Businesses have long required the allocation of overhead costs to inbound logistic transactions, such as goods receipts for regular and subcontracting purchases. I show you how to use the purchase info records in product costing and inventory transactions to meet this requirement, without any enhancement or custom coding.

This functionality has a constraint in the subcontracting process, which means the conditions method does not link to product costing in a straightforward way to make the allocation work in actual postings. I explain how to configure a standard functionality to make the actual posting, as well as the cost estimate, work automatically. They then can absorb overhead cost during both regular and subcontracting of a goods receipt. I do not cover accounts payable invoicing, because some overheads, such as inbound freight, are invoiced against the purchase order, and other overhead costs can be tracked only in a cost center.

For most of the organization, actual or budget variance is then calculated through a cost center allocation process. I outline all the various configuration steps in the materials management (MM) and managerial accounting (CO) areas to achieve the objective of applying purchasing-related overhead in the case of regular and subcontracting purchases, both in logistics transactions and cost estimates. I also describe how to use purchase accounting to make the subcontracting overhead allocation work.

To develop a strategy for overhead allocation, you first need to make purchase info records drive the costing process for purchased (or subcontracting) materials. This can be a major change for some organizations. Usually, many organizations still use purchase info records for purchasing and for product costing; they may rely on loading planned prices (into costing view 2 in the material masters), so there are two sources of the same data that feeds a goods receipt logistics transaction.

A single-source-of-truth philosophy works best with this method, where the data for purchasing (vendor-related prices) and product costing (base price and other overhead conditions) is maintained in the same place (i.e., the purchase info records) and drives the goods receipt valuation. To implement purchase info records-based product costing, the costing team needs to work hand in hand with its purchasing counterparts. From a business process perspective, various purchasing-related direct or indirect overheads (including quality inspection) are identified during the requirements-gathering phase. Each type of overhead is a condition type in the MM area. However, the individual rate calculation for the overhead allocation is still a manual process, and usually a product costing function.

I use examples to show you that when you use a purchase info record, the base price for the material cost estimate (e.g., the vendor Free On Board [FOB] price) is a separate condition from the base price condition that the purchasing department uses. This separate condition helps to keep the standard cost fixed during the cost accounting budgeting process. Usually, when the budgeting process to develop the product cost estimates start, vendor contracts are not 100 percent ready. The negotiation between buyers and their vendors may extend beyond the budgeting process. For any organization in which the vendor contracts are easier and timely, the same base price condition can be used by both product costing and purchasing. See the sidebar “Purchase Accounting” for information about its use in the described solution.

The overhead allocation applies to materials that are purchased directly from a vendor, either through a regular or subcontracting purchase method. Two key fields in the material master ensure this type of purchasing. Use transaction code MM03. In the screen that appears, populate the fields for Material and Plant. Select the MRP2 tab and press Enter to get to Figure 1. Note that procurement type F and a blank special procurement key make a material regular type of purchase, whereas procurement type F and special procurement key 30 make it subcontracting.

The special procurement key field is available in two screens. One is in the MRP 2 view, as shown in Figure 1. The other one is a costing special procurement key that is available in the costing 1 view of the material master. (I don’t show the latter, as many organizations may not use this field. In many organizations, these processes are cross-team decisons, so the MRP 2 view can be commonly used by product costing, as well as planning. However, there are some organizations in which costing may want to use the special procurement key on the costing 1 view for better control.) Apply this same logic (blank or 30) to determine the type of procurement (regular versus subcontracting) if you are using the costing special procurement key. Blank or no value makes it a regular purchase, and 30 pertain to subcontracting.

Figure 1

The material master procurement type display

Purchasing Conditions

In this configuration step, you define condition type, creating overhead conditions as delivery-related accrual conditions. This does not have any impact on the logistics process when the GL accrual happens during the goods receipt step. Completing the processing of a PO does not depend on these conditions, as they are configured as statistical conditions.

Details of a Condition Type

Figure 2 shows the material-related overhead (called the material burden) condition type (ZMB1), which is defined as a statistical accrual delivery condition. This condition type helps to post the material burden (this is a kind of purchasing department overhead) to a separate account. You need two condition types for each type of overhead (e.g., ZMB1 for regular purchases and ZMB2 for subcontracting) if it applies to both scenarios. This condition type is configured to use three different account keys (ZCS, FRE, and ZMB) in the purchasing pricing procedure. Also, you need two more condition types, such as ZPB0 and ZPB1, to keep the costing base cost in the purchase info record.

To define the material burden condition type (ZMB1) as shown in Figure 2, go to customizing and follow menu path Purchasing > Conditions > Define Price Determination Process > Define Condition Types.

The most important settings for the condition type are the condition category, which is delivery costs, or B. Select the Accruals indicator in the Control data 2 section. The calculation type is shown as a fixed amount. However, depending on the individual need, this value can also be percentage-based or a fixed amount (Figure 2).

Figure 2

The condition type configuration screen

The configuration of three other condition types (ZMB2, ZPB0, and ZPB1) is similar to the configuration of the settings shown in Figure 2.

Pricing Procedure

The pricing procedure carries all the various condition types in the proper sequence and with the individual account posting keys. This sequence helps to transfer these costs to the product costing area. I use standard pricing procedure RM0000 as an example to demonstrate the concept.

In customizing, follow menu path Materials Management > Purchasing > Conditions > Define Price Determination Process > Define Calculation Schema, to define or update the pricing procedures used in purchasing and product costing (Figure 3). Figure 3 shows the standard SAP pricing procedure RM0000 and the various standard conditions available. I use this pricing procedure for demonstrating the solution.

Figure 3

Materials management (MM) example pricing procedure

To provide flexibility to the cost accounting department using a standard costing base for material costing that is maintained in the purchase info records, you include the new condition types ZPB0 and ZPB1 with appropriate settings in the pricing procedure, as shown in Figure 4. From Figure 3, scroll down to reach Figure 4.

Figure 4

MM pricing procedure other conditions

The purchase department uses the condition type PB00 (or any other similar custom condition type) available in the purchase info records. For regular purchases in the purchase info record, the costing base condition ZPB0 and other overhead conditions are used (ZMB1, in my example).

For the subcontracting scenario in the purchase info records, both conditions ZPB0 and ZPB1 are used in addition to the overhead costing conditions (e.g., ZMB2). ZPB1 is negative to offset the PB00 type condition value (this part is demonstrated in the purchase info master data).

The subcontracting costing process is a little different from the regular purchased materials, as strategies available in the valuation variant for subcontracting in costing variant do not have the functionality of the origin group-driven assignment. Instead, the strategy in the valuation variant for subcontracting in the costing variant (effective price from quotation) for product costing reads the subcontracting purchase info record and sums up all conditions available to one GL account. That account is configured under the configure automatic posting account key GBB and account modifier VBO. (The details of this are part of the cost component structure configuration in the product costing area, which is not covered in this article. You can find that information in any product cost planning documentation.)

This ZPB1 pricing condition helps to offset the PB00 condition value in the costing module only and, at the same time, ZPB0 is available in the same purchase info record that is used for costing.

Figure 5 shows how to apply the material burden (ZMB1 or ZMB2 — both types of purchasing overhead) to both the purchasing and subcontracting processes. To reach Figure 5, scroll down the rows in Figure 3. Row 31 with sub-row 14 pertains to the regular purchase case with account keys FRE and ZMB. Sub-row 15 is used for the subcontracting process with the account keys ZCS and ZMB.

Figure 5

MM pricing procedure further conditions

There are two ways to make sure that these two condition types are used in their intended scenarios. The first option is to have just one pricing procedure for both types of purchases. In the purchase info records, the correct pricing condition type must be used (e.g., ZMB1 is used in the regular purchase info record and ZMB2 is maintained for subcontracting). Both condition types are available as options, so be careful while entering the data in purchase info records.

The second option involves two separate pricing procedures. Each condition type goes with its own purchasing process, so the data entry for the purchase info records is easier. Any other overhead type that is applicable to both regular purchase and subcontracting needs to be created as two separate conditions with its own account keys, as has been demonstrated in the examples of ZMB1 and ZMB2.

Purchase Accounting

You need to activate the purchase accounting function configuration to make the overhead conditions work in case of subcontracting. Purchase accounting and a separate set of condition types (such as ZMB2, in my example) are the prerequisites to enable a subcontracting goods receipt post to individual accounts, such as the material burden overhead account (account key ZMB). If the purchase account is not activated, any overhead condition available in the subcontracting purchase order cannot be posted correctly to a separate GL account during goods receipt (the inventory account balance is lost).

The purchase account settings use three account keys that I discuss in the next section. These are used for regular purchase processing only. You configure them using valuation grouping code or plant under transaction code OBYC. The valuation grouping code is used to group plants together. It generates some additional accounting lines for countries or plants for which a purchase account is not needed.  However, as shown later, the same GL account is used for all the purchase account keys in those countries where it’s not needed, and therefore, the impact is nullified. Figure 6 shows the activation of the purchase account at the company code level.

Under customizing, follow menu path Materials Management > Valuation and account assignment > Account Determination > Account Determination without Wizard > Purchase Account Management > Activate Purchase Account in Company Code (Figure 6) to activate the purchase accounting at a company code level. This is done by checking the indicator under the column named Purch. Acct  as shown in Figure 6.

Figure 6

Activate purchase account for the company code

Under customizing, follow menu path Materials Management > Valuation and account assignment > Account Determination > Account Determination without Wizard > Purchase Account Management > Calculation of Value for Purchase Account to configure calculation value settings (Figure 7). Select the indicators under the Recpt. Val and Del.costs columns against the plants for the company code to include both in the purchase account valuation.

Figure 7

Set up calculation of value for the purchase account

As shown in Figure 7, the value determination method for the purchase account has been activated as receipt value and delivery cost relevant. This configuration is also in line with the legal requirement from countries such as Spain and Belgium. The concept that I discuss here can still work when a legal requirement is being configured. However, the GL account assignment under the automatic account assignment section is different for those countries.

Define Transaction/Event Keys

This configuration step helps to create the account keys that are used under the step to configure automatic posting to link to different GL accounts. Under customizing, follow menu path Materials Management > Purchasing > Conditions > Define Price Determination Process > Define Transaction/Event Keys to configure the account keys (Figure 8). Figure 8 shows that two keys under the key name ZCS and ZMB have been configured along with a short name. All other account keys used in this article are standard.

Figure 8

Define account keys

Configure Automatic Posting

Figure 9 shows the automatic account determination (transaction code OBYC) configuration screen for the various account keys. Under customizing, follow menu path Materials Management > Valuation and account assignment > Account Determination > Account Determination without Wizard > Configure Automatic Postings to configure automatic GL accounts (Figure 9). Double click the account key and enter the chart of account, GL account, and valuation group code as shown in Figures 11 through 14.

Figure 9

Configure automatic account determination

The account keys ZCS are ZMB are shown in Figure 9. Other account keys, such as FRE, EIN, and EKG, are also relevant for the current solution. Account keys FRE, EIN, and EKG are used in the purchase account process. You need to configure statutory GL accounts here for countries with specific local legal requirements. However, for the purposes of my example, I use the same GL account for all of these account keys.

I use valuation grouping code 0001 for all the plants. Double-click on account key ZCS in Figure 9 to get to the screen shown in Figure 10. Also, with regard to the requirement to have overhead conditions in the subcontracting scenario, as Figure 10 shows, configure a GL account for account key ZCS. This GL account should be the same account that is used for account key BSV (Change in Stock), under the settings for configure automatic posting.

Fgure 10

Automatic account determination (ZCS)

Double-click account key ZMB in Figure 9 to get to Figure 11. The screen that appears (Figure 11) shows the account key ZMB has been configured with the material-related overhead absorption GL account.

Figure 11

Automatic account determination (ZMB)

Figures 12, 13, and 14 show the purchase account 540000 being used for FRE, EKG and EIN account keys. Scroll up and double-click account key FRE in Figure 9 to call up the screen shown in Figure 12. The configuration in Figures 12, 13, and 14 uses the valuation grouping code 0001. This represents a group of plants. For countries having a legal requirement and separate set of accounts, the valuation grouping code (first column) is different (the plants are different) and, therefore, the accounts can be different. For the current solution, just one GL account has been used for all purchase account-relevant keys. This balances the purchase account-relevant values to 0.00, in the case of regular purchases.

Figure 12

Automatic account determination (FRE)

To configure EIN, scroll up and double-click account key EIN in Figure 9. The screen that appears (Figure 13) shows that account key EIN has been assigned to the purchase account for the valuation group code 0001.

Figure 13

Automatic account determination (EIN)

To configure the GL account for account key EKG, scroll up and double-click account key EKG in Figure 9. The screen that appears (Figure 14) shows account key EKG has been assigned to the purchase account. This setting is, again, by valuation grouping code (plants).

Figure 14

Automatic account determination (EKG)

Define Origin Groups

Origin groups are used here to assign the condition type values from purchase info records to product costing cost components. The origin groups can be configured one to one, with the condition types being used under the materials management module for the overhead allocation. Figure 15 shows the various origin groups configured in the system. (The origin groups are used in the cost component structures, but this is beyond the scope of this article.)

For my example, origin groups ZMB1 and ZPB0 are used to assign condition types ZMB1 and ZPB0 in product costing. The two other conditions, such as ZMB2 and ZPB1, are subcontracting related, and you do not need to configure separate origin groups; that is due to the specific logic applied to the subcontracting cost determination process as described later under the section for valuation variant (conditions are shown in Figure 4).

Under customizing, follow menu path Controlling > Product Cost Controlling > Product Cost Planning > Basic Settings for Material Costing > Define Origin Groups to configure the various origin groups, as shown in Figure 15. Configure the origin group name and origin group (code) in this screen.

Figure 15

Define origin groups

Raw Material Cost Estimate

In this step, you map the various condition types defined in the MM area to the origin groups defined in Figure 15. This configuration is mostly done using the valuation variant Y01, in this example, (a costing variant component, as shown in Figure 16), condition types, and origin groups. The controlling area (3000) and company code (3000) are also shown in Figure 16.

Under customizing, follow menu path Controlling > Product Cost Controlling > Product Cost Planning > Selected Functions in Material Costing > Raw Material Cost Estimate > Assign Condition Types to Origin Groups. Configure the conditions types defined by purchasing and link these to the appropriate origin groups (Figure 16).

Figure 16

Assign condition types to origin groups

Costing Variant and Valuation Variant

A costing variant is used to create the cost estimates, and each costing variant is assigned to one valuation variant. (A costing variant has many other components. SAP online help has more details). Under the valuation variant (Y01, in my example), you define various strategies. To configure the purchase info record as the primary strategy for material valuation select Price from purchasing Info recrd  from the drop-down menu as shown in Figure 17 (this controls the regular purchase material cost determination.)

Figure 17

Define Valuation Variant (Material Costing)

Along with this, the sub-strategy quotation price via condition tables has been selected (lower half configuration as shown in Figure 17) to enable the cost estimates to look up the purchase info record condition types. The delivery cost button, shown in Figure 17, is the same as the origin group and condition type assignment done under Figure 16. If there is a business requirement to enter manual product cost prices for purchased materials that is supposed to overwrite the prices stored in purchase info records, you can make the price from purchase info record as the second strategy. In that case one of the plan prices, plan price 1, can become the first strategy of Figure 17. Ideally, all purchased materials should use purchase info record prices.

Under customizing, follow menu path Controlling > Product Cost Controlling > