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Proof of Concept
Table of Contents
1. Product Cost Planning Execution Guide - Proof Of Concept....................4 1.1. Production of Raw Brine Essentials for Planning Cost...............................4
3.1. Creation of Raw Material Masters...............................................................6 3.2. Creation of Finished Good Material Master................................................12 3.3. Creation of Bill of Material ......................................................................15 3.4. Creation of Work Centers........................................................................17 3.5. Creation of Routing.................................................................................18 4. Product Cost Planning-Determining Planned cost per unit .....................21 4.1. Planning Cost Element wise data in Cost Centers. .....................................21 4.2. Viewing Cost Centre Report ....................................................................23 4.3. Planning of activities at Production cost centers.........................................25 4.4. Planning Output of Service Department Activities......................................27 4.5. Calculation of Planned Activity Prices of Production & service Cost Centers & Validation of calculated results............................................................30 4.6. Planning consumption of Service Cost Centers Activity output by Production Cost Centers ....................................................................................37 4.7. Execution of Plan Reconciliation ..............................................................40 4.8. Execution of Plan Distribution Cycle..........................................................48 4.9. Entering Statistical Key Figures for Plan Assessment Cycle........................50
4.10. Execution of Plan Assessment Cycle.......................................................52 4.11. Updating Planned RM/PM purchase prices in Material Master ....................54 4.12. Running & saving of Cost Estimate.........................................................57 4.13. Marking & Releasing of Standard Cost Estimate.......................................61 5. Product Costing- Determining Actual cost per unit .................................66 5.1 Purchase of Raw Material..........................................................................66 5.2 Goods Receipt ........................................................................................68 5.3 Creation of Production Order.....................................................................70 5.4 Releasing, Scheduling & Costing the Production Order................................73 5.5 Goods Issue to Production Order...............................................................78 5.6 Confirmation of Quantity & Activity for Operations ......................................80
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5.7 Goods Receipt of Finished Goods against Production Order..........................84 5.8 Creation of Sales Order............................................................................87 5.9 Delivery of Finished Goods .......................................................................89 5.10 Picking of goods & Posting of Goods Issue................................................91 5.11 Billing .................................................................................................93
6. Glossary.................................................................................................94
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Operations
1. Dissolving 2. Refining
------ ------
Dissolver Refinery
Expected Output in POC for Planned Cost of Raw Brine in Rs./ KG Name Raw Materials Dissolver Production OHS Refinery Production OHS Service CC Cost Total Cost of Production Total Cost 140.00 26.80 52.71 15.86 235.37 Fixed 0.00 26.80 52.71 15.86 95.37 Variable 140.00 0.00 0.00 0.00 140.00
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2.
The following picture depicts the organization structure used for POC.
Client
218
Company
Controlling Area
Tata Chemicals
TCL
Company Code
Sales Organization
Purchase Organization
Plant
Plant SA
Distribution Channels
Distribution Channel TC
Divisions
Division TC
Sales Office
Storage Location
Product Costing
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3.
3.1.Creation of Raw Material Masters Use The Parameters for Creating Raw Materials Master are defined here. Procedure Access the activity using one of the following navigation options:
Product Costing
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Product Costing
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Enter
Press Enter Field Name Views Values Basic Data 1, Basic Data2, Purchasing, MRP1, MRP2, MRP3, Accounting 1, Accounting 2, Cost estimate1, Costing 2,
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Product Costing
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Field Name Name Basic Unit Measure Material Group Tab Sales: general/plant Availability Check Trans Grp Loading Grp Tab MRP1 MRP Type MRP Controller Lot Size
KP 0006 0003
KP 0006 0003
TAB MRP 2 Sched Margin Key TAB MRP 3 Availability Check Tab Forecasting Forecast Model
Product Costing
000
000
KP (no Check)
KP (no Check)
N
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Product Costing
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Field Name
Values
Values
Tab Accounting 1 Valuation class Price Unit Price Control Tab Cost Estimate 1 With Qty Structure Material origin Check Check Check Check 3000 1 V(moving Average Price) 3000 1 V(moving Average Price)
3.2.Creation of Finished Good Material Master. Use The Parameters for Creating Finished Goods are defined here. Procedure Access the activity using one of the following navigation options:
Product Costing
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Product Costing
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Field Name Material Name Basic Unit Measure Material Group Tab Accounting 1 Valuation class
1 S(Standard Price)
Note: For all other views, enter the details as given in 3.1.1 above.
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3.3.Creation of Bill of Material Use The Parameters for Creation of BOM are defined here. Procedure Access the activity using one of the following navigation options:
Press Enter.
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Go to Menu-Header and enter the base quantity (Quantity to which all component quantities in a BOM relate.) Field Name Base Quantity Save the BOM created. Values 1 Kg
Product Costing
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3.4.Creation of Work Centers Use The Parameters for creation of Work Center are defined here. Procedure Access the activity using one of the following navigation options:
Product Costing
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Field Name Work Center Work Center Category Person Responsible Usage Standard Value Key
3.5.Creation of Routing Use The Parameters for Creation of routing for FG 123 (Purified Brine) are defined here. Procedure Access the activity using one of the following navigation options:
Values 123 SA
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Field Name Work Center Control Key Base Qty Unit Machine (ACT1) Labour (ACT2) Unit
Product Costing
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Product Costing
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Planning-Determining
Planned
4.1. Use
The Parameters for Planning Cost Element wise data in Cost Centers are defined here. Procedure Access the activity using one of the following navigation options:
Field Name Layout Plan Version From & to Periods Year Cost Center (from to) Activity Type (from - to) Cost Element (from to) Entry 1-101 0 (Zero) 1 to 12 2005 * * *
Values
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Entries are to be made as per layouts given below for each cost center.
To go to next Dept (i.e. Cost Center) use Black Down Arrow Icon (Third from Top Left).
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4.2.
The data prepared on excel as shown below needs to be checked with SAP Report
Cost Center Group ===> Cost Center ===> CE 430000 453000 416300 416400 Cost Ele. Descrpn Salary Maintenance Water Gas TOTAL Own Cost
Total
3000 100
500
100 25
6500
12400
3100
2800
500
125
S_ALR_87013611 Accounting/Controlling /Cost Center Accounting /Information System/ Reports for Cost Center Accounting/Plan Actual Comparison/Cost Centers Actual Plan Variance
Field Name Controlling Area Fiscal Year From & To Periods Plan Version Cost Center Group Cost Element Group Execute. TCL 2005 1 to 12 0
Values
Product Costing
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Product Costing
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4.3. Use
The Parameters for Planning of activities (measurable Output) of Production Cost Centers are defined here. Procedure Access the activity using one of the following navigation options:
Field Name Version From Period To Period Fiscal Year Cost Center Activity type Entry 0 1 12 2005 * * Free
Values
To go to next Dept (i.e. Cost Center) use Black Down Arrow Icon (Third from Top Left). Enter the following data:
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Cost Centre /Field Name Dissolver/ Plan Activity Refinery/ Plan Activity
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4.4. Use
The parameters for entering Plan Output Values of Service Departments Activities are defined here. (Note: Before starting this activity, it is necessary to complete the Cost Element wise Planning for the relevant service cost centers thru transaction KP06 as explained in 3.1 above.) Procedure Access the activity using one of the following navigation options:
Field Name Version From Period To Period Fiscal Year Cost Center or CC Group Activity type or Activity Type Group Entry 0 1 12 2005
Values
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To go to next Dept (i.e. Cost Center) use Black Down Arrow Icon (Third from Top Left). Once you arrive at the required production cost Center update as below, Field Name Cost centre Activity Type Plan Activity Values Facilities Cups 125
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Product Costing
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4.5.
