Below are the basic steps in product costing with PP perspective.

PP - Transactional FlowStep 1: Material MasterLogistics > Production > Master Data > Material Master > Material > Create General > Immediately MM01

Step 2: BOM creationLogistics > Production > Master Data > Bills of Material > Bills of Material > Material BOM > Create CS01

Step 3: Work Center creationLogistics > Production > Master Data > Work Center > ( New Screen ) Work Center > Create CR01

4: Route creationLogistics > Production > Master Data > Routings > Routings > Routing > Create CA01

Step 5: PIR GenerationLogistics> Production>production planning>demand management>PIR>Create MD61

Step 6: MRP RunLogistics>Materials Management>Material planning>MRP>MRP>Total Planning>Online MD01 orLogistics > Production > MRP > MRP > Sng-Item, Multi-Level MD02

Step 7: Evaluation through MRP list and Stock requirement listLogistics>Materials Management>Materials Planning>MRP>Evaluations>MRP List>Individual Display MD05Logistics>Materials Management>Materials Planning>MRP>Evaluations>Stock Requirements List MD04

Step 8: Conversion of Planned order to Production orderLogistics > Production > Production control > Order > Create > With a planned order CO40orLogistics >Production > Production control >Order > Create >With material CO01(For creating production order Without planned order)

Step 9: Order managementLogistics >Production > Production control >Order > Change >With material CO02

Step10: ConfirmationsLogistics >Production >Production control >Confirmation >Enter >For order CO15orLogistics >Production >Production control >Confirmation >Enter >For Operation >For time ticket CO11N

Step11: Goods issue1. Logistics >Production >Production Control >Environment >Goods Movement >Goods Issue2. Logistics >Materials Management >Inventory Management >Goods Movement >Goods Issue MB1A--261Movement type

Step12: Goods receiptLogistics > Production > Production Order > Environment > Material Movement > Post Mat to Stock

orLogistics > Materials Management > Inventory Management > Goods Movement > Good Receipt > For Order MB31

Step13: Techo Or Close Order.This can be done from Prd. Order Header menu.

Below are steps to be followed for product costingTwo aspects:1. Calculating standard cost estimate2. Order costing====1. Create materialsa. Five raw materials (Two for creation of semi finished, three for finished)- ROHb. One semi finished material-HALBc. One finished material-FERT2. Create secondary cost elements for defining activity types3. Create secondary cost elements for defining credit elements in costing sheet4. Create activity types (use category 1 & price calc as 3 - for now)5. Define prices for combination of cost center and activity type in KP266. Define costing sheet7. Define cost component8. Define components of costing varianta. Date controlb. Valuation variantc. Costing type9. Define costing variant10. Next, create standard cost estimateUse either CKUC( for multi unit costing) or KKPAN ( for material without quantity structure)In case of costing with quantity structure (means with BOM) we use CK11N (for individual material costing) & CK24 for update price in material master & CK40N for mass costing & update material price.If want to capture OVERHEAD then overhead group & OH key to be defined, OH group is defined in MATERIAL MASTER. While rates are maintained for OH key with validity dates. This OH rates are then captured in cost sheet and then roll up in material cost thru use of costing variant.11. Next to update prices, use the below transaction CK24 for price updateFirst, MARKThen, RELEASE

Product Cost = Materials Cost(ROH + HALB Materials Cost)+Activity Cost (Operation Cost)+Overhead Cost.

The following is one way of doing the product costing assuming that the priority is given to planned prices to the costing variant.

1. Raw materials cost are generally entered as Planned price along with the valid from date in Costing 2 view, and price control indicator is "V". Origin group has to be given to all the Raw materials in costing 1 view.

2. For HALB Materials Price control indicator will be S for In-house manufactured & V for externally processed materials (Sub-Contracted Items) respectively. Also assign Overhead group for all In-house manufactured items.

3. No need to enter any value for the materials having S as the price indicator and for Sub-contracted items that's F30 also no need to enter any cost in the material master.

4. Activity cost is the cost incurred in performing individual operation. This cost is captured via the work center which we mention in each operation in the routing of that product. A Cost centre and an appropriate activity type is assigned in the work centre.

