Basics of Costing – Understanding Actual Cost 2567495 - Cost analysis report drilldown functionality (KKBC_ORD)
Hrusikesh Dalai
January 27, 2014 3 minute read
Basics of Costing – Understanding Actual Cost
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Hello Friends,
I try to put together a common document for Actual Cost, the information is available in SCN forums and i try to put it together in a document form so it is available at one place,
In my earlier Documents I have explained about standard costing and various settings required for executing Standard Cost estimate. In this document we will talk about more on Actual Costs.
T-code KKBC_ORD – Looking at below screenshot it shows the actual cost postings at different time of transactions and its origin. I will try to explain where does these things flow from.
Figure 5.1
Note- KKBC_PKO can be used to see the above transactions as well.
There are several business transactions where we got actual costs; based on posting origin we can divide the transactions External Postings ( Any other module origin such as FI, PP, SD, MM) to Controlling called Primary Cost.
Business transactions within controlling module called Secondary costs we will see in detail about these in this document. I must say there is various documents and discussion in Forum about these things. However i would like to elaborate more on what is the financial impact during different stages of transactions
Primary Costs
We will take example of production order here, During Goods are issued from Inventory P/L account is debited and B/S account is credited automatically. For this we generally create identically primary cost element of consumption account. Posting to these consumption accounts (primary cost elements) also generate parallel postings to a controlling cost object. In this case
Figure 5.2
Outside buys, sub-contracting scenarios where we purchase services or goods are recorded as credit to GR/IR account and debit to external expenses account.
Secondary Costs
When the production activities confirmed, the cost center is credited and product cost collector is debited. A production cost center receives debit due to primary costs such as payroll, Electricity etc. Confirmation of these activities allocates these activities across many products.
Figure 5.3
Credits
Finished goods are derived from the production order. The credit value is calculated by multiplying standard price by finished goods quantity delivered to inventory .Total variance is the order balance
Figure 5.4
This balance post after the variance calculation, this is basically the difference between standard cost and actual cost. Now let’s talk about actual cost
Post Actual Cost Let’s create and release a production order CO01.
Figure 5.5
Confirm Activities CO11n, while confirming you can see there are different this is when the actual Secondary cost get posted to Controlling.
There is no accounting entry for activity confirmation only CO postings happens
Dr Production order
Cost center Cr
Fig 5.6
and during Activity confirmation posts accounting with below entry
Dr. Activity cost GL(P/L)
Activity cost GL(P/L) Cr
During closing activities we execute several other transactions to settle the costs, Overhead calculation and the variances. I will try to cover these in my next postings.
Note-This is basics document and intended for basic understanding of Actual Cost.I will continue to edit the document after the suggestion.
Best Regards
Hrusikesh Dalai
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53 Comments
Former Member
January 28, 2014 at 1:34 pm
Hrusikesh,
I am liking your documents, I am still reading your other documents about standard costing, This one is simply great very simple to understand.
keep it up!!
Sushma
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Hrusikesh Dalai
Blog Post Author
January 28, 2014 at 1:43 pm
Sushma,
I am glad you like it, Thanks for the comment it is always great to receive that first feedback.
Hrusikesh
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Satish Shivaputrappa Kerur
January 28, 2014 at 4:43 pm
Hrusikesh
It's very good document.
Thanks & Regards
Satish
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Hrusikesh Dalai
Blog Post Author
February 4, 2014 at 2:08 pm
Thanks Satish,
i appreciate your comment.
BR
Hrusikesh
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Former Member
January 29, 2014 at 6:43 am
plz anyone help me for sap fico support project document..
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Hrusikesh Dalai
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February 4, 2014 at 2:10 pm
Maheswar,
Sorry i never heard if we have any specific document for that, You may need to specify what documents you need and then seach the forum.
BR
Hrusikesh
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Sumit Koshal
January 29, 2014 at 7:29 am
Hi Hrusikesh
Nice document, can you please share a document on actual activity rate calculation and revaluation of production order with actual activity rates T.codes KSII and CON2.... because that will complete the cycle.
