PRODUCT COSTING

This is used for valuation of inventories i.e. Finished goods and Work in progress

PP Module
MM Module |
FI Module | 🡪 Product costing
CO Module |

Note: SAP lab :Product costing made easy BPB publication –Not covered product
costing Crate a cost estimate with quantity structure

Cost element with quantity structure

At standard cost In the month end we get actual

cost Variable will be settled to

accounts

How standard cost will be arrived at :

Sales budget for next month🡪 Production budget🡪 Material requirement Planning
| |
(Make to orders (confirmed orders) (This is same men budget) +
And make to stock (expected orders)) Overhead planning =
Standard cost
Cost sheet for the product BILFG1
Raw materials xx
Raw material overheads xx
Production costs xx
Cost of goods manufactured (COGM) xx
Administration Expenses xx
Sales & Distribution exp. xx

Cost of goods sold (COGS) xx

To check with client at what level he wants to value stocks

At COGM level or At COGM +Admin level

Raw material standard cost

For each product –we find out materials
required For BILFG1 We required
BILRM1
BILRM2
MM Module :Material Master
Accounting view –moving average price
BIL RM1 75
BILRM2 125

PP Module: Bill of Material (BOM)

To produce BILFG1 what materials are required and how much quantity
BILRM1 1Kg
BILRM2 1Kg
Raw material standard cost =Quantity
from BOM (PP)*Rate from Material Master (MM)
(1*75)+1*125)=200

Raw material overheads

Overheads like freight charges :At the time of receipt it will be added to material –At the
time of consumption the material cost includes freight also.

Overhead like loading and unloading normal amounts change directly to P & L account
clients will tell us-how much percentage can be taken on raw material cost
(consumption.) 5% of raw material costs

Eg: 250*5%=12.5

Production costs:
Cost centers in PP Module :Work centers

Dept A Dept B Dept C Dept D

Dept A Dept B Dept C Dept D

Raw material Issue Issue Issue finished product

All products need not go through all the Departments

Process flow for each product in PP module we call as

routing. PP Module: Routing (Process flow)

Dept A Dept B Dept D
Raw material Issue Issue Finished product

Wages 300000
Salaries 100000
Power 320000

Planned cost 720000

=====
Planned hours available
Machines 100 working for 3 shifts (24 Hours )
No.of days 30 Days
100*30*24=72000
Machine hour rate 720000/72000=10 Rs
(Activity type)
To Produce BILFG1
Hours required 5Hrs
Production cost 10*5=50

Production cost : (Hours required in Dept A * Machine hour rate)+(Hours required in

Dept B* Machine hour rate )+ (Hours required in Dept D * Machine hour rate)

Example :
Why can’t we allocate based on production

Production Qty Hrs Req Cost

BILFG1 999 Kgs 1
BILFG2 1 Kg 999

1000 1000 720000

If we allocate cost based on production

BILFG1 720000*999/1000=719280
BILFG2 720000*1/1000= 720

720000
======
If we allocate cost based on hours required

BILFG1 720000*1/1000 =720

BILFG2 720000*999/1000 =719280

720000
========
ACTIVITY BASED COSTING
Co –Consultants job:

1. Creation of 2 secondary cost elements (Use Tr.code is KA06)

A) RM overhead rate
B) Activity allocation

Give the cost element 1200000

Valid from 01.04.2008 to 31.12.9999
Enter
Give the name and description :RM Overhead rate
Cost element category : Select 41 overhead rates
Save
Cost element 1200001
Enter
Name and description :Activity allocation
Cost element category :select 43 Interval activity allocation
Save

Creation of activity type –Machine hour:

Path :Accounting –Controlling –cost Center accounting –Master data –Activity type-
Individual processing –create (Transaction code KL01)

Activity type :BIL

Valid from :01.04.2008 to 31.12.9999
Enter
Give the Name & Description :Machine hour
Activity unit :select H
Cost center categories :Select * (All cost center categories)
Active type category :select 1 (Manual entry , Manual allocation)
Allocation cost element 1200001
Save

Creation of cost centers: (Tr.code is KS01)

Give the cost center :Dept G
Valid from : 01.04.2008 to 31.12.9999
Reference cost center :Dept A
Controlling area :BIL
Enter
Change the name to Dept G
Change the description to cost center :Dept G
Person responsible :MrG
Other things are common
Select save button

Cost center :Dept H

Reference cost center :Dept A
Controlling area :BIL
Enter
Change the name to Dept H
Change the description to cost center:Dept H
Change person responsible to Mr.H
Cost center category :select 9( Allocation cost center)
Save

Create of cost center group (Tr code is KSH1)

Give the cost center group :BILPROD

Enter
Description :BIL Production cost center group
Select insert cost center button
Select cost center Dept G
Save

Define overhead keys:

Path :SPRO-Controlling –Product cost controlling –Product cost planning basic
settings for material costing - overheads-Define overhead keys

Select new entries

Overhead key :BIL1
Description :BIL Overhead key
Save
Press enter to save in your request

