Cost Rollup SAP9.1 Page 1

Cost Rollup with Resources

Mascidon, LLC January, 2016 SAP 9.x Only

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Table of Contents SAP 9.1 Cost Rollup Functionality ................................................................................................................. 3

What is ‘Rolled up’? .................................................................................................................................. 3 Using the Cost Rollup ................................................................................................................................ 4 Figure 1.1 Cost Rollup Screen ................................................................................................................... 4 Figure 1.2 Currency Exchange Factor ........................................................................................................ 5 Rollup Button ............................................................................................................................................ 6 Cost Rollup Reporting ............................................................................................................................... 7 Figure 1.3 Summary Cost Rollup Report ................................................................................................... 7 Figure 1.4 Detailed Cost Rollup Report ..................................................................................................... 8 Figure 1.5 Rolled Up Costs Report Prompts .............................................................................................. 9 Figure 1.6 BOM Exploded with Rolled Up Costs ....................................................................................... 9 Figure 1.7 BOM Exploded with Rolled Up Weights ................................................................................ 10 Figure 1.8 BOM Exploded - Including Resources .................................................................................... 10 Figure 1.9 BOM Where Used .................................................................................................................. 11 More Button............................................................................................................................................ 12 Figure 2.1 ‘More’ Cost Rollup Options .................................................................................................... 12 Figure 2.2 BOM Data Updated ................................................................................................................ 13 Figure 2.3 Items Not Being Revalued and Why ...................................................................................... 14 Figure 2.4 Prompts for Query for Items Not Being Revalued ................................................................. 14 Process Button ........................................................................................................................................ 14

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SAP 9.1 Cost Rollup Functionality The cost rollup function is to make it easy for companies with complex bills of material to easily ‘roll’ up the costs for material, labor, machine and other costs from the bottom of the BOM to the finished goods level. Costs from one level need to roll-up to the next higher level. For instance, a BOM for a capital equipment manufacturer may have 8 – 15 levels in the BOM and from several hundred to several thousand components and sub-assemblies. This module provides the means to roll-up the costs in an organized manner. Additionally, this program provides the means to take the costs that were ‘rolled-up’ and move these costs to a price list. It also provides the means to move prices from a price list to the BOM price list and price fields - eliminating the need to manually perform this task for each BOM level. For manufacturing companies that periodically revalue their inventory, this module provides the means to use a price list to set the new costs for items managed as average cost or standard cost items. What is ‘Rolled up’? A bill of material in SAP 9.x has items and resources as lines on the BOM grid. Rolling up costs of ‘items’ in the BOM is the sum of the costs of the components in the BOM times the BOM quantity. For example, a BOM parent with parts B and C as component items priced at $2 and $4 respectively and having quantity requirements of 3 and 2 respectively would have a ‘rolled-up’ material cost of $2 x 3 + $4 x 2 = $14.00. Rolling up the cost of resources in the BOM is slightly more complex. The same logic applies, but resources can be machines, labor or other types. Each resource can have up to 10 resource cost layers. For instance, a ‘labor’ resource may have direct labor and overhead as two ‘layers’ of cost. Likewise a ‘machine’ resource could have several costs associated with the resource. For instance, you could define a depreciation cost and a utility cost. Space utilization costs could be another resource cost layer. Since ‘other’ costs could be anything other than machine or labor costs, it could have up to 10 ‘layers’ of cost. You define the resources and their cost layers. This program takes the layers and defines them at each level in the BOM. There are up to 10 ‘buckets’ of costs for each resource – matching the number of cost layers per resource that SAP defines in the Resource master screen. The roll-up process does the math for resource costs at each level and accumulates the costs from level to level, ending at the finished goods level. The end result of the 'roll-up’ process is a table with 2 buckets of material costs – material costs at this level in the BOM and the cumulative material up to and including this level. It also has 10 buckets of ‘labor’ costs for labor costs at that level in the BOM, and 10 buckets of ‘labor’ costs accumulated prior to and including this level. Similarly, there are 10 buckets of ‘machine’ costs for machine costs at that level in the BOM, and 10 buckets of ‘machine’ costs accumulated prior to and including this level. And finally, there are 10 buckets of ‘other’ costs for other costs at that level in the BOM, and 10 buckets of ‘other’ costs accumulated prior to and including this level. Remember – not all buckets would necessarily have costs. If you only defined 2 labor resource costs, then the other 8 buckets would be zero costs.

