Examples for Cost Object Hierarchies (SAP Library - Cost Object Controlling (CO-PC-OBJ))

Examples for Cost Object Hierarchies

Example 1: Cost Object Hierarchy Structured by Area of Responsibility

In the first example we will create a cost object hierarchy structured according to areas of responsibility. This example is in a repetitive manufacturing environment. The manufacturer wants to analyze the costs of his production lines and plants.

Cost Object Hierarchy Structured by Area of Responsibility: Actual Postings

This graphic is explained in the accompanying text

We enter the following cost object nodes:

Level 1 Plant

Level 2 Production line T-M00, production line T-V00

Certain costs can only be collected at the level of the production line. Examples of such costs:

Production costs that are assigned to a particular production line

For example, the manufacturer may allocate a certain number of machine hours for each production line. You perform an internal activity allocation that debits the cost object node production line.

Costs for materials that are staged for the production line as a whole

Sometimes materials are staged at the production line without reference to a product cost collector. In such cases it is not possible to determine which quantities were used for which product cost collectors. In such cases you can enter a goods issue and debit the cost object node production line.

Setup costs that are assigned to a particular production line

The setup costs can debit the production line. Setup costs can be allocated to cost object nodes by methods such as internal activity allocations.

Some costs can be collected directly on the orders or product cost collectors. Examples of such costs:

Material usage that can be assigned directly to the product cost collector
Activities that can be assigned directly to the product cost collector

Example 2: Cost Object Hierarchy Structured by Product Group

In the second example we will create a cost object hierarchy structured according to product groups.

Cost Object Hierarchy Structured by Product Group: Actual Postings

This graphic is explained in the accompanying text

Some raw materials can be assigned directly to particular products (such as the cocoa used in chocolate products).

Other raw materials can only be assigned to product groups (such as the cocoa used in both milk chocolate and plain chocolate).

Overhead is calculated for each product cost collector, although you can also calculate overhead at the level of cost object nodes.
Certain activities are also allocated to the cost object nodes.

Different types of cocoa are used for plain chocolate and milk chocolate. The material costs for the cocoa are updated to the product cost collector.
Internal activities can be confirmed separately for each manufacturing order. The production costs for the internal activities are updated to the product cost collector.