Analyzing and Comparing the Cost Estimates

Objective

After completing this lesson, you will be able to identify which application to use to display and compare cost estimate results.

Lesson Overview

In this lesson, you:

  • Analyze the cost component’s structure and how costs are split.
  • Compare cost estimates to identify any changes made during the production of materials.
  • Improve your manufacturing efficiency.

You can analyze cost estimates through:

  • Profitability Analysis, to analyze the costs by market segment.
  • Profit Center Accounting, to analyze the results by profit center.
  • Cost estimate details.

Profitability Analysis and Profit Center Accounting are covered in other courses. This lesson focuses on the analysis of cost estimate details.

General Reporting for Cost Estimates

Outline the General Cost Estimate analysis by costing item or cost component. Each of these requirements has a dedicated Fiori app:

  • Cost Components - Materials
  • Itemization - Materials
  • Comparison of Itemizations

These apps let you display cost estimates, analyze cost data, compare costs, and view detailed cost breakdowns. They offer the same features as part of the Manage Material Cost Estimates app or the Display Material Cost Estimates app (in the lower part), but they are separate apps.

You can break down the cost estimate results through a cost component split. The cost component split categorizes the costs across the entire production structure into material costs, production costs, material overhead, production overhead, and other costs.

Navigating the Cost Components - Materials App

The Item Categories app shows costs by cost item.

This screenshot is from the Cost Components – Materials app, showing a cost component structure for a material. The highlighted button gives access to the Choose Layout feature. The available layouts are: 1SAP01: Cost Components, 1SAP02: Cost Component Groups, 1SAP03: Total / Level / Lower Level.

Use the Cost Components - Materials app to view the cost component split from various perspectives, such as the cost of goods manufactured, the cost of goods sold, and inventory valuation. This split is possible if a Cost Component Structure has been defined first. Set this up through your configuration environment (covered in a different course).

This structure determines:

  • The cost components to which you assign the calculated costs.
  • How to group cost elements (G/L accounts) into each cost component.

Choose from standard SAP layouts to display Cost Components individually, by group, or by level.

Navigating the Item Categories App

Screenshot from the Item Categories app showing cost elements for a material, grouped by category. It also includes a list of standard layouts.

In the itemization, you can see the costs broken down into cost elements (G/L accounts). Material costs, external activities, and nonstock materials are assigned to different primary cost elements. This itemization shows them under cost elements determined by the system. Internal activity costs appear under the allocation cost element specified in the activity type’s master record. Overhead costs are also shown under secondary cost elements. Because all actual costs are also assigned to these cost elements, a plan/actual comparison is possible later.

You can create custom layouts to view additional information in the itemization. For example, you can add the purchasing organization, origin groups, or the text of activity types or item categories to the report.

Navigating the Comparison of Itemizations App

The Comparison of Itemizations app compares two material cost estimates based on their itemizations.

Screenshot from the Comparison of Itemizations app highlighting Cost Estimate 1 and Cost Estimate 2.

The report examines characteristics such as:

  • Item number
  • Item category
  • Cost element
  • Resource
  • Material
  • Cost center
  • Plant/work center
  • Cost center/activity type
  • Operation number
  • BOM item
  • Assembly indicator
  • Cost component

You can choose from several standard layouts to display information by item category, cost component/cost element, operation, costing item, and more. Also, you can customize the layouts to meet your needs.

Before running a comparison, select the type of cost estimates you want to compare using the Cost Estimate buttons. In the Cost Base field, adjust the lot size for which you want to display costs.

Use the Switch Currency button to toggle between company code currency/object currency and controlling area currency. For example, you can display costs in EUR instead of USD.

Now you know the main apps for retrieving information related to cost estimates analysis. Next, you learn how to create and update a material's standard price.

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