Overhead in Sales Costing

7/27/2019 Overhead in Sales Costing

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Overhead in Sales-Order-Related Production

Use

Overhead costs are costs that are not assigned directly to a particular cost object. You can use costingsheets to allocate overhead costs to cost objects, both in your planned and actual data.

You can determine material overhead costs on the basis of direct material costs.

You can determine production overhead costs on the basis of direct production costs.

You can determine sales and administration costs on the basis of the cost of goodsmanufactured.

Costing Sheet for CGM and CGS

There are a number of special requirements for determining overhead rates insales order costingandorder BOM costing.

If you have avaluated sales order stock, you can use the sales order costing and order BOM costingfunctions.

If you have anonvaluated sales order stock:

You can use sales order costing

You cannot use order BOM costing
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Prerequisites

You set the control parameters for the calculation of overhead rates in Customizing forProduct Cost

ControllingunderCost Object ControllingProduct Cost by Sales OrderBasic Settings for Product

Cost by Sales OrderOverhead. There you also specify the conditions for calculating overhead rates in

a costing sheet.

Insales-order-related productionyou can use two costing sheets.

You can specify one costing sheet directly in the sales order item. You can enter this costingsheet as a default value in Customizing forProduct Cost by Sales OrderunderControl of Sales-

Order-Related Production Check Requirements Classes. When you create a sales order, the

system transfers the costing sheet into the sales order item whose requirements type specifiesthe requirements class. You can specify the costing sheet in the Account Assignmentview of thesales order item (see also:Checking Sales Order Items).

You can determine order-specific overhead expenses by entering an overhead key in the salesorder item. If the costing view of the master record of the material in the sales order item specifiesan overhead group that is linked to an overhead key in Customizing, the overhead key is selectedthrough the overhead group and defaulted into the sales order item.

Requirements type CO2 is selected for a sales order item. Requirements type CO2specifies requirements class CO2. Costing sheet COGS1 is entered in requirementsclass CO2. The system transfers costing sheet COGS1 into the sales order item.

You have created the sales order item for material T-F100. The material master record ofT-F100 specifies overhead group SAP10. Overhead group SAP 10 is linked to overheadkey SAP10 in Customizing. As a default, the system proposes overhead key SAP10 forthe sales order item.

Note the following:

If you are using a valuated sales order stock, you can use this costing sheet tocalculate the sales and administration costs on the basis of the cost of goodmanufactured, in order to determine the cost of goods sold (see below).

If you want to do this, you must use the cost of goods manufactured as the basis for

calculating the cost of goods sold. Therefore, in the costing sheet (in our example,COGS1), you must enter a basis that specifies the cost element with which the salesorder item that carries costs and revenues is charged with actual costs. This is the costelement that is selected by automatic account determination in MaterialsManagement(MM) through transaction GBB (offsetting posting for inventory posting) andaccount grouping code VAY (see also:Example for Product Cost by Sales Order withValuated Sales Order Stock: Quantity and Value Flow). You must use the cost elementthat is selected through account grouping code VAY as the basis for the calculation of thecost of goods sold even when you are using a valuated sales order stock in which thesales order item does not carry costs and revenues. In this case, sales order costing
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proceeds as if the sales order item carried costs and revenues because in the actualdata, when the goods are delivered to the customer an account is accessed for which nocost element has been created (see also:Example for Valuated Sales Order StockWithout Product Cost by Sales Order: Quantity and Value Flow).

A second costing sheet is selected through the valuation variant. The system determines the

valuation variant through the costing variant. You can enter the costing sheet directly in the salesorder item. You can also enter the costing variant in Customizing for Product Cost by Sales

OrderunderControl of Sales-Order-Related Production Check Requirements Classes. Onceyou have entered a costing variant in the requirements class, you can no longer change it in thesales order item.

Requirements type CO2 is selected for a sales order item. Requirements type CO2specifies requirements class CO2. Costing variant PPC4 is specified in requirementsclass CO2. Costing variant PPC4 specifies valuation variant 001. Valuation variant 001specifies costing sheet COGM.

