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4 - Basics of Standard Costing - Understanding The Cost Component Structure-Part 3 - SAP Blogs

This document explains the Cost Component Structure (CCS) in SAP standard costing. The CCS groups material costs according to cost elements like material, labor, overhead. It defines which costs are fixed or variable and relevant for inventory valuation. The CCS can create main and auxiliary cost splits for different reporting needs. Settings in the CCS determine how cost estimates and actual costs are displayed in reports with separate lines for each defined cost element.

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112 views6 pages

4 - Basics of Standard Costing - Understanding The Cost Component Structure-Part 3 - SAP Blogs

This document explains the Cost Component Structure (CCS) in SAP standard costing. The CCS groups material costs according to cost elements like material, labor, overhead. It defines which costs are fixed or variable and relevant for inventory valuation. The CCS can create main and auxiliary cost splits for different reporting needs. Settings in the CCS determine how cost estimates and actual costs are displayed in reports with separate lines for each defined cost element.

Uploaded by

Abdul Basit Sheikh
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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8/24/2018 Basics of Standard Costing – Understanding the Cost Component Structure-Part 3 | SAP Blogs

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Basics of Standard Costing – Understanding


the Cost Component Structure-Part 3
November 25, 2013 | 18,512 Views |

Hrusikesh Dalai
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FIN Controlling
FIN (Finance) | MAN Production Planning (PP) | SAP Business Process Management | SAP
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8/24/2018 Basics of Standard Costing – Understanding the Cost Component Structure-Part 3 | SAP Blogs

This document is in continuation of my second document


http://scn.sap.com/docs/DOC-49167 –Basics of SAP Standard Cost
estimate- understanding costing variant-Part 2 and 3rd in the series

This document explains the Cost Component Structure (CCS) and


components assigned to CCS.  Explaining various settings in background
as previous part.

Cost Component Structure (CCS)

The cost component structure determines how the results of material


costing are updated. The cost component structure groups the costs for
each material according to cost component (such as material costs,
internal activities, external activities, and overhead). If the material is used
in the production of another material, the cost component split (which
breaks down the costs according to material costs, internal activities,
external activities, overhead, and so forth) remains in the system when the
costs are rolled up.

In the cost component split, you also de ne the following for material
costing:

Which part of the costs are fixed costs


Which costs are costs of goods manufactured and what are sales and
administration costs
Which costs are relevant for stock valuation, commercial inventory
valuation and tax inventory valuation
When the cost component structure is assigned to the organizational
units, you can specify that two cost component splits are created:

Main cost component split


This is the principal cost component split, meaning that it is used in the
standard cost estimate, which can be used to update the material master.
The main cost component split can be a cost component split for cost of
goods manufactured or a primary cost component split.

Auxiliary cost component split


this can exist in addition to the main cost component split, and is not used
in the standard cost estimate. It can be used for analysis purposes, in that
it can be displayed with the cost estimate and passed on to Pro tability
Analysis.

https://blogs.sap.com/2013/11/25/basics-of-standard-costing-understanding-the-cost-component-structure-part-3/ 2/23
8/24/2018 Basics of Standard Costing – Understanding the Cost Component Structure-Part 3 | SAP Blogs

Step 1 – T Code OKTZ

Screenshot 1

I have created Z1 and Z2 CCS for our analysis purpose. You can use two
cost comp structure for reporting purpose and di erent reporting need.

Material cost estimates are created in the Product Cost Planning


component. Sales order cost estimates and order BOM cost estimates are
created in Product Cost by Sales Order component. The cost components
separate the results of a cost estimate into raw materials, material
overhead, external activities, setup costs, machine costs, labor costs,
production costs, and other costs.

Display the cost components in the cost estimate

  T code ck13- view of Cost estimate Cost element and cost component like Mat,
Labor, OH etc.

https://blogs.sap.com/2013/11/25/basics-of-standard-costing-understanding-the-cost-component-structure-part-3/ 3/23
8/24/2018 Basics of Standard Costing – Understanding the Cost Component Structure-Part 3 | SAP Blogs

                         Screenshot 2

The above screen shows the distribution of cost as per the Cost component
structure

T-code OKTZ

In Cost Center Accounting, the cost component structure determines how


the results of the activity price calculation are updated. The cost
component structure groups the costs for each activity type of the cost
center according to cost components (such as material costs and labor
costs). If an internal activity allocation is carried out, the cost component
split (which breaks down the costs according to material, labor costs, and
so forth) is retained at cost rollup.

If the cost component split is not to be retained, you can create a switching
structure for the cost component structure for Cost Center Accounting. In
the switching structure, you specify which sender cost component goes
into which receiver cost component

See below

     Screenshot 3

From screenshot 2 you will notice there is a Column called cost element.
We get those from settings in Cost component structure setting by
assigning cost elements for respective cost component.

     Screenshot 4

Di erent Settings in Cost component Structure in see below.

Control

Cost Share- which includes Variable, Fixed and variable Cost


https://blogs.sap.com/2013/11/25/basics-of-standard-costing-understanding-the-cost-component-structure-part-3/ 4/23
8/24/2018 Basics of Standard Costing – Understanding the Cost Component Structure-Part 3 | SAP Blogs

Indicator for Roll up Cost Component

This indicator determines whether the costing results of a cost component


are rolled up into the next-highest costing level (cost roll up).

You can specify which cost components are rolled up into the next-highest
costing level according to the criteria speci c to your organization.

Example

If the sales and administration costs and the cost of goods manufactured
are to be costed simultaneously in a costing level, you can proceed as
follows:

You set this indicator for the cost components identified as the cost of goods
manufactured. These costs are rolled up into the next-highest costing level.
You do not set this indicator for the cost components identified as sales and
administration costs. These costs remain on the costing level on which they were
originally calculated.

     Screenshot 5

Also the lter criteria for itemization are important for example anything
which we wanted for statistically analysis purpose we can check not
relevant for inventory valuation.Some examples below shows based on the
settings how the result will a ect. Below screen you will see the cost
element separated by the Material, Labor and Overhead as we de ned in
CCS.

Cost estimate itemization view (T CODE-CK13n)

https://blogs.sap.com/2013/11/25/basics-of-standard-costing-understanding-the-cost-component-structure-part-3/ 5/23
8/24/2018 Basics of Standard Costing – Understanding the Cost Component Structure-Part 3 | SAP Blogs

     Screenshot 6

Target/Actual Comparison: Cumulative report (T CODE- KKO0), there is


additional con guration required in OKKN. You can build your own report
using report painter too.The cost components we de ned in CCS will ow
into these reports based on our section in Report painter.

Screenshot 7

In this document i tried to explain in a simple manner the use of cost


component structure. This is a basic and beginners understanding of cost
component structure. In my Next series of documents i will try explaining
Costing Sheet,Activity Planning,and Summary of Standard Costing and its
integration with production Planning.

Refer next document here-

https://blogs.sap.com/2013/11/25/basics-of-standard-costing-understanding-the-cost-component-structure-part-3/ 6/23

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