Product Cost Controlling S/4HANA

•  Walk through product cost controlling with SAP S/4HANA from end to end
• Master integrated planning, product cost planning, cost object controlling, reporting, and more 

 

 

 

 

 

 

 

 

 

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Table of Contents

 

• Chapter 1 Initial Planning

• Chapter 2 Controlling Master Data

• Chapter 3 Material Master Data

• Chapter 4 Logistics Master Data

• Chapter 5 Costing Sheets

• Chapter 6 Cost Components

• Chapter 7 Costing Variant Components

• Chapter 8 Costing Variant Tabs

• Chapter 9 Cost Estimates

• Chapter 10 Preliminary Costing on Production Orders

• Chapter 11 Simultaneous Costing

• Chapter 12 Overhead

• Chapter 13 Work in Process WIP

• Chapter 14 Variance Calculation

• Chapter 15 Settlement

• Chapter 16 Actual Costing

• Chapter 17 Sales Order Controlling

• Chapter 18 Special Topics
  Chapter 19 Event-Based Product Costing

• Chapter 20 Reporting

• Glossary

 

  

Chapter 1 Initial Planning

As shown in Figure 1, we follow a best-practice planning scenario, including instructions on Sales and Operations Planning, and conduct long-term planning runs.
To initiate integrated planning, you create sales plan quantities in Profitability Analysis (CO-PA) or sales and operations planning (S&OP), and then convert these quantities into a production plan that you transfer to demand management.

Note:
SAP Integrated Business Planning for Supply Chain (SAP IBP) will gradually replace Sales and Operations Planning (S&OP).

Long-term planning determines work center loads and purchasing requirements. Activity quantities are transferred to Cost Center Accounting (CCA), where plan activity prices are determined.

Figure 1 Sales and Operations Planning

 You plan procurement and production costs and set prices for materials and services. First, you determine the purchase price for externally procured items and then the manufactured cost for assemblies.

The following master data and configuration chapters describe the setup to create cost estimates.

Master Data

Master data is information that stays relatively constant over long periods of time. In the following chapters, we detail every master data field relevant to Product Cost Planning, providing numerous examples and case scenarios. We discuss the following master data:

 

Chapter 2 Controlling Master Data

We discuss CO master data, including cost elements, cost centers, activity types, and statistical key figures, as shown in Figure 2.

 Figure 2 Maintain GL Accounts Centrally

You'll also learn about cost of sales cost elements, how to swap the cost center standard hierarchy, and activity type groups.

Chapter 3 Material Master Data

As shown in Figure 3, we examine fields in material master views, including Material Requirements Planning (MRP), Controlling (CO), and Accounting.

 Figure 3 Change MRP2 View

We also examine: 

• ABC indicator
  
  
• Fixed lot size
  
  
• Discontinued Materials
  
  
• Material Ledger Documents
  
  
• Actual cost component split
  
  

 Chapter 4 Logistics Master Data

We look at logistics master data, including bills of materials (BOMs), routings as shown in Figure 4, product cost collectors, and purchasing info records.

Figure 4 Example BOM and Routing

More specific topics include recursive BOMs, product cost collector lists, plant-specific purchasing info records, and source lists.

Configuration

Most configuration settings are made when you first implement SAP. All configuration settings are closely controlled and monitored because they have a major impact on the system process design for your company. We explain the configuration in the following four chapters:

 

Chapter 5 Costing Sheets

Costing sheet configuration determines how cost estimates calculate overhead costs. A base cost is multiplied by a rate to debit a production order and credit a cost center. We examine costing sheets and how you use them to set up overhead calculation, as shown in Figure 5.

 Figure 5 Costing Sheet

In the previous three chapters, we discussed Controlling, material, and logistics master data, which provide cost estimates with the quantity and price information necessary to calculate the standard cost to procure or manufacture a material. This chapter discusses costing sheet configuration, which determines how cost estimates calculate overhead costs. We will explore overhead costs, the base to which overhead costs are applied, the overhead rate, and the credit key.

In addition to direct material and labor costs, overhead costs are typically included as a separate component of the finished product standard price. Overhead costs may include building lease, insurance, and general office staff not directly involved in  production.

 

Chapter 6 Cost Components

For reporting purposes, we analyze cost components and structures and how they group similar costs, such as material, labor, and overhead, as shown in Figure 6.

 Figure 6 Cost Components

We also look at how cost component groups can improve your reporting by making cost components available in standard cost estimate lists.

Chapter 7 Costing Variant Components

We examine in detail how you set up costing variant components that contain the configuration required to create cost estimates including:

• Costing Type
  
  
• Valuation Variant
  
  
• Date Control
  
  
• Quantity Structure Control
  
  
• Transfer Control
  
  
• Reference Variant
  

You display a costing variant with Transaction OKKN to display the screen shown in Figure 7.

Figure 7 Standard Costing Variant PPC1

 

Includes detailed information on delivery costs for purchased materials.

 

 

 

 

 

 

 

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Chapter 8 Costing Variant Tabs

We examine how you set up costing variant tabs that contain the configuration required to create cost estimates, including:

• Control
  
  
• Quantity Structure
  
  
• Additive Costs
  
  
• Update
  
  
• Assignments
  
  
• Miscellaneous
  
  
  

 

Chapter 9 Cost Estimates

We discuss how to create, mark, and release standard cost estimates to update the standard price and revalue inventory, as shown in Figure 9.

Figure 9 Create Standard Cost Estimate

We examine the mark and release process and costing runs, which automate the mass processing of standard cost estimates. Information on marking allowances and optimizing costing runs is included.

 

CHAPTER 10 PRELIMINARY COSTING ON PRODUCTION ORDERS

We detail how preliminary cost estimates calculate the planned costs for manufacturing orders and product cost collectors, as shown in Figure 10.

 

 Figure 10 Change Product Cost Collector

We analyze how preliminary cost estimates plan costs for cost objects such as manufacturing orders and product cost collectors based on order type configuration, as shown in Figure 12.

 Figure 12 Preliminary Cost Estimate

 

Chapter 11 Simultaneous Costing

We also look at how unit cost estimates are designed for use during the product development phase.

 In simultaneous costing, we examine how actual costs, such as component and sub-assembly goods issues and activity costs, are posted to cost objects during production order and process order activity confirmations, as illustrated in Figure 11.

Figure 11 Goods Issue to Production Order

We also cover information on default activities and operation sequences, as well as margin analysis and detailed reports.

 

Figure 11 Unit Cost Estimate for Product Development

They are easily changed because they resemble a spreadsheet format, as shown in Figure 11, which is ideal for a development environment.

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Cost Object Controlling allows you to determine planned costs for cost objects, to post actual costs, and then to analyze variances as discussed in the following chapters.

Planned and Actual Costs

In these chapters, we determine how to plan and post actual costs to cost objects: 

Chapter 12 Overhead

We examine how you perform overhead period-end calculations, as shown in Figure 12, based on the costing sheet configuration discussed in Chapter 5.

Figure 12 Overhead Calculation Results Screen

  

Chapter 13 Work in Process

We examine how work-in-process (WIP) is configured and how the period-end step is executed, as illustrated in Figure 13.

Figure 13  Assign Cost Elements For WIP and Results Analysis

 

 

  

Chapter 14 Variance Calculations

We examine production variance configuration, period-end processing, and analysis and provide examples of the types of variance calculations, as shown in Figure 14.

Figure 14 Variance Calculation Selection Screen

We also discuss how SAP S/4HANA improves variance calculation performance.

 

 

Chapter 15 Settlement

We analyze the settlement configuration and the period-end processing, as shown in Figure 15. We discuss settlement and processing types, including the allocation and PA transfer structures.

Figure 15 Settlement Rule Parameters

We examine new transactions available with SAP S/4HANA.

 

Chapter 16 Actual Costing

Actual costing valuates all goods movements within a period at the standard price. At the end of the period, the price and exchange rate differences
are used to calculate an actual weighted average price for the period, called the periodic unit price (PUP).

Some accounting standards state that standard costs are acceptable if adjusted at reasonable intervals to reflect current conditions. Actual costing allows the automation of variance capitalization by calculating the actual cost for manufactured goods. Actual costing valuates all goods movements within a period at the standard price. All
price and exchange rate differences for materials are collected as Material Ledger documents.
At the end of the period, the differences are used to calculate an actual average
price for the PUP.
This chapter explores how to configure, set up, and run actual costing.

 

Chapter 17 Sales Order Controlling

 Sales order costing scenarios involve customer orders that require you to procure components or assemblies manufactured for individual customers
or orders.

