Terminology in Product Cost Controlling 

 

Note how the following terms are used in Product Cost Controlling:

 

Cost Terminology in Product Cost Controlling

 

In manufacturing enterprises, standard costs are calculated in the following ways:

You create the standard cost estimate for a material in the application component Product Cost Planning.

The standard cost estimate for a material is normally created at the beginning of each fiscal year. In Cost Object Controlling, a standard cost is a predetermination of what the cost should be. This means that actual cost should not exceed standard cost. When variances are determined in the period-end closing process of Cost Object Controlling, standard costs are used as the basis for calculating target costs.

The total standard cost of a material can be written to the material master record as the standard price and used to valuate the material during the year. (See also: Basic Decisions in Cost Object Controlling)

The total standard cost can be updated to the stock segment of a make-to-order material as the standard price and used to valuate the sales order stock.

Preliminary costing of cost objects calculates planned costs. Preliminary costing is part of the application component Cost Object Controlling.

A target cost is a type of planned cost that is converted to a reference quantity such as the quantity produced (yield). This conversion can be performed at various points such as when the variances are calculated. Target costs can be calculated on the basis of standard costs or planned costs.

Target costs can also play a part in functions other than variance calculation, such as when the value of unfinished goods (work in process) is calculated in Product Cost by Period (see also: Work in Process in Product Cost by Period) or when actual costs are distributed in cost object hierarchies (see also: Actual Cost Distribution in Cost Object Hierarchies).

A modified standard cost estimate is an alternative material cost estimate.

Like the modified standard cost estimate, the current cost estimate is an alternative material cost estimate that you can create in the application component Product Cost Planning.

Actual costs are the costs that were actually incurred.

In the R/3 System you perform actual costing in the application component Actual Costing/Material Ledger (CO-PC-ACT).

Process in which the actual costs incurred for a cost object are written to the cost object.

Simultaneous costing makes it possible to see and analyze the actual costs for a cost object at any time.

Final costing is performed during the period-end closing activities. The entails the following: