Product Costing Config With Test Case With PP

Product Costing Configuration-By Order
Table of Contents for Configuration
Define Cost Sheet........................................................................................................3

Assign Cost Element to Costing Sheet........................................................................4
Maintain Overhead Rates............................................................................................5
Assign Secondary Cost Element to Production Cost...................................................6
Define Overhead Key..................................................................................................7
Define Overhead Groups.............................................................................................8
Define Cost Component Structure...............................................................................9
Update of Additive Costs...........................................................................................10
Cost Component Views.............................................................................................11
Assignment: Organization Units - Cost Component Structure..................................12
Cost Component Groups............................................................................................13
Define Costing Types................................................................................................16
Define Valuation Variants.........................................................................................18
Define Date Control...................................................................................................22
Define Quantity Structure Control.............................................................................26
Work In Process.........................................................................................................27
Define Results Analysis Keys...................................................................................27
Define Results Analysis Versions.............................................................................28
Define Valuation Method (Actual Costs)..................................................................29
Define Line IDs.........................................................................................................29
Define Assignment....................................................................................................30
Define Update............................................................................................................32
Define Posting Rules for Settling Work in Process...................................................33
How Accounting Entry is posted for WIP while settlement of order?......................33
Variance Calculation.................................................................................................35
Define Variance Keys................................................................................................35
Define Default Variance Keys for Plants..................................................................35
Check Variance Variants...........................................................................................36
Define Valuation Variant for WIP and Scrap (Target Costs)....................................37
Define Target Cost Versions.....................................................................................38
Define Number Ranges for Variance Documents.....................................................41
Settlement..................................................................................................................41
Create Settlement Profile...........................................................................................41
Create Allocation Structure.......................................................................................43
Create Source Structure.............................................................................................45
Define PA Transfer Structure for Variance Settlement.............................................48
Change Cost Element Group.....................................................................................50
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Table of Contents for Transactions
T.1. Material Master......................................................................................................51

T.2. Creation BOM (Bill of Material)...........................................................................56
T.3. Create Activity Type..............................................................................................58
T.4. Plan Data for Activity Types..................................................................................59
T.5. Creation of Work Centers......................................................................................60
T.6. Routing...................................................................................................................62
T.7. Costing Run............................................................................................................66
T.8. Mark & Release Costing Run.................................................................................67
T.9. Production Order....................................................................................................70
T.10. Goods Receipt of Material...................................................................................74
T.11. Goods Issue To Production Order........................................................................75
T.12. Work In Progress Determination..........................................................................77
T.13. Confirmation of Production Order......................................................................79
T.14 Production Receipt................................................................................................80
T.15. Calculation of Variance........................................................................................82
T.16. Settlement of Production Order............................................................................83

Define Cost Sheet
Header Details
Description: Define Costing Sheets

Transaction Code: SPRO
Menu Path: IMG -> Controlling -> Product Cost Controlling-> Product Cost
Planning -> Overhead -> Define Costing Sheets
Client dependent settings: Yes / No
FIELDS VALUES COMMENTS

Costing Sheet COGMT Cost Sheet COGMT has been created for the purpose of
loading the Overhead cost to products based on
percentage of Material cost. Different rates of Overheads
can be maintained for different plants.
Select Costing Sheet & Click on Costing Sheet rows

Select Row – 10 Click on Costing Sheet rows Base
* Add another row for Production Overheads – OH Calculation based on Production Costs
Select Controlling Area
Assign Cost Element to Costing Sheet
Enter the Cost Element from - RM CONSUMPTION to Usage: trading goods.
Here we have assign the Raw Material Cost elements.

Maintain Overhead Rates
Select Row – 20 (Material OH/OH Surch) click on Overhead rate
FIELDS VALUES COMMENTS

Overhead rate OH Key – J10 New OH key (J10) is created. We can have as many OH
key as per client requirements. For example if the client is
manufacturing different type of products, if the overhead
rate of the material are different we can maintain different
OH rate for the same with the help of OH key. OH key is
maintained in Material Master in Costing 1 tab.

