STAGE III - Selected Functions in Material Costing – Optional

1 Activate Cross-Company Costing (optional)
2 Activate Cost Component Split in Controlling Area Currency (Optional)
3 Define Quantity Structure Types for Mixed Costing (optional)
4 Define Costing Versions (optional)
5 Define Source Structure in Joint Production (optional)

Product Costing Config Flow - Stage II

Stage II Material Cost Estimate with Quantity Structure
1 Define Costing Types (legal, gr, Pc)
2 Define Valuation Variants (Price Picking Tab)
(Mat, act.Pr, su.con. Ex,proc, OH,Misc)
3 Define Date Control (cos from-to) (rel cost qty str)
4 Define Quantity Structure Control (Alt BOM /Rout)
5 Define Transfer Strategy (No tr/Fut /past /curr Co est)
6 Define Reference Variants (Optional)
7 Define Costing Variants 9link bet app & custtomizing)

Config Flow of SAP Product Costing

STAGE I - Basic Settings for Material Costing
1 Maintain Overhead Cost Elements
2 Define Calculation Bases
3 Define Percentage Overhead Rates
4 Define Quantity-Based Overhead Rates
5 Define Credits
6 Define Origin Groups (Optional)
7 Define Costing Sheets
8 Define Overhead Keys
9 Define Overhead Groups
10 Define Cost Component Structure

Origin group

1. The origin group defined in this step can be assigned to certain materials on the costing-1-view of the material master record.
2. This provides for calculating overhead rates for this material separately, even if the costs for the material are updated on the order under the same cost element as for other materials.

Direct Costs

A cost that is directly and fully identifiable with a reference object according to the costs-by-cause principle.

Overhead Rates

• The rate at which overhead is allocated to direct costs to charge cost objects with the proportion of the overhead costs attributable to them. This can be a lump sum, percentage, or quantity-based rate.
• An example of the use of overhead rates is to allocate overhead from material cost centers to orders by debiting the orders in proportion to the material withdrawals and crediting the material cost centers with the same amounts. This is also used to allocate sales and administration overhead.
• The rate applied to the direct costs to allocate the indirect costs.
• Overhead rates are used to pass on costs to cost centers that do not directly reference the activity used.

Cost Element

A cost element classifies the organization's valuated consumption of production factors within a controlling area. A cost element corresponds to a cost-relevant item in the chart of accounts.