Ctual Osting: Ith Aterial Edger

Actual Costing
With
Material Ledger
Getting Started: Custimizing and

Production Start-up
SAP AG 2000 ML Workshop Sao Paulo August 2000 (Jan-G. Groeneveld, Product Management R/3 Cost Management) / 1
Content
Inventory Accounting
With
Material Ledger
Custimzing of Material Ledger
Production Start-up
Before the first postings
Customizing Actual Costing: Overview
Customizing Material Ledger / Actual Costing
Material Ledger (mandatory for Actual Costing and Parallel Valuation)

Activate Material Ledger, preset Price Determination Key
Material Ledger Type & Currencies
Number Ranges
Dynamic Price Release
Update Structure (Single/Multi-Level Actual Costing)
Multi-Level Actual Costing
Actual Cost Component Split
Other R/3 Components
Customizing Material Ledger:
Activation and Price Determination
Table View Edit Goto Selection criteria Utilities System Help

Change View: Activation of Material Ledger
Company code Company code ML active Price determination Price determ.(binding)

1000 1000 X 2 X
6000 6000 X 3
6100 6000 X 3
9000 9000
Tips:
If Material Ledger is needed only for Transfer Pricing, set Price
Determination to 2 (transaction based), and set the flag binding!
If you want to use Actual Costing, set Price Determination to 3
(single/multi level). Set set the flag binding only if you want to
include ALL Materials in Actual Costing!
Material Ledger Type & Currencies
Table View Edit Goto Selection criteria Utilities System Help

Change View: Material Ledger Type
ML Type FI CurType CO CurType Manuell Description MLType

0000 V V Standard: WT like from FI+CO
0001 V Transfer Prices
Notes:
Only a total of three combinations of Currencies and
Valuation Approaches can be assigned!
If you use Transfer Pricing, you might not want to show this
valuation approach in you legal books.
Dynamic Price Release
Planned Price / Current

Future Valuation Price Standard Price
Dynymic Release
Costing 2 / Accounting 1 Costing 2, Accounting 1
with first
Material Posting
Note:
The Dynamic Price Release does not replace the traditional functions of price
releases; those have to be carried out in any case!
Tip:
Turn on Dynamic Price Release only when you plan to release new Standard
Prices!
Customizing Material Ledger: Overview
Material Ledger (mandatory for Actual Costing and parallel valuation)
Update Structure
Standard Update Structure
Individual Update Structure
Update Structure
The Standard Update Structure ensures that all of the following postings are
correctly recorded and stored in the Material Ledger:
Goods Receipts: Transfer posting - special stock, Material tansfer posting, Stock transfer,
Project, Subcontracting, Sales order, Cost center, Production, Consumption for single-level
orders, Purchase order (grp), Fixed asset, Consumption.
Goods Issues: Transfer posting - special stock, Material tansfer posting, Stock transfer,
Subcontracting, Sales order, Production, Procurement (change involving stocks), Purchase
order (grp), Purchase order, Procurement.
Preliminary Price Exchange
Quantity Price
valuation Differences Rate Diff.
Beginning inventory
Categories
Receipts
Production
Purchase order Process types
...
Other receipts/consumptions
Reccomandation:
Use the Standard Update Structure. The definition of alternative structures only
allows you to manipulate the price determination by handling single-level
consumptions in a different way.
Update Structure

Activate
Integration with Cost Center Accounting and ABC
Activation of Multi-Level Actual Costing
Materials
Procurement
Alternative
Process
Hierarchica
l Multiple Co-Production Cyclical
Assembly Methods of Production
Procurement
Note:
With the Activation of Actual Costing, the Material Ledger will internally update
the Quantity Structure. Only with this, price- and exchange rate differences can
be rolled up during Multi-Level Actual Costing.
You decide whehter or not the consumption of Cost Center Activities and
Business Process shall be updated in the Quantity Structure as well.
You decide whether the revaluation of actual Activity Prices and Business
Process Costs is to be carried out in Cost Object Controlling or aterial Ledger.
Integration with Cost Center Accounting and ABC
0 + 1: Cost Business D Actual ./. Plan

Processes
Objects are
revaluated with Production Settlement Material
actual activity prices

and costs of Cost Center
Activities
business processes. D Actual ./. Plan
2: Materials are Business D Actual ./. Plan

revaluated with Processes
actual activity
prices and costs of Production Settlement Material
business
processes.
Cost Center
Activities
D Actual ./. Plan
Update Structure

