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DEWAN MUSHTAQ GROUP

USER MANUAL

PRODUCT COSTING

Dewan Farooq Motors Limited


Delta Innovation Limited
Dewan Allied Engineering Limited
Delta Climate Control & Engineering
Limited
SIEMENS PAKISTAN ENGINEERING COMPANY LIMITED

Table of Contents

1. LEGEND..........................................................................................3
2. MATERIAL COST ESTIMATE........................................................4
2.1 PROCEDURE .................................................................................................4
3.1.1. ACCESS TRANSACTION BY:..................................................................4
ON THE THREE ENTRY TABS OF THE “CREATE MATERIAL COST
ESTIMATE WITH QUANTITY STRUCTURE” SCREEN, ENTER INFORMATION
IN THE FIELDS AS SPECIFIED IN THE TABLE BELOW:...................................4
3. WIP CALCULATION.......................................................................7
3.1 PROCEDURE .................................................................................................8
4.1.1. ACCESS TRANSACTION BY:..................................................................8
4. ACTUAL PRICE CALCULATION.................................................19
4.1 PROCEDURE ...............................................................................................19
4.1.1. ACCESS TRANSACTION BY.................................................................19
ON SCREEN “EXECUTE ACTUAL PRICE CALCULATION: INITIAL
SCREEN”, ENTER INFORMATION IN THE FIELDS AND ACTIVATE THE
INDICATORS AS SPECIFIED IN THE TABLE BELOW:....................................19
5. REVALUATION AT ACTUAL PRICES.........................................22
5.1 PROCEDURE ...............................................................................................22
5.1.1. ACCESS TRANSACTION BY.................................................................22
ON SCREEN “REVALUATION AT ACTUAL PRICE: INITIAL SCREEN”
ENTER INFORMATION IN THE FIELDS AS SPECIFIED IN THE TABLE
BELOW.................................................................................................................22
ACCESS TRANSACTION BY.............................................................................24
ENTER DETAILS AS SHOWN IN THE EXTRACT.............................................24

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1. LEGEND

ICONS EXPLANATION

Create (F5)

Change (F6)

Display (F7)

Copy (Shift+F9)

Delimit (Shift+F1)

Delete (Shift+F2)

Overview (Shift+F8)

Cancel (F12)

Save (Ctrl+S)

Back (F3)

Exit (Shift+F3)

Cancel screen (F12)

EXAMPLES EXPLANATION

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2. MATERIAL COST ESTIMATE
2.1 Procedure

This document describes the procedure to cost a material. The cost of the material can be
created for a number of reasons including margin analysis, make-buy decisions, and profitability
analysis are among the most common. The costing view identifies values by material, activities
and cost elements. The cost estimate with quantity structure enables you to calculate the non-
order-related cost of goods manufactured and the costs of goods sold for products, based on the
BOMs and routing in the Production Planning module. The system creates a quantity structure,
which is the BOM and routing combination, using data from the PP master data. You determine
what data is selected for costing by means of the costing variant in Customizing for Product Cost
Planning. The system vaulates the quantity structure based on the valuation variant contained in
the costing variant in Customizing

Procedural Steps
3.1.1. Access transaction by:
Via Menus Accounting->controlling->product cost planning  material
costing->cost estimate with quantity structure->create

Via Transaction Code CK11N

On the three entry tabs of the “Create Material Cost Estimate with Quantity Structure” screen, enter
information in the fields as specified in the table below:

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Field name Description R/O/ User Action and Values Comment
C s
Material 18 Char identifier to detail the R Enter Material you want to cost
material number/name
Plant 4 Char. Identifier that identifies R 1110
the plant the material is pulled
from
Costing 4 Character identifier that R PPC1
Variant identifies
the costing variant
Plant 4 Char. Identifier that identifies R 1110
the plant the material is pulled
from
Costing Identifies the costing version 1 O Costing version will be defaulted 1
Version

(Note: On above table, in column “R/O/C” ; “R” = Required, “O” = Optional, “C” = Conditional)

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The system will automatically fill in the remaining data based on the Costing Variant.

Field name Description R/O/ User Action and Values Comment


C s
Costing Pulls date to from date control R Automatically determined through
date to in costing variant. the Costing Variant
Qty Pulls qty. structure from date R Automatically determined through
Structure control in costing variant. the Costing Variant
date
Valuation Pulls valuation date from date R Automatically determined through the
date control in costing variant Costing Variant
Transfer Pulls Transfer Control from O Identifies how costing info is
Control Transfer control in costing transferred to cost estimate. This
variant key can be assigned to the
costing variant.

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3. WIP CALCULATION

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3.1 Procedure

This document describes the procedure to WIP calculation. WIP is calculated usually at the end of
the month. Work in process is valuated at actual costs; it is the difference between the debit and
credit of an order that has not been completely delivered or technically completed. The WIP value
may consist of material costs and conversion costs.

