SAP S/4HANA End-to-End Lab

The last part of this series, based on a practical ERP cost management course, covers process costing in a mass-production environment and the month-end cost close procedure. The cost close is not a CO-only task. It is an integrated process that runs after the production, purchasing, sales and finance actuals have all been closed. 1. Process costing splits cost between finished units and work in process Job costing suits cost tracking per production order. In mass production, only part of the input is completed and the rest remains in process, so the input cost has to be allocated between finished units and WIP. Method Suited to Cost is split between Job costing Cost tracking per production order Individual orders Process costing Mass production Finished units and work in process 2. Beginning WIP and degree of completion When beginning WIP exists, the weighted average method or the FIFO method can be applied. Equivalent units, which reflect the...

Part 2 of this series, based on a practical ERP cost management course, covers the master data that forms the backbone of cost calculation, job costing, manufacturing overhead allocation and joint costs. Before choosing a costing method, the first question to settle is: where is cost collected, and on what basis is it allocated to which product? 1. Cost master data determines the calculation result Master data object Role Examples from the course Cost center Responsibility unit that plans and collects cost — Cost element Classifies the nature of expenses and revenues — Activity type Expresses an activity quantity Labor hours, machine hours Internal order Tracks cost of a specific purpose Events, campaigns 2. Cost classification criteria Cost is classified by purpose. The direct/indirect and variable/fixed distinctions in particular have a large effect on allocation and on decision making. Criterion Catego...

This series is based on a practical ERP cost management course and summarizes the cost flow of a manufacturing company and the structure of cost management in an ERP system. Part 1 covers why cost management accounting is needed, how material cost, labor cost and overhead flow into products and cost of goods sold, and how an integrated ERP connects that flow. Note: the actual process and master data differ by company, depending on the production method and the ERP configuration. 1. Starting point of practical ERP cost management Cost management is not a stand-alone calculation. It links purchasing, production, inventory, sales and finance data into one flow. The series moves step by step from cost concepts to actual costing and the period-end close. 2. Structure of the course The course has two parts. This series concentrates on the main flow of Part 1. Part Topics Covered in this series Part 1 Cost concepts, actual costing, manufacturing overhead allocation...