Activate
Category Qty Value Material Labor Machine Process OH Price

Beginning Inventory 100 8,400 4,500 1,500 1,150 700 550 84,00
Receipts 900 72,600 50,000 8,500 6,200 4,800 3,100 81,00
Purchase Order 300 26,000 26,000 87,00
Trading Inc 200 18,000 18,000 90,00
Best Price Ltd 100 8,000 8,000 80,00
Production 500 38,500 20,000 7,000 5,000 4,000 2,500 77,00
Prod. Version1 500 38,500 20,000 7,000 5,000 4,000 2,500 77,00
... 100 8,100 4,000 1,500 1,200 800 600 81,00
Cumulative Inventory 1,000 81,000 54,500 10,000 7,350 5,500 3,650 81,00
Consumption 600 48,600 32,700 6,000 4,410 3,300 2,190 81,00
Ending Inventory 400 32,400 21,800 4,000 2,940 2,200 1,460 81,00
Note:
The Actual Cost Component Split needs to be activated; further, a report
has to be started to create the initial data.
Actual Costing uses the same Cost Component Split as the Product Cost
Planning.
Update Structure

Financial Accounting and Controlling
Profitability Analysis
Profit Center Accounting / Transfer Prices
Account Assignment
Invoice Verification
Financial Accounting and Controlling
Material Ledger
(Valuation Area)
10 Local currency
30 Group currency UNI
40 Hard currency USD
Financial Accounting Cost Controlling

(Company Code) (Controlling Area)
10 Local currency 10 Local currency
30 Group currency UNI 30 Group currency UNI
40 Hard currency USD
Tip:
Use a maximum number of three currencies / valuation approaches to
avoid constant currency translation and to reach a transparent
controlling.
Profitability Analysis (1)
Sales Quantity: 1,000 pc
Revenues: 10,000 US$
Plan Actual Var. % Var. Abs.
Raw Materials 50,000 45,000 5,000 10 %

Labor variable 4,000 5,000 -1,000 - 25 %
Machine variable 4,000 4,500 - 500 - 13 %
Logistic Processes 10,000 7,000 3,000 30%
Material Overheads 5,000 5,500 - 500 - 10 %
Contribution Margin I 27,000 33,000 6,000 22 %
Labor fix 10,000 10,000 0 0%

Machine fix 7,000 7,000 0 0%
Contribution Margin II 10,000 16,000 6,000 60 %
Note:
As of Release 4.6c, Profitability
Analysis can use the results of
Actual Costing just as any cost
estimate for the periodic
revaluation.
Profitability Analysis (2) Define costing key
Profitability Analysis (3) Assign costing key
Profitability Analysis (4) Assign value fields
Profit Center Accounting / Transfer Prices
America Europe/Africa Asia

D
E
Division A
USA
F J
? MEX
Division B
Corporate Executive
Board BRA
Note:
The Customizing of Transfer Pricing covers a white range of entries in the
IMG, such as Profit Center Accounting, Controlling Area, Financial
Accounting, General Controlling, Profitability Analysis, and others. For more
information, please navigate to the corresponding SAPNet Page.
Account Assignment
In Account Assignment, the following transactions are to maintained:

PRD for price difference postings (settlement, invoices, )
PRY for single-level price differences (closing entries of Actual Costing)
PRV for multi-level price differences (closing entries of Actual Costing)
KDM for exchange rate difference postings (settlement, invoices, )

KDV for single/multi-level price differences (closing entries of Actual Costing)
LKW for all differences, if closing entries of Actual Costing are performed without
revaluation of ending inventories.
GBB/AUI for the revaluation of Materials with actual activity and business process prices
Note:
Only multi-level consumptions are revaluated. Differences for single-level
consumptions remain on the PRD account.
It is common business practice to use P&L Accounts for the transactions.
However, different practices may be common in other countries.
The transaction COC is only relevant for customers in Brasil
Invoice Verification
Exchange Rate Differences occur with
Goods Receipts with reference to Purchase Orders

if the exchange rate at the time of Invoice Receipt
differs from the
exchange rate at the Time of Goods Receipts,

or from the
assumed exchange rate
Note:
Prerequisite for the calculaton of Exchange Rate Differences is that
you activate this function in Customizing of Logistic Invoice
Verification (Materials Management).
Content
With
Material Ledger
Production Start-up
Production Startup
Production Startup
To be startet from the Menu of Material Ledger
Creates Material Ledger Master Records
Converts stock values of Material Ledger to
stock values of Financial Accounting
(second and third currency)
Sets ML indicators in all Material Master records
Sets Material Price Determination Indicator
in Material Masters to 2 (can be changed to 3)
Fixes the Currencies used
Sets the Productive Indicator
Production Startup
Reverse Production Startup

If Production Startup is to be reversed in a
test system, apply Note 108374 and follow
the instructions.
If Production Startup is to be reversed in a
productive system, contact SAP Development
Support!
If you assigned a currency and valuation profile
(e.g. for parallel valuation approaches), and you
want to deactivate the Material Ledger, contact
SAP Development Support!
Content
With
Material Ledger
Production Start-up
Price Determination Control for Actual Costing
Price Determination Price Control Purpose
Transaction based 2 Moving Average Price Material Ledger is

