INTRODUCTION

A Warm Welcome Friends. You are going to love this book and we have taken great efforts to ensure that we present the configuration in a very simple yet detailed manner.

Product costing module of SAP has eased out all hassles of costing a manufactured product. Product costing module uses data for valuation from the Production planning (PP) module.

The Product Planning Module maintains the Bill of Material and

Routing or the Master Recipe. Product Cost primarily consists of Material Cost, Labor cost and Overhead cost

To arrive at the material cost, SAP picks up the quantity of raw and packing material required from the Bill of Material. It then valuates this quantity with the various prices available in the material master in accordance with the strategy specified in customizing.

In a like manner it does the same to arrive at the labor cost. The time required for each operation is specified in the routing or recipe. This quantity is mult

iplied by the activity prices maintained in the cost center accounting module. We will cover all this and more in this document

We will also cover product cost planning, cost object controlling by period (repetitive manufacturing), cost object controlling by order, cost object controlling by sales order and configuration settings for co-product costing.

We had configured controlling area 9100, in the document on cost center accounting. We will now do the product-costing configuration in controlling area 9100.

A) Product Cost Planning

For doing the configuration we will use the following path on the SAP application screen:-

SAP Menu à Tools à AcceleratedSAP à Customizing à SPRO - Edit Project à

1. Basic Settings for Material Costing

The company A Ltd for its plant 9100 requires the followin

g overheads:-

1) Material overhead

2) Production overhead

It should be calculated as follows:-

On materials 5 % material overhead should be calculated and on Wages 4 % Production overhead should be calculated.

Let us go about configuring the costing sheet from steps 1.a to 1.g .

We will now see how to create a costing sheet for the purp

ose of overhead calculation.

1.1 Maintain Overhead Cost Elements

IMG à Controlling à Product Cost Controlling à Product Cost Planning à Basic Settings for Material Costing à Overhead à Maintain Overhead Cost Elements

To allocate overhead to products, you need to define overhead cost elements.

The SAP system then posts the overheads to these overhead cost

elements.

The cost center is credited with the overhead cost element and the

product or the production order is debited with the overhead cost element.

Let us now create secondary cost elements for overhead.

Create secondary cost elements of type 41 (overhead).

Update the following:-

Click on Save