55907058 AC530 Costing Material Ledger (1)

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AC530 Actual costing/MaterialLedger

AC530

Release 470 04/11/2006



© SAP AG 2003

AC530 Actual cost ing/Material Ledger

THE BEST-RUN BUSINESSES RUN SAP

© SAP AG 2003

AC530Actual Costing / Material Ledger

SAP R/3 Enterprise 2003/Q4

Material number 50063840



© SAP AG 2003

Copyright

Copyright 2004 SAP AG. All rights reserved.

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© SAP AG 2003

z Cost and revenue element accountingz AC505 Product Cost Planning

(recommended)

z Basic knowledge of the interrelationshipsand value flows in controlling

Course Prerequisites



© SAP AG 2001

Target Group

z Participants:

Members of the project team

SAP consultants

Partners

z Length: 3 days

Note:

The course materials are not designed for a self-study program. They are only complete when

supplemented by the instructor‘s explanations. In your materials, you have room to note down this

additional information.

It is possible, that there is not enough time in the course to perform all of the exercises. The exercises

consist of additional examples to those covered in this course. Participants can also use these exercises

after the course to consolidate what they have learned.



(C) SAP AG AC530 1-1

© SAP AG 2001

z Course Goal

z Course Objectives

z Table of Contents

z Course Overview Diagram

z Main Business Scenario

Contents:

Course Overview




© SAP AG 2001

This course will prepare you to:

z Configure and use the Actual Cost ingfunction in the Material Ledger.

z Revaluate inventories of raw materials,semifinished products, and fin ishedproducts at actual cost.

z Analyze actual costs us ing the actual cost

component split in CO-PC or CO-PA.

Course Goals




© SAP AG 2003

At the conclusion of this course, you will be

able to:z Explain the capabilities and limitations of traditional inventory

valuation methods without the material ledger.

z Understand the purpose and design of the material ledger.

z Explain how pri ce differences of materials can be included in theinventory value of products in which those materials were used.

z Explain the concepts of actual costing, periodic unit price, andactual cost component split in SAP R/3.

z Perform the postings for the period-end close in the material

ledger, including revaluation of the inventor ies with actual prices.z Understand how the material ledger is integrated with other SAP

applications, particularly MM, FI, and CO-PA.

z Use special functions such as alternative valuation run optionsand the distribution of consumption variances.

Topic Objectives




© SAP AG 2003

Unit 5 Structured ValueChains

Unit 6 Period-End Close

Unit 7 Special Functions

Unit 8 Summary

Unit 1 Course Overview

Unit 2 Fundamentals of Material Valuation

Unit 3 Design and Purpose of the Material Ledger

Unit 4 Recording BusinessTransactions

Introduction

Appendix

Course Content




© SAP AG 2003

Course Overview

AC530 Actual Costing/Material Ledger

Fundamentals of Material Valuation

Design and Purpose of the Material Ledger

Recording Business Transactions

Structured Value Chains

Period-End Close in Actual Costing

Special Functions




© SAP AG 2001

Cost Center:Label

Cost Center:Recording

Result (FI)

Cost Elements

ProductionCost Centers

Result (CO-PA)

Business Scenario

ProductionOrders

Act iv ityType

Act iv ityType

CD Label CD Blank

Demo CD

Stock Accounts

External Procur ement




© SAP AG 2001

z IDES management has decided to implementSAP's actual costing funct ion to be able tocalculate the variances of fluctuating raw materialprices and internal production for the fin ishedproducts (CD production). You want to know thetrue actual prices of your finished products andanalyze them with the actual cost componentsplit.

z You have been temporarily assigned to the projectteam to participate in the implementation andassist in making any required changes.

z Once the system is live, you wi ll be one of theprimary users of actual cost ing in the multilevelCD production process.

Main Business Scenario




© SAP AG 2001

z Overview of Material Valuation Strategieswithout the Material Ledger.

z Standard cost accounting and variances.

Contents:





© SAP AG 2001

z Explain the possib ilities and l imitations of theprice controls Standard price and Movingaverage price.

z Explain the value flow of standard costs anddifferences in the R/3 System without usingactual costing in the Material Ledger.

At the conclusion of th is un it, you will beable to:

Fundamentals of Material Valuation: Unit Objectives




© SAP AG 2003

Course OverviewCourse Overview







Special Functions




© SAP AG 2001

z To begin, you will review several basicmaterial valuation pr incip les without the useof actual costing in the Material Ledger.

z You will recapitulate the advantages anddisadvantages of the price control techniquesstandard price (S Price) and moving averageprice (V Price), as currently used in your company.

Fundamentals of Material Valuation: Business Scenario




© SAP AG 2001

Valuation Strategies without the Material Ledger

Standard price(S Price):

- Constant- Recommended for finishedand semi-finished productsand raw materials (allmaterial types)

Moving average price(V Price):

- Adjusted with every receipt- Only recommends for rawmaterials and materials procuredexternally

Price control

Material Master

The valuation of materials in the SAP system (raw materials, semi-finished products and finished products) essentially depends on the price control that is set for the respective material in the

material master.

With moving average price control (V), a new material price is calculated after every receipt.The price is an average value calculated from the total inventory value and the total quantity of

the material in stock.

If the valuation of goods movements takes place at the standard price (S), this price remains

constant for at least one period. The standard price is typically the result of a standard cost

estimate for the material.

The main difference between both valuation procedures is that the moving average price (V)represents the current delivered price, while the standard price (S) is based on planned values

and does not account for any actual prices. Differences between the planned price and the

actual prices are not assigned to the material stock in Financial Accounting, but are collected ona price difference account. With the use of the moving average price (V), the material stock in

Financial Accounting should reflect the actual prices of a material.




The differences between both of these procedures are further explained through the use of

posting examples in the following slides.




© SAP AG 2001

Posting Example: Moving Average Price I

Stock GR/IR Account

Vendor

Procedure Stock Stock Value V Price

Beginning Inventory: 100 Pc at 2.00 100 200 2.00Goods Receipt: 100 Pc at 3.00 200 500 2.50

Invoice Receipt: 100 Pc at 4.00 200 600 3.00

Goods Issue: 150 Pc at 3.00 50 150 3.00

1

2

3

1 200

300

100

2

300 24

400

300

4

Raw Mat. Consumptio n

450

3

3

450

4

If the invoi ce receipt isfor 100 pieces, the

stock coverage

is 200 piecesall differences -> stock

3

Stock coverage

ok

The example above demonstrates how the material stock value and material price can mirror theactual prices of a material with a valuation at the moving average price (V).

With the scenario of invoice receipt after goods receipt, the GR/IR account is charged with the

goods receipt amount (300.00) as an offsetting entry to the inventory posting during goods

receipt.

The GR/IR clearing account is settled at the purchase price during invoice receipt, and the

vendor account is updated at invoice price (400.00).

During both receipt postings (goods receipt and invoice receipt), the moving average price (V)

in the material master is adjusted (2.00 to 2.50 to 3.00 UNI).

If a goods issue occurs now, this is valuated with the current moving average price (3.00 UNI).

The moving average price (V) is therefore, more useful if you want your material stock values

and material prices to reflect the most up-to-date data.




© SAP AG 2001

With a delayedinvoice receipt of

100 PC the stock shortageis 50 Pieces

Â price differences

despite moving average price

Posting Example: Moving Average Price II

stock

Price difference:

GR/IR Account

Vendor

Procedure Stock Stock Value V Price

Beginning Inventory: 100 200 2,00Goods Receipt: 100 Pc at 3.00 200 500 2.50

Goods Issue: 150 Pc at 2.50 50 125 2.50

Invoice Receipt: 100 Pc at 4.00 50 175 3.50

12

3

1 200

300

50

2

300 2

50

4

4400

300

4

Raw Mat. Consumptio n

3753

3 375

4

4

stock shortage

In certain cases the moving average price (V) in the material master can lead to price

difference postings.

The main disadvantage of using the moving average price is that the price used to valuate amaterial consumption is almost completely dependent on the time at which the goods issue is

posted in the system. If, for example, an invoice receipt is posted for an externally procured

material after a goods issue was entered, that invoice value is not reflected in the value of thematerial issued. For this reason, the issued material is not valuated at its actual procurement

cost.

This case of stock shortage is illustrated in the posting example above. The invoice receipt (4)

in this example is first posted after the material was already issued (3). After a subsequentsystem-internal stock coverage check, the price difference of 100.00 is only partially debited to

the material (50.00). The rest (50.00) flows into a price difference account.




© SAP AG 2001

Posting Example: Moving Average Price III

Operation Stock Stock Value V Price

Beginning Inventory 100 200 2.00

Goods Receipts: 100 Pc at 2.20 200 420 2.10


Goods Issue: 200 Pc at 2.20 100 220 2.20

Invoice Receipts: 100 Pc at 3.00 100 300 3.00


When multiple invoice receiptsare delayed there is adanger of incorrect valuation!

Even though allreceipts between

2.00 and 3.00 werevaluated!

? 80in stock

? 60in stock

stock coverage

In particular, the moving average price (V) can lead to unrealistic material prices in cases of multilevel

production or when there are variances that do not appear immediately. Such unrealistic prices occur, for

example, when, in the context of stock coverage, where a subsequent adjustment to material stock

takes place due to an incorrect base quantity being used.

In the current period, there are a number of goods receipts for a material that are valuated with the

Moving average price (V).

Afterwards, a goods issue occurs for 200 units of this material

Only then are the invoice receipts for the goods receipts above posted, so that in both cases, the invoice

price varies from the purchase order price.

Because there is stock coverage at the time of invoice receipt in both cases (stock quantity is at least as

large as the invoice quantity) , the price variances of all invoices are completely adjusted to stock. The

existing stock quantity is adjusted with a variance of 140 DM.

This results in a valuation of the remaining material stock and material consumption at an

unrealistically high price (3.60).



(C) SAP AG AC530 2-10

© SAP AG 2001

Characteristics of Price Control V

+The stock value is adjusted each t ime goods are received

+Real-time price fluctuations are posted to the stock

+Price differences only occur in exceptional circumstances

- Price fluctuations can not be adjusted to the finished products of higher levels (S-Price).

- Only recommended for raw materials or materials procuredexternally (real-time price for goods receipts known)

- False entries with severe consequences (compounded errors)

- Danger of incorrect valuations when invoice receipt is delayed

Moving Average Price

The illustrated situation demonstrates how the decision to use the moving average price (V) to have your

material stock values and material prices reflect the most up-to-date data can be a mistaken one.

For this reason, SAP recommends only using the moving average price (V) for material valuation of raw

materials and trading goods, as the delivered prices for these are usually known close to the time of the

goods receipt.

For materials produced in-house, such as semi-finished and finished products there is a great risk that,

at period-end closing, a large number of variances from order settlements (follow-up costs) are posted to

a relatively small stock which can lead to either price variances or faulty valuations.

A further disadvantage of the moving average price (V) is that incorrect entries (i.e. typing errorsduring posting) that are not noticed, can lead to an unrealistic stock value. Subsequent goods issues are

then valuated with these incorrect prices (compound errors).



(C) SAP AG AC530 2-11

© SAP AG 2001

Posting Example: Standard Price

stock

Price difference:

GR/IR Account

Vendor

Operation Stock Stock Value Standard Price

Starting Position: 100 200 2.00



1

2

3

1 200

2002

240 2

2 40

3

3

320220

240

The following applies to valuations at the standard price:

All stock postings take place at standard price

Variances are posted to price difference accounts.

Variances are updated.

Price changes can be observed and monitored.

If a material has standard price control, the value of the material is calculated with the standard

price. For subsequent goods movements or invoice receipts where the price varies from the

standard price, the differences are posted to a price difference account.

The following situation is illustrated above. A goods receipt posting with a price of (2.40) that is

not the same as the standard price (2.00) leads to price variances that are carried on a price

difference account (+40.-). The subsequent invoice receipt with a varying price (2.20) is also

not posted to material stock; instead, the variance is written to the price difference account (-20.00).



(C) SAP AG AC530 2-12

© SAP AG 2001

Characteristics of Price Control S

+ Al l stock postings take place at standard pr ice

+Prices remain constant for at least one period

+Price fluctuations do not credit/debit the cost objects (e.g. orders)->

consistent controlling with the standard price as benchmark

+Calculation of the standard price with cost component splits

+Recommended for all material types

- Price differences can not be subsequently adjusted to the ending

inventories or the consumed products (sales, production withdrawals)

Standard Price

If the material valuation takes place at standard price, all goods movements are valuated with the same

price The standard price control makes consistent controlling of the production process possible;

variances within production are transparent. The use of a periodic price is particularly recommended for

periodic controlling.

The standard price can also be used as a benchmark by which you can measure different methods of

production, or compare the contribution margins of a material in different market segments in

Profitability Analysis (CO-PA).

One disadvantage of standard price control is that the variances or price differences cannot be

allocated to the subsequent production levels. This becomes increasingly problematic with each

additional production level in multilevel production. In this case, real-time cost controlling for thefinished product cannot be guaranteed.



(C) SAP AG AC530 2-13

© SAP AG 2001

Period-End Close : Valuation Problems

Valuation period

Distribution ofPrice Differences?

Actual Prices?

Finished Goods

Ending Inventory Raw Materials

Raw material II

Raw Material I

While the danger exists of an incorrect valuation being carried out with the moving average price, both valuation strategies lead to variances, the assignment of which causes problems,

particularly at period-end. The material stock value does not reflect the current procurement

costs, as variances from the standard price are collected in a price difference account in

Financial Accounting and do not, therefore lead to a correction of the material stock account.

With multilevel production, the variances can no longer be assigned to the products that should

carry them. The assignment of these price differences to the ending inventories of rawmaterials, semi-finished products and finished products is just as impossible as a corresponding

assignment to the sold or discontinued goods.



(C) SAP AG AC530 2-14

© SAP AG 2001

Standard Cost Accounting Variances


Result (FI)

Order

Order

Cost Center Act iv ityType

V price

S price

S price

Result (FI)Variance categories Price difference account=

Cost Elements

ProductionCost Centers

Result (CO-PA)

Stock Accounts


With a multilevel production structure, variances can appear on different objects.

With external procurement, variances appear as a result of a change in the market and vendor prices.

Inflation scenarios can particularly cause significant variances.

The variances of internal production can arise in the area of cost responsibility (cost centers) or in the

area of production (variances from cost objects, such as production orders).

Because these standard cost accounting variances cannot be posted to the material stock, they are posted

as price differences to Profitability Analysis. Even though they can be divided into different variance

categories (price variances, quantity variances, etc.) in Profitability Analysis, they cannot, however, be

assigned to their corresponding products.

In Financial Accounting, these variance categories correspond to the balance of a price difference

account that, from an external accounting point of view, cannot be proportionally allocated to ending

inventory (assets) or consumption (period expense). Standard cost accounting can be advantageous in that it enables you to carry out a consistent and

efficient controlling of the production procedures by comparing the current actual prices with their

respective standard prices.



(C) SAP AG AC530 2-15

© SAP AG 2001

z Explain the possib ilities and l imitations of theprice controls Standard price and Movingaverage price.

z Explain the value flow of standard costs anddifferences in the R/3 System without usingactual costing in the Material Ledger.

You are now able to:

Fundamentals of Material Valuation: Summary




© SAP AG 2001

z Concept and Valuation Approaches of theMaterial Ledger.

z Concept of Actual Cost ing.

Contents:





© SAP AG 2001

At the conclusion of th is un it , you will be able to:

Design and Purpose of the Material Ledger: Unit Objectives

z Describe the concept and design of thematerial ledger.

z Describe and configure the currency andvaluation settings in the material ledger.

z Explain the concept of actual costing in thematerial ledger.




© SAP AG 2003

Course Overview







Special Functions




© SAP AG 2001

z You will now look at the basic settings for thematerial ledger in Customizing. Think aboutwhich valuations in the material ledger youwant to update, and how they interact withyour customizing settings in other modules.

z You will then think about the concept of actualcosting as provided by the material ledger.

Design and Purpose of the Material Ledger: Business Scenario




© SAP AG 2001

z Describe different multip le-currencyscenarios and how they are updated in thematerial ledger.

z Describe different mult iple-valuationscenarios and how they are updated in thematerial ledger.

z Describe how the valuation approaches inthe material ledger are configured, andconfigure them.

At the conc lusion of th is topic, you wi ll beable to:

Concept and Valuation Approaches of the Material Ledger:Topic Objectives




© SAP AG 2001

Group Legal Prof it Center

With possibleinventory revaluationusing actual prices

Analysis of actual costcomponent split

of value-addedprocess

Inventory

Actual Costing Transparency

Multiple CurrenciesTranslation usinghistorical exchange rates

Material Ledger

Multiple ValuationTransfer prices

Concept of the Material Ledger

Mat Wage Dep OH

The material ledger is a tool that collects data for materials that have master data stored in a material

master. The material ledger uses this data to calculate prices for the valuation of these materials. The

material ledger is the basis of actual costing and enables inventory to be valuated in up to three

currencies and/or valuations.

As a subsidiary ledger for materials, the material ledger is the prerequisite for multiple valuation of

material inventories. Without the material ledger, the inventory values of materials managed on a value

basis are updated in only one currency (company code currency). With the material ledger, the inventory

values can be carried in two additional currencies in the R/3 System. This is realized by updating all

goods movements in up to three currencies/valuations in the material ledger. The values are translated

into foreign currency amounts at historical exchange rates (at the time of the posting). The material

ledger can thus provide businesses located in high-inflation countries with additional information ontheir inventories in a hard currency. This reveals the influence of inflation on inventories.

The actual costing function takes the periodic values collected and automatically calculates new

inventory values and valuation prices independently of each other in the different currencies and

valuations.




© SAP AG 2001

Material Ledger (Valuation Area)

40 Hard Currency USD

30 Group Currency UNI

Cost Management

(Controll ing Area)10 Local Currency


Currency

Translation

Financial Accounting

(Company Code)10 Local Currency


40 Hard Currency USD

C u r r e n c y t y p

e 2 0

c a n n o t b e

u s e d i n t h e

F i n a n c i a

l A c c o u n t i n g

c o m p o n e

n t

Material Ledger: Valuation Assignment

10 Local Currency

When monetary amounts are transferred between different components of the R/3 System, integration is

achieved by means of the currency type. The currency type is a key that describes a currency amount

regarding the role of the currency in the system (such as the currency of the company code) and – if

you are using the multiple valuation function – the valuation approach on which the amount is based

(legal valuation, group valuation, or profit center valuation).

In Customizing, you specify which currency types are used separately in the different applications. It is

important to make sure that the settings in Financial Accounting, Controlling, and Material Ledger

harmonize with each other.

If you want to use currency types that are defined in Financial Accounting, set the Crcy type indicator

in FI. In this case the currency types are taken from Financial Accounting automatically. In the standard

system, this setting is covered by material ledger type 0000. If you want to use a combination of the

currency types in Controlling and the currency types in Financial Accounting, set the Crcy type indicator in FI and the Crcy type indicator in CO. In this case you must check the settings manually.

Recommendation: To ensure integration of information between Materials Management, Financial

Accounting, and Controlling, specify the currency type of the group currency as the company code

currency.

If you want to use other currency types, set the Manual indicator and choose an individual value. You

can enter additional currency types beyond the currency type for the company code currency (10).




© SAP AG 2001

LegalLegal

GroupGroup

Profit center Profit center

Company codeCompany codecurrencycurrency

GroupGroupcurrencycurrency

HardHardcurrencycurrency

10

11

12

30

31

32

40

Multiple Currencies and Valuations

CurrencyCurrency

ValuationValuation

A total of three fields for currencies/valuations are available.

If you want to use only the functions for multiple currencies and not those for multiple valuation, the

currency type simply represents a currency amount. Such currency types end with a zero.

If you want to use the functions for multiple currencies and multiple valuations (for example, for

intercompany transfer prices), the currency type also contains information regarding the valuation on

which an amount is based.

The graphic illustrates this:

Currency type 10 is defined as the legal valuation in the currency of the company code (the local

currency).

Currency type 31 is a different currency, which is based on a valuation for the corporate group (to

eliminate internal profits).

Currency type 32 uses the same currency as currency type 31 but is based on profit center valuation.Internal transfers of goods and services between profit centers are valuated with a price for management

purposes.

For more information on multiple valuation, see the course AC650 Tranfser Prices.




© SAP AG 2001

z Describe the concept of actual costing.

z Explain the dif ference between single-level and mult ilevel product ion scenarios.

At the conc lusion of th is topic, you wi ll beable to:

Actual Cost ing in the Material Ledger: Topic Object ives



(C) SAP AG AC530 3-10

© SAP AG 2001

Levels in the Production Process

Order

Order

Level 1

Level 2

Level 3

Cost Centers Cost Objects Inventory



External Procurement

Actual Costing/Material Ledger uses the terms single-level and multilevel.

The material ledger focuses on materials and their procurement. Material procurement is not

restricted to external procurement but also includes internal procurement (production, company transfer,

and so on).

The term single-level always refers to an individual material and its procurement process. This means

that all values and quantities that arise during the procurement of the material are collected on the basis

of that single level.

The above example shows three single levels: one for external procurement and two for internal

production.



(C) SAP AG AC530 3-11

© SAP AG 2001

Preliminary Valuation Price

Order

Order

Standard Price

Standard Price

Standard Price

Actual costs

Preliminary Valuation

Actual costs

Preliminary Valuation

Cost Center Accounting Cost Object Controlling




Material Ledger

Mat Wage Dep OH

Mat Wage Dep OH

When you use actual costing, all materials are valuated with a preliminary periodic unit price. This

price must remain constant during a given period.

This price can be a price calculated in a standard cost estimate with a cost component split (standard

price), a manual price, or an actual price from the previous period.

Like the standard price, this price has the advantage that a closed standard cost accounting system can be

implemented without the problem of price fluctuations preventing cost controlling of the production

process.



(C) SAP AG AC530 3-12

© SAP AG 2001



Material Ledger

Updating Single-Level Variances

Order

Order

Inventor y Price Dif.

Inventory Price Dif.





Variances arise during the period for this preliminary valuation price (or standard price).

The material ledger posts these variances to a price difference account and updates them separately for

each material. Single-level variances are all variances incurred for a material for the direct procurement

of that material.

With raw materials, these variances are usually caused by price fluctuations in external procurement

from vendors.

For semifinished and finished products, single-level variances are usually caused by internal cost

fluctuations in production that are determined when the order is settled.

Single-level variances do not include the price differences of material from lower levels of production.

For example, price variances in the procurement of raw materials are not included in order settlement

because the raw materials are assigned to the order with their preliminary valuation.



(C) SAP AG AC530 3-13

© SAP AG 2001



Material Ledger

Single-Level Material Price Determination

Order

Order

Ending Inv. Price Dif.






At the end of the period, you can use the functions for single-level price determination to assign the

variances recorded for each material. This enables the cumulative price differences to be assigned

proportionally to the ending inventory quantity and the material consumption of the period.

The inventory can be revaluated with the actual price of the period (the periodic unit price). Price

differences allocated to consumption remain on the price difference account at this point.

When you settle an order, the system allocates the price differences that arise during the production

process to the materials.



(C) SAP AG AC530 3-14

© SAP AG 2001



Material Ledger

Order

Order





PeriodicUnit Price

Periodic Unit Price

Mul tilevel Material Price Determination



PeriodicUnit Price

Multilevel material price determination can also extrapolate the variances that flowed into higher

levels of the production process using a multilevel actual quantity structure.

This quantity structure, which can be thought of as a type of actual BOM, tells the system which

materials were used to manufacture which higher-level products. The prices of finished products can

then be calculated accordingly on the basis of the historical costs.

As a result, price differences (such as for raw materials) can be rolled up to the semifinished products

and then to the finished products.

When you complete multilevel material price determination you can see the actual prices of the

materials (raw materials, semifinished products, and finished products) at the end of the period. These

actual prices reflect the prices actually incurred for the output actually produced or procured during the

period.

As an option, you can revaluate your products or raw materials with these actual prices. This procedure enables you to use actual costing as a supplement to your standard cost system in

parallel, since the values from your standard cost system (cost centers, orders) are not changed by the

revaluation.



(C) SAP AG AC530 3-15

© SAP AG 2001

Analyzing the Actual Cost Component Split

Order

Order

Actual costs

Preliminary valuation

Actual costs

Preliminary valuation





Material Ledger

Mat wage dep OH

Mat wage dep OH

Mat wage Af A GKZ

Mat ´wag dep OH

In Release 4.6C you can have the system calculate an actual cost component split for all periodic unit

prices. This enables you to compare the cost components of the standard prices with the cost components

of the actual costs.

Analysis at the level of cost components makes it clear what caused the cost fluctuations. For example,

you can see how much of the cost of your finished product was incurred by labor, material, and external

processing.



(C) SAP AG AC530 3-16

© SAP AG 2001

Actual Cost of Sales

Actual Cost of Sales in Profitabili ty Analysis

Contribution margin analysis

Actual costs broken down into cost components

Plan-actual variances

Plan Actual Var. % Var. (Abs.)Plan Actual Var. % Var. (Abs.)

Revenue:: $100,000Quantity sold: 1,000 pc

50.000 45.000 5.000 10 %Material costs 50 000 45 000 5000 10 %Material costs4.000 5.000 -1.000 - 25 %Production costs 4000 5000 -1000 - 25 %Production costs4.000 4.500 - 500 - 13 %Variable labor costs 4000 4500 - 500 - 13 %Variable labor costs

10.000 7.000 3.000 30%Process costs 10 000 7000 3000 30 %Process costs5.000 5.500 - 500 - 10 %Material-overhead 5000 5500 - 500 - 10 %Material overhead

6.00027.000 33.000 22 %Contribution margin I 600027 000 33 000 22 %Contribution margin I

10.000 10.000 0 0 %Fixed labor costs 10 000 10 000 0 0 %Fixed labor costs7.000 7.000 0 0 %Fixed production costs 7000 7000 0 0 %Fixed production costs

10.000 16.000 6,000 60 %Contribution margin II 10 000 16 000 6000 60 %Contribution margin II

You can use material ledger data for contribution margin analysis in CO-PA. This enables you to

determine the actual cost of goods manufactured for the products sold.

If you are using CO-PA, you must assign the actual cost component split to value fields in

profitability analysis and revaluate the invoices or settled orders. For more information, see the unit

Extended Customizing and CO-PA Integration.



(C) SAP AG AC530 3-17

© SAP AG 2001


Design and Purpose of the Material Ledger: Summary

z Describe the concept and structure of thematerial ledger.

z Describe and configure the currency andvaluation settings in the material ledger.

z Explain the concept of mult ilevel actualcosting in the material ledger.




© SAP AG 2001

z Material Price Determination Control

z Preliminary Valuation

z Cost Components

z Price Differences

z Exchange Rate Differences

Contents:





© SAP AG 2001

Recording Business Transactions: Unit Objectives

z Explain the reporting of simple businesstransactions in the material ledger.

z Describe the Customizing settingsrequired for cost components.

z Explain the treatment of price andexchange rate differences for materials inthe material ledger.

At the conclusion of th is un it, you will beable to:




© SAP AG 2003

Course Overview







Special Functions




© SAP AG 2001

z You review the concept of price determinationin the material ledger.

z You familiarize yourself with the pricedetermination structure display.

z You analyse actual values in the costcomponent view of the material ledger.

z For your first business transaction, you learn

how to analyse price and exchange ratedifferences using the material ledger.

Record ing Business Transactions: Business Scenario




© SAP AG 2001

Price Determination Control in the Material Ledger

SS VV

Standard Price Moving average price2Transaction-based

(as without th e Material Ledger)

Price control

price determin.

3Single/multilevel Standard PriceStandard Price

Actual cost ing Actual costing Actual cost Actual cost

component splitcomponent split

cannot be changedmanually

Mat . Wage Depr. OH.

Setting 2 for transaction-based price determination functions in the same way as the system without

the material ledger, but has the added advantage of allowing you to carry standard prices and moving

average prices in multiple currencies or valuations. This option is possible for materials with the price

control S or V.

With single-/multilevel material price determination (indicator 3 in the material master), a standard

price is used for preliminary valuation, and a periodic unit price is calculated for material valuation of

the closed period. This option is only possible for materials with the price control indicator S, and is only

recommended when you want to use actual costing in combination with multiple currencies or

valuations.

With single/-multilevel material price determination, the periodic unit price is updated for

informational purposes and can be used for material valuation of the closed period.




© SAP AG 2001

Table view Edit Goto Selection criter ia Utilities System Help

Change View: Activation of Material Ledger

Valuation area ML active

1000

6000

6100

9000

Company code

1000

6000

6000

9000

Price determination

3

3

Price determination

mandatory

X

X

Customizing: Material Price Determination

Produ ctive Start-upz After the productive start up , change the pri ce determinat ion for materials t hat

should be included in actual costing from 2 (default) to 3!z Price control is t hen automatically changed to Sz This funct ion can lead to a revaluation.

During activation of the material ledger for your valuation area in Customizing, you can specify what

type of material price determination is defaulted for the materials in this valuation area during the

creation of a material.

You also have the option af specifying whether this price determination indicator is a mandatory setting

that can not be changed.

Warning: This default is ignored during production startup: the system automatically sets the indicator

2 in the material master of all existing materials.

If you want to change the indicator for a material retroactively, choose Accounting -> Controlling ->

Actual Costing/Material Ledger -> Tools -> Change Price Determination.




© SAP AG 2001

Price Determination 2: Transaction based

Period 2Period 1

Moving average price

Standard Price

Mat.WageDepr.OH.

Mat .WageDepr.OH.

Transaction-based material price determination (control 2) corresponds to the functionality without

the material ledger, with the advantage that you can use multiple (up to three) currencies or valuations.

Price control 2 allows you to set the price control to standard price or moving average price.

If a material has price control 2, it cannot be included in actual costing. This means that a periodic unit

price will not be calculated for these materials. In the same way, no actual cost component split will be

generated.

The advantages and disadvantages of the standard price and moving average price have already been

explained in the "Fundamentals of Material Valuation" unit.