Define overhead groups

Same path

Select new entries button

Valuation area :BILP
Overhead group :BIL1
Overhead key :BIL1
Name of overhead group :BIL over head group
Save
Press enter to save in your request
Note:
Overhead rate will be given to overhead key
Overhead key will be assigned to overhead group
Overhead group will be specified in material master

Define calculation basis

Path :SPRO-Controlling- Product cost controlling –Product cost planning-Basic

setting for material costing –Over head –costing sheet components –Define
calculation bases

Select new entries button

Base :D1 (Text filed)
Name :Raw materials
Base :D2
Name :Production cost
Save
Press enter to save in your request

Select D1 double click on details folder

Controlling area :BIL
Enter
Select new entries button
From cost element :400000
To cost element :400099 RM consumption
Save
Select back arrow two times
Select base D2 Production cost
Double click on details folder
Controlling area :BIL
Enter
Select new entries button
From cost element :400100
To cost element :400299 Personnel & Manufacturing group

From cost element :400500

To cost element :400599 Depreciation a/c

From cost element :1200001 Activity allocation

To cost element 1200001
Save

Define percentage overhead rates:

Same path

Select new entries button

Overhead rate :D3
Name :RM overhead rate
Dependency :Select D010 Overhead type/Overhead key
Save
Press enter to save in your request

Select D3
Double click on details folder
Ignore the warning message press enter
Select new entries button

Valid from To Controlling area Overhead type Overhead key Percentage

01.04.2008 31.03.2009 BIL Select 2 BIL1 5

(Planned overhead rate) RM key

01.04.2008 31.03.2009 BIL 1 (Actual overhead rate) BIL1 10

Select save button or Ctrl+S

Press enter to save in your request

Define Credits
Same path

Select new entries button

Credit :D4
Name :BIL RM credit key
Save
Press enter to save in your
request Select :D4
Double click on details folder
Controlling area :BIL
Enter
Select new entries button
Valid to :31.03.2009
Cost element :1200000 RM overhead rate
Fixed percentage :100%
Cost center :Dept H (Allocation cost center)
Save
Actual over head rate 10%
Credit key D4 -1100000 Cost Dept.

1. RM1 Purchase/Receipt (Freight including)

Inventory RM local DR 600000

To GR/IR clearing RM local 600000

2. Loading & Unloading charges

Loading & Unloading charges Dr 7000 Dept H

To Bank 7000

3. RM 2 Purchase

Inventory RM local DR 300000

To GR/IR clearing RM local 300000

4. Loading & Unloading charges for RM 2

Lodging & unloading charges DR 3000

To Bank 3000

5. RM Consumption for production Order 1-RM1 and RM2

RM consumption local DR 40000 Order 1

RM Consumption local DR 20000 Order 1
To Inventory RM local 40000
To Inventories RM local 20000

6. RM consumption for production order 2 RM-1 and RM2

RM consumption local DR 10000 Order 2

RM Consumption local DR 30000 Order 2
To inventory RM local 10000
To Inventory RM local 30000

In the month end

RM material consumption 100000

Lodging & Unloading charges 10000
% on consumption 10% actual overhead rate

Cost center Dept H

(Allocation cost center)

Loading & Unloading for RM1 7000 DR Order 1 6000 DR

Loading & Unloading for RM2 3000 DR Order 2 4000CR

H Value will be zero

Order 1 Order2
RM Consumption 60000 40000
RM overhead rate 6000 4000
(Actual 10%) ----- -----
66000 44000
===== =====

Indirectly we are allocating cost center Dept H values to production orders based
on the consumption values.

Define costing sheets:

Path :Up to overhead the path is same- Define costing sheets

Select new entries button

Costing sheet :BIL
Description :BIL Costing
Sheet Save
Press enter to save in your request
Select :BIL
Double click on costing sheet rows folder
Select new entries button

Row Base Overhead Description

10 D1 Raw materials
20 400000-400099
D3 RM Overhead rate
From 10
To Row 10
 Credit :D4

Row 30
Base :D2
Description :Product cost

Row 40
Description :Cost goods manufacturer
From 10
To row 30
Save

Assign costing sheet to plant :

Path :SPRO-Controlling –Product cost controlling –Product cost planning –Material

cost estimate with quantity structure- Define costing variants (TR code is OKKN)

Select position button

Cost variant :Select PPC1 standard cost estimate (Materials)
Enter
Select PPC1
Select details button
Select valuation variant button
Select create beside valuation variant /plant
Select new entries button
In plant :BILP
Save
Press enter to save in your request

Select back arrow

Select valuation variant :001 with plant
BILP Select details button
Select overhead tab
Give the costing sheet :BIL costing sheet both in the places
Save
Define cost component structure:

To know the break up of standard product cost

What is raw material cost?
What is RM overhead cost ?
What is production cost ?

Path :SPRO-Controlling –Product cost Controlling –Product cost planning –Basic

settings for material costing –Define cost component structure . (OKTZ)

Select cost component structure 01

Double click on cost components with attributes folder
Select component structure :01 with cost component 10 raw materials
Double click on assignment:Cost component –cost element interval folder
Select new entries button
Cost competent structure 01
Chart of Accounts :BIL
From cost element 400000
To cost element 400099
Cost component :select 10 RM
Save
Ignore the warning message press enter
Press enter to save in your request
Select back arrow
Double click on cost components with attributes folder
Select cost component structure 01 with cost component 80 Material over head
Double click on assignment:Cost component cost element –Interval folder
Select new entries button
Cost component structure 01
Chat of Accounts :BIL
From cost element :1200000 RM overhead
Cost component :80 Material overhead
Save
Press enter to save in your request
Double click on cost components with attributes folder
Select cost component structure :01 with lost component 50 production
machine Double click on assignment cost component –cost element interval folder
Select new entries button
Cost component structure :01
Chat of Accounts :BIL
From cost element :400100
To cost element :400299
Cost component :select 50 production machine

One more
Cost component structure :01
Chat of Accounts :BIL
From cost center :400500
To cost center :400599
Cost component :50

One more

Cost component structure :01

Chat of Accounts :BIL
From cost element :1200001
Cost component :50
Save
Double click on cost component structure folder
For cost component structure 01 select active check box
Save
For cost component structure assignment structure 02 also for cost component
Note: The above procedure is to be followed to 02 also

PP CONSULTANT JOB:

Define MRP controller

Path :SPRO-Production –material requirements Planning –Master data-Define –MRP
controllers

Select new entries button

Plant :BILP
MRP controller :Mr.A
Save
Press enter to save in your request

Notes:
Define floats (Scheduling margin key)

Floats –Buffer days or grace days

1 days grace days
Production order creation 08.12.2008 10.12.2008
Production order release 10.12.2008 12.12.2008
Production start date 11.12.2008 13.12.2008
Production end date 15.12.2008 17.12.2008

Path :SPRO-Production –Material requirements planning –Planning –Scheduling and

capacity parameters –Define floats (Scheduling margin key)

Select new entries button

Plant :BILP
Margin key :BIL
Opening period :2 days
Float before production :2 days
Float after production :2 days
Release period :2 days
Save
Press enter to save in your request

Define production scheduler

Path :SPRO-Production-Shop floor control- Master data-Define production scheduler

Select new entries button

Plant :BILP
Production scheduler :B
Description :Mr.B
Save
Press enter to save in your request

Determine person responsible for work center

Path :SPRO-Production –Basic data –Work center –General data –Determination

person responsible

Select new entries button

Plant :BILP
Responsible person : Mr.C
Person responsible for work center :Mr.C
Save
Press enter to save in your request

CO END USER AREA:

Planning cost center wise (KP06)

Version 0
From period :9 (December)
To period :9 (December)
Fiscal year 2008
Give the cost center :Dept G
Select page down button or next page button
Cost element :400100 Salaries A/c
Select from based radio button
Select overview screen button (F5)
For 400100 Plant fixed cost 720000
Save

Planning for machine hours

Path :Accounting –Controlling –Cost center accounting –Planning-Activity output

/Prices-Change (KP26)

Version 0
From period 9
To period 9
Fiscal year 2008
Select next page or page down button
Cost center :Dept G
Activity type :BIL
Select form based radio button
Select overview screen button
Plant activity 72000
Save

calculation of Machine hour rate

Path :Up to planning the path is same – Allocations –Price calculation (KSPI)

Select cost center group radio button

Cost center group select :BILPROD
Execute
Select save button
Ignore the message press enter

MM END USER AREA

Creation of material master (MM01)

A) Raw material 2
B) Finished product 1

Give the material :BILRM2

Industry sector :Mechanical Engineering
Material type :Raw material
Press select view button
Select basic data1 :Select purchasing Select general plant data /storage /Accounting
Select organization levels button
Plant :BILP
Storage location :Hyderabad
Enter
Give the description :Raw material 2
Base unit of measurement :KG
Material group :BILC
Division :BS
Select purchasing tab
Purchasing group :BIL
Select accounting 1 tab
Valuation class :BIL1 RM Local
Price control :select V moving
Moving price 150
Save

One more material :BILFG1

Industry section :Mechanical engineering
Material type :Finished product
Press select view button

Select basic data1, MRP1, MRP2,MRP3, Work scheduling, general plant data /storage1,
accounting , Costing 1
Select organizational levels button /enter
Enter
Plant :BILP
Storage location :Hyderabad
Enter
Description :Finished product 1
Base unit measurement :KG
Division :BS
Select MRP1 tab
MRP type :select PD (MRP)
MRP controller :A
Lot size :select EX lot for –lot order quantity
Select MRP 2 tab
In –house production :0 days
Schedule margin key :select BIL
Select MPR 3 tab
Ignore the warning message press enter
Availability check :select KP (no check )
Select work scheduling tab
Production scheduler :B
Select accounting tab
Valuation class :BIL2 Finished products
Price control :S (Standard price)
Standard price 300
Select costing one tab
Overhead group :select
BIL1 Save
Note :BOM=Bill of Material

PP END USER AREA

Creation of Bill of Material

Path :Logistics –Production –Master data –Bills of material –Bill of material –

Material BOM –Create (CS01)

Give the material :BILFG1

Plant :BILP
BOM usage :select 1 production
Enter
For item 10
Give the component :BILRM1
Quantity 1
Item 20
Give the plant :BILRM2
Quantity 1
Save

Creation of work center

Path :Up to mater data the path is same –Work centers –then work centers-create
(CR01)

Plant :BILP
Work center :Dept G
Work center category :select 0001 Machine
Select basic data button
Give the description :Dept G
Person responsible :Mr.C
Usage 009
Under standard value maintenance
Standard value key :SAP1 Normal production
Select costing tab
Start date :01.04.2008
Cost center :Dept G
For machine activity :Give activity type BIL
Activity unit :H (Hour)
Formula key :SAP002 (Production machine time)
Save

Creation of routings

Path :Up to master data the path is same –Routings –Routings –Standard routings –
Create (Tr code is CA01)

Give the material :BILFG1

Plant :BILP
Enter
Usage :select 1 production
Status ;select 4 (released (general))
Select operation button
For operation 10 give the work center :Dept G
Control key :select PP01 in hour production
Double click on operation 10
Machine standard value 5
Unit :H (Hour)
Save
Note: Routing is process flow as a department wise

CO –END USER AREA

Creation of cost estimate with quantity structure:

Path :Accounting –Controlling –Product cost controlling –Product cost planning-

Material costing –cost estimate with quantity structure –Create (Tr code is CK11N)

Give the material :BILFG1

Plant :BILP
Costing variant :select PPC1 (standard cost estimate for material )
Enter
Costing date from :Today’s date
Note :In live environment next month first day date, this is planning date, In training
institution use today’s date
Costing date to :31.12.9999
Quantity structure date :08.12.2008
Valuation date :08.12.2008
Enter

Cost sheet
Raw materials

BIL RM1 1 Kg 75
BILRM2 1Kg 150 225

RM overhead cost -5% 11

Production costs 5*10 50
Machine hours 5 Hrs
Machine hour rate 10Rs -----
286

From the menu select Costs –>Display cost components

Select save button or Ctrl+S
Enter

Marking and releasing

Display material master

Path :Logistics –Materials management –Material master-Material –Display –Display

current (MM03)

Material :BILFG1
Press select views button
Select costing 2 view
Enter
Plant :BILP
Enter

A) Marking and releasing

Display material master

1. Making updates future price in live environment on 21st February create estimate for
March and store in the System.

2. Realizing updates current price on 1st of March release stock valuation will be at the
new rate from 1st of March

B) Marking and releasing :

Path :Accounting –Controlling –Product cost controlling –Product cost planning –

material costing –Price update (CK24)

Posting period 9
Fiscal year 2008
Company code :BIL
Plant :BILP
Material :BILFG1
Select test run check box
Select marking allowance button
Select company code :BIL
Costing variant :select PPC1
(Standard cost estimate for materials)
Save

Select back arrow

Deselect test run check box
Execute
Select material :BILFG1
Select costing to tab
Select back arrow two times
Select release button
Execute
Select material :BILFG1
Select costing to tab

ACTUAL COSTING

CO consultant Job

Check costing variants for Manufacturing orders (PP)

Path :SPRO-Controlling –Product cost controlling -Cost object controlling –product

cost by order –Manufacturing orders –Check costing variants for manufacturing
orders(PP) (Tr.code is 0PL1)

Select costing variant PPP1 Production order plan

Select details button
Select valuation variant button
Select create button beside valuation variant /plant
Select new entries button
In plant :BILP
Save
Press enter to save in your request
Select back arrow
Select valuation variant :006 with plant
BILP Select details button
Select overhead tab
Give the costing sheet :BIL costing sheet
Save
Select back arrow
Select costing variant PPP2 production Order Actual
Select details button
Select valuation variant button
Select create beside valuation variant/plant
Select new entries button
In plant :BILP
Save
Press enter to save in your request
Select back arrow
Select valuation variant 007 with plant :BILP
Select details button
Select overhead tab
Costing sheet :select BIL costing sheet
Save

Define goods received valuation for order delivery:

Same path

Select new entries button

Valuation area :BILP
Valuation variant :007 production order -Actual
Save
Press enter to save in your request

Work in process customization

Creation of 5 secondary cost elements (Tr code is KA06)

Give the cost element 1100000

Valid from :01.04.2008 to 31.12.9999
Enter
Name & Description :Order /Project result analysis
Cost element category :select 31 (order /project results analysis)
Save
Cost element 1100001
Reference cost element 1100000
Controlling area :BIL
Enter & Save

Cost element 1100002

Reference cost element 1100000
Controlling area :BIL
Enter & Save
Cost element 1100003
Reference cost element 1100000
Controlling area :BIL
Enter & Save
Cost element 1100004
Reference cost element 1100000
Controlling area :BIL
Enter
Save

Define results analysis keys

Path :SPRO-Controlling –Product cost controlling –Cost object controlling –

Product cost by order –Period end closing –Work in process –Define results-
Analysis keys (Tr code is OKG1)

Result analysis key :FERT WIP calculation for production orders

Define results analysis versions(Tr code OKG9)

Same path
Select new entries button
Select controlling area :BIL
Technical result analysis cost element :select 1100000
Save
Press enter to save in your request

Define valuation method (Actual cost) ( Tr code is OKGC)

Same path
Select new entries button
Select actual cost button
Controlling area :BIL
Result analysis version :0
Result analysis key :FERT
Enter & Save
Press enter to save in your request

Define line Id’s

Same path
Purchase of to get the break up of WIP (Work In Progress)value
Select line ID EL (Revenues)
EK Direct cost
FK Production cost
ABR settled cost for controlling area 1000

Select copy as button (F6)

Change the controlling area to BIL for all line ID’s
Enter & Save
Press enter to save in your request

Define Assignment (OKGB)

Same path
Select line ID EL that is revenues for controlling area 1000
Select copy as button
Change the controlling area to BIL
Change masked cost element to 00003+++++ (5 times plus)(300000 to 399999)
Enter & Save
Press enter to save in your request
Select line ID :EK Direct cost for controlling area 1000
Select copy as button
Change the controlling area to BIL
Change mass cost element to 00004000++
Enter and save
Select line ID FK that is production cost for controlling area 1000
Select copy as button
Change the controlling area to BIL

Production cost elements:

400100 -400199 Personnel 00004001++
400200-400299 Manufacturing 00004002++
400500-400599 Depreciation 00004005++
1200001 Activity allocation 00012+++++

Change master key cost element to 00004001

Enter & Save
Notes: for define assignment line ID brak up of WIP
Dept A Dept B ept C
Issue RM work in progress
RM over head
Production costs 100000 200000
Calculate internally WIP by using secondary cost elements and transfer to financial
accounting require the break up of WIP by using line ID’s and account assignments to
line ID’s.

Select line ID FK production cost for controlling area BIL

Select copy as button
Change the mass cost element to 00004002++
Enter & Save
Select 2FK line ID’s for controlling area BIL
Select copy as button –Change masked cost element from first line ID 00004005++
Change to 00012+++++
Enter & save
Select bank arrow

Select line ID ABR Settled cost for controlling area 1000

Select copy as button
Change the controlling area to BIL
Change mass cost element to 0001000001 :(settlement cost element)
Enter & save

Define update; (Tr.code is OKGA)

Same path
Select new entries button
Controlling area :BIL
Version 0
Result analysis key :FERT
Line ID :select EL revenues
Category :select N (costs not to be included)
Controlling area :BIL
Version 0
Result analysis key :FERT
Line ID :Select EK (Direct cost)
Category :select K cost
WIP 1100001
Revenues 1100002
Controlling area :BIL
Version 0
Revenues analysis key :FERT
Line ID :FK production cost
Category :select K cost
WIP creation 1100003
Reserves creation 1100004
Select page down button
One more controlling area :BIL
Version 0
Result analysis key :FERT
Line ID :ABR settled cost
Category :select A (Settled cost )
Save
Press enter to save in your request

Creation of two GL Masters:

WIP entry

Work in process DR BS CA(Current assets, Loans &

Advances)
To Increase /Decrease in WIP P&L Credit INC/DEC in stocks

FS00

Give the GL Account no. 200123

Company code :BIL
Select with template button
Give the GL A/c No.200121 INV RM local
Company code :BIL
Enter
Change short text to and GL A/c long text to work in process
Other fields are common
Save

GL A/c No.300201
Company code :BIL
Select with template button
Give the GL A/c no.300200 Increase /Decrease stocks FG
Company code :BIL
Enter
Change short text and GL A/c loge text to INC/DEC stocks – WIP (Work in Progress)
Save

Define posting result for setting work in process

Path :Up to period end closing the path is same –Work in process –Define posting
results for setting work in process (OKG8)

Select new entries button

Controlling area :BIL
Company code :BIL
Result analysis version :select 0
Result analysis category :WIPR (Work in Process with requirement to Capitalized)
P & L A/c 300201
Balance sheet 200123
Save
Press enter to save in your request

Define results analysis version (OKG9)

Same path

Select controlling area :BIL

select details button
Select transfer to Financial accounting check box
Save
Ignore the warning message press enter
Press enter to save in your request

RM issue overhead production costs Dept A Dept B Dept D

FG not received
Settle to accounts by using secondary costs elements break up WIP (BY using line IDs)
Define variance keys:

Path :Up to period end closing the path is same –Variance calculation :Define
variance keys (OKV1)

Select variance key 00001 Production order

Select copy as button
Change the variance key to BIL1
Change the name also variance key for BIL
Enter & Save

Define default variance keys for plants (OKVW)

Same path

Select position button

Give the plant :BILP
Enter
For plant :BILP
Assign variance key :BIL1
Save
Press enter to save in your request

Define target cost version: (OKV6)

Notes:
Budgeted cost =Budgeted production Qty * Standard price

Standard cost =Standard quantity * Standard price

Target cost =Actual production qty * standard price

Actual cost =Actual Production * actual price

Path :Same path

Select controlling area 1000 with target cost version 0

Select copy as button
Change the controlling area to BIL
Change the description to target cost version for BIL
Enter & Save
Press enter to save in your request

Assign variance key in Material master

Path :Logistics –Material management-Material master –Material –Change –

Immediately (MM02)

Give the material no.BILFG1

Press select views button
Select costing 1 view
Enter
Give the plant :BILP
Enter
Variance key :select BIL1
Save

Creation of cost element group (KAH1)

Give the cost element group :BILPRODN

Enter
Description :Production cost element for BIL
Select Edit-Cost element -Select insert cost element button
400100 400299 Personnel & Manufacturing
400500 400599 Depreciation
1200001 Activity allocation
Save

Create allocation structure:

Path :SPRO-Controlling –Product cost controlling- Cost object controlling –Product

cost by order-Period end closing –Settlement –create allocation structure

Select new entries button

Allocation structure :B2
Text :BIL Production differences allocation
structure Save
Press enter to save in your request
Select :B2
Double click on assignments folder
Select new entries button
Assignment Text
01 Direct costs(Raw materials)
02 Material overheads
03 Production costs
Save

Select assignment 01
Double click on source folder
From cost element :400000
To cost element 400099
Double click settlement cost elements folder
Select new entries button
Receiver category :select G/L, GL account
Select by cost element check box
Save

Double click on assignments folder

Select assignment 02 Material overheads
Double click on source folder
From cost element :1200000 RM overhead rate
Double click on settlement cost elements folder
Select new entries button
Receiver category :select G/L , GL Account
Select by cost element check box
Save
Double click on assignment folder
Select assignment 03 production cost
Double click on source folder
Give the cost element group :BILPRODN
save
Double click on settlements cost elements folder
Select new entries button
Receiver category :select G/L
Select by cost element check box
Save

Create settlement profile:

Same path

Select new entries button

Settlement profile :BIL
Description :BIL production order differences settlement profile
Select to be settled in full radio button
Allocation structure :B2
Default object type :select G/L
Select % settlement check box
Select equivalence number check box
Select amount settlement check box
Under valid receivers for GL account :Select settlement required
Document type :SA
Maximum no.of distribution rules :999
Residence time :12 months
Save
Press enter to save in your request

Define CO.No.range interval for the business transactions

RKL -Actual Activity Allocation

KZPI- Actual overhead (Periodic)

User transactions code :KANK

Give the controlling area :BIL
Select maintain groups button
Double click on RKL
Double click on KZPI
Select Co. No. range interval for BIL check box
From the menu select –Edit –Assign element group
Save
Ignore the warning message press enter

Define exchange rate for type P (Standard truncation for cost planning for INR to
EURO

(Transactions code OB08)

Select new entries button

Exchange rate type :P
Valid from :01.12.2008
From currency :INR
To currency :EUR
Direct quotation :0.02
Save
Press enter to save in your request

FI Consultant job
BILRM2 receipt

Purchase order Opening stock

|
GR
|
IV

Inventory RM local DR BSX

To Stock taking GBB BSA Current liability & provision

Production order differences are to be settled to accounts

Production order differences manufacturing DR PRD
To INC/DEC in stocks FG GBB AUA

Creation of 2 GL masters (FS00)

Give the GL A/c No.400201
Company code :BIL
Select with template button
Give the GL A/c No. :400200 Conversion charges
Company code :BIL
Change short text and GL account long text to production order differences
Select create /bank/Interest tab
Field status group change to G014 MM adjustment account
Save
GL A/c No. 100599
Company code :BIL
Select with template button
Give the GL A/c No.100500 VAT
payable Company code :BIL
Enter
Select type /Description tab
Chang short text and GL account long text to Stock taking
Select create /bank /interest tab
Change the field status group G049 (manufacturing cost accounts)
Save
Give the GL account no.300200 INC/DEC stock in FG
Company code :BIL
Select edit cost element button
Valid from :01.04.2008 to 31.12.9999
Enter
Cost element category :select 22 external settlement
Save

Assignment of account for automatic postings (OBYC)

(See the material )

Double click on transaction PRD Cost (Price) differences

Give the Chart of Accounts :BIL
Enter
Save
Give A/c No.400201 production order differences
Save
Press enter to save in your request
Select back arrow
Double click on GBB offsetting entry for inventory posting
Valuation modifier :X
General modification :BSA opening stock taking
Valuation class :BIL1
Account no. :100599 stock taking account
Valuation modifier :X
General modification :AUA production
Valuation class :BILL
Account 300200
Save
Press enter to save in your request

PP CONSULTANTS AREA

Define order type –Dependent parameters

Path :SPRO-Production –Shop floor control-Master data –Order-Define order type

dependent parameters. (Tr code is OPL8)

