Actual Costing with Material Ledger

1      Purpose

This configuration guide provides the information youneed to activate MaterialLedger and Actual Costing manually.

The application component Actual Costing/Material Ledger fulfillstwo basic objectives: The ability to carry material prices in multiplecurrencies/valuations, and actual costing.

Before activating the material ledger, make sure theactivation is necessary. Make sure you know which currencies and valuations youwant to use, because you cannot go back and change the setting.

If you use the Actual Costing/Material Ledgercomponent, you must also use Logistics invoice verification becauseordinary invoice verification does not support Actual Costing/Material Ledger.

After activatingthe material ledger, you should do period end closing without fail, otherwiseyou will have reconciliation issues at the end of the year. To reverse theprocess requires a lot of efforts and difficulties and you may need supportfrom SAP.

Activation Options:

If you just want to use the Actual Costing/Material Ledgercomponent to carry material inventory values in multiple currencies/valuations,you must activate the material ledger. In addition, you can choosetransaction-based price determination (price determination indicator inmaterial master record = 2). If you do this, you still have the option ofdeciding between price control standard price and moving average price for yourmaterials.

If you want the system to calculate a periodic unit pricefor your materials based on the actual costs incurred in a period, you willneed to activate actual costing in addition to activating the material ledger.In addition, you must choose single-level/multilevel price determination foryour materials (price determination indicator in material master record = 3).In this case, you must use price control standard price for all materials thatyou want to use in actual costing.

If you want to include variances from cost centers andbusiness processes in addition to the material cost variances in actualcosting, you must activate activity consumption update in the quantitystructure in addition to activating actual costing.

Work in Process (WIP) is not included in Actual Costing in SAP standard system. And this is not included in our solution. Tobring WIP to actual costing, SAP has a special development you can add to theMaterial Ledger cockpit called WIP revaluation. See note 608162. Note this function is only releasedwith restriction.

2     Preparation

2.1  Prerequisites

Before you start installing this ConfigurationGuide, you must install all the Baseline building blocks. You may eitherinstall the Building Material Industry Building Blocks before or after you workthrough this Configuration Guide.

No Goods Movement must be entered in theperiod you activate the Material Ledger, that is the Material Ledger has to beactivated at the start of a period.

3     Configuration

3.1  Preparing Master Data

3.1.1  Creating G/L Accounts

Use

In this step, you create G/L accounts that are not included inthe chart of accounts 00100010 and are to be used in material ledger. Theassignment of these accounts is described in a later step 3.2 Automatic Account Assignment for Material Ledger.

Procedure

1.     Accessthe activity using one of the following navigation options:

2.     Onthe EditG/L Account Centrally screen, enter theaccount number and the company code 1000.

3.     ChooseCreate (theicon right to the field Company Code).

4.     Maintainthe data in each tab as following:

5.     Choose Save.

Result

The necessary G/L accounts are created.

3.1.2  Check the setting in Classify G/L Accounts for Document Splitting

Use

This activity is necessary only if you have activated documentsplitting (BB 165 ActivateDocument Splitting).

For document splitting to be possible, the individual documentitems and the documents must be classified. For the individual document items youdo this by assigning them to an item category. The item category is determinedby the account number. In this step, you assign the new created accounts to anitem category.

Prerequisite

Document splitting is activated.

Procedure

1.     Accessthe activity using one of the following navigation options:

2.     Ifthe DetermineWork Area: Entry dialog box appears, enter Chart of Accounts 0010 then choose Continue.

3.     Onthe ChangeView “Classify G/L Accounts for Document Splitting”: Overview screen,make sure the following entries exist:

4.     ChooseSave.

Result

The G/L accounts are checked to be classified for documentsplitting purpose.

3.1.3  Creating Primary Cost Element

Use

If you decide to activate activity consumption update in a plantyou need a profit and loss account for the closing entries in ActualCosting/Material Ledger for transaction GBB/AUI (Credit cost center/processwith actual price adjustment) in OBYC. You must create this G/Laccount as a primary cost element. The credit to the cost center or businessprocess is identified under this cost element.

Prerequisite

The G/L account is defined.