© SAP AG 2001

Period 1Period 1

Preliminary Valuation: 100 MXN /Unit

Period 2Period 2

Price Determination 3: Preliminary Valuation

Preliminary Valuation: 110 MXN /Un.

Cumulated Differences: 500 MXN

Periodic Unit Price

Mat.WageDepr.OH.

For materials with price determination control 3 (recommended for actual costing), all valuation-

relevant transactions are always first valuated with the standard price.

During a period, the Material Ledger collects data for all activities that relate to the valuation of

materials. The preliminary valuation price (standard price) must remain constant during a period. It

can no longer be changed as soon as data in this period has been entered into the material ledger.

In the above example, the preliminary valuation price for the material is 100 MXN for Period 1, and 110

MXN for Period 2.

In addition to this, the differences between the preliminary valuation price and the actual price are

recorded, per material, for each posted activity. You can see the differences that were recorded during

the period as soon as they are entered.

In the above example, all activities in Period 1 were recorded with a preliminary valuation price of 100

MXN per unit. During the period, various price differences were entered forming a cumulativedifference of 500 MXN for all receipts. This difference could be the result of higher procurement prices

being collected than originally planned for the period.

Materials with price control 3 can be included in actual costing and the calculation of the actual cost

component split.




© SAP AG 2003

Material ledger Display

Beginning Inventory

Receipts

Consumption

Ending inventory

Material ACT-LCD-##Valuation Area 6000

View: Price Det. Structure

Period 01.2001

Currency Company code curr ency MXN

Material Ledger: Price Det. Structure

Further data

500 2500 0 0 5,00

2000 500 30 0 26,50

0 0 0 0 0

500 2500 0 0 5,00

500 2500 0 0 5,00

PriceExch. rate diff.Price Diff.Preliminary ValuationQuantity

Cumulative inventory

Label for CDMexico Price control

Price determin.Period status:

CurrenciesPeriod

In the material ledger display "Material Price determination", you can see all valuation-relevant

transactions for a material.

In addition to branching between the various value records, you can also look at the data for various

periods.

The screen contains general data for the material and a price determination display that shows the

various quantities and values of recorded transactions in the columns and a listing of the business

transactions grouped into various categories in the lines.

This display gives you an overview of the value-added-relevant data for each material, period and

value record, one which you could not receive without the use of the material ledger.



(C) SAP AG AC530 4-10

© SAP AG 2003

“ ” ”

Material Ledger: Categories

Beginning Inventory

Receipts

Consumption

Ending inventory



Period 01.2001


Display Material Ledger Data

Further data

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0



Label for CDMexico

Carried forwardfrom previous

period

Documents for receipts that

determine prices

Beginning Inventory

+ All receipts

Documents for all issues

Cumulative inventory- all issues

The line display of the material ledger data groups various business transactions into categories.

The information for the category Beginning inventory is transferred from the previous period. Postings

from the previous period are also displayed

In the second category, all receipts such as goods receipts or invoice receipts for this period are

displayed .

The optional category Other receipts/consumption can be used to separately display specific goods

receipts or goods issues that should be included in the calculation of the periodic unit price.

The cumulative inventory (statistical) is the total of the beginning inventory and the collected receipts.

This is used during period-end closing to distribute price differences proportionally to the remaining

inventory and consumption

All goods issues are displayed in the category Consumption. Goods issues are always valuated with the

preliminary valuation price. The values of the category Ending inventory are calculated by subtracting the values of consumption

from the values of the cumulative inventory. The values of the ending inventory are transferred into the

category Beginning inventory of the next period through the period closing program.



(C) SAP AG AC530 4-11

© SAP AG 2003

Material Ledger: Price Det. Structure

Beginning Inventory

Receipts

Purchase order

Consumption

Ending inventory


Period 01.2001



Further data

500 2500 0 0 5,00

500 2500 500 0 6,00

500 2500 500 0 6,00

0 0 0 0 0

1000 5000 0 0 5,00

1000 5000 500 0 5,50



Label for CDMexico

Differences betweenpreliminary valuationprice and actual price

Real-time valuationwith preliminary

valuation price

Averageactual price

for category

Exchange ratedifferences

between GR and IR


The columns of the material ledger display are explained in the above example. The following

transactions were entered for a material that was valuated with a standard price of MXN 5:

In this period the beginning inventory was 500 pieces, valuated at a standard price of 5.

One or more postings appear under the category Receipts that were preliminarily valuated in real-time

with the standard price. The result of a preliminary valuation of the receipts for 500 units is MXN 2500

(500 units * MXN 5).

However, the actual costs for the receipts was MXN 3000, so a price difference of MXN 500 has been

recorded. An exchange rate difference (as a result of exchange rate fluctuations) has not appeared in the

valuation view.

In the Price column, a statistically calculated actual price is displayed for the first 4 (price-forming)

categories that contain receipts or stocks with quantity entries. This is provided (at first) for

informational purposes and is not updated by the system. In the Price column, you can see that anaverage price of MXN 6.00 ((MXN 2500 + MXN 500) / 500 units) has been incurred for the

category Receipts. In the Cumulative inventory column you can see that the average procurement

price taking into account the beginning inventory equals MXN 5.50.

These price differences are not assigned to consumption and ending inventory (at first). For this reason,

the ending inventory is valuated with the preliminary price of MXN 5.



(C) SAP AG AC530 4-12

© SAP AG 2001

Standard CostEstimate

Material Master Material Ledger DocumentOverview

Document ItemsSource

DocumentDocument

Header AccountingDocuments

FIFIPPPP MMMM

MMMM COCO--PCPPCP

Period

COCOCOCO--COCO

Material Ledger Price determination

structure

Receipts 100 10000 1000 110

Cumulative inventory 170 17000 3400 120

Ending inventory 140 1,000 100

Consumption 30 3000 100

Beginning Inventory 20 2000 100

PrelimValCategory Quantity Price dif. Price

Interactive Information

You can go to the views displayed above from the material ledger display of the price determination

structure:

You can go to the accounting view of the material master.

You can display an existing standard cost estimate.

You can go to the material ledger document and, using variable display variants (ABAP List Viewer),

branch to:

y Header information for the material ledger document

y The source document (i.e. document for goods receipt)

y Various material ledger document items

y Additional accounting documents (CO-PA, FI, CO...)

In addition, you can look at the business transactions in the different value records and branch tosubsequent or previous periods.



(C) SAP AG AC530 4-13

© SAP AG 2003

Material Ledger: Cost Component View

Beginning inventory

Receipts

Consumption

Ending inventory


Period 01.2001


Material pri ce analysis

Further data

500 2500 2500 0 0 0

500 3000 3000 0 0 0

0 0 0 0 0 0

1000 5000 0 0 0 0

1000 5500 5500 0 0 0

OverheadsMachine CostsWagesValue:Quantity


Label for CDMexico

Value: Actual value - Level & lower lev el-f ixed/variab leView: Cost component-main cost component split

Material

Mat. Wag e Depr. OH.

Cost component data as alternative for: Actual valuePreliminary valuationdifferencesPrice differencesExchange rate differences

You can analyze the results of an actual cost component split per material from the menu in the

Material Ledger. In addition to this, you can transfer the results of the actual cost component split to CO-

PA in the same way as you can for a cost component split for planned costs.

You can analyze the results of the cost component split according to different criteria in the Material

Ledger display. For example, you can view the fixed or variable To do this you can branch to fixed or

variable parts of the cost component split, or analyze the differences per material movement, between an

actual cost component split and cost component split for planned costs.



(C) SAP AG AC530 4-14

© SAP AG 2001

Cost component

structure

Primary cost

component split

...

ML

MX

active Description

....

IDES Mexico

Primary costs

IDES MexicoX

Customizing: Activating Cost Component Structures

Product Cost Planning: Define cost component structures

X

X

Assignment: Organizat ional uni ts - Cost comp. struc ture

Company code Costing variant

6000 ++++

Plant

++++

Main cost

comp. split

ML

Auxiliary

cost comp. split

MX

Material Ledger: Activate actual cost component split

Valuation Area Company code

6000 6000

Activate actual cost

component split

X

COCO--PCPC--

ACT ACTCOCO--PAPA

P l a n

A c t u a l

COCO--PCPPCP

COCO--OMOM

=

The settings for cost components splits can be used for both actual and standard cost estimates. Material

cost estimates are created in Product Cost Planning (CO-PC-PCP). You can display cost components

in the standard cost estimate, analyse them using the information system and transfer them to

Profitability Analysis (CO-PA).

The cost component is arranged according to the results of the cost estimate, for example raw materials,

material overheads, services, set up costs, machine costs, personnel costs, production costs and other

costs.

If you have activated actual costing in the Material Ledger you can activate a actual cost component

split per valuation area. If you have defined several variants for the cost estimate, whereby you update

the standard price, you must have allowed marking of standard cost estimates. The component structurefor actual cost component splits is generated using the selected costing variant. If you want to start using

the Material Ledger, set the „activate actual costing“ indicator in this step.

If you are already using the Material Ledger and you want to start using actual cost component splits,

set the „activate actual cost component split“ indicator in this step. You must then execute report

"MLCCS_STARTUP" , which will create the data needed for the actual cost component split.

If you are already using actual cost components splits and change from price control 2 to 3, all existing

cost component split data will be deleted!



(C) SAP AG AC530 4-15

© SAP AG 2001

Cost component

structure

Primary cost

component split

ML

active Description

IDES Mexico

Customizing: Assigning Cost Components

Product Cost Planning: Define cost component structures

X

Assignment: Cost element -> component

Cost component

structure

From

cost element

ML 400000

Ch. Accts

INT

To cost element

409000

Component

10

Description

Material component

ML 420000INT 434000 20 Wages

ML 650000INT 655000 40 Overheads

... ...INT ... .. ...

Mat Wage Depr. OH.

Cost component splits provide a structure that arrangs costs of an activity type, a process or a material

according to cost components. In particular, a cost component split allows you to see the value added by

each manufacturing level during production.

Cost component splits can either be a cost component split for cost of goods sold, or a primary cost

component split (with transfer of original split costs from the cost center activity prices).

In order to be able to generate the cost component split, individual cost elements must be assigned to

the various cost components.



(C) SAP AG AC530 4-16

© SAP AG 2003

Goods Issue

Beginning inventory

Receipts

Other receipts/consumption

Consumption

Ending inventory


Period status Quantities and values enteredPrice control Standard pr ice

Period 01.2001



Sales order stock

Further data

500 2500 0 0 5,00

500 2500 500 0 6,00

0 0 0 0 0

50 250 0 0 5,00

950 4750 0 0 5,00

1000 5000 500 0 5,50

PriceExch. rate diff.Price diff.Preliminary valuationQuantity


Standard pric e MXN 5

Label for CDMexico

Consumption andending inventory are

valuated at standard price

Goods issues during a period are always valuated with the preliminary valuation price, regardless of

the prices with which the receipts were valuated.

Goods issues are displayed in the category Consumption.

The cumulative inventory minus all consumptions equals the ending inventory that is also valuated

with the preliminary valuation price during a period.



(C) SAP AG AC530 4-17

© SAP AG 2001

Topic: Exchange Rate Differences

z Logistics Invoice Verification

z Calculation of exchange rate differences



(C) SAP AG AC530 4-18

© SAP AG 2001

Must be used with the Material Ledger

Differences to conventional invoice verification

Invoice verification across company codesDistributed scenarios Any number of purchase orders / deliveries in one t ransact ionManual invo ice reductionTotal-based invoice reductionSupports transfer prices

Logistics Invoice Verification

Goods Receipt

Invoice Receipt Logisti cs Invoice Veri fi cat ion

factually and mathematicallycorrect? Invoice documents updated inMaterials Management and

Accounting

Material Ledger

When using the Material Ledger, you must use Logistics Invoice Verification. The "old" invoice

verification does not work here.

Differences to conventional invoice verification

Logistics invoice verification was developed, because some requirements of invoice verification (i.e.

MM and FI on separate systems) are not realizable with conventional invoice verification for technical

reasons.

New functions are only available in logistics invoice verification, including multiple selection, manual

invoice reduction, total-based invoice reduction, background processing, invoices with instalment

conditions and cross company code invoice verification. Logistics invoice verification will replace the

conventionainvoice verification at some point in the future.



(C) SAP AG AC530 4-19

© SAP AG 2001

Init ial entry of stock balances

(external value posted)

Transfers(standard price in other plants)

External procurement(order / invoice value)

Subcontracting(order / invoice value)

In-house production (settlement of

orders)

Material Debits/ Credits (MR22)

Price Differences

... a r i s e

t

h r o u g h

Price differences stored in the Material Ledger can occur in the cases mentioned above.



(C) SAP AG AC530 4-20

© SAP AG 2001

Goods receipts for purchase order, if...

The exchange rate of the goodsreceipt and invoice receipt aredif ferent (standard)

The exchange rate at the point of invoice receipt is different to theplanned exchange rate (P)

Prerequisite: Activation of exchange rate differenceentry in Customizing for LogisticsInvoice Verification

Exchange Rate Differences

... a r i s e

t h r

o u g h

In order to enter exchange rate differences, you must activate the entry for exchange rate differences

in Customizing for Materials Management / Invoice Verification.

When the treatment of exchange rate differences is activated, the exchange rate valid at the time the

invoice is posted is compared with one of the following:

y the exchange rate valid at the time of the goods receipt

y the exchange rate which is set as a planned exchange rate (type P). This exchange rate is usually

used for planning purposes in Controlling. It is used to simulate and document currency fluctuations.



(C) SAP AG AC530 4-21

© SAP AG 2001

Example: Calculation of Exchange RateDifferences

MXN

USD

3000 4000

P TypePlan exch. rate valid at IRMXN 100 = USD 10

M TypeExchange ratevalid at IRMXN 100 = USD 12

GR price IR price

480

Exch. rate difference:USD 80(4000* 0.12) - (4000* 0.10)

1."True"

Price difference:USD 120

(MXN 1000 * 0.12)

2.

360 Price difference:USD 40

(- Exch. rate diff. +

"True" pr ice difference)

3.

GR price

Planned exch. ratedrop

IR price

This example explains how exchange rate differences are calculated using exchange rate type P. The

numbers are based on the optional exercise in the course exercises for participants.

Explanation:

y 1) The price difference actually translated (the "true" price difference) is USD 120 (MXN 1000 price

difference * 0.12).

y 2) The invoice receipt of MXN 4000 shows a price difference of MXN 1000. Since the planned

exchange rate takes into account a fall in the exchange rate (MXN 100 drops from USD 12.00 to USD

10), an exchange rate difference of USD 80 is reported in the material ledger: (4000 * 0.12) - (4000

* 0.10) or USD 480 - USD 400 = USD 80.

y 3) The "true" price difference less the exchange rate difference results in a remaining price difference

of USD 40 (-USD 80 + USD 120). This price difference is reported in the material ledger.



(C) SAP AG AC530 4-22

© SAP AG 2001

z Explain the reporting of simple businesstransactions in the material ledger.

z Describe the Customizing settings required for cost components.

z Explain the treatment of price and exchangerate differences for materials in the material

ledger.

Recording Business Transactions: Summary




(C) SAP AG AC530 4-23

Recording Business Transactions: Exercises

Unit: Recording Business Transactions

At the conclusion of these exercises, you will be able to:

• Call up valuation-relevant information for the individual materialsusing the material ledger data display

• Determine which currencies and valuations are used in the SAPmodules relevant to material valuation

• Explain how the material ledger calculates price differences

• Use the material ledger to analyze actual prices for externally

procured materials and explain the cause of variances between actualand preliminary valuation prices

Your company has activated actual costing. You are responsible for the

production of a demo CD that your company sends to customers. In this

context, check the settings in your system that are relevant to valuation,and then carry out external procurement for one of the two input

materials: the labels for the CDs.

1 Display of Inventory Quantities and Values

Check the current inventory situation of the labels for your demo CD (material ACT-LCD-##) in the Mexico City plant (plant 6000). To do so, call up the material ledger data for

the label. To check the settings for the labels, also call up the material master and look for

the valuation data in the two additional currencies.

Current inventory: PC

Company code currency:

Standard price (S Price): MXN

Current inventory value: MXN

Group currency:Standard price (S Price): EUR

Inventory value: EUR

Hard currency:

Standard price (S Price): USD

Inventory value: USD



(C) SAP AG AC530 4-24

2 Currency Settings

Check which currency and valuation settings have been made in Customizing under the

relevant components FI; CO and ML (Note: the entry "0" appears as an empty/ blank field):

Financial Accounting: Settings in Company Code 6000

Currency Valuation Currency Type

1. Local currency

2. Local currency

3. Local currency

Controlling: Settings in Controlling Area 6000

Currency Currency Type

Currency setting

Material Ledger: Currency Types in Material Ledger Type 0000

Currency type from FI: ____ Currency type from CO: ____ Manual: ____

Which items are selected? What does this setting mean in the material ledger?

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

3 External procurement with price differences

3-1 Creation of an order

3-1-1 Order an additional 500 labels from the vendor 1096 Fabricas Mixtli. Use

the following data:

Purchase order type Standard purchase order

Vendor 1096 / Fabricas Mixtli S.A.

Purchasing organization IDES Mexico

Purchasing group Compras Mexico DF

Company code IDES Mexico

Material ACT-LCD-## (CD label)

Quantity 500 pc

Plant 6000 Mexico City



(C) SAP AG AC530 4-25

Storage location: 0001



(C) SAP AG AC530 4-26

3-1-2 Confirm your entries. The system automatically determines a purchase

order price. What is the price?

PO price: MXN Per PC

3-1-3 How is this price determined?

________________________________________________________ Save your purchase order and write down the purchase ordernumber. Purchase order number:

_____________________________________________

3-2 Goods Receipt and Price Differences

3-2-1 Post the goods receipt for your order (most of the data is taken from your order automatically): Enter your order number and select the OK button

in your item line.

Posting date Today's date

Purchase order number See previous exercise

Column/field OK Select

Plant 6000

Storage location 0001

Quantity As in the purchase order

Movement type 101

3-2-2 Then look at the data in the material ledger display (in company code

currency). How did these price differences occur? Reason: ________________________________________________________

________________________________________________________

________________________________________________________

3-2-3 Call up the material ledger document for the goods receipt, and branchfrom there to the original source document. What type of document are

you branching to?

Document type:

____________________________________________________

3-2-4 Call up the accounting document.

Amount of price differences: MXN

Price difference account number:

Price difference account text:

Return to the material price analysis.



(C) SAP AG AC530 4-27

4 Cost Component for Price (Actual Cost Component Split and Cost Component Split for

Planned Costs)

4-1 Actual Cost Component Split

4-1-1 You are in the Price determination structure view of the material priceanalysis for your labels. Write down the following values for your goods

receipt:

Receipt quantity: PC

Preliminary valuation: MXN

+ Price differences: +.....................................................MXN

Total value: MXN

4-1-2 Go to the Cost Component view. Enter the following settings:

Period: current

Currency/valuation: Company code currency

Value: Actual value; level + lower level, fixed +variable

View: Cost component / main cost component

split

The value for your goods receipt is under the Receipts category.

What is the actual value of the receipts for the period?

_________________________

Under what cost component is this value? ____________________________

4-1-3 Change the value setting from the actual value to the preliminary valuation

price. What is the preliminary valuation price of the receipts for the

period?

_________________________________________________________

Under what cost component is this value?

____________________________

4-1-4 Change the value setting to differences. What is difference between the

preliminary and actual value for the receipts?

________________________________________________________

4-2 Planned Costs

4-2-1 Call up the current standard cost estimate for your label using the

following parameters (Product Cost Planning: Material cost estimate withquantity structure) for you ACY-LCD-## label

Costing variant: PPC1



(C) SAP AG AC530 4-28

Costing version: 1

Valid from: Today



(C) SAP AG AC530 4-29

4-2-2 Go to the Costs Tab and set the reference figure to the current actual

inventory quantity (user input). Call up the Cost component view.

What plan value was calculated for the current inventory?

__________________________

Under what cost component is this value?

__________________________

Change to the Itemization view. In which cost element is the value

updated?

__________________________

4-3 Customizing for Cost Components

4-3-1 Go to Configure Automatic Postings in Customizing for Materials

Management. The account for the goods movements relating to the order

is determined using the consumption cost element, as for the cost estimate.The consumption cost element is found using operation GBB (offsetting

entry for inventory posting) under modification VBR (consumption).Check which account or cost element was selected for the consumption of

your label in the INT chart of accounts. Plant 6000 is assigned to

valuation modification 0001, and your label is assigned to valuationclass 3000.

Which account is updated for operation GBB/VBR and material ACT-

LCD-##?

Debit: _____________________ Credit: _____________________

4-3-2 Go to Basic Settings for Material Cost Estimates in Customizing for

Product Cost Controlling. Maintain the cost component structures.

Which cost component structure is used in company code 6000 for the

standard cost estimate?

Cost component structure for main costcomponent split:

Cost component structure for auxiliary

cost component split:

4-3-3 Go to Customizing for Actual Costing/Material Ledger , and check whether

the actual cost component split is activated for the following valuation

areas:

Valuation Area 6000: Yes / No

Valuation Area 6100: Yes / No

Which cost component structure is used for the actual cost component

split? Is it possible to select a specific cost component split for the actualcost component split?

________________________________________________________



(C) SAP AG AC530 4-30

________________________________________________________



(C) SAP AG AC530 4-31

4-3-4 Return to the maintenance of cost component structures. Display the

components for the structure ML

Component Name

Component 10:

Component 20:Component 30:

Component 40:

Component 100:

Component 200:

Component 300:

4-3-5 Go to the A ssignment cost component - cost element interval function for

the ML structure. To which cost component is the cost element for theconsumption of your labels (see above) directed?

________________________________________________________

4-3-6 To summarize the exercise for cost element determination, complete the

following table:

Operation

(MM)→ Account/ Cost

Element→ Cost

Component

GBB/VBR → →

5 Consumption at Cost Center 5-1 Your cost center 1000 withdraws 50 labels for test purposes. Post this goods issue:

Material: ACT-LCD-##


Movement type 201

Plant 6000


Receiver cost center 1000

Quantity 50 PC

Post.

5-2 Look at this goods issue in company code currency in the material ledger display

(view: price determination structure). With what price was the goods issue posted?

Price: MXN / PC



(C) SAP AG AC530 4-32

Optional Exercises



(C) SAP AG AC530 4-33



(C) SAP AG AC530 4-34


Optional: Invoice Verification and Exchange Rate

Differences


• Use Logistics Invoice Verification

• Explain how the system calculates exchange rate differences

1 Invoice verification

1-1 You receive the invoice for the order of your labels. What type of invoice

verification do you select, and why?

Reason:

_______________________________________________________

1-2 Carry out invoice verification with the following data:

Invoice Date: Today

Posting date: Today

Amount: MXN 4,000

Purchase order: Your purchase order number

Confirm.

At item level, correct the default amount (order value) to MXN 4,000 and select the

item to "Posting OK"

Post the invoice. (Ignore the possible warning messages about exceeding the

tolerances by entering over them)

1-3 After saving the accounting document, call up the material price analysis in thematerial ledger again (view: price determination structure, company currency).

Write down the price differences that were posted with the invoice receipt.

Invoice price differences: MXN

2 Exchange Rate Differences

2-1 In the material ledger display, change the display currency to hard currency. Look

at the material ledger document for invoice verification. Have price/exchange ratedifferences occurred?

Price differences: USD



(C) SAP AG AC530 4-35

Exchange rate differences: USD



(C) SAP AG AC530 4-36

2-2 In Customizing (Materials Management / Logistics Invoice Verification), look at

the settings for the calculation of exchange rate differences. Are exchange ratedifferences calculated in company code 6000? If so, which exchange rate type is

used?

_______________________________________________________________

_______________________________________________________________

_______________________________________________________________

_______________________________________________________________

2-3 In Financial Accounting, check the exchange rates used to calculate exchange rate

differences. (Tip: use the Position pushbutton).

Exchange Rate

Type

From Currency To Currency

Current type M MXN 100 USD

Current type P MXN 100 USD

2-4 To calculate exchange rate differences, the system translates the values of the

transaction currency (Mexican pesos) into the hard currency. To understand the

calculation of exchange rate differences, fill out the following table:

Currency Invoice Value

Mexican pesos MXN

USD for type M USD

USD for type P USD

Exchange rate differencein USD:

USD

The difference between the two values in USD is the exchange rate difference thatthe system calculates on the basis of the settings. You can see this difference in the

material ledger display.

2-5 The total value in hard currency is arrived at using the following logic: The

accounting value of the material cannot be changed by the calculation of exchangerate differences, because only a fictional exchange rate (the planned exchange rate)

is used. For this reason, the calculated exchange rate differences must be canceled

out by the inverse value. This is done by making a price difference posting.

The total value of the Price differences column results from two values: The inversevalue for the exchange rate differences and the "true" price differences that are

posted with invoice receipt.

Now, calculate the "true" price differences:

Price differences in MXN MXN

Exchange rate (type M)



(C) SAP AG AC530 4-37

“True” price difference in USD: USD



(C) SAP AG AC530 4-38

2-6 Hence, the sum of the "true" price differences and the inverse (negative) value of

the exchange rate differences is the value that can be seen in the Price differences

column:

Inverse value of the exchange rate

differences

USD

"True" price differences USD

Total price differences USD

This amount can be seen in hard currency as price differences for the invoice receipt

in the material ledger display and the accounting documents for invoice receipt.

This posting logic makes it possible to separate price and exchange rate differences

and assign them to the areas of responsibility.



(C) SAP AG AC530 4-39

Recording Business Transactions: Solutions


The following menu paths are used in the exercises and solutions:

ACT/ML: Accounting→ Controlling→ Product Cost Controlling→

Actual Costing/Material Ledger

IMG: Tools→ Customizing→ IMG→ Edit Project→ SAP

Reference IMG

1 Display of Inventory Quantities and Values

Material Ledger Display

ACT/ML: Material Ledger→Material price analysis


Plant: 6000

Period/Year: Current period/current year

→ Goto→ Material Master

Current inventory: 500 PC

Company code currency: Mexican pesos (MXN)

Standard price (S Price): MXN 5

Current inventory value: MXN 2500

Group currency: EUR

Standard price (S Price): EUR 0.60

Inventory value: EUR 300

Hard currency: USD

Standard price (S Price): USD 0.60



(C) SAP AG AC530 4-40

Inventory value: USD 300



(C) SAP AG AC530 4-41

2 Currency Settings

You learn how to make currency settings in the Implementation Guide.

Company code settings:

IMG:→ Financial Accounting→ Financial Accounting Global Settings→ Company

Code→ Multiple Currencies→ Define Additional Local Currencies

Select company code 6000

Financial Accounting: Settings in Company Code 6000

Currency Valuation Currency

Type

1.

L

o

calc

u

rr e

nc

y

MXN Legal

val.

10

2.

L

oc

al

cu

rr

en

cy

EUR Legal

val.

30

3.L

o

cal

cu

rr

e

USD Legalval.

40



(C) SAP AG AC530 4-42

nc

y

The valuation view “legal” is the setting “0”. Note that this character is displayed as a

blank.

Controlling Area Settings:

IMG:→ Controlling→ General Controlling→ Organization→ Maintain Controlling

Area

Maintain Controlling Area

Select controlling area 6000

Go To Details

Controlling: Settings in controlling area 6000

Currency Currency Type

Currency setting EUR 30

Settings for the Material Ledger

IMG:→ Controlling→ Product Cost Controlling→ Actual Costing / Material Ledger

→ Assign Currency Types to Material Ledger Type

Material Ledger: Currency Types in Material Ledger Type 0000

Currency typefrom FI: X

Currency typefrom CO: X

Manual: ____

With this setting, you specify that when the material ledger is activated, it copies thecurrency and valuation settings from Financial Accounting and Controlling. In addition,

the material ledger checks whether the settings in these modules correspond to each other.

Type 0000 has been activated for plants 6000 and 6100.



(C) SAP AG AC530 4-43

3 External procurement with price differences

3-1 Creation of an order

You create orders in Materials Management :

Logistics→ Materials Management→ Purchasing→ Purchase Order→ Create

→ Vendor/Supplying Plant Known

Make the following entries: Header data:

Purchase order type Standard purchaseorder

Vendor 1096 / Fabricas MixtliS.A.

Purchasingorganization

6000 IDES Mexico

Purchasing group 600 / Compras MexicoDF

Company code 6000 / IDES Mexico,SA de CV

Item overview

Material ACT-LCD-## (CDlabel)

Order quantity 500 PC

Delivery date: Today's date

Plant 6000 Mexico City


3-1-2 Confirm your entries. The system automatically determines a purchase

order price.

PO

price:

MXN

6

Per

piece

3-1-3 This price is determined from a purchasing info record.

Save your purchase order and write down the purchase ordernumber.

Purchase order number:

________________________________________



(C) SAP AG AC530 4-44

3-2 Goods Receipt and Price Differences

3-2-1 Post the goods receipt for your purchase order:

Logistics→ Materials Management→ Inventory Management→

Goods Movement→ Goods Receipt→ For Purchase Order→ PO

Number KnownEnter your purchase order number and confirm with enter . The system

determines the following information. Check whether this information iscomplete and matches that of the purchase order. Complete the

information as necessary (the information is in the line for the purchase

order item).


Purchase order

number

See previous

exercise

Plant 6000

Storage

location

0001

Quantity As in the purchase

order

Movement

type

101

Set the flag in the OK column (column to the right of the material or in

item details)

OK field Select

Post.

3-2-2 Material Ledger Display:

ACT/ML: Material Ledger→Material price analysis


Plant: 6000

Period/Year: Current period/current yearPrice differences:

The purchase order value of the product is MXN 3000. The value at the

current valuation price (S price) is MXN 2500. The difference of MXN500 is shown in the column for price differences.

3-2-3 Calling up the source document from the material ledger document:

Open the category Receipts→ Open the process category Purchase

Order→ Double click on the material ledger document



(C) SAP AG AC530 4-45

Go from the material ledger document to the source document:

Goto→ Source Document

The source document is the document that was created for the goods

receipt. A Materials Management document.