Assign Secondary Cost Element to Production Cost
Select Row – 60 (Production Costs) & click on base
Select Controlling Area
Cost Element
619000 DAA Production Dir. Int. Act. Alloc. Production
620000 DAA Machine Costs Dir. Int. Act. Alloc. Machine Costs
623000 DAA Burn In Dir. Int. Act. Alloc. Burn In
625000 DAA Setup Dir. Int. Act. Alloc. Setup

Define Overhead Key
Header Details
Description: Define Overhead Keys

Planning -> Basic Settings for Material Costing Overhead 
Costing Sheet: Components Define Define Overhead Keys
Click on New Entries
J10 – General – VIL is created as new Overhead key

Define Overhead Groups

Header Details
Description: Define Overhead Groups

Planning -> Basic Settings for Material Costing Overhead 
Costing Sheet: Components  Define Overhead Groups
Overhead Group is maintained in material master – Costing 1 tab.
Overhead rate is maintained in overhead key in Cost Sheet Costing Rows for a specific
period for a Controlling Area.
For example
FG Material – 1
RM Steel which is imported RM (Plastic) which is local purchase

Fluctuation in exchange rate No exchange rate fluctuation
We can capitalize the exchange rate fluctuation on material thru Over head by using cost center.
A cost center is assigned to a overhead key in Cost Sheet.
We can also analyze Over/Under absorption of overhead on the material.

Define Cost Component Structure

Header Details
Description: Define Cost Component Structure

Planning -> Basic Settings for Material Costing Templates
Define Cost Component Structure
Create New Cost Comp Structure J1 (Copy from Cost Comp. Structure – 01)
Select J1 Cost Comp. Structure & click on Assignment: Cost Component - Cost Element Interval
Ensure the component structure should always be Active. Normally if any change is made in
Structure it becomes inactive by default. We have to make the Cost Comp. Structure active
again.

Click New Entries Assign the Cost Elements from- to with Cost Sheet Rows (Refer to the Cost
Sheet). Here we assign the combination of Cost sheet Rows to the Cost Comp Structure. In this
case we have assigned the combination of Cost sheet – “COGMT” to Cost Comp. Structure –
“J1”. And also here we combine the GL, Cost Comp. Structure, Chart of Accounts & Cost sheet
rows.
Update of Additive Costs
Here we assign the update rules for the combination
Cost Comp. Structure

Cost Component
Chart of Accounts
Cost Element
Cost Component Views
Select the Cost Comp Structure & click on Cost Component views
Click on

Only Cost of Goods MFD should be ticked.
Assignment: Organization Units - Cost Component Structure
Select Cost Comp. structure J1 & click on Assignment Organization unit – Cost component
structure.

For example
If Controlling Area is one with multiple company codes and multiple cost Component structures
we can assign specific Cost Component structure to a specific Company Code. So that particular
Cost sheet specific to the company code is picked up.
Cost Component Groups
Select the Cost Comp. structure J1 & click on Cost Component Group


Define Costing Variants

Header Details
Description: Define Costing Variants

Transaction Code: OKKN
Planning -> Basic Settings for Material Costing Material Cost
Estimate with Quantity Structure Define Costing Variants
Click on details

Click here
Define Costing Types
Header Details
Description: Define Costing Types

Estimate with Quantity Structure Costing Variant:
Components Define Costing Types

Click on details
Click here

Click here
Define Valuation Variants

Header Details
Description: Define Valuation Variants

Components Define Valuation Variants

Refer to Cost Comp. Structure  Cost Component views we had assigned this combination.

Click on details
Click here
Select “Overhead” tab

Click here

The above configuration of Valuation variant shall be seen in Costing Variant
Define Date Control
Header Details
Description: Define Date Control

Transaction Code: OKK6
Components Define Date Control

Standard Date Control PC01 is used.
Click on details

Header Details
Description: Define Date Control

Components Define Date Control

Select Date Control PC01
Click on details
Define Quantity Structure Control

Header Details

Description: Define Quantity Structure Control

Components Define Quantity Structure Control
Click on details

Work In Process
Define Results Analysis Keys

Header Details
Description: Define Results Analysis Keys

Transaction Code: OKG1
Menu Path: IMG -> Controlling -> Product Cost Controlling Cost Object
Controlling Product Cost by Order Period-End Closing
Work in Process Define Results Analysis Keys

Define Results Analysis Versions

Header Details
Description: Define Results Analysis Versions

Work in Process Define Results Analysis Keys
Assign the Controlling Area to a RA Version

Define Valuation Method (Actual Costs)

Header Details
Description: Define Valuation Method (Actual Costs)

Transaction Code: OKGC
Work in Process Define Valuation Method (Actual Costs)
Assign Co Area-RA Version-RA Key-Status-Status No. When an Order is settled during

the Production process WIP using RA Key (FERT) – Status (REL) the accounting
document is posted.
When an order is confirmed and settled while doing the TECO (Technical Completion)
of Production Order RA Key (FERT) – (TECO) reversal of WIP accounting entry is
posted.
Define Line IDs
Header Details
Description: Define Line IDs

Work in Process Define Line IDs

The above are standard Line IDs
Define Assignment
Header Details
Description: Define Assignment

Transaction Code: OKGB
Work in Process Define Assignment
Click on New Entries  Copy ReqToCAP with “FK” & Sub mask the masked Cost Elements with
all ++++++++++ with valid from date.

