Planning Product Costs in SAP FICO

Planning product costs in SAP FICO is an essential process for controlling and forecasting the cost structure of manufactured products. This process helps businesses ensure that product costs are accurately planned and managed. This article will guide you through the steps involved in planning product costs in SAP FICO with examples to illustrate each step.

Step 1: Define Costing Variants

Costing variants are used to determine how product costs are calculated. To define a costing variant:

  • Go to transaction code OKKN to define the costing variant.
  • Create a new costing variant or modify an existing one.
  • Specify the valuation strategy and costing method (e.g., Standard Costing or Actual Costing).
  • Determine the price control indicator (e.g., V - Moving Average or S - Standard Price).

Example: A new costing variant "CV01" is created with the valuation strategy of "Standard Costing" and the price control indicator "S" for standard price determination.

Step 2: Define Costing Keys

Costing keys define how the various cost components (e.g., material costs, labor costs, overhead) are handled in the cost calculation. To define costing keys:

  • Go to transaction code OKB9 to define the costing keys.
  • Create a new costing key or modify an existing one.
  • Specify the cost element categories (e.g., material costs, labor costs, overhead costs) and costing procedure to be applied.

Example: A costing key "CK01" is created to allocate material and labor costs for the manufacturing process of Product A.

Step 3: Create Costing Models for Products

Next, create a costing model for the product that reflects how costs are to be calculated. This model defines the key components of cost calculation and how they are allocated.

  • Navigate to transaction code CK11N to create the costing model.
  • Enter the Material Number (e.g., MAT1001) and the Plant where the product is produced.
  • Select the Costing Variant (e.g., CV01) and enter the appropriate Costing Type (e.g., Standard Costing).

Example: A costing model "Cost_Model_A" is created for product "MAT1001" with costing variant "CV01" and costing type "Standard Costing."

Step 4: Input Cost Component Structure

The cost component structure outlines the breakdown of all costs involved in product manufacturing. This includes material, labor, overhead, and other direct costs. To set the cost component structure:

  • Use transaction code CK40N to enter the cost components.
  • Assign cost components (e.g., Material Costs, Labor Costs, Overhead) to the relevant cost element categories.

Example: The cost component structure for "MAT1001" is defined with cost components for Material (50,000), Labor (20,000), and Overhead (10,000).

Step 5: Plan Material Costs

Material costs represent the raw materials required to manufacture the product. To plan material costs:

  • Navigate to transaction code CK24 to enter material costs for the product.
  • Enter the Material Number (e.g., MAT1001) and the Plant where the product is manufactured.
  • Specify the planned cost for materials (e.g., 50,000 for raw materials).

Example: Planned material costs for "MAT1001" are entered as 50,000 for the manufacturing process in Plant 1000.

Step 6: Plan Labor and Overhead Costs

Labor costs and overhead costs must also be planned for accurate product cost estimation. To plan these costs:

  • Use transaction code CK24 to enter labor and overhead costs.
  • Specify the planned labor cost (e.g., 20,000) and the planned overhead cost (e.g., 10,000) for product "MAT1001".

Example: Planned labor costs for "MAT1001" are entered as 20,000, and planned overhead costs are entered as 10,000 for the given period.

Step 7: Execute Costing Run

Once all costs are planned, execute a costing run to calculate the total product cost:

  • Use transaction code CK40N to execute the costing run.
  • Enter the relevant Material Number and Costing Variant.
  • Click on Start to initiate the costing run.

Example: The costing run for "MAT1001" is executed, and the total cost is calculated as 80,000, which includes material costs (50,000), labor costs (20,000), and overhead costs (10,000).

Step 8: Review and Adjust Costing Results

After executing the costing run, review the results and adjust the costs if necessary:

  • Use transaction code CK13N to review the cost estimate results.
  • Check the breakdown of costs and make any necessary adjustments to reflect changes in cost assumptions.

Example: The total product cost of 80,000 is reviewed. The material cost is adjusted to 55,000 due to an increase in raw material prices, and the final cost is updated to 85,000.

Step 9: Transfer Planned Costs to Cost Centers

If you want to transfer the planned costs for the product to cost centers, follow these steps:

  • Navigate to transaction code KP06 to allocate planned costs to cost centers.
  • Specify the cost element, amount, and cost center.

Example: The planned cost of 85,000 for "MAT1001" is transferred to cost center "1000" to reflect the manufacturing costs.

Conclusion

Planning product costs in SAP FICO is a vital process for managing manufacturing expenses and ensuring financial accuracy. By following these steps, businesses can accurately plan and track product costs, helping to optimize profitability and control production expenses.




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