(C) SAP AG AC530 4-46

3-2-4 Calling up the accounting document from the material ledger document:

Go from the material ledger document to the accounting document:

Goto→ Accounting documents Accounting document

Amount of pricedifferences:

MXN 500

Price difference

account number:

231000

Price difference

account text:

Loss from price

differences -external

4 Cost Component for Price (Actual Cost Component Split and Cost Component Split for

Planned Costs)

4-1 Actual Cost Component Split

4-1-1 Data for goods receipt:

ACT: Material Ledger→ Material price analysis


Plant: 6000



Receiptquantity: 500 PC

Preliminary

valuation:

MXN 2,500

+ Price

differences:

+ 500 MXN

Total value: MXN 3,000

4-1-2 Cost Components

View: Cost ComponentsConfirm

Value setting: Actual value

Period: current

Currency/valuation: Company code

Value: Actual value; level



(C) SAP AG AC530 4-47

+ lower level, fixed + variable

View: Cost component /main cost

component split

Actual value for periodic receipts: MXN 3,000

Cost component in which the value exists: “Materials Components”

4-1-3 Value setting: Preliminary Valuation Price

The preliminary value for periodic receipts

equals: MXN 2,500

Cost component in which the value exists: “Materials Components”

4-1-4 Value setting: Differences

The difference between the preliminary and actual value for the receipts

equals: MXN 500



(C) SAP AG AC530 4-48

4-2 Planned Costs

4-2-1 Standard cost estimate for your labels

Accounting.→ Controlling→ Product Cost Controlling→ Product

Cost Planning→ Material Costing→ Cost Estimate with Quantity

Structure→ Display


Plant: 6000

Costingvariant:

PPC1

Costingversion:

1

Valid from: Today

4-2-2 In the upper right section of the interface, select the tab "Costs" and enter the quantity of the periodic inventory in the "Costs based on" field by

changing Costing Lot Size to User Entry.

Call up the Cost component view.

A planned value of MXN 5000 is displayed for the current inventory

quantity of 1000 pieces.

This value exists in cost component 10/ Materials Components.

In the "Itemization" view, you can see that the value is updated under the

cost element 400000.

4-3 Customizing for Cost Components

4-3-1 Account determination (1)

IMG:→ Materials Management→ Valuation and Account

Assignment→ Account Determination→ Account Determination

without Wizard → Configure Automatic Postings

Execute and close the dialog box by canceling Click on the Account

Assignment button, open the Offsetting entry for inventory posting line,

INT chart of accounts, and scroll down to general modification VBR and

valuation class 3000.

The offsetting entry for the inventory posting (modification VBR) forthe label is updated to account 400000 (credit and debit).

4-3-2 Maintaining the Component Structure

IMG:→ Controlling→ Product Cost Controlling→ Product Cost

Planning→ Basic settings for Material Costing→ Define Cost

Component Structure



(C) SAP AG AC530 4-49

In the Assignment dialog structure: Choose Organizational units - Cost

component structure The following structure is used in company code6000:

Cost componentstructure for main cost

component split:

ML

Cost component

structure for auxiliary

cost component split:

MX



(C) SAP AG AC530 4-50

4-3-3 Activating Actual Cost Component

IMG:→ Controlling→ Product Cost Controlling→ Actual

Costing/Material Ledger→ Actual Costing→ Activate Actual Cost

Component Split

The actual cost component split is activated for the following valuation

areas:

Valuation Area6000:

Actual costcomponent split

activated

Valuation Area

6100:

Actual cost

component split

activated

The actual cost component split uses the same structures as the

standard cost estimate: ML and MX. It is not possible to use

structures for actual costing that are different from product costplanning.

4-3-4 Cost component structure ML

IMG:→ Controlling→ Product Cost Controlling→ Product Cost

Planning→ Basic settings for Material Costing→ Define Cost

Component Structure

Select the cost component structure ML and choose the dialog structure

Cost component structure → Components with Attributes

Component Name

Component

10:

Materials Components

Component

20:

Prod. Labor / Setup

Component

30:

Production Machines

Component

40:

Logistics Processes

Component

100:

Material Overhead

Component200:

Admin + SalesOverhead

Component300:

Other Costs



(C) SAP AG AC530 4-51

4-3-5 Cost component for material consumption

In the dialog structure, double click on cost component structure, selectthe structure ML and choose Cost component with Attributes. Select Cost

component 10, then choose → Assignment : Cost Component - Cost

Element Interval

The cost element 400000, created for the consumption of raw materials,

is assigned to cost component 10 Material Components.

4-3-6 To summarize the exercise for cost element determination, complete the

following table:

Operation → Account/

Cost

Element

GBB/VBR → 400000



(C) SAP AG AC530 4-52

5 Consumption at Cost Center

5-1 Goods Issue Posting:

Logistics→ Materials Management→ Inventory Management→ Goods

Movement→ Goods Issue


Movement type 201

Plant 6000


Confirm in order to get to the next screen:

Receiver cost center 1000


Quantity 50 PC

Post.

5-2 Material Ledger Display:

ACT/ML: Material Ledger→ Material price analysis


Plant: 6000


View Price determination structure

Open the category Consumption→ Open the process category Cost Center →

Document "### GI for Cost Center 1000".

Price: MXN5/pc



(C) SAP AG AC530 4-53

Solutions for Optional Exercises



(C) SAP AG AC530 4-54



(C) SAP AG AC530 4-55


Optional: Exchange Rate Differences





Reference IMG

1 Invoice verification

1-1 Type of invoice verification: You use logistics invoice verification because

conventional invoice verification cannot be used when the material ledger is active.

1-2 Logistics Invoice Verification

Logistics→ Materials Management→ Logistics Invoice Verification→

Document Entry→ Enter Invoice

Enter the following data under Basic data above the item lines:

(CompanyCode) (6000)

Invoice date today

Posting date today

Amount MXN 4,000

Purchaseorder

Your purchaseorder number

At item level, correct the default amount (order value) to MXN 4,000 and select the

item to "Posting OK"

Ignore the warning messages generated due to the tolerance value being exceeded

and post the invoice

1-3 Material Ledger Display:

ACT: Material Ledger→ Material price analysis


Plant: 6000



(C) SAP AG AC530 4-56


Company code currency (MXN)

Open the category Receipts→ Open the process category Purchase Order→

Document "### Invoice …"

Invoice price

differences:

MXN 1,000



(C) SAP AG AC530 4-57

2-1 Price and exchange rate differences:

In the material ledger display, change the display currency to hard currency (USD).

Price differences: USD 40

Exchange rate

differences:

USD 80

2-2 Checking the settings for handling exchange rate differences in the ImplementationGuide:

IMG:→ Material Management→ Logistics Invoice Verification→ Incoming

Invoice→ Configure How Exchange Rate Differences Are Treated:

Exchange rate differences are calculated at the time of the invoice receipt. The two

values used for calculation are:

The invoice receipt value calculated with the exchange rate valid on the day of

invoice verification, and

Invoice receipt value calculated with the planned exchange rate (first column: “X”)using exchange rate type P (second column: “P”)

2-3 Exchange rates:

Accounting→ Financial Accounting→ General Ledger→ Environment→

Current Settings→ Enter Translation Rates

(Tip: use the "Position" key or the selection function and enter data for the

exchange rate type and currencies criteria to find the correct position quickly)

Exchange

RateType

From Currency To

Currency

Current

type M

MXN 100 USD

12.0

0

Current

type P

MXN 100 USD

10.00

Exchange rate type P, for example, is used in the planning cycle to translate the

result of a standard cost estimate from controlling area currency to the companycode currency.

2-4 Calculation of the exchange rate differences:

Currency Calculation/exchangerate

Invoicvalue

Mexican pesos

MXN4000



(C) SAP AG AC530 4-58

USD for type M

(MXN4000) *

(USD12.00/MXN100)

USD480

USD for

type P

(MXN4000) * (USD

10.00/MXN100)

USD

400

Exchangerate

difference in USD:

USD80



(C) SAP AG AC530 4-59

2-5 "True" price differences:

Price differences in

MXN

MXN 1000

Exchange rate (type M) MXN 100 = USD 12.00

“True” price differencein USD:

MXN1000 * (USD 12.00 /MXN100) = USD 120

2-6 Price differences:

Negative value of exchange ratedifferences

USD (-) 80

"True" price differences USD 120

Price Differences USD 40




© SAP AG 2001

z Controlling Levels and Procurement Alternatives

z Production Scenarios

z Plant Transfers, Sales and Analysis of the Actual CostComponent Split

Contents:





© SAP AG 2001

z Explain the components concept of the actualquantity structure in the material ledger.

z Explain and configure the Controlling areas for amaterial.

z Carry out a a product ion scenario and explain thevariances displayed in the material ledger.

z Sell manufactured products and analyse theresults in CO-PA.

At the conclusion of this unit, you wil l be able to:

Structured Value Chains: Unit Objectives




© SAP AG 2003

Course Overview







Special Functions




© SAP AG 1999

z In order to structure the most important productioncost information, you set up differentiatedcontrolling levels for your materials and work withprocurement alternatives.

z You carry out production of your demo CDs withproduct ion orders and calculate overhead andvariances periodically on the relevant product costcollector.

z When product cost collectors are settled, single-

level variances arise that can be displayed in thematerial ledger, but do not yet contain the variancesof lower-levels.

z In addition, you become acquainted with thehandling of material updates through stock transfersto other plants and materials.

Structured Value Chains: Business Scenario




© SAP AG 1999

z Describe the structured reporting of quantitystructures in the material ledger.

z Explain and set the controll ing levels of materials.

z Use the process types, characteristics of controlling levels and procurement alternatives for the display of a structured value chain for specificpurposes.

At the conclusion of this, you wil l be able to:

Controlling Levels and Procurement Alternatives:Objectives




© SAP AG 2001

Product Cost Controlling: Components

Material Movements

Material settlement Actual pr ice

Value structure

Actual Cost ing/Material Ledger

Quantity Structure:

Material Movements

Plannedcosts

Actualcosts

Order

Material $Int. $OH $Process $Total

Final CostingPeriod-End Close

Preliminary Costing

Simultaneous Costing

Cost Object Controlling

BOM routingrouting

Material pr ices

Activi ty pr icesProcess pr icesOverhead

Product Cost Planning

Value structure

Quantity Structure:

PP Master data

Standard Price

Material Int. OH Process

Price diff.Standard Price

Material Ledger

Process

Work in Progress

Scrap Variances

Variances

Settlement

Material Int. OH Process

Product Cost Planning is an area of Product Cost Controlling in which non-order-related cost planning

and price setting for materials are carried out. It accesses the master data of other R/3 applications, that is

BOMs, routings and work centers from Production Planning, and cost centers, activity types and

business processes from Overhead Cost Controlling. The goal of Product Cost Planning is to update the

standard price and create a cost component split to supply basic information for other R/3 applications

such as Cost Object Controlling, Profitability Analysis, and Sales and Distribution.

Cost Object Controlling offers constant and real-time controlling for the cost of goods manufactured.

You can carry out lot-based or periodic cost object controlling. Standard costing is the basis of Cost

Object Controlling in the R/3 system. With this, the actual quantity produced is multiplied by the

standard costs per unit in order to calculate the target costs. This value is compared with the actual costs

during cost analysis. If you have set price control S (standard price) in the material master record for

semi-finished and finished products, this means that, in Cost Object Controlling, all materials produced are valuated with the standard price when they are delivered to stock. During settlement of the cost

object, variances to this standard price are posted to Financial Accounting (price difference) and

Profitability Analysis (variance categories).

The component Actual Costing / Material Ledger makes it possible to calculate a period price of the

previous period. After you have determined the actual price you have the option revaluating the stocks.




© SAP AG 1999

Actual Quantity Structure

Material Ledger

zOrder settlement,different pr oductionscenarios

zGoods / invoice receipts,different vendors

FERT

HALB1 HALB2

ROH1 HAL B1-1 ROH2-1 ROH2-2

ROH1-1 ROH1-2

Transparencyof

Value-Added

To make the most of Product Cost Controlling; it may be necessary to differentiate between the various

methods of procurement for a material. This can help you find the most cost-effective procurement

method.

In addition, it may be necessary to analyze the costs of an entire value chain. For this, the actual

quantity and value flows for each material must be reported in a structured manner. This reporting can

take place in the material ledger and offers the basis for a later rollup of the existing variances.

With this, for example, the price differences from the purchase order of a raw material can be rolled up

to the semi-finished and finished products in whose production the raw material was entered during the

period.

In order to carry out a specific analysis of possible procurement alternatives, a structured display of

procurement alternatives can be configured in the material ledger. The level of detail of such an analysis

can be specified for each material. This is referred to as the controlling level of the material.




© SAP AG 2001

Procurement Process for Materials

Version1

Version2

e.g. Process categories:- Production- Stock Transfer - Purchase order - Subcontracting

Output Materials

Procurement Alternative

Procurement/Production process

Input Materials

The central element in the value chain is the procurement process. Procurement processes are used in

Product Cost Controlling to determine and show procurement costs. Procurement processes characterize

the procurement transaction for a material or possibly for multiple materials. The system uses process

categories to differentiate between the different types of procurement. Procurement processes deal with

both internal and external procurement. Examples of procurement processes are sub contracting, in-

house production, stock transfers or orders.

Process categories differentiate between the different types of procurement or consumption of

materials. There are, for example, the process categories Production or Purchase Order. The different

types of procurement and consumption are handled by the system in different ways; in other words,

different data is updated. The system uses this data to derive characteristics that can be used for the

creation of procurement processes, procurement alternatives and consumption alternatives.

Upon goods movements, the system determines the process category automatically depending on the

movement type. Depending on the process category, there is a single-level or multilevel procurement

process. For example, Purchase Order is a single-level procurement , and Production is a multilevel

procurement.




© SAP AG 1999

Possible Procurement / Production Processes

Material

ProcurementProcurementalternativealternative

Procurement /production process

Cyclicalproduction

Hierarchystructure

Multipleprocurement

methodsJoint

production

A procurement alternative presents the different options for procuring a material. Procurement

alternatives are situated hierarchically above process categories. A single procurement process can

produce multiple materials (such as with joint production), while the procurement alternative represents

the production of just one material.

The procurement process for the process category Production is called production process. If the

material ledger is active with multilevel actual costing, every production order is assigned to a

production process. If a goods receipt from an order is posted to a material, that goods receipt is then

assigned to the associated procurement alternative.

You can choose the level of detail used to create the procurement alternative by defining the

Controlling level. Through the Controlling level, you specify for each material which of these

characteristics is used for the creation of procurement alternatives or processes.



(C) SAP AG AC530 5-10

© SAP AG 2001

Process Types for Procurement

Material ACT-LCD##Valuation Area 6000

Period status: Quantities and Values entered

Price control Standard Price

Period 01.2001



PriceExch. rate diff.Price diff.Preliminary ValuationQuantity

Standard Price MXN 5

Label for CDMexico

Price unit 100 PC

Beginning inventory

ReceiptsProduction

Purchase order

Procurement Process

TypesPurch ase order

Material Transfer Postin g

Production

Subcontracting

Transfer posting - specialinventory

Stock Transfer

Procurement

Stock Transfer

Subcontracting

Upon goods movements, the system determines the process category automatically depending on the

movement type. Depending on the process category, there is a single-level or multilevel procurement

process. For example, Purchase Order is a single-level procurement , and Production is a multilevel

procurement. This system-internal differentiation plays a role in actual costing.

During procurement, the system distinguishes between the process categories mentioned above and

automatically updates them in the material ledger display.

See the section Extended Customizing for detailed information on how and under what conditions you

can make adjustments to this view, if necessary.



(C) SAP AG AC530 5-11

© SAP AG 2003

Controll ing Level of Material

Processcategory

Purchase order

Subcontracting

Stock transfer

Transfer posting/Material

Production

Plant/material

Purchasing organization/vendor

Plant/material

Purchasing organization/vendor

Plant/material

Withdrawal plant

Plant/material

Withdrawal plant/material

Plant/material

Production p lant/planning p lant

BOM/routing

Production version

Procurement

alternatives

Characteristics of the controlling level

...

...

...

...

...

Vendor A,Vendor B,etc.

Maintainowntexts

The level of detail for a procurement process can be determined by choosing the controlling level. The

controlling level determines the characteristics with which the procurement alternatives and

procurement processes are generated, and for which data is updated. In product cost planning (mixed

costing), the controlling level determines the characteristics of the procurement alternatives that are used

for calculating a mixed price. In periodic product cost controlling, you use a controlling level when

creating a product cost collector or using a production process, which is to be assigned to the lowest

node of a cost object hierarchy. In the material ledger, the controlling level is used to analyze actual

costs is the master data display.

If you have not explicitly set the controlling level, the system automatically sets the Plant/Material

level. You should take into account that the data volume on your computer increases if you select a

higher level of detail for the controlling level. Once you have defined a controlling level, it applies to all

application components. To change a controlling level, choose Edit controlling level of material. Enter a plant and a material and select a controlling level from the selection window.

You cannot change a controlling level if procurement alternatives or procurement processes are already

being used for this controlling level. In the display, a controlling level that cannot be changed is

identified by the locked padlock symbol.

In Enterprise release, the controlling level can also be changed in collective processing.



(C) SAP AG AC530 5-12

© SAP AG 2003

Structured Value Added

Material ACT-LCD-##Valuation area 6000

Period status Quantities and values entered

Price control Standard pr ice

Period 01.2001



PriceExch. rate diff.Price diff.Preliminary valuationQuantity

Standard pric e MXN 5

Label for CDMexico

Beginning inventory

ReceiptsProduction

Purchase order

Processcategory

Category

Procurement Alternative

Goods Movements,Invoice Differences

Vendor A/ PurOrg. 1

Vendor B/ PurOrg. 1

....IR..

....GR...

In the material ledger, the detailed reporting of the quantity structure is not just used for the periodic

rollup of costs. Rather, you can break down and evaluate the information in real-time, structured

according to individual aspects, in the material ledger display.

With the material ledger, the process category for goods movements is determined automatically

depending on the movement type.

When working with a detailed Controlling level, every goods movement is automatically assigned to

a procurement alternative. In the example above, the Controlling level Purchasing

Organization/Vendor has been selected for the process category Purchase Order. For this reason, a

goods receipt is automatically assigned to the related procurement alternative (in this example: Vendor

B).

The procurement alternatives are, as shown in the slide, hierarchically arranged under the process

categories



(C) SAP AG AC530 5-13

© SAP AG 1999

Production: Objectives

z Explain the possible scenarios of Cost ObjectControlling.

z Create and confirm a cost object and allocateoverhead.

z Settle a cost object and analyze its effects in thematerial ledger.

At the conclusion of this, you wil l be able to:



(C) SAP AG AC530 5-14

© SAP AG 2001

Cost Object Controlling: Scenarios

Order - BasedControlling

Production order Product Cost Collector

PeriodicControlling

Product line

Work center 1

lot -size orientated

Product lin e

WarehoWarehouseuse

WarehoWarehouseuse

Work center 2 Work center 3

Sales Order

SDSD

Production order

WarehoWarehouseuse

Sales order Controlling

z Collection of cos ts/revenues per sales order item, independent fr omproduction scenario

z Actual sal es and ad min is trationcosts to sales order items

z special direct costs fr om sales per sales order item

z Monitoring of funds co mmitment

z Work in progress or transport andprovisions thr ough results analysis

z High production rate

z stabil production envir onment

z No/ low set up c osts

z Lot-based controlling i s not required

z Cost collection to product costcollectors

z Example: repetitive manufacturing

z Flexible product ionenvironment

z High set up costs

z Complete assigment of costsper order is required

z Controlling per production lotrequired

z Example: Production order,process order

Cost Object Controlling offers order and period based controlling for the cost of goods manufactured

and plants.

In order-related product cost controlling you use manufacturing orders as cost objects. The costs updated

on the manufacturing order are normal analysed and settled by lot. This means that variances are

calculated after the total quantity planned for production has been delivered to the warehouse.

Periodic Cost Controlling collects costs over a longer period of time, using a cost object, whereby

debits and credits are considered for each period. In periodic product controlling, you use a product cost

collector as the cost object which allows the collection of costs at production level, regardless of the

production type. Regardless of whether you use order-related, process or repetitive manufacturing, you

can update costs to the product cost collector and also analyze these periodically. You can use cost

object hierarchies to create costs, that can not be directly assigned, to highler levels (cost object nodes in

the hierarchy). Make-to-order production means that materials are produced in accordance to a sales order item. Such

materials are called made-to-order materials or individual requirements. In this case, the cost object is a

cost and revenue bearing sales order item.



(C) SAP AG AC530 5-15

© SAP AG 2001

IDES Scenario: CD Production

ACT-LCD6000 ACT-BCD6000

ACT-DCD6000

ORDERORDER

Deliv1097

Deliv1098

PV02PV01

PRODCOST

500 PC 500 PC 500 PC

900 PC900 PC

50 PC

800 PC

BI: 500 PC

This diagram shows us the planned production scenario that will be completed in the exercises for the

unit. After you have procurred the raw materials, the "slug" using two procurement alternatives, the

finished product is completed.

To do this, we use a product cost collector, that uses a specific production version. In production, 100

pieces are scrapped, so that from 900 input materials only 800 finished CDs are produced.



(C) SAP AG AC530 5-16

© SAP AG 2003

Production Scenario: Relationship betweenProduct Cost Collectors and Production Orders

$$$$

Trgt Act. WIP Var.

PPPP--SFCSFC

COCO--PCPC

ProductionProcess

DataHeade

r Production process

Profit center

Business area:

Costing variant plan

Costing variant actual

Costing sheet

Overhead key

Results analysis key

Variance key

Name of production process

Company code

Material

Order type

Order

System status FREI ABGR ANRV ABWE

Name of production process

Production process no.

Production plant

Planning plant

Production version

Costing lot sizeOrders/PV Cost estimate

Settlement rule

Material Plant ACT-LDC- ## 6000

100032914

6000

FV01

Pversion: 0001Pversion: 0001

ACT-DC05

6000

RM01

701737

PREM

PPP3

COGM

000001

000003

6000

Characteristics

Production

order 1

Productionorder 2

Productionorder 3

PKOSA

Product Cost Collector Product Cost Collector

A product cost collector can be created independently of the production type. This means that you can

collect costs on a product cost collector during order-related production, process manufacturing and

repetitive manufacturing. The assignment of the production order to the product cost collector takes

place through a production process. The system automatically generates the production process when

the product cost collector is created. Manufacturing orders that are linked to product cost collectors

receive the status PCC. This status prevents costs from being posted to the production order. The status

of the product cost collector is relevant for period-end closing in Cost Object Controlling.

If you are working with the Controlling level Production Version, the product cost collector is created

for the characteristics material/production plant/planning plant/production version. SAP recommends

using this Controlling level whenever you are working with production versions. Alternatively, you can

also use the Controlling levels BOM/routing or production plant/planning plant.

If you have already created a product cost collector, then the system directly generates a link to the product cost collector when a production order is created for the corresponding characteristic values.

The costing variant Planned that was defined in the production order is not transferred from the product

cost collector, but rather continues to be defaulted from the order. It can be used, if necessary, to create

a temporary planned order cost estimate that cannot be saved.



(C) SAP AG AC530 5-17

© SAP AG 2001

Actual Costing/Material Ledger (CO-PC-ACT)

Material Ledger

Profitability Analysis(CO-PA)

Cost Object Controlling(CO-PC-OBJ)

Variance categories

Price 0 MXNQuantity 2 MXNStructure 2 MXNScrap 2 MXNLot size 0 MXNOutput price var. 0 MXNTotal: 6 MXN

Cost Objects

Material: ACT-DCD##

Quantity: 100 PC

Material 13

Production 9

OH 5

Process 4

TotalTotal 3131

Product Cost Planning(CO-PC-PCP)

Material master: ACT-DCD

Standard Price:

Cost Estimate

Material: ACT-DCDLotsize 100 pc.Price: MXN 25

Mat.12

Prod.7

OH.3

Proc.3

25 MXN Variances -6 MXN

Stock -25

Cost Object Controlling: Value Flow

Price Update

Inventory

25

Price diff.

6

Mat.13

Prod.9

OH5 Pr oc.4

For materials with price control S, the goods receipt in the warehouse takes place at the standard price

at completion of production. Generally, this results from a standard cost estimate that was released. The

cost object is credited with the quantity delivered to the warehouse multiplied by the standard price.

When the goods are received, the system automatically debits the inventory account and credits the

inventory change account in Financial Accounting.

The value of the total variance is posted to a price difference account in Financial Accounting during

settlement. Furthermore, the value of the total variance is updated in the material ledger. At the same

time the actual cost component split is determined from the cost elements for the settlement and

registered in the material ledger.

You can settle the variance categories to costing-based Profitability Analysis (CO-PA). Only the

variances calculated with target cost version 0 are relevant for settlement to Profitabiliy Analysis. You

settle to costing-based Profitability Analysis by variance categories and cost element groups. Youcontrol the variance categories through the value fields in Profitability Analysis.



(C) SAP AG AC530 5-18

© SAP AG 2001

Material Ledger

Single-level pri ce differences

Credit:

Goods Receipts: Credit withstandard price

Work in Progress-WIP at actualcosts (total settlement)-WIP attarget costs (period ic settlement)

Debit

Material cost s: Actual quantity*standardprice

Internal activity: Actual quantity*planprices (revaluation with actual pricespossible)

Overheads Actual overhead according tocosting sheet

Process costs: Actual process quantitieswith plan prices according to pr ocesstemplate (revaluation wi th actual process

possible)

Production Variances in the Material Ledger:

Cost Objects

Inventory

25

Price Diff .

6

Mat.13

Prod.9

OH5

Proc.4

Cost Component sp litacc. to Actual Costs

Variances:Debit - Goods receipt - WIP

All actual postings in the system that are related to a product cost collector, immediately debit the

product cost collector. Logistical functions, such as goods issue postings and confirmations continue to

be carried out with reference to manufacturing orders (or in repetitive manufacturing: production

versions). The resulting costs are updated on the product cost collector. You can carry out goods issues,

confirmations and goods receipts independently of each other. However, you can also ascertain that

activity allocations and goods issues and/or goods receipts are automatically carried out during

confirmations. You make the necessary settings for this in Logistics. You can confirm order headers or

individual operations. When calculating work in process in Product Cost by Period, it is best to perform

confirmations at the level of operations.

The period-end closing activities of Cost Object Controlling make the following possible: regular

periodic reporting, revaluation of activities at actual activity prices, periodic allocation of overhead and

process costs, as well as the calculation of work and process and the variances between target and actualcosts.

During the settlement and transfer of the calculated data to other objects and application components,

single-level price differences of the material are generated in the material ledger that contain the

variances of the product cost collector, but not price variances of lower levels, such as those from the

raw materials entered.



(C) SAP AG AC530 5-19

© SAP AG 2001

Consumption

z Sales

z Transfer to Other Plants



(C) SAP AG AC530 5-20

© SAP AG 2001

Overview of Data Flow to Profi tability Analysis

OverheadManagement

Product CostControlling

Profitability AnalysisProfitability Analysis

COCO

RevenueDiscounts

CostObject

COCO--PAPA

SDSD

•Processes•Cost Centers•Internal Orders

Mat. Wage OH Proc.Cost and revenue element accounting

COCO--PCPCCOCO--OMOM

FIFI

Profitabilitysegment

Standard Cost Estimate

The data from sales component (SD) is one of the most important sources of information for Profitability

Analysis.

Sales data is transferred to costing-based CO-PA from two main sales order processing tasks: Creating

or changing an order (optional) and Billing.

Sales data is transferred to account-based CO-PA from two main sales order processing tasks: Goods

issues and Billing.

Costs from other areas in CO can be transferred to CO-PA periodically, using activity and template

allocation, settlement and stock transfers.

In addition, it is also possible to carry out manual direct account assignments from FI to CO-PA.



(C) SAP AG AC530 5-21

© SAP AG 2001

Sales Order Processing

t

Customer

Process chainLogistics

SDSD

1

1

SalesOrder 1

2

Delivery. 1

3

Billing/Settlement

1

4

Payment

FIFI

Effective sales order processing requires the integrated processing of all activities relating to the

customer. The R/3 component SD (Sales and Distribution) is the perfect instrument to do this. R/3 uses

documents that are linked together, which are then used to start the respective workflows. The SD

component begins with the processes before the actual sale and ends with the processing of the customer

payment for the goods or services purchased. Each process takes place using an electronic document,

that is linked to the previous or next document.

Sales order processing begins with the creation of a sales document.

When the goods are delivered a delivery document is created, and a billing document is generated to

invoice the customer.

When the customer payment is received, the money for the order is received and you post the incoming

payment in FI.

The linked document flow in the R/3 System simplifies sales order processing for both you and your customers.



(C) SAP AG AC530 5-22

© SAP AG 2001

Delivery and Bill ing

X

X

X

Revenue

Receivables

Rebate

X

Actual Co st of Sales

X

Inventory

Quanti ty +Revenue +

Rebate +CoS +

1

SalesOrder

2

Delivery

3

Billing/SettlementQuantity Flow

COCO--PAPA

(costing based)

SD

FIFI

ECEC--PCAPCA

t

Accting AcctingCOCO--PAPA

MLML

Data is updated in CO-PA for accounting purposes at the same time that data is posted in Financial

Accounting. This means, the system creates corresponding line items in CO-PA, at the same time that it

creates the accounting documents for goods issue and billing, Note, that a line item will be created in

CO-PA for each individual cost/revenue element. The number of received line items is identical to the

number of items posted in FI. At this point, no line items are created for incoming orders, as these do not

result in postings to FI.

The values in account-based CO-PA are assigned to profitability segments and are saved in the

cost/revenue element, specified in MM (for goods issues) or SD (billing documents). Note, that the data

is only transferred to account-based CO-PA if the general ledger account in FI is defined as a cost or

revenue element in CO. (for more information, see the notes for general posting logic in Controlling).

A business transaction is usually ended in SD with a billing document. The Billing data is automatically

transferred to FI, where the Revenue and receivables postings are made at the same time. When creating a billing document, SD calculates all revenues, sales deductions and other values (e.g

standard costs) using the costing sheet, and stores these values in condition types. These condition

types are assigned to value fields in costing-based Profitability Analysis, so that the System can

automatically transfer these values to CO-PA.



(C) SAP AG AC530 5-23

© SAP AG 2001

Sales of Goods and Services

COCO--PCPC

Mat. CostEstimate

COCO--PAPA

Profitability Analysis

Bil ling Doc/ Order Settlement

Manufacturing

costs

Sales Order

Item. 10

ACT-DCD600 pieces

Mat500

Prod.250

OH177

Proc.300

Actual revenue

Planned Costs

Material Ledger Mat.600

Prod.300

OH100

Proc.400

?

Scenarios:

The sales item is based on products from make-to-stock production. The production process delivers the

finished goods, for example controlled by a production order, for sale to unrestricted-use stock. In this

case, the sales order item is not a cost object. If the sales order item is not a cost object, the revenues

from billing are transferred directly to Profitability Analysis (CO-PA). Posting of costs of goods

manufactured in CO-PA can be based on a cost estimate, already created in Product Cost Planning.

Possible variances can be transferred to CO-PA when the production order is settled.

If the sales order item is a cost object, the cost of goods manufactured for the sales are only transferred

to CO-PA at order settlement.

If you have activated the material ledger, it is possible to revaluate the billing document or order

settlement at period-end close using actual costs. This option is discussed in the Unit "CO-PAIntegration".



(C) SAP AG AC530 5-24

© SAP AG 2001

Process Types for Consumpt ion

Material ACT-DCD##Valuation Area 6000

Period status: Quantities and Values entered

Price control Standard Price

Period 01.2001




Standard Price 21.60 MXN

Label for CDMexico

Price unit 100 pc


Consumption

Stock Transfer

Sales Order

Plant A

Plant B

700 15120 0 0 21.60

600 12960 0 0 21.60

100 2160 0 0 21.60

60 1296 0 0 21.60

40 864 0 0 21.60

800 17280 2400 0 24.60

ConsumptionCategories:Preliminary valuation atstandard pri ce

Process Types for Consumption

AssetsSales Order

Cost Center

Material Transfer Posting

Production

Subcontracting

Transfer Posting - SpecialInventory

Stock Transfer

When materials are consumed, the data is categorized (in the same way as for procurement) according

to different process categories.

The consumption alternative represents the different ways a material can be consumed and is used in

the application component Actual Costing/Material Ledger for display in the material ledger master data

display.

In multilevel processes, the consumption alternative and the procurement alternative are the same; in

other words, the consumption alternative of a raw material is also the procurement alternative of a semi-

finished product.

All consumed material quantities, such as those for sales orders, stock transfers or consumption of cost

centers, are valuated with the standard price.



(C) SAP AG AC530 5-25

© SAP AG 2001

IDES Scenario: CD Production all Postings

ACT-DCD6000

ORDERORDER

Del.1097

Del.1098

PROD ORDER

SALE TRANS

ACT-DCD6100

COST

1000 PC

500 PC 500 PC

900 PC900 PC50 PC

600 PC

200 PC800 PC

100 PC

PV02

PV01

ACT-LCD6000

ACT-BCD6000

The above diagram shows an overview of the postings already made, along with the corresponding

quantity data. This data corresponds with the participant exercises completed during this course.

The aim of period-end close in the material ledger is to subsequently adjust the actual costs or

variances to the standard cost.



(C) SAP AG AC530 5-26

© SAP AG 2001


Structured Value Chains: Unit Summary

z Explain the components concept of the actualquantity structure in the material ledger.

z Explain and configure the Controlling areas for amaterial.

z Carry out a a product ion scenario and explain thevariances displayed in the material ledger.

z Sell manufactured products and analyse theresults in CO-PA.



(C) SAP AG AC530 5-27

Structured Value Chains: Exercises

Unit: Structured Value Chains


• Understand how value chains are structured by the materialledger

• Master the settings for controlling levels of a material

• Explain how the Material Ledger and Cost Object Controlling

(product cost collectors) are integrated

Your company has decided that it wants detailed costinformation for the second input material (CD blanks) and

the demo CDs. In procurement controlling, the

capabilities of the material ledger are to be utilized and more detailed controlling levels determined.

You produce the demo CDs and post goods issues.

1 Change Settings for Controlling Levels

1-1 Look at the Controlling levels of your CD labels and blank CDs. Which

characteristics are updated with these settings when goods are received for the process purchase order category? What are the settings?

Controlling Level for Purchase Orders: ACT-LCD-##

Characteristic 1

Characteristic 2

Controlling Level for Purchase Orders: ACT-BCD-##

Characteristic 1

Characteristic 2

1-2 You want to carry out procurement controlling for your blank CDs at a greater

level of detail. To do so, change the setting for the Controlling level for purchase

orders for your blank CD ACT-BCD-## to Purchasing organization/vendor .



(C) SAP AG AC530 5-28

2 External Procurement

2-1 Creation of Two Purchase Orders

2-1-1 Order 500 blank CDs ACT-BCD-## from Puebla Digital and another 500

from Productos Argentinos. Use the following data:

Purchase

Order1

Purchase

Order2

Purc

hase

orde

r type

Standa

rd

purcha

seorder

Standar

d

purchas

e order

Ven

dor

1097

(PueblaDigital

S.A.)

1098

(ProductosArgenti

nos)

Purc

hasi

ngorga

nization

6000 IDES Mexico

Purchasi

ng

grou p

600 Compras Mexico

Com pany

code

6000 IDES Mexico

Mate

rial

ACT-BCD-## (blank CD)

Qua

ntity

500 pc each

Plant 6000

Stor

agelocat

0001



(C) SAP AG AC530 5-29

ion:

When you confirm your entries, the system pulls the

valid prices from the vendor info record.

Price MXN

_____

____ /100PC

MXN

______

___ /100 PC

Save your purchase order and write down the purchase order

number.

Purchase order 1:

__________________________________________

Purchase order 2:

__________________________________________

2-2 Goods Receipts

2-2-1 Post the goods receipt for the first purchase order (most of the data is

automatically taken from the purchase order):

Posting

date

Today's date

Purchaseorder

number

See previous exercise

OK field Select

Plant 6000

Storage

location

0001

Quantity As in the purchase

order

Movement

type

101

Repeat this procedure for the second purchase order.



(C) SAP AG AC530 5-30

2-2-2 Then look at the ACT-BCD-## data in the material ledger display.

You now have more detailed information for the procurement

alternatives. What names do the procurement alternatives have? Double-

click on the lines of the procurement alternatives. Specific characteristics

have been defined for the procurement alternatives. Which characteristic

values do the procurement alternatives have in these cases?

Procurement Alternative 1

Name:

Characteristic Value

Process category

Controlling level

...

...


Name:


Process category

Controlling level

...

...

3 Change Procurement and Consumption Alternatives

3-1 You want to change the names of the procurement alternatives for ACT-BCD-## in the material ledger display. To do so, maintain the names of the twoprocurement alternatives with the following two texts.

Name of procurement

alternative 1097/6000

1097: Puebla

Digital

Name of procurement

alternative 1098/6000

1098:

ProductosArgentinos

Then look at the data for ACT-BCD-## in the material price analysis.



(C) SAP AG AC530 5-31

4 In-House Production

Basic data for in-house production

You now want to begin production of the demo CDs. You have decided to cost the

products by period and create a product cost collector for the demo CD. Later you willcreate a production order for this product cost collector and complete processing.

The following data is available:

Cost Center Group:

CCG530-##

Cost centers: CC530-##

Work centers: WP530-

##

Activity types: ATL-

##;ATR-##

Production

version:

0001

newmachine

4-1 Controlling level of the demo CD

Display the Controlling level of your demo CD for the process category Production

(material ACT-DCD-##):

Controlling level

4-2 Product Cost by Period with Product Cost Collectors

4-2-1 Create a product cost collector for your demo CDs.Enter the following data in the dialog box:

Material

ACT-DCD-##

Plant 6000

Order type

RM01

Controlling

level

Productionversion

Planni

ng

6000



(C) SAP AG AC530 5-32

plant

Produc

tionversion

01

Maintain the following entries in the Data tab:

Profit

center:

No entry

Business

area:

7000

Costingvariant

plan:

PREM

Costing

variantactual:

PPP3

Costingsheet:

COGM

Overhead key:

SAP10

Resultsanalysis

key:

No entry

Variance

key:

000003

When you save, the system asks if you want to create a preliminary costestimate. Answer Yes.

Create

preliminarycost

estimate?

Yes



(C) SAP AG AC530 5-33

Write down the purchase order number of the product cost collector.

Order number of product costcollector:

___ ___

___

___

___

Look at the cost estimate. What is the cost of goods manufactured for thedemo CD?

Cost of goods mfd for DEMO

CD: per 100 pc

MX

N

4-3 Production of the demo CDs

4-3-1 Create a production order for the production of the demo CDs (ACT-

DCD-##). Use the following data:

Material ACT-DCD-##

Order type PP08

Production plant 6000

Quantity 900 PC

Finish (date) today

Release the order and save. Write down the order number:

_____________________________________________________

4-4 Actual Postings for the Production Order

4-4-1 Create a final confirmation for your production order. Use the followingdata:

Confirmation type

Finalconfirmati

on

Yield to

confirm

800 PC

Confirme

d Scrap

100 PC

Posting

date

today

The Goods Movements icon displays information on which goods issues

and goods receipts the system will perform when you save theconfirmation.



(C) SAP AG AC530 5-34

Goods receipt ACT-DCD-##:

80

0P

C

Goods issue ACT-LCD-##:

90

0

PC

Goods issue ACT-BCD-##:

90

0P

C

(Do not confirm more than 950 pieces of the raw material, otherwise youwill not have enough materials available.)

Check that all goods movements are correct and save your confirmation as

a final confirmation.

4-4-2 Call up the material ledger display for all of your materials. Do pricedifferences exist for the goods receipt for the order? Why?



(C) SAP AG AC530 5-35

4-5 Update the Cost Component Split for Goods Issue

Go to the material price analysis for your demo CD ACT-DCD-##, and choose

view Cost component. Display the actual and then the preliminary values. Enter the values in the following table:

Cost

Component

Act

ualvalue

Preliminar

y Valuation

Material

component:

Production

setup:

Machine

production:

Materialoverheads:

Miscellaneouscosts:

Why are the cost component split values the same at this point in time (excluding

possible rounding errors)?

_______________________________________________________________

_______________________________________________________________

_______________________________________________________________

4-6 Period-End Closing in Cost Object Controlling

It is the end of the period, and you want to settle the product cost collector for ACT-DCD-##. To do this, perform the following steps using the data in the

corresponding tables.

4-6-1 Calculation of Overhead

Controllingarea

6000

Material ACT-DCD-##

Plant 6000

Period/Fisca

l year

Current period

Background

processing

_ (no)



(C) SAP AG AC530 5-36

Test run _ (no)

Dialog

display

X (yes)

Detail list X (yes)

Which type of overhead is calculated? What is the amount?

Type of overhead:

Overhead rate: %

Amount:

Currency:

Click the Change Display Variant icon to display the amount in object

currency (MXN)

Overhead: MXN ________________



(C) SAP AG AC530 5-37

4-6-2 Variance Calculation

Material ACT-DCD-

##

Plant 6000

Period/Fiscal year Current period

Selected target costversions

000

Test run __ (no)

Detail list X (yes)

How high are the calculated variances?

Target costs

Actual costs

Variances(Act. cost - alloc. act. costs

- scrap)

4-6-3 Settlement

Material ACT-DCD-##

Plant 6000

Settlement period Current period

Background

processing

_ (no)

Test run _ (no)

Detail lists X (yes)



(C) SAP AG AC530 5-38

Check transactiondata

_ (no)

Go to the detail list and make a note of the settled values: You can see the

values in local currency by changing the display variant.

Amount/currency

Sender

Settled to

material

EUR _____________ / MXN ____________

Settled to

profit

ability

segment

EUR _____________ / MXN ____________

Go to the material ledger display and write down the price variances incompany code currency.

PriceDiffere

nces

MXN



(C) SAP AG AC530 5-39

4-7 Actual Cost Component Split: Updating the Cost Components after Settlement

4-7-1 Go to the material price analysis for your demo CD, and choose Cost

components view. Display the actual and then the differences. Enter thevalues in the following table:

Cost

Component

Ac

tualval

ue

D

if fer

e

nc

es

Input materials:

Productionsetup:

Machine production:

Material

overheads:

Miscellaneous

costs:

How can you explain the differences that did not exist before the

settlement of the product cost collector?

________________________________________________________

________________________________________________________

________________________________________________________

4-7-2 In Material Price Analysis, go to Evaluated Quantity Structure by

selecting the relevant button. Change the base quantity to price unit 1.

Answer the following questions:

Price difference per CD EUR ______

Label quantity per CD ______ PC

Blank quantity per CD ______ PC

Recording quantity per CD ______ H

Labeling quantity per CD ______ H

5-1 Create a Sales Order



(C) SAP AG AC530 5-40

Create a sales order with the following data:

On the selection screen:

Order type: OR

Sales

Organization:

6000

Confirm the entries and enter the following data:

Sold-to-party 6666

Purchase order

number:

Order ## (your group

number)

Material: ACT-DCD-##

Quantity: 600 PC

Confirm your entries.



(C) SAP AG AC530 5-41

The system automatically determines a sales price using price and account

determination. What is the price?

_________________________________________________/ PC

Save the order and write down the order number:

__________________

5-2 Delivery for Sales Order

Post the delivery for your order. Make the following entries:


Shipping point: 6000

Selection date: A date in the next month

Order: Your sales order number


On the Picking tab, enter the suggested delivery quantity (total quantity of your

order) as the picking quantity. Click on the post goods issue icon.

Write down the number of the delivery:

____________________________

Go to the price determination view of the material price analysis of your demo CD

and check the data for your delivery. At what unit price was the delivery valuated?

MXN __________________________________

5-3 Billing the Sales Order

In order to be able to see the revenue generated by the sale in Profitability Analysis(CO-PA), you must create a billing document.

5-3-1 Create a Billing document for your delivery and save the document. Writedown the document number:

_____________________

5-3-2 Execute report IDES-530 in the information system for CO-PA. Make the

following entries:

From period:

Current period (MM.YYYY)

From/to

product:

ACT-DCD-##

Currency:

10 Company code currency



(C) SAP AG AC530 5-42

How does the system find the differentiated values for material

component, wages, etc. ?

_____________________________________________________

Why do no actual values for contribution margin accounting exist at this

time?

______________________________________________________



(C) SAP AG AC530 5-43

Enter the following values in the table:

Sales revenue: MXN

Total costs of

goods

manufactured intarget:

MXN

Contributionmargin II - target:

MXN

6 Further Goods Movements for the Demo CD

6-1 External Procurement of the Demo CD

6-1-1 Because your production capacity has been used up and the demand for

the demo CD has not yet been met, you decide to get the demo CDs from

vendor Studio Chapultepec. Create a purchase order with the followingdata:

Purchase

order type

Standard purchase

order

Vendor 1099 (Studio

Chapultepec)

Purchasing

organization

IDES Mexico

Purchasinggroup

Compras Mexico

Companycode

IDES Mexico

Material ACT-DCD-## (demoCD)

Quantity 200 PC

Price According to the purchasing info record

Plant 6000

Storage

location:

0001

When you confirm, the system issues a warning message. Ignore the

message. Which price was taken from the purchasing info record?



(C) SAP AG AC530 5-44

PO price: MXN / PC

Save your purchase order.

Purchase

ordernumber:

6-1-2 Post the goods receipt for your purchase order:

Posting

date

Today's date

Purchase

order

number

See previous exercise

OK field Select

Plant 6000

Storagelocation

0001

Quantity As in the purchaseorder

Movementtype

101

Post the goods issue.



(C) SAP AG AC530 5-45

Then look at the data in the material ledger display. You can now analyze

whether external procurement or in-house production is cheaper for you.

External procurementprice:

MXN / PC

In-house production

price:

MXN /

PC

Average receipt price: MXN /

PC

However, note that the price of in-house production does not contain the

price differences of the raw materials used at this point in time.

6-2 Transferring part of your demo CD

6-2-1 The manager of your second plant in Mexico has advised you that there is

an urgent need for demo CDs. Therefore, you place part of your inventory

at his disposal and enter the following posting:


Movementtype

301 (Transferposting, plant to

plant)

Plant 6000

Storage

location

0001

Receiverplant/

storagelocation

6100/0001

Material ACT-DCD-##

Quantity 100 PC

6-2-2 After saving the transfer posting, look at the data in the material ledger

display again. Display the data for plant 6000 and look at the accountingdocument for the posting. Then switch to the data display for plant 6100.

What is the cause of the price differences?

________________________________________________________

________________________________________________________

Display the cost structure in plant 6100. Where do the different cost

component split values come from?

________________________________________________________



(C) SAP AG AC530 5-46



(C) SAP AG AC530 5-47

Structured Value Chains: Solutions

Unit: Structured Value Chains




IMG: Tools→ Customizing→ Edit Project→ SAP Reference IMG

1 Settings for the Controlling Level

1-1 Display Controlling Level

ACT/ML→ Environment→ Edit Controlling Level for Material

In the table, you see that the checkmark for the process category Purchase Order isnext to the characteristics Plant/Material.

Controlling Level for Purchase Orders: ACT-LCD-##

Characteristic 1 Plant

Characteristic 2 Material

Controlling Level for Purchase Orders: ACT-BCD-##

Characteristic 1 Plant

Characteristic 2 Material

1-2 Change Controlling Level

Select the process category Purchase Order for ACT-BCD-## and click on the iconChange Controlling Level. Choose the setting Purchasing Organization/Vendor as

the new Controlling level. The checkmark is now next to the set level. The

characteristics purchasing organization and vendor are now updated in addition to

the previous characteristics.



(C) SAP AG AC530 5-48

2 External Procurement

2-1 Creation of Two Purchase Orders

Logistics→ Materials Management→ Purchasing→ Purchase Order→ Create

→ Vendor/Supplying Plant Known

First Order: Header data:


Vendor 1097 / Puebla Digital S.A.

under Organization data:

Purchasing organization 6000 IDES Mexico

Purchasing group 600 / Compras Mexico DF

Company code 6000 IDES Mexico

First Order: Item overview

Material ACT-BCD-## (blank CD)


Plant 6000


Confirm your entries. The system automatically calculates the purchase order pricefrom the purchasing info record.

PO price: MXN 11 1 pc each

Save the order!

Purchase order number 1: __________________________________________

Second Purchase Order: Header data:


Vendor 1098 / Productos Argentinos Imp. S.A.

under Organization data:






(C) SAP AG AC530 5-49

Second Purchase Order: Item overview

Material ACT-BCD-## (blank CD)


Plant 6000


Confirm your entries. The system automatically calculates the purchase order price

from the purchasing info record.


Save the order!

Purchase order number 2: __________________________________________

2-2 Goods Receipts

2-2-1 Goods receipt for the first purchase order:



Number Known

Enter your purchase order number and confirm. The system determines

the following information. Check this information in the line for the purchase order item.



Plant 6000



Movement type 101

Set the flag in the OK column (column to the right of the material)

OK field Select

Save.

Repeat this procedure for the second purchase order.



(C) SAP AG AC530 5-50

2-2-2 Procurement alternatives in the material ledger display:



Plant: 6000

Period/Year: Current period/current yearOpen the category Receipts→ Open the process category Purchase

Order

By adding the characteristics purchasing organization and vendor, thecorresponding procurement alternatives are generated and shown in the

material ledger display. For more information, double-click on the procurement alternatives.


Description Vendor:0000001097 Purchasing Org.:6000


Process category BB purchase order

Controlling level purchase order purchasing

organization/vendor

Purchasing

organization

6000 IDES Mexico

Vendor 1097 Puebla Digital S.A.


Description Vendor:0000001098 Purchasing Org.:6000


Process category BB purchase order

Controlling level purchase order purchasing

organization/vendor

Purchasingorganization

6000 IDES Mexico

Vendor 1098 Productos Argentinos



(C) SAP AG AC530 5-51

3 Change Procurement and Consumption Alternatives

ACT/ML→ Material Ledger→ Edit Procurement Alternatives/Consumption Alternatives

Enter material ACT-BCD-## and plant 6000. Select the first procurement alternative and click on the icon Display/Change. Enter a name in the field Changeable name. Click on

Confirm. Then double-click on the second procurement alternative and enter a text there as

well. Then save.

Name of procurement alternative 1097/6000 1097: Puebla Digital

Name of procurement alternative 1098/6000 1098: Productos Argentinos

In the material ledger display, open the category Receipts for ACT-BCD-## and then the

process category Purchase order . The procurement alternatives are now shown with your maintained text.

4 In-House Production

Cost Center Group: CCG530-##

Cost centers: CC530-##

Work centers: WP530-##

Activity types: ATL-##; ATR-##

Production version: 0001 new machine

4-1 Controlling level of the finished demo CD

ACT/ML→ Environment→ Edit Controlling Level for Material

Enter material ACT-DCD-## and plant 6000.

Controlling level Production Production version

The controlling level cannot be changed if product cost collectors have already

been created, or if a mixed costing uses a controlling level. In the current example,

the standard price of the demo CD has been updated with a mixed costing.



(C) SAP AG AC530 5-52

4-2 Product Cost by Period with Product Cost Collectors

4-2-1 Create product cost collectors.

Accounting→ Controlling→ Product Cost Controlling→Cost Object

Controlling→ Product Cost by Period → Master Data→ Product Cost

Collector→ Edit

Enter your material ACT-DCD-## and plant 6000, and click on the CreateProduct Cost Collector icon.

Enter the following data in the dialog box:

Material ACT-DCD-##

Plant 6000

Order type RM01

Controlling level Production version

Planning plant 6000

Production version 01

Click on icon Confirm.

Maintain the following entries in the Data tab:

Profit center: No entry

Business area: 7000

Costing variant plan: PREM

Costing variant actual: PPP3

Costing sheet: COGM

Overhead key: SAP10

Results analysis key: No entry

Variance key: 000003

Save your entries and create a preliminary cost estimate for the productcost collector.

Order number of product cost collector:

You display the preliminary cost estimate for the product cost collector byclicking on the Cost Estimate button on the Header Tab.

Cost of goods mfd for DEMO CD: per 100 pc MXN 2066.67



(C) SAP AG AC530 5-53

4-3 Production of the demo CDs

4-3-1 Creation of a production order for the demo CDs ACT DCD-##

Logistics→ Production→ Production Control → Order→ Create

→With Material

Material ACT-DCD-##Order type PP08

Production plant 6000

Confirm the entries.

Quantity 800 PC

Finish (date) today

Click on the Release order icon and save your order. Order number:

_______________________________________

4-4 Actual Postings for the Production Order

4-4-1 Confirmation for the production order:

Logistics→ Production→ Production Control → Confirmation→

Enter→ For Order

Enter your order number and confirm.

Confirmation type Final confirmation

Yield to confirm 800 PC

Confirmed scrap 100 PC

Posting date today

Enter.

Click on the Goods movements icon. The following goods movements are performed when you save the confirmation:

Goods receipt ACT-DCD-##: 800 PC

Goods issue ACT-LCD-##: 900 PC

Goods issue ACT-BCD-##: 900 PC

(Do not confirm more than 950 pieces of the raw material, otherwise you

will not have enough materials available.)

Save the confirmation. Note the message in the status bar: Confirmationsaved, Goods Movements: 3, Errors: 0



(C) SAP AG AC530 5-54


ACT/ML: Material Ledger → Material price analysis


Plant: 6000

Period/Year: Current period/current yearOpen the category Receipts → Open the process category Production

The order was delivered according to price control S at the standard

price. Possible higher follow up costs are only posted at order settlement

or material ledger settlement. There are, therefore no price differences at

this time.

4-5 Update the Cost Component Split for Goods Issue



Plant: 6000


View: Cost Component

Value: Actual value

and then Value: preliminary valuation

Cost Component Actual value Preliminary valuation

Material Components: MXN 13,200 MXN 13,200

Prod. Labor / Setup: MXN 900 MXN 900Production Machines: MXN 2100 MXN 2100

Material Overhead: MXN 1,080 MXN 1,080

Other costs: MXN 0 MXN 0

As the material has price control S, the goods issues are valuated at the standard

price. The standard price is also used to determine the preliminary value, which

means that there can be no differences in the cost component split.



(C) SAP AG AC530 5-55

4-6 Period-End Closing in Cost Object Controlling

4-6-1 Calculation of Overhead


Controlling→ Product Cost by Period → Period-End Closing→ Single

Functions: Product cost collector→Overheads→ Individual Processing

Controlling area 6000

Material ACT-DCD-##

Plant 6000


Background processing _ (no)

Test run _ (no)

Dialog display X (yes)

Detail list X (yes)

Execute. You see the costing structure.

Type of overhead: Material overhead

Overhead rate 10%

Amount: 162.00

Currency: EUR

Click the Layout icon to add the fields Value in Obj Currency and Object

Currency.

Overhead: MXN 1350.00

Click on the green arrow to return to the menu.



(C) SAP AG AC530 5-56

4-6-2 Variance Calculation



Functions: Product cost collector→ Variances→ Individual Processing

Material ACT-DCD-##

Plant 6000


Selected target cost versions 000

Test run __ (no)

Detail list X (yes)

Execute.

On the variance calculation list, you see the amount of the variances. You

can have this amount displayed in the different currencies.

Amount(controlling

area)

Amount(company code)

Target costs ≈EUR 1984.00 ≈MXN 16533.36

Actual costs ≈EUR 2231.00 ≈MXN 18600.00

Variances(Act. cost - alloc. act. costs -

scrap) .

≈EUR 160.00 ≈MXN 1320.00

Click on the green arrow to return to the menu.

For more detail, choose the Cost Types report and the Variance Category

layout. There you can see that the main variances are quantities, structure,

and mixed variances.



(C) SAP AG AC530 5-57

4-6-3 Settlement



Functions: Product cost collector→ Settlement→ Individual

Processing

Material ACT-DCD-##

Plant 6000

Settlement period Current period

Background processing _ (no)

Test run _ (no)

Detail lists X (yes)

Check transaction data _ (no)

Execute.Click on the detail list icon on the basic list for settlement and write downthe settled values:

Amount/currency

Sender The number of your product cost collector

Settled to material EUR 160 / MXN 1320

Settled to profitability segment EUR 160 / MXN 1320

Material Ledger Display:



Plant: 6000



Open the category Receipts → Open the process category Production

Price differences: ≈

MXN 1320



(C) SAP AG AC530 5-58

4-7

4-7-1 Actual Cost Component Split: Updating the Cost Components after

Settlement



Plant: 6000


View: Cost Component

Value: Actual Value, Differences

Cost Component Actual value Differences

Material Components: MXN 13,500 MXN 300

Prod. Labor / Setup: MXN 1,125 MXN 225

Production Machines: MXN 2,625 MXN 525Material Overhead: MXN 1,350 MXN 270

Other Costs: MXN 0 MXN 0

When settling the product cost collector, the difference between the actual

debits and target credits are determined as variances, and are transferred

into the material ledger using the different cost elements. The differencesare a result of the variances between the values for the actual cost

component split, and the cost component split for planned prices.

4-7-2 Material Price Analysis:

Button: Show/ Hide Evaluated Quantity Structure

Scroll the the right to choose

Button: Change Base Quantity

Select Price Unit and Confirm

Price difference per CD EUR 1.65

Label quantity per CD 1.125 pc

Blank quantity per CD 1.125 pc

Recording quantity per CD 0.011 H

Labeling quantity per CD 0.011 H



(C) SAP AG AC530 5-59

5 Sales Order Processing

5-1 Create a Sales Order

Logistics→ Sales and Distribution→ Sales→ Order→ Create


Order type: OR

Sales Organization: 6000

Confirm the entries and enter the following data:

Sold-to-party 6666

Purchase order number: Order ## (your group number)


Quantity: 600 PC

Confirm your entries.Choose Item Conditions icon

The sales price for your demo CD is MXN 30 / 100 pieces.

Save the order and write down the order number:

__________________

5-2 Delivery for Sales Order

Logistics→ Sales and Distribution→ Sales→ Order→Subsequent Functions→

Outbound Delivery


Shipping point: 6000

Selection date: A date in the next month

Order: Your sales order number


On the Picking tab, enter the suggested delivery quantity (total quantity of your

order) as the picking quantity. Click on the post goods issue icon.



(C) SAP AG AC530 5-60

Valuation price for goods issue:



Plant: 6000

Period/Year: Current period/current yearView: Price determination structure

The delivery is valuated at the standard price - 21.60 MXN per piece.

5-3 Billing the Sales Order

5-3-1 Billing Document

Logistics→ Sales and Distribution→ Sales→ Order→Subsequent

Functions→ Billing

Enter the document number for your delivery and save. The billing

document is created.

5-3-2 CO-PA Report IDES-530

Controlling→ Profitability Analysis→ Information System→ Execute

Report (Operating Concern IDEA, Costing-based Profitability Analysis)

Choose Report IDES-530

From/to period Current Period

From/to product: ACT-DCD-##

Currency: 10 Company code currency

How does the system find the differentiated values for materialcomponent, wages, etc.?

From the cost elements that were transferred from the standard costestimate.

_____________________________________________________

Why do no actual values for contribution margin accounting exist at this

time?

The actual cost component split values have not been transferred yet.



(C) SAP AG AC530 5-61

Enter the following values in the table:

Sales revenue: MXN 18,000

Total costs of goods

manufactured in target:

MXN 12,960

Contribution margin II -target: MXN 5,040

6 Further Goods Movements for the Demo CD

6-1 External Procurement of the Demo CD

6-1-1 Create Purchase Order

Logistics→ Materials Management→ Purchasing→ Purchase Order

→ Create→ Vendor/Supplying Plant Known

Header data:


Vendor 1099 / Studios Chapultepec




Item overview

Material ACT-DCD-## (CD label)Order quantity 200 PC

Plant 6000


Confirm your entries. The system automatically calculates a purchaseorder price from the purchasing info record.