Because the customer's sales order involves special requirements, you need to treat the
costing of sales orders individually. You cannot generally use the standard costs for the
material ordered by the customer but must adjust the cost estimate to reflect the customer's
specific requirements.

The first indication that sales order Controlling is involved in a process is the requirements
type, which you find in the Procurement tab of a sales order line item. You display
a sales order with Transaction VA03 or via the menu path Logistics • Sales and
Distribution • Sales • Order • Display. You may find it easier to locate a sales order by
displaying a list with Transaction VA05.
You can also manage sales orders with the Sales Order app (SAP Fiori ID F1814).

Chapter 18 Special Topics

We discuss configuration and period-end processing for:

 

• Subcontracting
• Delivery Costs
• Stock in Transit
  
  
  Figure 18 SAP Material Ledger Actual Costing Without Revaluation

 

• Delivery costs
  
  
• Overhead Templates
  
  
• Mixed cost estimates
  
  
• Cost estimate user exits
  
  

This third edition includes information on how SAP S/4HANA improves sales order controlling and SAP Material Ledger processing and reporting.

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Chapter 19 Event-Based Product Costing

At the time of writing, event-based production accounting is only supported 
with universal parallel accounting UPA. In this section, we’ll look at the configuration
settings that control the posting logic for the calculation of overhead, WIP, and production variances. We’ll then explain how the system calculates overhead,
WIP and production variances are captured as the underlying business transactions.

When moving to event-based production accounting, you can keep the
overhead calculation rules we saw in Chapter 5, but you must flag your
costing sheet as Evt. based, as shown for Costing Sheet 1010EP in Figure 19.15. It’s not
possible to combine non-event-based costing sheets with event-based WIP because,
the assumption is that the creation of the reference document will trigger a first follow-on
document for the overhead, followed by a follow-on document for
either WIP or production variances, depending on the order status.

 Figure 19.15 Costing Sheet for Event-Based Production Accounting

You determine that a production order, a process order, or product cost collector should generate journal entries for WIP and production variances by assigning the appropriate Event-Based Processing Key to the order. As we saw for WIP calculation in Chapter 13, the default key is selected using the order type and plant combination. Figure 19.16 shows the event-based processing key for production orders, which combines the settings for WIP calculation, variance calculation, and potential settlement receivers. Notice that if you use this key, WIP is calculated at actual costs, and variances (if calculated) can be split into the categories Input Price Variance, Input Quantity Variance, Resource Usage Variance, Lot Size Variance, and Remaining Variance, and it’s possible to assign some costs to cost centers or WBS elements rather than assigning all costs to Material. To access these settings, chose Controlling • Product Cost Controlling • Product Cost by Order • Period-End Closing • Event-Based WIP and Variance Posting from the menu bar and select the appropriate Event-Based Processing Key. If you work with best practices, these settings are delivered using scope item 3F0 and have been available since SAP S/4HANA 2022.

Figure 19.16 Event-based Processing Key for Product Cost by Order

 By comparison, the event-based processing key for product cost by period shown in Figure 19.17 calculates WIP at Target Costs. In other words, using the target costs for the operation recorded at the reporting point reached. Production variances are only split into Input Price Variance, Input Quantity Variance, and Resource Usage. The variance and the remaining variance and all costs must be settled with the material. Suppose you don’t create any reporting points and record all goods issues and confirmations as a backflush on completion of the finished product. In that case, no WIP will be calculated; only variances will be made if changes are made to the standard BOM or routing quantities. These settings are also delivered with scope item 3F0 and have been available since SAP S/4HANA 2023.

Figure 19.17 Event-based Processing Key for Product Cost by Order

Unless you are working with the best-practice settings, you should check that all general
ledger accounts for goods issues and confirmations to the orders and goods receipts on completion,

The follow-on overhead costs have been assigned to the delivered WIP sources, as shown in Figure 19.18.

The system will increase WIP for the values posted under the general ledger accounts for material
cost (0MAT), labor cost (0LBR), and overhead cost (0OVH) and decrease WIP
in proportion to the values posted under the general ledger accounts for delivered
costs (0DLV).

Figure 19.18 WIP Sources for Event-Based Processing

 You should also check the general ledger accounts to be updated to account for work in
process and reserves for unrealized costs for each of the WIP sources, as shown in
Figure 19.19.