If you are using a nonvaluated sales order stock, you must go into Customizing for Product Cost

by Sales OrderunderPreliminary Costing and Order BOM CostingProduct Costing for Sales

Order Items / Order BOMsCosting Variants for Product CostingCheck Costing Variants for

Product Costing and turn on thePass on lot size indicator. Otherwise the overhead will not becalculated correctly.

Features

The calculation of overhead rates in your planning data always simulates the calculation of overheadrates in your actual data.

Overhead is calculated internally in sales order costing and in order BOM costing in two steps.Processing differs depending on whether you are using a valuated sales order stock or a nonvaluatedsales order stock.

Sales Order Costing and Order BOM Costing with Product Costing

Valuated Sales Order Stock: Sales Order Costing or Order BOM Costing

1. Overhead is applied to the itemizations of all production levels to calculate the cost of goodsmanufactured.

Overhead rates are applied by means of the costing sheet of the valuation variant (COGM in ourexample) if the indicatorPass on costing sheet of sales order is not selected in Customizing

forProduct Cost by Sales OrderunderPreliminary CostingCheck Costing Types.

Within individual requirements assemblies, overhead is allocated for all materials in the assemblyusing the costing sheet of the sales order item (in our example, this is COGS1) if theindicatorPass on costing sheet of sales order is selected.

Within collective requirements assemblies, overhead is always allocated for all materials in theassembly using the costing sheet of the valuation variant.
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2. Then the sales and administration costs are determined on the basis of the manufacturing costsof goods sold to calculate the cost of goods sold. To calculate the cost of goods sold, the systemuses the costing sheet specified in the sales order item (in our example, this is COGS1). Thiscosting sheet must contain a base line with the cost element for the manufacturing cost of goodssold. This is the cost element under which the sales order item is debited in your actuals. (Seealso:Actual Costs in Product Cost by Sales Order: Scenario).

For the order BOM cost estimate, the second step is only performed if the material in thesales order item is costed.

The second overhead allocation is not performed for any materials listed in the orderBOM that enter that material.

Example for Sequence of Overhead Allocation withValuated Sales Order Stock (Product Costing)

* In this example, the indicatorPass on costing sheet of sales orderin the costing type is not selected.

**The cost of goods sold for the finished product is always determined on the basis of the costing sheetspecified in the sales order cost estimate.

Nonvaluated Sales Order Stock: Sales Order Costing

1. For all individual requirements assemblies, the overhead charges are calculated for the items thatare not individual requirements materials. This means that overhead charges are calculated for
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collective requirements materials, internal activities, and business processes, as well as externalprocessing and subcontracting.

Overhead is allocated using the costing sheet of the valuation variant (in our example, this isCOGM) if the indicatorPass on costing sheet of sales orderis notselected.

Overhead is allocated using the costing sheet of the sales order item (in our exampl

Overhead in Sales-Order-RelatedProduction

Use

Overhead costs are costs that are not assigned directly to a particular cost object. You can usecosting sheets to allocate overhead costs to cost objects, both in your planned and actual data.

o You can determine material overhead costs on the basis of direct material costs.

o You can determine production overhead costs on the basis of direct production costs.o You can determine sales and administration costs on the basis of the cost of goods

manufactured.

Costing Sheet for CGM and CGS
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There are a number of special requirements for determining overhead rates insales order

costingand order BOM costing.

If you have avaluated sales order stock, you can use the sales order costing and order BOMcosting functions.

If you have anonvaluated sales order stock:

o You can use sales order costingo You cannot use order BOM costing

Prerequisites

You set the control parameters for the calculation of overhead rates in Customizing forProduct

Cost ControllingunderCost Object ControllingProduct Cost by Sales OrderBasic Settings

for Product Cost by Sales Order Overhead. There you also specify the conditions forcalculating overhead rates in a costing sheet.

Insales-order-related productionyou can use two costing sheets.

o You can specify one costing sheet directly in the sales order item. You can enter thiscosting sheet as a default value in Customizing forProduct Cost by Sales

OrderunderControl of Sales-Order-Related Production Check Requirements Classes.When you create a sales order, the system transfers the costing sheet into the salesorder item whose requirements type specifies the requirements class. You can specifythe costing sheet in theAccount Assignmentview of the sales order item (seealso:Checking Sales Order Items).

You can determine order-specific overhead expenses by entering an overhead key in thesales order item. If the costing view of the master record of the material in the sales orderitem specifies an overhead group that is linked to an overhead key in Customizing, theoverhead key is selected through the overhead group and defaulted into the sales orderitem.

Requirements type CO2 is selected for a sales order item. Requirements typeCO2 specifies requirements class CO2. Costing sheet COGS1 is entered inrequirements class CO2. The system transfers costing sheet COGS1 into thesales order item.

You have created the sales order item for material T-F100. The material masterrecord of T-F100 specifies overhead group SAP10. Overhead group SAP 10 is

linked to overhead key SAP10 in Customizing. As a default, the system proposesoverhead key SAP10 for the sales order item.

Note the following:
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If you are using a valuated sales order stock, you can use this costing sheet tocalculate the sales and administration costs on the basis of the cost of goodmanufactured, in order to determine the cost of goods sold (see below).

If you want to do this, you must use the cost of goods manufactured as the basisfor calculating the cost of goods sold. Therefore, in the costing sheet (in our

example, COGS1), you must enter a basis that specifies the cost element withwhich the sales order item that carries costs and revenues is charged with actualcosts. This is the cost element that is selected by automatic accountdetermination in Materials Management(MM) through transaction GBB(offsetting posting for inventory posting) and account grouping code VAY (seealso:Example for Product Cost by Sales Order with Valuated Sales Order Stock:Quantity and Value Flow). You must use the cost element that is selectedthrough account grouping code VAY as the basis for the calculation of the cost ofgoods sold even when you are using a valuated sales order stock in which thesales order item does not carry costs and revenues. In this case, sales ordercosting proceeds as if the sales order item carried costs and revenues becausein the actual data, when the goods are delivered to the customer an account isaccessed for which no cost element has been created (see also: Example forValuated Sales Order Stock Without Product Cost by Sales Order: Quantity andValue Flow).

o A second costing sheet is selected through the valuation variant. The system determinesthe valuation variant through the costing variant. You can enter the costing sheet directlyin the sales order item. You can also enter the costing variant in Customizing for Product

Cost by Sales OrderunderControl of Sales-Order-Related Production CheckRequirements Classes. Once you have entered a costing variant in the requirementsclass, you can no longer change it in the sales order item.

Requirements type CO2 is selected for a sales order item. Requirements typeCO2 specifies requirements class CO2. Costing variant PPC4 is specified inrequirements class CO2. Costing variant PPC4 specifies valuation variant 001.Valuation variant 001 specifies costing sheet COGM.

o If you are using a nonvaluated sales order stock, you must go into CustomizingforProduct Cost by Sales OrderunderPreliminary Costing and Order BOM

CostingProduct Costing for Sales Order Items / Order BOMsCosting Variants for

Product Costing Check Costing Variants for Product Costing and turn on the Pass onlot size indicator. Otherwise the overhead will not be calculated correctly.

Features

The calculation of overhead rates in your planning data always simulates the calculation ofoverhead rates in your actual data.

Overhead is calculated internally in sales order costing and in order BOM costing in two steps.Processing differs depending on whether you are using a valuated sales order stock or anonvaluated sales order stock.

