Product Cost by Sales Order: Scenario (SAP Library - Cost Object Controlling (CO-PC-OBJ))

Product Cost by Sales Order: Scenario

Prerequisites

You must make the following decisions with settings in Customizing for Product Cost by Sales Order:

That the materials are assigned to a sales order stock
Whether the sales order stock is valuated

You normally use a valuated sales order stock.

That the sales order item carries costs and revenues
How inventories should be valuated

You specify whether the dependent requirements are controlled by individual requirements or collective requirements in the material master record in the MRP view with the indicator Individual/collective.

Purpose

You use Product Cost by Sales Order in the following situations:

When you are manufacturing with reference to a sales order in a complex make-to-order environment
When you are purchasing customer-specific trading goods with reference to a sales order and reselling them to your customers
When you are providing services whose costs are assigned to a sales order
When you want to assign special direct cost of sales to the sales document item
When you want to allocate process costs (such as development costs) to the sales document item
When you want to allocate the sales and administration overhead or other overhead costs using the sales document item as the cost object

Process Flow

You create a sales order.

Product Cost by Sales Order is normally used with orders of the order type standard order (TA). The material ordered or the combination of material and order type determines whether the Product Cost by Sales Order functionality is active for the order item or not.

You create a sales order cost estimate.

You can calculate the planned costs for the sales order item in a sales order cost estimate. You can create a sales order cost estimate with product costing or unit costing. You can use unit costing to postprocess (modify) the results of product costing. You can use the sales order cost estimate to:

Calculate the standard price (see also: Valuated Sales Order Stock: Valuation)

Create reserves for unrealized costs or reserves for imminent loss or complaints in results analysis.

Pass the cost component split for the planned costs to Profitability Analysis (CO-PA) To do this, you must create a sales order cost estimate with product costing. If you want to transfer the cost component split, you cannot postprocess the sales order cost estimate using unit costing.

For trading goods: external procurement

Purchase requisitions can be generated on the basis of the sales order items directly, or on the basis of planned orders. These purchase requisitions are assigned to the sales order item. The purchasing department converts the purchase requisitions into purchase orders. The purchase order is assigned to the sales order item.

If the sales order stock is valuated, the externally procured materials are assigned to the sales order stock at the time of the goods receipt. The standard price is the net order value. If the sales order item carries costs and revenues, price differences between the net order value and the invoiced price are assigned to the sales order item.

In manufacturing enterprises: production

If the material being manufactured has a multilevel BOM, other materials may have to be manufactured with reference to the sales order if the material is controlled by individual requirements and consequently cannot be withdrawn from the make-to-stock inventory. Manufacturing orders are created for these dependent requirements. If the sales order stock is valuated, the manufacturing orders for the semifinished products deliver the semifinished products to the valuated sales order stock where they are withdrawn by manufacturing orders for higher-level materials. The manufacturing orders are credited when they deliver materials to inventory and charged when they withdrawal materials from inventory.

Actual costs on the sales order item

You can view the funds commitment in the valuated sales order stock on the sales order item as statistical actual data in the Product Cost Controlling Information System. A requirement is that you represent the material stock accounts as a cost element of cost element category 90.

When you deliver to the customer, the goods issue posting results in the sales order item being debited with the standard price. You can post costs for internal activities directly to the sales order item.

Actual revenues on the sales order item

The customer is billed for the deliveries made and activities performed for the sales order. The revenues are assigned to the sales order item.

Period-end closing

You can perform the following steps for the dependent manufacturing orders in the period-end closing activities in Product Cost by Order:

Dynamic template allocation
Revaluation of activities at actual prices
Overhead allocation (such as calculation of material overhead and production overhead to determine the cost of goods manufactured)
Calculation of work in process (WIP)
Variance calculation
Settlement

Background documentation

You can transfer the total variance of the manufacturing orders or product cost collector assigned to a sales order item to the sales order item that carries costs and revenues. You proceed as follows:

Create the price difference account to which you settle the variances as a cost element (the price difference account is not normally a cost element). Use a price difference account that you select by means of automatic account determination using transaction GBB and account grouping code AUA. When you settle the total variance to Financial Accounting (FI), the total variance is assigned to the sales order item.

Make sure that you don’t settle the total variance to Profitability Analysis (CO-PA) twice. The total variance can be transferred to CO-PA both when the manufacturing orders or product cost collectors are settled and when the sales order item is settled. Therefore, turn off the Variances indicator in the settlement profile specified in the order type.

In the period-end closing activities for the Product Cost by Sales Order component you perform the following activities for the sales order item:

Dynamic process cost allocation
Revaluation of activities at actual prices
Allocation of overhead (such as calculation of the sales overhead and the administrative overhead to calculate the cost of goods sold)
Settlement of the sales order item to a profitability segment in CO-PA

If you have performed results analysis, you settle the results analysis data.

If you have not performed results analysis, you settle the costs and revenues carried on the sales order item.

You can transfer a cost component split for the planned costs to CO-PA if you:

Have created a sales order cost estimate or an order BOM cost estimate using product costing and have not modified it with unit costing

Transfer the cost component split of a standard cost estimate to CO-PA

Settlement of the reserves calculated in results analysis to FI and EC-PCA (if applicable)

Analysis
In the Product Cost Controlling Information System you analyze the costs and revenues that were incurred for the sales order and the dependent production orders.

See also:

For detailed information on the required Customizing settings for the Product Cost by Sales Order component, see the following section:

Checklist for Product Cost by Sales Order