 

 Figure 19.19 WIP Account Determination Rules

 

Event-Based Overhead

The rules for the application of overhead are the same as we saw in Chapter 5, the only
difference being that the overheads are applied at a different point in time, so the
example in Figure 19.20 shows the material overhead being calculated when the raw
materials were issued to the production order. What’s important here is the link to the
Reference document because it provides the link to the goods issue that resulted in the
line item for material overhead. If the goods issue is cancelled, this link
is needed to find and reverse the associated overhead and WIP. Notice also that these
documents have a new business transaction type, KZPI. If you are involved in discussions
about system sizing, bear in mind that an overhead document is created for each
reference document rather than for the whole order during the period close and that
this will result in extra documents, especially if you have many different confirmations
and goods issues on a single order.

Figure 19.20 Line Item for Event-based Overhead

 Event-Based Work in Process

Just like the overhead calculation, WIP is also associated with a reference document, so in Figure 19.21, we see two reference documents: one for the confirmation and one for the goods issue, and the associated WIP posting with the business transaction type EBWP. The WIP in the first line includes the activity costs for the operation confirmed and the production overhead, and the WIP in the second line contains the raw material costs for the goods issued at this operation and the material overhead (see Figure 19.20). In neither case was the WIP calculation triggered by the user. It was calculated automatically when the underlying reference document was posted. All
the costs on order 1043166 are considered work in process because there has not yet been a stock delivery.

 Figure 19.21 Line Items for Event-based WIP (Goods Issue and Confirmation) 

 

 

 

 

 

 

 

 

 

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Chapter 20 Reporting

We examine the standard reports available for Product Cost Planning and Cost Object Controlling and how you can drill down from high-level summarization reports to detailed reports based on cost elements and line item reports. We discuss the production order information system and standard CCA reports, as shown in Figure 20

 

Figure 20 Standard Cost Center Report 

 

Includes SAP HANA improvements with order summarization and line item reporting.

In this chapter, we examine Enhancement Packages (EHPs) and how they deliver the latest developments through business functions to your system.

• We examine four business functions closely related to CO.
• We also look at the Universal Journal, as shown in Figure 20.

 

 Figure 20 Universal Journal Table ACDOCA

We examine the benefits and improvements resulting from SAP S/4HANA, including the Universal Journal, the single source of truth, and SAP Fiori apps.

 

 

Enhancement Packages and Business Functions

Previously, SAP delivered new functionality through either Support Packages (SPs) or complete software upgrades and new versions. This process required functional teams to write test scripts with expected results and thoroughly test all methods used by the company to ensure none would be adversely affected. Coordination between different departments on the timing of an upgrade can be challenging, as finance departments often have distinct busy periods compared to sales and distribution or materials management. Consequently, many companies deferred the introduction of SPs or upgrades, missing out on the latest functionality and process improvements.

Now that we've discussed EHPs and business functions in general, let's examine four specific business functions related to Product Costing and Controlling.

 

1. FIN_CO_COGM: Multiple Valuation of Cost of Goods Manufactured

Available since EHP 5, this CO business function supports the valuation of the cost of goods manufactured (COGM) in multiple accounting approaches for depreciation, activity prices, and COGM and inventory values, described as follows:

• Transfer of depreciation from Asset Accounting to Controlling

The depreciation values for international accounting principles are updated to the leading ledger

 

GLOSSARY

  

Activity Type

An activity type identifies activities provided by a cost center to manufacturing
orders. The secondary type general ledger account associated with an activity type identifies the activity costs on cost center and detailed reports.

Allocation Structure

An allocation structure allocates the costs incurred for a sender by cost element or cost element group and is used for settlement and assessment. An assignment maps a source cost element group to a settlement general ledger account.

Biil of Material (BOM)

A bill of material is a structured hierarchy of components necessary to build an assembly. BOMs, together with purchasing info records, allow cost estimates to calculate the material costs of assemblies

Cost Center

A cost center is master data that identifies where the cost occurred. At the end of each period, a responsible person assigned to the cost center analyzes and explains the cost center variances.

Event-Based Costing

As of SAP S/4HANA release 2022, event-based processing is available with the universal parallel accounting business function. According to the costing sheet, goods movements and confirmations represent events that trigger the overhead calculation. Depending on the order's status, this triggers either the posting of a journal entry for the WIP or
the cancellation of any existing WIP and the calculation of production variances.

FBL3N - G/L Account Line Item Display

FBl3N displays G/L line items. It does so only for the G/L accounts that have the 'Display Line Item' checkbox selected.

