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The words "Refinement" and "Split" can be used interchangeably.

My client is a textile producer and I have defined the cost components, as follows.

1 Raw Material
2 Semi-Finished Comp
6 Production Overhead
8 Sub-Con Charges
9 Labor Charges
10 Utility Charges
11 Dyes and Chemicals
12 Accessories

The main COGS account is 590001[Cost element category =1]

Point to remember, while creating COGS split accounts:

Characteristics of main COGS account and Split COGS accounts should be same.

As all of us know where to configure the COGS split accounts, below I show the configuration valid for my client.

A split structure have been defined to accommodate split cost accounts. This is called splitting profile and named as "ZCOGSSPLIT".

Figure: Setting of main COGS split.

Figure: Different COGS account replicating the cost component structure

The COGS split profile "ZCOGSSPLIT" is linked to company code 1000.

We must know when the COGS split accounts will be having entry/posting.

Point of incident is PGI/Delivery[601 movement type].

Figure: PGI document

The new functionality of COGS Split behave in such a way that during PGI, primary COGS account would be posted against finished goods inventory account and then, based on COGS split profile, primary COGS account posting will be reverted back to generate postings against COGS split accounts.

Figure: Initial/primary posting of COGS during PGI

Immediate reversal entry takes place to nullify main COGS account and generate debit postings to COGS split accounts.

Figure: Reversal entry into main COGS account and postings to COGS split accounts.

The PGI document also creates a controlling document. As per S/4 HANA's new feature controlling document has been generated with typical alphanumeric number range A00001HB00.

Figure: Controlling document display

The main COGS account gets debited 5 times and gets credited 5 times, as well.

[The sale order is having 5 line items].

Point to be noted: Quantity of change in stock against COGS gets updated only once, i.e, at the time of main COGS postings.

Conclusion: There are different ways to utilize COGS split accounts. It may so happen that finance department wish to incorporate COGS split accounts into the FSV[financial statement version] or finance department would not incorporate COGS split accounts into FSV, instead accommodate main COGS account,only.

So, either main COGS in FSV or COGS splits in FSV.