Product Costing: Additive Costs - S4HANA Configuration and Demo

[@anupambera1068]

Learnt a good thing today from you..

[@AbdullahGalal]

Glad to know

[@saibalu4320]

Hi Abdullah, Let me first congratulate you on your new role with Nokia and i am sure you are deserve it. It's really good & informative. And i wanted to appreciate you that the way you explained the Additive cast with the business process (& configuration as well) where it can be used!! And i am really looking forward for more business scenarios.

[@AbdullahGalal]

Thank you Sai for the continuous support, subscribe to the channel to support the content

[@vishalmaheshwari3030]

Hi Sir, I saw your few videos of product costing,they are really amazing and kind of explanation is crisp and very informative as per industry standards. But just one request,can you start series on Profitability - COPA. It would be great and really helpful

[@AbdullahGalal]

Thank you, will do my best

[@salmaabulwafa2998]

Amazing playlist, I have acquired alot of knowledge and skills from it. Please make a video for WIP, variance and settelment

[@AbdullahGalal]

Thank you Salma, will add WIP to my plan

[@g.harikrishnakrishna1528]

excellent explanation

[@AbdullahGalal]

Glad it helped!

[@Quicksilver1st]

Thanks for this series of videos, exceptional quality!. It must take considerable time and effort to put these together. Would be interesting to see how it all comes together in the process/production orders and eventually during ML close. Are you planning to cover those?

[@AbdullahGalal]

Thank you, it does take a lot of effort. Yes my plan is to continue, but unfortunately I'm not able to find a decent S4HANA access to use so it's on hold for now.

[@mannepalliashwinkumar6040]

Well explained

[@AbdullahGalal]

Thank you!

[@bolognesi4094]

Excelent!

[@AbdullahGalal]

Thanks!

[@felixadeniyan5799]

@@AbdullahGalal What is the t-code to delete additive cost.

[@sukumarchakravarty410]

Excellent

[@AbdullahGalal]

Thanks

[@kapilmehta-jr6ok]

Hi Abdullah, I can see Valuation type as an input field on screen of CK74N. How did you enable this ? Did you implement some note ??

[@rioTUBE1990]

Hello sir, thanks for the explanation of Add Cost. I have a question about this. So how do system transfer this add cost during current month to get PUP when CO MONTH END CLOSING. Is system read from the riil transaction in ADDTV COST ELEMENT then transfer it to the material?So if there is no value in COST ELEMENT ADDTV so in the end of the month there is no cost component structure addictive cost in PUP? thanks sir

[@AbdullahGalal]

Hi, this is a difficult question, my expectation would be to check the real business case where we want to use it. But generally PUP is standard +/- variances regardless of cost components, so I don't see this as an issue A cost accountant will only use additive costs if he keeps getting a variance due do a certain condition like freight for example, so adding the additive cost will actually increase accuracy and reduce the variances. Analyzing and building the costing business solution for inventory management is one of the most critical steps in any project, all these things must be considered

[@AbdullahGalal]

This is a very interesting and challenging discussion, discussing this will be very beneficial to me too, do you have any specific scenarios in mind?

[@dirkludik]

Hi Sir, Once additive cost is loaded how can we see a list of all products with their additive cost values.?

[@ahsansiddiqui01]

Understood the process. But I have one question. Does the additive cost automatically get added during process order confirmation. Or we put DLV status on process order.

[@AbdullahGalal]

The standard is we don't add them to production orders, I would suggest you look into what additive costs you're adding and why and then structure the costing and variance settlement process around this, the answer can change completely based on the business case

[@javediqbal1452]

Hi Abdullah nice video i have requirement we want to transfer stock from one plant to another plant within same company code in standard price control with delivery cost to be inventorized on receiving plant. I tried through additive cost as you explained in video but entry posted to secondary cost element also price varaince document posted i want to freight charges to added in inventory how to do it

[@adamv6753]

I see how this affects standard costs, however, can this be used for actual costs? For example, if we goods receipt a product on a purchase order from a supplier, the PIR will have X costs, however, we want to add Y cost that is an internal cost (transportation before we receive the product into inventory). Can this function be used to add cost to the actual cost? these products are managed with price control V.

[@AbdullahGalal]

Price control V will pick the valuation from the PO price and later the PIR, we can't add additive costs there. If the business case is to add transportation cost to the items above the Price, then I would find a way to add a transportation condition to the PO and post it to the transportation vendor , I already explained how to do this in another video

[@pink4268]

can we delete cost estimate of material with BOM or cost estimate of material FERT (finished goods)?

[@AbdullahGalal]

Why? What's the business case? If you already have stock then you should do another cost estimate to post the adjustment entry. If you don't have stock then just repair the BOM and run another cost estimate too Anyway check this answers.sap.com/questions/5823507/how-to-delete-standard-cost-estimate-that-already-.html

[@RA-rh5lb]

are these GL used in cost components are secondary cost elements or can we use primary cost elements also.?

