In Cost Object Controlling, actual costs for cost objects are recorded during simultaneous costing.

In the Product Cost by Period component, you can collect actual costs for the following objects:

• Product cost collectors
• Cost object hierarchies

In the Product Cost by Order component, you can record actual costs for manufacturing orders.

In the Product Cost by Sales Order component, you record actual costs for sales order items that carry costs and revenues.

In the Costs for Intangible Goods and Services component, you record actual costs for general cost objects or for internal orders that carry revenue.

You can see the actual costs in the information system at any time, and compare them with the planned costs.

Cost objects can be debited with primary costs in the following ways:

• Through postings in Financial Accounting (FI)
• Through postings in Materials Management (MM)
• Through postings in Human Resources (HR)

Cost objects can be charged with secondary costs in the following ways:

• Through postings in Controlling (CO)
• Through the use of time sheets (CATS)

Cost objects can also be debited with actual costs by confirmations in Logistics (LO). In confirmations, a cost object can be debited with:

• Secondary costs through internal activity allocations that are generated automatically by the confirmation
• Primary costs through material withdrawals that are generated automatically by the confirmation

Postings in FI (Financial Accounting) can be entered manually, or they can be generated automatically from the goods movements in MM.

If you enter a G/L account posting in FI, this generates a corresponding posting in CO (Controlling) under the primary cost element linked to the G/L account.

An accounting document is generated in FI for each posting.

Actual costs can be debited to cost objects from the following business transactions in MM (Materials Management):

• Goods issues
• Goods receipts for purchase orders
• Invoice receipts for purchase orders

Goods movements in MM generate postings in FI automatically.

Goods issues are goods movements in inventory management with which materials are withdrawn to manufacture a product. The following events take place on the basis of the goods issue:

• The warehouse inventory is reduced by the quantity withdrawn

• The cost object is debited under a primary cost element

• A line item is generated in CO.

• In FI, the inventory change account is debited and the inventory account is credited.

• An accounting document is generated in FI.

• A material document is generated in MM.

The R/3 System can also generate goods issues automatically. You can specify in the system that goods issues are to be generated automatically when a confirmation (backflush) or goods receipt is entered.

Backflushing enables the realization of lean production scenarios. Backflushing is often used in repetitive manufacturing.

A goods receipt is a goods movement in inventory management.

• Goods receipts enable you to confirm the arrival of goods.

• Goods receipts record the transfer of materials manufactured in-house into the finished goods inventory.

When you enter a confirmation, the system displays the default values for the quantities to be confirmed. You can overwrite these default values. The default values for the quantities to be confirmed are transferred from a quantity structure.

In repetitive manufacturing you normally use reporting point backflushes. When you confirm a reporting point, the system automatically confirms all operations before that reporting point that are larger than the previous reporting point.

You can use milestone confirmations in order-related production and process manufacturing. When you confirm a milestone, the system automatically confirms all operations before that milestone that are larger than the previous milestone.

If you are using reporting point backflushes and milestone confirmations, you must confirm the reporting points and milestones in the specified sequence. Operations that are neither a reporting point nor a milestone but have already been confirmed manually are not included in the reporting point backflush or milestone confirmation.

You can provide the last reporting point or milestone with an automatic goods receipt. You specify whether an operation is a reporting point or a milestone in the control key of the operation. You specify whether an automatic goods receipt is generated for the last operation:

• In repetitive manufacturing in the repetitive manufacturing profile
• In order-related production and in process manufacturing through the control key of the operation

The following quantity structures are used in the confirmation:

Selection of the routing relevant for the confirmation of activity quantities.

• If you are using production orders, the routing copied into the manufacturing order is the basis for determining the default values of the quantities used.
• If you are using process orders, the master recipe copied into the manufacturing order is the basis for determining the default values of the quantities used.
• When activities are confirmed in repetitive manufacturing, the following routings can be included:

• The routing used in the preliminary cost estimate for the product cost collector
• The routing used in the standard cost estimate for the material

Selection of the BOM relevant for the confirmation of material withdrawals:

The system posts a backflush (goods issue) on the basis of the following information:

• In order-related production, the quantity of materials withdrawn for each operation is defaulted from the BOM in the production order.
• In process manufacturing, the quantity of materials withdrawn for each phase is defaulted from the materials list in the process order.

• In repetitive manufacturing, the quantity of materials withdrawn for each reporting point is defaulted from the current BOM (the BOM specified in the production version).

You can manually change the proposed activity quantities and material quantities. You can substitute other materials for the proposed materials. You can substitute other activities for the proposed activities.

In backflushes, the order is debited by a goods issue. The material quantities used are valuated with a price in the material’s master record selected in accordance with the price control indicator.

When activities and business processes are confirmed, the order is debited automatically by means of internal activity allocation. The price used to valuate the activities and business processes is determined by means of the valuation variant linked to the order through the costing variant for simultaneous costing. The system uses the valuation variant that is assigned to the costing variant specified in the Costing variant actual field in the manufacturing order or product cost collector. You can specify this costing variant as a default value in Customizing for Product Cost by Period or Product Cost by Order under Define Default Values for Order Types. If the receiving order is not linked to a costing variant for simultaneous costing (this is the case, for example, with production orders that do not have a quantity structure), the planned activity price of the period is used for valuation. The system uses the price in Cost Center Accounting (CO-OM-CCA) or Activity-Based Costing (CO-ABC).

Overhead Cost Controlling (CO-OM) includes the application components Cost Center Accounting (CO-OM-CCA), Activity-Based Costing (CO-ABC) and Internal Orders (CO-OM-OPA). Secondary costs can be transferred to Cost Object Controlling from these application components.

Secondary costs can be caused by the following:

• Internal activity allocations

• Repostings of internal activity allocations
• Template allocation

• Revaluation of activity types and business processes at actual prices

• Calculation of overhead

You perform template allocation, revaluation at actual prices, and overhead allocation during the period-end closing process in the applicable subcomponent of Cost Object Controlling (such as Product Cost by Period).

1. An incoming invoice for a purchased part is posted in FI. The cost object is debited with direct materials costs.
2. A material for a cost object is withdrawn from inventory. The cost object is debited with direct materials costs.
3. Internal activities are allocated to a cost object from a production cost center. These costs are debited to the cost object as direct costs of production.
4. At the end of the period, you determine the overhead expenses for the cost object. This calculates the material overhead on the basis of the direct material costs and production overhead on the basis of the direct production costs. The overhead expenses are updated as overhead.

You can create screen variants for transaction-based posting of actual data in Customizing for Cost Center Accounting. In the screen variant, you specify which data the user can enter during list entry of documents.

If the All currencies indicator is selected in Customizing for the controlling area, you can set the transaction currency on the list screen or on the detail screen before you enter the first document item. Once the first document item has been entered, the transaction currency can no longer be changed. The system proposes the controlling area currency.

You can assign actual costs to cost objects using statistical key figures.

Statistical key figures serve to characterize objects in the Controlling component. In Cost Object Controlling, statistical key figures are used for informational purposes and as a basis for distributing overhead costs. Statistical key figures can be used in Cost Object Controlling as a reposting aid.

You can choose the functions activity allocation, reposting, statistical key figures, and time sheet in the menus of Product Cost by Period, Product Cost by Order, Product Cost by Sales Order, and Costs for Intangible Goods and Services under Actual Postings.

If you are using template allocation in repetitive manufacturing, processes are always allocated in the form Actual = Target. The system always first attempts to calculate the target costs on the basis of the version-specific cost estimate (preliminary cost estimate for product cost collector with Controlling level Production Version). If no version-specific cost estimate exists, the target costs are calculated on the basis of the standard cost estimate for the material.

Primary costs are written to the cost object as direct costs. Primary costs are written to the cost object under a primary cost element. Each primary cost element in CO is linked to a G/L account in FI.

Secondary cost postings are written to the cost object as direct costs or overhead costs, depending on how the costs were incurred. Secondary costs are written to the cost object under a secondary cost element. Secondary cost elements have no direct correspondence in FI.

• Line items

In the case of errors in posting, you can enter repostings for:

• Primary costs

• Line items
• Activity allocations

You cannot use the following business transactions for cost object hierarchies:

• Confirmation
• Backflush
• Goods receipt

You can only perform a G/L account posting for a cost object ID (cost object node in a cost object hierarchy or general cost object) if the G/L account under which the posting is to be made has a field status group that allows an additional account assignment to a cost object ID.

If you want to enter a goods receipt for a cost object ID, the movement type must also allow this account assignment.

Information on the functions that are available in the menu of Cost Object Controlling for entering actual costs can be found in the following sections:

For information on the posting logic, refer to the following section: