Product Cost Controlling 

Definition

Area within Controlling that includes the following:

Product cost planning involves cost object controlling of the costs for a material or object of cost controlling. This is unrelated to any order.

It is a tool for planning costs and setting prices for materials, and calculates the cost of goods manufactured and the cost of goods sold for each product unit.

This enables you to enter preliminary costings, simultaneous costings and final costings to cost objects. Product cost controlling settles the costs incurred in your organization to your activity units (in other words, the cost objects).

Cost objects in the R/3 system include manufacturing orders, product cost collectors or sales document items and so on.

The application component in Cost Object Controlling you decide to use, depends on the following:

For example, you can perform a lot-related analysis in Order-Related Product Controlling. Alternatively, you can make a periodical analysis in Periodic Product Controlling.

For example, costs of materials produced to customer specifications are analyzed in Sales Order Controlling. Mass produced materials on the other hand, are analyzed in Order Related Product Controlling or in Periodic Product Controlling. The Controlling for Intangible Goods and Services application component is available to you, for intangible goods and services.

You can analyze plan, target, and actual values on a cost object or aggregate basis (such as by plant). You can do this using the Information system in Product Cost Controlling. You can also compare the data entered in Cost Object Controlling with the data determined by Product Cost Planning.

For example, you can pass data from Cost Object Controlling on to the following application components:

This is an alternative to Standard Cost Accounting, where you can assign costs (incurred in the period) directly to the materials.

In the R/3 system, actual costing refers to materials, which are calculated using a preliminary standard price. They are recalculated using the price variation of the actual costs.

The system collects the preliminary standard price and its variances (such as price or exchange variances) internally for every business transaction related to valuation (such as goods receipt, invoice receipt or production order settlement). At the end of the period, you can settle these variances to material stocks and consumption from the previous period. This takes place at several manufacturing levels. This is how you achieve a material valuation, which is based upon time-related actual values.

An efficient report range for the Product Cost Planning, Cost Object Controlling and Actual Costing/Material Ledger areas is available in the information system in Product Cost Controlling. You can evaluate data created in these components using standard and special reports.

Selection Criteria

These components provide basic information for the following business functions: