Table of Contents

Table of Contents
Introduction 7

1 Introduction to product cost planning 11

1.1 Purpose of product cost planning 11
1.2 Product life cycle 13
1.3 Introduction to the cost component split 16
1.4 Introduction to costing variants 32

2 Cost estimates without reference to materials 73

2.1 Purpose of cost estimates without reference to materials 73
2.2 Base planning objects 73
2.3 Easy Cost Planning for cost estimation 74
2.4 Unit costing 83

3 Cost estimates without quantity structure 93

3.1 Organizational structures for cost estimates 93
3.2 Single-level cost estimates 95
3.3 Multilevel cost estimates 96

4 Cost estimates with quantity structure 107

4.1 Costing master data 107
4.2 Creating a cost estimate with quantity structure 107
4.3 General material settings affecting costing 138

5 Raw material cost estimates 147

5.1 Purchased materials 147
5.2 Purchased material cost estimate 148

6 Costing manufactured materials 175

6.1 Manufactured materials 175
6.2 Bills of materials 175

5
Table of Contents

6.3 Routings and recipes 186

6.4 Production versions 210

7 Updating the material master 213

7.1 Updating standard prices 213
7.2 Updating other prices 224

A The Author 238

B Index 239

C Disclaimer 244

6
2 Cost estimates without reference to
materials
Early in the product life cycle, little is known about the costs of a
material or even the specific components and operations required
to manufacture that material. Costs can be manually specified in unit
cost estimates to represent the costs in these early stages of product
development. Using special material types, non-productive materials
can be defined to represent reusable manufacturing processes and
component lists for developing costs.

2.1 Purpose of cost estimates without reference to materials

Using the term “cost estimates without reference to materials” is a bit mis-
leading. What is really intended is the ability to create a cost estimate
without having to create a production material to go with it. The research
phase of the product life cycle is a time of experimentation, and there is no
compelling reason at this point to begin to create materials that will never
make it into production. The desire at this stage is the ability to estimate
the costs of creating a type of product. If the result is not deemed to be cost
effective, then there is no need to move forward with creating a material.
SAP provides alternative methods for generating cost estimates without
requiring a production material.

2.2 Base planning objects

Prior to the release of S/4HANA, a special method for generating costs
was included; it was known as “base planning objects”. This feature al-
lowed for the assignment of costs without specifically referencing a mate-
rial. Base planning objects could reference costs from other base plan-
ning objects as well as materials, activity types, and other cost objects.
The same processes used for creating cost estimates for base planning
objects are also used when creating unit cost estimates. The only differ-
ence is that unit cost estimates are assigned to specific materials. Seeing
that the base planning object functionality is essentially duplicated with
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Cost estimates without reference to materials

unit cost estimates, base planning objects found themselves on the sim-
plification list when S/4HANA was introduced, and the functionality was
made obsolete (refer to SAP Note 23492942). Some of the functionality
has been temporarily restored in S/4HANA (see SAP Note 21336443), but
I personally believe that this was done to support those customers con-
verting to S/4HANA who were unable to switch over to unit costing prior to
the conversion. The intent is that base planning objects will no longer be
supported and should no longer be used. Other methodologies exist which
virtually duplicate the older functionality.

2.3 Easy Cost Planning for cost estimation

SAP Note 2349294 suggests two alternatives for managing costing simu-
lations. One is to use Easy Cost Planning transaction CKECP to develop
ad hoc costs. Easy Cost Planning is a very flexible tool, used to create
cost estimates for planning costs for certain CO objects and also for gen-
erating ad hoc costs used in “what if” analyses. A full examination of Easy
Cost Planning and its uses is beyond the scope of this book. One of the
main features of this module is the ability to develop a costing model to
generate repeatable cost estimates. The costing model uses templates to
generate costing items based on characteristics that are defined with the
model. Usually the pre-defined costing model is first selected for the cost
estimate. Then, values are assigned to the characteristics. Based on those
values and the underlying templates, the cost items are assigned to the
cost estimate. Changes and additions can be made to the resulting cost
itemization before saving. A fuller explanation of how this works is found
in the book “Practical Guide to Using SAP® CO Templates” published by
Espresso Tutorials.

2.3.1 Creating a cost estimate with CKECP

Transaction CKECP can also be used without assigning a costing model
to the cost estimate. Skip the selection of the costing model and go directly

2
SAP Note 2349294—“S4TWL—Reference and Simulation Costing”
3
SAP Note 2133644—“ Error message SFIN_FI 004: Transactions KKE1,
KKE2, KKE3 cannot be called”
74
 Cost estimates without reference to materials

to the itemization screen to create the ad hoc cost estimate. The cost es-
timate in the following example is used to determine the cost for a new
type of ink that is purple in color.

