Variant configuration functionality allows customers to select product features according to their requirements. An example of a configure-to-order (CTO) product is a laptop with options such as RAM, a hard disk, a processing unit, and a mouse.

Determining the standard cost for such a configurable product (material type KMAT) is a challenge. The product configuration is dynamic; the customer configures the product when it places the sales order. In the case of a static product, you can easily upload the standard cost for a finished good product (material type FERT) to the material master. R/3 provides the costing run functionality through transaction code CK40N, which you can use to upload the standard cost to the material master for correct material valuation. Although my example refers to R/3, the functionality also works in mySAP ERP Central Component (ECC).

Since R/3 provides calculation of standard cost only for those materials whose composition (product BOM) is known, it cannot calculate the cost for a configurable material using Costing Run functionality (transaction CK40N). However, you can use a workaround to dynamically calculate the standard cost for a configurable product at the time of the creation of a sales order. This three-step approach is not documented elsewhere; I developed it through experience and research.

Define Configurable Products

You can use material type KMAT to define configurable products in R/3. To do this, use transaction code MM01 and material type KMAT to manually define the material master. You can make material configurable by going to the material master basic data view. Check the Material is configurable check box. You need to do this only once initially while creating the material master. This is a prerequisite for using variant configuration functionality in an SAP system.

Figure 1 shows an example of a configurable laptop, defined using material type KMAT, which demonstrates the problem of standard cost calculation.

Figure 1

Configurable material check box in material master basic data view

The illustration of a configurable laptop in Table 1 shows that the customer can choose among three types of hard disk, two types of RAM, two types of processor, and two variants of keyboard and mouse. The possible number of product combinations for one KMAT material here is 24 [3*2*2*2]. The standard cost of any one of these product combinations is the sum of the standard costs of its parts that constitute the product. The R/3 material master provides the flexibility to store only one standard cost, but the problem here is the need to maintain multiple standard costs for one KMAT material. Now I’ll guide you through all the SAP configuration steps to cost configurable products.

Table 1

Illustration of dynamic cost calculation

SAP Configuration

You use three pieces of configuration to calculate the product cost dynamically from its parts during the sales order creation. Once the system has calculated the standard cost in the sales order, you can use the same standard cost to book inventory cost at the correct standard cost in the accounting documents. Later on, you can use this for margin analysis. The three pieces of R/3 configuration are independent of each other and they work together to make the costing of configurable products work in R/3:

Step 1. Set up the variant configuration relevant for standard costing

Step 2. Modify the Sales and Distribution (SD) pricing procedure

Step 3. Put user exit changes in place for a third-party procurement scenario

Step 1. Set Up the Variant Configuration Relevant for Standard Costing

Create a material master for the KMAT material — in my example in Table 1, a laptop — by using transaction code MM01. Create a material master for all the characteristic values. Characteristic values are the components of the laptop, such as 20 GB hard disk, 40 GB hard disk, and 80 GB hard disk (Table 1). This example has nine characteristic values: 3+2+2+2=9.

Enter 0.01 in the Standard Price field (Figure 2) in the accounting view of the KMAT material as the dummy standard cost. I use a dummy standard cost in the material master because standard R/3 tries to pick the standard cost of the material from this field (MBEW- STPRS) in the material master for valuating the inventory in the subsequent accounting documents. If you leave this field blank, R/3 shows an error at the time of accounting document creation because of the failure of initial R/3 checks. The process I am describing does not remove the SAP data validation checks as these are done automatically by the standard SAP core code logic. Rather, it alters the logic for picking the standard cost.

Figure 2

Dummy standard cost

Use the variant configuration functionality to define the product characteristics. Follow this process to capture the dynamic standard cost for the configurable product in the sales order through pricing reference characteristic:

• Create a pricing reference characteristic via transaction code CT04
• Add a procedure to characteristic values via transaction code CT04
• Include the pricing reference characteristic when you define the class for the KMAT material via transaction code CL01

You determine the product configuration at the time of sales order creation. At a technical level, this implies the selection of characteristic values that constitute the configurable product. The system requires the characteristic values of the product during the sales order pricing for calculation of standard cost. The pricing reference characteristic acts as a medium to make the characteristic values available at the time of sales order pricing.

