SAP CO Product Costing-Mixed Costing Process in S/4 HANA

The topic of Mixed Costing, especially in the context of SAP, is a profound one. Here’s an in-depth exploration:

1. Purpose of Mixed Costing: Mixed costing allows companies to value a material using multiple alternative methods. This becomes crucial when sourcing raw materials or semi-finished goods from multiple vendors or produced using different manufacturing processes, ensuring an accurate representation of costs.

2. Raw/Pack Materials: Purchasing Without Split Valuation: In this scenario, the system averages the prices from multiple vendors. This simplifies valuations, but may not always reflect the most accurate cost, especially if one vendor’s price significantly deviates from the others.

3. Raw/Pack Materials: Purchasing With Split Valuation (MM Point of View): Split valuation allows different stock quantities of a material to be managed separately based on different criteria (like vendor, region, etc.). In an MM context, this means each stock type can have its own valuation, ensuring accurate tracking of costs for the same material from different sources.

4. Semi Finished Materials: Mixed Costing with Split Valuation: For semi-finished goods that can be either purchased or manufactured, costs can vary. Mixed costing, combined with split valuation, enables accurate tracking of these variances, ensuring products’ cost reflects its actual production or procurement cost.

5. Finished Materials: Mixed Costing with Split Valuation: For finished goods produced on different lines or plants, the manufacturing costs can vary. Split valuation captures these differences, and when combined with mixed costing, offers an accurate valuation for such finished goods.

6. Creating Split Valuation: In SAP, this is achieved by defining valuation categories (like ‘V’ for Vendor) and then defining valuation types for each category. These types represent different stock categories for the same material (e.g., stock from Vendor A vs. Vendor B).

7. Purpose of Separate “Valuation Class” for Each Valuation Type: Each valuation type can be linked to a different valuation class, enabling differentiation in G/L postings. It provides granular control over financial postings based on the source or type of material.

8. Purpose of Separate GL accounts for Each Valuation Type: This ensures financial transparency. Different stocks, even of the same material, might have different financial implications. By posting to separate G/L accounts, companies can track, analyze, and report on these differences.

9. OBYC Settings (FI-MM Integration): In the OBYC settings, automatic account determination is configured. This ensures that during material movements, relevant financial postings are made to the correct GL accounts, based on transaction type and valuation class.

10. Cost Component Structure Explanation for Split Valuation: The cost component structure breaks down the cost of a product into its individual components (like raw materials, labor, overhead). With split valuation, this structure can further differentiate costs based on valuation types, offering detailed insight into cost makeup.

11. Master Data for Mixed Cost Estimate – CK91N: Here, you define procurement alternatives for a material. This informs the system of different methods (like purchase or produce) available for procuring a material, essential for mixed costing.

12. Mixing Ratios – CK94: In this step, you define the proportion in which different procurement types or methods are mixed. It’s a crucial step in mixed costing.

13. Complete Product Costing Flow with Mixed Costing:

    • Material Creation with Mixed Costing: Begin by defining the material with relevant procurement alternatives and mixing ratios.

    • Production Planning: Plan production considering the different procurement methods and their associated costs.

    • Production Execution: Actual production costs are captured, considering split valuation.

    • Production Order Settlement: Finally, the costs accumulated on the production order are settled to the relevant cost objects, like material ledgers or cost centers.

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