Calculation of Planned Activity Prices of Production & service Cost Centers & Validation of calculated results
Use The Parameters for Calculation of Planned Activity Prices of Production & Service Cost Centers are defined here. Procedure Access the activity using one of the following navigation options:
Values Production & Service CC group (To be done separately for each)
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Product Costing
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Go back. The system will ask whether to post these prices. If clicked on Yes, it will post the prices (even though the report is executed in Test Run).
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Similarly, execute the planned price calculation for Service cost Centers. b) Service cost Centers
Product Costing
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Product Costing
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The Planned prices posted as above should be checked and validated through transaction KP26. The relevant screen Shots are given below:
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Product Costing
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4.6.
Planning consumption of Service Cost Centers Activity output by Production Cost Centers
Use The parameters for Planning Consumption of Service Cost Centers Activity Output in Production Cost Centers are explained here. Procedure Access the activity using one of the following navigation options:
After you press Enter, system shows, by default, the first layout i.e. 1-101. Click on Next Layout Icon to select the layout 1-102. Field Name Layout Plan Version From & to Periods Year Cost Center (from to) Activity Type (from - to) Cost Element (from to) Entry 1-102 0 (Zero) 1 to 12 2005 * Prod CC Group can be selected * As required * Free (not Form based) Values
Click on Overview Screen Icon (on Top Left corner of the screen)
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Enter the following values Receiver Cost Centre Sender cost centre Planned Fixed consumption 100 50
Dissolver Refinery
Facilities Facilities
Product Costing
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Product Costing
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4.7. Use
Plan Reconciliation is executed to identify and reconcile mismatches, if any, between Sender CCs Output and Receiver CCs Input. The procedure for executing Plan reconciliation is explained here. Procedure Access the activity using one of the following navigation options:
Field Name All Cost Centers Plan Version From & to Periods Year Test Run Details List Select 0 (Zero) 1 to 12 2005
Values
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Execute.
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If the Results are correct, then Save it. (System posts the data even if it is executed in Test Run)
Once these results are posted, system will automatically post the Plan Cost of Service Cost Centers to Production Cost Center based on the Activity Consumption planned by them. See the Cost Center Report Screen Shots given below.
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Product Costing
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Product Costing
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Product Costing
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NOTE: If there are any differences in Plan Data between the Output of Service Cost Centers & consumption of Production Cost Centers, it will be reflected in the Plan Reconciliation Report. If the data is posted after execution of KPSI, system will automatically adjust the values of output of Service Cost so as to match with consumption by production cost centers. Screen Shots relevant for automatic matching of Sender & Receiver Activity Quantities are given below
Product Costing
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Product Costing
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4.8.
Execution of Plan Distribution Cycle Use The procedure for execution of plan Distribution Cycle is explained here. After execution of distribution cycle, the sender cost centers cost will be allocated to receivers cost centers, based on the criteria defined in the cycle. Ideally, the entire cost of sender cost centre should be distributed to the receivers. In distribution, sender cost centers cost is allocated to the receivers in the respective cost elements. Hence, Secondary cost element is not required for distribution. Procedure Access the activity using one of the following navigation options:
First execute in Test Run, analyze the results & then execute to post
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First execute in Test Run, analyze the results & then execute to post .Click on the number in sender/receiver column to see the details of distribution. For checking whether entire cost of Service CC has been distributed to other cost centers, go to the cost centre report (S_ALR_87013611).
Product Costing
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4.9.
Entering Statistical Key Figures for Plan Assessment Cycle Use The procedure for entering SKF for executing Plan Assessment Cycle is explained here. Procedure Access the activity using one of the following navigation options:
Product Costing
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Product Costing
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4.10. Use
The procedure for execution of plan Assessment Cycle is explained here. After execution of assessment cycle, the sender cost centers cost will be allocated to receivers cost centers based on the criteria defined in the cycle. Ideally, the entire cost of sender cost centre should be distributed to the receivers. In assessment, it is allocated through a single line item (secondary Cost element) in the receiver cost centre. Procedure Access the activity using one of the following navigation options: Transaction Code SAP EASY Access KSUB Accounting/Controlling/Cost Center Accounting /Planning/ Allocations/Assessment
First execute in Test Run, analyze the results & then execute in production run to post .Click on the number in sender/receiver column to see the details of assessment.
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The result of the assessment cycle is as shown in the screen shot below. For verification of the resultant output, go to the cost centre report (S_ALR_87013611).
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4.11.
Updating Planned RM/PM purchase prices in Material Master Use The Parameters for updating the planned RM/PM purchase prices in Material Master are defined here. Prerequisites 1. For all the RM/PM codes, planned purchase prices should be available from Purchase Department. These planned prices should be with reference to price unit in Accounting 1 view of the Material master of the respective material. 2. Before updating the planned price field, it is necessary to know beforehand the costing variant which will be used for annual planning and the planned price field (in RM/PM Material Master) to which it is linked through valuation variant. In our example, we have used Costing Variant ZPC5 in which pricing strategy for materials as per valuation variant (TCL _New Valuation Variant) is Planned Price3 or Moving average Price. The relevant screen shots are given below:
Click on Valuation variant and view the pricing strategy for materials.
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Procedure Access the activity using one of the following navigation options:
Go to Costing 2 View of the material master and put the price in the planned price 3 field. Date should be first date of the year for which plan is to be prepared.
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Save it & do the same for other raw materials. When the number of RM/PM is large, in that case we can use LSMW for mass upload. However, LSMW needs to be created.
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4.12. Use
The Parameters for running & saving the Cost estimate for the material are defined here. The cost estimate determines what costs go into the standard price for the material. Only those cost components, that are flagged as relevant for stock valuation, are included in the standard price. A material cost estimate is used to calculate the standard price which will be updated in the material master record. Procedure Access the activity using one of the following navigation options: Transaction Code SAP EASY Access CK11n Logistics/Production-Process/Product Cost planning/ Material Costing/Cost Estimate with Qty Structure/Create
Product Costing
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Product Costing
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Give the Costing dates, Qty Structure date & Valuation Date & press enter
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Check the Standard Cost estimate results and verify it with the desired result. Then Save it by clicking on the save icon. The cost estimate must be executed with a costing variant (made for the specific purpose like Annual Planning, Inventory Valuation, and Current Costing etc.) and saved. Once it is released thru transaction CK24, it will be updated in the Master record of the FG/ SFG. Transaction CK24 is explained below.
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4.13.
Marking & Releasing of Standard Cost Estimate Use The Parameters for Marking & release of the standard Cost estimate for the material are explained here. Once the standard cost estimate is released, the standard price will appear in the Accounting 1 & Costing 2 view of Material Master. To view the cost component structure, double click on the current period field. Procedure Access the activity using one of the following navigation options: Transaction Code SAP EASY Access CK24 Logistics/Production-Process/Product Cost planning/ Material Costing/Price Update
First click on marking allowance to allow release of standard cost for the current period. This is to be done only once at the beginning of the period.
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Product Costing
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Give the material number and execute in test run first. Check it & mark. It will show the future price calculated.
Now go back and click on release. Following screen shot shows the released standard cost estimate.
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Check and save it. Cross check the updated price in the material master as shown in the screen shot below.
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(Note: Please consider the values shown in the screen shot as only the reference values. Do not cross check the same with the desired output. The purpose is to show the flow of activities.)
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5.1 Purchase of Raw Material Use The Parameters for Purchase of Raw Materials are defined here. Procedure Access the activity using one of the following navigation options:
ME21N Logistics/ Materials Management / Purchasing / Purchase Order / Create / Vendor /Supplying Plant Known.
