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Former Member

Sale order costing process : Help required

Hello All,

Belatted Happy New Year 2011 to all.

I have a question related to Sale Order Costing. It goes like this,

My client is into Pipe coating business who receives the pipe from the customers, coats it as per there requirements and despatches it thereon. There is no concept of FG here as its only the service he is doing on it and also when he receives the pipe there is no raw material cost on it. Raw materials for him would be chemicals etc which he uses to coat the pipe.

And also this demands variant configuration from SD and PP angel.

As this scenario is customer specific, it demands Sale Order based costing(Sale order cost estimate).

My doubt is, how the sale order costing process goes with.

In general scenarios, Make to stock, we use production order based costing where standard cost estimate is calculated for planned cost and actuals are incurred on PO settling the variance to COPA

Similarly how the costing goes with if Sale order cost estimate is used. What i think is, here instead of Standard cost estimate for plan, we will go with Sale order cost estimate at sale order level, and incur actual cost at production order and settle the cost of Production order to Sale order. Correct me if i am wrong, and request you ppl there to explain me the process of costing in the scenario said above.

apart from that, my client wants the flexibility to change the cost estimate at quotation level.

Please suggest me with solution explaining the process of costing here.

Thanks in advance,

Ravi Kumar

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1 Answer

  • Best Answer
    Jan 07, 2011 at 02:02 PM

    Hi Ravi

    Your understanding of the scenario is very much right...

    In your case, you need to have sales order as cost object...


    Your stock would be non valuated stock, because the FG is not your stock.. You are just doing a service

    Based on the characteristics chosen in the Sales orders, system would determine the Sales order BOM

    Based on sales order BOM, Sales order cost estimate would be calculated....

    You would receive the Customer pipe in your stock against the sales order... It would be a non valuated GR... You can track the Qty only

    Sales order would trigger a production order... The prod order can have its planned cost, which is only for information sake

    The Customer Pipe, Chemicals would be issued to prod order to coat the pipe... And also Labor/machine hrs may be confirmed

    There after your production order would be settled on Sales order

    Then you would do PGI (Post Goods Isue).. This will not trigger any accounting doc

    Then you do billing... The sales revenue would be posted on the sales order

    Then you settle the sales order to COPA.. This will close the cycle


    The IMG Settings required would be as below

    1. You would use account assignment category (AAC) E

    2. Create a Requirement class with

    a. AAC = E.... (Means sales order is CO Object)

    b. Valuation Indicator = BLANK (Means Non Valuated Stock)

    c. Costing ID/Costing Method = As per your choice to calculate the Sales order cost estimate

    3. Assign this req class to Requirement Type

    4. Give this req type to your PP/SD team.. They would assign it to Strategy group / Item Category to determine it in the sales order


    Ajay M

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    • Former Member Ajay Maheshwari SAP Trainer

      Hello Sir,

      Thanks for the quick reply, and for the useful info provided. I will close the issue.


      Ravi Kumar