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There is a lot of forum question answers and content available in SCN about Standard Costing

Note-This is a beginner’s and basic guide to understand cost estimate and various settings behind it.

This document is intended to explain the cost flows to a standard cost estimate. Explaining various settings in background.  I will try to explain this from backward from Cost estimate to configuration. This will answer some basic questions like Material Cost, Overhead Cost, Labor etc. in a standard cost.

When you take a look at a material cost estimate what you will understand the Quantity Structure, Valuation, Costing Dates etc.

  • Standard cost of a material looks like in T-Code- CK13n (you can view this from costing-2 view in material master too T-Code-MM03.)
  • I will try to walk through these 6 tabs below explaining basic configurations and data flows from different configuration to Standard Cost estimate.

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     Screenshot-1

  • For our analysis purpose I have selected standard layout 1SAP02-Costing items (overview)
  • there are several  layout  available in standard SAP and user can define their own too.

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     Screenshot-2

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Screenshot-3

1-Costing Data

It contains data like Costing variant, Costing Version, Lot Size and Transfer Control. Lets talk about Costing Messages and Costing status later on.

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Screenshot -4

  • Costing variant-Configuration Costing Variant in T-code OKKN- (Will  cover in more detailed way in part 2.)

-Assign various Control parameters like Costing Type, Valuation variant, Date Control QTY structure Control, Transfer Control etc.

-Maintain parameters different Tabs like Control, Qty Structure, Addictive Cost, Assignment and Misc.

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Screenshot 5

  • Costing Version configuration using  T CODE- OKYD

-Number that serves to differentiate between cost estimates for the same material.

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     Screenshot 6

  • Lot Size

The costing lot size in the material master record is usually used as a basis for costing all materials, however one can manually change the lot size during cost estimate.

  • Transfer Control-Configure in T-code OKKM usually used the standard.

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Screenshot 7

– This controls how costing with quantity structure searches for existing cost estimates when existing costing data are transferred to another cost estimate. In this example we assigned PC02 in TCODE OKKN.

2-Costing Dates-we will learn more about date control in Costing variant

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     Screenshot 8

-Costing Date from -Date from which the cost estimate is valid.

-Costing Date to- This date determines the date up to which the cost estimate is valid

-Qty Structure Date-Date with which the quantity structure is selected for the cost estimate with quantity structure.

-Valuation Date-Date on which the materials and activities in a cost estimate are valuated.

3-Qty Structure-It contains BOM and Routing data. ( Usually PP functionality)

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Screenshot 9

  • Bill Of Material (BOM)- T CODE- SET up CS01 , To view T-code -CS03

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Screenshot 10

If you go back and refer my screenshot 3 the detailed cost (M) comes from this settings.

Note- we will have to do cost component settings too will cover the point in net part.

  • Routings- Create Routings T-Cod-CA01 ( PP functionality) to view CA03

– A routing shows operations in a sequence. This form the basis for

Lead time scheduling. Product costing, capacity planning, Refer screenshot 3 Cost Internal Activity (E) comes from this settings. We will understand more detail in my next part about assigning work center, activity and activity planning.

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Screenshot 11

4- Valuation- It contains the currency, Costing sheet and Overhead key.

T CODE-KZS2-Creating and maintaining Costing Sheet,

T CODE-KOOK-Defining and changing Overhead key

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Screenshot 12

if you refer to screenshot 3 Overhead cost (G) flows from this settings from costing sheet and overhead key.

  • Costing Sheet-It controls the calculation of Overhead basically we use one costing sheet for each object for which system is to determine overhead costs. ( will see more detail in my next part)

  • The Overhead Key-The overhead key is used to determine order-specific or material-related overhead rates. The overhead amounts depend on the plant and the overhead key. The overhead depends primarily on the overhead key. If an overhead key is not maintained for the material or the order, overhead is to be determined in relation to the plant.

After defining a costing sheet that points to two condition tables. In the first table, the overhead amount depends on the overhead key. In the second table, the overhead amount depends on the plant. An access sequence determines which conditions have priority.

5- HISTORY- It contains the user and costing run date data.

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Screenshot 13

Cost By/Marked By/released By- The user names who performed respective costing run task.

Some large companies have different person to mark the cost and different person to release the cost as it rectifies the human errors if any. But in my experience i have seen mostly it is performed by the same person.

Costing run – usually this data updated when we use T-code CK40n to do standard costing in case of individual material costing using CK11n this field will not populate. So we can always go and check that costing run data to verify the settings at that point of time.

6-Costs-Baiscally it is summarization and cost component view

TCODE-OKTZ setting up cost component Structure (we will see in detail in part 2 of this document)

  • If you refer back screenshot 8 breaking out cost like overhead, labor and material based on these settings here.In Product Cost Controlling, the cost component structure determines how the results of material costing are updated. The cost component structure groups the costs for each material according to cost component (such as material costs, internal activities, external activities, and overhead). If the material is used in the production of another material, the cost component split (which breaks down the costs according to material costs, internal activities, external activities, overhead, and so forth) remains in the system when the costs are rolled up

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Screenshot 14

Error Log- Identifies the messages if costed with error or without error.

Intention of creating this document is to reach out to the beginners and those who wanted to know and understand the flow of Standard Costing. i will update the document as n when some more points needs to be included .

This is my first document and I should thank Ajay , Forum members,and SCN  SAP ERP Financials – Controlling

I was nervous to put together the basics in a document and publish it in SCN.  I will continue edit it for improvement.

