Check Cost Component Structure (SAP Library - Reference Object WBS Element)

Check Cost Component Structure

In this step you create a cost component structure and the associated cost components. The cost component split is generated on the basis of the cost components. These settings are used for:

Material cost estimates

Sales order cost estimates created with the functions of product costing

Order BOM cost estimates

Easy Cost Planning

Material cost estimates are created in the Product Cost Planning component. Sales order cost estimates and order BOM cost estimates are created in the Product Cost by Sales Order component.

The following applies to product costing:

You can:

Display the cost components in the cost estimate

Analyze the cost components in the information system

Transfer the cost components to Profitability Analysis (CO-PA)

The cost components also serve as a filter for the costing results. They determine the following:

Which costs are included in the cost estimate for the higher-level material

Which costs should be part of the standard price for the material costed

Which costs should be part of the commercial and tax price for the material costed

The value added that arises through

transfer prices

The cost components break down the results of the cost estimate into factors such as raw materials, material overhead, external activities, setup costs, machine costs, labor costs, production costs, and other costs.

The following applies to Easy Cost Planning gilt:

In the cost estimate, the cost component groups are displayed, and you can analyze the costs there. The cost component split, however, is not saved and consequently is not available in the information system.

The information in this section applies in principle to Easy Cost Planning , with the following exceptions:

It is not possible to transfer the costing results to Profitability Analysis because the cost component split is not saved.

You cannot view the costs in the auxiliary cost component split.

You can only see the differences between the transfer prices (delta profit) if your operational valuation view is group valuation. You create the operational valuation view in the operational version (000) in Customizing for General Controlling under Organization -> Maintain versions.

Structure of the Cost Components in a Cost Component Split

The cost components are listed in a material cost estimate that can contain up to 40 cost components (cost fields).

You can create up to 40 cost components that contain variable costs.

For cost components that contain full costs, the system creates a second cost field internally for the fixed costs. This means that you can create no more than 20 cost components for full costs.

The structure of the cost components is the same for each material in the <DS:GLOS.356F23D01D253946E10000009B38F983>order BOM cost estimate. This means, for example, that:

The costs for a raw material appear under the cost component "raw materials" in the cost estimate of the semifinished material and the higher-level semifinished materials and finished materials

The costs for an internal activity appear under the cost component "production costs" in the cost estimate of the semifinished product and the higher-level semifinished products and finished products

This way the product cost estimate shows you not only the total costs for the usage of a semifinished product, but also what the costs are composed of, the cost component split. The system updates a cost component split for each material (including the raw materials). In contrast to the R/2 system, you do not have to create separate cost components for the semifinished materials.

You can identify the cost component split of the cost component structure as a primary cost component split . In this case you can include the primary costs from Cost Center Accounting and Activity-Based Costing in the cost estimate. Overhead that goes into the primary cost component split is still treated as secondary costs.

The primary cost component split and the cost component split for the cost of goods manufactured can exist in parallel to allow comparisons and analyses. In this case you specify which cost component split is the main cost component split. Only the main cost component split can update of results of the standard cost estimate to the material master. The second cost component split (called the auxiliary cost component split) is used more for statistical information purposes and can be evaluated in Profitability Analysis, for example.

Assignment of Cost Elements to Cost Components

All costs in the All costs in the SAP system are assigned to cost elements . This assignment is made in the following way:

If costs arise for...	then assignment is made through...
Materials	account determination
Nonstock materials	the BOM item
Internal activities	the
External activities	the record or the operation
Overhead	the costing sheet

Materials that are assigned to the same cost element through automatic account determination can be separated for controlling purposes through an origin group in the costing view of the material master record.

You can create cost components in the following ways:

Cost element from, cost element to

For example, costs that are assigned to cost elements 400000 to 410000 are assigned to the same cost component.

Cost element from

For example, costs assigned to cost element 400000 are assigned to one cost component, while costs assigned to cost element 410000 are assigned to a different cost component.

Origin group

For example, costs that are expected for materials of origin group EXTN are assigned to the same cost component (regardless of the cost element).

Cost element from, origin group

For example, costs assigned to cost element 400000 and origin group EXTN are assigned to the same cost component.

Cost element from, origin group, cost element to

For example, costs assigned to cost elements 400000 to 410000 and that come from materials with origin group EXTN are assigned to the same cost component. Costs that are within this cost element interval but have a different origin group are assigned to a different cost component.

No entries

If you leave the entries Cost element from, Origin group and Cost element to blank, all costs in the cost estimate that were not assigned are assigned to the cost component with a blank entry. For example, this can be a cost component for "other costs".

Example of Assignments of Cost Elements to Cost Components

The costs in the itemization (such as material usage costs, internal activities, and overhead) are assigned to cost components as follows:

Itemization		Cost elements		Cost component
M Plant 01 RAW-1	->	400000	->	01 material costs
M Plant 01 RAW-2	->	400000	->	01 material costs
M Plant 01 RAW-3	->	410000	->	01 material costs
E CCenter 1 ACT-1	->	610000	->	02 internal activities
E CCenter 1 ACT-2	->	611000	->	02 internal activities
G material overhead	->	660000	->	03 overhead

Material account determination selects an account (such as 400000, 410000) and a primary cost element for each material (item category M). These cost elements are assigned to cost component 01.

For each internal activity (item category E) there is an activity type defined in the CO module. The master record of this activity type points to a secondary cost element (such as 610000 or 611000). These cost elements are assigned to cost component 02.

Overhead (item category G) is calculated in Controlling in a costing sheet. The credit key in the costing sheet points to a secondary cost element (such as 660000). These cost elements are assigned to cost component 03.

Attributes of the Cost Components

When defining the cost components you must determine whether they:

Containvariable costs or costs

Contain cost of goods manufactured , sales and administration costs, or nonrelevant costs

Are relevant for the initial cost split

Are rolled up to the next-highest costing level

The "Roll up" indicator determines, for example, that the costs for the usage of a raw material in a semifinished product are displayed in the cost estimates of the higher-level semifinished products and of the finished product.

Costs that are flagged as the cost of goods manufactured are normally rolled up.

Costs that are flagged as sales and administration costs are not normally rolled up.

When defining the cost components, you must specify whether the cost component plays a role in the creation of the different prices that are transferred into the material master record. You have the following options:

Standard price

Costs that are flagged as relevant for stock valuation form part of the standard price if the results of the standard cost estimate are marked and released. These costs also serve as a basis for the following:

The calculation of target costs in variance calculation

The valuation of scrap in variance calculation

The valuation of work in process for the confirmed yield for the operation (order-related production, process manufacturing) or at the reporting point (repetitive manufacturing)

Commercial price

Costs that are flagged as relevant for inventory valulation for the purposes of commercial law form part of the commercial price. This price is calculated in an inventory cost estimate and can be written to the material master record.

Tax price

Costs that are flagged as relevant for inventory valuation for the purposes of tax law form part of the tax price. This price is calculated in an inventory cost estimate and written to the material master record.

Transfer price surcharge (optional)

This category allows you to group together several cost components of a cost component structure.

Differences between the transfer prices (delta profit)

If you use the functions of

in group costing, you can specify that costs that arise from supply relationships with other company codes and profit centers are updated under the cost component. You can specify this for one cost component for each cost component structure.

Proposals for the Update of Additive Costs

Here you can define which cost elements or cost elements and origin groups are proposed in cost estimates without quantity structure or when additive costs are entered when you enter a cost component.

In Customizing, you should make sure that the cost element proposed is actually in the cost element interval for the cost component.

Transfer Structure

The transfer structure transfers the costs from the cost components of one cost component structure to the cost components of another cost component structure.

If you are using

primary cost component splits or activity types in Activity-Based Costing, you can pass this information on. If the cost component structure of the primary cost componen split differs from the cost component structue for materials, you can specify which cost components of the source cost component structure go into which cost components of the target cost component structure.

Cost Component Views

You can display the results of the cost estimate in the following views:

Cost of goods manufactured

Cost of goods sold

Sales and administration costs

Inventory (commercial)

Inventory (tax)

Inventory valuation

The cost component views are created using the attributes of the cost components in the cost estimate. For example, costs for cost components that are flagged as relevant for inventory valuation are shown in the cost component view "Stock valuation".

When you create a cost estimate, you can display the costs in the cost component views defined.

The cost component views are included in the calculation of overhead. In the costing type, you specify the calculation base (such as the cost of goods manufactured) on which the overhead for the semifinished products in the finished product are calculated.

These cost component views also determine how the costs are used in other application components in the SAP System:

For Sales and Distribution, the view for the cost of goods sold determines which costs can be used as a basis for pricing to determine a net value for the sales order item.

For Profitability Analysis, the view for the cost of goods sold determines what costs are compared to the sales revenues to calculate the contribution margin for each product.

For Materials Management, the view for stock valuation determines which costs go into the standard price for the material.

For Materials Management, the views for inventory determine which costs go into the tax price and the commercial price for the product.

Organizational Levels of Cost Components

The costing type determines the level on which you can define the cost component structure.

