Product Cost by Order

In this step you define the control parameters that affect Product Cost by Order.

All costs incurred during production are collected on production orders or process orders and passed to inventory when you settle. The variances can be calculated cumulatively (for the entire life span of an order) or in each period.

If you are not using the R/3 Production Planning component, you can collect the costs on a production order without quantity structure in the R/3 System. The costs for these orders are planned manually using the functions of cost estimates without quantity structure.

To be able to use the Product Cost by Order component, you must do the following:

The valuation variant determines which prices are used for the material components, internal activities, and external activities. It determines which costing sheet is proposed. You define a separate valuation variant as a default value for each order type.
To do this, you must create a costing sheet that contains the control parameters for the calculation of overhead rates. You can also:
The valuation variant for the actual costs determines which transfer price is used to valuate the confirmed internal activities. The valuation variant is defined as a separate default value for each order type.
The valuation variant for the valuation of goods received determines whether the goods receipt is valuated with the material price in accordance with the price control (that is, with the standard price or the moving average price) or with some other price (such as the planned price that was calculated in a periodic cost estimate). You define a separate valuation variant for each valuation area.
To do this, you must create a
settlement profile and a settlement structure. The settlement structure is proposed through the settlement profile. The settlement profile is proposed through the order type.

For period-end closing you can do the following:

To be able to calculate the work-in-process inventory, you must do the following:
The results analysis key controls how the work in process is calculated and canceled. It is defined as a default value for each order type.
The results analysis version controls which work in process costs can be capitalized.

In the Product Cost by Order component, the work in process can be calculated at actual costs or at planned costs. To be able to calculate the work in process, you must do the following:

To be able to settle the work in process to Financial Accounting, you must:
The posting rules assign the results analysis cost elements under which the work in process is updated on the order to G/L accounts (such as the unfinished products inventory (balance sheet) and the inventory change account (P+L)).
To be able to calculate variances, you must:
The variance key determines whether variances can be calculated cumulatively or by period.
The variance key appears in the material master as a default value (defined separately for each plant). The variance key is copied from the costing view of the material master record into the production order or process order.
The target cost version controls how the target costs are calculated and which variance categories are calculated.
To be able to pass the calculated variances to Profitability Analysis, you must do the following:
The PA transfer structure assigns the cost elements of the order and the variance categories to value fields.

If joint production is active, you cannot calculate work in process or variances.

However, in joint production in process manufacturing you can distribute the actual costs to the order items created for each co-product when you carry out the period-end closing activities.

To do this, you must:

If you want to define equivalence numbers or percentages in the settlement rule for each cost element group, you must define a source structure that groups the actual costs expected for the order header by cost element group.

Default values for the settlement rule are defined through an apportionment structure in the material master record for the primary product or process material.

For information on the Customizing settings for production orders and process orders, see the Implementation Guide under Production control.

To be able to see data in the Product Cost Controlling information system, you must first make some settings. (See also the Information System for Product Cost Controlling)

Caution

If the total number of orders is 100,000 or more (including production orders, process orders, maintenance orders, and internal orders), you should read Note 45290 in OSS. If you do not have access to OSS, contact the SAP Hotline.