Product Cost by Period at Product Level

Description

Product Cost by Period at Product Level allows you to separate the functions of Product Cost Planning from the functions of Cost Object Controlling. Product Cost by Period at Product Level is part of the Product Cost by Period component.

You continue to process business transactions in Logistics for the manufacturing orders or run schedule headers. The costs incurred in production are, however, charged to a product cost collector rather than to the individual logistical orders. This means that the cost object is now the product cost collector, rather than the manufacturing order.

The functions of Product Cost Planning such as the availability check, order release, scheduling, and status management are still performed on the logistical order. Product cost collectors in Cost Object Controlling allow the following functions:

• Creation of preliminary cost estimates

• Simultaneous costing

Simultaneous costing is possible because all business transactions performed on an order assigned to the product cost collector result in costs being charged to the product cost collector. In addition, the product cost collector can be charged with actual costs directly, such as by means of G/L account postings in Financial Accounting (FI). The actual costs of the product cost collector can be viewed and analyzed in the system at any time.

• Final costing during the period-end closing process

During the period-end closing process for the product cost collector, you can:

• Allocate process costs if you are using Activity-Based Costing (CO-OM-ABC)

• Revaluate the activities assigned to the cost object at actual activity prices

• Calculate the overhead to be allocated

• Calculate work in process (WIP)

The WIP calculation process determines the value of the unfinished products. In the Product Cost by Period component, you always calculate WIP at target costs.

• Calculate variances

You can calculate the variances between the target costs and the actual costs for the period. The variance calculation function can also calculate the value of the unplanned scrap.

• Settle the work in process and variances to Financial Accounting and Profit Center Accounting (EC-PCA). You can also settle variances to Profitability Analysis (CO-PA).

You can analyze the target costs and actual costs of the product cost collector in the information system for Product Cost Controlling at any time.

The use of product cost collectors enables "lean" cost management.

Product cost collectors are created for production processes. A production process can be created in accordance with a naming rule for the following objects:

• For a production version

• For any combination of routing and bill of material

The production process is generated dynamically by the system when you create the product cost collector. The number of the production process is recorded in the product cost collector. The preliminary cost estimate for the product cost collector references the production process.

If you create a separate product cost collector for each production version or for each routing/BOM combination, you can analyze the costs of individual production methods for each product cost collector.

Product Cost by Period with product cost collectors provides the following benefits:

• Focus on the product as the cost object

• You can use the Cost Object Controlling functions on the product cost collector independent of the production type . You can use product cost collectors in order-related production, process manufacturing, and repetitive manufacturing.

• Fewer cost objects to be processed at the end of the period. This means improved performance during period-end closing in Cost Object Controlling and in the information system.

Product cost collectors can be used in make-to-stock production and in repetitive manufacturing for sales-order-related production using a valuated sales order stock. Product cost collectors can also be created as fully generic. This means the product cost collector for the material has no reference to a quantity structure. The limitation here is that you cannot create a preliminary cost estimate for this type of product cost collector, nor can you calculate work in process or scrap.

Product cost collectors cannot be used in the following situations at this time:

• In joint production

• With collective orders

• In sales-order-related production settings other than repetitive manufacturing

• In engineer-to-order environments

Installation Information

If you have used

production cost collectors in a repetitive manufacturing environment, those production cost collectors are automatically converted into product cost collectors through XPRA RK_PKOSA_MLMV_X1 when 4.5A is installed.

See also: XPRA RK_PKOSA_MLMV_X1

Effects on Customizing

In the default values for each order type and plant, you define whether the costs incurred for business transactions performed for a production order or process order are collected on a product cost collector or on the manufacturing order (see also: Define Default Values for Order Types ).

In repetitive manufacturing the costs are always collected on product cost collectors. It is therefore not necessary to specify explicity that you want to collect the costs on a product cost collector in repetitive manufacturing.

Product cost collectors are settled by period. The settlement process determines the equivalence numbers dynamically on the basis of the individual stock segments to which the product cost collector delivered materials. Settlement to the appropriate stock segments is performed on the basis of those equivalence numbers. The strategy for dynamic determination of equivalence numbers is specified in default rule STR (with strategy for tracing factor determination). This default rule is predefined for each order type of order category "05" (product cost collector).

See also:

• Assign naming structure to plant

Product cost collectors are orders of the order category "05" of cost collector type PKMN. Cost collectors of cost collector type PKSA are not used from Release 4.5A onwards. For this reason you do not need to maintain a cost collector search strategy.

Changes to the Interface

The product cost collector replaces the production cost collector in repetitive manufacturing from Release 4.5A onwards.

Changes in Procedure

You create product cost collectors manually in the menu of Product Cost by Period . Because the product cost collector also replaces the production cost collector in repetitive manufacturing, you create your product cost collectors manually in repetitive manufacturing environments from now on.

Further Notes

For detailed information on product cost collectors, see the documentation Product Cost by Period . There you can also find information on the special aspects of product cost collectors in repetitive manufacturing for sales-order-related production with a valuated sales order stock.