Costing Run

[Former Member]

hi

Can someone pls share a document or explain the flow of costing of a material? When n why cost estimate is done, marking and release of the const estimate and when does the changed or released cost estimate updated to the material master of the material?

thanks in advance

deepak

[former_member184655 · Accepted solution]

Dear Deepak,

1.Standard cost estimate for a product is one of the important process that's to be carried out before production confirmation either in

Discrete or REM scenario.

2.Standard cost estimate will be done once after the master data say material master,BOM,routing is ready and finalised.

3.For all the Raw materials cost are generally entered as Planned price along with the valid from date in Costing 2 view,and price

control indicator is "V".Origin group has to be given to all the Raw materials in costing 1 view.

4..For HALB Materials Price control indcator will be S for Inhouse manufactured & V for externally processed materials (Sub-

Contracted Items) respectively.Also assign Overhead group for all Inhouse manufactured items if a costing sheet is maintained for

overheads.

5.No need to enter any value(price) for the materials having S as the price indicator and for Sub-contracted itesm that's F30 also no

need to enter any cost in the material master.

6..Activity cost is the cost incurred in performing individual operation.This cost is captured via the work center which we mention in

each operation in the routing of that product.A Cost centre and an appropriate activity type is assigned in the work centre.

5.Proper Rates should be assigned for the combination of Activity type and Cost centre.

6.Overhead cost is the indirect cost that we capture according to the customer's requirement.

7.If certain items for certain products alone should not be considered for costing means,then we can achieve this using

costing relevancy indicator in the BOM and for the activity(operation's mentioned in routing) which should not be considered for costing

also can be mapped by removing the costing relevancy indicator in routing.

8..Cost estimate Related T codes are CK40N,CK11N,CK24.

9.UseCK40N always,so that you can do the costing ,mark the price and release the same.Generally Cost Rollup will be taken for

Finished product so that the sytem automatically calculates for the Semi-Finsihed products standard cost based on the raw materials

cost & the routing cost..

10.IF you are using CK11N,then only costing will be done,but for marking and release you have to use CK24.

11.After the steps selection,structure explosion,costing,then after marking check in the material master of that finished product ,the

calculated cost will get stamped in costing view,under Future column,planned price.After release of the same,this cost will be seen

under current planned price.

I hope the above steps will help you to understand about the importance of costing and procedure of doing it.

Regards

Mangalraj.S

[Former Member · Accepted solution]

Hi Mangalraj,

Thank you for the effort. This answered a good part of my query. but i'm still unable to get what is a Cost Estimate why it has to be performed and how is it different from the costing run?what significance do Marking and Release in CK24 have with respect to the Costing Run?

Thanks and Regards

Deepak Prasanna S

[former_member184655 · Accepted solution]

Dear Deepak,

1.Costing Run or Create Material Cost Estimate with quantity structure are same.

2.If the costing run is carried out using CK40n,it first does the job of (create material Cost estimate with quantity structure) cost

calculation,nothing but the cost required to produce a product and then the same value is marked for the material in the material

master and then released.

3.What's the cost required to produce a product? = BOM Cost (component's Cost) + Routing (activity or operation) cost + overhead

cost (if an overhead group is assigned to the Finished product for which you are doing a costing run).

4.In costing Run there are total 5 steps like 1.selection (we select the product for which we want to do costing)

2.Structure Explosion.

3.Costing(the system sums up the materials cost and operation cot).

-

---

> Analysis is only for checking and report purpose

4.Marking

5.Release.

5.IF carryout the costing using CK11N,it only does the first 3 steps of CK40N,so for marking & Release T code CK24 is used.

6.Instead of using CK11N & then CK24,using CK40N will be much helpful and easy.

This costing run will run once after the master data is ready,If any major changes takes place in the BOM or routing ,then only again a

costing run will be made for the same product,till that period the same price will be considered as the standard price.

I hope your doubts will be cleared by the above inputs.

Regards

Mangalraj.S

[former_member698542 · Accepted solution]

Hi Deepak,

When we do Marking the standard price for the current period will be updated and once you release it in CK24 the Future Standard Price also get Updated.

You can view this in Costing 2 View in Material Master .

Thanks and regards

Murugesan

[Former Member]

Hi,

The question for your answer, your FICO guy will be best person to answer. Coming to point to understand what is material price is very important, in SAP the material price concept is divided into two i.e.

a) Standard Price(S.P) and b) Moving Avg price(M.A.P).

During the Implementation, for all the material in a plant, it has to be discussed with the client, how they are pricing material in their legacy system and how their balance sheet is prepared, whether they are following S.P or M.A.P prices.

If you maintain S.P for all material any variance in the production cost will hit the price diff account in the balance sheet. If this is ok by the client, it can be followed.

If you maintain MAP for all the material, any variance will hit the material price directly and reflect in the Balance sheet in the stock inventory account.

SAP suggest to go with SP only for all practical purpose, provided your BOM and Routings and Activity prices are manitained as accurately as possible.

Cost Estimate for the material can be run every month beginning or quarterly(depending on BOM and Routings and Activity prices are manitained as accurately as possible.) As our friend suggested the details of Std Cost estimate in sufficient to understand.

Navin.

[Former Member]

Hi Deepak

Your Question:- what is a Cost Estimate why it has to be performed

ANS

Cost estimate has to be done for any company. It will calculate final saleble FERT cost. So that management can fix selling price keeping the profit margin to make profit for the company. Final FERT cost is calculated by using BOM and Routing. The material used at each level is taken from BOM and the Activity hrs is taken from Routing. So that everything can be converted in to cost while calculating the final cost of the FERT.

Q:- How is it different from the costing run?

ANS

Costing run is the cost calculated per order, It is the Target coat and actual cost of the product making.

Q:- what significance do Marking and Release in CK24 have with respect to the Costing Run?

ANS

While doing marking the future price for the period is updated in costing view of the material master.

While doing release the future price for the period is updated in Accounting view of the material master.

So that management can have an idea of the correct material price.

Hope this will clear youir doubt.

Regards

J . Saravan