CO, Multiple Valuation of Cost of Goods Manufactured

Technical Data
Technical Name of Business Function	`FIN_CO_COGM`
Type of Business Function	Enterprise Business Function
Available as of	SAP Enhancement Package 5 for SAP ERP 6.0 (SAP_APPL 605)
Technical Usage	Central Applications (SAP_APPL and EA_APPL)
Application Component	CO-PC CO-OM-CCA FI-AA FI-GL or FI-GL (New)
Directly Dependent Business Function Requiring Activation in Addition	Financials Extension (`EA-FIN`)

This business function is aimed at international groups that are required to valuate their goods inventories in accordance with multiple accounting principles (for example, in accordance with IFRS following group guidelines as well as in accordance with local accounting principles).

With this business function, you valuate costs of good manufactured using multiple accounting principles in parallel. It offers you an integrated, verifiable valuation process that influences your financial statements considerably.

Consequently, this business function eliminates the cumbersome manual process of valuating your inventories separately for different accounting principles.

Integration

You can use this business function if you use new General Ledger Accounting or if you use classic General Ledger Accounting. Moreover, it allows you to work with ledgers as well as with parallel accounts.

Prerequisites

Use of this business transaction requires the following prerequisites to be met:

You have installed the following components from the named version:

Type of Component

Component

Only required for the following functions

Software Component

SAP_APPL 605 and

EA_APPL 605

Technical Component or Business Content, such as Portal Content

Not Relevant

You have set up the Product Cost Controlling (CO-PC) component.
You have set up the Cost Center Accounting (CO-OM-CCA) component for price calculation.
To be able to work with the alternative valuation run in the material ledger, you need to have activated the enterprise extension EA-FIN.
To be able to apply different depreciation values for the multiple valuation of the cost of goods manufactured, you need to have set up the Asset Accounting (FI-AA) component.
For closing entries, you use the General Ledger Accounting (FI-GL) (New) application component or classic General Ledger Accounting (FI-GL).
You have activated the business function CO, Multiple Valuation of the Cost of Goods Manufactured (FIN_CO_COGM).

For information on the Customizing settings for the individual functions, see the release note FIN_CO_COGM: Multiple Valuation of Cost of Goods Manufactured (New).

Features

You can valuate the cost of goods manufactured in accordance with multiple accounting principles.

The accounting principles determine which valuation approaches are applied

In Asset Accounting and in Cost Center Accounting
For actual price calculation, and
For the cost of goods manufactured and the inventory values

Asset Accounting and Cost Center Accounting

In Controlling, you can create an additional version that transfers the data from a second depreciation area in Asset Accounting to Cost Center Accounting. Version 0 continues to exist as the leading version, whereas the new version is managed as the the delta actual version.

In the standard reports in Cost Center Accounting, you can analyze costs by switching between the valuation views for legal valuation and the parallel cost of goods manufactured.

Price Calculation

You continue to perform direct activity allocation (including order confirmation and time recording) based on the planned price for the cost center and the activity type. The activity quantities and the planned prices are also recorded in the material ledger. To take depreciation into account with both accounting principles, the prices in the leading version and the delta version are calculated in parallel at the period end.

You can analyze the prices using Activity Type Price Report by viewing the leading version and then the delta version.

Cost of Goods Manufactured and Inventory Values

All of the material movements continue to be valuated using standard costs. The material movements, invoices, and order settlements are also recorded in the material ledger. At the period end, you perform a periodic costing run for actual costing and an alternative valuation run for the alternative valuation:

To calculate the cost of goods manufactured using the prices in the leading version, you perform a periodic costing run.
To calculate the cost of goods manufactured using the prices in the delta version, you perform an alternative valuation run. The alternative valuation run must be indicated as the run for parallel costs of good manufactured and must reference the delta version in its settings.

In each run, you can analyze the results among the costing results. You can see the cost center being credited in the relevant version in the Cost Center Accounting standard reports.

If you want to report inventory values correctly in accordance with both accounting principles, make the closing entries from both runs in General Ledger Accounting.

Example

For examples, see the test case descriptions for the business function: Call transaction Switch Framework Customizing (SFW5) and then call the test catalog for the business function CO, Multiple Valuation of the Cost of Goods Manufactured (FIN_CO_COGM). The test catalog has the same name as this business function. The test catalog contains the following test case descriptions:

Transferring Depreciation in CO-CCA and Price Calculation
Calculating the Cost of Goods Manufactured and Closing Entries

More Information

For detailed information about the individual functions of the business function, see the SAP Library under SAP ERP Central Component Accounting Controlling (CO) Product Cost Controlling (CO-PC) Actual Costing/Material Ledger (CO-PC-ACT) Periodic Actual Costing Multiple Valuation of Cost of Goods Manufactured.