Steps And Uses Of Product Costing

How to do costing run?
What is the use of costing run?
 
Steps for Product Costing:
 
Create Cost center (FI/CO) – KS01
 
Create Activity Type (FI/CO) – KL01
 
Assign Rates for a cost center/activity type combination – KP26 
 
Do Cost estimates - CK11N, CK24 or CK40N 
 
If you use CK40N, Costing, Mark the price and Release the same can be done in single step. 
Cost Rollup is done for Finished product so that the system automatically calculates for the Semi-Finished products standard cost.
 
IF you use CK11N, only costing will be done, but for marking and release you have to use CK24.
OPL8 - For each Production order type, Order Type Dependent Parameters – Under controlling tab - Costing variant Planned and actual has to be assigned.
 
KKF6N - Create Product Cost Collector for REM scenario for all In-house Manufactured assemblies.
 
 
Use of Costing run:
 
Costing run is used to capture the cost involved in the manufacturing of a product.
 
E.g.
 
Manufactured materials 
Services 
Other intangible goods
 
You can analyze costs to help provide answers to questions such as:
 
What is the value added of a particular step in the production process? 
What proportion of the value added can be attributed to a particular organizational unit? 
What is the cost breakdown including primary costs or transfer prices? 
How high are the material, production, and overhead costs? 
How can production efficiency be improved? 
Can the product be supplied at a competitive price?
 
You can use Product Cost Planning to do the following:
 
To calculate the non-order-related cost of goods manufactured and cost of goods sold for each product unit. 
To establish how the costs are broken down for each product, and to calculate the value added for each step of the production process ( Concept of Cost Rollup). 
To optimize the cost of goods manufactured through comparison costing ( Product Cost Controlling Information System). 
To provide basic information for other R/3 applications, for example:
To establish standards with which to assess production efficiency in Cost Object Controlling.
To update prices in the material master record and in Profitability analysis.

 

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