Sales Order Costing and Order BOM Costing with Product Costing
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Valuated Sales Order Stock: Sales Order Costing or Order BOM Costing

9. Overhead is applied to the itemizations of all production levels to calculate the cost ofgoods manufactured.

o Overhead rates are applied by means of the costing sheet of the valuation variant(COGM in our example) if the indicatorPass on costing sheet of sales orderis not

selected in Customizing forProduct Cost by Sales OrderunderPreliminaryCostingCheck Costing Types.

o Within individual requirements assemblies, overhead is allocated for all materials in theassembly using the costing sheet of the sales order item (in our example, this is COGS1)if the indicatorPass on costing sheet of sales orderis selected.

o Within collective requirements assemblies, overhead is always allocated for all materialsin the assembly using the costing sheet of the valuation variant.

2. Then the sales and administration costs are determined on the basis of themanufacturing costs of goods sold to calculate the cost of goods sold. To calculate thecost of goods sold, the system uses the costing sheet specified in the sales order item (inour example, this is COGS1). This costing sheet must contain a base line with the costelement for the manufacturing cost of goods sold. This is the cost element under which

the sales order item is debited in your actuals. (See also: Actual Costs in Product Cost bySales Order: Scenario).

For the order BOM cost estimate, the second step is only performed if thematerial in the sales order item is costed.

The second overhead allocation is not performed for any materials listed in theorder BOM that enter that material.

Example for Sequence of Overhead Allocationwith Valuated Sales Order Stock (ProductCosting)
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* In this example, the indicatorPass on costing sheet of sales orderin the costing typeis not selected.

**The cost of goods sold for the finished product is always determined on the basis of the costingsheet specified in the sales order cost estimate.

Nonvaluated Sales Order Stock: Sales Order Costing

3. For all individual requirements assemblies, the overhead charges are calculated for theitems that are not individual requirements materials. This means that overhead chargesare calculated for collective requirements materials, internal activities, and businessprocesses, as well as external processing and subcontracting.

o Overhead is allocated using the costing sheet of the valuation variant (in our example,this is COGM) if the indicatorPass on costing sheet of sales orderisnot selected.

o Overhead is allocated using the costing sheet of the sales order item (in our example,this is COGS1) if the indicatorPass on costing sheet of sales order is selected.

For all collective requirements assemblies, overhead is calculated on the basis of thecosting sheet of the valuation variant if transfer control is not active.

You specify in Customizing forProduct Cost by Sales OrderunderPreliminary

CostingCheck Costing Variants in the Transfer Controlparameter whether thecollective requirements materials are recosted or existing cost estimates used.

2. Then a second overhead allocation is performed with the costing sheet of the sales orderitem.


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o If the indicatorOverhead only for raw materials for sales orderin the costing type isselected, overhead is only applied to the individual requirements raw materials with thecosting sheet of the sales order item (in our example, this is COGS1).

SAP recommends that you select the indicatorOverhead only for raw materialsfor sales order.

o If the indicatorOverhead only for raw materials for sales orderin the costing type is notselected, overhead is applied in the costed structure to all itemization items of allindividual requirements materials that are manufactured in-house. This is done using thecosting sheet of the sales order item. The only items that are included are those for whichit was defined in the attributes of the cost component that they are relevant to rollup.Items that have an itemization are only included through the items of their itemization: nooverhead is applied to the leading item of the itemization. Overhead can be applied tooverhead calculated in the first step.

If you are using a valuated sales order stock, the indicator Overhead only for rawmaterials for sales orderis irrelevant.

You also define underCheck Costing Variants whether the lot size of the sales order item ispassed on for costing the individual requirements materials.

You specify whether a material is an individual requirements material or a collective requirementsmaterial in the material master record in the MRPview with the indicatorIndividual/collective. Ifyou are using a given raw material both as an individual requirements raw material and as acollective requirements raw material, make sure that the system finds different consumptionaccounts and therefore different cost elements. You do this in Customizing forMaterialsManagement(MM) by means of automatic account determination.

A material is an assembly if a BOM for the material is exploded. A material is a raw material if noBOM for the material is exploded. Whether a BOM is exploded or not does not depend simply onwhether the material has a BOM. Additional factors such as the indicatorSpecial procurementinthe material master record and theQuantity structure determination in the costingvariantdetermine whether a BOM is exploded or not.

