the structure in the extract. The data of the extract can then no longerbe displayed.

Note, that an extract is normally only valid for the duration of one release. Thismeans that after a release upgrade you usually cannot access extracts generatedin a previous release. Therefore after a release upgrade you should generate newextracts with the desired selection criteria.

You can generate extracts in the order selection, the sales order selection and the"Analyze Costing Run" report.



Figure 221: Using Extracts (2)

Selecting Cost Objects

Figure 222: Information System Controlling by Sales Order



Figure 223: Selecting Sales Orders (1)

Sales order selection provides you with powerful means to build up a list of salesorders that interest you. In conjunction with exceptions and filters, a variety ofselection criteria supports your efforts to analyze only the critical sales orders. Thenumber of selection criteria regarding the sales order items was enhanced againin 4.6C.

You get a list of sales orders based on your selection criteria, and you get a firstimpression by looking at the key indicators. Now that you have identified thecritical sales orders that you want to examine more closely, you now drilldown todetailed cost element reports to view them.

You can use the features of the SAP List Viewer. You can adapt the list to yourneeds easily. It is therefore recommended that you define your own displayvariants.

You can also go to different views without having to make a new selection.



Figure 224: Selecting Sales Orders (2)

Sales Order with Assigned OrdersThe SAP List Viewer standardizes and simplifies the use of lists in the SAPsystem. Each list has a standardized interface and a standardized list formatavailable. It contains convenient features for dynamic creation of display variants.Some of the important functions for the SAP List Viewer are:

Create display variant

You can use display variants to change the format of your list.

Sorting

You can sort the lines in ascending or descending order according to columnvalues.

Set filters

You can choose to display only those lines that meet certain criteria.

Total and subtotal values Within a list, you can calculate totals and subtotals overone or more chosen columns.



Figure 225: Sales Order with Assigned Orders (1)

Figure 226: Sales Order with Assigned Orders (2)

A sales order hierarchy report gives you an impression of the structure of anindividual sales order. It gives you a structure of the sales document items and therelated production or internal orders.

The report shows predefined views:

� Plan/Actual costs� Plan/Actual quantities� Planned costs fixed/variable� Actual costs fixed/variable� Planned/Actual revenues

You can create display variants with the figures in which you are most interested.



Sets of sales orders are supported in the report.

By drilling down, you access detailed cost element reports for the sales order, forthe sales document items, or for the assigned orders.

Figure 227: Report Tool: Hierarchy Graphics

The following reports use hierarchy graphics in CO-PC:

� Sales order with assigned orders� Multilevel costed BOM� Order hierarchy� Cost object hierarchies� Collective order� Partner cost component split



Performing a Cost Object Summarization

Figure 228: Summarization of Different Object Types

You can save cost object data �permanently� in �summarization objects�. Thedata in the summarization objects does not change. This means that every so oftencurrent data must be �added and summarized� by a new run.

Customizing

Figure 229: Customizing

To use the reporting options, you have to customize the Information System



The following steps are necessary:

� Product drilldown: Import/transport reports� Order selection and summarization

� Define selection profiles� Define selection screens for order list� Define exception rules� Create order hierarchies

� Product Cost by Order

� Import reports for Product Cost by Order� Generate reports for Product Cost by Order

� Product Cost by Sales Order

� Import reports for Product Cost by Sales Order� Generate reports for Product Cost by Sales Order

Figure 230: Summarization Hierarchy for Sales Orders

To execute a summarization you need a predefined summarization technique, the�summarization hierarchy�. Basically there are two procedures for executing asummarization: Summarizing through classification characteristics or masterdata. SAP recommends that you summarize using master data for Release 4.5and higher.