Procedure

1.     Accessthe activity using one of the following navigation options:

2.     Onthe EditG/L Account Centrally screen, enter the G/LAccount 531050 and the Company Code 1000.

3.     ChooseEditcost element (F8).

4.     Onthe CreateCost Element: Initial Screen, enter the ValidFrom and to date then choose Enter.

5.     Onthe CreateCost Element: Basic Screen, make the following entries:

6.     Choose Save.

Result

The cost element for actual activity price adjustment is created.

3.1.4  Check the Assignment of Cost Elements to Cost Element Groups

Use

The purpose of this activity is toassign the new cost element to one cost element group.

Procedure

1.     Accessthe activity using one of the following navigation options:

2.     Onthe ChangeCost element group: InitialScreen, enter the cost element group 0010_MAT andchoose Hierarchy (F6).

3.     Onthe ChangeCost element group: Structure screen, make sure the followingvalue exists.

4.     ChooseBack.

Result

The cost element is checked to be assigned to a cost element group.

3.2   Defining Account Determinations for Material Ledger

Use

The purpose of this activity is todefine the account determinations for material ledger.

For accountdetermination, the following transactions in OBYC shouldbe maintained when the material ledger is used:

Procedure

1.     Accessthe activity using one of the following navigation options:

2.     On the Maintain FI Configuration:Automatic Posting - Procedures screen, double-clickon transaction PRY.

3.     Ifthe EnterChart of Accounts dialog box appears,enter Chartof Accounts 0010, and thenchoose Continue.

4.     ChooseRulesand make the following entries:

5.     ChooseSaveand make the following entries:

6.     ChooseSaveand Back.

7.     On the Maintain FI Configuration: AutomaticPosting - Procedures screen, double-click on transaction PRV.

8.     ChooseRulesand make the following entries:

9.     ChooseSaveand make the following entries:

10.  ChooseSaveand Back.

11.  On the Maintain FI Configuration:Automatic Posting - Procedures screen, double-clickon transaction LKW.

12.  ChooseRulesand make the following entries:

13.  ChooseSaveand make the following entries:

14.  ChooseSaveand Back.

15.  On the Maintain FI Configuration:Automatic Posting - Procedures screen, double-clickon transaction COC.

16.  Onthe MaintainFI Configuration: Automatic Posting - Rules screen, make thefollowing entries:

17.  ChooseSaveand make the following entries:

18.  ChooseSave.

19.  ChoosePostingKey and make the following entries:

20.  ChooseSaveand Back.

21.  On the Maintain FI Configuration:Automatic Posting - Procedures screen, double-clickon transaction GBB.

22.  ChooseNewEntries and make the following entries:

23.  ChooseSave.

Result

The account determinations for material ledger are maintained.

3.3  Activating MaterialLedger

Use

In this step, Material Ledger is activated inone or more valuation areas. When the material ledger is activated in aspecific valuation area, all the materials in that valuation area are valuatedusing the material ledger.

If you activatethe material ledger for a plant, you should also activate it for all the otherplants in the company code. This ensures that the accounts in FinancialAccounting and Materials Management are reconciled.

Procedure

1.    Access theactivity using one of the following navigation options:

2.    On the Change View“Activation of Material Ledger”: Overview screen, make the following entries:

3.    Save your entries.

Result

The material ledger of different valuation area isactivated.

3.4   MaterialUpdate

3.4.1  Defining Movement Type Groups of MaterialLedger

Use

In this step you definemovement type groups for the Material Ledger and define howconsumption is to be revaluated with these movement type groups.

Procedure

1.    Access theactivity using one of the following navigation options:

2.    On the Change View“Define Movement Type Groups for ML Update”: Overview screen, choose New Entries and make the following entries:

3.    Save your entries.

Result

Movement type groups are defined.

3.4.2  Assigning Movement Type Groups of Material Ledger

Use

In this step you assign themovement type groups of the material ledger to specific movement types.

Prerequisite

Movement type groups are defined.

