Ramarao
SAP-FICO Consultant
E-Mail – rammakkena2021@[Link]
LinkedIn:- [Link]/in/ramaraomakkena
Product Costing Automation Configuration in SAP
Product Costing in SAP is a crucial part of Controlling (CO), specifically under Product Cost
Controlling (CO-PC). Automation of product costing aims to streamline the calculation of
cost estimates, allocation of overheads, and posting of entries for materials, work centers,
and production orders.
1. Key Configuration for Product Costing Automation
Step 1: Activate Material Ledger for Actual Costing:- If you're aiming for more automated
and precise product costing, you should activate the Material Ledger (ML) for actual costing.
This allows the system to track actual costs rather than relying solely on standard costs.
Path: SPRO -> IMG -> Logistics - General -> Material Master -> Valuation and Account
Assignment -> Activate Material Ledger
T-Code: OMX2 (Activate Material Ledger)
Tables:
o CKML: Material Ledger – Tracks actual costs for materials
o CKMI: Material Ledger Information – Contains data on inventory prices and
cost components
Step 2: Define Costing Variants for Automation:- To automate the costing process,
configure costing variants that will define how the costing run is executed. These variants
ensure that all required parameters (e.g., valuation method, costing sheet, overheads) are
set up for automatic execution.
Path: SPRO -> IMG -> Controlling -> Product Cost Controlling -> Costing -> Define
Costing Variants
T-Code: CK40N (Execute Costing Run)
Tables:
o CKV3: Costing Variant – Stores the configuration for costing runs (e.g., costing
method)
o CKV2: Costing Variant Assignment – Contains the assignment of costing
variants to materials or cost objects
Configuration Details:
Assign your costing variants to the relevant material types or cost objects (e.g.,
make-to-order production).
Set the costing version and costing method (e.g., standard costing, actual costing).
Use the overhead key and costing sheet to allocate overheads automatically.
Ramarao
SAP-FICO Consultant
E-Mail – rammakkena2021@[Link]
LinkedIn:- [Link]/in/ramaraomakkena
Step 3: Maintain Costing Sheets for Overhead Allocation:- In SAP, costing sheets define the
rules for allocating overhead costs (e.g., factory overhead, administrative costs). Automating
this process ensures that overheads are allocated as part of the costing run.
Path: SPRO -> IMG -> Controlling -> Product Cost Controlling -> Costing -> Define
Costing Sheets
T-Code: CK11N (Create Cost Estimate)
Tables:
o CKVH: Costing Sheet Header
o CKIS: Costing Items – Stores details of allocated overheads.
Configuration Details:
Define the overhead costs that should be applied automatically (e.g., percentage
rates for factory overhead).
Assign activity types for labor, machine hours, etc., and assign these activities to
work centers.
Step 4: Set Up Costing Run for Automation:- Automating the costing run can be achieved by
scheduling it to execute periodically, thus reducing manual intervention. This can be done
by setting up automatic costing runs for cost estimates.
Path: SPRO -> IMG -> Controlling -> Product Cost Controlling -> Costing -> Set Up
Costing Runs
T-Code: CK40N (Execute Costing Run)
T-Code for Scheduling: SM36 (Schedule Background Job)
Configuration Details:
Set up a costing run variant to automate the cost estimate calculation for products.
Schedule the costing runs using background jobs to execute at predefined times
(e.g., after material master changes or at month-end).
Background Job Scheduling:
T-Code: SM36 – Schedule the job to run at specific intervals.
In the job scheduling screen, select Costing Run (CK40N) and define the period,
frequency, and execution time.
Step 5: Automate Material Costing for Production Orders:- For production orders, you can
automate material costing and cost tracking to reduce manual work during production
processes. This is especially helpful in make-to-order or process manufacturing.
Ramarao
SAP-FICO Consultant
E-Mail – rammakkena2021@[Link]
LinkedIn:- [Link]/in/ramaraomakkena
Path: SPRO -> IMG -> Production -> Order Management -> Define Order Type for
Automatic Costing
T-Code: COHV (Mass Processing of Production Orders)
Tables:
o AUFK: Order Master Data – Contains details of the production orders.
o AFKO: Order Header Data – Contains specific details of production orders.
o AFVC: Operation Data for Orders – Stores operation details related to costing.
