
Explore production variances categories and learn to analyze input and output variances, including material, labor, and overhead changes, for effective cost control.
Configure the enterprise structure in SAP S/4HANA for company code, fiscal year, and logistics before applying production variance analysis and costing.
Explore fundamental financial accounting settings in sap s/4 hANA CO, including general ledger, chart of accounts, cost elements, posting groups, fiscal year, posting periods, and business partner configuration.
Configure a SAP S/4 HANA controlling area with company assignment, currency, fiscal year, and standard cost center hierarchy, then enable production variance analysis and related costing settings.
Create general ledger and reconciliation accounts, enable OBYC FI-MM integration, and set up business partners to manage cost elements, price differences, and production variances across P2P and production cycles.
Design a factory overhead costing sheet in SAP S/4HANA CO, detailing cost components like material cost, labor, depreciation, and setup costs, plus factory overhead and internal activity allocations.
Learn to configure cost component structures in SAP S/4HANA costing, assign primary and secondary cost elements, set material and labor costs, and define inventory valuation and depreciation rules.
Explore standard, preliminary, and simultaneous costing variants, including material, conversion, and overhead costs, and plan via price controls and quantity structures.
Configure variance calculation and settlement settings for production cost variances in SAP S/4 HANA CO, define variance categories and allocation structures.
Map primary cost elements to activity types through a splitting structure and rule, then assign cost elements to each activity type.
Understand SAP S/4 HANA costing by building cost center planning with cost elements and hours for labor, machine, and setup, then calculate the activity type rate using Kepi 26.
Configure the material ledger and activate actual costing to support production variance analysis, currency settings, and legal valuation within SAP S/4 HANA costing.
Explain material input price variance, linking standard costs to actual prices, covering raw materials, cost components, and its impact on cost estimation in SAP S/4HANA CO costing.
Explore how input price variance arises from material price changes and activity type shifts, and learn to isolate standard versus actual costs through scenarios and cost estimation.
Explore input quantity variance through material by changing quantity, perform material quantity variance, and perform cost estimation based on bill of material and routing in SAP S/4HANA CO costing.
Explore how input quantity variance arises from material quantity and activity type changes in SAP S/4HANA CO costing, with end-to-end cost estimation, production, and variance analysis.
Explain how resource usage variance arises in costing when substituting alternate materials in production, with quantity changes updating resource usage variance rather than input quantity variance.
Analyze remaining input variance in SAP S/4HANA costing, covering input quantity, input price, and resource usage variances across material and activity types, mapped through costing sheets and routings.
Explore lot size variances as a fixed cost variance on the output side in SAP S/4 HANA CO costing. Learn how setup expenses and production quantity influence large size variances.
Explore mixed price variance in SAP S/4 HANA CO costing across multiple manufacturing lines with BOMs and routings, and learn to set mix ratios for cost estimation and variance.
Understand how remaining variance arises when no standard cost estimation exists, causing the system to assign variance categories as remaining input or remaining output and proceed with settlement.
Learn how to calculate output price variance by tracing fluctuations in standard cost estimation, bill of materials, and routing from the start to the end of the period.
Learn to calculate assembly scrap, operation scrap, and component scrap variances in SAP S/4 HANA CO, and how scrap affects quantities and costs.
Explore operation scrap in SAP S/4HANA CO costing, where 10 percent scrap at the first and second operations alters planned quantities, material and labor costs, and the resulting cost variances.
Component scrap in SAP S/4 HANA CO costing is explained with its impact on input quantity variance, planned quantities, and cost estimation, highlighting when scrap affects materials and operations.
Explore end-to-end costing in SAP S/4HANA CO, covering make-to-stock, make-to-order, and engineered-to-order; discrete vs repetitive manufacturing, transfer pricing, intercompany, and profit center cost analysis.
Learn to design the SAP enterprise structure, including company code, plant, storage location, and logistics, and connect P2P and OTC cycles with the controlling area and profitability reporting.
Explore cross‑company costing, chart of accounts, and material ledger concepts for sap s/4hana co costing, including price control and valuation flows.
Explains SAP S/4HANA CO cost component structure for cost of goods manufactured and cost of sales, detailing material, conversion and overhead costs, subcontracting, origin groups, and overhead methods.
Explain the overhead concept and the link between casting sheet and template allocation, detailing how primary cost components split and how cost centers, profit centers, and master data enable planning.
