Explaining the Concept of Cost of Sales Reporting


After completing this lesson, you will be able to:

  • Describe the purpose of cost of sales functionality
  • Analyze and view normal postings and functional areas
  • Post a document including functional area
  • Create a cost of sales financial statement

Cost of Sales Reporting

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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Postings with Additional Objects

The functional area characteristic can be derived from master data, such as a cost center or a WBS element. This item is added to the entry when the cost object is used in a journal entry and then posted into the universal journal.

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Cost of Sales Financial Statement

Let’s generate a cost of sales financial statement. You create a financial statement version in Manage Global Hierarchies that uses functional areas to display the data groups.

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