In Assignment of Cost Element for WIP we attach a Cost Elements by masking the cost elements
with a Line ID in the required column (RA Category)
WIPR WIPP RUCR RUCO
After assignment of Line ID to RA Category, a RA Key is assigned to a combination of
Co Area Version RA Key Line ID Category Cost

Element
1000 0 FERT EK K
1000 0 FERT FK K
A RA Key is defined to an order type, when order is created RA key is captured in order.

Define Update
Header Details
Description: Define Update

Transaction Code: OKGA
Work in Process Define Update

Define Posting Rules for Settling Work in Process

Header Details
Description: Define Posting Rules for Settling Work in Process

Work in Process Define Posting Rules for Settling Work in
Process
For Settlement of an Order to WIP (Work In Process) we have to assign the GL to a

Result Analysis (RA) Version & to a RA Category
How Accounting Entry is posted for WIP while settlement of order?
1. Production Order is created with a combination of Costing Control (T-Code-

CO01)
Costing Variant Costing Variant Actual
Costing Sheet Overhead Key
RA Key Variance Key

2. Material is issued against a Production Order (T-code - MB1A)

3. Calculate work in Process (From Production Order system picks up the following
(T-Code- KKAX)
a. Valuation of WIP
b. Result Analysis Key (RA)-FERT
c. Status – REL (Here system looks for valuation method for Work In
Process{ FERT-REL-Status Number -1 (WIP Calculation on Basis of
Actual Costs)}
d. Overhead Key
4. Update of WIP Calculation And Result Analysis and looks for the combination
a. Controlling Area
b. RA Version (While executing Calculate Work in Process RA version is
determined)
c. RA Key (While Calculate Work in Process RA key is determined)
d. Determines the line ID from the Cost Element Category
e. Determines the category (Cost)
f. Determines sender secondary cost elements for settlement and value along
with RA category
g. Determines receiver primary cost element (with RA Category WIPR
looks for posting rules in WIP Calculation and Result analysis (RA) along
with RA version “0”. Picks up the primary cost element GL.
i. Controlling area
ii. Company Code
iii. RA Version
iv. RA Category
v. Record
vi. P&L Account
vii. Balance sheet Account

Variance Calculation
Define Variance Keys

Header Details
Description: Define Variance Keys

Transaction Code: OKV1
Menu Path: IMG  Controlling  Product Cost Controlling Cost Object
Variance Calculation Define Variance Keys
Define Default Variance Keys for Plants

Header Details
Description: Define Default Variance Keys for Plants

Transaction Code: OKVW

Variance Calculation Define Default Variance Keys for Plants

Variance Key can be made default plant wise
Check Variance Variants

Header Details
Description: Check Variance Variants

Transaction Code: OKVG
Variance Calculation Check Variance Variants

Define Valuation Variant for WIP and Scrap (Target Costs)

Header Details
Description: Define Valuation Variant for WIP and Scrap (Target Costs)
Variance Calculation Define Valuation Variant for WIP and
Scrap (Target Costs)

Define Target Cost Versions

Header Details
Description: Define Target Cost Versions

Transaction Code: OKV6
Variance Calculation Define Target Cost Versions



Define Number Ranges for Variance Documents

Header Details
Description: Define Number Ranges for Variance Documents

Transaction Code: KANK
Variance Calculation Define Number Ranges for Variance
Documents
Settlement
Create Settlement Profile

Header Details
Description: Create Settlement Profile


Settlement Create Settlement Profile
Settlement Profile in Settlement of Production Order is FA_ABP
Default Values Valid Receivers

Allocation Structure A1 G/L Account

PA transfer structure E1 Cost Center
Default Object Type CTR Order
WBS Element
Fixed Asset
Material
Profit Segment
Sales Order
Cost Objects
Order item
Create Allocation Structure

