Calculating Additive Costs

Objective

After completing this lesson, you will be able to explain the use of additive costs

Additive Costs

The diagram depicts additive cost estimates for material lifts in Plants X and Y, including transport and insurance costs for the Forklift T-FL30 and its components.

Note

Additional costs that cannot be determined through the BOM or routing can be included in a cost estimate by using the additive cost feature. The additive cost technique uses the unit costing spreadsheet and enables the additive cost to be added as an item category and identifies specific items to be included, such as materials, activity types, and processes. Enter a quantity. The system will locate the price and the cost element, and determine the appropriate cost component.

If necessary, the cost component can be manually changed to another cost component. This technique supports an itemized method for entering additive costs and allows existing master data to be used simultaneously.

The earlier method can also be used with the unit costing sheet. You need to identify only the price and cost component by specifying a V for the item category. The system locates the cost element using the same logic as in earlier releases. To use this method, the cost component layout must have the manual cost element defined for a cost component. When you use the detailed method, the cost element defined must be assigned to a cost component. No additional configuration is necessary.

Additive costing has the following uses:

  • Adding known costs to the material cost estimate with the quantity structure that are not contained in the quantity structure. In the example, the costs include transport or insurance costs.

  • Including manual costs for each material price or use only manual costs (as controlled by the valuation variant) when valuating material components.

  • Transferring cost estimates from non-SAP S/4HANA applications.

An additive cost estimate is inserted in a cost estimate with a quantity structure. You can use unit costing functions to create the additive cost estimate.

Additive Costs Update

The image explains how additive costs are assigned to a new cost estimate using the costing variant PPC1, integrating cost elements not represented by the quantity structure.

The costs calculated in an additive cost estimate are added to the costs calculated in an automatic cost estimate when costing is performed again. When material components are valuated, you can include additive costs for each material price or use only additive costs, as controlled by the valuation variant.

The costing variant determines whether the additive cost estimate is included in an automatic cost estimate.

The costing type, valuation variant, and version of the automatic cost estimate must correspond with those of the manual cost estimate. The quantity structure date of the automatic cost estimate must be within the validity range of the manual cost estimate.

Cost elements are required to handle additive costs, for example, applying overhead.  One cost element is assigned for each cost component (in the settings for the cost component structure). You can also distinguish between cost elements using origin groups.

Note

Alternatives to additive cost include costing sheets and templates. These are both automatic but somewhat generic. Additive costs are more specific, but for actual value flows, manual journal entries may be required.

Including Additive Costs

Summary

  • Additive costs enhance material cost estimates by including costs not covered by BOM or routing.
  • Use unit costing spreadsheets to add specific items like materials, activities, and processes as additive costs.
  • Additive costs can be manually adjusted and integrated with existing master data for detailed cost estimation.
  • The costing variant determines inclusion of additive costs in automatic cost estimates, ensuring consistency.
  • Alternatives to additive costs include costing sheets and templates, which are automatic but less specific.