Valuation of Production Activities 
Use
The cost of goods manufactured of a product is composed of material, production and overhead costs.
The production costs are listed in the itemization as items of category E (internal activity) and can be assigned to cost components in the cost component split (such as the production costs component).
To calculate the production costs, the activities required for production must be valuated with a price.
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Prerequisites
You determine which activity price is selected by defining a valuation variant in Customizing for Product Cost Planning and assigning it to the costing variant.
More than one activity price can be carried in Cost Center Accounting at the same time. You use the planned/actual version in the valuation variant to determine which version is relevant for costing.
You will generally use version zero for the standard cost estimate, the modified standard cost estimate and the current cost estimate.
For inventory costing, you can use versions other than version zero if you want to use activity prices that contain components that are not to be capitalized.
In Cost Center Accounting, you can
Set the price for each activity type according to policy
Calculate iteratively the activity price for each activity type
Calculate the actual costs for each activity type using the actual costs incurred for the cost center
Features
Material Cost Estimate with Quantity Structure
You calculate the costs for internal activities with the following entries:
The formula and the performance efficiency rate key in the work center
The standard values for the operation in the routing
The prices for the activity types in Cost Center Accounting
Unit Costing
You enter the costing items of category E manually. The system determines the price in accordance with the valuation variant from Cost Center Accounting.
See also:
Implementation Guide (IMG) for Product Cost Planning