For a standard cost estimate the cost component structure must be selected through the company code . This ensures that the same cost component structure is used for all plants and costing variants in the company code. If you use different cost component structures in different plants, the standard cost estimate in one plant cannot access the results of standard cost estimates in other plants to transfer costing data for materials transferred from one plant to another.

modified standard cost estimates , current cost estimates , inventory cost estimates , and sales order cost estimates, the cost component structure can be selected at the following levels:

Company code

Plant

Costing variant

Costing variants that specify the same costing type and valuation variant must use the same cost component structure.

You can also specify the following:

When the validity of the assignment starts

Whether a cost component structure with an

auxiliary cost component split should exist in addition to the cost component structure with the main cost component split

Cost Component Groups

From the maximum of 40 cost components, you can create cost component groups for example in order to group together all production costs or all raw material costs. These cost component groups can be evaluated in the costed multilevel BOM or in the custom-programmed reports.

For each cost component, you can assign two cost component groups.

Cost Compnents in the Information System

To be able to display the cost components in the information system, you must define cost component groups that define the row structure of the report. You can define these groups in the step Maintain cost component groups for the Report Writer. They are a copy of the cost component structure for the information system.

Absorption Costing and Variable Costing

You can represent your cost accounting system in the R/3 System as absorption costing or as variable costing. If you use variable costing, when you define the cost components you should only flag the variable portion of the activity types as relevant to inventory valuation. The effect of this is that with internal activity allocation, even if they are made in a confirmation, the relevant cost centers are only credited with the variable costs of the activity type prices. At the end of the period you can pass the fixed costs directly to Profitability Analysis (CO-PA) by means of assessment. The variable cost of sales is transferred to CO-PA at invoicing. Variances between the standard cost of goods manufactured and the actual cost of goods manufactured can be transferred from Cost Object Controlling to CO-PA at the end of the period.

Requirements

You must already have carried out the following steps in Customizing for G/L accounting:

Maintain chart of accounts list

Assign company code to a chart of accounts

You must already have carried out the following steps in Customizing for revenue element accounting:

Make default settings

Create batch input session

Process batch input sessions

If you want to define origin groups for the materials, you must already have carried out the step Define origin groups.

If you are using additive costs , make sure that the costing variants and the valuation variants for costing include the additive costs.

Check costing variants

Check valuation variants

If you are using a primary cost component split for activity types, check the following settings:

In Customizing for Cost Center Accounting:

Check cost component structure

Check switching structure

In Customizing for Controlling general:

Maintain versions (settings by fiscal year)

Standard Settings

The standard system contains a predefined cost component structure. If you want to use this cost component structure, you must do the following:

Check the definition of the cost components (such as relevant for inventory valuation, or relevant for commercial and tax inventory valuation).

Assign the primary cost elements (such as for materials and external activities) that are in your chart of accounts to the cost components in the standard cost component structure.

Assign the secondary cost elements for internal activity allocations and overhead that you have defined in cost and revenue element accounting to the cost components in the standard cost component structure.

Assign the cost components in the standard cost component structure to the cost elements under which you want to update the results of the additive cost estimate

Check the assignment of the cost component structure to your organizational units, and the validity

Recommendations

SAP recommends that you use only one cost component structure. This ensures that the costing results are always comparable.

If you are using

primary cost component splits for activity types in Cost Center Accounting, and the cost component structure is not the same as that of the material cost estimate, transfer this information in the cost estimate through assignments to a transfer structure.

Activities

1. Create a cost component structure.

Enter an alphanumerical key and a name for the cost component structure, and specify whether the cost component structure is a primary cost component split.

2. Define the cost components.

Enter the cost component structure, a key and a name for the cost component. Define the attributes of the cost component. For example, specify if the cost component contains

variable or full costs

production, distribution or administrative costs

relevant for the stock evaluation

Assign cost components to cost component groups.

3. Assign the cost elements, or cost elements and origin groups, to these cost components.

For each cost component, enter the cost component structure, the chart accounts, and the relevant cost element interval.

4. If you want to use additive costs, assign cost elements and origin groups to the cost components under which you want to update the costs.

5. If you want to transfer data from a primary cost component split in Cost Center Accounting and the primary cost component split uses a different cost component structure, assign the cost components of the source cost component structure to the cost components of the target cost component structure.

6. Check the supplied cost component groups.

7. Check the definition of the cost component views.

8. Assign the cost component structure to the relevant organizational units, and specify when the assignment is valid and whether you want to have an auxiliary cost component split in addition to the main cost component split.

9. When the cost component structure is no longer in the creation phase, activate it.

Further Notes

For more information, see the document Product Cost Planning.