Example for Sequence of Overhead Allocationwith Nonvaluated Sales Order Stock (ProductCosting)


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*Which costing sheet is used to allocate overhead to itemization items of individual requirementsassemblies that themselves are not individual requirements material items depends on thesettings in the Costing type (indicatorPass on costing sheet of sales order).

** Overhead is allocated to collective requirements materials using the costing sheet in thevaluation variant (in our example, COGM). However, you can also specify in the costing

variantwith the transfer controlthat the collective requirements materials are not recosted.

*** In this example, the indicatorOverhead only for raw materials for sales orderis selected.Overhead is allocated to the individual requirements raw materials using the costing sheet of thesales order item (in our example, COGS1).

General Information on the IndicatorPass on cost ing sheet from sales order

If you select Pass on costing sheet of sales order, you should make sure that the overhead isalso calculated in your actual data on the basis of the costing sheet in the sales order item. Thismeans that the costing sheet specified in the sales order item is passed on to the productionorders assigned to the sales order item. You achieve this with the Copy costing sheetindicator inCustomizing forProduct Cost by Sales OrderunderCheck Requirements Classes. In this case,

the costing sheet for the production order is not found through the valuation variant of the costingvariant that is specified as a default value for each order type and plant for the preliminary costestimate of the production order.

If the indicators Pass on costing sheet of sales order(for planned overhead) and Copy costingsheet(for actual overhead) are not selected, the system calculates the overhead for the relevantmaterials using the costing sheet of the valuation variant (in our example, COGM).

IndicatorPass on cos t ing sheet of sales orderwith Valuated Sales Order Stock


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If you are using a valuated sales order stock, you should be aware that the indicator Pass oncosting sheet of sales orderis used differently in this case. You have the following options:

o The costing sheet of the sales order item (in our example COGS1) can only be used tocalculate the sales and administration costs for the purpose of determining the cost ofgoods sold. In this case you enter in the base line of the costing sheet the cost element

with which the sales order item is debited in the actual data (manufacturing cost of goodssold, such as 893015). Define the overhead rates for sales and administration overhead.In this case the cost of goods manufactured is calculated with the costing sheet in thevaluation variant (in our example, COGM).

o You can use the costing sheet of the sales order item to calculate the cost of goodsmanufactured and the cost of goods sold for the finished product of individualrequirements.

Example for Passed-On Costing Sheet withValuated Sales Order Stock

In this case you must be especially sure that the cost elements are fully separated. For example,if a material is used as a semifinished product that is part of another individual requirements

material and is also used as a finished product to be sold, you must make sure that the systemfinds different cost elements in each case. You control this through the movement type.


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Material ABC is manufactured in your company as a semifinished product forindividual requirements and as a finished product for individual requirements.

If you withdraw the material from the valuated sales order stock as asemifinished product to use it in the manufacture of another material, the systemuses movement type 261. Account grouping code VBR is assigned to this

movement type in Customizing forMaterials Management(MM) in materialaccount determination. The system finds account 890000 (Consumption RawMaterials) through the valuation class 7900 specified in the accounting view ofthe material master record. A primary cost element exists for this account. Youcan use this cost element as a basis for calculating the cost of goodsmanufactured of a material whose manufacture consumes the material ABC.

If you withdraw the material as a finished product from the valuated sales orderstock and deliver it to your customer, the system uses the movement type 601. Ifthis sales order item carries costs and revenues, account grouping code VAY isassigned to this movement type. The system finds account 893015 (cost of owngoods sold, with cost element) through valuation class 7900. A primary costelement exists for this account. You can use this cost element as a basis for

calculating the cost of goods sold of material ABC if material ABC is sold as afinished product.

For detailed information on material account determination, refer to theImplementation Guide (IMG) forMaterials ManagementunderValuation and

Account AssignmentAccount Determination.

You can also calculate sales and administration costs with the pricing procedurein SD.

Costing Sales Orders with Unit Costing

The overhead rates are always calculated using the costing sheet specified in the sales orderitem. In our example, this is costing sheet COGS1.

Postprocessing Product Cost Estimates with Unit Costing

The overhead items from the product cost estimate are converted into variable items (item

category V) (see also: Costing Items in Unit Costing). Then a second overhead allocation isperformed using the costing sheet of the sales order item. In our example, this is costing sheetCOGS1.

Basis of the Costing Sheet

As mentioned above, the calculation of planned overhead charges always simulates thecalculation of actual overhead charges. With a valuated sales order stock, planned overhead isallocated to the cost element for the cost of sales. But with a nonvaluated sales order stock,planned overhead is allocated to the consumption cost elements or to the cost elements for theinventory changes of the materials used.

Valuated Sales Order Stocks
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If you are using a valuated sales order stock, the actual overhead for individual requirementsmaterials can be calculated on the sales order item after the product has been delivered to thecustomer.

If you are using a valuated sales order stock, the sales order item is debited with the actual costsfor the material when it is delivered to the customer. The sales order item is debited under the

cost element that corresponds to the account Manufacturing costs of goods soldin FinancialAccounting (FI) for delivery to the customer. If you want to calculate the overhead charges on thebasis of the cost of goods manufactured, this cost element must be entered in the base line of thecosting sheet.

This is sales and administration overhead that is used to calculate the cost of goods sold. Otheroverhead costs such as material overhead and manufacturing overhead are already included inthe actual manufacturing COGS of the material delivered to the customer.

If you want to calculate the actual cost of goods sold on the sales order item, you also calculatethe planned COGS. You must also determine the planned material overhead rates and theplanned production overhead rates. This means that the cost elements for the materials used andfor other costs such as activity allocations must be entered in the base lines in the costing sheet.

In multilevel production, make sure you apply overhead only to the raw materialsand not to the semifinished products. To achieve this, enter only the costelements for raw materials in a base line of the costing sheet. Do not enter costelements for semifinished products in a base line of the costing sheet. Otherwise,overhead will be applied to the materials twice.

Before planned overhead is applied to the cost of goods manufactured, the costs shown in theitemization of the cost estimate are summarized and totaled under the cost element of the cost ofsales.

When the goods are delivered to the customer, the sales order item is debitedwith cost element 893015 (manufacturing cost of goods sold, with cost element).Suppose you want to calculate the cost of goods sold on the basis of themanufacturing cost of goods sold. You therefore enter cost element 893015 in abase line of the costing sheet. In an overhead row, you define the overhead ratefor sales costs and/or administration costs.

Overhead Allocation with Valuated Sales OrderStock: Costing Sales Order with Product Costing


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*Which costing sheet is used to apply overhead to the raw materials in the assemblies dependson whether the costing sheet was passed on.

** Transfer according to the cost component view to be used as the basis for overheadapplication as specified in the costing type in the field Calculation base. It is recommended thatyou enter the cost component view for the cost of goods manufactured or inventory valuation.You should not enter the cost component view for the cost of goods sold.

Overhead is applied to the raw materials in the assemblies in the first step. Individualrequirements raw materials are treated the same as collective requirements raw materials. Thebase lines of the costing sheet are normally used to ensure that no overhead is applied tosemifinished products. Otherwise, overhead would be applied to the semifinished products twice.

After the first step in overhead application, the itemization of the finished product is summarizedby the system automatically. The sum calculated by the system is updated internally under thecost element of the manufacturing costs of goods sold, and in the second step the sales andadministration costs are applied to it.

The sales and administration costs are then shown in the itemization of the sales order costestimate. The manufacturing costs of the goods sold and the sales and administration costs areupdated to the sales order item under the original cost elements.