The difference between the work in process in the current period and the work in process in the
pervious period corresponds to the inventory change of unfinished products

Procedural Steps
4.1.1. Access transaction by:

Via Menus Accounting->Controlling->Product Cost Controlling  Cost Object


Controlling ->Product Cost by Order -> Period-End Closing-
>Single Functions->Work in Process->Individual Processing->
Calculate

Via Transaction Code KKAX

Enter details as shown in the extract and press F8 or execute in test run first. When results are
accurate then remove check box from test run and press execute.

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Field name Description R/O/ User Action and Values Comment
C s
Order Order R Enter production Order
Number Number defining production
order
WIP to Posting period for which WIP is R Enter Posting Period a two digit
Period to be calculated code
Fiscal Year 4 Digit code representing fiscal R Enter Fiscal year
year
RA Version Plan/actual version for DMG. O Enter RA version “0”
Backgroun To execute process in O Un-check this box
d background
Processing
Test Run To Execute process in test run O Check this box first in test run and
uncheck in actual run
Log To show error messages if O Check this box to see error
information errors occurs. messages in case error exists
messages
Save Log To save log O Check this box on
Display To show order even if errors O Check this box on
Order with exist
errors

WIP will be calculated as follows

Now go back to the main screen and go to KO88 to settle the order and enter the detail as shown
in the extract and press F8 or execute in test run first

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Field name Description R/O/ User Action and Values Comment
C s
Order Order R Enter production Order
Number Number defining production
order
Settlement Posting period in which order is R Enter Posting Period a two digit
Period to be Settlement code
Fiscal Year 4 Digit code representing fiscal R Enter Fiscal year
year
Processing Field for processing type O Field default set to “Automatic”
Type
Test Run To Execute process in test run O Check this box first in test run and
uncheck in actual run
Check To check transaction data O Leave this field blank
transaction during posting
data

Following screen will be displayed

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Then press on the selection list icon as below

Now press on the accounting document button to view the accounting


entry.

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Now go back to the main screen, go to CO02 and change the status of order as technically
completed

Go to functions in the main menu then got to restrict processing and click on technically complete
and save the order.

For reversing WIP in next period again recalculate WIP. Go to KKAX and enter the details as
shown in the extract and press execute.

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Now again settle the cost of order, go to KO88 and enter the details as shown in the extract and
press execute or F8.

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Field name Description R/O/ User Action and Values Comment
C s
Order Order R Enter production Order
Number Number defining production
order
Settlement Posting period in which order is R Enter Posting Period a two digit
Period to be Settlement code
Fiscal Year 4 Digit code representing fiscal R Enter Fiscal year
year
Processing Field for processing type O Field default set to “Automatic”
Type
Test Run To Execute process in test run O Check this box first in test run and
uncheck in actual run
Check To check transaction data O Leave this field blank
transaction during posting
data

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Now see the accounting document of WIP reversal by pressing
button.

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WIP of collective Orders can also be settled. Go to KKAO and enter the details as below and
press F8 or execute

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Field name Description R/O/ User Action and Values Comment
C s
Plant Field Representing Plant R Enter Plant
With Field for WIP of production R Check this box on
Production orders
Order
WIP to Posting period for which WIP is R Enter the posting period
Period to be calculated
Fiscal Year 4 Digit code representing fiscal R Enter Fiscal year
year
RA Version Plan/Actual RA Version for DMG O Enter RA Version “0”
Backgroun To execute process in O Un-check this box
d background
Processing
Test Run To Execute process in test run O Check this box first in test run and
uncheck in actual run
Log To show error messages if O Check this box to see error
information errors occurs. messages in case error exists
messages

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4. ACTUAL PRICE CALCULATION
4.1 Procedure

The R/3 System can calculate iterative prices based on actual costs and actual activities. After
running actual price calculation, you can choose to revalue actual activities allocated to cost
centers (revaluation in other cost collectors requires a second step such as transaction KON1 –
Revaluation at Actual Prices: Internal Orders). Because you carry out actual price calculation at
period-end closing, no actual prices exist at the time of the actual activity posting. The initial
valuation of actual activity uses plan prices or, if no plan price exists (as is the case with pure
actual cost calculation); you can post the activity without a valuation. During period-end closing,
the R/3 System calculates the actual prices iteratively using this transaction and, provided you
have configured the system, revalues the activities. By revaluing the actual activities with actual
prices, you can fully allocate sender cost centers with no residual balance.

The R/3 System takes all actual costs (primary and secondary) and actual activities of the target
cost centres into account to calculate the iterative actual price. Any plan prices (whether
calculated by the R/3 System or entered manually by you) are ignored during this calculation
process.