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Using the Cost Rollup To provide these functions, a screen has been added to the ‘Production’ menu. See Figure 1.1 below.

Figure 1.1 Cost Rollup Screen

The cost rollup function is the first process to be run. This is done using the screen shown in Figure 1.1. The user would input data as follows:

Source of material prices – this is where the system will look to retrieve the component material costs to use for the cost rollup. There are 3 options available in the drop down:

o Price list – if this is chosen, the list of price lists is shown to the ‘right’ and the user must choose one of the price lists (Base Price is shown in the example).

o Current cost – if this is chosen then the material costs are obtained from the average cost or standard cost. If the item valuations are FIFO, then this would revert to ‘Last purchase price’ for those items.

o Last purchase price – when this is chosen the last purchase price is used to calculate the material cost.

Material price multiplier – this is a factor to use to adjust the prices for the material prices. It would be used to simulate a 10% material price increase for example by using a multiplier of 1.10. If rolling-up costs to determine the cost of the finished item, this would normally be set to 1 so that no extra cost factor is added.

Process all items? If this check box is selected, all finished goods items will have their costs rolled up. Notes:

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o The screen tab ‘Items’ will not be used when this is selected. The system determines the list of finished goods as the list of all items that are not children in a BOM, have an associated BOM with children, and have the warehouse inputted on this screen as their assigned warehouse, and is an active item.

o If you have a complex BOM – say 10 – 11 levels deep and you have 20,000 – 30,000 items within the BOMs, this may take 6 – 10 hours depending on the BOMs, the traffic within SAP, and the speed of your server.

Warehouse code – this warehouse is used to determine the actual cost to utilize when processing items using ‘Current cost’. It also limits the parent items that can be selected for processing. Only those parents with this warehouse code are candidates for the ‘Rollup’.

As the screen is opened, the program grabs the current currency settings for this date for all of the non-system currencies. If the ‘Currency’ tab is clicked, the user has the option to change the rollup exchange factor. This grid is shown in Figure 1.2. The user cannot add or delete any part of the grid, they can only change the rollup exchange factor. For example, even though the currency factor may be 1.5, you may want to project an upcoming currency factor as part of the cost rollup. To save the parameters entered, click the ‘Update’ button. The parameters are saved in the table DCMCOSTRP. If selecting specific items for the rollup function, these items are entered in the ‘items tab’ grid and saved in the table DCMCOSTROLLUPITEMS. Items can be intermediate assemblies. The currency factors to use are stored in the table DCMCURRENCY. All of these factors are subsequently used during the cost rollup.

Figure 1.2 Currency Exchange Factor

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Rollup Button When the rollup button is clicked there are several checks performed:

The currency factors must be in place and non-zero for all currencies that are not the system default currency. The currency factor for the system currency is de-facto equal to 1.

Either the ‘Process All Items’ flag is checked, or at least one item is included in the item grid. All items in the grid are subject to these conditions:

o It must be an active item o It must have a BOM that is associated with the warehouse selected

A valid warehouse code is required. o Note: drop ship warehouses are not candidates for BOM cost rollups as SAP does not

allow on hand and therefore costs for drop ship warehouses. If the checks fail, the reasons for the failure are displayed for the user. The user must correct the problem(s) before continuing. If the checks pass, then the following occurs:

The items to process are written to the SAP table ‘DCMROLLUPITEMS’ table. The table DCMCURRENCY is updated with the exchange rates in the currency grid. The stored procedure DCM_sp_CostRollupInMemSAP91 is called with the following parameters

(in this sequence): 1. The following variable is based on the ‘Source of material prices’ selection:

a. Price list P b. Last purchase price L c. Current cost C

2. Price list – the price list number, or 0 if the ‘Source of material prices’ is not ‘Price List’. 3. Warehouse – the warehouse is passed 4. Material price multiplier – the entry from the screen 5. Update all flag if the ‘Process All Items’ check box was checked

The cost rollup process will be initiated and the costs will be written to the table DCMCOSTROLLUP. This may take a short amount of time – 10 – 20 seconds – if only updating a few BOMs. The amount of time depends on the number of records in the BOMs selected for update. With about 500,000 records in the BOM, the update time is 10 – 14 hours. With 100 records in the BOM, the update time is 10 – 20 seconds. The determining factors are: number of levels in the BOM; the number of components in the BOM; and the activity in SAP at the time the update occurs. The end result is that the costs for material, labor, machine and other costs are written to the DCMCOSTROLLUP table.

