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To calculate the cost of sales in Profitability Analysis (CO-PA), there are basically two ways to choose from.

While a retail company only needs to display the total value of goods as cost of sales, a much more detailed breakdown of the costs of goods manufactured is required in a manufacturing company. The costs are represented in the Structure link Cost Component Split for Cost of Goods Manufactured. The cost component split for costs of goods manufactured subdivides your company's material value into fixed and variable cost components for the cost of goods manufactured (such as material costs, internal services, external services), which can then be entered into different rows during multi-leveled contribution margin accounting.

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Valuation with cost estimates therefore valuates in CO-PA the quantities of products sold together with the costing results (such as the standard cost estimate) that were calculated in Product Cost Planning (CO-PC). See also the section Structure link Costing Sequence.

For valuation using cost estimates, you can also define an access key to the Structure link Material Ledger in order to use the actual cost estimate to valuate your sales quantities during periodic revaluation (see Setting Up Valuation Using Actual Cost Estimates from Material Ledger).


As an alternative to valuating using material cost estimates, it is possible in retail companies to calculate the value of goods using a condition from the material master or the goods issue document. For more detailed information, see the section Valuation Using Conditions or choose Master Data ® Valuation ® Define Conditions and Costing Sheets in Customizing for CO-PA.


To calculate the cost of sales, you define rules in CO-PA Customizing and then use these rules to call up one or more specific material cost estimates in Product Cost Planning. To tailor contribution margin accounting to your needs, you can trace and display different requirements, such as the following examples:

Procedure for Valuation using Material Cost Estimates

The valuation rules described above are stored in Customizing for CO-PA and are defined by the combination of the costing key and the assignment of the costing key to characteristics. How all this is related is depicted in the following graphic:


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When a sales order or a billing document is posted, the system first checks whether valuation using material cost estimates is active.

The type of costing that is to be used to calculate the cost of sales is specified in a costing key. Costing keys can be assigned to different characteristic values. The cost components for cost of goods manufactured from Product Cost Planning are assigned to value fields in CO-PA.

The Costing Key

You use the costing key to define the rules specifying which cost estimates from Product Cost Planning should be used to valuate the cost of sales in CO-PA. Flexible assignment means that you can assign the desired cost estimates based on the product or material type, or based on any other characteristic in your operating concern. In the costing key, you define the callup parameters required for cost determination. The following includes an example demonstrating the valuation logic:


To set up valuation using material cost estimates, carry out the steps described in Customizing under Master Data ® Valuation ® Set Up Valuation Using Material Cost Estimates.







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