You can use the Price Report to compare the iterative prices with those prices taking manual
price settings into account. In this way, you can analyze the effects of price changes (in actual,
the manually set prices, and the iteratively calculated plan prices) on the complete pricing
framework. Access the pricing report using the menu path: Accounting>Controlling>Cost
Centres>Information system>Reports for cost centre accounting>Prices>Cost Centres: Activity
Prices or transaction code KSBT

Procedural Steps
4.1.1. Access transaction by

Via Menus Accounting>Controlling>Cost Center Accounting>Period-end


closing>Single functions>Price calculation

Via Transaction Code KSII

On screen “Execute Actual Price Calculation: Initial Screen”, enter information in the fields and
activate the indicators as specified in the table below:

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Field Name Description R/O/C User Action and Values Comment
s
Cost center The target cost center group. O Set the radio button and enter the Choose a
group target cost center group. group or all
cost
centers.
Period (from) The first period for which R Enter the first period in the
activity price calculation is processing timeframe.
carried out.
Period (to) The last period for which C You can run the activity price
activity price calculation is calculation for several periods in
carried out. parallel. The Parameters –
Period (from) field contains the
first period, and the Parameters –
(Period) to field contains the last
period.
Fiscal year The fiscal year for which R Enter the appropriate fiscal year.
activity price calculation is
carried out.
Background To execute process in O Un-check this box
Processing background
Test Run To execute process in test O Check this box first in test run and
run uncheck in actual run
Detailed List To see the details of price O Check this box on to see the
calculation calculation details

(Note: On above table, in column “R/O/C”; “R” = Required, “O” = Optional, “C” = Conditional)

Run the price calculation by clicking on the Execute button.


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In production, the “Information” dialog box containing the message “Results of iterative activity price
calculation have been posted” is displayed.

Confirm the message by clicking on the Continue Enter button. The “Calculate actual price
Results: Basic list:” screen is displayed.

To exit transaction click on green arrow icon or press F-3.

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5. REVALUATION AT ACTUAL PRICES
5.1 Procedure

The R/3 System can calculate iterative prices based on actual costs and actual activities. After
running actual price calculation, you can choose to revalue actual activities allocated to cost
centers (revaluation in other cost collectors requires a second step such as transaction KON1 –
Revaluation at Actual Prices: Internal Orders). Because you carry out actual price calculation at
period-end closing, no actual prices exist at the time of the actual activity posting. The initial
valuation of actual activity uses plan prices or, if no plan price exists (as is the case with pure
actual cost calculation); you can post the activity without a valuation. During period-end closing,
the R/3 System calculates the actual prices iteratively using this transaction and, provided you
have configured the system, revalues the activities. By revaluing the actual activities with actual
prices, you can fully allocate sender cost centers with no residual balance.

The R/3 System takes all actual costs (primary and secondary) and actual activities of the target
cost centres into account to calculate the iterative actual price. Any plan prices (whether
calculated by the R/3 System or entered manually by you) are ignored during this calculation
process.

You can use the Price Report to compare the iterative prices with those prices taking manual
price settings into account. In this way, you can analyze the effects of price changes (in actual,
the manually set prices, and the iteratively calculated plan prices) on the complete pricing
framework. Access the pricing report using the menu path: Accounting>Controlling>Cost
Centres>Information system>Reports for cost centre accounting>Prices>Cost Centres: Activity
Prices or transaction code KSBT

Procedural Steps
5.1.1. Access transaction by
Via Transaction Code MFN1
Via Menu AccountingControllingProduct Cost ControllingCost Object
ControllingProduct Cost by OrderPeriod end ClosingSingle
FunctionRevaluation at Actual PriceIndividual Processing

On screen “Revaluation at Actual Price: Initial Screen” enter information in the fields as specified in the
table below

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Field Name Description R/O/C User Action and Values Comments
Order Order Number R Enter order Number
Period Period covered by revaluation R Enter period
actual price
Fiscal Year Fiscal year of the revaluation R Enter fiscal year
at actual price

Click the button “execute

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Collective Processing

Access transaction by

Via Transaction Code MFN1


Via Menu AccountingControllingProduct Cost ControllingCost Object
ControllingProduct Cost by OrderPeriod end ClosingSingle
FunctionRevaluation at Actual Price Collective Processing
CON2

Enter details as shown in the extract

Field Name Description R/O/C User Action and Values Comments


Plant Plant for which revaluation of R Enter plant
actual prices to be executed
With Revaluation on all production R Check this box on to revalue all
Production orders plant wise production orders plant wise
orders
Period Period for which revaluation R Enter period
is to be executed
Fiscal Year Fiscal year of the revaluation R Enter fiscal year
at actual price

Execute

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Process End

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