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SAP Costing Sheets Allocate Overhead

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SAP Costing Sheets Allocate Overhead

by John Jordan

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There are three methods to distribute overhead costs to the cost of goods sold for the standard price.

In increasing level of flexibility and complexity, they are as follows:

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 are credited during activity confirmation.

 

Templates:

Templates allow you more flexibility.

 

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 are credited during period-end overhead calculation.

SAP costing sheets offer sufficient flexibility to allocate overhead costs in most cases.

You view the configuration of costing sheet settings with Transaction KZS2 or via IMG menu path:

Controlling • Product Cost Controlling • Product Cost Planning • Basic Settings for material Costing • Overhead • Define Costing Sheets. 

The screen in Figure 1 is displayed.

21 001

Figure 1: Costing Sheet Overview

Available costing sheets are listed on the right of the Overview screen. Select the first costing sheet, A00000, and double-click Costing sheet rows on the left to display the screen shown in Figure 2.

21 002

Figure 2: Costing Sheet Rows Overview

You can view details of the three costing sheet components:

Calculation Base:

Select any row with an entry in the Base column and double-click Base at the left to display a screen that allows you to enter cost elements and origin groups. Each cost element identifies unique cost types within a cost estimate, such as raw material or machining costs. Costs identified by the base are multiplied by an overhead rate to determine the overhead value in the cost estimate.

Origin Group:

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.

Overhead Rate:

Select any row with an entry in the Overhead rate column and double-click Overhead rate at the left to display a screen that allows you to enter date-dependent overhead rate percentages.

Credit Key:

Select any row with an entry in the Credit column and double-click Credit at the left to display a screen that allows you to enter the cost center to receive the overhead credit during overhead calculation

Costing sheets require the additional period-end process of overhead calculation, which debits manufacturing orders and credits cost centers.

 

Summary:

SAP costing sheets allocate overhead costs based on cost elements and origin groups.

 

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Glossary

 Accrual Order

An accrual order enables you to monitor period-related accrual calculation between expenses posted in Financial Accounting and Controlling.

 

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Fixed Assets

Fixed assets are company-owned, long-term tangible assets, such as forms of property or equipment. These assets make up its day-to-day operations to generate income. Being fixed means they can't be consumed or converted into cash within a year. 

Cost Center

A cost center is master data that identifies where the cost occurred. A responsible person assigned to the cost center analyzes and explains cost center variances at period-end.

Cost Component Structure

You define which cost components make up a cost component split by assigning them to a cost component structure. You assign cost elements and origin groups to cost components within the cost component structure.

Internal Order

An internal order monitors costs and revenue of an organization for short- to-medium-term jobs. You can carry out planning at a cost element and detailed level, and budgeting at an overall level with availability control.

Order Type

The order type categorizes orders according to their purpose and allows you to allocate different number ranges and settlement profiles.

Origin Group

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.

Periodic Reposting

Periodic reposting is a posting aid that enables you to adjust postings made to your cost centers or business processes, internal orders, or WBS elements. It has the same result as transaction-based reposting. The results of transaction-based repostings have a direct effect on the actual costs of the sender and the receiver, whereas periodic repostings have a one-time effect on actual costs at period-end closing.

Postings relevant to Controlling (CO) such as telephone costs, postal charges, insurance, and so on are entered in Financial Accounting (FI) and posted to an allocation cost center or a business process. These are used exclusively for cost collection. This minimizes the number of different account assignments you have to make when entering data in FI. At the end of the period, the collected costs are reposted to the cost centers or business processes which incurred the costs by of means user-defined keys (fixed values or dynamic tracing factors)

Settlement

Work in process (WIP) and variances are transferred to Financial Accounting, Profit Center Accounting (PCA), and Profitability Analysis (CO-PA) during settlement. Variance categories can also be transferred to value fields in CO-PA.

Standard Cost Estimate

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.

Standard Hierarchy

A standard hierarchy represents your company structure. A standard hierarchy is guaranteed to contain all cost centers or profit centers because a mandatory field in cost and profit center master data is a standard hierarchy node.

Statistical Key Figure

Statistical key figures define values describing cost centers, profit centers, and overhead orders such as number of employees or minutes of long-distance phone calls. You can use statistical key figures as the tracing factor for periodic transactions such as cost center distribution or assessment. You can post both plan and actual statistical key figures.

Statistical Order

In this type of internal order, the cost center is maintained in the order as the real cost object. When a transaction is posted to this type of order, the real cost is incurred by the cost center and the internal order maintains a statistical balance.

Tracing Factor

Tracing factors determine the cost portions received by each receiver from senders during periodic allocations, such as assessments and distributions.

Price Control

The Price control field in the Costing 2 view determines whether inventory is valuated at standard or moving average price.

Price Unit

The price unit is the number of units to which the price refers. You can increase the accuracy of the price by increasing the price unit. To determine the unit price, divide the price by the price unit.

