3/26/24, 11:27 AM
Product Cost By Period Cycle - SAP Community
Community
SAP Community  Products and Technology  Enterprise Resource Planning  ERP Blogs by Members
 Product Cost By Period Cycle
Enterprise Resource Planning Blogs by Members
Gain new perspectives and knowledge about enterprise resource planning in blog posts from community
members. Share your own comments and ERP insights today!
All community 
What are you looking for today?
Product Cost By Period Cycle
former_member493884
Participant

‎01-03-2018 5:42 PM

14 Kudos
In continuity to my previous blog on Product Cost by Order method for Product Costing,
in this article I am going to discuss the Product Cost by Period Cycle.
Permalink: https://blogs.sap.com/2017/11/30/product-cost-by-order-cycle/ ‎
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
https://community.sap.com/t5/enterprise-resource-planning-blogs-by-members/product-cost-by-period-cycle/ba-p/13364195
1/17
3/26/24, 11:27 AM
Product Cost By Period Cycle - SAP Community
activity costs on Production Order/ Product Cost Collector(Planned order) later on during
confirmations through formula,
= (Actual qty * Plan Price KSPI)
We have three work centers (3001, 3002 & 3003) providing three different activities
(MCH, PRCS & ASMB) respectively as shown below.
Product Cost By Period Cycle,
Now, let see the BOM and Routing for FG3 we going to manufacture. The BOM we used
in our example is Single level BOM (without SFGs) as the figure below illustrates,
https://community.sap.com/t5/enterprise-resource-planning-blogs-by-members/product-cost-by-period-cycle/ba-p/13364195
2/17
3/26/24, 11:27 AM
Product Cost By Period Cycle - SAP Community
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 are going to procure the RM3 through Procure to Pay process as shown below,
https://community.sap.com/t5/enterprise-resource-planning-blogs-by-members/product-cost-by-period-cycle/ba-p/13364195
3/17
3/26/24, 11:27 AM
Product Cost By Period Cycle - SAP Community
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.
https://community.sap.com/t5/enterprise-resource-planning-blogs-by-members/product-cost-by-period-cycle/ba-p/13364195
4/17
3/26/24, 11:27 AM
Product Cost By Period Cycle - SAP Community
As all the prerequisites are set, it’s time to take off. From here we start the end user
process for Repetitive Manufacturing,
First we create the the Product Cost Collector then Planned order with planning table
where planned order number is generated and the we schedule that planned order using
the transaction shown in the below figure,
After scheduling Planned order we do confirmation for Assembly Back-flush (which
includes Raw material and component both) for Reporting point & operation 010.The
accounting entry for Raw Material Consumption is generated here,
Db
Cr
RM Consumption (P&L account COGS)
Inv RM (Balance sheet account)
https://community.sap.com/t5/enterprise-resource-planning-blogs-by-members/product-cost-by-period-cycle/ba-p/13364195
5/17
3/26/24, 11:27 AM
Product Cost By Period Cycle - SAP Community
Now, we do the confirmation for RP 030 where confirmation for OP 020 is automatically
performed, as the result of this transaction FG Good receipt takes place which in turn
calculates Target Cost by formula,
Target Cost = Actual GR Qty * Plan Price(Current. Cost est.)
The account entry for FG Good receipt (mvt type 261) is following,
Db
Inv FG (Balance sheet account)
Cr
Change in Inv (P&L account -COGM)
The process is illustrated in the figure below,
Following are the reports shown in the figure below to analyse and make corrections in
the Repetitive Manufacturing process,
https://community.sap.com/t5/enterprise-resource-planning-blogs-by-members/product-cost-by-period-cycle/ba-p/13364195
6/17
3/26/24, 11:27 AM
Product Cost By Period Cycle - SAP Community
Now, in case of scrap posting we run the following transaction shown in figure below, here we are posting the scrap qty 5 units for
