Project Name: Document Name: Document ID: Prepared by:

TH Milk ECC 6.0 Implementation Project

Cow farm costing (Agriculture Product)

THM_BP_CO015_V1.1 Contact No. Dat Huy Nguyen, Consultant Version: Date: 1.1

Reviewed by: Khoa Duong, Team Lead Suresh V Rajagopalan, Project Msanager Suresh V Rajagopalan, Project Manager

Contact No.

Date:

Approved by: Released by:

Contact No. Contact No.

Date: Date:

Revision History
SR. NO.
1 2

VERSI
ON NO. 1.0 1.1

DATE OF REVISION
19/07/2010 22/08/2010

SECTION NUMBER

DESCRIPTION CHANGE
Version 1.0 Version 1.1

OF

REASON CHANGE

FOR

CHANGE
MADE BY Dat Nguyen Dat Nguyen

REVIEWED BY

Khoa Duong Khoa Duong

THM_BP_CO015_V1.1

Page 1 of 9

Confidential

THM_SAP_IMPLEMENTATION_BLUE PRINT
Business Process Details
Module Business Process Sub Process / No Description Controlling

Cow farm costing (Agriculture Product)

Not applicable THM_BP_CO015_V1.1 Manage transaction specific to field crop, feed output and raw milk costing

Sr No 1.1 i. Sr No 2.1 i. 2.2 i. 2.3 i. Sr No 3.1 i.

Topics Requirements & Expectations Calculate standard cost for agriculture products such as output from field crop, output from feed center and raw milk. Topics Existing Process General Explanation Not applicable Explanation of Existing Functions & Events Not applicable Special Organizational Considerations Not applicable Topics Proposed Process General Explanation - Total cost of farm includes agriculture products (raw milk, cow feed, and field crop) and capitalized expenses. To calculate the cost of milk and capitalized expense, we divided each farm into 2 cost centers: milking cow cost center and growing cow cost center. Process of calculating cow capitalization will be presented in THM_BP_CO016_V1.1 - Cow farm costing (Cow). - Milking parlor is considered as a cost center at each farm. Field Crop Costing Field crop is considered as one separate profit center in SAP. For each crop, one CO process order will be created with the start and end day for production. This process order will be used to record all direct material costs. Three cost centers will be created for 3 growing areas to absorb all the indirect costs which cannot be allocated directly to each CO process order. These expenses will be allocated back to CO process order using statistical key figure the area of each field at the period end, before WIP calculation. The output price of the CO process order can be calculated by market price less some percentage. The production confirmation will be done by field crop staff At the period end, WIP calculation will be run for each process order to post the

ii.

THM_BP_CO015_V1.1

Page 2 of 9

Confidential

difference between the direct expenses and the output of the process order to WIP account. WIP calculation will be done by CO staff. iii. Provision for loss can be made using Financial Accounting entry directly in G/L against COGS account (posting to Dummy Cost Center). Feed Output Costing Standard cost for feed output will be calculated periodically (monthly or quarterly) based on a standard BOM and overhead cost which is calculated using one activity - output feed. Activity rate for feed cost center output feed - will be calculated by divided the total cost planning for feed cost center and allocation cost from supported cost centers by the total production output quantity. There are a certain number of output feed products; for example, feed for milking cow, feed for dry cow (24), feed for heifer (7-12), feed for heifer (12-23), feed for nursery (04), feed for calves (5-6). For one month, one process order will be created for each type of output. The actual BOM can be different from the standard BOM when the actual goods issue happens, depending on the stock availability. Production execution for feed output can be referred to THM_BP_PP018_V1.0.doc iv. - The variance between the standard cost and actual cost will be settled to COGS. Milk Costing Standard cost for raw milk will be based on one activity: output raw milk. SAP System will integrate with Afikim to get information about the output of raw milk daily Plan for all cow farm activity at milking cow cost center. Another overhead cost needs to be planned in general cost centers and after that allocated to milking cow cost center and growing cow cost center. Variance analysis will be based on milking cow cost center report. And at the month end this variance will be settled to COGS. 3.2 i. Explanation of Proposed Functions & Events Field Crop Costing Planning Standard price of field crop output is maintained in material master (MM01). To revise the standard price, using transaction code MR21. For field crop, well use CO production order to manage each field crop KKF1 For each material to be grown, we can create Material Cost Estimate without Quantity Structure (KKPAN) or Base Planning Object (KKE1) using planning data. This information later can be copied to each CO production order when planning for a new field crop by exploding either Material Cost Estimate or Base Planning Object.