Create a pricing reference characteristic via transaction code CT04. Create a reference characteristic with a characteristic group REF using transaction code CT04 (Figure 3). Enter REF in the Chars Group field. Enter ZPRREFCHAR in the Characteristic field. Then enter the start date, in my example 10/05/2006, to provide the validity start date of the characteristic. Press Enter and click on the Yes button to create a new characteristic. Fill in the Basic data tab to define the pricing reference characteristic.

Figure 3

Pricing reference characteristic

Connect the pricing reference characteristic with the sales procedure by manually entering the communication structure SDCOM in the Table name field in the Addnl data (additional data) tab (Figure 4). You must do this to make the variant configuration values available to the SD module through the SDCOM communication structure. Once the setup is complete, the system automatically transfers the product configuration (selected characteristic values of the product) to sales order pricing for dynamic computation of the standard cost.

Figure 4

Reference table in pricing reference characteristic

Add a procedure to characteristic values via transaction code CT04. Write $self.='' in the procedure (Figure 5), replacing with the name of the reference characteristic and with the name of the characteristic value. In my example, these refer to ZPRREFCHAR and ZRAM-VAR1, respectively. Do this when you define the characteristics using transaction code CT04. Go to the Values tab and from the menu path select Extras>Object dependencies>Editor. Select Procedure as the relationship type to input the illustrated code, which you must do for all the characteristics other than the pricing reference characteristic. This enables the reference characteristic to hold the values of selected characteristic values.

Include the pricing reference characteristic when you define the class for the KMAT material via transaction code CL01. Use transaction code CL01 and enter 300 in the Class type field to enable use of the characteristics to configure a material. Include the pricing reference characteristic as defined in the Class definition (Figure 6).

Figure 5

Define the procedure

Figure 6

Pricing reference characteristic in class definition

The configurable product (the laptop) and the product characteristics have just one link, which you can create manually through transaction code CU41 by defining a profile for the configurable material and then associating it with the Class. It is essential to include the pricing reference characteristic in the definition of Class to link it with the configurable product so you can use it during sales order pricing.

Step 2. Modify the SD Pricing Procedure

Follow three procedures to produce SD pricing procedure changes:

• Create a new pricing condition for recording the standard cost in SD documents via transaction code V/06
• Create condition records for the new pricing condition via transaction code VK11 to maintain the standard cost of all the characteristic values
• Modify the SD pricing procedure to add the new cost condition

Create a new pricing condition for recording the standard cost in SD documents via transaction code V/06. In transaction code V/06 (Figure 7) set Cond.category (condition category) to O. Condition category O enables it to interact with the communication structure SDCOM and fetches the product configuration characteristic values as stored in the pricing reference characteristic.

Figure 7

Define cost condition

Create condition records for the new pricing condition via transaction code VK11 to maintain the standard cost of all the characteristic values. Use transaction code VK11 to create condition records for all the characteristic values to store the standard cost associated with each part (Figure 8). You can access these condition records from the sales order pricing procedure to populate the new cost condition (standard cost condition ZCOS in my example), which later on adds up in the sales order pricing procedure to form the standard cost of the configured product.

Figure 8

Condition records

Modify the SD pricing procedure to add the new cost condition. Use transaction code V/08 to select your pricing procedure. Go to Control in the left side panel and add the requirement to the new cost condition so it is selected only for KMAT materials (Figure 9). Enter B in the SubT (Subtotal Type) column to add the standard costs of all the characteristics. Use the opposite requirement logic to limit the SAP standard cost condition VPRS in the pricing procedure (Figure 10).

Figure 9

Pricing procedure

Figure 10

VPRS requirement

In the sales order, the reference pricing procedure passes on the characteristic values to SD pricing through the SDCOM structure. The new standard cost pricing condition picks up the standard cost condition value for the characteristic from the condition table, which is maintained on the basis of the characteristic value VARCOND-KOMP field (Figure 11). The subtotal adds up the standard cost condition values and writes it to VBAP-WAVWR.

Figure 11

Illustration of a sales order

You use the VBAP-WAVWR field to post the goods issue at standard cost if the KMAT material is not a sales order stock. For sales order stock, make a modification in user exit MV50AFZ1 (USEREXIT_SAVE_DOCUMENT_PREPARE or USEREXIT_SAVE_DOCUMENT) to reference the standard cost from VBAP-WAVWR instead of EBEW- STPRS, which is the sales order stock valuation table. If the production order is created with reference to the sales order line item, then it makes the stock a sales order stock. Under such a scenario, standard SAP references the EBEW-STPRS field for standard cost. Therefore, you must modify the user exit so the system can pick up the standard cost from VBAP-WAVWR and not from EBEW-STRPS.

The system passes on the cost condition to billing through a copy routine. Map the new pricing condition to a value field in Profitability Analysis (CO-PA) so you can use the standard cost in CO-PA for profitability analysis.

Step 3. Put User Exit Changes in Place for a Third-Party Procurement Scenario

Third-party procurement implies creation of a purchase order (PO) from the sales order. In this case the KMAT material needs to be sales order stock. A sales order stock implies that the sales order itself must trigger the purchase order. The schedule lines of the sales order line item capture the purchase order information so that the vendor can supply directly to the customer against the specific sales order material configuration.

R/3 automatically triggers user exit ZXCKAU04 at the time of goods receipt on the PO. For sales order stock, the system automatically picks up the standard cost from EBEW-STPRS for creating the accounting documents. Use the VBAP-WAVWR value through the user exit to book the inventory at standard cost at the time of goods receipt (movement type 101E). Use the user exit ZXCKAU04 to record this value in the EBEW- STPRS field. Per standard SAP logic, post goods issue (PGI) against the sales order (movement type 601E) happens at the standard cost in the EBEW- STPRS field. I already stored the standard cost value through the user exit in this field; the system automatically makes the bookings at the standard cost at the time of PGI.

R/3 automatically triggers user exits ZXEPFF02 and ZXEDFU02 at the time of creation of an inter-company A/P IDoc through billing output condition RD04 from the inter- company billing document. RD04 is an SAP predefined billing output that you need to associate with the output determination procedure that the inter- company billing document uses. RD04 automatically generates the inter-company A/P IDoc.

You need to create inter-company A/P and A/R documents within the company codes to reflect the purchase of the product from the vendor plant’s company code by the company code attached to the sales organization. Use these to capture the standard cost from the EBEW- STPRS field. This change is required in specific scenarios in case the company code of the sales organization and the vendor plant are different.

User exit ZXF06U06 is for the processing program of the inter- company A/P IDoc. This user exit is required only when you need to write additional processing logic for processing the inter-company A/P IDoc.

An example of the use of this user exit would be to pass reference values to an inter-company A/P document. The inter-company A/P document doesn’t contain the link with the customer sales order. If you need this link to conduct reconciliation of A/P documents with reference to the sales order, you can code the logic to populate the sales order reference in the inter-company A/P document in this user exit. For the solution discussed in this article, you don’t need to make modifications to this user exit.

Akhilesh Mittal

Akhilesh Mittal is a lead SAP consultant at Infosys Technologies Ltd. with eight years of consulting and industry experience. He has experience in FI and CO along with exposure to SD. Akhilesh is currently a consultant in the SAP space for a leading organization in the high technology domain. He has a degree in electronics and communication engineering from IIT Guwahati and an MBA in finance and systems from IIM Lucknow.

You may contact the author at akhileshmittal@yahoo.com.

If you have comments about this article or publication, or would like to submit an article idea, please contact the editor.