Configuration Details:
Automatically assign cost elements and cost centers to production orders.
Set cost tracking options in the order type configuration to ensure that actual costs
are updated automatically during the production process.
2. Automation in Product Costing
CK40N – Execute Costing Run:
Purpose: Runs the costing for materials or products automatically based on defined
costing variants.
Automation: Can be scheduled to run at specific intervals (e.g., daily, weekly,
monthly).
SM36 – Schedule Background Jobs:
Purpose: Schedules the costing run (CK40N) or other related tasks to run in the
background automatically.
Automation: Configure recurring jobs for automatic execution of costing runs.
CK11N – Create Cost Estimate:
Purpose: Creates a cost estimate manually or automatically for a material.
Automation: Can be integrated with background job scheduling for automated cost
estimates.
CK13N – Display Cost Estimate:
Purpose: Displays the cost estimate of materials.
Automation: Used for monitoring and verification of the automated cost estimate
process.
CK24 – Display Costing Run Results:
Purpose: Displays the results of a costing run (e.g., cost breakdown).
Automation: After the costing run is executed, this T-code provides an overview of
the calculated costs.
Ramarao
SAP-FICO Consultant
E-Mail – rammakkena2021@[Link]
LinkedIn:- [Link]/in/ramaraomakkena
COHV – Mass Processing of Production Orders:
Purpose: Mass process production orders, including cost updates.
Automation: Facilitates the bulk update of costings for production orders.
3. Key Tables in Product Costing Automation:- The tables below are integral for automating
product costing and storing cost-related information.
CKML: Material Ledger – Holds actual costing data for materials if Material Ledger is
activated.
CKEKS: Cost Estimate Header – Stores the header data for cost estimates, including
cost version and validity period.
CKIS: Costing Items – Contains detailed cost breakdowns for each cost estimate.
CKPO: Costing Object – Contains costing information for a specific object (e.g.,
production order, material).
CSKA: Cost Elements – Contains master data for cost elements.
CSKB: Cost Element Categories – Defines the categories (primary, secondary) for cost
elements.
AFKO: Order Header Data – Stores information about production orders, relevant for
cost tracking.
AUFK: Order Master Data – Contains order-specific information, including cost
centers and order type.
COBK: Accounting Document Header – Stores the accounting document data for
cost-related postings.
4. Automating Accounting Entries for Product Costing:- Automating the accounting entries
for product costing means the system will automatically generate entries as part of the
costing process. Here’s how SAP handles it:
Example of Automatic Accounting Entries in Product Costing
1. Cost Estimate for Material:
o Debit: Inventory (Material) – XX
o Credit: Material Cost Account (Cost Element) – XX
2. Overhead Allocation (via Costing Sheet):
o Debit: Work in Progress (WIP) – XX
o Credit: Overhead Account (Cost Element) – XX
3. Production Order (Material Consumption):
o Debit: Work in Progress (WIP) – XX
o Credit: Inventory (Material) – XX
4. Cost of Goods Manufactured (COGM):
o Debit: Finished Goods Inventory – XX
o Credit: Work in Progress (WIP) – XX
5. Sales and COGS Posting:
o Debit: Cost of Goods Sold (COGS) – XX
o Credit: Finished Goods Inventory – XX
Ramarao
SAP-FICO Consultant
E-Mail – rammakkena2021@[Link]
LinkedIn:- [Link]/in/ramaraomakkena
These automatic accounting entries ensure that every costing run, production order, and
overhead allocation automatically updates the relevant financial accounts, ensuring
accurate and real-time tracking of costs.
5. Example of Background Job Automation for Costing Run:- You can automate a costing
run to be executed at specific times via background jobs:
1. T-Code: SM36 (Schedule Background Job)
2. Job Name: Enter a custom name, such as "Costing Run"
3. Program: Select the program for the costing run (e.g., CK40N).
4. Parameters: Define the parameters (e.g., costing variant, material numbers).
5. Start Condition: Choose the frequency (e.g., daily, weekly, monthly).
Once the job is scheduled, the system will automatically execute the costing run at the
defined intervals, ensuring automated product costing.