See also:Update of Planned Costs
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Overhead Allocation with Valuated Sales OrderStock: Postprocessing Product Cost Estimateswith Unit Costing

If you are using a valuated sales order stock, the itemization of highest assembly is transferredinto the unit cost estimate for postprocessing. When product cost estimates arepostprocessedwith unit costing, the items of item category G (overhead) are converted into items of itemcategory V (variable item). Then a second overhead allocation is performed using the costingsheet of the sales order item. In our example, this is costing sheet COGS1.

Nonvaluated Sales Order Stock

When you are using a nonvaluated sales order stock, actual overhead can be allocated asfollows:

o For materials produced in-house, overhead can be allocated after the dependent objects(such as production orders) have been settled to the sales order item

The sales order item is debited according to the settings in the settlement structure of thedependent objects either under the source cost element or under the settlement costelement. If you are using settlement cost elements, you must transfer these settlementcost elements into the base lines of the costing sheet. If you are settling under the sourcecost element, enter the source cost elements in the base lines.
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See also:Settlement in Product Cost by Order or Periodand the ImplementationGuide (IMG) forProduct Cost by OrderorProduct Cost by Period

Assume you are settling under the source cost element. For goods issues withproduction orders, you have debited the production orders under cost element400000 (consumption raw materials). After the production order has been settled,the actual overhead expenses for the sales order item are determined. Theoverhead is applied on the basis of cost element 400000.

o For externally procured materials, overhead can be allocated after the goods receipt orinvoice receipt (depending on the setting in the account assignment category).

The sales order item is debited under the consumption cost element of the externallyprocured material (such as 400000). This cost element must be entered in the base lineof the costing sheet.

Example for Sales Order Cost Estimate withProduct Costing (Nonvaluated Sales Order Stock)

All levels of the production structure of the individual requirements assemblies are exploded. Forexample, the itemization of the semifinished material (HALB) of the individual requirements goesinto the "large" itemization of the sales order item. The individual requirements semifinishedproduct is not shown in the "large" itemization.
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The large itemization is only shown in the postprocessing stage.

Postprocessing Product Costing with UnitCosting (Nonvaluated Sales Order Stock)

*Overhead is applied to the raw materials contained in the assemblies in product costing asdescribed above.

**In the postprocessing stage, overhead is applied in accordance with the costing sheet of thesales order item.

All semifinished products from individual requirements are exploded in the itemization forpostprocessing. Semifinished products from collective requirements are not exploded.

In the "large" itemization, the itemizations of the assemblies located lowest in the productionstructure are shown first. The itemization of the finished product itself is shown at the lowestposition in the "large" itemization.


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Postprocessing accesses the itemization before the second application ofoverhead. This means that no sales and administration costs should becalculated in product costing. Sales and administration costs should not becalculated until the postprocessing stage, or they should be calculated in SD.

Configuration Simulation

You can simulate a cost estimate for a configured material (refer to:Simulating a Cost Estimate(Configuration Simulation)). In this case, the system uses the costing sheet from the valuationvariant for the first and second allocation step.

Sales and Administration Costs

You can calculate sales and administration costs in sales order costing (that is, using the costingsheet of Product Cost Controlling; in our example, this is costing sheet COGS1) or through theconditions in SD (that is, using the pricing procedure in SD).

See also:

Product Cost Estimate for Sales Order Item

Unit Cost Estimate for Sales Order Item

Postprocessing Product Cost Estimates with Unit Costing

For information on cost rollup with a nonvaluated sales order stock, refer toGeneral Informationon Nonvaluated Sales Order Stocksand the Implementation Guide (IMG) ofProduct CostControlling.

For information on transfer control and on passing on the lot size in sales-order-relatedproduction, as well as information on other required Customizing settings, refer to the

Implementation Guide ofProduct Cost ControllingunderCost Object ControllingProduct Costby Sales Orderand to the sectionProduct Cost Estimates for Sales Order Items.

For detailed information on overhead costs, see the documentation CO Overhead CostControlling.
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Documents

Overhead in Sales Costing