THM_BP_CO015_V1.1

Page 3 of 9

Confidential

Planning for CO Production Order by exploding either Material Cost Estimate without Quantity Structure or Base Planning Object using transaction code KKF4 Plan for overhead expenses for general cost centers which support for common field crop cost center such as Logistic Center, Maintenance, and warehouse using transaction code KP06. Also, using KP06 to plan for direct expenses for common field crop cost center. Create and run assessment cycle for these expenses from general cost centers to common field crop cost center using transaction KSUB. The naming convention of the planning/actual assessment cycle is 1 letter of Company Code + P (planning assessment cycle) or A (Actual assessment cycle) + 2 letters for Version and 2 letters for running number. For example, company code 1000 will have assessment cycle for planning version 10 which will assess cost from logistic cost center to Common Field Crop Cost Center as 1P1001. Create and run assessment cycle for these expenses from common field crop cost center to CO production order using transaction KSUB with statistical key figure SKF001 (Area). Statistical Key figure SKF001 Area is created using transaction KK01. Enter planning value of SKF using transaction KP46 before doing assessment. During production period, do goods issue to order for all material consumption to the field crop using transaction code MB1A, movement type 261: ref to THM_BP_MM019_V1.1 During the harvesting period, do goods receipt for the field crop output from order using transaction code MB31, using movement type 101: ref to THM_BP_MM018_V1.1 Overhead expenses, direct labour expenses and other expenses allocation to field crop cost center will be posted to common cost center through normal FI transaction or CO assessment transaction. At the period end, before WIP calculation, do assessment from common cost centers to CO Production Order using transaction code KSU5 with statistical key figure SKF001 (Area). Enter the actual value of SKF using transaction KB31N before doing assessment. At the period end, period cutoff is run using transaction code KKA0 before calculating WIP. This period cutoff for field crop use version 0. All orders which are before the period cutoff will be ignored during WIP calculation. Since this

Execution

THM_BP_CO015_V1.1

Page 4 of 9

Confidential

period cutoff will affect all company codes within controlling area 1000, suggested that this transaction will not be run for all company codes since the Go Live day of Company Code 1000. Production orders in other company codes must be mark for deletion after 3 months. If the WIP calculation (KKAX for Individual Processing or KKAO for Collective processing) is correct, do actual run before posting WIP using transaction CO88 - settlement (accounting document is posted). When the CO production order is finished with Technical Complete or Final Confirmation (actual quantity receipt is equal to planned quantity), run variance calculation using transaction KKS2 and then post settlement using transaction CO88 (accounting document is posted). After the CO production order is completed, close the order to prevent posting goods receipt using transaction KKF2. Additional Transaction Codes ii. KAH1 create cost element group KSH1 create cost center group

KOH1 create order group Feed Center Costing General Explanation Output feeds include two processes, fermentation and output feeds processing For fermentation processing, only Bill of Materials is created for the semifinished goods, overhead will not be included in this process For output feed processing, both Bill of Materials and Master Recipe will be created for standard cost calculation. Planning Standard Cost Estimate Planning activity quantity for Output Feed Center using transaction code KP26. Activity type 1110 Output Feed Center will be used for total quantity of output feed. Plan for overhead expenses for general cost centers which support for feed center such as Logistic Center, Maintenance, and warehouse using transaction code KP06. Also, using KP06 to plan for direct expenses for feed center. Create and run assessment cycle for these expenses from general cost centers to feed center cost center using transaction KSUB. The naming convention of the planning/actual assessment cycle is 1 letter of Company Code + P (planning assessment cycle) or A (Actual assessment cycle) + 2 letters for Version and 2 letters for running number. For example, company code 1000 will have assessment cycle for planning version 10 which will assess cost from logistic cost center to Feed Center Cost Center as 1P1001.

THM_BP_CO015_V1.1

Page 5 of 9

Confidential

Run cost splitting KSS4 to link activity type with corresponding expenses. Run transaction code KSPI to calculate activity price of the services which are to be allocated. Run standard cost estimate for cow using CK40N. Ref to PP business process THM_BP_PP018_V1.0.doc Overhead expenses, direct labour expenses and other expenses allocation to feed center cost center will be posted through normal FI transactions or CO assessment transactions. Run KSS2 cost splitting to link activity type with corresponding expenses. Run KSII to calculate activity price of output feed center Revaluate process order at the actual price of activity using transaction code CON2 Run WIP calculation using KKAX for Individual Processing or KKAO for Collective processing. If everything is correct, do actual run before posting WIP using transaction CO88 - settlement (accounting document is posted). When process order is finished with Technical Complete or Final Confirmation (actual quantity receipt is equal to planned quantity), run variance calculation using transaction KKS2 and then post settlement using transaction CO88 (accounting document is posted). After process order is completed, close the order to prevent posting goods receipt using transaction COHVPI.