[@AbdullahGalal]

That depends: - Raw materials: primary cost element - Activities and overheads: secondary

[@barbaraneale7166]

Hi Abdullah I am very interested in the Additive Cost scenario where I need to add freight and transportation costs to get a material from one plant to another belonging to the same company code but not sure how this will work from an Actual Costing perspective. The standard from the sending plant will not include the transportation costs, but in the receiving plant it will, so from a financial accounting perspective I will get a gain on stock transfer CR inventory Sending Plant DR inventory receiving plant (incl additive costs) CR Gain on stock transfer. From an actual costing perspective the gain on the stock transfer will be allocated to inventory (is my understanding - correct me if I am wrong) and therefore it will try to reduce the value of inventory by the additive cost amount, this is incorrect however as I have incurred transport and freight how do I stop it from doing this? Thanks in advance B

[@AbdullahGalal]

Hi Barbara, interesting case, let's look into this in detail: ------------------ 2 Company Codes: 1000 and 2000 , 1 finished product ABC with standard cost of $10 in 1000 and $12 in 2000 (2 additive cost for freight) CoCd 1000 sells to 2000 without profit margin (at cost) so the sales price is also $10 ------------------ 1000 will create a Sales order, and 2 financial entries: (@Goods Issue: Dr. COGS $10 // Cr Stock $10) ---- Item cost in 1000 = $10 (@Billing: Dr. IC Customer $10 / Cr. IC Revenue 10) --- Item sales price in 1000 = $10 ------------------- 2000 will create a Purchase Order with 2 vendors (CoCd 100 + external freight vendor) and will have 2 financial entries: (@Goods Receipt: Dr. Stock $12 // Cr. IC GR/IR $10 // Cr. Freight GR/IR $2) (@ Invoice Receipt: Dr. IC GR/IR $10 // Dr. Freight GR/IR $2 // Cr. IC Vendor $10 // Cr. Freight Vendor $2) I think in your explanation you skipped the freight expense part, check the case I explained and tell me if you still see any issues

[@kathiresannagarajan7648]

@@AbdullahGalal Thanks for the detailed explanation on Intercompany process. I think, Barbara is referring to Inter-plant transfer. I do have similar query whether such transfer will be considered during actual costing run. Also, how will the additional costs like royalty etc. will be added to inventory as a part of actual costing, if we are going to consider them as additive cost?

[@ballisticgeico1662]

Nice video. Can additive be updated to actual cost at month end? If so, can you also create a video. Many thanks

[@AbdullahGalal]

I don't have a direct answer, only some thoughts, do you actually have this requirement in you project? or just exploring?

[@tobym7955]

Hi Sir, great videos and really easy to understand. Thank you for sharing your knowledge!! Just wonder about a scenario of a Intercompany relationship where a Production Plant sells Ex Works to a Trading plant. In-bound freight costs are added to Standard cost of the material as additive costs on Trading Plant side. Then Inbound freight costs are part of the standard costs. When the Trading company sells the material, the inbound freight costs of the material are also implicitly included in their COGS. On a monthly basis, the Trading company receives actual invoices for inbound freight from the forwarder. My question is, how to handle/to set up the variance calculation in SAP for this, that standard inbound freight plus the only variance of actual to standard inbound freight is settled to the Income statement?

[@AbdullahGalal]

inbound freight variances are posted to PPV accounts same as inventory price variances, then it either stays in PPV OR IF you're using ML Actual Costing then at end of month it's allocated between inventory and COGS

[@ratulroy5855]

Hi Sir, Excellent video. My client requirement is to change the existing cost component structure. They are in ECC system now and material ledger is not activated. Can you please suggest me

[@AbdullahGalal]

Check this SAP note, you need to use your S-user launchpad.support.sap.com/#/notes/434873

[@santoshsomashekar]

Hey can you explain how we can do this in sales order costing

[@AbdullahGalal]

Will see if I can create a video on this. For now check this out answers.sap.com/questions/8703567/additive-costs-in-sales-order-cost-estimate.html

[@mohammadalighadi4324]

I have watched all your Product Costing videos. could you please make a video regarding Alternative Valuation Run.

[@AbdullahGalal]

will do my best

[@SARAVANANS-vb5ht]

Hi Abdullah Nice video, can I ask 2 questions? 1, why we need to create the GL as secondary cost element instead of primary cost element? 2, at the time of monthend, how to do the actuals for this addictive cost? Can you pls clarify

[@AbdullahGalal]

-Secondary cost elements because this is an internal CO posting, not coming from a an external financial entry (like invoice or payment) - Difference between standatd and actual is posted to variance, but then we allocate this variance to inventory and COGS (based on what's sold and what's in stock), when we use additive costs we're including this part of the variance in inventory and COGS from the begining instead of waiting to month end, it's a little complicated to understand but hope you get it

[@mukthayarshaik8601]

abdullah bhai can u please tell me about Joint And By product

[@AbdullahGalal]

good one, will try to make a video

[@gangadhar.1905]

Hello..how to learn SAP FICO and S4Hana from you?

[@AbdullahGalal]

Follow the channel for the coming videos, and follow me on LinkedIn to see my announcements for new training groups

[@RA-rh5lb]

@@AbdullahGalal when are you start your new training group.

[@k.sureshkumar3646]

Well explained

[@AbdullahGalal]

Thank you