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2007-03-13

 

Product Cost by Sales Order

Purpose

In the application component Product Cost by Sales Order, the sales document items (items in inquires, quotations, or sales orders) function as the cost objects for which you can determine costs and revenues in both planned and actual data.

If you have already created a sales document item that carries costs and revenues for an inquiry or quotation, the subsequent sales document item (such as the sales order item) references the previous one. This enables you to manage the costs of the entire sales and distribution process. You can also flag a sales order item without a previous inquiry and quotation as carrying costs and revenues.

In sales-order-related production, you use the functions of Product Cost by Sales Order to collect and analyze the costs in complex make-to-order production on the sales order item.

In mass production on the basis of sales orders, the focus of cost management is on the material being produced. If you are using a valuated sales order stock in mass production on the basis of sales orders, you can collect and analyze the costs on manufacturing orders (production orders or process orders) or product cost collectors. In this case you control the costs of the products. The flow of quantities and values corresponds to that of make-to-stock production, while the cost accounting method costs the products.

For information on product cost management at the level of manufacturing orders, refer to the following documentation:

Product Cost by Order

For information on product cost management at the level of product cost collectors, refer to the following documentation:

Product Cost by Period

For information on the use of product cost collectors in sales-order-related production, refer to the following section:

Product Cost Collectors in Sales-Order-Related Production

The documents Product Cost by Order and Product Cost by Period are also relevant if you are a manufacturing enterprise and are interested in using the Product Cost by Sales Order component in conjunction with Product Cost by Order or Product Cost by Period.

You can use the Product Cost by Sales Order component in the following situations:

When you are manufacturing in-house with reference to a sales order in complex make-to-order production
When you are purchasing customer-specific trading goods with reference to a sales order and reselling them to your customers
When you are providing services whose costs are assigned to a sales order
When you want to collect the sum of the actual costs incurred for the sales order item on the sales order item (standard cost of goods manufactured of sales plus variances) For detailed information, refer to the sections Valuated Sales Order Stock and Settlement in Product Cost by Order or Period.
The Product Cost by Sales Order component enables you to do the following:

Calculate and analyze planned costs and actual costs by sales document item
Calculate and analyze planned revenues and actual revenues by sales document item
Revaluate the activities and business processes allocated to the cost objects with actual activity prices
Allocate the overhead costs to the cost object using overhead calculation or dynamic process allocation
Calculate the value of goods that have been delivered to your customer but not invoiced
Create reserves automatically
Transfer data to Financial Accounting (FI)
Transfer data to Profitability Analysis (CO-PA)
Transfer data to Profit Center Accounting (EC-PCA)
Implementation Considerations

You use the Product Cost by Sales Order component in the following situations:

When you want to analyze costs and revenues for sales document items
When you are using a nonvaluated sales order stock
Integration

Product Cost by Sales Order accesses master data and transaction data in Controlling (CO), Sales and Distribution (SD), and Materials Management (MM). In manufacturing enterprises, Product Cost by Sales Order also accesses data in Production Planning (PP) or Production Planning for the Process Industries (PP-PI).

If you are a manufacturing enterprise, you normally use Product Cost by Sales Order in conjunction with Product Cost by Order or Product Cost by Period.

To estimate the costs for materials, you use the Product Cost Planning component (CO-PC-PCP).

You can view planned costs, target costs, and actual costs in the Product Cost Controlling Information System (CO-PC-IS).

Features

With the Product Cost by Sales Order component you can collect and analyze costs for:

The manufacturing orders (production orders and process orders) and product cost collectors assigned to a sales order item
The purchase orders assigned to a sales order item
Funds commitments in inventory
You can supplement the display of these funds commitments with the purchase requisition commitment and the purchase order commitment for the sales order item.