Header Details
Description: Create Allocation Structure

Settlement Create Allocation Structure
Select Allocation Structure A1

Select Assignment & Source
Select Assignment & Settlement Cost element

Select the Cost Elements or cost element group.
Select Assignment & Settlement Cost element

Select Receiver Category – CTR

ORD
Create Source Structure

Header Details
Description: Create Source Structure

Settlement Create Source Structure
Select Structure _ FA & Assignment

Select Material Cost & Source
Enter the Cost Element Values from – to or enter the Group
Select Production Cost & Source

Select Miscellaneous Costs & Source

Define PA Transfer Structure for Variance Settlement

Header Details
Description: Define PA Transfer Structure for Variance Settlement

Transaction Code: KEI1
Menu Path: IMG -> Controlling -> Profitability Analysis Flows of Actual
Values Settlement of Production Variances Define PA
Transfer Structure for Variance Settlement
Select E1 (PA Settlement, Production Variance & click on Assignment lines

Select Assignment “30” (Quantity Variances material) & Source
Note down the Group “ CO-PC-MAT
Change Cost Element Group

Header Details

Description: Change Cost Element Group

Transaction Code: KAH2
Menu Path: Accounting Controlling Cost Center Accounting Master
Data Cost Element Group Change
Insert the Secondary Cost Element under Cost Element Group.

T.1. Material Master

Creation of Finished Goods
Header Details
Description: Creation of Finished Goods

Transaction Code: MM01
Menu Path: Logistics Materials Management Material Master Create
(General) Immediately
Select the Views
Enter Organization Levels


Following are mandatory fields to be maintained in Material Master for Product Costing

Following are mandatory fields to be maintained in Material Master for Product Costing
A warning message can be ignored (In-house production time is 0 for material produced in-
house)

No entry is required

Enter the following
Valuation Class 7920

Price Control S
Standard Price XXXX
Check box With Qty Structure to be checked.
Save.
Create Raw Material with material type “ROH”
Enter the following

RM1 RM2
Valuation Class 3000 3001
Price Control V V
Standard Price 75 50 (For Example)
T.2. Creation BOM (Bill of Material)

Header Details
Description: Creation of BOM

Transaction Code: CS01

Menu Path: Logistics Production Master Data Bills of Material Bill of
Material Material BOM Create
Enter the following
Material
Plant 1000
BOM Usage 1 (Production)
Save

T.3. Create Activity Type

Header Details
Description: Creation of Activity Type

Transaction Code: KL01
Menu Path: Accounting Controlling Cost Center Accounting Master
Data Activity TypeCreate

Enter the following
Basic Data
Activity Unit (H) Hour
Cost Center Catg * For all cost center categories
Allocation default values
Activity Type 1
Allocation of cost element Secondary Cost element which is used for allocation
T.4. Plan Data for Activity Types

Header Details
Description: Plan Data for Activity Type

Transaction Code: KP26
Menu Path: Accounting Controlling Cost Center Accounting Planning
Activity Output/Prices

Cost Center & Activity combination should be same as mentioned in KP26 (Activity Planning)
Enter the Following

Version
From Period
To Period
Cost Center or Cost Center Group
Activity Type
Select Form Based
Enter the Fixed Price
T.5. Creation of Work Centers
Header Details
Description: Creation of Work Centers

Transaction Code: CR01

Menu Path: Logistics Production Master Data Work Centers  Work
Center  Create

T.6. Routing
Header Details
Description: Creation of Routing

Transaction Code: CA01
Menu Path: Logistics Production Master Data Routings  Routings 
Standard Routings  Create


Enter the following

Usage 1
Status 4 (Always use Release)
Click on Routings
Double Click on the line
Enter the following
Work Center
Control Key PP01
Double click on the line

Enter the following

Standard Values Unit
Machine Time Taken H (Hours)
SAVE
T.7. Costing Run
Header Details
Description: Costing Run

Transaction Code: CK11N
Menu Path: Accounting Controlling Product Cost Controlling Product
Cost Planning Material Costing Cost Estimate with Quantity
Structure Create

Enter the Material No

Plant
Costing Variant
Costing Version
Enter
Enter

T.8. Mark & Release Costing Run

Header Details
Description: Costing Run

Transaction Code: CK24
Menu Path: Accounting Controlling Product Cost Controlling Product
Cost Planning Material CostingPrice Update

Enter the following
Period
Fiscal Year
Company Code
Plant
Material
Click on Marking Allowance

