Lesson Overview
In this lesson we will go over the core functions and processes in Product Cost Controlling (CO-PC).
Business Scenario
As a manufacturer, you are interested in controlling your production costs, also known as cost of goods manufactured (COGM). You want to be able to forecast what your costs should be before production start, monitor your actual productions costs, and understand where any variances come from in order to improve your processes and to be sure you sell your products at the desired profit margin.
Product Cost Controlling
Product Cost Controlling gives you information about a minimum selling price for your product and helps to decide if it’s cheaper to make or buy the product. It helps you perform complex cost analysis and determine your inventory values.
The first step of Product Cost Controlling is to calculate the expected production costs. This calculation serves as a benchmark for when your production is running and actual costs are being generated.