The business object "cost object hierarchy" contains a number of cost objects structured in hierarchical form.
A cost object hierarchy can be used to analyze target costs, actual costs, and variances in situations where costs cannot be collected at the level of orders or materials.
A cost object hierarchy consists of cost object nodes to which you can assign the following:
The assignment to a cost object hierarchy lets you select production cost collectors and manufacturing orders by the node they are assigned to.
At the level of the cost object hierarchy, price differences can be passed on to inventory and from there to Financial Accounting and Profitability Analysis.
It is also possible to distribute the costs to the assigned orders and settle them from there.