Master Data of PP-PI in Product Cost Controlling (SAP Library

Master Data of PP-PI in Product Cost Controlling

Production costs in process manufacturing are calculated using the master recipe and the resources. The production costs can be determined separately for each phase.

Master recipes

A master recipe describes the production of materials in a production run. You can create a master recipe either with reference to a material (the primary product) or to the process. It specifies the following:

Which resources are required
Which operations are performed, and in what sequence
The phases the operations are divided into
Whether and how a phase is confirmed
Which material components are required to execute the phase
Whether a particular material component is included in costing
Which intra materials, valuable materials, and remaining materials are produced
Whether the costs for the valuable materials are calculated according to equivalence or by using the net realizable-value method
Whether a goods issue is posted when the last phase is confirmed

The master recipe contains standard values for carrying out the phase. To calculate the planned costs for the phase, these standard values are interpreted together with the formula in the resource.

Caution

From Release 3.0C onwards it is no longer possible to cost the operations in the master recipe or in the process order. To avoid duplicate calculation of costs, only the phases are costed.

To correct errors in the dataset, you should delete the indicator for relevancy to costing from the operations in existing master recipes and process orders.

Resources

Resources include the means of production and persons involved in a production process. The resource is assigned to a plant.

The master record of each resource specifies a cost center. The cost center is assigned to a controlling area. A cost center can have resources from different plants assigned to it. Each plant is unique in a company code (and therefore also in a controlling area).

In cost center planning, the activities required for the resource are planned using activity types.

Note the differences between primary and secondary resources:

The primary resource is that part of the installation or processing unit at which an operation is carried out. All phases automatically contain the same primary resource as the operation.
An operation or phase can also have additional resources assigned to it. These resources are called secondary resources.

Both the costs incurred for the primary resource (such as the cost of heating for a reaction chamber) and the costs incurred for the secondary resource (such as personnel costs) can be assigned to the product or products through activity types.

The amount of activity expected for an activity type is calculated from the formula in the resource and the standard values in the phase in the master recipe. The planned cost for the phase is calculated by valuating this activity with the activity prices in Cost Center Accounting.

Note

The master recipe corresponds to the routing in order-related production, and the resource corresponds to the work center.

Material master records

A material master record contains all information necessary to manage a material. The following views are important in Cost Object Controlling:

Accounting view
Costing view

The accounting view:

Controls the valuation of the material and the assignment of the material to a G/L account and therefore to a primary cost element
Shows the sum and the value of all valuated inventories of the material
Contains prices that can be transferred from inventory cost estimates for the material (such as the tax price 1 and commercial price 1)

The costing view controls the following for Cost Object Controlling:

Whether the material number (the origin) is updated in the cost element itemization in the Controlling component

Here you ensure that the material number for material costs is displayed in the information system.

Whether the consumption of the material is subdivided according to origin groups

This allows you to create groups of raw materials or trading goods for purposes such as calculating overhead uniformly for each group.

The basis on which overhead costs for the material can be calculated (overhead group)

If you have entered an overhead group, you can link it to an overhead key and define conditions for selected groups of semifinished and finished products.

Whether variances for orders are calculated through this material

The variance key in the material master record is transferred into the production order. It specifies that such orders are selected during variance calculation.

The costing view also controls the following:

Whether the material is normally costed in product costing or unit costing
The default lot size for costing
How BOMs and routings are selected for cost estimates with quantity structure
The status of the material

This information in this view comes from the following sources:

The standard cost estimate for the material, when the standard cost estimate is marked and released (such as the future standard price, the current standard price, and the previous standard price)
The modified standard cost estimate or the current cost estimate for the material (such as planned price 1)

The co-production extras contain an apportionment structure that determines the apportionment of the total costs for an order to the individual co-products.

See also:

For more information, see the document PP-PI Production Planning – Process Industries.