Costing sheet

Use of costing sheet:


In the costing sheet, you determine the following:
  • The direct costs to which overhead is applied (calculation base)
  • The conditions under which overhead is applied (dependency)
  • Whether overhead is calculated on a percentage basis or on a quantity basis
  • The amount of the overhead percentage, or the amount of overhead for each unit of measure
  • The validity period for the overhead
  • Which object (cost center or order) is credited, and under which cost element for actual postings (credit key)
Overhead cost elements: 
IMG à Controlling à Product Cost Controlling à Product Cost Planning  à Basic Settings for Material Costing à Overhead à Maintain Overhead Cost Elements

 Overhead cost elements used to define overhead to products.


Calculation Base: 
IMG à Controlling à Product Cost Controlling à Product Cost Planning  à Basic Settings for Material Costing à Overhead à Costing Sheet: Components à Define Calculation Bases

The calculation base determines to which cost elements overhead is applied together.
We will define 2 bases on which overheads will be calculated:-
1)  Materials
2)  Wages

Product Costing fastfacts

Define calculation base
Define percentage overhead rates
Define costing sheets
Define overhead keys
Define cost component structure:
Define structure
Define cost component
Assign cost elements to cost components


Product costing is a tool for planning costs and establishing prices for materials. It is used to calculate the costs of goods manufactured and the costs of goods sold for each product unit. 

If costing is carried out on the basis of data in Production Planning (PP), then the cost estimate is a product cost estimate with a quantity structure (for example, BOM and routing). If costing is carried out on the basis of data that you enter manually, then the cost estimate is a product cost estimate without a quantity structure. 
Product costing belongs to both the Production Planning (PP) Module and the Controlling (CO) Module. 

Cost Object Controlling is used in the following areas:

§ Order Related Production.

§ Repetitive Manufacturing.

§ Process Manufacturing.

§ Sales Order Related Production.

§ Engineer to Order.

Maintaining number range in Controlling area KANK

We can create new number range from scratch or copy from the standard Controlling area 0001.
Usually just to make sure the data consistency we do not copy number ranges but rather create.

Controlling area OX06

Controlling area is an organizational unit within a company that represents company for cost accounting purpose.
Controlling area can have more then one company code assigned to it, but one company code can have one and only one controlling area. All company codes under same credit control are must have same operative charts of accounts.
IMG --> Controlling --> G/L--> organization --> Maintain controlling area   OX06



Use CoCd --> CO area if your company code is same as the controlling area and you have just one company code in the controlling area otherwise use second option. 

Cost element group KAH1


Accounting → Controlling→ Cost Element Accounting (or Cost Center Accounting) → Master data → Cost element groups → Create/Change/Display.

Cost element group used for collecting similar characteristics in same groups.
Cost element group structure used for row structure for reporting purpose.


Characteristics & Values in SAP COPA




Cost elements: Primary & Secondary

Cost center is a cost element classifies the organization's valuated consumption of production factors within a controlling area.
Cost center is an organizational unit within a controlling area that represents a defined location of cost incurred. It can be defined based on various criteria such as functional requirements, allocation criteria,physical location etc. 
Primary Element
Primary costs that originate outside the company; relate directly to the income statement in FI and must be 
included in the FI Chart of Accounts.
All Primary cost elements gets linked to Income statement.
Secondary Element
Secondary costs that result from internal allocation activities; NO relation to G/L accounts in FI. These 
accounts are exclusively for cost accounting and are only maintained in CO.



SAP CO introduction

Introduction

The SAP CO (Controlling) Module provides supporting information to Management for the purpose of planning, reporting, as well as monitoring the operations of their business. Management decision-making can be achieved with the level of information provided by this module. 

Some of the components of the CO(Controlling) Module are as follows: 

· Cost Element Accounting

· Cost Center Accounting

· Internal Orders

· Activity-Based Costing ( ABC)

· Product Cost Controlling

· Profitability Analysis

· Profit Center Accounting

The Cost Element Accounting component provides information which includes the costs and revenue for an organization. These postings are automatically updated from FI (Financial Accounting) to CO (Controlling). The cost elements are the basis for cost accounting and enables the User the ability to display costs for each of the accounts that have been assigned to the cost element. Examples of accounts that can be assigned are Cost Centers, Internal Orders, WBS(work breakdown structures). 

Cost Center Accounting provides information on the costs incurred by your business. Within SAP, you have the ability to assign Cost Centers to departments and /or Managers responsible for certain areas of the business as well as functional areas within your organization. Cost Centers can be created for such functional areas as Marketing, Purchasing, Human Resources, Finance, Facilities, Information Systems, Administrative Support, Legal, Shipping/Receiving, or even Quality. 

Some of the benefits of Cost Center Accounting : 
(1) Managers can set Budget /Cost Center targets; 
(2) Cost Center visibility of functional departments/areas of your business; 
(3) Planning ; 
(4) Availability of Cost allocation methods; and 
(5) Assessments/Distribution of costs to other cost objects. 

Internal Orders provide a means of tracking costs of a specific job , service, or task. Internal Orders are used as a method to collect those costs and business transactions related to the task. This level of monitoring can be very detailed but allows management the ability to review Internal Order activity for better-decision making purposes.

Activity-Based Costing allows a better definition of the source of costs to the process driving the cost. Activity-Based Costing enhances Cost Center Accounting in that it allows for a process-oriented and cross-functional view of your cost centers. It can also be used with Product Costing and Profitability Analysis. 

Product Cost Controlling allows management the ability to analyze their product costs and to make decisions on the optimal price(s) to market their products. It is within this module of CO (Controlling) that planned, actual and target values are analyzed. Sub-components of the module are: 

· Product Cost Planning which includes Material Costing( Cost estimates with Quantity structure, Cost estimates without quantity structure, Master data for Mixed Cost Estimates, Production lot Cost Estimates) , Price Updates, and Reference and Simulation Costing. 

· Cost Object Controlling includes Product Cost by Period, Product Cost by Order, Product Costs by Sales Orders, Intangible Goods and Services, and CRM Service Processes. 

· Actual Costing/Material Ledger includes Periodic Material valuation, Actual Costing, and Price Changes. 

Profitability Analysis allows Management the ability to review information with respect to the company’s profit or contribution margin by business segment. Profitability Analysis can be obtained by the following methods: 

· Account-Based Analysis which uses an account-based valuation approach. In this analysis, cost and revenue element accounts are used. These accounts can be reconciled with FI(Financial Accounting).

· Cost-Based Analysis uses a costing based valuation approach as defined by the User. 

Profit Center Accounting provides visibility of an organization’s profit and losses by profit center. The methods which can be utilized for EC-PCA (Profit Center Accounting) are period accounting or by the cost-of-sales approach. Profit Centers can be set-up to identify product lines, divisions, geographical regions, offices, production sites or by functions. Profit Centers are used for Internal Control purposes enabling management the ability to review areas of responsibility within their organization. The difference between a Cost Center and a Profit Center is that the Cost Center represents individual costs incurred during a given period and Profit Centers contain the balances of costs and revenues.