Reporting Point 030 i-e; Operation 020 & 030.
Here comes the time to land the flight, means to perform month end activities for Product
costing by period,
First you need post Actual cost through Finance to Production cost centers, then
calculate Actual activity price which is going to be used in Activity price Variances through
CON1 which need to be executed if you are not using ML/Actual Costing.
We also calculate overhead as a part of month end activity for Product Cost collector.
The figure below depicts the list of activities/ transactions performed for month end
closing.
https://community.sap.com/t5/enterprise-resource-planning-blogs-by-members/product-cost-by-period-cycle/ba-p/13364195
7/17
3/26/24, 11:27 AM
Product Cost By Period Cycle - SAP Community
WIP (Work in Process) calculation is also one of the activity needed to be performed as a
part of Month End closing activities. Unlikely to Product cost by Order here WIP is
calculated on Target Cost which in case of Product by order is the difference between
Actual Cost on Order and Std Cost Estimate for good delivered, if order is not TECO or
Fully Delivered.
In below figure the transaction for WIP calculation is shown,
The WIP is calculated for every Reporting point. As in our case 300 qty is confirmed at
RP 010 and at RP 030 (which includes OP20 & OP30) only 275 qty including 5 qty of
scrap is confirmed. This is shown in the below figure,
https://community.sap.com/t5/enterprise-resource-planning-blogs-by-members/product-cost-by-period-cycle/ba-p/13364195
8/17
3/26/24, 11:27 AM
Product Cost By Period Cycle - SAP Community
Now the Variance Calculation is performed, the variance for only 270 qty is calculated
which is confirmed at RP 030 (means OP 020 & OP 030).
https://community.sap.com/t5/enterprise-resource-planning-blogs-by-members/product-cost-by-period-cycle/ba-p/13364195
9/17
3/26/24, 11:27 AM
Product Cost By Period Cycle - SAP Community
The formula to calculate Variance is shown the figure below,
Here, you can also see that WIP for 25 qty and variance for 300 qty both are calculated
at the same time through formula,
Variance= Actual Costs- Target Cost(270 item) – WIP(25 items) – Scrap(5 items)
Similar to Product Cost by Order the final transaction is the settlement for WIP and
Variance which are already calculated in previous transaction.
Now its time for safe and secure landing, as a result of settlement the Variances are
calculated and posted to Material and CO-PA. Plus following accounting entries for WIP
and variance is generated as shown below,
Db
Production Variance (P&L account COGS)
Cr
Change in stock (P&L account COGM)
Db
WIP Inventory (Balance sheet account)
Cr
WIP Offset (P&L account COGM)
https://community.sap.com/t5/enterprise-resource-planning-blogs-by-members/product-cost-by-period-cycle/ba-p/13364195
10/17
3/26/24, 11:27 AM
Product Cost By Period Cycle - SAP Community
After settlement we check the Product Cost Collector report using T-Code: KKF6N > Cost
Analysis,
Note that variance is calculated and the remaining balance of Product cost collector is
WIP.
Repetitive manufacturing is bit complex process with various scenarios, in this article the
slight overview of Product cost by Period process is given. In the next and last blog of
this series of Product Costing in SAP I will discuss the the Product Costing By Sales
Order Cycle.
Hope you find this useful. Please don’t forget to share you views.
I appreciate the time you took to read this blog.
SAP Managed Tags:
https://community.sap.com/t5/enterprise-resource-planning-blogs-by-members/product-cost-by-period-cycle/ba-p/13364195
11/17
3/26/24, 11:27 AM
Product Cost By Period Cycle - SAP Community
FIN (Finance),
FIN Controlling,
FIN Product Cost Planning,
FIN Cost Object Controlling,
FIN Profitability Analysis
Tags:
co-pc
Product cost by Period
5 Comments
ramarao_pokuri
Participant