The trading goods in a sales order item
The service performed for a sales order item
Flagging a sales order item as carrying costs and revenues enables you to:

Assign special direct cost of sales to the sales document item
Allocate process costs (such as development costs) to the sales document item
You can do the following at the end of the period:

Allocate process costs to sales order items
Revaluate activities and business processes at actual prices
Allocate overhead
Perform results analysis
Transfer data to other application components such as FI, CO-PA, and EC-PCA
Enter a commitment carryforward at the end of the year
In Product Cost by Sales Order you normally use a valuated sales order stock. In a manufacturing enterprise, the unfinished goods are valuated through the calculation of work in process (WIP) on the manufacturing orders assigned to the sales order item. Materials that have been manufactured but not yet delivered are valuated at the time of the goods receipt posting for the manufacturing order (production order or process order). You can valuate goods that have been delivered but not yet invoiced using results analysis. Settling to FI capitalizes goods in transit and goods at construction sites in your balance sheet. You can also represent the valuation of goods in transit and goods at construction site with the functions in FI.

If you are not using Sales and Distribution, you can create a customer requirement for the material in Production Planning. The costs and revenues can be assigned to this requirement and analyzed in the information system.

Constraints

You cannot determine variances for the sales document item.

See also:

For information on valuated sales order stocks, read the following sections:

Valuated Sales Order Stock

Update of Valuated Sales Order Stock

Standard Price with Valuated Sales Order Stock

Viewing Valuated Special Stocks

Example for Valuated Sales Order Stock Without Product Cost by Sales Order: Quantity and Value Flow

Product Cost Collectors in Sales-Order-Related Production

Variances with a Valuated Sales Order Stock

For information on sales order items that carry costs and revenues, refer to the following section:

Sales Order Item That Carries Costs and Revenues

For information on logistical processing such as assembly processing and variance manufacturing, refer to the following section:

Selected Logistical Processes and Cost Objects in Cost Object Controlling

For information on the special requirements with a nonvaluated sales order stock, refer to the following section:

Special Case: Nonvaluated Sales Order Stock

For more information on the master data in Controlling and Production Planning, as well as other basic information, see the following section:

Cost Object Controlling

For detailed information on master data in Sales and Distribution, as well as other information on sales and distribution processing, see the document SD Sales and Distribution Processing.

You can view the data of the Product Cost by Sales Order component in the information system in a number of different formats. For more information, see the document Product Cost Controlling Information System.

For detailed information on Profitability Analysis, see the document CO Profitability Analysis.

For detailed information on Profit Center Accounting (EC-PCA), see the document EC Enterprise Controlling.

In engineer-to-order environments, you link a project to the sales order. The necessary information on cost management for a project can be found in the document Project System.


Sales Order Items That Carry Costs and Revenues

Definition

Item in a sales order on which costs and revenues can be collected.

Use

With a valuated sales order stock, you flag the sales order item as carrying costs and revenues in the following situations:

In complex make-to-order environments when you want to analyze the costs of sales-order-based in-house production
When you want to collect and analyze the costs for trading goods (external procurement) on a sales order item
When you want to collect and analyze the costs of a service on a sales order item
When you want to collect the sum of the actual costs incurred for the sales order item on the sales order item (standard cost of goods manufactured of sales plus variances) For detailed information, refer to the sections Valuated Sales Order Stock and Settlement in Product Cost by Order or Period.
When you want to assign special direct costs of sales to the sales document item
When you want to allocate process costs (such as development costs) to the sales order item
When you want to allocate sales overhead through the cost object sales document item
When you want to report capitalized funds commitments on the sales order item
In addition to the statistical actual costs, purchase requisition commitments and purchase order commitments can be shown on the sales order item.

If the sales order stock is nonvaluated, you always flag the sales order item as carrying costs and revenues.

Integration

You control whether a sales order item carries costs and revenues in Customizing for Product Cost Controlling under Cost Object Controlling ?Product Cost by Sales Order ?Control of Sales-Order-Related Production ?Check Account Assignment Categories.


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