Understanding Product Cost Planning Basics

Objective

After completing this lesson, you will be able to explain the purpose of a costing variant

Costing Variant

A diagram illustrating the concept of Costing Variant, highlighting key considerations such as cost components, BOM & routing, material and activity prices, update of standard costs, profit center contribution, and the use of cost estimates from other plants.
A diagram detailing the features of Costing Variant, including cost component structure, valuation variant, costing type, date and quantity structure control, partner version, and cross-company costing.

Costing Variant Component Definitions

  • Costing Variant:

    The costing variant is the central control element of a cost estimate. It allows you to specify the quantity structure to be valued and the prices to be used, and thus, whether the cost estimate is a standard, modified standard, inventory, or current cost estimate.

  • Valuation Variant:

    Specifies which prices are used to valuate the materials, activity types, processes, subcontracting, and external activities

  • Costing Type:

    • Specifies the valuation view to be costed such as legal, group, and profit center.

    • Defines the purpose of costing and the price update.

    • Specifies a partner version to generate a partner cost component split.

  • Costing Version:

    Used to capture the cost estimate iteration. Version 1 is typically used to update the material master.

  • Reference Variant:

    Controls how an existing quantity structure that has already been costed is used in the cost estimate. This improves performance of costing runs.

  • Transfer Control:

    Controls how existing cost estimates are used in other cost estimates. This improves performance of costing runs.

  • Cost Component Structure:

    The cost component structure groups the costs for the individual materials according to cost component (such as material costs, internal activities, external activities, and overhead).

  • Cost Component Views:

    Each cost component is assigned to a cost component view. When you display a cost estimate, you choose a cost component view which filter the cost components you see in the cost estimate.

  • Quantity Structure Control:

    • This applies only to material cost estimates with quantity structure.

    • Specifies the master data in Logistics (BOM and routing or master recipe).

  • Data Control:

    Controls the validity period of the cost estimate, the quantity structure date, and the valuation date.

  • Cross Company Costing:

    This concept is referring to cost estimates that include items that are sourced from different company codes. The transfer control is used for this.

A graphic showing the cost estimate details for the material Forklift T-FL00, including costing variant PPC1, plant code 1010, and costing lot size of 100.

Each cost estimate that you create is based on a costing variant.

A costing variant for material cost estimates contains control parameters to determine the quantity structure automatically and to update the prices in the material master. These settings contain information such as the prices used by the system to cost materials, activities, and business processes.

The control parameters contained in the costing variant, and the settings you define, depend on whether you create a material cost estimate or a base object cost estimate.

The lot size can be entered when creating a cost estimate or, if left blank, the material master lot size will be used from the costing 1 view. A larger lot size affects the unit cost since the fixed costs will be spread out over more units.

To access the online help for product cost planning, use this link: https://help.sap.com/viewer/5e23dc8fe9be4fd496f8ab556667ea05/2021.000/en-US/e2064b5399b57425e10000000a44176d.html

Valuation Variant and Costing Type

A graphic illustrating the relationship between valuation variant and costing type and how they relate to costing parameters including costing variant, material, plant, and costing lot size through a costing variant.

Each costing variant contains a valuation variant and a costing type.

The valuation variant determines at which price materials, activity types, processes, subcontracting, and external activities are valued by the system (for example, the latest price or the average price calculated for the entire fiscal year).

The costing type determines the purpose of the costing, such as base object costing or material costing, and the price update permitted.

Creating Ad-hoc Cost Estimates

A material cost estimate without a quantity structure is referred to as Unit Costing.

A material cost estimate without a quantity structure enables you to do the following:

  • Plan the costs for raw materials, internal activities, and external activities for a product in the form of a unit cost estimate.

  • Assign the material overhead and production overhead to the product.

  • Assign the costs to cost components and save them.

  • Display the material usage costs for semi-finished products grouped by cost component.

A screenshot illustrating the process of creating an ad-hoc cost estimate, with a scenario for costing a product without BOM or routing, copying an existing cost estimate, and adjusting it with different components or services.

Valuation type: An option that lets you manage stocks of a single material in a plant in different stock accounts in terms of value. You can valuate different stocks of the same material separately. Some stocks of a material can be procured externally. Others are produced internally. Using split valuation, you can assign your "bought-out" stocks and your "made-in" stocks to different accounts and valuate the "bought-out" stocks at different prices to the "made-in" stocks. Such stocks can be subject to different price controls.

Costing Version: Versions 01 to 99 are delivered with the system. In configuration, costing versions are configured for mixed costing. You can also change the description in the same table.

Cost component structure with text: Controls whether an entry tool corresponding to the cost component structure is generated when an additive cost estimate or a material cost estimate without quantity structure is created.

Dates:

  • Costing date from: Date from which the cost estimate is valid. This can only be date for today or later. If this estimate is going to be used for the next year standard, then the first day of the next fiscal year is typically used.

  • Costing date to: This typically set to 31.12.9999 (the latest possible date). Variance calculations require cost estimates that are effective for the entire year.

  • Valuation date: Date on which the materials and activities in a cost estimate are valuated. For example, purchasing info records can contain different quoted prices for different dates. Activity prices can vary by period as well.

A screenshot showing the process of selecting the number of levels to copy and choosing a specific cost estimate.

Future: This is referring to cost estimates that have been marked into the material master future field.

Current: This is referring to cost estimates that have been released into the material master current field.

Previous: This is referring to cost estimates in the Previous material master field.

Costing Status: This is used to determine the processing status of the estimate. These are the main statuses:

  • KA Costed Without Errors
  • KF Costed with Errors
  • VO Marked Without Errors
  • VF Marked with Errors
  • FR Released Without Errors
A screenshot demonstrating a single-level unit cost estimate where all items belong to one parent, intended for use in calculating the cost of a new product or performing what-if analyses.

Summary

  • Costing variants are central control elements in cost estimates, specifying quantity structures and prices for valuation.
  • Valuation variants determine pricing for materials, activities, and processes, influencing cost estimates.
  • Costing types define the purpose and price update of cost estimates, such as base object or material costing.
  • Ad-hoc cost estimates allow planning costs for raw materials and activities without a quantity structure.
  • Cost component structures group costs by material, internal, and external activities, aiding in cost analysis.

Learning

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