The next part of document will update the more detailed configuration and steps to understand Basics of Standard costing

Refer to next part here http://scn.sap.com/docs/DOC-49167

Best Regards

Hrusikesh Dalai

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102 Comments

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  1. Prasad Swain

    Simplified!!!! πŸ˜‰

    Well done!!Congratulation for writing this document. I like the flow of this document specialy starting with Cost estimate, i was always wondered when i start working in FICO how does a cost estimate and these values flowing from where and though there are several threads about this but i was never able to put together to understand it. it took me longtime to understand the basics and various settings behind it. I think for non financial folks like me it will be easier to understand the standard cost estimate screen now.

    i like the first screenshot of circles πŸ˜‰ where you broke different parts and later explained. Simple document yet incredible Kudos πŸ™‚ . i will wait for your next document.

    Thanks

    Prasad.

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  2. Pankaj K Agrawal

    Dear Hrusikeshji,

    Great start, good to see your valuable knowledge transfer doc.

    Much much appreciated for your great effort.

    Eagerly waiting for the new documents to be out soon.

    Thanks a lot

    Kind Regards

    pankaj

    (0) 
    1. Hrusikesh Dalai Post author

      Hello Lakshmi,

      Thanks for appreciating my effort and reading the document. Yes there is couple of other documents already i posted i will try to finish the Costing in next couple of parts.

      i hope it may helpful to you and other community members.

      BR

      Hrusikesh

      (0) 
  3. ACR RUBEN

    Hi Hrushikesh Dalal,

    Very well documented. Explained in a well mannered way so that we can understand easily.

    Great work.

    Keep up.

    Regards

    ACR.Ruben

    (0) 
  4. milk bike

    Hi Hrusikesh

    Thank you for the nice documentation and your time on it. One question, I’m trying to define an overhead key. It seems transaction code KOOK doesn’t exist?

    Milk

    (0) 
    1. Hrusikesh Dalai Post author

      Milk,

      I appreciate your feedback. See below Andy already responded to your question here.

      Thanks Andy for your appreciation and answering the question.

      BR

      Hrusikesh

      (0) 
      1. milk bike

        One more question please – if I make a change to the costing variant or costing sheet and anyway it leads to a change to the standard price released. What would be the impact to the existing open sales orders (or purchase orders)?

        (0) 
        1. Hrusikesh Dalai Post author

          Hi milk,

          Lets not discuss the questions here,I will request you to open a new thread in question answer forum,which will be appropriate and also consider the SCN forum rules.

          Now to answer your question In simple terms just by changing costing variant and costing sheet will not update already released standard cost.however it will revalue your inventory once you do the costing run and the impact- inventory will be debited with new std and consumption will be credited with old std. and difference will post to price difference.

          Thanks

          Hrusikesh

          (0) 
  5. John More

    Hrusikesh,

         Thanks for the time and efforts you put into publishing this valuable information. It takes courage to do so as some might critique your work but I found this to be exceptionally beneficial and well presented.

    (0) 
    1. Hrusikesh Dalai Post author

      John,

      Thanks for highly motivated words, its my pleasure to write these documents and i will continue to do so in coming days.

      I appreciate your sincere feedback and comment.

      Best regards

      Hrusikesh

      (0) 
  6. Sushma Reddy

    Hrusikesh

    A well directed for new person like me, Do you provide training for Costing in SAP?

    What will be most things i need to know for good understanding about SAP Product costing?

    Any suggestion?

    Thanks

    Sushma

    (0) 
    1. Hrusikesh Dalai Post author

      Sushma,

      I appreciate your comment, There is very rich content available in SCN forum to learn SAP costing. Follow Ajay n Big Choi and some of other folks out there to get their contents when they participate.

      Thanks

      Hrusikesh

      (0) 
  7. Sushma Reddy

    Hrusikesh,

    Awesome documents specially i like the screenshots and detailed explaination. Keep sharing. The way you explained is different and very easy to follow

    Thanks

    Sushma

    (0) 
    1. Hrusikesh Dalai Post author

      Thank You Sushma,

      I appreciate your comment and feedback. It motivates me further to contribute and share. I believe by sharing i learn more than anyone else.

      BR

      Hrusikesh

      (0) 
  8. Rohit P

    Hi Hrusikesh,

    I started reading this document and I am new to costing concepts and this document is helping me a lot in gaining the functional knowledge. I am a BPC consultant and keen to learn this. Also is this something related to  “Material cost estimate without cost quantity structure” and Material cost estimate with cost quantity structure”. Actually I am trying to understand Calculation of COGM and COGS and then I found your document. Any content related to this please post to me.

    Really helpful for beginners like me.

    Regards,
    Rohit

    (0) 
    1. Hrusikesh Dalai Post author

      Rohit

      Sure if you have questions you can ask in forum by opening a thread.I have a series of document posted related to costing in SAP here in SCN  you can go through it.

      SCN forum is always there to a post any question you have experts will always answer it

      thanks for reading it , I appreciate your comment.

      regards

      Hrusikesh

      (0) 
  9. Carolyn Williams

    Hi Hrusikesh, I have read the previous stream of questions/ answers and appreciate you have a good knowledge of SAP product costing.

    I have moved to SAP product costing having used another system and I have a question regarding purchased goods. Do you know how I can add inbound freight costs to the purchase price to arrive at a standard cost?

    Many thanks in advance

    Carolyn

    (0) 

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