Cost Object ControllingTheCost Object Controllingcomponent is designed to answer the question: What costs have been incurred for which objects? For this purpose, the component assigns costs to the output of the company. The output can be materials manufactured in-house, individual orders, or intangible goods.This component provides real-time cost management functions that measure the cost of goods manufactured in all plants.Cost Object Controllingenables you to determine the cost of goods manufactured and the cost of goods sold.You can: Establish planned costs (budgeted costs) Record actual costs for the cost objects Compare actual costs with target costs and with planned costs, and analyze variances Determine price floors for products or individual ordersYou can use the functions ofCost Object Controllingby lot or by period.Cost Object Controllingsupplies basic information for the following business functions: Price setting and general price policy Inventory valuation Cost of goods manufactured Profitability analysis Profit center accountingImplementation ConsiderationsHere are some of the ways you can utilizeCost Object Controlling: Determine whether the actual costs of an order matched or exceeded the planned costs Determine the production variances between actual costs and target costs, and why these occurred Decide whether to accept a particular sales order (whether the sales order will be profitable) Identify areas in your company where you have particularly low costs and therefore which cost objects you should concentrate on Decide whether it would be more profitable to manufacture a cost object in-house or to outsource it Determine whether and how the cost of goods manufactured can be reducedCost Object Controllingalso can provide special information on: The cost of unplanned scrap Cost savings resulting from new production methods Cost behavior during capacity bottlenecksThe cost of goods manufactured for finished products and the work in process for orders can be used to capitalize the inventories in your balance sheet.IntegrationBefore you can useCost Object Controlling, you calculate the planned costs for each product in a cost estimate. You can use different costing methods inProduct Cost Planning(CO-PC-PCP) for this purpose.Cost Object Controllingaccesses master data and transaction data inProduction Planning(PP),Production Planning - Process Industries(PP-PI),Materials Management(MM),Sales and Distribution(SD), andOverhead Cost Controlling(CO-OM).You can view the data ofCost Object Controllingin theProduct Cost ControllingInformation System(CO-PC-IS).When you settle, you can transfer the data ofCost Object Controllingto other components in the system: Actual Costing/Material Ledger(CO-PC-ACT) Financial Accounting(FI) for purposes such as capitalizing unfinished and finished products and automatically creating reserves Profitability Analysis(CO-PA) to analyze the costs by market segment Profit Center Accounting(EC-PCA) to analyze the results by profit centerSee alsoIntegration of Cost Object ControllingFeaturesAll postings of actual data that refer to a cost object result in an immediate debit of the cost object.The closing activities at the end of the period allow you to do the following: Revaluate activities at actual prices Allocate overhead using template allocation and by defining overhead rates for cost objects Determine the work in process (the value of unfinished goods) Determine the variances between target costs and actual costs Transfer the calculated data to other objects and application components Compile periodic reports on a regular basisAnalysis functions are supported by theCost Object Controlling Information System.You can analyze planned costs, target costs, actual costs, and quantity information at various levels such as the plant, product group, or individual cost object. The data is always available in real time.Drilldown capabilities enable you to access detailed information.ExampleFrom the evaluations at plant level, you drill down to the product groups and from there down to materials/products or individual orders.More InformationCost Object Controllingis subdivided into the following application components: Product Cost by Order Product Cost by Period Product Cost by Sales Order Costs for Intangible Goods and ServicesFor detailed information on creating material cost estimates, such as for the purpose of calculating the standard costs of your materials, seeProduct Cost PlanningFor information on cost accounting in engineer-to-order, seeProject System (PS)