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Cost Rollup Reporting There is a Cost Rollup report which shows the rolled up costs in summary or detail. Figure 1.3 shows the report in summary. Figure 1.4 shows the report in detail. The difference is that the detail shows all 20 cost buckets (10 for costs at this level, and 10 for cumulative costs prior and including this BOM level). Most of the time you will only look at the summary. If there is a question as to where the costs are coming from you would run the detailed cost report. The summary report shows only the cumulative totals for the material, labor, machine and other costs. During the cost rollup, the system also rolls up the weight of an item. This is an excellent ‘reasonableness’ test for the BOM. If the BOM rolled up weight differs substantially from the selling weight, there is likely a BOM problem or a component weight problem.

Figure 1.3 Summary Cost Rollup Report

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Figure 1.4 Detailed Cost Rollup Report

The detailed cost report shows the costs for each of the labor, machine and ‘other’ cost buckets defined as resources. The run rates of the operations for each of these resources should be reviewed if one of the costs does not look correct.

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The report of the rolled up costs is available in the ‘Production Reports’ menu. The prompt for this report is shown in Figure 1.5.

Figure 1.5 Rolled Up Costs Report Prompts

Another means of viewing the costs within the DCMCOSTROLLUP table is a query that can be accessed from a BOM screen. The query shows the cumulative rolled up costs at each level in the BOM in an indented manner. See Figure 1.6. It also shows the material, labor, machine and other costs incurred at each level of the BOM. This report can be used to pinpoint egregious errors in the BOM – whether the error is a cost factor incorrectly entered, or a BOM quantity factor that is incorrect, or extra or missing components or sub-assemblies.

Figure 1.6 BOM Exploded with Rolled Up Costs

Similar to the rolled up costs query, the rolled-up weights query displayed in Figure 1.7 shows the weights at each level in the BOM as well as the weight contribution at each level in the BOM.

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Figure 1.7 BOM Exploded with Rolled Up Weights

In many instances it is instructive to see the full BOM, including the associated resources. The standard BOM report from SAP shows only the ‘items’. Figure 1.8 shows the full BOM including the associated resources.

Figure 1.8 BOM Exploded - Including Resources

In many instances it is beneficial to review a ‘Where Used’ explosion for a component. For instance, if there are manufacturing problems and a component is the cause, you may want to see all the higher levels where this component item is used. Within the cost rollup module there is a ‘BOM Where Used – Item Master’ query that provides this functionality from the Item Master screen. Use the ‘Tools

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Queries User Queries and find this query and execute it while in the item master screen with the appropriate item displayed on the item master screen. The result of the query is shown in Figure 1.9. Note: if you have SQL development capabilities access this query to add more fields to this query. For example, you could add on hand information, cost information, flags for engineering revision, etc..

Figure 1.9 BOM Where Used

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More Button When the ‘More’ button is clicked, the screen pops up additional options as shown in Figure 2.1.

Figure 2.1 ‘More’ Cost Rollup Options

There are 3 options available. All three require the user to select a price list to process.

Move results to price list takes the rolled up costs that have been calculated and stored in the DCMCOSTROLLUP table and takes the sum of the costs and moves the costs to the price list selected. The ‘costs’ are in 4 buckets – Material, Labor, Machine and Other. The user selects one or all of these costs to be included by checking the appropriate radial buttons. You could run this process multiple times – moving only the material costs to the price list for example, and then to a second price list, move all the cost bucket summaries.

Update BOMs from price list – if this option is chosen, then all of the items in the cost rollup associated with BOMs have their cost and the ‘price list’ updated in the BOM table. Refer to Figure 2.2. The Prices and the price list information for the items in the selected price list with a non-zero price are updated. Notes:

o All BOM parent items and children are updated based on the prices in the price list chosen if the price list price is not zero. If zero, then the price and price list indicated in the BOM are left as-is.

o You can select which BOM parent / component warehouse information to update by entering the ‘From’ and ‘To’ warehouses. Only BOM parent warehouses or child item warehouses that match these are processed during the update. For example, if you

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chose ‘from and to’ both as ‘01’, then if a BOM has a parent or children associated with a different warehouse, these records (parent or children) will not be processed.

