James would now like to understand how to create a cost of sales report.
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Cost of sales accounting deducts manufacturing costs from sales revenue for a given accounting period. The expenses are allocated to the commercial functional areas in SAP, which include production, sales and distribution, administration, and more. Expenses and revenues that cannot be assigned to functional areas are reported in other profit and loss items, which are sorted or grouped according to expense and revenue type.
With this type of grouping, cost of sales accounting identifies where costs originate in a company. It identifies the economic reason for a particular expense.
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