Save your purchase order and write down the purchase order number.

Purchase order number:

________________________________________



(C) SAP AG AC530 5-62

6-1-2 Goods Receipt for Purchase Order:



Number Known

Enter your purchase order number and confirm. The system determines

the following information. Check this information in the line for the purchase order item.



Plant 6000



Movement type 101

Set the flag in the OK column (column to the right of the material or initem details)

OK field Select

Post.




Plant: 6000Period/Year: Current period/current year

Procurement price analysis:

External procurement price: MXN 30.00 / PC

In-house production price: MXN 23.25 / 1 pc

Average receipt price: MXN 24.60 / 1 pc



(C) SAP AG AC530 5-63

6-2 Transferring Part of Your Demo CD

6-2-1 Post Goods Issue/Receipt


Goods Movement→ Transfer Posting

Posting date Today's dateMovement type 301

Plant 6000


Confirm.

Receiver plant/storage location 6100/0001

Material ACT-DCD-##

Unit of Entry 100 PC

Post.




Plant: 6100


Open the category Receipts→ Stock Transfer → Double-click on the

material ledger documentBranch from the material ledger document to the accounting document.

Goto→ Accounting documents

Accounting document

The material is delivered to plant 6100 with the value calculated in plant

6000 (standard price: MXN 21.60). In plant 6100, a preliminary valuation

takes place with the standard price valid there (MXN 20.00). Thedifference between these two value bases is displayed as the price

difference.

The cost component split is transferred from the delivering plant.




© SAP AG 2003

z Actual Price Determination

z Concept of the Periodic Unit Price

z Costing Run for the Multi-Level Actual Costing:

Contents:

Period-End Close in Actual Cost ing




© SAP AG 2003

z Explain actual price determination

z Explain how the periodic unit price is calculated

z Run the period-end close with or withoutrevaluation

z Create a costing run for multilevel actual costing,execute it, and analyze it


Period-End Close in Actual Costing: UnitObjectives




© SAP AG 2003

Course Overview







Special Functions




© SAP AG 2001

z Once the period closing program has been run, youcan carry out the period-end closing activities inthe material ledger.

z We will first concentrate on the posting logic. Youwill analyze the effects of the closing entry in thematerial ledger depending on whether the option torevaluate was chosen.

z Then you'll work with the multilevel actual costingfunction across multiple plants. You'll learn how to

create a costing run, execute it, and analyze it.

Period-End Close in Actual Costing: Business Scenario




© SAP AG 2003

z Explain actual price determination

z Explain how the periodic unit price is calculated

z Determine single-level material prices

z Generate closing entries with and withoutrevaluation of the ending inventory

z Analyze price difference post ings

At the conclusion of this topic, you wil l be able to:

Periodic Unit Price and Closing Entries: TopicObjectives




© SAP AG 2003

Cost Object Control ling Mater ial Ledger Cost Center Accounting

Cost Center


Order

Order

Cost Center

Act iv ityType

Act iv ityType

Standard p rice

Standard p rice

Standard price

Period-End Close in Cost Center Accounting

Planned pr ices(= Planned costs/Actual

costs)

Planned pr ices(= Planned costs/Actual

costs)

Actual pr ices(= Actual costs/Actual

activity)

Actual pr ices(= Actual costs/Actual

activity)

$

$

?

?

Cost center accounting is used to valuate all cost objects (orders) at a preliminary planned price. This

price can be set manually, or it can be the result of planned price determination with a cost component

split.

Like the standard price, this planned price has the advantage that a closed standard cost accounting

system can be implemented without the problem of price fluctuations preventing cost controlling of the

production process.

However, if actual costs and actual activity are known at the end of the period, you can determine the

actual price in cost center accounting and use this price to revaluate the cost objects, if appropriate.




© SAP AG 2003

Energy:

Actual costs: 77.000,-

2 0 0 0

k w h

5 0 0 0 k w h

5 0

S er H

2 0 S e r H

Service:


CD Production:


100 SerHSerH

ATRkwh

ATL

Actual Pr ice Determination

50 h labeling

200 h recording

$

$

$

$

When calculating actual prices, the system takes into account all activity flows between cost centers

and determines the price in an iterative process by dividing actual costs by actual activity. Actual

prices are determined as follows:

First divide primary costs by the activity quantity. Use the resulting preliminary price to revaluate the

activity input of other cost centers.

In the following steps, the prices determined are used to calculate other activity flows in an iterative

process, until the exact price has been determined for a cost center.

Price calculation procedure:

The periodic differentiated price is determined by dividing the costs of each period by the activity

quantities of the period. Use of this method means that different prices can occur in different periods.

The cumulated price is determined by dividing the cumulated costs of the current and previous

periods by the cumulated activity quantities. This method smoothes price fluctuations in the course of

the fiscal year. In the current period adjustments are made for activity allocations posted in previous

periods. This method ensures that the sender cost center is fully credited at the end of each period. The

cumulated price can only be used in actual.




© SAP AG 1999

Activate Actual Costing / Activ ity Type QuantityUpdate

Cost center Act iv itytype

Order

1.) Activity type quantity update

Act iv it ies:- "380h recording"- with plan or actual pricefrom order

Optional actual price revaluation

Order

2.) Activity type quantity update,price relevant

Act iv it ies:- "380h recording"- direct actual price

Actual prices, price relevant

norevaluation

Cost center Act iv ity-type

With Release 4.6, it is possible to update activity consumptions of cost centers as well as process

consumptions of business processes (that are necessary for the production of a material) in the

quantity structure of Actual Costing/Material Ledger. You have the following possibilities:

You can have the system update the activity quantities without including them in price determination.

You can use this setting if you want to receive information about the complete actual quantity structure.

Through revaluation of the actual activity price, you can later debit the respective cost object with the

variances between the planned price of the cost center/activity type or the process and the actual price

calculated at the end of the period.

If you choose the setting relevant to price determination, the variances between the planned price of

the cost center/activity type or business process and the actual price calculated at period end are

recalculated. The cost center or process is credited and the material (for which consumption took place)

is correspondingly debited. If you choose this setting, you can no longer revaluate actual prices in period-end closing of Cost Object Controlling, because the variances of the cost centers/processes are

debited directly to the material. If you have made this setting, all allocations to manufacturing orders,

that are settled to the material, are posted with a price that remains constant throughout the period. A

price change that occurs during the period is not accounted for in allocations to orders settled to the

material.

You can deactivate actual costing at anytime in order to, for example, avoid larger activity quantities

during the update of actual quantity structures. In this case, you must do without the functions of actual

costing for the respective period. The indicator for the updating of activity types must not be changed or

deleted within a period. This would lead to false material debits during price determination.




© SAP AG 2001

Period Status in the Material Ledger

New Period openedNew Period opened(Period Closing Program)(Period Closing Program)

Single-Level Price Determination

Multilevel price determination

Closing entry performed(Deletion possible)

O l d P e r i o d

Period status:

Price changes madePrice changes made

Quantities and values enteredQuantities and values entered

Material Ledger data is automatically assigned a period status. This status shows which functions have

been completed for the material and which functions can still be completed. The Material Ledger

recognises whether valuation relevant operations have been completed for the material or whether the

period closing program has run.

The status Period opened registers the funcctions of the period closing program and allows valuation

relevant operations to be created for the period opened.

The status price changes made, documents that the valuation price for a material has been changed.

Valuation relelvant operations can only be created using this changed price.

Quantities and values created means that valuation relevant operations have already been posted. It is no

longer possible to change the price in the current period.

Status single-level price determination completed shows that a single-level price has already been

calculated. Further values can still be entered and the price can still be redetermined. This status is a prerequisite for multilevel material price determination.

The "Multilevel price determination" status allows the entry of further valuation-relevant transactions

for the closed posting period. Multilevel price differences are calculated for the material.

The "Closing entry performed" status prevents the entry of further valuation-relevant transactions for

the closed posting period. However, the closing entry can be reversed and repeated (status Closing entry

reversed)



(C) SAP AG AC530 6-10

© SAP AG 2001

Determination of the Periodic Unit Price

ReceiptsReceiptsPeriod openedPeriod opened

(Beginning Inv.)(Beginning Inv.)

SingleSingle--levellevel

price determin.price determin.

Variances

(Act. cost - alloc. act. costs - scrap)

Preliminary valuation of the cumulated inventory + cumulated variancesCumulative inventory

= Periodic Unit Price

The periodic unit price is determined once a period has ended. It reflects the actual costs of a material

for the closed period.

To determine the periodic unit price, the system uses the cumulative inventory (all goods received plus

beginning inventory) and the cumlative difference (all differences between the standard price and the

entered price for all goods received and the beginning inventory).

You have to set the material price determination for each period (in the "Organizational tasks" menu

or directly from a "costing run").

Single-level material price determination includes variance amounts from differences in price, exchange

rates and revaluation differences that have arisen due to the (single-level) procurement of a material in

this period.

Once a period has been closed, the cumulative differences are added to the cumulative inventory for

that period. The system uses this to calculate the weighted average price, which can be used for valuating the ending inventory. The valuation for the current period remains unchanged during

single-level material price determination.



(C) SAP AG AC530 6-11

© SAP AG 2001

Periodic Unit Price: Assigning Single-Level Variances

Receipts 500 2500 1500 8,00

Cumulative inventory 1000 5000 1500 6,50

Ending inventory 50 250 6,5075

Other receipts/consum. 0 0 0 0

Consumption 950 4750 1425 6,50

Preliminary ValuationQuantity

Beginning Inventory 500 2500 5,00

PriceDifference

Price

Notallocated

- Period status: determined single-level- Price control: S price- Standard price: 5.00 MXN- Inventory value: MXN 250 (50 pc)

- Periodic unit price = MXN6.50 ( also in material master)

N e w!

N e w!

Material: ACT-LCD

Material price determination is the step that calculates the periodic unit price. The moving price field

in the material master is updated with the calculated price. The price control of the material remains set

to S.

The periodic unit price is also used to calculate a statistical total value. This value is for informational

purposes only and reflects the value of the material in inventory at the current periodic unit price.

Single-level material price determination sets the status determined single-level . Price determination

can be repeated as many times as you want.

The line Not allocated is inserted under the consumption category because with single-level

determination, the price differences cannot be attributed to the different consumptions.

The functions of single-level material price determination serve as the basis for multilevel actual

costing.



(C) SAP AG AC530 6-12

© SAP AG 2001

Account Assignment: Valuation Grouping Code

ValuationGrouping Code

300000 400000

xxxxxx

Valuation Area 2

Valuation Area 3

Valuation Area 4

Valuation Area 1

281000 231000

• Valuation Grouping Code of the Valuation Area

If you want automatic account determination within a chart of accounts to proceed differently for

particular company codes or plants (valuation areas), you assign different account grouping codes to

those valuation areas.

You must define automatic account determination separately for each valuation grouping code within a

given chart of accounts. Automatic account determination applies to all valuation areas that are assigned

to that valuation grouping code.

If the user specifies a company code or plant when he enters a transaction, the system derives the

valuation area and the valuation grouping code from that information.

Automatic account determination can be performed simultaneously for valuation groups (called

valuation grouping codes) with multiple valuation areas.

All valuation areas that use the same automatic account determination should be assigned to the same

account grouping codes. This simplifies the maintenance of automatic account determination.



(C) SAP AG AC530 6-13

© SAP AG 2001

Account Assignment: Movement Types > Trans Keys

Movement typeGoodsreceipt

Items

BSXPRD

...

Transaction Key

Generalized

posting lines

Material inventory accountsPrice diff erences (external)

...

When transactions in inventory management and invoice verification are relevant to accounting, the

system posts the G/L accounts in financial accounting and cost accounting automatically. When users

enter goods movements, they do not need to specify a G/L account because the R/3 System finds the

account automatically based on the following data: When the user enters a transaction and specifies a

company code or plant, the R/3 System automatically finds the chart of accounts valid for the company

code. You must define automatic account determination separately for each chart of accounts.

• Transaction key: The posting procedures for the accounting-relevant transactions in inventory

management and invoice verification are predefined. Posting records are assigned to each relevant

movement type in inventory management and each transaction in invoice verification. These posting

records are generalized in what are called value strings. Rather than actual G/L account numbers, the

value strings contain keys for the posting procedure (such as a stock posting or consumption posting).You do not need to define these transaction keys, as they are automatically derived from the transaction

(invoice verification) or the movement type (inventory management). You only need to assign to each

posting procedure the G/L account to be posted.

• Account grouping (only for offsetting entries for stock postings, consignment liabilities, and price

differences). If you want to post price differences for goods receipts for purchase orders, goods receipts

for production orders, and other movements to different price difference accounts, you can define

different account groupings for the transaction key.



(C) SAP AG AC530 6-14

© SAP AG 2001

Automatic Account Determination

Accounting 1

Valuation class

3000

3001

3030

7900

7920

300000 Rawmaterials 1

300010 Rawmaterials 2

303000 Operating supplies

790000 Semif inishedproducts

792000 Finished products

Example: Transaction BSX= Mat. inventory accountsMaterial

Master

Valuation Grouping Code

ValuationClasses

Each material master record contains a valuation class that plays a role in G/L account determination.

Automatic account determination is defined separately for each valuation grouping code. Different

accounts are assigned to the valuation class for each valuation/transaction key.

The slide shows the account determination for valuation/transaction key BSX (stock posting). This

transaction assigns material inventory accounts to stock postings. This assignment is based on the

valuation class specified in the material master record.

The valuation class enables you to define automatic account determination differently depending on the

material. For example, you can post the receipt of a raw material to a different inventory account than

the receipt of a trading good even though the user enters the same transaction in each case.

You can achieve this by assigning different valuation classes to the materials and then assigning a

different G/L account to the transaction for each valuation class.

If you don't want automatic account determination to be differentiated by valuation class for a

transaction, you don't need to specify a valuation class for the corresponding posting procedure.



(C) SAP AG AC530 6-15

© SAP AG 2001

Special Account Determination using the Material Ledger

The fol lowing tasks should be maintained in the material ledger The fol lowing tasks should be maintained in the material ledger for for

account determination:account determination:

PRD for pr ice difference post ings ( invoices, order sett lement,... )PRY For single-level pr ice di fferences (closing entr ies in the mater ial ledger )PRV For mul til evel pri ce di fferences (closing entr ies in t he mater ial l edger )

KDM for transaction-based exchange rate difference postings (invoices, order settlement)

KDV for exchange rat difference postings (closing entries in material ledger)

LKW for al l dif ference postings from the closing entr ies without inventoryrevaluation

GBB/AUI For the revaluation of actual prices and actual process prices in thematerial ledger (modi fication AUI)

Above, you can see the operation keys that must be maintained when using actual costing.



(C) SAP AG AC530 6-16

© SAP AG 2003

Closing Entries: Process Steps

Collect Price and Exchange Rate Differencesz In price dif ference accounts, or within categories in material ledger

Period Closing Programz Opens new period

Release Future Pricesz Standard cost estimate or marked actual price

Execute Price Determinationz Single-level, later multi-level

z Determines V price (repeat as required)

Post Closing Entryz Mandatory for every period

z Reverse posting not possible

z Deletion possib le

z With Revaluationz Price differences posted proportionally t o remaining stock

z Price control (old period) on V price? Revaluation

z Without Revaluationz Price differences posted p roportionally to accruals account

z Price control remains with S price

Mark future price

?Clos

ed

During period 1, the system provisionally evaluates all transactions with the standard price. The

periodic unit price is not determined during the period, rather it is calculated during material price

determination. Thus, the system registers all preliminary valuation price differences in price and

exchange rate difference accounts, and updates them in specific categories in the material ledger data.

During period end closing, you run the period closing program. You can then release a marked future

price for period 2 (for example, from a standard cost estimate), or the valuation price remains unchanged

for preliminary valuation. In period 2, you make postings for the previous period 1 where necessary.

Material price determination updates the periodic unit price in the material master record (in the

company code currency) as a statistical valuation price for the period being closed (period 1). Price

determination creates no entries in Financial Accounting.

You check the results, post them as closing entries and determine whether you need to revaluate the

material inventories for period 1. The closing entry must be made for each period. After you post closingentries, it is no longer possible to post to the previous period.

In the following slides, you see the effects of closing entries. These can vary depending on whether a

revaluation takes place.

(PRC – AVR/activity price differences)

(PRC – AVR price diff. )



(C) SAP AG AC530 6-17

© SAP AG 2003

Material ConsumptionCo 4750

Inventory4750 CoBI 2500

Re 2500

GR/IR Account

IR 3000 3000 RE

Vendor

4000 IR

Price diff.

RE 500IR 1000

Example of Entry Before Closing Entries

Re

IR

Co

Re

ReIR IR

IR

Co

CoRe

Inventory value:MXN 250

Standard price (S Price): MXN 5Per. unit pr ice: MXN 6.50

Material: ACT-LCD

Beginning Inventory: 500 pc / MXN 2500

Goods Recpt/Purch. Order: 500 pc / MXN 3000

Invoice Receipts: for 500 pc / MXN 4000

Consumption: 950 pc / MXN 4750

Ending Inventory: 50 pc

?

Closing entries at the end of the period result in postings to accounts. The example above shows data for

material ACT-LCD-## at the end of the period and the corresponding accounts before closing

entries.

The price difference account shows variances that arise during the period: MXN 10 was entered as price

differences for goods receipts, MXN 20 for invoice receipts. The material was more expensive than the

price used for the posting of the goods receipt (standard price).

950 pieces were consumed from the cumulative inventory of 1000 pieces, resulting in an ending

inventory of 50 pieces.

The cumulative variance of MXN 1500 is added to the preliminary valuation for the cumulative

inventory (MXN 5000) and distributed to the cumulative inventory of 1000 pieces via material price

determination. This results in a periodic unit price of:

MXN 1500 + MXN 50001000 pieces = MXN 6.50

Closing entries are created using this periodic unit price.



(C) SAP AG AC530 6-18

© SAP AG 2001

Beginning Inventory (BI): 500 pc / 2500 MXN

Goods Recpt/Purch. Ord er: 500 pc / 3000 MXN

Invoice Receipts: 500 pc / 4000 MXN

Consumption: 950 pc / 4750 MXN


Material: ACT-LCD

Price Diff. (PRY)

Inventory47502500

2500

Price Diff. (PRD)

5001000

Closing Entr ies With Revaluation

Status: Closing Entry Performed

Price control: V (prev. period on ly)V price: 6.50 MXN

75

Inventory value:325 MXN

(50 PC * 6.50= +75 MXN)

75BI

BI

locked

N e w! N e w

!

u n c h a n

g e d

During the revaluation process, the system makes the following postings:

y The material stock account is debited with the proportional price differences (75 MXN).

y The price difference account (transaction key PRY) is credited with the same amount.

Note, only part of the price differences are posted to material stock. Prices differences that must be

assigned to consumption remain in price difference accounts (at least for single-level calculation).

The system changes the price control for the material in the previous period from S to V. Thus the

periodic unit price (calculated during material price determination) becomes the valuation price for the

previous period.

In the Accounting view for the material master record, you can see the periodic unit price and price

control V for the closed period. The standard price remains unchanged and can still be displayed.

The example above shows data for material ACT-LCD## at the end of the period and the corresponding

debits and credits for the accounts involved.



(C) SAP AG AC530 6-19

© SAP AG 2003

Accrual ML (LKW)

Closing Entries Without Revaluation

Beginning Inventory (BI): 500 pc / MXN 2500

Goods Recpt/Purch. Ord er: 500 pc / MXN 3000

Invoice Receipts: 500 pc / 4000 MXN

Consumption: 950 pc / MXN 4750


Material: ACT-LCD

Price diff . (PRY)

Inventory47502500

2500

Price diff . (PRD)

5001000

Status: Closing entry performed

Price control: SS price: MXN 5.00

75

Inventory value:MXN 250

(50 PC * 5.00)

BI

locked

u n c h a n

g e d75BI

u n c h a n g e d

If you decide not to revaluate your materials at period end, the periodic unit price of the closed period

is purely for information. Price control remains on S. No changes are made to the material master

record. The periodic unit price is also used to calculate a statistical total value. This value is for

informational purposes only and reflects the value of the material in inventory at the current periodic unit

price.

The "Closing entry performed" status prevents the entry of further valuation-relevant transactions for

the closed posting period. However, the closing entry can be reversed and repeated (status Closing entry

reversed)

Closing entries at the end of the period result in postings to accounts. The example above shows data

for material ACT-LCD-## at the end of the period and the corresponding accounts. The price difference

of MXN 75, proportionally allotted to the ending inventory ((MXN 6.50 - MXN 5.00) * 50 units), is

posted to price difference account ML accrual (transaction key LKW) in this case. If you decide not to revaluate your materials with the actual price, the amount which would have been

posted to the material stock account is posted to another price difference account using posting key

LKW. It is up to you which account you chose for this posting.



(C) SAP AG AC530 6-20

© SAP AG 2001

Closing Entries: Next Period

Receipts 0 0 0 0

Cumulative inventory 700 175 75,00 6,50

Ending inventory 50 250 00

Other receipts/consum. 0 0 0 0

Consumption 0 0 0 0

PreliminaryValuation

Quantity

Beginning Inventory 50 250 6,5075,00

PriceDifference

Price

Closing entry performed.- Doc. incl. offsetting entryfor prev. period

N e x t P e r

i o d- Status: Quantities and values entered- Price control: S price

- Standard price: 5.00 MXN- Inventory value: 250 MXN- Period. V price = 6.50 MXN

Before a period is closed, the ending inventory value of period 1 is transferred to the category Beginning

inventory in the subsequent period. In the example above, the standard price was 25.00 MXN as in the

previous period. Generally, the first material movements were also posted at this standard price, so that

it can no longer be changed.

After closing the revaluated period 1, the beginning inventory of period 2 is still valuated using the

preliminary valuation price (standard price of 5.00 MXN). In the system, the revaluation posting of the

old period is no longer valid when the date becomes the first day of the current period.

However, as the actual price (periodic unit price of period 1) is known (6.50 MXN), the difference

between the preliminary valuation price and the periodic unit price of period 1 (175 MXN) is entered as

a price difference in the Beginning inventory category.

In this way, actual price determination does not change the preliminary valuation of the beginning

inventory.



(C) SAP AG AC530 6-21

© SAP AG 2001

Costing Run for Multilevel Actual Costing: Topic Objectives

z Create and execute a costing run for mult i-levelactual costing.

z Analyze the run resul ts.

At the conclusion of this topic, you wil l be able to:



(C) SAP AG AC530 6-22

© SAP AG 2003

Actual Cost ing: Process Steps

Costing run AC530 AC530: Plant s 6000 & 6100

Period 01 2000

Costing Cockpit: Actual Costing

General data Process steps Results

Process step Parameter Execute Status Successful With errors Still open

Selection:

Determine sequence

Single-level price determin.

Multi-level price determin.

Revaluation of consumption

Perform closing entry

Mark material price

0

0 0 0

0 0 0

0 0 0

Redeterminestatus data

1. General data:

- Assign plant2. Process steps:- Choose selection criteria- Execute

3. Results:- Status- Log- Results overview- Mater ial l is t

You can execute multilevel actual costing for one or more plants in the costing run. The differences

between the preliminary valuation price for the material and the material inventory and consumption are

calculated. This is done using single-level or multilevel material price determination. The actual prices

calculated by these steps can then be used to revaluate the closed periods and also for future valuations.

You can display selected periods under general data. Here you can see which plants were assigned to

the costing run, which plants can still be assigned to the costing run and which plants you can not assign

to the costing run.

The Process view shows you the status of the corresponding process steps for single or multilevel price

determination or the closing entries. Status data for the hierarchy display is not automatically created

when entering the costing results or after executing a costing function. In order to display the most up to

data information, you should regenerate the status data. The other views display the number of materials,

for which each step was successful or unsuccessful, or is still outstanding or was not included. The results of the costing run are displayed, in a hierarchical overview under results. You can use the

costing run display to display materials that have errors, and/or for log evaluation. You can select

various filters for the material list display, for example, you can display all materials that contain errors,

or only materials with goods movements.



(C) SAP AG AC530 6-23

© SAP AG 2003

Plants

Selection:

Process step Parameter Execute Status Successful With errors Still open

Selection:

Determine sequence



Revaluation of consu mption


Mark material price

1088

0 0 0

0 0 0

0 0 0

General data

Process steps

Results:

Selected materials:only price control 3

Log

Before performing multilevel actual costing, select the relevant plants from the selection screen

Available plants. You can assign each plant to exactly one costing run for each period. If you have

already carried out a process step for a costing run, the plant assignment can no longer be changed. You

can only change the plant assignment, if you completely delete the costing run.

Select the parameters under Process and Selection. Specify the method of processing. With larger

volumes of data, you can have the system carry out the function in the background.

When you Execute, you see a list of the relevant plants with information on how many materials were

selected. You can find additional information on the materials for each plant displayed in hierarchy

form. Note that only materials with price determination control 3 (single-level/multilevel) in the

material master are selected here that.

You can also see the log for further information. Check the results, remove possible errors and, if

necessary, select again. Next, determine the costing sequence.



(C) SAP AG AC530 6-24

© SAP AG 2003

Determine the sequence for the costing runassigns

Process step Parameter Execute Status Successful With errors still open

Selection

Determine sequence





Mark material price

1088

1088

0 0 1088

0 0 588

Results overview Material li st

ACT-BCD-## 6000 1

ACT-LCD-## 6000 1

ACT-DCD-## 6000 2 ACT-DCD-## 6100 3

...

Plant Level Single-level MultiMaterial Closing

Material ledger display

Process steps

AC530 1088

Level 0 50 notmoved

Level 1 450 procured, but not multilevelLevel 2 550 Procured, multilevel

Level 3 38 " (higher levels)

....

When you determine the sequence, the system generates the costing level and assigns the selected

materials to these levels. The sequence is determined using material ledger data, in other words the

periodic update of goods movements and other material related operations.

The following costing levels are generated:

y Level 0: All materials that have been assigned price control 3 in the material master but for which no

values or quantities have been created in the period.

y Level 1: All materials for which quantities and/or values have been created during the period but that

were not procured on a multilevel basis. Multilevel procurement occurs if you use one material in

order to procure another (example: if you use a raw material to produce a semi-finished product).

y Level 2 and higher: All selected materials that were procured on a multilevel basis.

This results in a list of all costing levels (for example level 1 raw materials, level 2 semi-finished goods

and so on) with information about the assigned materials. From the level overview you can go to the

other overviews.



(C) SAP AG AC530 6-25

© SAP AG 2003

Single-Level Price Determination


Selection

Determine sequence





Mark material price

1088

1088

1088 0 0

0 0 588

AC530 1088

Lev el 0 50Level 1 450Level 2 550

Lev el 3 38....


Plant LevelSL ML BI

Status:Price determined single-level

Process steps

S price Per.V priceMaterial % var.

ACT-BCD-## 6000 1 10.00 12.50 25.00

ACT-LCD-## 6000 1 5.00 6.50 30.00

ACT-DCD-## 6000 2 21.60 24.60 13.89 ACT-DCD-## 6100 3 20.00 21.60 8.00

...

Tolerances can be set

Before you use single-level price determination, you need to enable the material price determination.

This is only relevant for materials that have material price determination 3. To display the allowed tasks,

see Allowed tasks. If necessary, set material price determination. After this, you can run the multi-level

and the single-level material price determination for the cost run in the specified period.

The system calculates periodic allocation prices for the processed period and updates them in the

material ledger data for information purposes in all currencies.

Multi-level price determination is based on single-level price determination for all materials. Check the

results of the single-level material price determination and then run the multi-level price determination.



(C) SAP AG AC530 6-26

© SAP AG 2003

Multi-Level Price Determination


Selection

Determine sequence





Mark material price

1088

1088

1088 0 0

588 0 0

AC530 1088


Lev el 3 38....


Material Plant LevelSL ML BI

Status:Price determined multi-level

Process steps

S price Per.V price % var.

Tolerances can be set

ACT-BCD-## 6000 1 10.00 12.50 25.00

ACT-LCD-## 6000 1 5.00 6.50 30.00 ACT-DCD-## 6000 2 21.60 29.45 47.25 ACT-DCD-## 6100 3 20.00 29.4536.34...

During multi-level price determination, the results of the single-level material price determination are

used to calculate new prices for all materials in costing level 2 and above.

The multi-level material price determination works consecutively through the costing levels, starting at

the lowest one. This enables the calculated actual prices of materials from the lower levels to be included

in the price determination of higher levels. The price variances of, for example, raw materials are thus

transferred to semi-finished products and then in turn to finished products.

When the results of multi-level material price determination are checked, the system provides you with

a hierarchical overview of the costing run results. You can use the costing run display to display

materials that have errors, and for log evaluation.

You can use the display of master data for Material Ledger for an overview of the goods movements

and to navigate into the relevant documents.

The overview provides the statuses of the single-level or multi-level price determination. The other views display the number of materials for each level, for which each action was successful or

unsuccessful, or is still outstanding or was not intended. You can select various filters for the material

list display, for example, you can display all materials that contain errors, or only materials with goods

movements.



(C) SAP AG AC530 6-27

© SAP AG 2003



Selection

Determine sequence





Mark material price

1088

1088

1088 0 0

588 0 0

1088 0 0

Process steps

Single-level consumption:

Assignheader accountor originalaccount

For closing entry:Revaluate

FI G/L accounts(optional with CO account ass.)

As an option, you can adjust the single-level consumption values in actual costing with the periodic unit

price in all value records. Make the adjustment at the end of the period. The actual costing run

determines the relevant amounts and records the results in a document. In the closing entry you can post

the amounts determined for the revaluation of consumption to financial accounting, in addition to the

other transactions. As part of this process, the material price determination allocates the differences

incurred to the categories Consumption and Ending inventory in proportion to quantities.