Select plant :1000 with order type PP01

Select copy as button
Change the pant to BILP
Enter and Save
Press enter to save in your request

Define scheduling parameters for production orders

Path :Up to Shop floor control the path is same- Operations-Scheduling –Define
scheduling parameters for production orders (Tr code is OPU3)

Select plant :1000 with order type PP01

Select copy as button
Change the plant to BILP
Enter and save
Press enter to save in your request

Define confirmation parameters

Path :Up to shop floor control the path is same –Operations-Confirmation-Define

confirmation parameters (OPK4)

Select plant 1000 with order type PP01

Select copy as button
Change the plant to BILP
Enter and Save
Press enter to save in your request

Define checking control

Path :Up to shop floor control the path is same –Operations –Availability check –
define checking control (OPJK)

Select business function :1 & 2 for order type PP01 for plant
1000 Select copy as button
Change the plant to BILP
Enter
Change the plant to BILP
Enter and save
Press enter to save in your request

END USER AREA

Creation of production order:

Path :Logistics –Production-Shop floor control-Order –Create –with material (Tr code
is CO01)
Give the material :BILFG1
Production plant :BILP
Planning plant :BILP
Order type :select PP01 Production order
Enter
Give the total Qty under quantities :10
Start date & end date :Today’s date
Select cost order button (Ctrl+F7)
From the menu select Goto 🡪Costs –Analysis
Select back arrow
Select release order button (Ctrl+F1)
Save
From the menu select order display note the order no.60003225
Enter
Select assignment tab
Not to the reservation no.66076

Raw material receipt by way of opening stock

Path :Logistics –Materials management –Inventory management –goods movement –

Goods receipt –Other (Tr code is MBIC)

Give the movement type 561

Plant :BILP
storage location :HYD
Enter
Give the material no. :BILRM2
Quantity :100 kgs
Select save button or Ctrl+S
From the menu select other goods receipts display
Enter
Select accounting documents button
200121 Inventory RM LCL 15000 BILRM2 BIL1 BSX
100599 Stock taking 15000 BILRM2 GBB BSA BIL1

100*150

Raw material issue to production order:(Tr code is MB1A)

Select to reservation button

Give the reservation no.66076
Enter
Qty
BIL RM1 15
BIL RM2 15
Save
From the menu select goods issue display
Enter
Select accounting documents button
Select accounting document no.

200121 Inventory RM local 1125 BILRM1 BSX BIL1

400000 RM consumption local 1125 BILRM1 GBB VBR BIL1

Quantity consumed * Avg rate ( 15 *75)

200121 Inventory RM local 2250 BILRM2 BSX BIL1

GBB VBR
400000 RM consumption local 2250 BILRM2 BIL1
Qty consumed * Avg. rate (15*150)

Actual overhead calculation

Path :Accounting –Controlling –Product cost controlling –Cost object controlling

– product cost by order –Period end closing –single functions –Overhead –
Individual processing (Tr code is KGI2)

Give the order no. 60003225

Period 9
Fiscal year 2008
Select text check box
Select dialog display check box
Execute
Select back arrow
Deselect text run check box
Execute

Work in process calculation

Path :up to single functions the path is same –Work in process –Individual processing
–Calculate (Tr code is KKAX)

Give the over no. 60003225

WIP period 9
Fiscal year 2008
Result analysis version :select 0
Select test run check box
Execute
Select back arrow
Deselect test run check box
Execute
Settlement of work in process to accounts
(31.12.2008 (month end date)

Path :Up to single functions the path is same –Settlement of individual processing (Tr
code is K088)

Give the order no. 60003225

Settlement period 9
Fiscal year 2008
Deselect text run check box
Select check transaction date check box
Execute
Select detail lists button
Select accounting documents button
Select accounting document no.
300201 INC/DEC in stock WIP 3713 P &L
Account 200123 Work in Process 3713 Balance Sheet
(Actual RM +Actual RM overheads)

To view work in process report

Path :Accounting –Controlling –Product cost controlling –Cost object controlling –

Product cost by order –Information system –Reports for product cost by order –
Object list –Order selection (Tr code is S_ALR_87013127)

Plant :BILP
Material number :BILFG1
From period :01 2008
To Period :9 2008
Execute
Select report call button

Confirmation of production order

Path :Logistics –Production –shop floor control –Confirmation –Enter-For operation
– time ticket (Tr code is Co11N)

Give the order no. 60003225

Operation /Activity :10 kg
Confirmation type :select final confirmation
Yield to confirm :10 kg
Fro activity 2 to confirm :60 Qty
Unit :H (Hour)
Save

Production receipt

Path :Logistics –Material management –Inventory management –Goods movement –

Goods receipt for order (Tr code is MB31)

Give document date :31.12.2008

Posting date :31.12.2008
Give the movement type :101 (Goods receipt for order into ware house)
Order 60003225
Plant :BILP
Storage location :HYD
Enter
Ignore the warning message press enter
Select save button or Ctrl+S
From the menu select goods receipt display
Document no.5000011861
Enter
Select accounting documents button
Select accounting document no.

