Scenario/Processes Actual Costing - PowerPoint Presentation

1. Scenario/ProcessesActual CostingScenario OverviewScenario ExplorerBusiness ValueOpen LegendScenario FlowAccountantScenario DescriptionThe following business roles are involved in this scenario:Actual costing is the complete and precise determination of product costs based on actual costs incurred for all objects along the value chain. The calculation is based on actual cost of materials, services, and overheads incurred for the final product for a specific accounting period.These costs are calculated by evaluating business transactions that are recorded throughout a period of time. At the end, actual costs can be used to (re)valuate inventories, internal service confirmations, and cost of goods sold. It is a part of period end closing activity. You can also set the new standard cost with actual cost for future periods. Click process chevrons for detailsFurther InformationActual CostingRevenue RecognitionPreparations

2. Scenario/ProcessesActual CostingScenario OverviewScenario ExplorerBusiness ValueOpen LegendScenario FlowAccountantScenario DescriptionThe following business roles are involved in this scenario:<Role Name><Role Name>Actual costing is the complete and precise determination of product costs based on actual costs incurred for all objects along the value chain. The calculation is based on actual cost of materials, services, and overheads incurred for the final product for a specific accounting period.These costs are calculated by evaluating business transactions that are recorded throughout a period of time. At the end, actual costs can be used to (re)valuate inventories, internal service confirmations, and cost of goods sold. It is a part of period end closing activity. You can also set the new standard cost with actual cost for future periods. Click process chevrons for detailsFurther Information<Role Name><Role Name><Role Name>LegendProcess mainly driven by the userProcess mainly driven by the systemProcess running in an external systemManual process not supported by the systemProcess that communicates with third-party software (mouse-over for details)Process with relevance to FinancialsRelated scenarioInfo button with more informationClose LegendActual CostingRevenue RecognitionPreparations

3. Scenario/ProcessesPreparationsActual CostingProcess Details: PreparationsActual CostingRevenue RecognitionProcess DescriptionThe Preparations process is a set of period end closing activities. These steps are necessary for the execution of the actual costing process. GR/IR (Goods Receipt/ Invoice Receipt) clearing is a function that you execute in order to clear the Purchase in Transit and Unbilled Payables accounts when both the goods received and the associated invoices have been recorded in the system.Overhead distribution allocates overhead costs from support cost centers to primary cost centers or projects based on distribution rules that you assigned to the support cost centers.Work-in-process (WIP) clearing is a periodic task that is usually performed at regularly scheduled times or during period closing to correct and clear the work in process account.Overhead absorption is a periodic task that is used to apply the overhead to the direct costs of the production lots once the overhead costs are distributed from support cost centers to the primary cost centers.GR/IR ClearingOverhead DistributionWIP ClearingPerformed byAccountantIn the Work Center(s)Inventory ValuationCost and RevenueXClick process chevrons for detailsScenario ExplorerBusiness ValueScenario FlowFurther InformationOverhead AbsorptionX

4. Scenario/ProcessesPreparationsRevenue RecognitionProcess DescriptionYou can use an Actual Cost Rollup that calculates the actual costs of materials, production lots and other objects along the value chain. Actual cost rollup also calculates actual resource cost rates based on the total cost incurred by production cost centers within the calculated period. You can either revaluate the current period inventory using the Actual Cost Allocation, or adjust your inventory cost with the actual cost for future periods using Actual Cost Release.You can revaluate inventory, internal service confirmations and cost of goods sold using Actual Cost Allocation by posting the difference between the preliminary postings and the actual costs calculated by actual cost rollup.You can use Actual Cost Release to release the actual cost for materials. You can then overwrite the inventory cost with the source type actual cost by using the Update Inventory Costs function.Performed byAccountantIn the Work Center(s)Inventory ValuationClick process chevrons for detailsScenario ExplorerBusiness ValueScenario FlowFurther InformationActual CostingProcess Details: Actual CostingXActual CostingUpdate Inventory CostsActual Cost ReleaseActual Cost AllocationActual Cost RollupX

5. Scenario/ProcessesActual CostingProcess Details: Revenue RecognitionProcess DescriptionThe actual cost allocation function posts a revaluation of COGS (Cost of Goods Sold) to the same account as the COGS. If you are using accrual methods, this is a deferred cost account. You can execute the revenue recognition run after the actual cost allocation run to realize the revenue.Click process chevrons for detailsScenario ExplorerBusiness ValueScenario FlowFurther InformationPerformed byAccountantIn the Work Center(s)Cost and RevenuePreparationsActual CostingXRevenue RecognitionRevenue RecognitionX

6. Revenue RecognitionActual CostingPreparationOverhead AbsorptionRevenue RecognitionActual CostingBusiness ValueOverviewWithout Actual Costing, the determination of actual product cost and COGS can be very difficult. Late invoices of products lead to a loss of precision, if it was already consumed or sold. In manufacturing, the determination of resource cost and the roll-up of deviations across multiple production levels create additional challenges. Actual Costing handles fluctuating purchase prices  and reduces the impact of late invoices by calculating period average prices for raw materials and trade goods. It can help to comply with legal requirements where valuation based on actuals is must .It is a powerful tool to closely monitor performance along the value chain and provides a cost breakdown, helping manufacturing companies to analyze the source of the cost for finished products. In this way, it can help you to increase profitability.The process helps you to analyze the value chain which can be of benefit in cost controlling.Actual costing is based on existing entities and therefore requires very little additional business configuration.You can combine Business ByDesign’s Actual Costing with standard cost valuation for inventories to enjoy the advantages of both methods, clear benchmarks for cost controlling and the precision of actual cost. You can also use your actual costing results to review and adjust your planned resources cost rates. Key BenefitsScenario ExplorerBusiness ValueScenario/ProcessesScenario FlowFurther InformationWIP ClearingOverhead DistributionGR/IR ClearingUpdate Inventory CostsActual Cost ReleaseActual Cost AllocationActual Cost Rollup

7. Actual CostingScenario FlowScenario ExplorerBusiness ValueScenario/ProcessesScenario FlowFurther InformationInventory ValuationGR/IR ClearingCost and RevenueOverhead DistributionWIP ClearingActual Cost RollupRevenue RecognitionOverhead AbsorptionActual Cost ReleaseActual Cost AllocationLegend & VariantsWork center in which process is performedBusiness document flowProcess related to FinancialsProcess mainly driven by the userWork CenterUpdate Inventory Costs

8. Actual CostingFurther InformationScenario ExplorerBusiness ValueScenario/ProcessesScenario FlowForum Get in touch with experts to discuss your specific requirements. To enter the community, click here.*More DetailsSAP provides a complete product documentation, covering all aspects of the business scenario. For more details, click here.Self-Enablement SystemsIf you want to try out the business scenario, click here.*WIKIIn addition to the product documentation, SAP provides Wikis that describe additional aspects of SAP Business ByDesign. To access the WIKI, click here.*Do you want to try it out?Do you need more information?Do you want to discuss with others?VV* Note that to access the links above you need to have a user in SAP Business Center. If you cannot access the page directly and if you are using Microsoft Internet Explorer®, please check http://support.microsoft.com/kb/890474.Further Information