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:
Summarizing Data on Original Objects
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:
A further subdivision is:
The necessary data collection runs transfer the data for the summarization time frame to the summarization structures by period:
The following example is divided into a master data part and a scenario.
The master data includes:
The scenario describes a production process over two periods:
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.
Costs of Semifinished Products in Summarized Analysis
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.
Objects with Full Settlement
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.
The example production order above is a case where a production order with the settlement type full settlement runs over two periods. The total target costs are only calculated and updated on the database in the period in which the order is delivered or technically completed. In the SAP System, target costs are calculated and updated duringvariance calculation.
Note the key figures for the target costs and for the actual cost debit of the production order for the finished product. While the actual costs of period 1 have no corresponding target costs, the actual costs of period 2 have corresponding target costs cumulated across both periods in the amount of $950. Separate analysis of an individual period would lead to wrong results.
On highly summarized levels or reporting over extended periods of time, this periodic effect normally tends to zero.
Summarization Time Frame
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:
The restriction of the validity period in the data collection run has NO influence on the selection of the objects whose data are summarized. You specify the objects to be selected by defining a summarization hierarchy, for example.
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.
Special Processing with Status-Dependent Selection
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.
You are using a summarization hierarchy with a status selection profile that only includes objects for which variances have been calculated. At the same time, you specify the summarization time frame as from period 2 to period 2. This would result in the production order for the finished product from the numerical example above being included for the first time, but only the data of period 2 would be summarized. This would result in the cumulative target costs only having partial corresponding actual costs in the summarization report - as explained under Objects with Full Settlement.
To obtain usable results, you should therefore choose a summarization time frame that reflects the maximum life of the original objects.
Therefore you should make sure that the summarization time frame includes the maximum life of the objects that are being summarized for the first time.