Product Costing – Creation of Costing bill of material (BOM) – SAP

Product cost – Expenses attributable to a particular product is Product Cost. Product costing is part of controlling module in SAP.


1. Material Masters of RM, SFG, FG

2. Bill of Materials, Routing, Master Recipe

3. Work centers / Resources or equipment ID’s\

4. Activity Types

5. Configuration – WIP, Variance, and Settlement

6. Primary and Secondary Cost Elements,

7. Assessment/Distribution Cycles

8. Statistical Key.

Material Master – Master data is the core and very important data which is essential to business. Generally material master contains all details of material viz Basic Information, Classification, Sales Organisation, Foreign trade text data, Purchasing, MRP, work scheduling, General Plant Data, warehouse management, Accounting, Costing, Plant Stock & Storage Location Tab.

Bill of Materials – BOM is quantity structure basically list of components with quantities that are being used to manufacture a particular Product.

Routing – A detailed list of activities that has to be carried out during the production process. Routing plays very crucial role in calculation machine time, Labour time & operation cost.

Master Recipe –All operations in routing is in sequence. Routing uses “Resources” or work centre for different activity Types. The master recipe is used for the manufacture of products.

Activity Types – Activities that are to be performed within oen or many cost centres are activity type. Various activities like Machine Hrs, Labour Hrs, Power, steam etc can be created.

Activity Rate – Activity Rates are the standard rate calculated for above activity types. These are cost centre wise. Overhead Cost commonly known as fixed cost are being calculated on recipe hr X Activity Rate X resource rating.

Every resource which is used in production process is part of master recipe. Values are assigned to each resource in constant formula.

Product Costing in SAP

For product costing in SAP first thing is to check whether the costing has already been done or not. This can be checked in T Code – MM03 – Costing 2 view. If cost estimate amount is coming in this tab then Product is already been costed. If value is coming ZERO then Costing required for that material code.

Costing BOM is nothing else but a replica of Production BOM and hence next step is to check whether BOM is there or not. This can be checked in T code CS03. BOM usage for production BOM is “1” & for costing BOM it is “6”.

Standard Cost is BOM + Recipe. Next step is to check whether recipe is there for that particular product code for which you are going to do costing? Recipe can be checked in T Code C203.

Now Costing BOM being created in T Code CS01. The detail are copied from Production BOM. This means Costing BOM created with reference to Production BOM. T code for this is CS01 with BOM usage 6. One can also maintain the yield percentage in Batch Lot Size.

Plant specific Material status & costing lot size to be maintained in costing 1 view of material master with T Code MM02.

Above were only Pre-requisite, Costing starts with T code CK11N, & shall be run with both Costing Variant. Error log is to be checked for any costing error.

Mark & release required in CK24. After mark & release, standard cost can be viewed in MM03 Costing 2 view.

Change the status of Plant specific Material status in MM02.

Check the costing 2 tab in MM03 or CK13N, cost estimated are being updated.

Summary Steps:

1. T Code MM03 –Check whether costing is done or not.

2. T Code CS03 — Check whether BOM is maintained or not

3. T Code C203 — Check whether Recipe is maintained or not

4. T Code CS01 — Creation of costing BOM wrt Production BOM

5. T Code MM02 — Change to be made in costing view 1 (i.e. Costing 1)

6. T Code CK11N — Costing of material is to be run under both the cost variant

7. T Code CK24 — Marking & release process

8. T Code MM02 — Maintain blocks in costing view

9. T Code MM03– Check the final updation with respect to current costing.

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