Standard Price activated only for
Transfer Prices.
Specific Materials
shall not be included
in Actual Costing.
Single/Multi-level 3 Standard Price Actual Costing will be

Moving Average Price done for all these
can not be set manually Materials at the end of
but is assigned during each period.
period end revaluation.
Note:
After the Production Startup, you have to change the key for the price
determination from 2 to 3 for all those Materials, for which you want
to do Actual Costing.
During the switch of the price determination from 2 to 3, the Price
Controll for all affected Materials will be set to S
The programm that changes the price determination key does under no
circumstances effect a revaluation of stocks.
Structured Value Chains: Process Types
Preliminary Price
Demo CD / Plant 6000 Quantity
valuation difference
Price
Beginning inventory 1000 250 25.00
Receipts 1000 250 30 28.00

Production
... ... ... ...
Purchase order
... ... ... ...
Stock transfer
... ... ... ...
Subcontracting
... ... ... ...
Other receipts/cons. 0 0 0
Cumulative inventory 2000 500 30 26.50
Note:
With the standard settings, all material related postings are stored and
displayed with reference to Plant (example: 6000), Material (Demo CD),
and Process Type (Production, Purchase Order, ).
These characteristics are described with controlling levels of each
Material. If postings are entered, and values are assigned to the
characteristics, procurement alternatives are created.
Structured Value Chains: Process Types
Process Type Characteristics of the Controlling Levels
Purchase order
Plant/material
Purchasing organization/ vendor
Subcontracting
Plant/material
Purchasing organization/ vendor
Stock transfer
Tip:
Plant/material You can change the
Issuing plant
Reposting/
material
controlling level of each
Plant/material Material, so that addititional
Issuing plant/ material
Production characteristics are stored
Plant/material
Production plant/ planning plant and displayed.
BOM / routing
Production version
Preliminary Price
Demo CD / Plant 6000 Quantity
valuation difference
Price
Beginning inventory 1000 250 25.00
Receipts 1000 250 30 28.00

Production ... ... ... ...
Purchase order
... ... ... ...
Vendor A/ Puchase Org. 1
... ... ... ...
Vendor B/ Puchase Org. 2
Other receipts/cons. 0 0 0
Cumulative inventory 2000 500 30 26.50

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Actual Costing

Getting Started: Custimizing and

Custimzing of Material Ledger

Before the first postings

Customizing Material Ledger / Actual Costing

Material Ledger (mandatory for Actual Costing and Parallel Valuation)

Update Structure (Single/Multi-Level Actual Costing)

Multi-Level Actual Costing

Actual Cost Component Split

Other R/3 Components

Table View Edit Goto Selection criteria Utilities System Help

Company code Company code ML active Price determination Price determ.(binding)

Table View Edit Goto Selection criteria Utilities System Help

ML Type FI CurType CO CurType Manuell Description MLType

0001 V Transfer Prices

Planned Price / Current

Customizing Material Ledger / Actual Costing

Material Ledger (mandatory for Actual Costing and parallel valuation)

Multi-Level Actual Costing

Actual Cost Component Split

Other R/3 Components

Customizing Material Ledger / Actual Costing

Material Ledger (mandatory for Actual Costing and parallel valuation)

Multi-Level Actual Costing

Actual Cost Component Split

Other R/3 Components

0 + 1: Cost Business D Actual ./. Plan

actual activity prices

2: Materials are Business D Actual ./. Plan

Customizing Material Ledger / Actual Costing

Material Ledger (mandatory for Actual Costing and parallel valuation)

Multi-Level Actual Costing

Actual Cost Component Split

Other R/3 Components

Category Qty Value Material Labor Machine Process OH Price

Customizing Material Ledger / Actual Costing

Material Ledger (mandatory for Actual Costing and parallel valuation)

Multi-Level Actual Costing

Actual Cost Component Split

Other R/3 Components

Financial Accounting Cost Controlling

Plan Actual Var. % Var. Abs.

Raw Materials 50,000 45,000 5,000 10 %

Contribution Margin I 27,000 33,000 6,000 22 %

Labor fix 10,000 10,000 0 0%

Contribution Margin II 10,000 16,000 6,000 60 %

America Europe/Africa Asia

In Account Assignment, the following transactions are to maintained:

KDM for exchange rate difference postings (settlement, invoices, )

Exchange Rate Differences occur with

Goods Receipts with reference to Purchase Orders

exchange rate at the Time of Goods Receipts,

Custimzing of Material Ledger

Before the first postings

Reverse Production Startup

Custimzing of Material Ledger

Before the first postings

Price Determination Price Control Purpose

Transaction based 2 Moving Average Price Material Ledger is

Single/Multi-level 3 Standard Price Actual Costing will be

Beginning inventory 1000 250 25.00

Receipts 1000 250 30 28.00