Field Name Vendor Purchasing Org Purc. Group Company Code Material PO Quantity Net Price Material PO Quantity Plant Net Price Delivery Date
Values 200000 TCLP SPI (SPI Purchase Group) TCL 116 10 KG 18 120 5L SA 2 30.08.2005
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Press Enter. Under Material Data Tab: Uncheck nfo Update field.
Now Confirm the Net Price entered is same as displayed, else re-enter. Press Enter Save
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5.2 Use
Goods Receipt
The Parameters for Goods Receipt of Raw Materials are defined here. Procedure Access the activity using one of the following navigation options:
MIGO_GR (MIGO) Logistics/ Materials Management / Purchasing / Inventory Management / Goods Movement/ Goods Receipt / Purchase Order / GR for Purchase Order.
Press enter
Values MIT
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Product Costing
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5.3 Use
The Parameters for Creation of Production Order are defined here. Procedure Access the activity using one of the following navigation options:
Product Costing
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Product Costing
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Values 10 07.10.2005
Product Costing
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5.4
Product Costing
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Scheduling
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Product Costing
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Product Costing
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Check all the tabs on the main screen of the production order & save.
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5.5
Use
The Parameters for Goods Issue to Production Order are defined here. Procedure Access the activity using one of the following navigation options:
Product Costing
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Product Costing
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5.6
Use
The Parameters for Confirmation of Quantity & Activity for operations to Production Order are defined here. Procedure Access the activity using one of the following navigation options:
Product Costing
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Transaction Code
CO11N
Field Name Order Ope/Acty Confirm type Quantity Confirmation Activity Confirmation Machine Labor
H 1H
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Product Costing
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Check the actual cost debited to the production order in the Cost Report.
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5.7 Use
is
defined here.
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Product Costing
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Go to the Production order cost report and see the cost analysis
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5.8 Creation of Sales Order Use The Parameters for Creation of Sales Order are defined here. Procedure Access the activity using one of the following navigation options:
Field Name Sold to party PO number & Date Payment terms Item 48 xxx / xx.xx.2005 As required 0010
Values
Product Costing
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Press Enter. Select the Line item & go to Item conditions for Pricing
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5.9 Use
Product Costing
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The Parameters for Creation of Sales Order are defined here. Procedure Access the activity using one of the following navigation options:
Product Costing
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5.10 Use
The Parameters for Picking of goods & Post Good issue are defined here. Procedure Access the activity using one of the following navigation options:
Put the delivery number and press enter Go to the Tab for Picking & enter the quantity to be picked
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Click on Post goods issue. The message will be displayed for Outbound Delivery Saved.
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5.11 Billing
Use The Parameters for Creation of Billing Document (i.e. Invoice) are defined here. Procedure Access the activity using one of the following navigation options:
VF01 Logistics/Logistics Execution /Outbound Process /Goods Issue for Outbound delivery/Billing/ Billing Document / Create
Save the document & check the messages. If any errors are there, correct the same & then Save. It will generate the Billing Document & also post the same in FI (i.e. release of invoice to accounts). Check the Accounting Document Posted.
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6.
Sr.No 1
Glossary
Terminology Material Master Meaning / Concept A data record containing all the basic information required to manage a material. This data is sorted according to various criteria including data of a descriptive nature (such as size, dimension and weight) and data with a control function (such as material type and industry sector). In addition to this data, which can be directly maintained by the user, it also contains data that is automatically updated by the system (such as stock levels).
BOM
It is a complete & formally structured list of components of a product. An organizational unit within a controlling area that represents a defined location of cost incurrence. A unit in a controlling area that classifies the activities performed in a cost center Replica of GL Codes in Co. It is a Bridge between FI & CO. It exists only in CO & is used for transferring costs from one CO Object to other. A process used for transferring cost from one CC to another in the same cost element. A process used for transferring cost from once CC to another by using a Secondary Cost Element. It defines one or more sequences of operations for the production of a material
Activity Type
Distribution
Assessment
Routing
Product Costing
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