Execution

iii. Milk Costing -

General Explanation Milk processing will include only activity type of Milk cost center. This activity will cover all expenses for raw milk. No Bill of Materials will be created for Milk cost calculation

Planning Planning activity quantity for Milk Cost Center using transaction code KP26. Activity type 1100 Output Raw Milk will be used for total quantity of milk output. Plan for overhead expenses for general cost centers which support for Milk Cost center such as Logistic Center, Maintenance, and warehouse using transaction code KP06. Also, using KP06 to plan for feed expenses and direct expenses for milk cost center. Create and run assessment cycle for these expenses from general cost centers to milk cost center using transaction KSUB. The naming convention of the planning/actual assessment cycle is 1 letter of Company Code + P

THM_BP_CO015_V1.1

Page 6 of 9

Confidential

(planning assessment cycle) or A (Actual assessment cycle) + 2 letters for Version and 2 letters for running number. For example, company code 1000 will have assessment cycle for planning version 10 which will assess cost from logistic cost center to Milk Cost Center as 1P1001. Run cost splitting KSS4 to link activity type with corresponding expenses. Run transaction code KSPI to calculate activity price of the services which are to be allocated. Run standard cost estimate for cow using CK40N. Ref to PP business process THM_BP_PP017_V1.0.doc Goods issued of medicine, vaccine, from logistic center to farm: Ref to THM_BP_MM019_V1.0 Accounting of feed issued from feed center to each farm: Ref to THM_BP_MM019_V1.0s Overhead expenses, direct labour expenses and other expenses allocation to Milk cost center will be posted through normal FI transactions or CO assessment transactions. Run KSS2 cost splitting to link activity type with corresponding expenses. Run KSII to calculate activity price of Milk Cost Center. Revaluate process order at the actual price of activity using transaction code CON2 When process order is finished with Technical Complete or Final Confirmation (actual quantity receipt is equal to planned quantity), run variance calculation using transaction KKS2 and then post settlement using transaction CO88 (accounting document is posted). 3.3 i. Sr No 4.1 i. 4.2 i. 4.3 i. 4.4 i. After process order is completed, close the order to prevent posting goods receipt using transaction COHVPI. Special Organizational Considerations Not applicable Topics Change Management Issues Not applicable Description of Improvements Not applicable Description of Functional Deficits Not applicable Approaches for covering Functional Deficit Not applicable Execution

THM_BP_CO015_V1.1

Page 7 of 9

Confidential

Sr No 5.1 i. Sr No 6.1 i.

Topics Notes on Further Improvement Not applicable Topics System configuration considerations Normally, in SAP standard system, actual/planning assessment/distribution should only repost costs within CO-OM. This means cost is only allowed to repost between cost center and internal order. However, in our business scenario, we have the process of reposting cost from cost center to production order. To do this, we have to activate the following business transactions for production order (Object type ORF): RKIU/RKIV/RKBU/RKBV. File conversion considerations (Master data maintenance). Not applicable Interface / Enhancements considerations Not applicable Reporting / Layout considerations Not applicable Authorization considerations Not applicable

6.2 i. 6.3 i. 6.4 i. 6.5 i.

THM_BP_CO015_V1.1

Page 8 of 9

Confidential

Business Process signoff document

Module Business Process Sub Process / No Description Controlling

Cow farm costing (Agriculture Product)

Not applicable THM_BP_CO015_V1.1 Manage transactions for agriculture product raw milk, feed and field crop Organizational Units THM Cow Farm Business Process Owner Nguyn L Huy

Project THM Team

Name
Nguyn nh Thng Core Team Members Nguyn L Huy Nguyn Th Anh Gilbert Jardin CO Process Owner Project Coordinator Project Manager

Designation

Signature

Date

Project CSC Team

Name
Nguyen Huy Dat Duong Dang Khoa Suresh V Rajagopalan

Designation
FICO Consultant FICO Team Lead Project Manager

Signature

Date

THM_BP_CO015_V1.1

Page 9 of 9

Confidential