In the revaluation of consumption, the portion allocated to the category Consumption is allocated to the

individual consumption alternatives in proportion to quantities consumed. The allocation is made only to

single-level consumption alternatives because multilevel consumption amounts have already been

revaluated as part of multilevel price determination. You can perform the revaluation of consumption on

original and on collective account assignment.

Revaluation on original account assignment

Here the original account assignment objects (the FI account posted on goods issue) are updated as key

features of the consumption alternative. To do this, you have to specify in customizing which movement

types are relevant for revaluation in this way. The amounts determined in revaluation of consumption

can now be recalculated for these consumption alternatives of the original account assignment. As an

option, you can additionally specify in customizing whether you also want to perform a recalculation

in the CO account assignment.



(C) SAP AG AC530 6-28

Revaluation on collective account

For all consumption alternatives not marked as relevant for revaluation, the revaluation amounts

determined are posted to a collective account during closing entry. The collective account must be

stored in the customizing of the account determination for transaction key COC.

When the closing entry is made, the relevant documents of consumption revaluation are posted in

financial accounting.



(C) SAP AG AC530 6-29

© SAP AG 2003

Closing Entries


Selection

Determine sequence




Mark material price

1088

1088

1088 0 0

588 0 0

1088 0 0

AC530 1088


Lev el 3 38....


Plant LevelSL ML BI

Status:Closing entry performed

Process steps

S price Per.V price % var.

FIFI

COCOPAPA

Material

ACT-BCD-## 6000 1 10.00 12.50 25.00

ACT-LCD-## 6000 1 5.00 6.50 30.00

ACT-DCD-## 6000 2 21.60 29.45 47.25 ACT-DCD-## 6100 3 20.00 29.45 36.34

...

qRevaluateqTest runqReversalqConsumptionqSelect CO account assignment

Before you can make closing entries, you need to enable closing entries. To do so, double-click on the

closed padlock, which will then be opened.

After you post closing entries for period 1, it is no longer possible to post to the previous period. You

check the prices determined, post them as closing entries and determine whether you need to revaluate

the material inventories for period under review. The closing entry must be made for every period and

can only be made for the previous period. Different results and documents are generated depending on

whether a revaluation takes place (also see the beginning of the unit).

You can reverse the results of the closing entry. However, you can only do this for the last posting

period.



(C) SAP AG AC530 6-30

© SAP AG 2003

Analysis of the Variances

AC530 1088

Level 0 50Level 1 450Level 2 550

Lev el 3 38....


Material Plant LevelSL ML BI S price Per.V price % var.

1000 3000 4850 29,45

700 900 29,453395

1250 3000 4850 29,45

0 2100 1455 29,45

Single-leveldifference

Quantity

0 0 00

Multileveldifference

Price

Beginning inventory

Receipts

Production

Version1

Version 2

....IR..

....GR...

850 3000 4850 29,45

Document: Receipt from lower levels (costed actual BOM) ACT-DCD-## FVersion01

Qty Sing.-lev. Multilev.Process 0001: 800 PC - 4850.00

ACT-LCD: 900 PC 1350.00 0.00 ACT-BCD: 900 PC 2250.00 0.00Labeling 9 H 347.34 0.00Recording 9 H 902.66 0.00

ACT-BCD-## 6000 1 10.00 12.50 25.00

ACT-LCD-## 6000 1 5.00 6.50 30.00

ACT-DCD-## 6000 2 21.60 24.60 13.89 ACT-DCD-## 6100 3 20.00 21.60 8.00

...

Actual BOM

To analyze actual costs, you can jump to the material list directly from the costing run. From there you

can go directly to the material ledger display.

The material ledger display provides more comprehensive means of analyzing the variances of your

materials. With multilevel procurement and variances, you can jump to the origin of the procurement

with the Actual BOM button.

There you see an overview showing the quantities of materials, activity types, or business processes that

were required to produce a particular output. You can also see the single-level or multilevel price

differences for each receipt or consumption that resulted from the subsequent adjustment.



(C) SAP AG AC530 6-31

© SAP AG 2001


Period-End Close in Actual Costing: Unit Summary

z Explain how the periodic unit price is calculated.

z Run and analyze the period-end close with or without revaluation.

z Create a costing run for multilevel actual costing,execute it, and analyze it.

z Analyze price difference post ings.



(C) SAP AG AC530 6-32

Period-End Closing in Actual Costing: Exercises

Unit: Period-End Close in Actual Costing


• Perform single-level period-end closing for the material ledger

• Create a run for multilevel actual costing

• Analyze the results of multilevel actual costing

Your cost accounting manager carries out a run for multilevel actual

costing. He is not happy as different actual prices have resulted for your

CDs.

Period-end closing of the material is performed for the previous posting period. You can complete the first step, material price determination, asoften as you want, and at any time. The second step, however, in which

you post period-end closing as accounting-relevant, can only be carried

out for the previous posting period.

Your trainer will now close the current posting period and begin a

new one. As a result, the current month (the period in which you

have carried out all postings) becomes the previous posting period.This allows you to make closing entries.

The next month becomes the current posting period.

Period-end closing of the material ledger in release 4.0 is carried out withthe two steps Single-Level Price Determination and Post Closing. This

function does not take into account any multilevel price or exchange rate

differences.

During this exercise, you will perform and analyze the closing for one of your materials using the menu path that contains the functions of release

4.0.

Later, your trainer will perform multilevel actual costing for all course

participants' materials.



(C) SAP AG AC530 6-33

1 Preparation for Close in Cost Center Accounting

1-1 Cost Center Situation before Period-Close

Enter the following settings for the cost center information system in your user

parameters:

Cost center group: CCG530-##Controlling area 6000

Report time period Current period in current fiscal year

Report currency: Object currency

Save.

1-1-1 Call up the report to analyze the plan/actual variances for your cost center.

Controlling area: 6000

Period/fiscal year: Current month

Plan version: 0

Cost center group: CCG530-##

Cost element: No entry

Why does your cost center have planned costs but no actual costs? Why?

________________________________________________________

What is the amount of the activity output for your cost center?

Activity types Plan/Actual Quantity

Plan HoursATL-##

Actual Hours

Plan HoursATR-##

Actual Hours

1-1-2 Under which activity was the actual activity posted?

________________________________________________________

1-2 Posting of Actual Costs to Cost Centers

Create a G/L account document. Use the template AC530 and make the followingchanges:

(To do this, you should make sure you are in company code 6000)

Document date: Today's date

At item level Replace cost center CC530-30 with your cost center

CC530-##.

Post the document.



(C) SAP AG AC530 6-34

1-3 Actual Price Determination

1-3-1 Call up a report that displays the existing prices for the activity types of

your cost center. Make the following entries:

Cost center: CC530-##

Activity type: -Version: 0

Period/fiscal year: Posting period

Price indicator No entry

Price unit: 1

Display all selected prices

A price is displayed for each activity type. Fill out the following table.

Activitytypes

Total price Currency Price indicator

AT-##:

ATR-##:

What is the meaning of the price indicator? What type of price is it used for?

_______________________________________________________

Display the cost component split for the planned price of ATL-##. Is there

a cost component split?

_________________________________________________________

1-3-2 Complete actual price determination for your cost center group.

Cost centers: Cost center group CCG530-##

Business processes: No business processes

Parameters: Current period

Process control: • No background processing

• No test run

• Detail lists

Execute, post and then leave screen. You will analyze the prices in the

next exercise.



(C) SAP AG AC530 6-35

1-3-3 Call up the price report again, using the same parameters as before:


Activity types: -

Version: 0

Period/fiscal year: Previous posting period

Price indicator: No entry

Price unit: 1

Only display the prices to be allocated

A further price with the indicator 5 is displayed for each of the activity

types. Complete the table:

Activity

types

Total price Currency Price indicator

ATL-##: 5

ATR-##: 5

What is the meaning of the price indicator? What type of price is it used

for? Does a cost component split exist now?

________________________________________________________

________________________________________________________

________________________________________________________

The difference between the planned and actual prices can be calculated in

a later step of period end close in actual costing.



(C) SAP AG AC530 6-36

2 Period-End Closing in the Material Ledger (Single-Level Actual Costing)

2-1 Organizational Measures (Menu Path: ACT/ML Periodic Material Valuation)

Check whether single-level material price determination and the closing entry are

allowed for the previous posting period (current month) in plant 6000. If not,establish the allowance to do this.

2-2 Single-Level Calculation of Material Prices for Your Labels

2-2-1 Check to see which standard price and moving average price is valid for

the previous posting period and which is valid for the current posting period. You can find this information by choosing the Prices and

inventory value icon in the material ledger display for your labels (ACT-LCD-##, plant 6000). When doing so, fill out the following table.

Values before pricedetermination

Previous postingperiod

(current month)

Current postingperiod

Period status:

S price: MXN MXN

V price: MXN MXN

Price control:

Current inventory value: MXN MXN

Inventory value

(statistical):

MXN MXN

2-2-2 Open the category Consumption for the previous posting period so that

you can see the values for the process categories (production, cost center).Write down the amount of the price differences and the prices of the

following lines:

Price differences Price

Category Cumulative inventory: MXN MXN

Category Consumption: MXN MXN

→ Process category Production: MXN MXN

→ Process category Cost

center :

MXN MXN

Category Ending inventory: MXN MXN

Leave this session and open a new session for the following exercises.



(C) SAP AG AC530 6-37

2-2-3 Carry out single-level material price determination for your labels in your

second session. Use the following data:


Plant: 6000

Treating materials already processed: Process again


Warning when variance larger than:

1%

Error when variance larger than: No entry

Check against: S price

Background processing: No

Save log: Yes

Execute. Are there warning messages?

Reason for the warning:

__________________________________

2-2-4 Look at the material ledger data for the previous posting period (current

month). Were there any changes as a result of price determination? Under Prices and Inventory Values, you can see which standard price and whichmoving average price is valid for the previous period and which is valid

for the current posting period. Fill out the following table.

Values after pricedetermination


(current month)


Period status:

S price: MXN MXN

V price: MXN MXN

Price control:

Inventory value: MXN MXN

Inventory value (statistical): MXN MXN



(C) SAP AG AC530 6-38

2-2-5 Previous posting period in the material ledger display: How are the price

differences now distributed and at which price are the lines valuated?

Category Cumulative inventory: MXN MXN/pc

Category Consumption: MXN MXN/pc

→ The line Not allocated: MXN MXN/pc→ Process category

Production:

MXN MXN/pc

→ Process category Cost

center :

MXN MXN/pc

Category Ending inventory: MXN MXN/pc

What does the line Not included mean?

________________________________________________________

________________________________________________________ ________________________________________________________

________________________________________________________

________________________________________________________

2-2-6 Look at the material ledger document that was written for price

determination (you find it if you open the category Ending inventory in a

second session). Go to the detail screen of the document.

Was an accounting document written for the price determination?

Yes/no:

_______________

Reason:

________________________________________________________

________________________________________________________

________________________________________________________



(C) SAP AG AC530 6-39

2-3 General Ledger Account Balance before Closing Entry

2-3-1 First check to which account the price differences for goods receipts,

invoices and settlement were posted. The activity that the accountdetermination from material management uses to find the price difference

account is PRD. Plant Mexico is assigned to the valuation grouping code0001. To which account in the INT chart of accounts is this activity

posted?

Account Determination MM - Activity PRD

Material Valuation class Account/debit

Account/credit

ACT-LCD-## 3000

ACT-BCD-## 3000

ACT-DCD-## 7920

2-3-2 For the raw materials: Call up the balance for both PRD accounts for the previous posting period (use multiple selection):

Accounts Balance

231000 and 281000 MXN

2-3-3 Go to the line item overview for the balance of the current month, and choose display variant G/L Account Standard.

Document type for posting

2-3-4 Check which account the price difference for activity PRY - Single-level

price differences/Material Ledger - are posted to.

Account Determination MM - Activity PRY

Valuation class Account

No differentiation S: H:

2-3-5 Display the balance of the accounts for the previous (current) posting period.

Account Balance

231520 and 281520 MXN

How do you explain this balance?

________________________________________________________



(C) SAP AG AC530 6-40

2-4 Making Closing Entries for Your Labels (with Revaluation)

2-4-1 Make the closing entries with revaluation for your labels. Use the

following data:

Material ACT-LCD-##

Plant 6000Treating materials already

processed:

Process again

Period/Fiscal year Previous posting period

Revaluate material X (yes)

Revaluate consumption No

Select CO account assignment No

Background processing No

Test run No

Save log Yes

Execute.

2-4-2 Call up the material ledger display for your labels for the previous posting

period. Which period status does the material have now?

________________________________________________

2-4-3 Go to the Accounting 1 view in the material master. Fill out the followingtable:

Previousposting period

Currentposting

period

Change throughclosing entry

Yes/no?

S price: MXN MXN

V price: MXN MXN

Price control:

Stock value: MXN MXN

Value per unit

price:

MXN MXN



(C) SAP AG AC530 6-41

2-4-4 The closing entry revaluates the ending inventory, whereby the price and

exchange rate differences are posted to the inventory stock account. Gointo the previous posting period in the material ledger display. Click on

the Closing doc. icon and go from there to the accounting documents.

Choose the accounting document with the lowest number and choose Goto

– Display as List - display variant 530 Demo. Write down the following

data:

Posting date

Account Activity Amount

Was the account, that the price differences were originally posted to (G/L

account 231000 / Activity PRD) created by the closing entry?

___________________________________________________

Which activity was used by the closing entry for the stock revaluation?

____________________________________________________

2-4-5 Display the balance of the accounts for activity PRY again and call up the

line item overview for the current period. Which document type was used

for the posting?

Document type for posting:

2-4-6 In order to fully understand how the periodic price differences aredistributed to FI accounts at period-end, and to be able to explain the line

"not included" (material price analysis), complete the following sentence:

Of the periodic price difference amount of MXN ______________ posted,

MXN ___________ could be assigned to the period close inventory of the

raw materials. The remaining price difference amount of MXN

___________ is consumed by the material quantity used during the period

and remains in single level actual costing as price differences.

2-4-7 Now, choose the accounting document with the highest document number.

What posting date does this document have?

Posting date

How do you explain this second posting?

________________________________________________________

________________________________________________________

________________________________________________________



(C) SAP AG AC530 6-42

2-4-8 Materials that have the period status Closing Entry Posted are not included

in multilevel actual costing.

To check the period status of your materials, call up the appropriate reportin the information system of the material ledger. Select all materials that

start with ACT*. Which status do your labels have?

________________________________________________________ 2-4-9 Reversal of Closing Entries

Now reverse the closing entries for your material ACT-LCD-##.

To check the period status of your materials and make sure that they are

included in multilevel actual costing, call up the Listing of Materials by

Period Status report with the same selection criteria again.

Which status do your labels now have?

________________________________________________________

3 Period-End Closing in the Material Ledger (Multilevel Actual Costing)

When carrying out multilevel actual costing, you cannot selectindividual materials. You can only select by plant. For this reason,

your trainer will carry out multilevel actual costing for all course

participants' materials. Your task is to understand the posting logic

and analyze the results.

3-1 Multilevel Actual Costing: General Data for the Run

Go into the costing run AC530 for the previous posting period. Which plants areassigned to the run?

Plant 1

Plant 2

3-2 Multilevel Actual Costing: Process Steps

3-2-1 Selection: Look at the process steps for multilevel actual costing. Howmany materials were selected for the run? What are the criteria that

determine whether a material is selected?

Number of selected materials

All materials are selected that

________________________________________________________

________________________________________________________

3-2-2 Parameters: Check the parameters for single-level price determination.During price determination, which prices can you check to see whether a

variance of a certain amount should lead to warning or error messages?

Price 1



(C) SAP AG AC530 6-43

Price 2



(C) SAP AG AC530 6-44

3-3 Multilevel Actual Costing: Costing Results:

3-3-1 Select the view Costing run overview and the hierarchy setting Costing

run/level/cycle number . Which costing levels were determined? Howmany materials are assigned to the levels?

Level Number of Assigned Materials

Level 0

Level 1

Level 2

Level 3

When are the materials assigned to level 0?

________________________________________________________

________________________________________________________

When are the materials assigned to level 1?

________________________________________________________

________________________________________________________

When are the materials assigned to the other levels?

________________________________________________________

________________________________________________________

3-3-2 Set the hierarchy to Costing Run/Plant/Material Type/Valuation

Class/Origin Group and check whether the material types were

successfully included in the costing run.

Level Materialtype/number

Status of single-level

settlement

Status of multilevel

settlement

Status of closing

entry

Raw materials

Semi finished products

Plant 6000

Finished product

Plant 6100 Finished product



(C) SAP AG AC530 6-45

3-3-3 Now select the top hierarchy node (the number of the run) and display the

material list for the run. Use the filter Only materials with goods

movements. For a better overview, hide the results list in the left portion

of the screen and enlarge the material list display. Which status do your

materials have?

Material Status of single-level

settlement

Status of multilevel

settlement

Status of closing

entry

ACT-LCD-##

ACT-BCD-##

ACT-DCD-## (6000)

ACT-DCD-## (6100)

3-3-4 Choose the display variant Movement Data. Which material has the largest

receipt quantities?

________________________________________________________

3-3-5 Choose the display variant Price Analysis. According to which criterionare the materials sorted here?

Sorting criterion:

________________________________________________________

How high are the price variances for your materials?

Material Standard

price

Periodic unit

price

Absolute

var.

Relative

var.

ACT-LCD-## MXN MXN MXN %

ACT-BCD-## MXN MXN MXN %

ACT-DCD-## (6000) MXN MXN MXN %

ACT-DCD-## (6100) MXN MXN MXN %

3-3-6 You want to analyze the origin of the price differences of your demo CD

in plant 6100. Go to the material ledger display for your demo CD in plant

6100 by double clicking. Select the display variant Single-Level and

Multilevel Price Differences. Are the price differences of the product

primarily single or multilevel in nature?

Cumulated Price Differences

Single-level MXN

Multilevel MXN

Look at the material ledger document for the multilevel price differences.From which material do these differences originate?

Input material with multilevel price differences:



(C) SAP AG AC530 6-46



(C) SAP AG AC530 6-47

3-3-7 Evaluated Quantity Structure (Multilevel)

Use the Evaluated Quantity Structure (Multilevel) to analyze the amountof difference for each resource. Which input resources have yielded the

highest differences for one CD?

Resource Difference

1.

2.

3.

4.

3-3-8 Analyze the closing document of the material ledger. For which of your materials in plant 6000 has consumption be recalculated?

Material Consumption price differences

_____________________ _______________________

_____________________ _______________________

_____________________ _______________________

3-3-9 Which account was the price difference posted to? Now select Display as

list and layout /530 Demo in the FI document.

Account for transaction key COC

__________



(C) SAP AG AC530 6-48

Period-End Close in Actual Costing: Solutions



(C) SAP AG AC530 6-49



(C) SAP AG AC530 6-50

Unit: Period-End Close in Actual Costing

The following menu paths are used in the solutions:

ACT: Accounting→ Controlling→ Product Cost Controlling→



Reference IMG

1 Preparation for Close in Cost Center Accounting

1-1 Cost Center Situation before Period-Close

Enter user parameters:

Accounting→ Controlling→ Cost Center Accounting→ Information system→

User settings

On the Basic data / Report Objects tabs enter Cost center group CCG530-## and

controlling area 6000.

On the tab Report Time Period set the current period and current fiscal year.

On the tab Report Currency set the currency to object currency. Save.

1-1-1 Report to Analyze Actual / Plan Variances:

Accounting→ Controlling→ Cost Center Accounting→ Information

System→ Reports for Cost Center Accounting → Plan/ Actual

Comparisons→ Cost Centers: Actual/Plan Variances


Period/fiscal year: Current month / Current year

Plan version: 0

Cost center (value): CCG530-##


No actual debits exist for your cost center because no actual costs have

been entered.

______________________________________________________



(C) SAP AG AC530 6-51

Activity output for your cost center:

Activity types Plan/Actual Quantity

Plan 10 hoursATL-##

Actual 9 hours

Plan 10 hoursATR-##

Actual 9 hours

1-1-2 The activity output is posted to the production order during confirmation.

1-2 Posting of Actual Costs to Cost Centers

Accounting→ Financial Accounting→ General Ledger→ Document entry→

Enter G/L Account Document.

Choose template AC530 from the templates for the item and make the followingentries/changes:

(You may need to change to company code 6000 via "Environment" before you dothis)

Document date: Today's date

At item level: Replace cost center CC530-30 with your cost

center CC530-##.

Post the document.

1-3 Actual Price Determination

1-3-1 Current planned prices

Accounting→ Controlling→ Cost Center Accounting→ InformationSystem→ Reports for Cost Center Accounting → Prices→ Cost

Centers: Activity Type Prices


Activity types: -

Version: 0

Period/fiscal year: Posting period

Price indicator: No entry

Price unit: 1

Display all selected prices



(C) SAP AG AC530 6-52

The following values are displayed:

Activity types Total price Currency Price indicator

ATL-##: 15 EUR 1

ATR-##: 35 EUR 1

Price indicator 1 means that the displayed price is an iterative plan price(planned costs / planned activity).

The planned prices have a cost component split as they were determined

iteratively (price indicator 1) and because the cost component structure is

active for the version. This cost component split will be transferred using atransfer structure to the auxiliary cost component split (primary cost

component split), the cost estimate and to the material ledger.

1-3-2 Actual Price Determination

Accounting→ Controlling→ Cost Center Accounting→ Period End-

Closing→ Single Functions→ Price Calculation

Cost center group: Select the radial button cost center group,

enter only your group CCG530-##

Business processes: No business processes

Parameters: Current period

Process control: • No background processing

• No test run

• Detail lists

Execute. This posts the prices.

1-3-3 Accounting→ Controlling→ Cost Center Accounting→ Information

System→ Reports for Cost Center Accounting→ Prices→ Cost

Centers: Activity Type Prices

Call up the price report again, using the same parameters as before:

A further price with the indicator 5 is displayed for each of the activity

types. Complete the table:

Activity types Total price Currency Price indicator

ATL-##: 19.23 EUR 5

ATR-##: 47.43 EUR 5

Price indicator 5 means that the displayed price is an iterative actual price(actual costs / actual activity). These prices also have a cost component

split, which you can display (goto - cost component split).



(C) SAP AG AC530 6-53

2 Period-End Closing in the Material Ledger (Single-Level Material Price Determination)

2-1 Organizational Measures

ACT/ML: Periodic Material Valuation→ Organizational Measures→ Display

Allowed Tasks

Plant: 6000, Fiscal year: current

2-2 Determine single-level material prices

2-2-1 Data before price determination




Plant: 6000


Click on the Prices and Inventory value icon to receive the following data.You can use the arrows to switch between periods.

Values before pricedetermination


(current month)


Period status: Quantities and

values entered

Period opened

S price: MXN 5 MXN 5

V price: MXN 5 MXN 5

Price control: S S

Current inventory value: MXN 2500 MXN 2500

Inventory value(statistical):

MXN 2500 MXN 2500

2-2-2 Open the category Consumption:


Category Cumulativeinventory:

MXN 1,500 MXN 6.50

Category Consumption: MXN 0.00 MXN 5.00

Process category Production:

MXN 0.00 MXN 5.00

Process category Cost

center:

MXN 0.00 MXN 5.00

Category Ending

inventory:MXN 0.00 MXN 5.00



(C) SAP AG AC530 6-54

Keep this session open as it is and open a second session.



(C) SAP AG AC530 6-55

2-2-3 Single-level material price determination for your labels:

ACT/ML: Periodic Material Valuation→ Determine Material Prices

(Single-Level)

Material ACT-LCD-##

Plant 6000Treating materials already processed:

Process again

Period/fiscal year Previous posting period

Warning when variance larger than:

1%

Error when variance larger than: No entry

Check against S price


Save log Yes

Execute.

Material price determination issues three warnings: The calculated price

varies from the comparison price by more than the threshold value (1%) inall three currencies. Amount of variances (in company code currency):

30% (MXN 6.50)

2-2-4 Changes through Price Determination



Plant: 6000

Period/Year: Previous period/current year

Click on the Prices and Inventory Values icon to receive the following

data. You can use the arrows to switch between periods.

Values after price

determination Previous posting

period(current month)

Current posting

period(next month)

Period status: Price determined single-level

Period opened

S price: MXN 5.00 MXN 5.00

V price: MXN 6.50 MXN 6.50

Price control: S S

Inventory value: MXN 250 MXN 250

Inventory value MXN 325 MXN 325



(C) SAP AG AC530 6-56

(statistical):

The price calculated through material price determination is updated as the

V price in the material master and the material ledger.



(C) SAP AG AC530 6-57

2-2-5 Distribution of Price Differences



Plant: 6000

Period/Year: Previous period (current month)/current yearOpen the category Consumption:


Category Cumulative inventory: MXN 1,500 MXN 6.50

Category Consumption: MXN 1,425 MXN 6.50

The line Not Allocated: MXN 1,425 MXN 0.00

Process category Production: MXN 0.00 MXN 5.00

Process category Cost center : MXN 0.00 MXN 5.00

Category Ending inventory: MXN 75 MXN 6.50

What does the line Not included mean?

The price differences that cannot be settled to consumption are written in

the line Not included . No revaluation of higher material levels takes placein single-level material price determination. For this reason, all price

differences of consumption have not yet been assigned to the individual

process categories, in other words, have not yet been distributed.

2-2-6 Documents for Price Determination

No accounting document is written for the price determination document, because no postings are carried out during material price determination.

All calculations of material price determination are only statistical.

2-3 General Ledger Account Balance before Closing Entry

2-3-1 Account Determination for Price Difference Account

IMG:→ Materials Management→ Valuation and Account Assignment

→ Account Determination→ Account Determination without Wizard →

Configure Automatic Postings

Execute and close the dialog box by canceling. Click on the button

Account assignment, open the line Cost (Price) Difference PRD, INT

Chart of accounts

Account Determination MM - Activity PRD

Material Valuation class Account/

debit

Account/ credit

ACT-LCD-## 3000 231000 281000

ACT-BCD-## 3000 231000 281000



(C) SAP AG AC530 6-58

ACT-DCD-## 7920 231500 281500



(C) SAP AG AC530 6-59

2-3-2 Account Balance for Raw Materials

Accounting→ Financial Accounting→ General Ledger→ Account→

Display Balances

Enter both accounts 231000 and 281000, using multiple selection, select

using company code 6000 and the current fiscal year. The account balance

depends on the number of participants and can, therefore not be given as asolution.

2-3-3 Line Item Overview

Double click on the field balance in the column for the current period.Then choose layout G/L Account Standard . The following document types

were posted to the account

Document type for posting • WE (goods receipt)

• RE (invoice)

2-3-4 Account Determination MM - Activity PRY

IMG:→ Materials Management→ Valuation and Account Assignment

→ Account Determination→ Account Determination without Wizard →

Configure Automatic Postings

Execute and close the dialog box by canceling. Click on the button

Account assignment, open the line Cost (Price) Differences (MaterialLedger), INT chart of accounts.

Account Determination MM - Activity PRY

Valuation class Account

No differentiation 231520, 281520

2-3-5 Display the account balances:


Display Balances

Enter the account, select company code 6000 and the current fiscal year.

Account Current period account balance

231520 and 281520 MXN 0

(unless the instructor has performed a closing entry!)Activity PRY is only used during the closing entry for the material ledger.As no closing entries have been made, no postings have occurred for the

current month.



(C) SAP AG AC530 6-60

2-4 Making Closing Entries for Your Labels (with Revaluation)

2-4-1 Make the closing entries for your labels. Use the following data:

ACT/ML: Periodic Material Valuation→ Post Closing

Material ACT-LCD-##

Plant 6000



Revaluate consumption No

Select CO account assignment No


Test run No

Save log Yes

Execute.

2-4-2 Through the closing entries, the material receives the status Closing entry

performed .

2-4-3 Material master: In the material ledger display, click on the Material

Master icon. This takes you to the Accounting 1 view. Fill out the

following table:

Previous

posting period

Current

posting

period

Change through

closing entry

Yes/no?S price MXN 5.00 MXN 5.00 No

V price: MXN 6.50 MXN 6.50 No

Price control V S Yes

Stock value: MXN 325 MXN 250 Yes

Value per unit

price

MXN 325 MXN 325 No

The price control for the previous period was changed during the closing

entries. In the previous posting period, the material now has price control

V . The material is valuated with the periodic unit price of this posting

period. The standard price is not changed through the material ledger closing entries in any of the periods.



(C) SAP AG AC530 6-61

2-4-4 Closing document:

If you specify that the material inventory should be revaluated, the

following postings take place:

1. The sum of the price and exchange rate differences for the endinginventory is posted to the balance sheet account to revaluate the

inventory of the closed posting period 1 in line with the calculated periodic unit price for posting period 1.

2. The differences for consumption initially remain on the correspondingdifference accounts. In multilevel material price determination, you

can adjust the portion of consumption that was used for the productionof other materials.

To see these postings, click on the Closing document icon in the material

ledger display. Next, click on the Accounting Documents icon and open

the accounting document with the lowest document number. ChooseGoto – Display as List – and then layout 530 Demo.

Posting date Last day of previous posting period

Account Activity Amount

300000 Raw materials 1 BSX MXN 75

281520 ML price differences PRY (-) MXN 75

280000 Exchange rate difference KDM MXN 0

The price differences for activity PRD (231000) are not posted by the

closing entry in the material ledger, instead the account for activity PRY

(281520) is used.2-4-5 Account Balance for Activity PRY


Display Balances

Enter the accounts 231520 and 281520, select via company code 6000 and

the current fiscal year.

Document type for posting:

ML - Material Ledger

2-4-6 Distribution of Price Differences


Display Balances

Complete the following sentence:

Of the periodic price difference amount of MXN 1.500 posted MXN 75

could be assigned to the period close inventory of the raw materials. The

remaining price difference amount of MXN 1.425 is consumed by the



(C) SAP AG AC530 6-62

material quantity used during the period and remains in single level actual

costing as price differences.



