OzeWorld Guide

Topic 1.1 Overview Of Product Cost Planning 1

This lesson represents the goals of product cost planning and the merchandise life cycle. It identifies costing methods and clarifies how to tell apart between intangible and tangible goods. Your business wants to install the product cost planning component in the SAP ERP. Like a project member, you need to choose the functions of CO-PC-PCP (product cost planning) required by the business and when they will be required. You will need to apply these functions. What’s the amount of the expense of goods produced and the cost of goods sold?

Can we justify creation at this market price? What is my lower price limit? From a price-accounting perspective, is it cheaper to create in small or large great deal sizes? How are costs down damaged? For example, how do material costs compare to wages? How does the creation process be improved?

Which organizational unit impacts product costs the most? In which plant can the product be manufactured the cheapest? What effect do machine depreciation and energy costs have on the product (principal costs)? In the SAP ERP, materials are valuated with one price, which may be set by a standard cost estimate. In the very beginning of the product’s life routine, only rough estimations and specifications are available.

Product Cost Planning can provide initial exact cost projections. Through the product standards and design stage, costs increase when refinements are created to original specs. After transition to the prototype stage, the first constructive data can be inserted in the form of BOMs. In this phase, the necessity for integration and direct access to data in Logistics raises.

Data that’s not available in Logistics is added by the person responsible for the product cost planning. Following the products attain market maturity, the integration of get better at data for tangible goods has a substantial impact. At this stage, the complete product range is costed and exact cost shifts are supervised regularly. Improvements in the production procedure for important products should be reflected by and analyzed in Product Cost Planning.

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If you plan a fresh product for which there is no professional data in the SAP ERP, you are capable of doing the initial planning and cost projections by making a Base Planning Object using Reference and Simulation Costing. Using this method, you plan the costs for an item by hand. When the first material master data is created in the SAP ERP, you can use the Material Cost Estimate without Quantity Structure to manually plan the cost of goods produced and the expense of goods sold for the merchandise. You can use the base-object cost estimate as a guide because of this. Two methods are available for material cost estimate planning without volume structure, multi-level unit charging and single-level unit costing.

Multi-level unit costing enables one to plan cost at the assembly level without requiring production bills of material. When a cost estimate with quantity framework is created, the system uses professional data from Logistics. This method costs individual products precisely and provides various analysis options to compare various alternatives. Costing runs are used to process mass data. They are used periodically to cost the whole product spectrum.

A center point of this course is integration. Functions are introduced gradually. Consequently, the course material is not made to be used as a reference. For a comprehensive reference, refer to the SAP Library under Product Cost Planning. The methods and items circled are discussed in this course above. Materials can be produced in-house, subcontracted, or procured externally.

Data for these materials is positioned in the logistics components PP, PP-PI, and MM. This data is seen when the materials are costed. Product cost estimates can also be used for inventory comparison and valuation purposes in Cost Object Controlling. This course provides examples that illustrate the way the methods and concepts of Product Cost Planning are found in make-to-stock production. This program introduces intangible goods using the exemplary case of the bottom object costing. Similar costing methods are provided for services by means of a cost estimate without a volume structure.

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