Revalue inventory from price list – this option creates revaluation transactions for all items in the selected price list that have prices greater than zero. Notes:

o All items in the price list are revalued based on the prices in the price list chosen if the price list price is not zero. If the price list price is zero, then no revaluation occurs for those items.

o You can select which warehouse – item combinations to revalue by entering the ‘From’ and ‘To’ warehouses. Only items for the matching warehouses are revalued. For example, if you chose ‘from and to’ both as ‘01’, then only the ‘01’ warehouse current cost is revalued based on the price list non-zero price.

o ‘Revaluation’ affects the general ledger because revaluation transactions are created. It is imperative that a backup be made prior to this update.

o Revaluation is not performed on items with negative on-hand quantities. These should be resolved prior to running this option.

o The accounting period must be open for postings. o The Inventory Revaluation transaction created as a result of this update is your basic

report for this update. A query is used to show all of the items not updated. This query is shown in Figure 2.3. Its prompts are shown in Figure 2.4. Items are not updated for these reasons:

Negative on hand in inventory (by warehouse) By warehouse means if you select all warehouses and one of the

warehouses has a negative on hand and another does not, then only the item with a positive warehouse on hand will be revalued.

Item is inactive – SAP will not allow a transaction against an inactive item. Item is not ‘Inventoried’ – i.e. not flagged as an ‘Inventory’ item. The warehouse must not be ‘locked’ for this item, and cannot be a drop ship

warehouse

Figure 2.2 BOM Data Updated

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Figure 2.3 Items Not Being Revalued and Why

Figure 2.4 Prompts for Query for Items Not Being Revalued

Process Button The Process button initiates the ‘More’ functions shown in Figure 2.1. Depending on the selections, the following processing functions take place:

Move results to price list – if this radial button is checked, then the results from the cost rollup function performed are summarized and moved to the price list chosen. The data in the cost rollup file is stored by item and includes 31 costs. The 31 costs are in 4 groups:

o There is one material cost bucket o There are 10 buckets each for the labor, machine and other buckets.

Which of these 31 buckets are summed and moved to the price list for this item is determined by the radial buttons selected for these 4 cost buckets.

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o Note: this process is always done first. The system does not change any existing prices in the price list unless the cost rollup function processed that specific item.

o Note: the ‘from and to’ warehouses do not impact this update and are ignored. Update BOMs from price list – if this radial button is pressed, then this process is initiated after

the ‘Move results to price list’ function has been completed. This implies and means there will be a time delay prior to this portion of the update beginning. For instance, if you clicked the ‘Process for move results to price list’ and there were 50,000 items to be updated, this may take some time. The update BOMs process will not initiate until this earlier process is complete.

o The price list selected is the source of the prices that are used to update the BOMs. You can use the results of the ‘Move results to price list’, or if you access this screen without selecting the radial option to ‘Move results to price list’, you can choose any price list to use.

o Only BOM parent or children that are within the warehouse range selected are included in the update.

o Only items within the price list selected that have a non-zero price are updated. Revalue inventory from price list - if this radial button is pressed, then this process is initiated.

o This process uses all of the non-zero prices from the selected price list and compares it to the current cost (standard or average cost only). If the current cost for an item – warehouse differs from the price list price, then an inventory revaluation transaction is created for this item.

Only item – warehouses that have an on hand that is 0 or positive can be processed.

Only items with warehouses that are not locked can be updated. Only items that are active can be updated. For example, if all warehouses are selected and item ‘A’ is in the price list at

$10.00, and the current cost in the warehouse 01 is $9.00 and in warehouse 02 is $11.00 and in warehouse 03 is $10.00, then 2 revaluation records are created for item A to adjust the cost in warehouse 01 to $10 and to adjust the cost in warehouse 02 to $10.00.

Items that are assigned the FIFO cost method are ignored during this update. Drop ship warehouses are ignored. For instance, if you selected the range of

warehouses as ‘01’ to ‘99’ and the drop ship warehouse is ‘03’ (in the middle of the selected range), it will be ignored. The reason for this is that SAP does not allow inventory transactions against a drop ship warehouse.

o To review the revaluation results, access the SAP inventory revaluation screen and retrieve the last document(s). There is one document per warehouse updated.