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Product cost

Former Member
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Dear All

can u pl. explain how to capture product cost?


Accepted Solutions (1)

Accepted Solutions (1)

Active Contributor
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Hi Mr.Rajsingh,

Just to add check the following

The costs of the internal activities are a function of the activity types, formulas, standard values, and quantities and so on. An example of an internal activity is the labor cost for setup.

Material cost for the components is another element of the production order cost.

Overhead is calculated periodically.

<b>Production Costing</b>

The activity used in an order can be divided into internal activity and external activity. Planned

costs are calculated for both.

The system calculates the planned costs for the activities contained in an operation or

sub operation via the valuation variant specified for the order type (defined via the costing variant).

The values of the individual activities are specified via the activities defined in cost center accounting.

Whether an operation is relevant to costing depends on its Control key and its costing relevancy indicator.

• You can specify via the control key of the operation whether the operation is relevant to costing.

• If, according to its control key, the operation is relevant to costing, you must ensure that the costing relevancy indicator is set (general data screen) for the activity produced in the operation to be costed.

Overhead Cost

Overhead costs are costs which can be assigned only indirectly to the production order, such as electricity costs or general storage costs.

Overhead costs are assigned to the production order via overhead surcharges. They are updated in the order under the cost elements defined in the costing sheet.

A costing variant is defined in customizing per order type and plant. The costing variant refers to a costing sheet. The costing sheet determines what overhead surcharges are assigned to the order.

The costing sheet specifies:

• Which direct costs to apply surcharges to

• Under which conditions an overhead is calculated

• How high, depending on these conditions, the surcharge percentage is

• Which object (for example, a cost center) is credited under which cost element during actual postings

<b>When you do the cost roll up as explained by Mr.Taj or using CK40N,the product

cost is the total of raw material cost(as per to the item & quantity defined in BOM)

the system calculates plus the conversion cost(Activity cost for performing the

operation which you have assigned the cost centre to the work centre and the

workcentre you have assigned in routing)plus the overhead cost(If you have

assigned any overhead group to the raw materials).

This cost after doing the cost roll up & release it get's stamped in the costing2

view of the header material under Current Planned price.

I hope atleast now you must be able to get some idea about Product Costing.</b>

<b>Reward points if useful.</b>



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Answers (3)

Answers (3)

Former Member
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Raj Singh,

For entire BOM cost including operations in routing then run use CK11n and mark the cost CK66 and then release CK88.

In costing view "qunaity structure" check box must be enable.

If any question then let me know.



Former Member
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Product Costing

This section describes the settings you must maintain for the distribution of the costing results cost component split.


Customizing needs to be carried out for message type COPCPA.

The following data must be distributed to all participating systems:

Master data

Material master (accounting view and costing view)

Control data

Object ID Description

OMWC C MM-IV Separate material valuation

V_001K_K Account determination for Valuation areas

V_025K Account category reference

V_CK01 Costing type

V_CK03 Costing variants

V_CK05 Valuation variants

V_CK16 Date control

V_CK24 Transfer control

V_T001W Plants

V_T006D Dimensions for units of measurement

V_T006I ISO codes for units of measurement

Former Member

Product Cost by Period or Product Cost by Order?


In the R/3 System, you can manage your job costs at the level of products. There are two different methods:

Product Cost by Period

The Product Cost by Period approach is recommended for products that have relatively stable designs and are manufactured over an extended period of time. If you are manufacturing your products in a repetitive manufacturing environment, you always use Product Cost by Period. Product Cost by Period may also be appropriate in order-related production or process manufacturing environments. A prerequisite for successful use of Product Cost by Period is that you are focusing on manufacturing a product over an extended period of time.

In Product Cost by Period, you normally collect the costs on product cost collectors.

If you cannot (or do not want to) assign costs to particular product cost collectors, you can use a cost object hierarchy. You can then collect costs at levels above that of the product, such as product groups or areas of responsibility.

Product Cost by Order

Product Cost by Order is recommended in lot-based production environments. Typical applications of Product Cost by Order are in order-related production or batch-based process manufacturing. The production process is based on manufacturing orders where the focus of production and cost analysis is on particular quantities (production lots).

Active Contributor
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Hi raj singh,

Similar type of query is posted in SDN earlier..... please use the search function ..... incase still you have further query then please post the further doubt.......

Thanks & Regards