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So we can understand in layman that indirect overhead is nothing but service department cost.
This is the role of production department and finance department prepare the budget or resources
rate for the specific activity.
Material cost is arrived through bill of material (Qty’s * Price).The price is taken from the
purchasing department.
Conversion cost is the cost of all the activities directly involved in the production which is specified
in the above Routing.
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.
Configuration Required;
It gives the breakup of cost of the product. As configuration given below in steps
Click on New Entry and give the Cost Comp.Str As Z1 and Active tick for both and description in
name column. Select Z1 and double Click on cost component -> go the New entry name the
cost component as mentioned in screen shot
Now click on Assignment: Cost and assign the cost GL as per material Name as shown in below
screen
Now go back and select Z1 and double click on Cost Component view and click on New Entry
Create cost component view as given in screen
Likewise below all cost components are created as shown in below screen
Now go back and double click on Assign Organization unit –Cost component structure
2. Costing Sheet. (KZS2)
Click on New Entry give the Cost sheet Name now select the cost sheet name and
double click on Cost sheet row as screen shot given below.
Control parameters:
Costing type
Valuation Variant.
Date control.
Quantity structure Control.
Transfer control.
Reference variant.
2. Cost Object Controlling:
It comprises:
Config. required:
Revaluation of Activities.
Actual overhead calculation.
CO Production settlement(Distribution of costs between main product and Byproduct)
WIP calculation.
Variance Calculation.
Production order.
Process order.
Controlling production order.
Routing:
It contains sequence of operations. And for each operation, it specifies on which work center to
be performed and on what activities to be performed and planned execution time for them.
Routing is defined at material and plant combination.