Exercise 18: Information System

Exercise ObjectivesAfter completing this exercise, you will be able to:� Use the sales order selection report� Create a user-specific layout for this report

Business ExampleYou have to report the Results Analysis figures for a range of sales order items.Your report must contain the following columns:

� Sales Order Number� Order Item� Revenue Affecting Net Income� Cost of Sales� WIP (Work in Process)� Reserves for Unrealized Costs

Task:The report for the sales order selection was developed on the basis of the SAP ListViewer. We use the SAP List Viewer functionality to create a user-specific displayvariant with the column order specified above.

1. Start by executing the report for the sales order selection.


Sold-to party: 1171

Select: Execute

2. Create a user-specific display variant that displays the fields: revenueaffecting net income, cost of sales, WIP, and Reserves for unrealized costs.

3. Save the user-specific display variant that you just created.

Display variant: AC515-##User-specific: xDescription: Results Analysis Overview




4. Execute the report again, but enter your new display variant AC515## onthe initial screen. The report�s initial screen now displays your new displayvariant.

Sold-to party: 1171Display variant: AC515-##

Choose Execute.



Solution 18: Information SystemTask:The report for the sales order selection was developed on the basis of the SAP ListViewer. We use the SAP List Viewer functionality to create a user-specific displayvariant with the column order specified above.

1. Start by executing the report for the sales order selection.


Sold-to party: 1171

Select: Execute

a) Menu path:

Accounting→ Controlling→ Product Cost Controlling→ Cost ObjectControlling→ Product Cost by Sales Order→ Information System→ Reports for Product Cost by Sales Order→ Object List→ SalesOrder Selection

2. Create a user-specific display variant that displays the fields: revenueaffecting net income, cost of sales, WIP, and Reserves for unrealized costs.

a) Select Change Layout.

Remove the following columns from the current display variant:Material, Plant, Planned profit pct (base: plan costs), Actual profit pct(base: actual costs), Actual revenue (with sales deduction), Actualcosts.

Change the field group to Results Analysis. In the list, select thecolumns Revenue affecting net income, Cost of sales, WIP, andReserves for unrealized costs.

Select Continue to confirm the selection.

The report data is updated to display the requested fields.

3. Save the user-specific display variant that you just created.

Display variant: AC515-##User-specific: xDescription: Results Analysis Overview

a) Select Save Layout.

Select: ContinueContinued on next page



4. Execute the report again, but enter your new display variant AC515## onthe initial screen. The report�s initial screen now displays your new displayvariant.

Sold-to party: 1171Display variant: AC515-##

Choose Execute.

a) Proceed as in Step 1-1.



Lesson Summary

You should now be able to:� Describe the structure of the information system� Use the standard reports for effective controlling� Understand the technique used by the information system� Customize the information system to suit your needs


Unit Summary AC520

Unit SummaryYou should now be able to:� Describe the structure of the information system� Use the standard reports for effective controlling� Understand the technique used by the information system� Customize the information system to suit your needs


AC520 Course Summary

Course SummaryYou should now be able to:

� Explain how Product Cost Controlling relates to other CO components� Explain how to use Product Cost Controlling� Explain the differences between the following forms of product cost: Product

Cost by Order, Product Cost by Period, and Product Cost by Sales Order� Explain the most important terms concerning the design of a scenario in Cost

Object Controlling: controlling on product or order level, sales-order-relatedproduction with or without controlling by sales order, valuated or unvaluatedsales order stock

� Prepare the right Cost Object Controlling �design� for production processesand select the best cost object for it

� Carry out preliminary costing, simultaneous costing, and final costing inCost Object Controlling

� Carry out important transactions for allocating costs to cost objects� Carry out important transactions for period-end closing such as template

allocation, WIP calculation, Results Analysis, and settlement� Carry out important analyses in Cost Object Controlling using the

information system


Course Summary AC520


FeedbackSAP AG has made every effort in the preparation of this course to ensure theaccuracy and completeness of the materials. If you have any corrections orsuggestions for improvement, please record them in the appropriate place in thecourse evaluation.


AC520 - 2005-Q2 - A4 - Cost Object Controlling for Make-To-Stock Production and Sales-Order-Related...

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