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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