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I recently used some interesting configuration in the valuation variant to value externally and intercompany purchased materials. My client has unique challenges because they are vertically integrated.
They produce almost every raw material that goes in to their finished goods including packaging and the machinery to produce finished goods. The amount of intercompany purchases is massive and we needed a sustainable way to value purchased items and reference the purchasing conditions for intercompany markups and other charges like freight and shipping labor.
This configuration is a multi-step process, but it’s fairly simple when you have all the pieces configured correctly.
First, in configuration Transaction OKKN shown in Figure 1, you configure the costing variant.
I created a custom costing variant for the standard cost estimate instead of using the standard PP01. The costing variant is the main configuration for how materials are costed in SAP. The yellow buttons represent costing variant components.
Figure 1 Configure Costing Variant
The valuation variant contains parameters for cost estimate valuation. In a valuation variant, you specify the strategy sequence for how costs are selected. For produced materials, the component’s standard price, moving average price, purchase info record price, or planned prices may be selected. You can also choose a particular plan/actual version and average the plan activity rates for the year or take the current activity rates. You navigate to the valuation variant with Transaction OKK4 as shown in Figure 2.
Figure 2 Configure Valuation Variant
The solution to this requirement was to:
This strategy applies to costing component materials on a Bill of Material (BOM) for a finished good, as well costing any materials that do not have a BOM. This means that to value a material, SAP will first look for a Purchasing Info Record (PIR) for the item or its BOM components. SAP will take the price in the PIR and add any purchasing conditions that have been mapped to the valuation variant. If a PIR is not found, SAP will go on to strategy 2 which is 7 Valuation Price According to Price Control in Material Master. If a material is price control S, SAP will choose the standard price. If price control V, SAP will choose the moving average price.
When you click on the yellow Delivery Costs button in OKK4 valuation variant configuration shown at the bottom of Figure 2, you see a table that allows you to assign purchasing conditions to a valuation variant as shown in Figure 3. You can navigate there with Transaction OKYO. I worked with a purchasing team member to determine which purchasing conditions were relevant for costing and mapped those in the table.
Figure 3 Asign Purchasing Conditions
I also created several Origin Groups with Transaction OPKS as shown in Figure 4 to further separate costs in a cost estimate. For example, we needed to split out the intercompany markup condition ZMKP in a cost estimate. I used Origin Group MRKP to separate this condition from other conditions.
Figure 4 Create Origin Groups
I mapped the origin groups to cost components in the Cost Component Structure with Transaction OKTZ as shown in Figure 5.
Figure 5 Map Origin Groups to Cost Components
Finally, I worked with my purchasing team members to ensure PIRs and purchasing conditions were created for all externally and intercompany purchased items.
You display PIRs with Transaction ME13 as shown in Figure 6.
Figure 6 Display Purchasing Info Record Selection
The price for costing is picked up from the Net Price field if a PIR exists for the material being costed in that plant.
Figure 7 Display Purchasing Info Record
You display purchasing conditions with Transaction MEK3 as shown in Figure 8:
Figure 8 Display Purchasing Conditions
You can maintain conditions using a few different combinations based on what is configured in the access sequence. Here is an example I created as a demonstration as shown in Figure 9:
Figure 9 Display Purchasing Conditions
Here is the final result when a cost estimate of a finished good contains purchased items:
In Transaction CK11N create cost estimate with quantity structure, you can see the components of the finished good on the left. I clicked on one of the purchased components and clicked on the Valuation tab to show that the material’s cost is coming from the Purchasing Info Record as shown in Figure 10.
Figure 10 Disaplay Material Cost Estimate
A cost component identifies costs of similar types, such as material, labor, and overhead costs, by grouping together cost elements in the cost component structure.
The costing variant contains information on how a cost estimate calculates the standard price. For example, it determines if the purchasing info record price is used for purchased materials, or an estimated price manually entered in the Planned price 1 field of the Costing 2 view.
The moving average price in the Costing 2 view determines the inventory valuation price if price control is set at moving average. It is updated during goods receipt.
An origin group separately identifies materials assigned to the same cost element, allowing them to be assigned to separate cost components. The origin group can also determine the calculation base for overhead in costing sheets.
A purchasing info record stores all of the information relevant to the procurement of a material from a vendor. It contains the Purchase Price field, which the standard cost estimate searches for when determining the purchase price.
This is a material cost estimate used to calculate the standard price of a material. The cost estimate must be executed with a costing variant that updates the material master, and the cost estimate must be released. A standard cost estimate can be released only once per period and is typically created for each product at the beginning of a fiscal year or new season.
The standard price in the Costing 2 view determines the inventory valuation price if price control is set at standard (S). The standard price is updated when a standard cost estimate is released. You normally value manufactured goods at the standard price.
You supply component parts to an external vendor who manufactures the complete assembly. The vendor has previously supplied a quotation, which is entered in a purchasing info record with a category of subcontracting.
Tracing factors determine the cost portions received by each receiver from senders during periodic allocations, such as assessments and distributions.
The efficiency and speed of the SAP HANA in-memory database allowed the introduction of the Universal Journal single line-item tables ACDOCA (actual) and ACDOCP (plan). The Universal Journal allows all postings from the previous financial and controlling components to be combined in single items. The many benefits include the development of real-time accounting. In this book, we discuss both period-end and event-based processing.
The valuation class in the Costing 2 view determines which general ledger accounts are updated as a result of inventory movement or settlement.
The valuation date determines which material and activity prices are selected when you create a cost estimate. Purchasing info records can contain different vendor-quoted prices for different dates. Different plan activity rates can be entered per fiscal period.
The valuation grouping code allows you to assign the same general ledger account assignments across several plants with Transaction OMWD to minimize your work.
The grouping code can represent one or a group of plants.
You use valuation types in the split valuation process, which enables the same material in a plant to have different valuations based on criteria such as batch. You assign valuation types to each valuation category, which specify the individual characteristics that exist for that valuation category. For example, you can valuate stocks of a material produced in-house separately from stocks of the same material purchased externally from vendors. You then select procurement type as the valuation category and internal and external as the valuation types.
The valuation variant is a costing variant component that allows different search strategies for materials, activity types, subcontracting, and external processing. For example, the search strategy for purchased and raw materials typically searches first for a price from the purchasing info record.
This valuation variant allows a choice of cost estimates to valuate scrap and WIP in a WIP at target scenario. If the structure of a routing is changed after a costing run, WIP can still be valued with the valuation variant for scrap and WIP resulting in a more accurate WIP valuation.
In the context of multiple valuation and transfer prices, you can define the following views:
– Legal valuation view
– Group valuation view
– Profit center valuation view
Operations are carried out at work centers representing; for example, machines, production lines, or employees. Work center master data contains a mandatory cost center field. A work center can only be linked to one cost center, while a cost center can be linked to many work centers.
Work in process (WIP) represents production costs of incomplete assemblies. For balance sheet accounts to accurately reflect company assets at period end, WIP costs are moved temporarily to WIP balance sheet and profit and loss accounts. WIP is canceled during period-end processing following delivery of assemblies to inventory.
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Tanya Duncan is Senior Manager at Deloitte Consulting, the world's largest private professional services firm. She previously worked for Owens Corning, a Fortune 500 global building materials company in Toledo, OH. She is experienced in global SAP deployments and has authored SAP books:
Comments 2
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Thanks for your contribution Tanya.
We also implemented this configuration with a different requirement.
Origin group affected to pricing condition help to map different Cost Component Element.
Our problem is the following: this configuration is suitable for purchased product but cannot be implemented for subcontracted product as you cannot use strategie L.
KR
Théophane