(C) SAP AG AC530 6-63

2-4-7 The inventory postings in posting period 2 are automatically reversed so

that the material valuation in posting period 2 is left unchanged.

Posting date First day of current period

How do you explain this second posting?

The second posting causes the beginning inventory to be valuated again atstandard price for accounting purposes. If the standard price is identical in

both periods, the second document contains the same values as the firstdocument but with the opposite sign.

2-4-8 Information system: Period status of materials

ACT/ML: Information System→ Object List→ Materials by Period

Status

Selection: All materials that start with ACT*.

Period status of the labels (ACT-LCD-##): Closing entry completed.

2-4-9 Reversal of closing entries ACT/ML: Periodic Material Valuation→ Post Closing

Material ACT-LCD-##

Plant 6000




Test run NoSave log Yes

Reverse with:

Menu: Closing Entry→ Reverse

Call up the period status report again for your material ACT-LCD-##.Your material now has the status Closing entry reversed .

3 Period-End Closing in the Material Ledger (Multilevel Actual Costing)

3-1 Multilevel Actual Costing: General Data for the RunCosting run:

ACT/ML: Actual Costing→ Edit Costing Run

Costing run: AC530, previous posting period.

Under General Data:

Plant 1 6000



(C) SAP AG AC530 6-64

Plant 2 6100



(C) SAP AG AC530 6-65

3-2 Multilevel Actual Costing: Process steps:

3-2-1 Selection: Line selection, create/edit column (Note: Update the status data

by clicking on the button Execute directly).

Number of selected materials 128

The system selects all materials that have price determination controlsingle/multilevel (3).

3-2-2 Parameters: Single-level price determination line, icon in the first parameters column

Prices against which you can check:

Price 1 Standard price in posting period

Price 2 Periodic unit price in previous posting period

3-3 Multilevel Actual Costing: Costing Results3-3-1 Select the view Costing run overview and the hierarchy setting Costing

run/level/cycle number .

Level Number of Assigned Materials

Level 0

Level 1

Level 2

Level 3

Depends on the number of course

participants

First, all materials are selected (see process steps below) that have price

determination control 3. All of these materials are assigned to a level.

Level 0: All selected materials for which no goods movements took placeduring the posting period.

Level 1: All selected materials for which goods movements took placeduring the posting period that were not procured on a multilevel basis.

Multilevel procurement exists when other materials are entered into a

material.

Remaining levels: All selected materials that were procured on a

multilevel basis. For example, the demo CDs in plant 6000 are procured on a multilevel basis because input materials are used in their production.

The demo CDs in plant 6100 are assigned to a higher level because they

were procured from plant 6000. For this reason, the demo CDs in plant6000 represent a lower level.



(C) SAP AG AC530 6-66

3-3-2 Participation in costing

Hierarchy: Costing run/plant/material type/valuation class/origin group

Use the Display Legend icon to display the meanings of the status icons.

Level Material

type/number

Status of

single-levelsettlement

Status of

multilevelsettlement

Status of

closingentry

Finished

product

Successful Successful Successful

Semi-

finished product

Successful Not

implemented

Successful

Plant

6000

Rawmaterials

Successful Notimplemented

Successful

Plant

6100

Finished

product

Successful Successful Successful

3-3-3 Material list: The material list shows information on the selected materials, while the hierarchy only displays the data on a summarized

level.

Select the top hierarchy node (the number of the run) and click on the iconfor the material list (on the left). Choose the following from the dropdown

list:

Display material list with filter→ Materials with goods movements

Maximizing of the material list display: The icons Hide hierarchy and

Increase size.

Status of your materials:

Material Status of

single-level

settlement

Status of

multilevel

settlement

Status of

closing

entry

ACT-LCD-## Successful Notimplemented

Successful

ACT-BCD-## Successful Not

implemented

Successful

ACT-DCD-## (6000) Successful Successful Successful

ACT-DCD-## (6100) Successful Successful Successful

3-3-4 Layouts: Transaction data

Click on the layout icon in the material list and select Transaction data (/MOVEMENTS). The material with the highest receipt quantity appears

at the top of the list.



(C) SAP AG AC530 6-67

3-3-5 Layouts: Price analysis

Choose the variant Price Analysis. The materials are sorted according to

the size of the relative variances between the periodic unit price and thestandard price.

(You will receive the figures shown in the table if you have carried out the

exercises exactly. If you have posted other quantities or values, thefigures may be different.)

Material Standardprice

Periodic unitprice

Absolutevar.

Relativevar.

ACT-DCD-##

(6100)

MXN 20.00 MXN 29.45 MXN 9.45 47.25 %

ACT-DCD-##

(6000)

MXN 21.60 MXN 29.45 MXN 7.85 36.34 %

ACT-LCD-## MXN 5.00 MXN 6.50 MXN 1.50 30.00 %

ACT-BCD-## MXN 10.00 MXN 12.50 MXN 2.50 25.00 %

3-3-6 Cause of the price differences

In the column Material in the material list, double-click on your demo CD

in plant 6100. This takes you to the Material Ledger display. Chooselayout Single- and multilevel price differences through the corresponding

icon.

In the line Cumulative inventory:

Cumulated Price Differences

Single-level MXN 160Multilevel MXN 785

Open the category Receipts and the process category Stock Transfer .

Double click on the document for multilevel material price determination

( Receipts from lower levels).

Origin of multilevel price differences

Input material with multilevel price differences:

ACT-DCD-## / plant 6000

All price differences from plant 6000 that were attributed to the demo CD

in plant 6100 are multilevel price differences. To analyze how the price

differences in plant 6000 arose, you must switch to the material ledger

display in plant 6000: Use the green arrow to return to the costing run. Inthe column Material in the material list, double-click on your demo CD in

plant 6000. This returns you to the material ledger display again.



(C) SAP AG AC530 6-68

3-3-7 Evaluated Quantity Structure (Multilevel)

Change to the display for ACT-DCD-## in plant 6000. Select the Evaluated Quantity Structure icon and then base quantity: 1 pc.

Resource Difference

1. CD Blank MXN 2.81

2. Label for CD MXN 1.69

3. CD Recording MXN 1.14

4. CD Labeling MXN 0.39

3-3-8 From the material price analysis (CKM3), call up the closing document for

one of your materials in plant 6000.

Material Consumption price differences

ACT-LCD-## MXN 75

ACT-DCD-## MXN 4,710

3-3-9 Now select the FI document from the closing document, select Select

Accounting Documents and layout /530 Demo.

Account for transaction key COC: 231099




© SAP AG 2003

z Integrated Profitability Analysis in CO-PA

z Price Update

z Production Startup

z Alternative Valuation Run

Contents:

Special Functions




© SAP AG 2003

z Set up an integrated connection to CO-PA andanalyze the prof itabili ty reports.

z Describe the update of future prices.

z Describe the extended options such as thealternative posting run

z Prepare and execute production startup for the

material ledger.


Special functions: Unit Objectives




© SAP AG 2003

z Once you are familiar with the functions of thematerial ledger, you examine the extendedfunctions that you can implement in Customizing.

z You also see the settings required to transfer calculated actual costs to profitability analysis, andto include the costs as actual costs of sales.

Special Functions: Business Scenario




© SAP AG 2003

Course Overview






Special Functions





© SAP AG 2003

Profitability AnalysisProfitability Analysis

Actual Cost ing and CO-PA Integration

Profitability segment

COCOPCPC

Plan CostComponent Split

Material valuationduring the period

Actual Co stComponent Split

Optio nal Revaluationat Period clo se

Financial AccountingFIFI

Standard Cost Estimate Actual Cost ing/Material Ledger

Mat Lohn AfA GKZ Mat Lohn AfA GKZ

COCOPAPA

Customer order

In Financial Accounting goods movements (for example sales) are valuated with the standard price. In

Profitability Analysis the billing documents are normally valuated with the cost component split for

the standard price (Target costs: Actual quantity * planned costs).

Actual costing in the material ledger calculated the actual costs for the finished products (or other

materials). Actual costs are determined periodically, and contain all follow-up costs and lower level

material components.

As the actual cost component split already contains the variances for all materials, it is no longer

necessary to subsequently allocate the production variances to the results each month. You can use a

periodic revaluation with actual cost component split to analyze actual costs.

As with the cost component split for planned costs, CO-PA can decide for the actual cost component

split whether, a main or auxiliary cost component split will be used for the valuation. This allows the

actual cost component split to use the actual prices for the cost center (Primary Cost ComponentSplit).




© SAP AG 2001

Customizing CO-PA: Actual Cost ing Assignment

CO-PA access to actual costing/material ledger:Define valuation view Transfer cost

Transfer Main or auxiliary cost component split component split

Ass ign value fields for transfer of average price and average price

Assign Cost ing Key to Material TypesPoint of valuation Activity Material type02 Periodic revaluation Billing FERT02 Periodic revaluation Billing HALB... ... ...

Assign Value Fields Cost Component Structure MLPoint of Val. Cost component Fix/Var.... In value field02 Periodic revaluation 10 Raw materials Variable 100 Material Costs Actual variable02 ... 20 Fixed Salaries Fix VV120 Personnel Costs Actual Fix... ... ...... ... ...

C o s t c o m p o n e n t

s t r u c t u r e a s i n

s t a n d a r d c o s t

e s t i m a t e

A c t u a l c o s t c o m p o n e n t s p l i t

a c t i v e :

Access to the periodic unit price and the actual cost estimate in the material ledger is defined by

maintaining the costing keys. Valuation of your sales quantities using the periodic unit price/actual cost

estimate, usually takes place in CO-PA within a periodic revaluation at period close.

This assignment determines for which point of valuation, which activity type and for which plan version

the specific product costing (decided through the costing key) for a material type will be read.

The value fields for an operating concern can be assigned to the individual components of the relevant

cost component structure for actual costing using the assign value fields function. It is important to note

that the value fields must be assigned separately for each point of valuation in profitability analysis.

It is possible to differentiate between variable and fixed cost portions when transferring the costcomponents to profitability analysis.

More than one cost component can be included in a single value field for each cost estimate (N:1

Relationship). The values from the cost components are then cumulated and transferred to profitability

analysis.




© SAP AG 2001

Period Close in CO-PA

Periodic Revaluation in CO-PA menu:Time Point 02: Periodic Revaluation

From Period 003.2001To Period 003.2001

Activity types Order Settlement

Test run Al l value fi elds modifi able

Selection Criteria Value Fields

Own value fieldsor

Delta documents(old value fields)

Characteristic for Revaluation- Customer *- Article *- Column *... *

Periodic valuation enables you to select actual data that has already been posted, and revaluate it using a

self defined valuation strategy for the point of valuation 02 (Periodic Revaluation - Act). This can be

applied for activity types A (Customer order receipt), F (Billing data as well as for all user defined

activity types.

For example, periodic revaluation allows you to revaluate line items, that were posted in profitability

analysis at the start of the period using the standard cost of goods manufactured, using actual costs or the

actual cost of goods manufactured. The difference between the original value of the line items and the

newly determined value is updated as Delta in a new line item. If periodic valuation is carried out more

than once for a line item, a new delta line item will only be created if a difference occurs. The updated

values from the periodic valuation can be seen in the Information System.

Alternatively, if you use the valuation with material cost estimate, you also have option to explicitly

display the periodic values along side the original values. In order to do this you must create your own

value fields, in which the values of the periodic valuation can be stored. In theory it is also possible to

recalculate values that were determined outside of the valuation in CO-PA. On the other hand this

means that, quantity and value fields used, according to the value field assignment for the SD interface,

to transfer sales orders and billing documents remain unchanged.




© SAP AG 2003

Actual Cost of Sales in Profitabili ty Contribution Margin Analysis Actual costs broken down into cost components Target/Actual Variances

Profitability Reports in CO-PA

Target Actual Var. % Abs. var.

Revenue: $100,000

Quantity sold: 1,000 PC

50,000 45,000 5,000 10 %Material cost s

4,000 5,000 -1,000 - 25 %Production costs

4,000 4,500 - 500 - 13 %Variable labor costs

10,000 7,000 3,000 30%Process costs5,000 5,500 - 500 - 10 %Material OH

6,00027,000 33,000 22 %Contribution margin I

10,000 10,000 0 0 %Fixed labor costs

7,000 7,000 0 0 %Fixed production costs

10,000 16,000 6,000 60 %Contribution margin II

The goal of cost of sales accounting is to display the costs for the quantity sold, divided up into useful

sections.

The planned costs of goods sold for a material is determined in product cost planning. You can access

the cost of goods sold from Product Cost Planning in Profitability Analysis within the valuation.

In Customizing, you can determine which cost estimates from product cost planning are used for the

valuation of actual or plan data in profitability analysis. To do this you have to define a costing key. The

costing key characterizes a specific set of access parameters, which are used to control access to the

costing data from product cost planning during the valuation.




© SAP AG 1999

Maintain future price

Material li st

Material Plant Level S price Per.unit price % var.

ACT-BCD00 6000 1 750.00 745.00 -0.67 ACT-LCD00 6000 1 25.00 26.50 6.00

ACT-DCD00 6000 2 1177.50 1429.50 21.40

ACT-DCD00 6100 3 1250.00 1177.50 -5.80

...

Costing run

Manual maintenance

Selection according to...- Plant- Material type- Material numbers...

Future date

Rules

Manual individualmaintenance

Future valuation price

$...

from 1.1...

o r

Through the function Marking, the new future valuation prices are updated in all currencies or

valuations in the material ledger data.

To mark the calculated moving prices (V) as the valid valuation prices for future periods, you can either

mark an entire costing run or individual materials.

Through individual maintenance, you select the materials whose future valuation prices you want to

maintain (for example, all raw materials). If you want to maintain or control the future valuation prices

manually, set the indicator Manual individual maintenance. Otherwise, the future valuation prices

calculated by the system are used. In addition, enter the date for which the future valuation price should

be valid. Under Rules, you can specify the criteria for determination of the future valuation price for

each currency or valuation:

y The currency and/or valuation from which the translation should take place

y The existing price from which the translation should take placey The date and exchange rate type with which translation should take place (only with different

currencies)

y The factor by which the result should be multiplied (for example, with a factor of 0.5 the price will be

reduced by half)

If you have set the indicator Manual individual maintenance, check the new future prices and the

respective date and change anything if necessary. After choosing Save, you receive information on the

price change.



(C) SAP AG AC530 7-10

© SAP AG 2001

Releasing Prices

Futurevaluation price

backgroud processing Tolerances can be set

Dynamic pr ice release- activate for each valuation area

Manual ReleaseSelection according to ...

- Plant

- Material type- material numbers

...

CurrentStandard Price

first goods movement/material

from 1.1...

During the release, the system updates the valid future prices in the respective currencies or valuations as

the current standard prices. If necessary, the relevant stock quantity is revaluated. The prerequisite is

that planned prices exist in the system that are valid for the time period. If such valid planned prices are

not available, the former valuation price is still used. The following additional prerequisites exist for

materials with material price determination 3. The status of the material ledger data for the current

period must be Period opened or Price change effected. This means that no goods movement, invoice or

order settlement have been posted after the period-end closing program. In addition, the closing entries

for material price determination have not yet been made.

In addition to this, in Customizing, you can specify for each valuation area that a planned price is

released as the valuation price with the first goods movement in a new period if the validity date of the

planned price is attained. This dynamic price release is useful if it is, from an organizational point of

view, difficult for you to release the planned prices between the period closing program and the first

goods movement. In this case, use the dynamic price release so that the materials that were moved in

this period of time are valuated with the new price. Nevertheless, you must release the planned prices

before the end of the period for materials not moved in this period of time. A dynamic price release

takes place with order settlements, the entry of an invoice and every goods movement of a material. You

should, therefore implement both the dynamic price release and the conventional price release

methods.



(C) SAP AG AC530 7-11

© SAP AG 2003

Customizing: Material Ledger/Actual Costing

Material Ledger Typefor each valuation area

Activate Actual Costingfor each valuation area

Material PriceDetermination(new materials)

Transaction-

based

Single/multilevel

Activate Material Ledger for each valuation area

Material Ledger

Maintain ML Number Ranges

Activate Dynamic Price Changes(optional for each valuation area)

Al ternative Update Structure(optional for each valuation area)

Production Startup...

Assigns currencies and valuationsStandard: Transfer FI/CO (0000)

Optionalactivity type update

No

Yes, quantities

only

Yes, w/ act.prices

Acti vating CostComponent Structures

The first step is to activate the material ledger. If you activate the material ledger for a given plant, you

should also activate it for all other plants in the company code. This assures proper reconciliation of

accounts between financial accounting and materials management.

You use material price determination to control whether material prices are determined on a

transaction basis or a single-level/multilevel basis. You can define a default value or a mandatory value

with which the materials to be created are valuated. Make sure that all materials have transaction-based

price determination after production startup. You can change the material price determination and the

price control of the relevant material or materials in the material master and in the material ledger data.

The next step is to create material ledger types and assign a maximum of three currency types to

each of these material ledger types. The standard system contains material ledger type 0000, which uses

the currency types from Financial Accounting.

Check whether the ML number ranges meet your requirements. Check whether the document type ML

supplied in the standard system for material ledger documents is maintained. Check whether the number

ranges of the accounting documents are maintained. In the standard system, the number range starting

with 47 is intended for accounting documents for material ledger documents. A group for material ledger

documents exists for each relevant transaction type in the standard system. Each group is assigned a

number range of 100,000,000 numbers. It is generally not necessary to add new groups.



(C) SAP AG AC530 7-12

© SAP AG 2001

In the Material Ledger menu (Uti lit ies)

Creates Material Ledger master records

Calculates Material Ledger stock values from

FI stock values (2nd and 3rd currency)

Sets ML indicators in all material master records

Sets the material price determination indicator in material

master records for 2nd currency (can be changed in 3rd)

Fixes the currencies used

Sets the productive indicator

Production Startup

Production StartupProduction Startup

Before production startup, you should have completed and checked all preparation work. From an

organizational point of view, make sure that no material postings are necessary during conversion in the

relevant plants during conversion. Between activation and production startup, the relevant plants are

locked. Please read note 108374 about resetting data for production startup of the material ledger.

The production startup function prepares data for the material ledger.

After production startup of the material ledger, you cannot change the currencies, currency types and

material ledger types. Ensure that the material type attributes are correct in Customizing for Logistics -

General. Conversion is only possible for materials that have a material type that allows the update of

values. In Customizing, ensure that all valuation areas in which you want to use the material ledger are

flagged as active for the material ledger. Additional valuation areas can be set subsequently as active and

productive. From an organizational point of view, ensure that the accounting view for the relevant

material has been created in the material master record. If you worked with the material ledger in your production system prior to Release 4.0A, read note

0081463 in the OSS system.



(C) SAP AG AC530 7-13

© SAP AG 2003

The Idea Behind the Alternative Valuation Run

In addition, up to 999 alternative valuation runs can be created for

each periodic actual costing run.

z Simulation on the basis of actual data by means of

Cumulation: Material prices based on time windows spanningmore than one period

Al ternative valuation: Cost accounting based on alternativevalue records for internal purposes

The alternative valuation run (AVR) is a tool foralternative costing based on the periodic actual quantitystructures. An AVR makes a copy of the actual data of selected periods. Each AVR performs calculations on itsown data copy. The main periodic calculation steps,single and multilevel price determination, are alsoavailable to the AVR. Unlike periodic actual costing, whichonly pertains to the special analysis of periodic data, theAVR can be used to analyze several related periods. Their quantity and value structure is summarized whilethe data is copied and thus lead to different results aftersingle or multilevel price determination.



(C) SAP AG AC530 7-14

Unlike periodic actual costing, which only carriesoperational standard prices, the AVR offers alternativevaluation rules for determining material prices.

If in periodic costing the same periodic average price isused for valuating consumption and ending inventoryduring single-level valuation, the AVR permits alternativeallocation rules to allocate the differences to consumptionand ending inventory.

Finally, in the AVR the plants taking part in multilevelprice determination can be combined in an alternativeway to structure the periodic actual costing, thus allowingusers to get a full view of value chains that are brokendown in periodic costing, and a broken-down view of value chains that are end-to-end in periodic costing.

Up to 999 alternative valuation runs can be created foreach period. Each of these runs works on its own data

copy and administrates the results in its own data area.



(C) SAP AG AC530 7-15

© SAP AG 2003

Uses

z Cumulation

Smoothing of seasonal or accidental periodic fluctuations

Minimizing the influence of work in progress, the periodassignment problem, beginning and ending inventories

Credits to cost centers even during months when orders did notsupply goods to stock

z Al ternative valuation

Support of alternative accounting policies under IAS, US GAAP,

HGB, etc.

Performing calculations wi th simulated prices as an alternative toperiodic actual costing

The results of an AVR provide information of a different nature than that of periodic costing. The

calculation of the AVR depends on the costing parameters set and is therefore indirectly subject to the

users' intention, who are likely to pursue their own costing purposes by setting parameters. Possible uses

of the cumulation function of the AVR include calculating year-based actual prices, minimizing the

problem of period assignment, smoothing seasonal fluctuations, including the (optional) crediting of cost

centers on the basis of activity consumption of the adjusted value added. Another possible use is the

analysis of the production volume for a whole fiscal year, and comparing such volumes for different

fiscal years.

The alternative valuation function of the AVR permits the use of parallel accounting standards with

alternative material prices and activity prices, for example under HGB, IAS, or US GAAP. Price

components for which legislation prohibits capitalization can be included in the calculation, and theeffects of changed wage costs on the value added of finished goods can be simulated. Depending on the

quantity structure, beginning inventories can also be deleted and the cost flow to production costs can be

restricted for a certain period.

This function of being able to include any other material prices as an alternative to standard prices for

valuation permits users to simulate the effect on the value added of changed raw material prices.



(C) SAP AG AC530 7-16

© SAP AG 2003

Cumulation across time windows of any length

Period

1 2 3 4 5 6 7 8 9 10 11 12

Year to date

... Quarters

Time windows of any length can be cumulated. The same time windows can be cumulated in several

alternative valuation runs. In each AVR, the periods to be cumulated are defined from new and

independently of other costing runs. Time windows can straddle the fiscal year end. If material prices or

activity prices change in the course of a cumulation period, these price changes are taken into account

when the data is summarized. If there are price changes, the preliminary valuation within the AVR is

standardized to the price of the first cumulation period, unless the user specifies different standard prices

to be used.



(C) SAP AG AC530 7-17

© SAP AG 2003

Cumulation of periods in AVR

120400200EI

3010050Co

150500250CUM140300150Re

10200100BI

Diff Vvalue

Quantity

JAN

40200100EI

80400200Co

120600300CUM

0200100Re

120400200BI

Diff Vvalue

Quantity

FEB

54600300EI

36400200Co

901000500CUM

50800400Re

40200100BI

Diff Vvalue

Quantity

MARCH

50600300EI

150900450Co

2001500750CUM

1901300650Re

10200100BI

Diff Vvalue

Quantity

CUM

January

February

March

Diff(CUM) := Diff( BI(Jan)) + Diff (Re(Jan-March))

200 := 10 + (140 + 0 + 50)

BI Beginning inventory

Re Receipts

CUM MI + Re or Co + EI

Co Consumption

EI Ending inventory

Several periods are summarized during data copy, and in the AVR the summarization is performed

during the cumulation step. Unless the user has defined specific rules, the summarization is performed as

follows:

The given beginning inventory of the first cumulation period is used as the beginning inventory (BI) of

the cumulation period .

The receipts (Re) of the cumulation period are the total of periodic receipts of all cumulation periods.

The cumulative inventory of the cumulation period is the total of cumulative beginning inventory and

cumulative receipts.

The quantity and preliminary value of consumption of the cumulation period is the total consumption of

all periods. The differences allocated to the consumption of consumption equal zero at the time the data

is summarized. They are calculated later, during single-level price determination in line with the

proportion between cumulative and consumed quantity.

The ending inventory (EI) of a cumulation period is the ending inventory quantity of the last period of

the cumulation period. The differences are set to zero during data summarization. They are calculated

later, during single-level price determination, in line with the proportion between cumulative and ending

inventory quantity.



(C) SAP AG AC530 7-18

The cumulative ending inventory differences do not normally equal the ending inventory differences of

the last cumulation period. The reasons for this are complex. The above simple example explains the

difference as resulting from the simple fact that the proportion of consumed and ending inventory

quantity changes periodically and does not correspond to the cumulative proportion of 450 over 300 for

every period.

During data summarization, only the single-level differences, i.e. single-level price and exchange ratedifferences, are summarized. The multilevel differences are, however, set to zero and calculated later by

multilevel price determination.



(C) SAP AG AC530 7-19

© SAP AG 2003

Cumulation ? Periodic average

Period 1 Period 21000

90KG 10KG

100900

100

10KG 90KG

9010

Product A Product B Product A Product B

Product A

1100

100 KG 100 KG

190910

Product B

Average (per. 1 & 2)

Product A

1100

100 KG 100 KG

550550

Product B

Cumulation (per. 1 & 2)

The differences on the cumulative inventories are not simply the sum of differences incurred in all

periods, but are determined from new on the basis of the cumulative quantity structure. In the above

example, the same material is used in the production of two different products. In line with the

cumulative consumption proportions of 1:1, the costs are allocated in equal proportions, and therefore

more evenly than in the periodic calculation. There product A (possible unfairly) carries most of the

costs incurred, because in the same period in which the highest usage costs were incurred, the goods

receipt of product A, which was decisive for the quantity, also occurred.



(C) SAP AG AC530 7-20

© SAP AG 2003

Alternat ive valuation in AVR:

z Material valuation is controlled through the settings of thecosting run:

Alternative Prices:

Planned prices (CO Version > 0)

Periodic actual prices

Cumulated actual prices:

Different valuation between consumption and endinginventory via BADI BADI_ENDING_INV

Transfer of planned prices from material master or other

externally specified prices for f inal inventory valuation

Transfer of alternative cost component splits for endinginventory valuation

Call-up of BADI CKMLAVR_SIM to manipulate quantity andvalue structure (valuation and simulation)

Alternative valuations can be modeled using several settings. When creating an AVR, alternative prices

can be set for valuating the activity consumption. All plan prices known in cost center accounting are

available in addition to the periodic actual prices. But a plan price that is to be used in the AVR must be

available in all valuation views used for calculation in the material ledger and have been specified via

the material ledger type set. In addition the activities consumed can be valuated with cumulative actual

prices.

BADI BADI_ENDING_INV can be used to valuate the ending inventories with freely definable prices

as an alternative to the average price. Unless they are covered by the externally specified ending

inventory valuation, the cumulative differences are allocated to consumption and charged further during

price determination.

After data summarization, which is performed during the cumulation step, the cumulative data structure

can be modified by calling up BADI CKMLAVR_SIM. In this way, depending on the material type or

other criteria, alternative prices can be set for revaluating the cumulative inventories and for further

charging. In addition, the quantity structure can be reduced with this BADI, for example to remove

irrelevant beginning inventories, receipts or consumption from the calculation.



(C) SAP AG AC530 7-21

© SAP AG 2003


Special Functions:Unit Summary

z Set up an integrated connection to CO-PA andanalyze the prof itabili ty reports.

z Describe the update of future prices.

z Prepare and execute production startup for thematerial ledger.

z Implement extended Customizing options, such

as activity type updates and individual materialupdate structures.



(C) SAP AG AC530 7-22

Special Functions: Exercises

Unit: Special Functions

Topic Results Analysis


• Analyze the results of multilevel actual costing

• Customize CO-PA so that you are able to use the results of actualcosting effectively.

• Mark the calculated actual prices as future valuation prices

You have been asked to analyze the results of multilevel actual costing in

detail.

In addition, you will mark the calculated actual prices for the inputmaterials as valuation prices for the subsequent period.

As the cost component split is only known after the multilevel pricedetermination, these values have to be subsequently entered into CO-PA.

This occurs during periodic revaluation, which will be executed for you

by the course leader.

1 Multilevel Actual Costing: Integrated Analysis using Profitability Analysis (CO-PA)1-1 Contribution Margin Accounting in CO-PA

1-1-1 First call up the CO-PA report IDES 530 using the following parameters:

• Currency type 10

• Current period

1-1-2 The report shows you the contribution margin accounting for your demo

CD with target and actual values. Fill out the following table.

Target Actual

Quantity

Revenues:

Variable costs

Fixed costs

Total costs



(C) SAP AG AC530 7-23

2 Origin of the Target Values in Contribution Margin Accounting

2-1 How were the target values for contribution margin accounting determined?

________________________________________________________

________________________________________________________

2-2 From the CO-PA report, call up the standard cost estimate for your demo CD. Go tothe costs tab and set the base quantity for the displayed costs to the total cost of

sales quantity (see previous task). Now display the cost component and fill in the

following table:

Base quantity: As above (total cost of sales quantity)

Total variable costs:

Total fixed costs:

Total:

Compare the values in the standard cost estimate with those from CO-PA.

Go back to the CO-PA report.

3 Origin of the Actual Values in Contribution Margin Accounting

3-1 From the CO-PA report, call up the "Cost Component for Price" report.

Enter the following settings:

Period/year: Previous posting period


Type of price: Periodic unit price

Base quantity: User entry: Sales quantity (see above)

Fill out the following table.

Base quantity: As above (total cost of sales quantity)

Total variable costs:

Total fixed costs:

Total:

Compare the values in the standard cost estimate with those from CO-PA.

3-2 Customizing CO-PA for the Transfer of the Actual Cost Component Split

Go to Customizing for Profitability Analysis (CO-PA).

3-2-1 In the section "Define access to actual costing/material ledger": Which

costing key does CO-PA access to copy the actual data from the materialledger?

________________________________________________________



(C) SAP AG AC530 7-24



(C) SAP AG AC530 7-25

3-2-2 In the section "Costing Key →Material Types": Which costing key isused for the periodic revaluation IST?

___________________________________________________

3-2-3 In the section "Define Value Fields": Which value fields form the cost

element "material component" that is controlled by the cost componentstructure that we are using?