200122 Inventory FG 2860 BILFG1 BSX BIL2

GBB AUF
300200 INC/DEC in stocks FG 2860 BILFG1 BIL2
Qty produced * standard rate
10*286
To make production order technically complete (TECO)

Path :Logistics –Production –shop floor control –Order –Change (Tr code is CO02)

Give the order no.60003225

Enter
From the menu select functions –Restrict processing –Technically complete
Save

Calculation of variances

Path :Accounting –Controlling-Product cost controlling –Cost object controlling –

Product cost by order - period ending closing –single functions- Variances –Individual
processing (Tr code is KKS2)

Give the order no.60003225

Select execute button
Select back arrow
Deselect text run check box
Execute
Double click on variance amount

Open one more session for order display (CO03)

Give the order no.60003225
Enter
From the menu select go to cost analysis

Calculation of work in process (KKAX)

Path :Upto single functions same path –Work in Progress –Individual processing-
Calculate

Work in process for Dec

Production for Dec
To calculate WIP once again work in process will be reserved and variances will be
settled to accounts
Give the order no. 60003225
WIP to Period 9
Fiscal year 2008
Result analysis version:0
Deselect text run check box
Execute
Settlement of work in process to accounts :KO88
Give the order no. 60003225
Settlement period 9
Fiscal year 2008
Deselect test run check box
Select check transaction date check box
Execute
Select details list button
Select accounting documents button
Select accounting document no.
GBB AUA
300200 INC/DEC in stocks FG 853 BILFG1 BIL2
400201 Production order diff 853 period
300201 INC/DEC in stock WIP 3713 P & L debit
200123 work in process 3713 –Balance sheet credit

ASSET ACCOUNTING AREA

Capital work in progress line item settlement

Machine purchase Debit to CWIPMachine no.15
01.12.2008 Commission 13/12/2008

Freight charges 05.12.2008 settle from CWIP to respective asset

Commissioning charges 12/12/2008

Define settlement profile:

Path :SPRO-Financial accounting –Asset accounting- Transactions-Capitalization

of assets under construction –Define /Assign settlement profiles (TR code is OKO7)

Double click on define settlement profile

Select settlement profile AI Settlement assets under construction
Select details button
Select to be settled in full radio button
Allocation structure :select A1( CO allocation
structure) Default object type :select FXA asset
Select % settlement check box
Select equivalence numbers check box
Select amount settlement check box
Under valid reserves for fixed assets :Select settlement required
Document type :AA (Asset Posting)
Max no. distribution rules :999
Residence time :12 months
Save
Select back arrow two times
Double click on assign settlement :Profile to company code
Select position button
Give the company code :BIL
Enter
For company code BIL assign settlement profile AI
Save
Press enter to save in your request

Creation of capital work in progress asset master (AS01)

Give the asset class :BIL4000 capital work in progress

Company code :BIL
Enter
Description :CWIP –General
Capitalized on :01.12.2008
Select time dependent tab
Business area :BILH
Select depreciation areas tab
Depreciation key :0000 (no depreciation)
Save
Note down the asset no.500001-0

Asset purchase posting (F-90)

Give the doc .Date & Posting date :01.12.2008

Type :KR
Company code :BIL
Posting key 31
Vendor account 2001
Give the amount 600000
Business area :BILH
Text :Machinery purchase posting
Posting key 70
Account no. :500001-0
Transaction type :100 External acquisition
Remove the TDS codes
Enter
Amount :*
Text :+
Document –Simulate & Save

Freight payment (F-02)

Give the Doc date & Posting date :15.12.2008

Type :SA
Company code :BIL
Posting key 70
Account :500001-0
Transaction type 100
Enter
Give the amount 10000
Text :Freight payment
Posting key 50
Account no. :200105 SBI current a/c
Enter
Amount :*
Business area :BILH
Text :+
Document –simulate & save

Creation of machinery master (AS01)

Give the asset class :BIL 2000 Dept A

Company code :BIL
Enter
Description :Machine no.15
Capitalized on to days date
Select time dependent tab
Business area :BILH
Select depreciation area tab
Depreciation key :BIL1
Useful life :15 years
Period :6 months
Ordinary depreciation start date :Today’s date
Save
Note: the asset no.200004-0

Settlement of CWIP to machine no.15

Path :Accounting –Financial accounting –Fixed assets –Posting-Capitalized asset

under construction –distribute (Tr code is A1AB)

Company code :BIL

Asset 500001
Sub number 0
Execute
From the menu select Edit –select –select all (F5)
Select enter button
Category :select FXA asset
Settlement receiver :200004-0
Give the percentage 100
Select back arrow
Save
Select settlement button (Shift +F8)
Give the asset value date :13.12.2008 (Today’s date)
Text :CWIP settlement
Deselect text run check box
Execute

Go and see the document (FB03)

Enter
Note :In live environment you take a purchase of machinery don’t enter
directly Asset account, first enter in Capital Work in Progress after
commissioning added all charged convert to asset accounting.