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Tip 57 from 100 Things You Should Know About Controlling with SAP 2nd Ed

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SAP assembly scrap allows you to plan how many assemblies may not meet quality standards.

Since no production process is perfect, there is always a percentage of scrap produced. Assemblies or components that do not meet quality standards may either become scrap or require rework. Depending on the problem, cheaper items may become scrap, while more costly assemblies may justify rework.

Characteristics from a profitability segment can be read and posted to income statement line items based on the best guess principle. This feature was introduced in account-based CO-PA in S/4HANA 1610. You can use drill-down reporting on posted data. Without attributed profitability segments, you must wait until month-end activities such as settlement, allocation and top-down distribution. With this new CO-PA feature, you can achieve real-time profitability reporting during the month.  

SAP Subcontracting involves sending components to a vendor where an assembly is manufactured. The vendor returns the completed assembly, and during goods receipt, the components are issued from subcontract inventory. Subcontracting is a purchasing-controlled process. Let's examine the details.

The special procurement type field in the material master MRP 2 view determines if you manufacture a material with the subcontracting process.

SAP cost estimates determine how the material is sourced by the procurement type. Material requirements planning (MRP) guarantees material availability by monitoring stocks and requirements and by generating planned orders for procurement and production. A cost estimate needs data on how the material is procured as the first step in determining material cost. Let’s see how to display procurement types and then look at how cost estimates utilize this information.

SAP Actual Costing with SAP Material Ledger allows variances to flow to semi-finished and finished products based on the consumption of lower-level components. While multi-level price determination allows you to see the actual price of all materials at the end of the period, you cannot display price differences rolled up separately from the lowest to highest-level materials. You only see price differences assigned from the next lowest level.

There are 3 methods to distribute overhead costs to the cost of goods sold for the standard price. In increasing level of flexibility and complexity they are:

Activity Rate: You can either increase the planned activity price to include overhead or create separate overhead activity types. Manufacturing orders are debited and production cost centers credited during activity confirmation.

Costing Sheets: Costing sheets allow flexibility in allocating overhead across products based on cost elements and origin groups. Manufacturing orders are debited and cost centers credited during period-end overhead calculation.

Templates: Templates allow you more options to base your overhead costs on.

Cost components group similar cost types together by cost element. Typically materials, labor, and overhead.

Cost components are not available as columns in standard cost estimate list reports. However, they are useful when analyzing production or purchasing performance across a range of products. Add cost components to standard cost estimate list reports and costed multilevel BOM reports by creating cost component groups and assigning them to cost components.

SAP Material Ledger has two basic functions:

        1. Carry material prices in multiple currencies and valuations

        2. Actual costing

 Actual costing generates a material ledger document for all goods movements at the standard price (preliminary valuation). At period-end, an actual price is calculated for each material based on the actual costs of the period. This actual price is called the periodic unit price and can be used for the following at period-end:

Your three period-end options when activating SAP Material Ledger are:

 - No period-end processing

 - Single-level price determination

 - Multilevel price determination

Let’s discuss each in detail.

You can choose standard or moving average price for inventory valuation. Let’s discuss each method in detail. You change the price control indicator with Transaction MM02 or by following menu path:

Logistics • Material Master • Material • Change

Navigate to the Costing 2 view to display the screen shown in Figure 1.