In addition to the calculation of standard costs at the company code level, SAP ERP also includes functionality to calculate standard costs across the entire corporation.  These are referred to as group costs. Instead of using legal transfer prices, which is the basis for company code standard costs, group costing performs complete across company costing.

SAP ERP contains the capability to parallel value material movements and inventory stock simultaneously in both of these valuations using functionality included in the SAP Material Ledger.  Further, with CO Product Costing, Production/Process Orders can be simultaneously costed in both of these valuations – Actual Costs, as well as Target Costs and Variances.

Further, the group valuation results can be recorded in a Special Purpose Ledger that is defined as group valuation.  Also, SAP ERP provides security functionality to control the display of this data by valuation type.  For example, the personnel at a company code can be granted authorization to only display company code valuation results, and not group results, if this is a requirement.

To utilize the group costing and valuation functionality, all of the corporation’s legal entities do not need to be fully implemented on SAP EPR.  It is possible to maintain a subset of product costing master data and interface into SAP ERP transactional activity monthly.

You can learn more about this topic at Controlling 2014 during my session Case Study: How Eli Lilly and Company implemented group costing. During this session, I will explore SAP ERP group costing and valuation functionality in detail, in addition to share more about the implementation approach we selected at Eli Lilly and Company.