Explore material overhead configuration in sap s/4 hana co, including bases, quantity and percentage rates, credits to cost centers, and casting sheets, plus ml activation and price determination.
Explore how margin analysis in SAP S/4HANA COPA uses account-based copper within the operating concern to deliver characteristic-driven profitability reports with seamless reconciliation.
Discuss end-to-end costing in sap s/4hana, from standard cost estimation to price differences and exchange rate differences, with material ledger impact on production and procurement costs.
Explore how actual costs flow through production cost centers, allocate to activity types, perform cost splitting, and settle variances using order-based costing in SAP S/4 HANA CO costing.
Delve into SAP S/4HANA costing basics, including split valuation with domestic and import types, valuation classes, and cost components to master inventory valuation, material ledger, and price differences.
Explore mixed casting in SAP S/4HANA costing by integrating internal manufacturing, multiple BOM/routing configurations, production versions, master recipes, and split valuation to determine cost of goods manufactured.
Explore subcontracting in SAP S/4HANA costing, comparing fully outside manufacturing and partially outside, including purchase and production orders, external processing, and cost center and costing integration.
Explore joint production and by-products in sap s/4hana co, including co-productions, by-products, standard vs actual costing, net realization value, and co-product settlement.
Explore make-to-stock and make-to-order costing in SAP S/4 HANA CO, including sales order cost, predetermined rates, result analysis, and settlement with overhead templates.
Explore make-to-order costing in SAP S/4HANA with validated and non-validated scenarios, including how goods movements trigger accounting entries, production and sales order integration, and cost settlement.
Explore repetitive manufacturing in SAP S/4HANA costing, focusing on production versions and product cost collectors, and compare with make-to-stock and make-to-order using work in progress and cost settlements.
Explore SAP transfer pricing concepts for interplant transfers, including transfer price, markup, and internal costs; compare legal, group, and profit center valuations and inter vs intra company scenarios.
Explore intra and inter company stock transfers, transfer pricing, and standard costing across multiple currencies and valuations in sap s/4hana co.
Explore distribution usage variance in material ledger and reconciliation of raw material stock between SAP and physical counts. Learn how production orders and inventory adjustments align with quarterly physical inventory.
Learn how marginal analysis in SAP S/4HANA replaces account-based COPA, integrates universal allocation, predictive accounting for incoming sale orders, and attributed profitability analysis to forecast profits.
Explore margin analysis techniques in SAP S/4HANA CO, including top-down distribution and COPA assessment. Understand universal allocation, sender and receiver roles, and distribution to profitability segments.
Demonstrate an end-to-end SAP costing cycle, from material master to casting sheet and multi-level BOM, overhead templates, two cost centers, and cumulative material ledger concepts.
Added new recording session of SAP CO S4 HANA -Complete End to End Scenarios of Cost center accounting, Product Costing, Material Leger and COPA ( Account based-Margin ANLYSIS)
The Product Costing module allows organizations to determine the production costs of products. This is integral for controlling and for assessing profitability. Material Ledger enables actual costing and supports multiple valuations in parallel.
Product Costing Techniques:
Product costing by order (Make to Stock): Costs are determined based on manufacturing orders. It's suitable for non-repetitive production.
Product costing by Sales order (Make to Order): Costing is done for specific sales orders. Typically used for customized products.
Product costing with Sales order controlling vaulted stock with sale order controlling: When both anticipated stock and actual sales order-driven stock exist.
Product costing with sales order controlling non-vaulted stock with sale order controlling: For products produced directly against sales orders without anticipation.
Product costing by period: Periodic costing for products irrespective of orders.
Repetitive manufacturing without reporting points consideration: Costs for products that are manufactured repetitively and without specific checkpoints.
Repetitive manufacturing with reporting points (work in process) consideration: Costs are captured at different stages or checkpoints of the production process.
Joint Production Process: Multiple main products are derived from one production order.
CO-Product costing process and By Product Costing Process: Co-products are main products with similar value, whereas by-products have minor value compared to the main product.
Mixed Costing process- Split Valuation: When a material can be procured/manufactured in more than one way.
Sub-Contracting, External Operations Product costing process: Costs when a part of the manufacturing process is subcontracted to external suppliers.