Process Order

Process orders are used for the production of materials or provide services in a certain quantity and on a certain date. They allow resource planning, process order management control, and account assignment and order settlement rules to be specified.

Procurement Alternative

A procurement alternative represents one of a number of different ways of procuring a material. You can control the level of detail in which the procurement alternatives are represented through the controlling level. Depending on the processing category, there are single-level and multilevel procurement alternatives. For example, a purchase order is single-level procurement, while production is multilevel procurement.

Production Order

A production order is used for discrete manufacturing. A BOM and routing are copied from master data to the order. A sequence of operations is supplied by the routing, which describes how to carry out work-steps.
An operation can refer to a work center at which it is to be performed. An operation contains planned activities required to carry out the operation. Costs are based on the material components and activity price multiplied by a standard value.

Product Drilldown Reports

Product drilldown reports allow you to slice and dice data based on characteristics such as product group, material, plant, cost component, and period. Product drilldown reports are based on predefined summarization levels and are relatively simple to setup and run.

Production Variance

Production variance is a type of variance calculation based on the difference between net actual costs debited to the order and target costs based on the preliminary cost estimate and quantity delivered to inventory. You calculate production variance with target cost version 1. Production variances are for information only and are not relevant for settlement.

Production Version

A production version determines which alternative BOM is used together with which task list/master recipe to produce a material or create a master production schedule. For one material, you can have several production versions for various validity periods and lot-size ranges.

Purchase Price Variance

When raw materials are valued at the standard price, a purchase price variance PPV will post during goods receipt if the goods receipt or invoice price is different from the material standard price.

Profitability Analysis

Costing-based profitability analysis enables you to evaluate market segments, which can be classified according to products, customers, orders (or any combination of these), or strategic business units, such as sales organizations or business areas concerning your company’s profit or contribution margin.

Profit Center

SAP Profit Center is a management-oriented organizational unit used for internal controlling purposes. Segmenting a company into profit centers allows us to analyze and delegate responsibility to decentralized units.

Purchasing Info Record

A purchasing info record stores all 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.

Raw Materials

Raw materials are always procured externally and then processed. A material master record of this type contains purchasing data but not sales.

Routing

A routing is a list of tasks containing standard activity times required to perform operations to build an assembly. Routings, together with planned activity prices, provide cost estimates with the information necessary to calculate labor and activity costs of products.

Sales and Operations Planning

Sales and operations planning (SOP) allows you to enter a sales plan, convert it to a production plan, and transfer the plan to long-term planning.

S&OP is slowly being replaced by SAP Integrated Business Planning for Supply Chain (SAP IBP), which supports all S&OP features. S&OP is intended as a bridge or interim solution, which allows you a smooth transition from SAP ERP to on-premise SAP S/4HANA and SAP IBP. See SAP Note 2268064 for details.

SAP Fiori

SAP Fiori is a web-based interface that can be used in place of the SAP GUI. SAP Fiori apps access the Universal Journal directly, taking advantage of additional fields like the work center and operation for improved variance reporting.

Settlement

Work in process (WIP) and variances are transferred to Financial Accounting, Profit Center Accounting (PCA), and Profitability Analysis (CO-PA) during settlement. Variance categories can also be transferred to value fields in CO-PA.

Settlement Profile

A settlement profile contains the parameters necessary to create a settlement rule for manufacturing orders and product cost collectors and is contained in the order type.

Settlement Rule

A settlement rule determines which portions of a sender’s costs are allocated to which receivers. A settlement rule is contained in a manufacturing order or product cost collector header data.

Setup Time

You need setup time to prepare equipment and machinery for the production of assemblies, and that preparation is generally the same regardless of the quantity produced. Setup time spread over a smaller production quantity increases the unit cost.

Simultaneous Costing

The process of recording actual costs for cost objects, such as manufacturing orders and product cost collectors in cost object controlling, is called simultaneous costing. Costs typically include goods issues, receipts to and from an order, activity confirmations, and external service costs.

Source Cost Element

Source cost elements identify costs that debit objects, such as manufacturing orders and product cost collectors.

Source List

A source list is a list of available sources of supply for a material, which indicates the periods during which procurement is possible. Usually, a source list is a list of quotations for a material from different vendors.

You can specify a preferred vendor by selecting a fixed source of supply indicator. If you do not select this indicator for any source, a cost estimate will choose the lowest cost source as the cost of the component. You can also indicate which sources are relevant to MRP.

Standard Price

The standard price in the Costing 2 view determines the inventory valuation price when 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.

Subcontracting

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 Factor

Tracing factors determine the cost portions received by each receiver from senders during periodic allocations, such as assessments and distributions.

Universal Journal

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.

Valuation Class

 The valuation class in the Costing 2 view determines which general ledger accounts are updated as a result of inventory movement or settlement.

Valuation Date

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.

Valuation Grouping Code

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.

Valuation Type

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.

Valuation Variant

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.

Valuation Variant for Scrap and WIP

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.

Valuation View

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

Work Center

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

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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