Select the Company code & Save

Run the Price update on Test Run later remove the check box Test Run and Execute the Price
update.
Execute F8
After Saving go to T-Code CK24 again click on Release icon
Enter
Company Code
Plant
Material
Execute release in test Run
Remove the test run & execute it again.
Go to Material Master of FG in Cost2 Tab we can view the Future Price

When we update the price & release the future cost estimate in Material Master
T.9. Production Order

Header Details
Description: Create Production Order

Transaction Code: CO01
Menu Path: Logistics Production Production Control Order Create

Enter the following
Material
Plant
Order Type PP01 (Standard Production Order (int. number))

Total Qty
Finish Date
Start Date
Click on to Release the Production Order & Click on for Cost Order.
Click on Goto
We get Cost analysis for the Plant, Material & for Planned Qty

We can get Cost item wise
Click on Assignment Tab

Note the Reservation No
Save
T.10. Goods Receipt of Material

Header Details
Description: Goods Receipt

Transaction Code: MB1C

For testing purpose we shall take Open Stock with Movement 561 for plant.
T.11. Goods Issue To Production Order

Header Details
Description:
Transaction Code: MB1A

Enter the Production Order & Click on Reservation & Enter the Reservation No (Refer to
Production Order  Assignment Tab.

System shall automatically pickup the Material & Qty mentioned in Production Order.
Save
Accounting Entries
T.12. Work In Progress Determination before activities and overheads (Optional)
Header Details
Description: Work in Progress

Transaction Code: KO88

Remove the Test Run Check Box and Execute F8
Settlement Rule

Accounting Entries
T.13. Confirmation of Production Order
Header Details
Description: Confirmation of Production Order

Transaction Code: CO11
Menu Path: Logistics Production Production Control Confirmation
Enter For Operation Time Ticket

Enter the Following
Activities
Machine Actual Machine Hours utilized
Click on Goods Movement & Save
T.14 – Actual Overhead Calculation (KGI2)

T.15 - Work In Progress Determination after activities and overheads
T.15 Production Receipt
Header Details
Description: Production Receipt

Transaction Code: MB31
Menu Path: Logistics Production Production Control Goods
Movements MB31 - Goods Receipt

Save
Accounting Entries

T.15. Calculation of Variance
Header Details
Description: Calculation of Variance

Transaction Code: KKS2
Menu Path: Logistics Production Production Control Period-End
Closing Variances Individual Processing

Select the Line & Click on Cost Element
T.16. Settlement of Production Order
Header Details
Description:
Transaction Code: KO88

Accounting Entry

Product Costing Config With Test Case With PP

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Product Costing Config With Test Case With PP

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Product Costing Configuration-By Order

Table of Contents for Configuration

Define Cost Sheet........................................................................................................3

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Table of Contents for Transactions

T.1. Material Master......................................................................................................51

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Define Cost Sheet

Description: Define Costing Sheets

Client dependent settings: Yes / No

FIELDS VALUES COMMENTS

Select Costing Sheet & Click on Costing Sheet rows

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Select Row – 10 Click on Costing Sheet rows Base

Select Controlling Area

Assign Cost Element to Costing Sheet

Enter the Cost Element from - RM CONSUMPTION to Usage: trading goods.

Here we have assign the Raw Material Cost elements.

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Maintain Overhead Rates

Select Row – 20 (Material OH/OH Surch) click on Overhead rate

FIELDS VALUES COMMENTS

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Assign Secondary Cost Element to Production Cost

Select Row – 60 (Production Costs) & click on base

Select Controlling Area

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Define Overhead Key

Description: Define Overhead Keys

Click on New Entries

J10 – General – VIL is created as new Overhead key

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Define Overhead Groups

Description: Define Overhead Groups

Overhead Group is maintained in material master – Costing 1 tab.

RM Steel which is imported RM (Plastic) which is local purchase

We can also analyze Over/Under absorption of overhead on the material.

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Define Cost Component Structure

Description: Define Cost Component Structure

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Update of Additive Costs

Here we assign the update rules for the combination

Cost Comp. Structure

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Cost Component Views

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Only Cost of Goods MFD should be ticked.

Assignment: Organization Units - Cost Component Structure

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Cost Component Groups

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Define Costing Variants

Description: Define Costing Variants

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Define Costing Types

Description: Define Costing Types

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Define Valuation Variants

Description: Define Valuation Variants

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