‎01-05-2018 4:25 PM

0 Kudos
Nice explanation
Former Member

‎01-07-2018 10:51 AM

0 Kudos
Hi mmk1
Nice document..Thanks for sharing information.
https://community.sap.com/t5/enterprise-resource-planning-blogs-by-members/product-cost-by-period-cycle/ba-p/13364195
12/17
3/26/24, 11:27 AM
Product Cost By Period Cycle - SAP Community
Would be waiting for other topics as well!
former_member375644
Explorer

‎01-29-2018 3:35 PM

0 Kudos
Hello Muhamma Muzammil Khan,
Nice Document, Thanks for sharing knowledge.
mirza_farooq2
Explorer

‎05-09-2018 8:23 AM

0 Kudos
Excellent Blogs with good explanation, Thanks for sharing knowledge.
muhammadfahad_raza
Explorer

https://community.sap.com/t5/enterprise-resource-planning-blogs-by-members/product-cost-by-period-cycle/ba-p/13364195
13/17
3/26/24, 11:27 AM
Product Cost By Period Cycle - SAP Community
‎02-25-2021 5:38 AM

0 Kudos
excellent Effort Muzammil. Nicely presented document.
 You must be a registered user to add a comment. If you've already registered,
sign in. Otherwise, register and sign in.
Comment
Labels In This Area
ABAP Extensibility 1
ACCOSTRATE 1
ACDOCP 1
Adding your country in SPRO - Project Administration 1
Approval Workflows 1
ASN 1
Asset Management 1
Azure Center for SAP Solutions 1
Bundled Cloud Services 1
Cental Finance 1
Cloud Integration 1
AzureSentinel 2
Business Processes 1
CFIN 1
EDI 850 1
Fiori 1
Data Quality Management 1
EHS Product Structure 1
Flexible Workflow 1
LogicApps 2
Oil 1
OSS Note 390635 1
Gas 1
PIR Consumption Mode 1
DMOVE2S4 1
Energy 1
EPC 1
HomogeneousDMO 1
management 1
Material Management 1
MS Teams 2
open connectors 1
Order Change Log 1
PIR's 1
EDI 2
FINSSKF 1
General 1
IDOC 2
MicrosoftSentinel 2
outsourcing 1
Decisions 1
Gen AI enabled SAP Upgrades 1
Getting Started 1
Microsoft 2
Notifications 1
Carbon 1
Cloud ALM 1
Developing with SAP Integration Suite 1
generate_xlsx_file 1
MD61 1
CAPM 1
Connection - The default connection string cannot be used. 1
EDI 856 1
Integration 1
auditlog 1
Bank 1
CFIN Document Splitting 1
Customer Screen in Production Order 1
desafios4hana 1
AI and RPA in SAP Upgrades 1
MT940 1
PCE 1
Permit to Work 1
PIRs 1
PIRs Consumption 1
MD04 1
Newcomer 1
ORDERS 2
https://community.sap.com/t5/enterprise-resource-planning-blogs-by-members/product-cost-by-period-cycle/ba-p/13364195
14/17
3/26/24, 11:27 AM
Product Cost By Period Cycle - SAP Community
PIRs Reduction 1
Plan Independent Requirement 1
Primavera P6 1
Process Excellence 1
Process Order Change Log 1
Purchase requisition 1
RiseWithSAP 1
SAP 1
Process Management 1
Product Information 1
Production Order Change Log 1
Redwood for SAP Job execution Setup 1
Rizing 1
S4 Cost Center Planning 1
SAP Best Practices 1
SAP Build 1
SAP Data Quality Management 1
SAP Note 390635 1
Premium Plus 1
Schedule Agreement 1
S4 HANA 1
SAP Build apps 1
s4hana 2
SAP Cloud ALM 1
SAP Maintenance resource scheduling 2
SAP S4HANA 2
SAP Upgrade Automation 1
RISE with SAP 1
SAP S4HANA Cloud private edition 1
SAP WCM 1
SAP Work Clearance Management 1
SDM 1
Related Content
Asset Management in SAP S/4HANA Cloud Private Edition | 2023 FPS01 Release

in Enterprise Resource Planning Blogs by SAP yesterday
Advanced WIP reporting in S/4HANA Cloud Public Edition

in Enterprise Resource Planning Blogs by SAP Sunday
What’s New in Purchase Requisitions - SAP S/4HANA Cloud Public Edition 2402

in Enterprise Resource Planning Blogs by SAP Friday
S4 HANA Cost Center Activity Rate Calculation Hybrid Approach

in Enterprise Resource Planning Blogs by Members Thursday
Asset posting not working on HANA - AFAB

in Enterprise Resource Planning Q&A Wednesday
Popular Blog Posts
https://community.sap.com/t5/enterprise-resource-planning-blogs-by-members/product-cost-by-period-cycle/ba-p/13364195
15/17
3/26/24, 11:27 AM
Product Cost By Period Cycle - SAP Community
IDoc Basics For Functional Consultants
former_member213836
Active Participant
 965878
 318
 653
LSMW for Functional Consultants in simple step-by-step way
former_member182098
Active Contributor
https://community.sap.com/t5/enterprise-resource-planning-blogs-by-members/product-cost-by-period-cycle/ba-p/13364195
16/17
3/26/24, 11:27 AM
Product Cost By Period Cycle - SAP Community
 569345
 294
 387
Pricing procedure Steps and Details in Follow
SAP MM
former_member183424
Top Kudoed
Authors
Active Contributor
 680776
 160
Privacy
chris_scott
Copyright
 317
Terms of Use
Legal Disclosure
 2
ashishpinjwani
Trademark
sudipghosh
Support
 3
Newsletter
Cookie Preferences
https://community.sap.com/t5/enterprise-resource-planning-blogs-by-members/product-cost-by-period-cycle/ba-p/13364195
 2
17/17