I will provide some details on the SAP S/4 HANA Finance “Cost of Good Sold Split” functionality.
In earlier ECC we use one account for the cost of goods sold which get debited at the time sales order delivery and accounting get recorded with a material price.
Example; Finish Product Material 2000
Screenshot for Material Master,
After delivery accounting will get recorded in FICO as follows,
Cost of goods sold account…. Dr
To Finish Product Stock account… CR
Screenshot for Delivery Accounting,
This account assignment system derives from OBYC setting as per Valuation Class of the Material.
Once Delivery is complete next step will be billing of the sales order
Billing with VPRS Condition,
Screenshot for billing Conditions,
In another hand in COPA COSG value get recorded at the time of billing depend on the internal price condition VPRS.
Screenshot for COPA Document in billing
Now we have completed the sales to billing process in the ECC for understanding the cost of goods sold treatment in ECC.
When we talk about SAP S/4 HANA and its functionality of COGS Split, we have to get some basic details of product costing as well. In this, we have to think about Cost Component Structure. I am not going to give details about the Cost Component Structure but basic details like, In structure, we define different type of cost component used during the Production/ Product costing and Cost get a bifurcated per nature of the expenses/ cost.
SPRO: Controlling > Product Cost Controlling >Product Cost Planning >Basic Settings for Material Costing > Define Cost Component Structure
Will explain with help of below example,
In the example, Y1 is Cost Comp Str.
Screenshot for type of the Cost Comp Stru Y1
In the source, We have assigned Cost element which gets debited / Consumed at the time Production order/ used in Standard price calculation, with a different type of cost natures.
Screenshot for type of the Cost Comp Stru
Cost Element Assignment,
Screenshot for Cost Comp Stru,
With this reference will check one Finish Product Standard Cost Estimation,
Material Master: INV_SFIN
Standard Price of material is 1.20 GBP
Screenshot for Material Master
Cost of goods sold is 1.20 GBP calculated in standard Costing and split of the same is shown in itemization,
Screenshot for Product Costing and itemization,
As SAP S/4 HANA gives functionality to map this COGS split at the time of actual delivery and post COGS with split, Where in ECC earlier only one cost of goods sold is recorded,
To carry out this assignment we need to configure,
SPRO: Financial Accounting (New) > General Ledger Accounting (New) >Periodic Processing
Integration >Materials Management > Define Accounts for Splitting the Cost of Goods Sold
In this configuration, we have to define profile for cost split and assignment with cost comp structure
Screenshot for COGS Split Configuration
In detailed COGS account assignment, we can assign target accounts for each cost component itemization,
Screenshot for Detailed COGS Split Configuration
Once this done, we can assign cost split profile to company code,
Screenshot for Company Code Assignment with COGS Split Profile
Now we will check the sales order delivery for the same Material and Cost Split of COGS,
Sales order created with INV_SFIN material and Qty 1
Screenshot for Sales Order
Now delivery for the same,
Screenshot for sales order delivery,
Once Post good issue posted, system will create material document and accounting document for good issue,
Screenshot for PGI
Here you can find in screenshot there are two accounting documents created for one delivery will go in more details in next screenshot
- First Document, 4900000054 Accounting document
Screenshot for PGI Accounting Document 1
Normal delivery accounting entry is generated, only difference is system will not use COGS account but will use Inventory Change of COGS ( its Primary cost type of Account)
- Second Document, 4900000055 Accounting document
Screenshot for PGI Accounting Document 2
In second document system has credit Inventory Change of COGS is got credit and debited target account as per cost component split structure assigned in configuration.
Now in S/4 HANA is using Account Base COPA, Cost of good sold gets recorded to COPA at the time of delivery its self.
Screenshot for PGI Accounting Document with COPA Fields,
As shown in the screenshot at the time split COGS system has posted COPA Characteristics in the same document.
The last step of this process will be Billing which is normal process and accounting get recorded as below screenshot,
Screenshot for Sales Billing,
I have tried to make understanding of COGS Split functionality of SAP S/4 HANA, Please update if I missed anything.