I am actually looking for these closing activities of CO
Regards,
Sumit Koshal
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Hrusikesh Dalai
Blog Post Author
February 4, 2014 at 2:11 pm
Sumit,
My next document will emphasize on the same. I hope it to complete it soon.
BR
Hrusikesh
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Former Member
January 31, 2014 at 6:23 am
hi all i am new to this site could any one please tell me where will i get asset accounting material and controlling material . thanks
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Former Member
February 4, 2014 at 2:36 pm
very good article mr.Hrusikesh ..
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Hrusikesh Dalai
Blog Post Author
February 4, 2014 at 3:02 pm
Thanks Mr Sada for your comments.
BR
Hrusikesh
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Sreekanta M
February 5, 2014 at 11:59 am
Thanks for sharing valuable information...
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Hrusikesh Dalai
Blog Post Author
February 14, 2014 at 6:45 pm
Thanks Mariks and i appreciate your ratings.
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Former Member
February 19, 2014 at 12:22 pm
Hi,
Those are Five star series,
Devendra
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Hrusikesh Dalai
Blog Post Author
February 19, 2014 at 2:28 pm
Devendra,
I appreciate your comment and motivating words.
Thanks
Hrusikesh
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Former Member
February 20, 2014 at 4:04 am
Hi Hrusikesh,
Thanks for your comment,Your contribution definitely superb,
It is the big task for the consultant to explain the subject in simple and easiest manner,You have made it through your FIVE STAR SERIES.
Really great,
With Regards,
Devendra
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RAHEEM BAKSH
February 24, 2014 at 7:06 am
Hi Hrusikesh Dalai
Great explanation and good effort to cover on this topic.
Regards
Raheem
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Hrusikesh Dalai
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February 26, 2014 at 4:45 pm
Thanks Raheem appreciate your comment
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Sudeep A
February 24, 2014 at 7:40 am
Good document.. Nice explanation.
Regards,
Sudeep.
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Hrusikesh Dalai
Blog Post Author
February 26, 2014 at 4:45 pm
Thanks Sudeep.
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Former Member
February 26, 2014 at 2:54 am
Hrusikesh,
i am great admire of your series. This helped me a lot.
THanks for simplifying it.
PRasad
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Hrusikesh Dalai
Blog Post Author
February 26, 2014 at 4:45 pm
I am glad it helped you Prasad. Thanks for the wonderful words.
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Former Member
February 26, 2014 at 7:18 am
Hi..
I think that if you use standard cost for raw material and calculate actual cost through material ledger, KKBC_ORD don’t report actual Data.
Because raw material’s cost in KKBC_ORD report is only standard cost, not actual cost.
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Hrusikesh Dalai
Blog Post Author
February 26, 2014 at 4:48 pm
Yes i agree Big Choi ! Sorry This document covers the topic where Material ledger is not active. I am sorry i should include this somewhere in my Notes. Thanks for clarifying and explaining.
Best Regards
Hrusikesh
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Former Member
February 26, 2014 at 8:45 am
Hi,
All the goods movements in process order or production order happens only at Standard price. The actual cost column gives Actual qty x Standard price. Here system will not take actual price.
Regarding activities, after revaluation of order we get actual hours consumed x actual price calculated in KSII.
Regards
Anand
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Hrusikesh Dalai
Blog Post Author
February 26, 2014 at 4:52 pm
Anand,
thank You for looking at it, I agree well this document is intend for basic understanding of Actual cost i will come up with my next document which will cover more topics like variances and period end closing activities.
Thanks.
Hrusikesh
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Former Member
March 4, 2014 at 5:17 am
Hi Harkush
I like your documents. almost I have read all and can say that you are doing a commendable service.
BR Shalabh
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Hrusikesh Dalai
Blog Post Author
April 3, 2014 at 3:56 pm
Shalabh,
I am glad you liked it.
Thanks
Hrusikesh
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