Procedure

1.    Access theactivity using one of the following navigation options:

2.    On the Change View “Assign ML MovementType Groups”: Overview screen, assign Movement Type Group CC to followingmovement types:

During consumption of revaluation, theconsumption items with above movement types that are assigned with CF or CC areto be revaluated using the original consumption account. With CC assignment,the CO account assignment of the original goods issue is revaluated too. Thoseremaining consumption items will be revaluated on a collective account that isdefined in transaction COC (Revaluation of other consumables) in OBYC.

3.    Save your entries.

Result

Movement type groups are assigned.

3.5   Actual Costing

3.5.1  Activating Actual Costing

Use

In this step, actual costing for materials isactivated per plant and you can decide whether (in addition to materialconsumption) activity consumption and/or processes which are used to produce amaterial should be updated in the quantity structure in Actual Costing/MaterialLedger.

Prerequisite

Material ledger is activated.

Procedure

1.    Access theactivity using one of the following navigation options:

2.    On the Change View “Activateactual costing”: Overviewscreen, make the followingentries:

If you activatethe activity consumption update in the quantity structure with setting 2 (Update is active and relevant toprice determination), you cannot usethe function Revaluation at ActualPrices at period closing in Cost Object Controlling, as the variances fromthe cost center / process are debited directly to the material. If you use thefunction Revaluation at Actual Pricesat period closing, the cost center / process will be credited twice and thematerials will be debited twice.

3.    Save your entries.

Result

Actual costing is activated.

3.5.2  ActivatingActual Cost Component Split

Use

In this step, actual cost component split foreach valuation area is activated.

After this step, in case the cost component structure ischanged, it will cause inconsistency during the Material Ledger PeriodClosing.  So always make sure the costcomponent structure is correctly maintained before doing this step.

Procedure

1.    Access theactivity using one of the following navigation options:

2.    On the Change View“Activate Actual Cost Components Split”: Overview screen, make the following entries:

3.    Save your entries.

Result

Actual cost component split is activated.

3.6  Periodic Actual Valuation of CO-PA

3.6.1  DefiningValue Fields

Use

In this activity, define a new value field for the periodic unitprice. If you want to transfer actual cost components into different valuefields as for the standard cost estimate, you need to create extra value fieldsfor each of the individual cost components.

Procedure

1.    Access the activity using one of the followingnavigation options:

2.    On the Edit Value Fields: Start screen,make the following entries:

3.    Choose the Create/Change button.

4.    Confirm the information Caution: You areprocessing cross-client data structures, with Enter.

5.    On the Create Val. Fld VVAPR screen,make the following entries:

6.    Choose Save and Activate.

Result

The value field for the periodic unit priceis created.

3.6.2  AssigningValue Fields to Operating Concern

Use

In this activity, assign the new value field to your operatingconcern.

Procedure

1.    Access the activity using one of the followingnavigation options:

2.    On the Maintain Operating Concernscreen, make the following entries:

3.    On the Data Structure tabchoose the Display<-> Change button.

4.    Confirm the information Caution! You arechanging/deleting cross-client settings with Enter.

5.    Choose the Change data structurebutton.

6.    On the Edit Data Structure:Characteristic screen, choose the Value fields tab.

7.    On the Edit Data Structure: Value Fieldscreen, choose the value field VVAPR from Copy from box.

8.    Choose the left-facing arrow Transfer fields.

9.    Choose Save and Activate.

10.  ChooseBack.

11.  TheGenerateenvironment dialog box appears. Choose Yes.

Result

The value field for the periodic unit priceis assigned to the operating concern.

3.6.3  DefiningAccess to Actual Costing/Material Ledger

Use

In this activity, define a costing key for valuation with actualcosts of goods manufactured.

Procedure

1.    Access the activity using one of the followingnavigation options:

2.    On the Change View “Costing Key forActual Cost Estimate”: Overview screen, choose New Entriesand make the following entries:

3.    Double-click Val.Fld Allocatn for PeriodicMoving Average Price in the left dialog structure.

4.    On the Change View “Val.Fld Allocatnfor Periodic Moving Average Price”: Over screen, choose New Entriesand make the following entries:

5.    Choose Enter.

6.    Choose Back twice.

7.    On the On the Change View “Costing Keyfor Actual Cost Estimate”: Overview screen, make the followingentries:

8.    Choose Save.

Result

The costing for actual cost estimate isdefined.

