Product Cost by Period in SAP S/4 Hana Controlling

The Product Cost By Product Cost Collector is the tool under Cost Object Controlling which is used in the Repetitive Manufacturing scenario. It is recommended if you are manufacturing the same Product over long period of time with slight or no variations in its BOM/ Recipe or Routing. This can be used in the business with mass production or made to stock scenario to manage it production to gain the benefits of economy of scales. Generally, in FMCG industries where periodic sales would be foretasted and the demand for product is based on the period, the Production is schedule and executed as per periodic demand foretasted the Product Cost by Period method will be useful for Product Costing.

We start the process from the Plan Activity Price calculation which is used to post the activity costs on Production Order/ Product Cost Collector(Planned order) later on during confirmations through formula,

= (Actual qty * Plan Price KSPI)

The Master data preparation for manufacturing FG3 are,

1- BOM (Bill of Material for FG3)

2- Work Center (3001- 3002- 3003)

3- Rate Routing (which is used in case of Repetitive Manufacturing)

Also in Rate Routing we assigned the control keys in which we have defined milestones/ operations at which we do the confirmation known as reporting points.

4- Execute Planned Cost estimate.

Now, we assigned the RM3 to Operation 010 (first reporting point) in routing so that when we do the confirmation for this operation the RM3 quantity is by default suggested and posted along with it.

Info : Raw materials can be issued to product cost collector using any one of the following 3 ways

1. Manual goods issue: We use transaction MB1A to issue goods manually to order.

2. Back flushing: For this, settings need to be done in MRP2 view of material master and may be in work center master data.

3. Automatically through routing operation confirmation: For this we need to assign the components to operation in BOM master data as shown in this setting.

Also, we create production version which is the combination of BOM and Routing. For every Production version we create separate Product cost collector. We assign the Production Version in MRP4 view of FG Material Master.