5. Proper Cost should be assigned for the combination of Activity type and Cost centre.

6. Overhead cost is the indirect cost that we capture according to the customer's requirement.

7. If certain items for certain products alone should not be considered for costing means, then we can achieve this using costing relevancy indicator in the BOM and for the activity(operation's mentioned in routing) which should not be considered for costing also can be mapped by removing the costing relevancy indicator in routing. Overhead group is assigned in Costing1 view.

8. Creating Cost center - KS01

9. Create Activity Type - KL01.

10. Assigning Rates for a cost center/activity type combination in T code KP26.

11. Cost estimate Related T codes are CK40N,CK11N,CK24.

12.UseCK40N always, so that you can do the costing ,mark the price and release the same. Generally Cost Rollup will be taken for Finished product so that the system automatically calculates for the Semi- Finished products standard cost.

13. IF you use CK11N,then only costing will be done, but for marking and release you have to use CK24. 14. For each Production order type in T code OPL8 Order Type Dependent Parameters - Under controlling tab - Costing variant Planned and actual has to be assigned.

15. In REM scenario - Product Cost Collector has to be created using T code KKF6N for all In-house Manufactured assemblies. _Order Settlement_ When a production order is settled, the actual costs incurred for the order are settled to one or more receiver cost-objects (for example, to the account for the material produced or to a sales order). Offsetting entries are generated automatically to credit the production order: If the costs for the production order are settled to a material account, the order is credited each time material is delivered to stock. The material stock account is debited accordingly. If the costs for the production order are settled to another receiver (for example to a sales order), the order is credited automatically at the time of settlement. The cost-objects are debited accordingly. The debit posting remains in the order and can be displayed even after the costs have been settled. The settled costs are updated in the corresponding receiver cost-object and can be displayed in reporting. During production, product cost collectors and manufacturing orders are debited with actual costs. Each time goods are received into inventory, the system valuates the receipt and credits the product cost collector or

manufacturing order accordingly. The actual costs posted to an order can be more or less than the value with which an order was credited when the goods receipt was posted. When you settle, this difference between the debit and credit of the order is transferred to Financial Accounting (FI). Settlement also feeds data from Cost Object Controlling to other components. The following can happen during the settlement process: · The order balance can be reduced to zero by transferring to Financial Accounting (FI) the difference between the preliminary inventory valuation (goods receipt) and the actual costs incurred. The price difference can also be transferred to Profit Center Accounting (EC-PCA) and Actual Costing/Material Ledger (CO-PC-ACT). · The total variance can be transferred to profitability segments in Profitability Analysis (CO-PA). This enables you to see an additional contribution margin in CO-PA. You can transfer the individual variance categories of the total variance to value fields in CO-PA in combination with certain cost elements or cost element groups. The variances are normally settled to CO-PA as variance categories. However, you can also settle the order balance to CO-PA. · The work in process can be transferred to Financial Accounting (FI) and Profit Center Accounting (EC-PCA) in accordance with the posting rules in Customizing.

Steps For Order Settlement You should follow following steps for Order Settlement after confirmation :

1. After Final Confirmation of Order ( Status : CNF) make GR for for order using Tcode : MIGO / MB31 so Production Order Status will be DLV.

2. Then complete the order technically by using Tcode : CO02----> Functions ( Menu)-----> Restrict Processing -------> Technically Complete. You can carry out TECO for multiple Orders in Tcode : COHV (Mass Processing).

3. Over head calculation- KGI2 or CO43

4. WIP calculation - KKAX or KKAO

5. Variance - KKS2 or KKS1

6. Settlement - KO88 or CO88.

“Planned Overhead” calculation can be defined in TWO ways :

a) Product-specific – we need to define one Costing Sheet, Assign Costing Sheet in Valuation Variant in Costing Variant. This Costing Sheet needs to be assigned in related Production Order. This Overhead Cost will be displayed in Standard Cost Estimate Itemization with the “Item Category-G”. In the Costing Sheet, generally calculation of Overhead will be defined as percentage on Material or Production Cost.

b) Plant specific—we need to do plant specific configuration settings are required. I think Plant specific config settings are missed for your Plant ML01. You can copy the configuration settings available with ML01 with CW01.

Regarding “Actual Overhead” calculation, as a part of period-end activities we need to execute t-code-CO42-Apply Overheads for Cost Objects. It will calculate and post difference in Planned and Actual Consumption of Material and Production Cost and Overhead will be posted accordingly.