F.13 - Automatic Clearing

You use Transaction F.13 to post automatic clearing.

F.19 - Analyze GR/IR Account and Accrual

F. 19 analyzes the GR/IR clearing account and posts adjustment entries for outstanding amounts to adjustment accounts. It makes the offsetting entry to the account for goods delivered but not invoiced or to the account for goods invoiced but not delivered.

FS10N - G/L Account Balance Display

This report lets you view the totals of a single or range of G/L accounts. The totals are by month to give you an overview of how the account has changed over time.

You access this report with Transaction FS10N.

Goods Receipt

It is a goods movement used to post goods received from external vendors or in-plant production. All goods receipts increase stock in the warehouse.

GR/IR Account Maintenance

Transaction MR11 helps you correct the balance on the GR/IR, which is caused by a difference in quantity (not price) between the invoice and the goods receipt. It should only be used when no more invoices or goods receipts are expected or can be posted.

Profit Center

A profit center receives postings parallel to cost centers and other master data, such as orders. Profit center accounting is integrated with the Universal Journal with S/4HANA. You normally create profit centers based on areas in a company that generate revenue and have a responsible manager assigned.
If profit center accounting is active, you will receive a warning message if you do not specify a profit center, and all unassigned postings are made to a dummy profit center. You activate profit center accounting by configuring Transaction OKKP, which maintains the controlling area.

Purchase Order

The purchase order is a legal contract that binds the supplier to provide the materials or services and the purchaser to pay upon receipt.

Purchasing Info Record

A purchasing information record stores all the information relevant to procuring a material from a supplier. It contains the Purchase Price field, which the standard cost
estimate searches when determining the purchase price.

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 Price

If price control is set at standard (S), the standard price in the Costing 2 view determines the inventory valuation price. The standard price is updated when a standard cost estimate is released. You normally value manufactured goods at the standard price.

Statistical Key Figure

Statistical key figures define values describing cost centers, profit centers, and overhead orders such as the 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 planned and actual statistical key figures.

Subcontracting

You supply parts to an external supplier who manufactures the complete assembly. The supplier has previously provided a quotation, which is entered in a purchasing
info record with a category of subcontracting.

Activity Type

An activity type identifies activities provided by a cost center to manufacturing orders. The secondary cost element associated with an activity type identifies the activity costs on cost center and detailed reports

Allocation Structure

An allocation structure allocates the costs incurred by a sender to specific cost elements or cost element groups, and it is used for settlement and assessment purposes. An assignment maps a source cost element group to a settlement general ledger account.

Alternative Hierarchy

While there can only be one cost center standard hierarchy, you can create as many alternative hierarchies as you like. You create an alternative hierarchy by creating cost center groups

Automatic Account Assignment

Automatic account assignment enables you to specify a default cost center for each cost element within a plant using Transaction OKB9.

Availability control

Availability control enables you to actively manage costs by issuing warnings and error messages when costs are incurred.

Bill of Material (BOM)

A bill of material (BOM) is a structured hierarchy of components necessary to build an assembly. BOMs, together with purchasing info records, allow cost estimates to calculate the material costs of assemblies.

Controlling Area Currency

You use the controlling area currency for cost accounting. You specify the controlling area currency when defining it in customizing for Controlling. You can assign multiple company codes with different currencies to a controlling area.

Cost Center

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

Cost Component

A cost component identifies costs of similar types, such as material, labor, and overhead, by grouping cost elements into the cost component structure.

Cost Component Group

Cost component groups allow you to display cost components in standard reports. In the most straightforward implementation, you create a cost component group for each component and assign each group to a corresponding cost component. You assign cost component groups as columns in cost estimate list reports and costed multilevel BOMs.

Cost Component Split

The cost component split refers to the combination of cost components that comprise the total cost of a material. For example, suppose you need to view three cost components— material, labor, and overhead —for your reporting requirements. In that case, the combination of these three cost components represents the split of these cost components.

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.

Cost Component View

Each cost component is assigned to a cost component view. When you display a cost estimate, you can choose a cost component view, which filters the cost components displayed in the cost estimate.

Cost Element

Cost elements are included in a general ledger account. Primary cost elements identify external costs, while secondary cost elements identify costs allocated within control, such as activity allocations from cost centers to manufacturing orders.