Cross plants –Special Procurement product costing: Costs are determined when procuring from a different plant within the same company.
Additives cost estimation: The costs of additive materials in the manufacturing process.
SAP CO S/4 HANA -Material Ledger/Actual Costing
Multiple Currencies:
Company Code Currency: Primary currency for a company code.
Group Currency: Consolidation currency.
Index based Currency: Adjustments for inflation or other index-based factors.
Multiple Valuations:
Legal Valuation: As per local regulations.
Group Valuation: Consolidated valuation.
Profit Center Valuation: Based on profit center reporting needs.
Transfer pricing:
Inter Company: Pricing between different company codes.
Intra Company: Pricing within the same company code.
Work in process functionalities to Actual Costing: Determines the cost of semi-finished goods.
Physical Inventory count integrated with Material Ledger/Actual Costing: Actual stock valuation as per physical count.
Distribution Usage variances: The differences between planned and actual usage of materials and activity types in production.
Activity Types: Quantitative measures of services provided by a cost center. Adjustments made for variances between planned and actual activity provided.
Material Ledger- Actual Costing Execution and CKM3: The CKM3 transaction provides a detailed material price analysis showing the evolution of material prices.
This overview provides a detailed but condensed understanding of the topics related to SAP CO: S/4 HANA 2021 in the context of Product Costing and Material Ledger. Each of these topics can further be elaborated into detailed processes, configurations, and examples based on real-time scenarios.
Variance analysis is a critical component of controlling in the manufacturing sector, as it highlights the deviations between the planned (or standard) and the actual outcomes, which then informs management decisions.
Let's delve into the nuances of these variance categories for a better understanding:
Input Side Variances:
1. Input Price Variance:
This is the difference between the standard cost and the actual cost of inputs.
For instance, if a company planned to purchase raw material at 10 per unit but actually purchased it at 11 per unit, this leads to a price variance.
2. Input Quantity Variance:
It's the difference between the standard quantity and the actual quantity used.
If a company planned to use 50 units of a raw material but ended up using 52 units, this will result in a quantity variance.
3. Resource-Usage Variance:
This arises when alternative resources are used instead of the ones originally planned.
For instance, using a higher-grade material instead of a standard one can lead to this variance. It's essentially the difference in cost between the actual resource used and the planned one.
4. Remaining Input Variance:
Any variance that cannot be attributed to the previously mentioned categories falls under this. Overhead rate changes during the production cycle are common culprits.
Output Side Variances:
1. Output Price Variance:
This arises from the difference between the actual selling price and the standard selling price of the finished product.
2. Mixed Price Variance:
In scenarios where materials are valuated using a mixed cost estimate, any difference between the standard cost (derived from a standard mix) and the actual cost (resulting from an actual mix) leads to this variance.
3. Lot Size Variance:
Differences between the actual batch size or lot size used in manufacturing and the lot size considered during standard costing lead to this variance. This is crucial because certain costs might be fixed per batch, and deviations in batch sizes can lead to cost discrepancies.
4. Remaining Variance:
This is a catch-all category for variances that don’t fit into any other specified category. A common reason for such a variance is the absence of a target cost for the material, which can arise if a standard cost estimate is unavailable or if there's been no goods receipt against a production order.
Scrap Variances:
In manufacturing, scrap refers to the portion of a raw material or semi-finished goods that, due to defects or inefficiencies during the production process, doesn't end up as a part of the final product. Understanding the sources and reasons for scrap is vital to optimize production processes, minimize waste, and control costs. Scrap variances help pinpoint where in the process the wastage is happening and how it might be minimized.
1. Assembly Scrap:
Definition:
Assembly scrap pertains to the waste or defects that occur during the main assembly process. This is when different components or materials are being assembled to form the final product or a significant subassembly.
2. Operation Scrap:
Definition:
Operation scrap refers to the waste that happens at a specific operation or stage in the manufacturing process, well before the assembly.
3. Component Scrap:
Definition:
Component scrap is related to the waste of specific components or parts used in the production process. This isn't necessarily about a stage in the process but is about defective parts.
In Conclusion: Variance analysis is crucial in manufacturing to pinpoint areas of inefficiency or unforeseen changes. By understanding where and why variances occur, companies can adjust their operations accordingly, resulting in better cost management and profitability. However, the key is not just to identify but also to act upon these variances by taking corrective measures