What is SAP Product Costing

What is SAP Product CostingSAP product costing will enable you to get expenses apportioned to your finished goods manufactured or services that you render. By using PC and other sub modules of controlling you can find profitability of different manufactured items and services.

Using spread sheets or other tolls to derive expenses of a finished goods is questionable because of its authenticity and correctness in calculation. But SAP PC will enable you to perform all tasks within this module with greater details. Because of its security and other relevant uses you can trust on the data that it delivers. 

Product costing is basically done in three steps;

  1. Integrated planning
  2. PC planning
  3. Cost Object controlling

In integrated planning you do planning for future fiscal years. In this you create sales plan, production plan. Followings can be considered as part of integrated planning part of product costing;

  • Budget preparation
  • Sales and operational planning
  • Material Requirement Planning
  • CC Planning
  • CE Planning
  • Activity Price Planning
  • Calculate Standard costs

In product cost planning you set prices for different materials and services you render. Determination of purchase price of externally procured items and manufactured items are done in this part of product costing. Estimations and various other configurations are also done here. Followings are part of PC planning phase of this module;

  • You create master data for cost center, elements, material master, activity type, BOM, work center and statistical key figures etc.
  • Prepare cost sheet, calculation base, overhead rates, components etc
  • Valuation of plant and valuation of materials
  • Standard cost estimate, costing run

Cost object controlling part will enable you to determine planned expensess. Actual expenses are posted by using this part of product costing. After posting actual expenses you will be able to do variance analysis based on the configuration you have done for your product costing. In the cost object controlling part you do followings;

  • Preliminary costing
  • Simultaneous costing
  • WIP calculation
  • Variance calculation
  • Settlement of variance

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