Product Cost Planning

Product Cost Planning

This Business Scenario Map illustrates how standard cost estimates are used to establish new standard prices for materials. Several people are involved in the process to establish the standard cost within an organization. Once the price has been estimated, the impact of the estimate on inventory valuation is determined. If the new inventory value is deemed to be acceptable, the cost estimates are released and material stocks of those materials with standard price control are revalued with the standard price.
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Business Benefits
Tightly integrated with Purchasing and Production components incl. BOM etc
Tightly integrated with other Controlling components
Cost breakdown for each product
Secure and documented process
Cost Estimator
Cost Accountant
Inventory Accountant
Create cost estimate
Check cost estimate
Mark cost estimate
Allow marking
Check revaluation results
Release cost estimate
.
Business Benefits
Receives reliable cost information
True costs and reflected in all material movements
 

Product Cost Planning

Product Cost Planning is a planning tool that helps you predict the cost incurred when you manufacture a product or provide a service. Organisations use it to:

  1. set prices for the valuation of finished and semifinished goods in the Materials Management application component
  2. set prices for the valuation of finished and semifinished goods in the Sales and Distribution application component
  3. Calculate the cost of goods manufactered or the cost of goods sold for the profitability analysis function in Controlling
  4. Set a standard to measure production efficiency in Cost Object Controlling

Product Cost Planning shows you:

  1. The cost composition of each product
  2. The value added in each manufacturing step
  3. The value added in each overhead process
  4. The value added by each profit center, plant, business area and company

You can also create an inventory cost estimate at the end of your fiscal year to provide alternative valuation of your inventory for balance sheet purposes. Other functions include reference and simulation costing, which allow you to simulate the cost impact of changing one production factor or modifying the amount of overhead allocated to a product.