Cost Estimate

A cost estimate calculates the plan cost to manufacture a product or purchase a component. It determines material costs by multiplying BOM quantities by the standard price, labor costs by multiplying operation standard quantities by plan activity price, and overhead by costing sheet configuration.

Costed Multilevel BOM

A costed multilevel BOM is a hierarchical overview of the values of all items of a costed material according to the materials costed quantity structure (BOM and routing). You display a costed multilevel Bill of Materials (BOM) on the left side of the cost estimate screen. You can also view a costed multilevel BOM separately with Transaction CK86_99.

Costing BOM

Costing BOMs are assigned a BOM usage of costing and are usually copied from BOMs with a production usage. You can adjust the costing BOMs to differ from the production BOMs if necessary. With system-supplied settings, standard cost estimates search for costing BOMs before production BOMs.

Costing Lot Size

The costing lot size should be close to actual purchase or production quantities to reduce lot size variance. Unfavorable variances may result if you create a production order for less than the costing lot size. You need setup time to prepare equipment and machinery for 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. This applies to externally procured items because vendors typically quote higher unit prices for smaller amounts.

Costing Run

A costing run is a collective processing of cost estimates, which you maintain with Transaction CK40N.

Costing Sheet

A costing sheet summarizes the rules for allocating overhead from cost centers for cost estimates, product cost collectors, and manufacturing orders. The components of a costing sheet include the calculation base (a group of cost elements), the overhead rate (a percentage rate applied to the base), and the credit key (the cost center receiving credit).

Costing Type

The costing type determines if the cost estimate can update the standard price.

Costing Variant

The costing variant contains information on how a cost estimate calculates the standard price. For example, it determines whether the purchasing information record price is used for purchased materials or an estimated price is manually entered in the Planned Price 1 field of the Costing 2 view.

Currency Type

The currency type identifies the role of the currency, such as whether it is local or global.

Demand Management

Demand management involves planning the quantities and dates of assemblies and defining the strategy for designing, producing, or procuring a finished product.

Dependent Requirements

Dependent requirements are caused by higher-level dependent and independent requirements when running MRP. Independent requirements, created by sales orders or manually planned independent requirement entries in demand management, determine lower-level dependent material requirements.

Detailed Reports

Detailed reports display cost element details of manufacturing orders and product cost collectors. During variance analysis, you can drill down on cost elements to display line-item reports.

Distribution Rule

You maintain distribution rules in settlement rules, as well as in manufacturing orders and product cost collectors.

Enhancement Package

A collection of new and improved business functions for SAP Business Suite and SAP ERP.  These optional enhancement packages can be configured in a wholly modular fashion by activating only the latest features and functionalities customers want.

Event-Based Processing

As of SAP S/4HANA release 2022, event-based processing is available, where goods movements and confirmations represent events that trigger the calculation of overhead according to the costing sheet. Then, depending on the order's status, this triggers either the posting of a journal entry for the work in process (WIP) or the cancellation of any existing WIP and the calculation of production variances.

External Processing

External processing of a manufacturing order operation is performed by an external vendor. This is distinct from subcontracting, which involves sending material parts to an external vendor who manufactures the complete assembly via a purchase order.

Goods Issue

A goods issue is the movement (removal) of goods or materials from inventory to manufacturing or a customer. When goods are issued, the warehouse stock number is reduced.

GR/IR

GR/IR is the SAP process for executing the three-way match—purchase order, Material Receipt, and vendor invoice. You use a clearing account to record the offset of the Goods Receipt (GR) and Invoice Receipt (IR) postings. As soon as they are completely processed, the postings are added to the cleaning account balance.

Internal Order

An internal order monitors an organization's costs and revenue 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.

Long-Term Planning

Long-term planning enables you to develop medium—to long-term production plans and simulate future production requirements using long-term MRP. You can also determine future purchasing requirements for vendor RFQs, update purchasing information records, and transfer planned activity requirements to cost center accounting.

Margin Analysis

Margin Analysis is the refined version of Account-based COPA. The Universal Journal combines financial and managerial accounting, recording all dimensions, including custom fields. Margin Analysis provides consistent financial information without requiring reconciliation and a comprehensive financial audit trail. All innovations developed for the Universal Journal are immediately available within Margin Analysis. A consistent approach ensures the common usage of ledgers, currencies, valuations, predictions, and simulations and their availability in planning and reporting.

Master Data

Master data is information that stays relatively constant over long periods. For example, purchasing information records typically contain vendor information, such as a business name, which remains relatively unchanged.

