Presented by Dawn Watts
Accurate product costing and inventory valuation has increasing importance in today's competitive business landscape. With the move to S/4 Material Ledger activation is required. However, the activation of the Material Ledger is just the beginning. Learn how the use of the Material Ledger Actual Costing functionality can benefit companies across different financial and regulatory environments.
Attend this live webcast with FI/CO expert Dawn Watts, to learn the following:
- Why choose actual costing versus standard costing?
- What does it take to active actual costing in S/4 HANA?
- What configuration is required to setup actual costing in S/4 HANA?
- What does the actual costing cockpit look like and what are the steps to complete a costing run?
- What is an alternative valuation run and why do you use it?
- What are the pros and cons of activating and using actual costing?
Q&A
Q: Do you have to be on S4 to implement Material Ledger and/or Actual Costing?
A: The actual costing cockpit has been in existence since the release of Material Ledger in 1996. Material Ledger and actual costing can be activated in the ERP versions. However, some of the updated functionality may not be available in earlier versions.
Q: What are the differences between earlier versions of Material Ledger Actual Costing and the recent S4 versions?
A: For those who used actual costing in SAP ERP, there are two main changes to the actual costing. 1.) The runtime is much faster due to the SAP HANA in-memory database and new table structure and 2.) the execution steps have been consolidated from eight to five. For those in SAP S/4HANA, in version 1610 there were some significant changes to Actual Costing. The changes are so significant that SAP refers to the new mode as “new actual costing”.
Q: In what geographies and industries do you typically see Material Ledger Actual Costing implemented?
A: Historically Material Ledger Actual Costing has been used in industries such as chemicals, pharmaceuticals, and food and in countries with high inflation or legal requirements, such as Brazil.
Q: What characteristics will margin analysis receive from the revaluation of consumption?
A: The determination of whether the original controlling account assignment and its details are populated during the revaluation of consumption is dependent upon the configuration settings in the “Define Movement Type Groups of Material Ledger” and “Assign Movement Type groups of Material Ledger” sections of the IMG.
Q: Can we use to display actual cost of a material, both of group currency (EUR) and company code currency at the same time? Using of both of them is correct or not?
A: Yes, you can display actual cost of a material in both Group Currency and Company Code Currency at the same time. Fiori App F2680 can be used for this purpose.
Q: The decision of activating Actual Costing can be challenging when we are speaking of the visibility of the actual costs and cost component split in the receiving company, after an intercompany sale. Can you recommend a solution to roll-up the actual variances from company A to company B? Company A: Manufacturing company which sells FG to Company B, at the month-end actual costing is ran, price differences are posted and inventory is revaluated. Company B: Principal Company which owns the FG and sells it to a 3rd party Customer trough a Sales Company.
A: This can be achieved using standard SAP if you either (a) Activate Group Valuation, or (b) Utilize business function LOG_MM_SIT (which is automatically activated with S/4HANA) and BADI ROLLUP_COST_COMP_SPLIT
Q: Is it possible to have both standard cost and actual cost running at the same time in S/4 HANA?
A: Yes. In fact that is the recommended setup.
Q: When you're linking Movement Types in the step "Assign Movement Types for Material Ledger", is there a thumb rule that can be applied to ensure that the "CC" or "CF" are assigned to the right Movement Types?
A: First decide whether you want to Revaluation of Consumption variances to be allocated to the original account and cost object (in which case, you should assign to CC), or allocated to the original account alone (in which case, you should assign to CF), or allocated to a generic P&L account (in which case, you should leave it blank). Then, only assign the respective Movement Type Groups that are for Single Level Consumption (i.e. consumption movements where the receiver is not a material, such as scrap, goods issues to cost center or projects, issues to Cost of Sales, etc.).
Q: Should Movement Type 261 be linked to "CC", if not, how will the system distinguish between Goods Issued to a Production Order and Internal Order?
A: If you want Revaluation of Consumption variances to be allocated to the original account and cost object, then you should assign Movement Type 261 to CC. There shouldn’t be any confusion between Internal Order and Production Order because ROC is only for Single Level Consumption (e.g. issues to Internal Orders) and not multilevel consumption (i.e. issues to Production Orders).
Q: Why should the Price Difference Accounts (PRY) should not be created as Cost Elements? Would the answer change if we use Marginal Analysis?
A: There is no strict rule about whether Price Difference Accounts should be created as Cost Elements or not. The setup is easier if you do not create the accounts as a cost element because you do not need to default it to a cost object. However, if you use Margin Analysis and want to view the PRY accounts along with their Margin Analysis characteristics (Material, Plant, Product Hierarchy, etc.) then you can create them as cost elements.
Q: Do we need to activate material ledger again after the technical activation, change the valuation type from "2" to "3"?
A: If you want to activate Actual Costing in addition to Material ledger, then yes, you need to change the Price Determination from 2 to 3 by using transaction CKMM.
About the Speaker
Dawn Watts is an experienced SAP consultant and founder of Guided Tech Solutions: An SAP consulting company specializing in SAP Finance & Controlling. Dawn has led SAP project implementations and support teams in Finance & Controlling for 2 decades. She has experience working with financial, customer service, and manufacturing teams in the telecommunications, medical devices, flooring, industrial, life sciences, and energy industries.