The goal of this section is to explain the business methodology of summarization in Cost Object Controlling. In addition, the consequences of that methodology for the interpretation of the data on the part of the user will be explained.

The following aspects will be discussed:

1. How is the data on original objects summarized (such as production orders)?
2. Costs of semifinished products in summarized analysis
3. Objects with full settlement
4. Summarization time frame

A common feature of all methods of summarized analysis in Cost Object Controlling (product drilldown, summarization hierarchy, cost object hierarchy) is that they are based on the data of the original objects (such as production orders and product cost collectors).

The data is updated to these original objects as follows:

• With original period
• With original cost element

A further subdivision is:

• Planned costs (debit / credit)
• Actual costs (debit / credit)
• Target costs (debit / credit)
• Work in process (results analysis data)
• Variance categories

The necessary data collection runs transfer the data for the summarization time frame to the summarization structures by period:

• As key figures in product drilldowns
• With original cost element for the summarization hierarchy or cost object hierarchy

The following example is divided into a master data part and a scenario.

The master data includes:

• BOM
• Routing with valuated operations
• Standard prices

The scenario describes a production process over two periods:

• A production order for 1 semifinished product (HALB) is completely manufactured in period 1.
• A production order for 1 finished product (FERT) is created in period 1 and withdraws the required materials in this period (1 raw material and a semifinished product). In period 2, additional activities are posted to the production order. The order is delivered to stock in period 2.

Both orders have a settlement rule with settlement type FUL (Full settlement). At the end of each period, period-end closing is carried out in Product Cost by Order.

Overhead is applied to the internal activities. The planned overhead rate is 50%, but the actual rate is 75% – resulting in variances.

The costs of the semifinished products are usually a special case with summarization characteristics that are higher in the hierarchy than the material.

While raw materials consumption, activities consumption, overhead, work in process, variance categories, and plan/actual comparisons can easily be aggregated by cost element on the individual summarization levels, the summarized key figures for planned costs, actual costs, and target costs have to be interpreted separately.

Consider, for example, summarization at the key figure level for period 1. At the material level, the actual cost debit of 450 USD for the semi-finished product and 675 USD for the finished product cause no problems in the interpretation of data.

But now look at the actual cost debits of both orders summarized as a key figure ($450 + $675 = $1125). You cannot interpret this value as the entire actual cost of the period, because this key figure includes both the production costs of the semifinished product and the withdrawal of a semifinished product for the production of the finished product.

Even if you offset the actual cost debits of $1125 with the summarized actual cost credits of $400, this is still not the actual cost of the period.

A similar problem arises for the key figures for the planned costs and target costs.

Analyze the costs for semifinished products separately from other costs. You can do this in the summarization hierarchy and in the cost object hierarchy by means of cost-element-based summarization and an appropriately defined material account determination (separate cost element for the update of the consumption of semifinished products).

For the product drilldown you can define an appropriate cost component structure that assigns the cost element for the consumption of semifinished products to a separate cost component. You specify this cost component structure in Customizing for the Information System under Maintain Report Parameters for Product Cost Controlling.

When you interpret the costs of semifinished products, you must decide which percentage is already reflected in the costs of the period or which semifinished products were already manufactured in the previous periods. This cannot be supported by the system.

Many users make use of summarized analysis for periodic reporting. The costs of the individual objects are normally cumulated. With manufacturing orders, this is achieved by the use of settlement type FUL (full settlement). The following explains the problem of periodic analysis of objects with full settlement.

With a data collection run you must specify a summarization time frame in the form "from period"/"to period".

The time frame specifies the following:

• Data on the summarization object for periods within the summarization time frame of the data collection run is reset and recalculated on the original objects.
• Data on the summarization object for periods outside the specified time frame of the data collection run is retained. This prevents the data calculated in an earlier data collection run from being deleted by a new summarization run.

Specify at least the open periods in Financial Accounting as the summarization time frame, because the data on the original objects could still change within the open periods. You normally choose the closing period and the period prior to that.

If you use the summarization hierarchy in conjunction with a status selection profile, you must take this into account in the definition of the summarization time frame.