Material Master

A material master contains all the information required to manage a material. Information is stored in views, each corresponding to a department or area of business responsibility. Views conveniently group information for users in different departments, such as sales and purchasing.

Material Requirements Planning (MRP)

MRP ensures material availability by monitoring stock levels and generating planned orders for Purchasing and Production.

PA Transfer Structure

A PA Transfer Structure allows you to assign costs and revenues from other functionalities to value and quantity fields in profitability analysis.

Process Order

A process order is a type of manufacturing order used in process industries. A master recipe and materials list are copied from the master data to the order. A process order contains operations that are divided into phases. A phase is a self-contained work step that defines the details of one part of the production process using a primary resource.
In process manufacturing, only phases are costed, not operations. A phase is assigned to a subordinate operation and contains standard activity values used to determine dates, capacity requirements, and costs.

Procurement Alternative

A procurement alternative represents one of several methods for 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 a single-level procurement, whereas production involves multilevel procurement.

Production Order

For discrete manufacturing, a production order is used. A BOM and routing are copied from the master data to the order. The routing supplies a sequence of operations describing how to carry out work steps.
An operation refers to a work center where it is to be performed. It 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 Cost Collector

A product cost collector collects target and actual costs during the manufacture of an assembly. Product cost collectors are necessary for repetitive manufacturing and optional for order-related manufacturing.

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 set up and run.

Production Variance

Production variance represents the difference between the net actual costs debited to the order and the target costs based on the preliminary cost estimate and the quantity delivered to inventory. You calculate production variance with target cost version 1. Production variances are provided for informational purposes only and are irrelevant to settlement.

Production Version

A production version determines which alternative Bill of Materials (BOM) is used, along with which task list or master recipe, to produce a material or create a master production schedule. You can have multiple production versions with varying validity periods and lot-size ranges for one material.

Purchasing Info Record

A purchasing information record stores all the information relevant to procuring a material from a supplier. It contains the purchase price field, which the standard cost estimate uses to determine the purchase price.

Purchase Price Variance

When raw materials are valued at the standard price, a purchase price variance will be posted during goods receipt if the goods receipt or invoice price differs from the material standard price.

Profit Center

A profit center receives postings parallel to cost centers and other master data, such as orders. Profit Center Accounting (PCA) is a separate ledger that enables reporting from a profit center point of view. You normally create profit centers based on areas in a company that generate revenue and have a responsible manager assigned.

Invoice Receipt

You enter a vendor invoice in SAP with Transaction MIRO or via menu path

Logistics - Materials Management - Logistic Invoice Verification - Document Entry - Enter Invoice

Material Ledger Drilldown Reporting

You access ML drilldown reporting with Transaction KKML0 via the following menu path:

Controlling - Product Cost Controlling - Actual Costing/Material Ledger - Material Ledger - Information System - Drilldown Reporting - Run Drilldown Report

CKM3N - Material Price Analysis

Transaction CKM3N Material Price analysis report / Price History View report CKM3N/CKM3 is used to analyse the price consumed for a material in a plant along with overhead.

MB5S - List of GR/IR Balances

MB5S displays any difference between GR and IR quantities & their values.

ME23N - Display PO History

You use ME23N to display information about an existing purchase order to see whether the vendor invoice has been received and/or paid.

MR11SHOW - Display/Reverse MR11 document

MR11 documents can be reversed using MR11_SHOW or by clicking on Account Maintenance, which documents the PO history. Be cautious if more than one PO has been corrected in an MR11 document, as it may reverse the entire document.

Profit Center

A profit center receives postings parallel to cost centers and other master data, such as orders. Profit center accounting is integrated into the Universal Journal with S/4HANA. Profit centers are usually created based on areas in a company that generate revenue and have a responsible manager assigned.
If profit center accounting is active, you will receive a warning message if you do not specify a profit center, and all unassigned postings are made to a dummy profit center. You activate profit center accounting by configuring Transaction OKKP, which maintains the controlling area.

Purchase Order

A purchase order is a legal contract that binds the supplier to provide the materials or services and the purchaser to pay upon receipt.

Unit Costing

Unit costing is a method that does not typically use BOMs or Routings when developing new products. You create a preliminary structure of materials and activities in a view similar to a spreadsheet layout.

Valuation Class

The valuation class in the Costing 2 view determines which general ledger accounts are updated due to inventory movement or settlement.