In the application component Product Cost by Sales Order, the sales document items (items in inquires, quotations, or sales orders) function as the cost objects for which you can determine costs and revenues in both planned and actual data.

If you have already created a sales document item that carries costs and revenues for an inquiry or quotation, the subsequent sales document item (such as the sales order item) references the previous one. This enables you to manage the costs of the entire sales and distribution process. You can also flag a sales order item without a previous inquiry and quotation as carrying costs and revenues.

You can use the Product Cost by Sales Order component in the following situations:

• When you are manufacturing in-house with reference to a sales order in complex make-to-order production
• When you are purchasing customer-specific trading goods with reference to a sales order and reselling them to your customers

• When you are providing services whose costs are assigned to a sales order
• When you want to collect the sum of the actual costs incurred for the sales order item on the sales order item (standard cost of goods manufactured of sales plus variances) For detailed information, refer to the sections Valuated Sales Order Stock and Settlement in Product Cost by Order or Period.

The Product Cost by Sales Order component enables you to do the following:

• Calculate and analyze planned costs and actual costs by sales document item
• Calculate and analyze planned revenues and actual revenues by sales document item
• Revaluate the activities and business processes allocated to the cost objects with actual activity prices
• Allocate the overhead costs to the cost object using overhead calculation or dynamic process allocation
• Calculate the value of goods that have been delivered to your customer but not invoiced
• Create reserves automatically

• Transfer data to Financial Accounting (FI)

• Transfer data to Profitability Analysis (CO-PA)

• Transfer data to Profit Center Accounting (EC-PCA)

You use the Product Cost by Sales Order component in the following situations:

• When you want to analyze costs and revenues for sales document items
• When you are using a nonvaluated sales order stock

Product Cost by Sales Order accesses master data and transaction data in Controlling (CO), Sales and Distribution (SD), and Materials Management (MM). In manufacturing enterprises, Product Cost by Sales Order also accesses data in Production Planning (PP) or Production Planning for the Process Industries (PP-PI).

If you are a manufacturing enterprise, you normally use Product Cost by Sales Order in conjunction with Product Cost by Order or Product Cost by Period.

To estimate the costs for materials, you use the Product Cost Planning component (CO-PC-PCP).

You can view planned costs, target costs, and actual costs in the Product Cost Controlling Information System (CO-PC-IS).

With the Product Cost by Sales Order component you can collect and analyze costs for:

• The manufacturing orders (production orders and process orders) and product cost collectors assigned to a sales order item
• The purchase orders assigned to a sales order item
• Funds commitments in inventory

• The trading goods in a sales order item
• The service performed for a sales order item

Flagging a sales order item as carrying costs and revenues enables you to:

• Assign special direct cost of sales to the sales document item
• Allocate process costs (such as development costs) to the sales document item

You can do the following at the end of the period:

• Allocate process costs to sales order items
• Revaluate activities and business processes at actual prices
• Allocate overhead
• Perform results analysis
• Transfer data to other application components such as FI, CO-PA, and EC-PCA
• Enter a commitment carryforward at the end of the year

In Product Cost by Sales Order you normally use a valuated sales order stock. In a manufacturing enterprise, the unfinished goods are valuated through the calculation of work in process (WIP) on the manufacturing orders assigned to the sales order item. Materials that have been manufactured but not yet delivered are valuated at the time of the goods receipt posting for the manufacturing order (production order or process order). You can valuate goods that have been delivered but not yet invoiced using results analysis. Settling to FI capitalizes goods in transit and goods at construction sites in your balance sheet. You can also represent the valuation of goods in transit and goods at construction site with the functions in FI.

You cannot determine variances for the sales document item.

For information on valuated sales order stocks, read the following sections:

For information on sales order items that carry costs and revenues, refer to the following section:

For information on logistical processing such as assembly processing and variance manufacturing, refer to the following section:

For information on the special requirements with a nonvaluated sales order stock, refer to the following section:

For more information on the master data in Controlling and Production Planning, as well as other basic information, see the following section:

For detailed information on master data in Sales and Distribution, as well as other information on sales and distribution processing, see the document SD Sales and Distribution Processing.

You can view the data of the Product Cost by Sales Order component in the information system in a number of different formats. For more information, see the document Product Cost Controlling Information System.

For detailed information on Profitability Analysis, see the document CO Profitability Analysis.

For detailed information on Profit Center Accounting (EC-PCA), see the document EC Enterprise Controlling.

In engineer-to-order environments, you link a project to the sales order. The necessary information on cost management for a project can be found in the document Project System.