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Could anyone please explain the various Steps involved in creation of Production order cost, then goods
issue, confirmation, settlement with possible entries. How the actual cost, plan cost and target cost flown in
to the system and also I need along with settings ,

Thanks& Regards



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 Re: Product cost issue

Mangalraj Senthamaraikannan Nov 26, 2008 6:43 AM (in response to Sapdeep k)

Dear Sandeep,

Product Cost = Materials Cost(ROH + HALB Materials Cost)Activity Cost (Operation



1.Raw materials cost are generally entered as Planned price along with the valid from date in
Costing 2

view,and price control indicator is "V".Origin group has to be given to all the Raw materials in
costing 1

2.For HALB Materials Price control indcator will be S for Inhouse manufactured & V for externally

processed materials (Sub-Contracted Items) respectively.Also assign Overhead group for all

manufactured items.

3.No need to enter any value for the materials having S as the price indicator and for Sub-

items that's F30 also no need to enter any cost in the material master.

4.Activity cost is the cost incurred in performing individual operation.This cost is captured via the

center which we mention in each operation in the routing of that product.A Cost centre and an

appropriate activity type is assigned in the work centre.

5.Proper Cost should be assigned for the combination of Activity type and Cost centre.
6.Overhead cost is the indirect cost that we capture according to the customer's requirement.

7.If certain items for certain products alone should not be considered for costing means,then we

achieve this using costing relevancy indicator in the BOM and for the activity(operation's mentioned

routing) which should not be considered for costing also can be mapped by removing the costing

relevancy indicator in routing.

Overhead group is aasigned in Costing1 view.

8.Creating Cost center - KS01

9.Create Activity Type - KL01.

10.Assiging Rates for a cost center/activity type combination in T code KP26.

11.Cost estimate Related T codes are CK40N,CK11N,CK24.

12.UseCK40N always,so that you can do the costing ,mark the price and release the

Cost Rollup will be taken for Finished product so that the sytem automatically calculates for the

Finsihed products standard cost.

13.IF you use CK11N,then only costing will be done,but for marking and release you have to use

14.For each Production order type in T code OPL8 Order Type Dependent Parameters - Under

controlling tab - Costing variant Planned and actual has to be assigned.

15.In REM scenario - Product Cost Collector has to be created using T code KKF6N for all Inhouse

Manufactured assemblies.

Check these links[What's Order settlement?|ORDER SETTLEMENT]

Steps For Order Settlement

You should follow following steps for Order Settlement after confirmation :

1. After Final Confirmation of Order ( Status : CNF) make GR for for order using Tcode : MIGO /

so Production Order Status will be DLV.

2. Then complete the order technically by using Tcode : CO02-----> Restrict

Processing -

> Technically Complete. You can carry out TECO for multiple Orders in Tcode : COHV

(Mass Processing).

3. Over head calculation- KGI2 or CO43

4. WIP calculation - KKAX or KKAO

5. Variance - KKS2 or KKS1

6. Settlement - KO88 or CO88.

I hope this helps you.



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Noopers Sap Mar 17, 2009 7:21 PM (in response to Mangalraj Senthamaraikannan)

Hi Mangalraj,

The answer was super. It was very nicely written out.

I have an issue - wondering if I can get some help

When running the global P&l there is a difference in the amount when using the local
currency versus the sales district currency. I do realize that there are different values
based in the currency type used but the amounts are pretty large.

Could this issue be coming from the Product Costing side? At the moment of the order
settlement, the xrate is not considered properly? If so, how do i check this?

Please can you or any other guru out there help me?


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 Re: Product cost issue

Mangalraj Senthamaraikannan Nov 27, 2008 7:29 AM (in response to Sapdeep k)

Dear Sandeep,

Are you satisfied with the answer,Can you please reply on this?



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Joy s Jul 17, 2012 6:51 AM (in response to Mangalraj Senthamaraikannan)

My company is currently on Standard costing in SAP, and wants to change to

average costing.

Can you tell me any method or preferrably a detailed steps on how we can go
about doing this? What are the advantages, disadvantages or the implications
that might happen if we do this?

Thank you so much

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 Re: Product cost issue

Toidi Diputs Jul 17, 2012 6:31 PM (in response to Joy s)


It is not proper to hijack a thread from its original content.

Please open a new thread, if necessary.

There is plenty of help in (e.g.

bbd/content.htm") for changing price control from "S" to "V".



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