SAP FICO Product Costing -Simplified For Beginners

SAP Controlling (CO) is another important SAP module offered to an organization. It supports coordination, monitoring, and optimization of all the processes in an organization. SAP CO involves recording both the consumption of production factors and the services provided by an organization.

SAP CO includes managing and configuring master data that covers

cost and profit centers,

internal orders,

Product Costing,

Actual Costing,

Material Ledger,

Controlling Profitability Analysis (COPA)

Product Cost Planning (CO-PC-PCP) is an area within Product Cost Controlling (CO-PC) where you can plan costs for materials without reference to orders, and set prices for materials and other cost accounting objects.

You can use Product Cost Planning to analyze your product costs, such as for:

• Manufactured materials

• Services

Analyzing product costs helps 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 are the material, production, and overhead costs?

• How can production efficiency be improved?

• Can the product be sold at a competitive price?

Product Cost Planning accesses master data in other components, such as BOMs, routings, and work centers in Production Planning, and cost centers, activity types, and business processes in Overhead Cost Controlling. Costing data within Product Cost Planning can also be made available to other applications. For example, you can update the standard price in the material master with the results of cost estimates, and valuate materials using this new standard price.

Product Cost Planning enables you to answer questions such as:

• Which is our most efficient production line?

• How much of the total cost is overhead?

• How much have our costs increased, and why?

• How much can we lower our unit costs by increasing output?