3.6.4  AssigningCosting Keys to Material Types

Use

In this activity, assign the costing key to material types for periodicrevaluation of actual data.

Procedure

1.    Access the activity using one of the followingnavigation options:

2.    On the Set Operating Concerndialog box, enter 10US, and then choose Continue.

3.    On the Change View “Costing Key forMaterial Type”: Overview screen, make the following entries forPV (point of valuation) 02:

4.    Choose Save.

Result

The costing key is assigned for periodicrevaluation.

3.6.5  AssigningValue Fields for Actual Cost Component Split

Use

If you want to copy the actual cost componentsplit in detail you need to assign individual cost components to thecorresponding value fields. You can overwrite thestandard cost estimate with the actual cost estimate or you can create your ownvalue fields for the actual cost estimate.

Procedure

1.    Access the activity using one of the followingnavigation options:

2.    On the Determine Work Area: Entrydialog box, make the following entries then choose Continue.

3.    On the Change View “Assign CostElements to Value Fields”: Overview screen, choose all entrieswith PV 01 then choose Copy As….

4.    On the Change View “Assign CostElements to Value Fields”: Overview of Sel screen, make thefollowing entries, that is change PV 01 to 02:

5.    Choose Enter then Save.

Result

Same value fields areassigned to actual cost estimate as to standard cost estimate.

3.7  Production Startup of Material Ledger

Use

The purpose of this activity is to execute the ProductionStartup for the Material Ledger activation.

Prerequisite

·        Make sure that the currency settings are correct in Customizing for FinancialAccounting and in the Material Ledger. After production startup of the materialledger, no changes in thecurrencies, currency types or material ledger types are allowed.

·        Make sure that the attributes of the material types in Customizing forLogistics – General are correct. The only materials that will be converted arematerials with material types that allow value updates.

·        Make sure in Customizing that all plants in which you want to activate the material ledger areset as active for the material ledger. Check your Customizing settings for eachplant. You can retroactively set additional plants as productive and active, aswell.

·        Make sure that Accountingviews exist for the relevant materials in the material master records.

·        Make sure that no material postings in the relevantplants are necessary during the conversion. Between activation and productionstartup, the relevant plants are blocked.

The preparation of data for production startup of thematerial ledger cannotbe reversed.

Procedure

1.    Access the activity using one of the followingnavigation options:

2.    On the Production Startup of Mat.Ledger screen, make the following entries:

3.    Choose Execute.

Result

The system does the following:

Master data

·        Turns on the Material ledger active indicator in theaccounting view of all the material master records of the plant

·        Sets the pricedetermination indicator in the material master records to price determination 2

·        Creates material ledgermaster data for the current period, the previous period, and the last period ofthe previous year

·        Calculates prices in theother currencies for the material ledger data if, in fact, a price was maintainedin the accounting view

·        Notes the currency settingat the time of production startup internally

Transaction data

·        Transfers inventoryquantities, inventory values and prices from material master records to thematerial ledger data for the current period, the previous period, and the lastperiod of the previous year

·        Calculates the inventoryvalues and prices in the currencies of the material ledger at the current dateusing the stated exchange rate type

·        Amends thepurchase order histories with the set currencies, using the settings foradditional currencies found in Customizing for Financial Accounting

3.8  Changing Material Price Determination

Use

In this activity, changematerial price determination that is used in material master.This functionis typically used after the material ledger is installed, because at that pointall materials have price determination control 2 (transaction-based).

If you use Actual Costing/Material Ledger, you shouldalso use standard price control of raw materials and trading goods to ensureconsistent cost management of your production process. Only in this way arevariances completely transparent within production!

Procedure

1.    Access the activity using one of the followingnavigation options:

2.    On the Change Material Price Determinationfor Material Ledger screen, make the following entries:

3.    Choose Execute.

Result

The price determination (and,if applicable, the price control) of the relevant material or materials ischanged in the material master record and in the material ledger data.

You should only change the price determination settingwhen it is absolutely necessary. If you change the price control, such as from 3to 2 and back to 3, this can cause inconsistencies in material price analysis.