Operating Concern IDEA, Cost Component Structure ML

Point of valuation: Value field for materialcomponent

Actual data transfer - transaction-

based:

Periodic revaluation - actual:

3-2-4 CO-PA report AC530 is defined using form AC530. Check and see howthe line material component is defined in the form:

Value field for line material

component :

Value field for Material Component

cell (in Actual Data column):

4 Detailed Analysis of Actual Values in Contribution Margin Accounting

4-1 Material Prices

Contribution Margin Accounting shows you that the material price variances are

responsible for the highest contribution to your negative result. In the followingtasks, you will analyze the cause of these variances.

4-1-1 You are in the contribution margin report for your material (demo CD in plant 6000). Call up the material ledger display. Using the data, determine

why the demo CD has such large price differences.

Amount of price differences from receipts:

Price differences from purchase orders: MXN

Price differences from production: MXN

Which vendor can already be seen to be the cause of the high pricevariances?

________________________________________________________

4-1-2 Which of the two categories has single and multilevel price differences?Use the display variant Single- and multilevel differences.

________________________________________________________

Where do the single level price differences for this category come from?



(C) SAP AG AC530 7-26

________________________________________________________

Where do the multilevel price differences for this category come from?

________________________________________________________



(C) SAP AG AC530 7-27

4-1-3 What is the portion of single- and multilevel price differences from

production?

Single-level price differences / production MXN

Multilevel price differences / production MXN

Using the multilevel material ledger document, check which of the inputmaterials is of greatest significance for multilevel actual costing.

Multilevel price differences due to label: MXN

Multilevel price differences due to blank CD: MXN

4-1-4 In order to identify the source of the high price variances, call up the

material ledger display for the material component with the highest price

variances. Which vendor sold you the material at a high price?

Vendor Price

1096 / Fabricas Mixtli: MXN

1097 / Puebla Digital: MXN

1098 / Productos Argentinos: MXN

1099 / Studio Chapultepec: MXN

You have identified both vendors that are directly and indirectly

responsible for the high price of your finished product, and can now takeappropriate action.

4-2 Actual Values from Cost Center Accounting

Contribution Margin Accounting shows you that the wages and salaries variancesare the second largest contributor to your negative result.

4-2-1 Call up the report to analyze the plan/actual variances for your cost center.Make the following entries:



Plan version: 0

Cost center (value): CC530-##


Analyze the actual cost variances: Which cost element has particularly

large variances between plan and actual?

________________________________________________________

4-2-2 Under which cost element has the material ledger balanced the cost center

in actual?

________________________________________________________



(C) SAP AG AC530 7-28



(C) SAP AG AC530 7-29

5 Maintain Prices

5-1 Scope of the exercise

In this exercise, you will maintain the future price for both of your input materials.

These prices can no longer be released in the current period. Why?

_________________________________________________________

_________________________________________________________

5-2 Maintenance of the Future Valuation Price of Both of Your Input Materials

Call up price maintenance from the material ledger menu. Make the following

entries:

Materials ACT-LCD-## and ACT-BCD-##

Plant 6000

Manual individual maintenance X (yes)

Date of the future price First day of the month after nextClick on the Maintain Rules icon. Make the following entries:

Use Periodic unit price

In currency/valuation: Company code currency

Conversion date Today's date

Exchange rate type M

Additional factor 1.00000

What does the setting “Use: Periodic unit price” mean?

_________________________________________________________

_________________________________________________________

_________________________________________________________

5-3 Save your entry and check the result.

Go into the material ledger display for one of the two materials look at theadditional data. Has the future valuation price been maintained? Also check the

material master after this entry ( Accounting 1).

6 Value Flow Monitor

In the info system of the material ledger, call up the Value Flow Monitor report for all

materials in company code 6000 last period.

Write down the distribution of price differences for each valuation class.

Valuation class Cumulative RoC Allocated Ending Inv

3000 __________ ______ _________ _____

7900 __________ ______ _________ _____



(C) SAP AG AC530 7-30

7920 __________ ______ _________ _____



(C) SAP AG AC530 7-31

Special functions: Solutions



(C) SAP AG AC530 7-32



(C) SAP AG AC530 7-33

Unit: Special Functions

Topic Results Analysis

The following menu paths are used in the solutions:

ACT: Accounting→ Controlling→ Product Cost Controlling→


IMG: Tools→ Customizing→ Edit Project→ SAP Reference IMG

1 Multilevel Actual Costing: Integrated Analysis using Profitability Analysis (CO-PA)

1-1 Contribution Margin Accounting in CO-PA

1-1-1 CO-PA Report IDES-530

Controlling→ Profitability Analysis→ Information System→ Execute

Report (Operating Concern IDEA, Costing-based Profitability Analysis)

Choose Report IDES-530

Currencytype

10

From/to period

Current period

1-1-2 The report shows you the contribution margin accounting for your demo

CD with target and actual values. Fill out the following table.

Target Actual

Quantity:

Revenue:

Variable

costs:

Fixed costs:

Totalcosts:

(Write down the costs here:)



(C) SAP AG AC530 7-34

2 Origin of the Target Values in Contribution Margin Accounting

2-1 The target values are determined through the valuation of the sales quantity at plan

price.

2-2 Determining the Target Values

From the CO-PA report, call up the standard cost estimate for your demo CD,

and complete the following data:


Plant: 6000

Costingvariant:

PPC1

Costingversion:

1

Valid from: Today

In the upper right-hand section of the interface, select the "Costs" tab and enter the

quantity used (600 pieces) in the "User entry" field.

Base quantity:

Total variable

costs:

Total fixed

costs :

Total:

The values equal the target values in CO-PA.

Go back to the CO-PA report.

3 Origin of the Actual Values in Contribution Margin Accounting

3-1 From the CO-PA report, call up the "Cost Component for Price" report.

Enter the following settings, if required:

Period/year: Previous posting period


Type of price: Periodic unit price

Base quantity: User entry: Sales quantity (see

above)

Fill out the following table.



(C) SAP AG AC530 7-35

Basequantity:

Total

variablecosts:

Total fixed costs :

Total:

The values equal the target values in CO-PA.



(C) SAP AG AC530 7-36

3-2 Customizing CO-PA for the Transfer of the Actual Cost Component Split

The Customizing entries for the following questions are found under the following

menu nodes:

IMG: Controlling→ Profitability Analysis→ Master Data→ Valuation

3-2-1 Define access to actual costing/material ledger:

IMG: ...→ Set Up Valuation using Material Cost Estimate→ Define

Access to Actual Costing/ Material Ledger

For actual costing, CO-PA accesses the costing key ACT, whereby the

data from the legal valuation is transferred.

3-2-2 Costing Key → Assign Material Types

IMG: ...→ Set Up Valuation using Material Cost Estimate → Costing

Key→ Assign Material Types

Point of Valuation 02: Costing key ACT is used for all activities and

materials.

3-2-3 Assign Value Fields

IMG: ...→ Set Up Valuation with Material Cost Estimate → Assign

Value Fields

Operating Concern IDEA, Cost Component

Structure ML

Point of valuation:

Value field for materialcomponent

Actual datatransfer

Transaction-

based BZ 01

VV150(Total from fixed andvariable amounts)

Periodic

revaluation -

actual

BZ 02

VV151(Total from fixed and

variable amounts)

3-2-4 Form AC530 for CO-PA Report

IMG: Controlling→ Profitability Analysis→ Information System→

Report Components→ Define Forms→ Define Forms for Profitability

Reports

Choose Display Form, and the select Form IDES 530.

Double Click on the material component field, a dialog box appears that

shows the value field displayed in the line.



(C) SAP AG AC530 7-37

Value field for line

material

component :

Value field VV150

material

component



(C) SAP AG AC530 7-38

In the same line, double click on the actual value field. In the first dialog box you see that this value field is different to the one defined for the line.

Confirm. You now see which value field is read for this report field:

Value field

for material

component cell (in Actual Data column):

Value field

VV151

MaterialComponent

ACT

4 Detailed Analysis of Actual Values in Contribution Margin Accounting

4-1 Material Prices

Contribution Margin Accounting shows you that the material price variances are

responsible for the highest contribution to your negative result. In the following

tasks, you will analyze the cause of these variances.4-1-1 You are in the contribution margin report for your material (demo CD in

plant 6000). Call up the material ledger display. Using the price

determination structure, determine why the demo CD has such large pricedifferences.

Amount of price differences from receipts:

Price differences from purchase orders:

MXN

Price differences from

production:

MXN

Which vendor can already be seen to be the cause of the high price

variances?

Vendor 1099 (Studios Chapultepec) delivered at a price of MXN _____

and caused a price variance of MXN _____.

4-1-2 Which of the two categories has single and multilevel price differences?

Use the display variant Single- and multilevel differences.

Category "Production" has single and multilevel price differences.

Where do the single level price differences for this category come from?

The single-level price differences for production come from order

settlement.

Where do the multilevel price differences for this category come from?

The multilevel price differences come from the material component price

variances during the manufacturing process.



(C) SAP AG AC530 7-39

4-1-3 What is the portion of single- and multilevel price differences from

production?

Single-level price differences / production

MXN

Multilevel price differences / production

MXN

Using the multilevel material ledger document (receipts from lower

levels), check which of the input materials is of the greatest significance

for multilevel actual costing.

Multilevel price differences due tolabel:

MXN

Multilevel price differences due

to blank CD:

MXN

4-1-4 In order to identify the source of the high price variances, call up thematerial ledger display for the material component with the highest price

variances. Which vendor sold you the material at a high price?

Vendor Price

1097 / Puebla Digital MXN

11

1098 / Productos Argentinos MXN14

You have identified that vendors Productos Argentinos and StudiosChapultepec are responsible for most of the price variances of your Demo

CD.

4-2 Actual Values from Cost Center Accounting

4-2-1 Plan/Actual Variances for Cost Center

Accounting→ Controlling→ Cost Center Accounting→ Information

System→ Reports for Cost Center Accounting→ Plan/ Actual

Comparisons→ Cost Centers: Actual/Plan Variances

Make the following entries:


Period/fiscalyear:

Previous posting period

Plan version: 0

Cost center

(value):

CC530-##



(C) SAP AG AC530 7-40


Cost element 43000: Wages has particularly high variances. This confirmsthe result that you got from the contribution margin structure: High wage

and salary costs have had a negative effect on your results.

4-2-2 The cost center is credited under cost element 895000: Plant activity.



(C) SAP AG AC530 7-41

5 Maintain Prices

5-1 No more price releases can take place in the current posting period. For materials

with price control 3, a standard price can only be changed if the material ledger hasnot updated any data yet.

5-2 Maintenance of the Future Valuation Price of Both of Your Input Materials

ACT/ML→ Material Ledger→ Set Prices→ Maintain Future Prices

Materials ACT-LCD-## and ACT-BCD-##

(Multiple selection, not the to/from

fields)

Plant 6000

Validity

date

Date entered manually: First day of the

month after next

Click on the Maintain rules icon and choose the tab for company code.

Use Periodic unit price

In

currency/valuation:

Company code currency

Conversiondate

Today's date

Exchange

rate type

M

Additional

factor

1.00000

Enter the same parameters for all three currencies.

The “Use periodic unit price” setting means that the future valuation price isdetermined from the periodic unit price in the respective currency. The columns for

currency conversion ( Translation date and Exchange rate) are only of meaning if

the price in one currency should be calculated into another currency.

The results of price maintenance are seen in the Manual individual maintenance

area. If necessary, you can overwrite these results.

Execute.

5-3 Results of Price Maintenance

Go into the material ledger display for one of the two materials and look at the

additional data. The future valuation price is updated with the price maintenancedata.



(C) SAP AG AC530 7-42

6 ACT/ML→ Info System→ Object List Value Flow Monitor

Company code 6000

Period Previous

Execute materials All

Valuation class Cumulative RoC Allocated Ending Inv

___________________ __________ ______ _________ _____

___________________ __________ ______ _________ _____

___________________ __________ ______ _________ _____




© SAP AG 2001

Summary






Extended Customizing and CO-PA Integration





© SAP AG 2001

Course Objectives

z Explain the possiblities and limits of traditional stockvaluation without the material ledger.

z Understand the purposes and structure of the materialledger.

z Explain how material price differences can flow into thestock value of products for which these materials wereused.

z Explain actual costing and the determination of the

periodic unit pri ce.z Carry out the postings for period-end closing in the

material ledger, including the revaluation of stocks withactual prices.

z Understand the integration of the material ledger with other SAP applications.





© SAP AG 1999

Recommended Follow-Up Courses

z AC650 Transfer Prices




© SAP AG 1999

Recommended Follow-Up Activ ities

z Repeat the exercises! Use the IDES dataor your own data when doing so.

z Read the online documentation!

z Read the IMG documentation!

z Read the release notes!




© SAP AG 2003

z Addi tional slides for:

z Currency and Valuation Examples

z Details for determining the costing sequence for multilevel actual costing.

z Material Update Structure

z Allocation of consumption differences

z Manual Change of Actual Cost Component Split

z Details on AVR

Contents:

Append ix




© SAP AG 2001

Example for one single currency

US-Based GroupLocal currency

Requirements

nUS dol lars

Settings in FI

10: US dollars

Settings in CO

10: US dollars

Requirements

nUS dollars

Settings in FI

10: US dollars

Settings in CO

10: US dollars

Company in Detroit

Material Ledger

1 data record

Material Ledger

1 data record

Price / Material

10: USD 100

Price / Material

10: USD 100

Company in Chicago

Actual Costing Actual Costing

In this example, the group is based in the USA. The group consists of two companies. One company is

based in Detroit and the other in Chigago.

The headquarters must report in US dollars to comply with legal requirements in the United States.

As both companies are situated in the USA you only require one currency. Both companies and the

headquarters use the same valuation approach. This means that only one valuation appraoch is required.

In turn, this means that only one currency is required in the SAP Accounting and Controlling

components This currency will use currency type 10: Local Currency, Legal Valuation

In the material ledger, actual costing can be used to calculate actual costs for materials and if necessary

to revaluate for legal valuation.




© SAP AG 2001

US-Based GroupLocal currency

Group valuationHard currency

Example for Mult iple Valuation

Requirements

nUS dol lars

nUS dol lars

Settings in FI

10: US dollars

31: US dollars

Settings in CO

10: US dollars

31: US dollars

Requirements

nMexican pesos

nUS dollars

Settings in FI

10: Mexican pesos

31: US dollars

40: US dollars

Settings in CO

10: Mexic anpesos

31: US dollars

Company in Mexico City

Material Ledger

2 data records

Material Ledger

3 data records

Price / Material

10: USD 10031: USD 90

Price / Material10: 800 MXN31: USD 9040: USD 110

Company in Detroit

Actual Costing Actual Costing

This slide shows a group of affiliated companies based in the United States. One company in the group

is in Detroit, while another is in Mexico City. As in the earlier example, the headquarters report in US

Dollar to comply with legal requirements of the United States.

To comply with the legal requirements of the United States, the company in Detroit reports in US

dollars. At the same time, the company reports to group headquarters which consolidates all its affiliated

companies. This consolidation currency is called group currency. All internal profits are illiminated

during consolidation. The resulting valuation approach is called group valuation.

The company in Mexico City must report in Mexican pesos to comply with legal requirements in

Mexico. Like the Detroit company, the Mexican company needs to prepare its financial statements both

to meet legal requirements and also to report to group headquarters. When it reports to group

headquarters, the company must use the group currency (USD). In addition, Mexican law requires to

report in a hard currency, due to inflation issues. In the SAP system, this means that both companies define their local currency as currency type 10

(Detroit: USD, Mexico: MXN). In addition to that, both companies define a Group currency at Group

Valuation (Currency Type 31), USD. The Mexican company defines a hard currency (currency type 40)

US Dollar).




© SAP AG 2001

Costing Run: Costing Sequence

...

...

...

...

Directed level

Cycle level

Directed level

Directed level

Cycle level

Directed level

When you determine the sequence, the system generates order in which the costing run will be

completed. This internal function is the first level of multilevel actual costing. The quantity structure is

determined from actual data collected from movements and operations in logistics (materials

management, production planning and so on).

The quantity structure is generated from actual data in order to fulfil the prerequisites of multilevel

actual costing. In contrast to the plan quantity structure the actual quantity structure contains objects

(materials, worklists, bills of materials,...) that were actually used during production. The quantity

structure tool uses the input data to create a process model, which contains materials, processes and

procurement and consumption alternatives. This process model is condensed to a predecessor/successor

model, which only contains relations (that is quantity flows) between materials. In a final step, the

predecessor/successor model is split up into a level model, which describes the sequence in which

materials have to be processed. The update of movements and operations for actual costing is controlled using the actual costing/material ledger controlling levels.

This results in a list of production levels (for example level 1 raw materials, level 2 semifinished goods

and so on) with hierarchical information about the respective materials. You can go to the material list

from the level overview, which allows you to display detailed information about the materials. From the

material list you can then directly access the material ledger data.




© SAP AG 2001

Material Update Structure

PriceExchRt diff.Price diff.Prelim. valuationQntty

Beginning inventory

Receipts

Production

Purchase order

Processtypes

Categories

Procurement alternatives

Vendor A/6000

Vendor B/ 6000

....IR..

....GR...

(Rem.) Purchase order

Unspecified receipts for process type

Other receipts/consumpt ions

Other user-definablereceipts

P+: Other procurement

C+: Other consumption

Inventory

Consumption, labor

Naming rules

The material update structure determines which transactions are entered in which category of the

material ledger display. SAP recommends the use of the standard update structure.

Optionally, you can define your own material update structure. The data for the goods movements is

collected in different categories of the material ledger according to the material update structure.

Through your own naming rules, you can assign your controlling levels to a process category in order to

make further distinctions between specific transactions in the material ledger data than provided for in

the standard system.

If the process category represents a receipt, choose the category Receipts. The category Receipts has

an influence on the price. However, with process category B+ (procurement), you can also choose the

category Other receipts/consumptions in order to distinguish between such receipts in the material

update structure.

If the process category represents a consumption, you can decide whether the consumption should have an influence on the price. The category Other receipts/consumptions has an influence on the price;

the category Consumption doesn‘t. If you want to further distinguish between process categories that

represent a consumption, enter a movement type group for the material ledger. This only applies to

consumptions that are single-level.

A material update structure must contain at least the process categories B+ and V+.




© SAP AG 2001

Define Material Update Structure

B+: Other Procurement

Other Receipts/Consumption

V+: Other Consumption

Inventory

Check Cost Center

Production

Purchase order

Vendor A/ 6000

Vendor B/ 6000

....IR..

....GR...

Purchase Order:

Beginning inventory

Receipts

PricePrice diff.Preliminary ValuationQuantity

Receipts only in categories- Receipts- Other R/C

Consumption only incategories- Consumption- Other R/C

Only:B+ ProcurementV+ ConsumptionVA AssetsVK Cost center VKA Customer order VNAW Consumption (plant not active)VP Project

VUBM Material Transfer Posting

i.e.: single level consumption /B+

CreateOwn CO Level

(Name):e.g Check Cos t Center

AssignProcess category

(e.g VK)to Own CO Level

DefineUpdate Structure

& AssignValuation Area

3

4

ReceiptsConsumption

Specific MovementType Group?

2

You can assign your own Controlling levels to a process category using your own name formation

rules. This allows you to differentiate between specific activities in the material ledger data, further than

you could in the standard system.

First you have to create your own controlling level. Then you create your self-defined name. You may

have also created your own movement type groups to allow you to differentiate your name.

Choose new entry and enter the process category. Enter B+ for process categories for procurement

(receipts). For consumption process categories enter a process category that begins with V.

Enter the controlling level and your own movement type group, as required.

Save.

To view the list of assignments, go to Customizing and choose "Assign Self-defined Names for

Receipts/Consumption". From here you can display the assignment of name formation rules to process

categories. Recommendation: Use the standard naming structure. The definition of alternative structures

enables you to manipulate the calculation of the periodic unit price, as you can differentiate between the

way you include single-level consumption (for example cost center withdrawals).




© SAP AG 2003

Manual Change of Actual Cost Component Split

You can use this function to change actual cost component splits for each procurement alternative. This

may be necessary for the following reasons. for example:

Individual values in a split are incorrect.

No cost component split information was available for a transaction at the time the actual entry was

made. This is now to be added retrospectively.

The same selection criteria are available as for material price analysis. In addition, once you have

selected the material, you can switch from main to auxiliary cost component split (and vice versa). This

is also possible for nodes that cannot be changed. To simplify changing cost component split values, you

can rescale the base quantity from the actual quantity to any quantity (user input). Double-click on a procurement alternative. The existing cost component split is displayed on the right. Now you can edit

the fields that have a white background color.

You should only make changes that do not change the column total. The difference form the existing

column total created by your changes is displayed on the Difference line.

In order to transfer changes to values in local currency (column Variable 1) to other currencies, select

column Variable 2 (or Variable 3) and choose Translate from local currency. The new values are

translated to the other currency and displayed in the column selected. To replace the cost component




split values with values from a cost component split template, choose Transfer . Save your entries. The

changed lines are highlighted in color.

If the total for all elements changes, a debit/credit document is posted (similar to transaction MR22,

Material debit/credit). In account determination, posting keys UMB and PRD must be maintained with

modification MAN.




© SAP AG 2003

Allocation of Activity Quantity Dif ferences

Cost Center

Actual quantitythrough entry of activitye.g. 6000 h

Retrogradeconfirmation:5000 h

Al location rules

1000 h

Order

Order

If for example you have used indirectly determined activity quantities to allocate the costs of your

activities (retrograde confirmations), variances from the quantities actually determined may arise. On

the basis of the quantity measured, the system is enabled to determine a more accurate operating

rate. This gives you more detailed information on target costs and the cause of variances.

Allocation of activity differences

• Enter the activity for the actual quantities.

• Produce an allocation of activity differences.

You can display and edit a default allocation.

Allocate activity differences

Post the allocation of activity differences

Option for correction

You can edit the allocation before posting it. In this process you can adjust the quantities to beallocated and decide whether to debit the adjustment for this quantity to the associated order, material

or finished product.

You can use this function to allocate activity differences from the recording of actual activityquantities

to orders, or to product cost collectors or make a subsequent debit to the finished product. You should perform the allocation of activity differences at least once a month before period-

end close.



(C) SAP AG AC530 9-10

When you post activ ity di fferences, the relevant cost centers are debited or credited.



(C) SAP AG AC530 9-11

© SAP AG 2003

Allocation of Material Quantity Differences

Beginning Inventory:1100 PC

Goods Issues: 1000 PC

Automatic

allocation

100 PC

Inventory

Physical inventory documentInventory:0 PC

Order Order

You can use this function to allocate consumption differences from a physical inventory to orders, or make a subsequent debit to the material or finished product. You should performthe allocation of consumption differences at least once a month before period-end close. Inthe material ledger you can use the material price analysis to check the inventory values and to monitor postings. The material price analysis tells you the movement types of thepostings under Other receipts and consumption. You can obtain the movement types of theconsumption line in the original document.

The function is composed of Generate allocation Edit and post allocation Display allocation of consumption differences

Enter the required selection criteria. You will get a list of inventory documents. Select one ormore lines, and choose Allocate. The system provides a default quantity allocation. You canchoose whether to create a subsequent debit for the quantities and values to the followingobjects:

Orders Material Finished product Product cost collector To edit this allocation, choose Details. The individual items are displayed. Now you can

change the quantity, the allocation indicator and the recipient object for each item. When you



(C) SAP AG AC530 9-12

have made your changes, choose Post in the Item overview. To display the result, chooseDetails.



(C) SAP AG AC530 9-13

© SAP AG 2003

AVR: Detailed View of Cockpit

Determining the firstand last period of an

alternative costing run

Transfer of endinginventory values from

a previous run

While creating an AVR, the first and last period of the cumulation period are defined. The beginning

inventory of the AVR is set to equal the quantity and valuation of the beginning inventory of the first

period of the cumulation period. If a different beginning inventory valuation is required, this can be

accommodated by referring to a previous run. If that is the case, the valuation of the AVR beginning

inventory is made in line with the ending inventory valuation of the previous run.



(C) SAP AG AC530 9-14

© SAP AG 2003


While creating an AVR, the first and last period of the cumulation period are defined. The beginning

inventory of the AVR is set to equal the quantity and valuation of the beginning inventory of the first

period of the cumulation period. If a different beginning inventory valuation is required, this can be

accommodated by referring to a previous run. If that is the case, the valuation of the AVR beginning

inventory is made in line with the ending inventory valuation of the previous run.



(C) SAP AG AC530 9-15

© SAP AG 2003


Revaluation of inventories

Revaluation of single-level consumption

Marking of futurestandard price

Specifying the pricesincluded in costing for

each valuation view

Under the Settings tab, the prices can be set for valuating the activity consumption. If parallel value

records are maintained in the material ledger, a price has to be entered for each of the parallel value

records. In the above example, the material ledger in the participating plants has two parallel value records,

legal and profit center valuation.

The valuation alternative controls the allocation of the cumulative differences to consumption and ending

inventory. If no entry is made here, cost allocation is made in the same way as for the single-level material

price determination of the periodic actual costing, on the basis of consumption and ending inventory

quantities.

There is an option to revaluate the material inventories on the basis of the calculated prices of an AVR.

The revaluation is posted to the last period of the cumulation period. The posting is not made on theinventory accounts themselves, but on inventory delta accounts. Using the account modification constant or

an accounting policy rule, the postings of different alternative valuation runs can be recorded on separate

accounts.

In addition the prices calculated by an AVR can be marked as future standard prices.



(C) SAP AG AC530 9-16

© SAP AG 2003


Under the Settings tab, the prices can be set for valuating the activity consumption. If parallel value

records are maintained in the material ledger, a price has to be entered for each of the parallel value

records. In the above example, the material ledger in the participating plants has two parallel value records,

legal and profit center valuation.

The valuation alternative controls the allocation of the cumulative differences to consumption and ending

inventory. If no entry is made here, cost allocation is made in the same way as for the single-level material

price determination of the periodic actual costing, on the basis of consumption and ending inventory

quantities.

There is an option to revaluate the material inventories on the basis of the calculated prices of an AVR.

The revaluation is posted to the last period of the cumulation period. The posting is not made on theinventory accounts themselves, but on inventory delta accounts. Using the account modification constant or

an accounting policy rule, the postings of different alternative valuation runs can be recorded on separate

accounts.

In addition the prices calculated by an AVR can be marked as future standard prices.



(C) SAP AG AC530 9-17

© SAP AG 2003


Determining thedifferences between

the AVR and the actualcosting of the last

period

Determining thecumulative actual

values

Call-up of BADI

CMLAVR_SIM tomodify data

Cumulation of periods

zUsing the process step Cumulate data, the periodic data is copied and summarized, providing the

cumulation period covers more than one period.

zIf BADI CKMLAVR_SIM is activated, it can be called up in process step Modification of value added .

This BADI can be used to set any number of material prices and to modify the quantity structure. If the

BADI is not activated, this process step is hidden.

zIf in line with its settings, the AVR uses cumulative actual prices to valuate activity consumption, they are

determined with process step Determine actual prices. This process step remains hidden, unless valuation

of activity consumption is made with cumulative actual prices.

zIf the given AVR is a posting run, the postings that result can be simulated and analyzed in the processstep Determine delta postings.

zThe process step Post closing is used to make the delta postings that previously existed as statistical

entries. During posting, material inventories and single-level consumption can be revaluated and cost

centers can be credited. In the same way as for periodic revaluation, postings for the subsequent period are

reversed.

zSAP recommends revaluation of the periodic actual costing. From a preventive maintenance point of

view, SAP only supports AVR revaluation for material inventories. If this recommendation is disregarded



(C) SAP AG AC530 9-18

and cost centers are credited via an AVR, the following must be observed: Either credit only the periodic

actual costing with periodic actual prices, or exactly one AVR with cumulative actual prices.



(C) SAP AG AC530 9-19

© SAP AG 2003


zUsing the process step Cumulate data, the periodic data is copied and summarized, providing the

cumulation period covers more than one period.

zIf BADI CKMLAVR_SIM is activated, it can be called up in process step Modification of value added .

This BADI can be used to set any number of material prices and to modify the quantity structure. If the

BADI is not activated, this process step is hidden.

zIf in line with its settings, the AVR uses cumulative actual prices to valuate activity consumption, they are

determined with process step Determine actual prices. This process step remains hidden, unless valuation

of activity consumption is made with cumulative actual prices.

zIf the given AVR is a posting run, the postings that result can be simulated and analyzed in the processstep Determine delta postings.

zThe process step Post closing is used to make the delta postings that previously existed as statistical

entries. During posting, material inventories and single-level consumption can be revaluated and cost

centers can be credited. In the same way as for periodic revaluation, postings for the subsequent period are

reversed.

zSAP recommends revaluation of the periodic actual costing. From a preventive maintenance point of

view, SAP only supports AVR revaluation for material inventories. If this recommendation is disregarded



(C) SAP AG AC530 9-20

and cost centers are credited via an AVR, the following must be observed: Either credit only the periodic

actual costing with periodic actual prices, or exactly one AVR with cumulative actual prices.



(C) SAP AG AC530 9-21

© SAP AG 2003

AVR: Results and Integration

z Actual cost component sp lit is calculated

z Inventory can be revaluated

z Analysis v ia material price analysis (CKM3)

z Analysis by d isplaying the valuated quantity structure

z Transaction CKMLAVRPERD compares the cumulative tothe periodic data

z Result can be reconciled to Business Information

Warehousez Results can be analyzed in the Value Flow Monitor

z Revaluation possib le in prof itabili ty analysis



(C) SAP AG AC530 9-22

© SAP AG 2003

Follow-up to profitability analysis

Definition of a costing

selection

Assignment to

an AVR

z Definit ion of a costing selection

z IMG:z - Controlling- Profitability Analysisz Master Data- Valuation- Create valuation with material- costing- Define access to actual costing/material ledger

z Assigning a costing select ion to alternative valuation runs z IMG:z - Controllingz Product Cost Controlling -- Actual Costing/Material Ledger – Actual

Costing – Enter Cost Component Split in CO-PA

