Material Cost Estimate with Quantity

Structure
Purpose
Costing with a quantity structure is a tool for planning costs and setting prices for materials
without reference to orders. It is used to calculate the cost of goods manufactured and cost of
goods sold for each product unit. You can use the results of material cost estimates with a
quantity structure to valuate materials at standard prices.
Implementation Considerations
Before a cost estimate with a quantity structure can be created, a bill of materials and routing
(PP) or a master recipe (PP-PI) must exist for the material being costed. For more information,
see Master Data for Costing with Quantity Structure .
Features
A cost estimate with a quantity structure uses the PP or PP-PI master data to determine the
materials and internal activities required to manufacture the product. The cost estimate is created
automatically using this data.
You can use a costing run to process mass data.
There are a number of reports in the cost estimate itself and in the Product Cost Controlling
Information System that you can use to display and analyze the costing results together with the
relevant quantity structure:

Costed multilevel BOM

Itemizations

In addition to these PP-oriented displays of the costing results, there is a cost component split for
each material that breaks the costs down into cost components :

Cost component split for the cost of goods manufactured

Primary cost component split

Partner cost component split

See also:

Purpose of Product Cost Planning

Calculation of Cost of Goods Manufactured and Cost of Goods Sold
Product Cost Planning

Product Cost Planning (CO-PC-PCP) is an area within Product Cost Controlling (CO-PC) where
you can plan costs for materials without reference to orders, and set prices for materials and
other cost accounting objects.
You can use Product Cost Planning to analyze your product costs, such as for:

Manufactured materials

Services

Analyzing product costs helps provide answers to questions such as:

What is the value added of a particular step in the production process?

What proportion of the value added can be attributed to a particular organizational unit?

What are the material, production, and overhead costs?

How can production efficiency be improved?

Can the product be sold at a competitive price?

Components of Product Cost Planning

Product Cost Planning comprises the following components:

Material Cost Estimate With Quantity Structure

Costing materials based on a quantity structure in Production Planning

Material Cost Estimate Without Quantity Structure

Costing materials without a quantity structure in Production Planning

Price Update

Transferring the results of material cost estimates to the material master

Reference and Simulation Costing

Planning new products and services using base planning objects

Easy Cost Planning and Execution Services

Rapid cost planning without master data within an ad hoc cost estimate.

Implementation Considerations

In your organizational structure, each company code needs to be assigned to a controlling

area.

Materials are always valued at valuation area level, while costing must be performed at
plant level. You therefore need to define the plant as the valuation level in Customizing
under Enterprise Structure Definition Logistics - General Define valuation level .
This creates a valuation area with the same name for each plant. All costing data is then
stored with reference to a plant.

Integration

Product Cost Planning accesses master data in other components, such as BOMs, routings, and
work centers in Production Planning, and cost centers, activity types, and business processes in

Overhead Cost Controlling. Costing data within Product Cost Planning can also be made
available to other applications. For example, you can update the standard price in the material
master with the results of cost estimates, and valuate materials using this new standard price.
For more information, see Information for Other SAP Applications.
Caution
Because of this high level of data integration, SAP recommends that you make a thorough check
before going live to ensure that the correct data is accessed for the quantity and value structures,
to prevent incorrect costing results.
For more information about integration, see Origin of Costing Data.
Features
Functions

You can access the functions of Product Cost Planning from either the Accounting menu or the
Logistics menu:

Accounting Controlling Product Cost Controlling Product Cost Planning

Logistics Production Product Cost Planning

Logistics Production - Process Product Cost Planning

The following table gives you an overview of the menu and functions of Product Cost Planning:
Menu Option

Function

Cost Estimate

Used to process mass data, and is

Material Costing Costing Costing Run with BOM and
created automatically with Production
Run Edit Costing Run
routing
Planning data (product cost estimate)
Material Costing Cost
Estimate with Quantity
Structure

Cost Estimate with Quantity

Created automatically with Production
Structure (with BOM and
Planning data (product cost estimate)
routing or master recipe)

Material Costing Cost

Estimate with Quantity
Structure Additive Costs

Additive Costs

Created using data you enter manually

(unit costing)

Menu Option

Function

Cost Estimate

Used to process mass data, and is

Material Costing Costing Costing Run with BOM and
created automatically with Production
Run Edit Costing Run
routing
Planning data (product cost estimate)
Material Costing Cost
Created using data you enter manually
Material Cost Estimate
Estimate Without Quantity
(unit costing) or transfer from a nonWithout Quantity Structure
Structure
SAP system
Reference and Simulation
Costing

Reference and Simulation

Costing

Easy Cost Planning &

Execution Services Edit Ad Ad Hoc Cost Estimate
Hoc Cost Estimate

Created using a planning form

(costing model) that can access the
data in the SAP system

Menu Option
Material Costing Price Update

Created using data you enter manually

(unit costing)

Function
Price Update

Material Costing Master Data for

Mixed Cost Estimate

Definition of procurement alternatives and mixing

ratios for Mixed Costing

Easy Cost Planning & Execution

Services Edit Costing Model

Define planning forms for Easy Cost Planning

Menu Option

Information
System

Environment

Functions Available

Costing results

Additional functions in
Product Cost Planning

Examples

Lists of material cost estimates and base

object cost estimates

Detailed reports

Comparison reports

Archive and delete costing data

Check costing variant

You use different costing methods in Product Cost Planning depending on the availability of data
in Production Planning (PP and PP-PI) and on the type of object you want to cost.

Automatic costing (also known as product costing)

The quantity structure (BOMs and routings or master recipe) for the material is
automatically determined and valuated using data from Production Planning (PP or PPPI).
For more information, see Cost Estimate with Quantity Structure: Process Flow.

Unit costing
This cost estimate calculates the costs for the following objects without accessing BOMs
and routings in Production Planning:
o

Materials (for example, additive costs for a material cost estimate with quantity
structure, material cost estimate without quantity structure)

Base planning objects

With this costing method, you enter the costing items manually. You can access existing
SAP system data such as materials, business processes, cost centers, and activity types for
this purpose.
For more information, see Unit Costing.

Multilevel unit costing

This cost estimate calculates the costs for the following objects without accessing BOMs
and routings in Production Planning:
o

Materials (material cost estimate without quantity structure)

Base planning objects

With this costing method, you enter the costing items manually. You can access existing
SAP system data such as materials, business processes, cost centers, and activity types for
this purpose. You can also display the costing structure hierarchically and, using a
worklist, access frequently used data.
For more information, see Multilevel Unit Costing.
Configuration Settings

You make the configuration settings for Product Cost Planning in Customizing for Product Cost
Controlling.
For more information, see Preparation for Costing: Customizing and the Implementation Guide
(IMG) for Product Cost Controlling.