Figure 2.1: Transaction CKECP initial window

Figure 2.1 shows the initial window with the Create with Planning Form tab
opened. Enter the description of the item to be costed. Skip the selection
of the planning form and click on the Addnl Data tab. The required costing
parameters are shown in Figure 2.2.

Figure 2.2: Transaction CKECP costing parameters

Because a cost estimate with itemization is being created, a costing vari-

ant is required. Only costing variants using costing type 26 (Ad Hoc Cost
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Cost estimates without reference to materials

Estimate) can be used for creating ad hoc cost estimates with Easy Cost
Planning. Either company code or plant must be entered. Company code
is necessary to determine the chart of accounts to use. If plant is entered
instead of company code, the company code is derived from the plant def-
inition. A profit center can be assigned, if so desired, but it is not necessary
in this case. The dates come from the date control definition assigned to
the costing variant. Click on to create a new cost estimate. To
make changes to an existing estimate, click on .

Figure 2.3: Initial cost estimate window

To bring up the itemization window, click on the but-

ton (see Figure 2.3). The Choose Planning Form button should be ignored
because this type of cost estimate does not use the planning form to enter
characteristics to drive the cost estimate. Click on the button (show/
hide structure) to hide the Costing Structure window at the left so that
more of the itemization view can be seen.

Figure 2.4: Blank itemization window

The initial itemization window is shown in Figure 2.4. When adding a line,
first enter the item ID for the specific line. The following item types are
available:

ff B—base planning object. Requires base planning object ID, quan-

tity, and cost element if not already assigned to the base planning
object itself. Base planning objects are not intended to be used in
S/4HANA.

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 Cost estimates without reference to materials

ff E—internal activity. Requires cost center, activity type, quantity of

activity, and unit of measure. The cost element comes from the
definition of the activity type.
ff F—external activity (external processing of work in process). Re-
quires purchasing information record ID, plant, purchasing organi-
zation, quantity, and cost element.
ff L—subcontracting. Requires purchasing information record ID,
plant, purchasing organization, quantity, and cost element. The
cost element is derived from the account assignment configuration
for subcontracting (transaction event key FRL—External Activity).
ff M—material. Requires material number, plant, quantity, and unit
of measure. Cost element is derived from the automatic account
assignment configuration for transaction event key GBB (inventory
posting offset), modifier VBR (consumption).
ff N—external service. Requires service ID, plant, purchasing organ-
ization, quantity, and unit of measure. Cost element is derived from
the valuation class assigned to the external service activity.
ff P—process (manual). Requires business process ID and quantity.
Unit of measure is derived from the business process. The cost
element is taken from the business process definition.
ff T—text item. Requires a description. This is not included in the
cost.
ff V—variable item. Requires quantity, price, price unit, and cost
element. Text describing the cost should also be entered under
Description.

There are several buttons which can be used to manipulate the itemization
and display details about the itemization:

Cost estimate log—clicking this button displays the message log for
the specific costing node represented by the itemization window.

Item information—select an item line and click on this button to get

detailed information about the specific object.

Confirm cost estimate—after all changes have been made to

the cost estimate, click on this button to save those changes.

Fill column—select the item lines. Then, select the cell to copy by
77
 Index

B Index
A Cost component group 21
Cost component split 16, 190
Activity type 19
primary 19
allocation 190
Cost component structure 22
cost center planning 190
additive costs 30
price calculation 23
assign to CO version 24
unit of measure 190
COGM cost component split 23
cost component 25
B organizational assignment 31
Base planning objects 73, 102 primary cost component split 23
BOM 93, 175 transfer structure 30
alternative 182 Cost component view 19, 88
application 177 cost of goods manufactured 114,
base quantity 182 129, 214
component 175, 182 external procurement 130
fixed quantity component 182 inventory (commercial) 229, 232
header 181 inventory (tax-based) 229, 232
lot size range 182 inventory valuation 114, 214
pricing factors 183 Cost element 17
relevancy to costing 183 Cost estimate
search strategy 178 activity types 192
selection ID 178 activity type unit of measure 206
status 179, 182 change currency 124
usage 176, 182 cost component groups 126
Bulk materials 142 cost component list 129
cost component split levels 130
cost component views 21, 113
C costing data selection 96, 108
Cost component 17 costing data tab 118
control settings 26 costing lot size 108
cost component view assignment costing master data 134
28
costing overview 112
cost element assignment 29
costing structure 112, 123
group costing 29
costing variant 108
groups 28
costing version 108
origin group assignment 29

239
Index

costs based on costing lot size Costing variant 33

116 additive cost settings 63
costs based on price unit 116 control tab 34
costs based on quantities from cost component split currency 68
multilevel BOM 116 cost component structure 65
costs based on user entry 116 costing version settings 66
costs for view 115 cross company costing 69
costs tab 113 date control 110
custom cost reports 133 error logging 70
dates selection 98, 110 error management 71
dates tab 119 quantity structure settings 61
definition 32 transfer control 109
delivery costs 163 update settings 64
detail list 112, 127
effective price with no fixed con-
ditions 161 D
history tab 122 Date control 34, 51
itemization 127
message log 118, 132 E
purchasing delivery costs 162
Easy Cost Planning 74
purchasing effective cost 160
ad hoc cost estimate 75
purchasing gross price 158
costing type 82
purchasing net price 159
costing variant 81
quantity structure selection 111,
valuation variant 82
212
quantity structure tab 119
saving 136 F
status 118 Field key 199
transfer control 109 Fixed cost 18
valuation tab 121, 149 Formula parameters
vendor selection 165 general formula constant 202
without quantity structure 95 general operation 194
with quantity structure 175 PRT constant 202
Costing lot size 79, 88 standard value 196
Costing type 34, 35 user-defined fields 199
overhead 40 value from PRT allocation 202
partner cost component split 41 work center constant 195
price update 35, 225, 231 Formulas 202
save parameters 39 divide-by-zero 202
valuation view 39

240
 Index

G current standard cost estimate

214
Group valuation 39
Do Not Cost 143
future planned price 220
I future standard cost estimate
Inventory cost estimates 224 214
Item type Planned Price 1 149
A—co-product 128 planned price fields 235
B—base planning object 76, 128 plant-specific status 139
delivery costs 163 previous planned price 223
E—internal activity 77, 80, 86, previous standard cost estimate
128 214
F—external activity 77, 128 procurement type 149
G—overhead allocation 128 production version maintenance
I—delivery costs 128, 149 210
L—subcontracting 77, 128 selection method 179
M—material 77, 80, 86, 87, 128 slection method 210
N—external service 77, 129 special procurement key 149
O—arithmetical operation 129 special procurement key for
P—business process (manual) costing 149
77, 129 standard price 223
T—text 77, 85 tax price fields 234
V—variable item 77, 129 With Qty Structure 94, 98, 145
X—business process (automatic) Material status
129 configuration 139
Moving average cost 12
L
Late price change 221 O
Legal valuation 39 Origin group 18, 163
Overhead group 121
Overhead key 121
M
Marking 213, 216
Marking allowance 217 P
Material master Parallel processing 218
bulk material 142 Price update
commercial price fields 234 commercial inventory 36, 224
Costing Lot Size 86 determination of lowest value
cross-plant status 138 226, 232
current planned price 223 other 37, 231

241
Index

standard price 36 Release cost estimate 94

tax-based inventory 36, 224 Releasing 213, 220
Production version 179, 210 Resource 190
BOM assignment 211 Routing 93, 186
check validity 211 costing relevancy 206
locking 211 header 186
lot size 211 rate routing 186
task list assignment 211 standard values 198
validity 211 sub-operation 209
Product life cycle 13 user-defined fields 201
Profit center valuation 39
Purchasing S
calculation schema 154
Standard cost 12
conditions 147, 155, 157
fixed condition 160
pricing procedure 154 T
purchasing information record Task list 186
157 control key for operation 208
scales 170 costing relevancy 206
header 186
Q lot size 189
operation field key 199
Quantity structure 93
operation standard values 195
Quantity structure control 34, 53
BOM 54, 180 status 188
plant specific 180 type 2 188
rounding 184 type N 188
routing 54, 188 type R 188
type S 188
usage 188
R Template 121
Recipe 93, 186 Transfer control 34, 55
costing relevancy 206
header 186
phase 209
U
standard values 198 Unit costing 83
costing structure 96
user-defined fields 201
explode material cost estimate
Reference variant 34, 58
86
additive costs 61
multilevel 96
revaluation settings 60
single-level 95
transfer control 59
User-defined fields 200
242
 Index

V
Valuation variant 34, 42
activity type prices 44
business process prices 44
CO version 45
delivery costs 162
external processing 46
material delivery costs 43
material purchasing strategies
43
material valuation strategy 43,
121, 150
overhead 47, 122
plant specific settings 50
price factors 48
purchasing sub-strategy 154
subcontracting 45
Variable cost 18

W
Work center 190
costing definition 190
costing tab dates 204
default values 198
formula constants 195
formula parameters 193
formulas 193, 204
standard value key 197
Worklists 103
containers 103

243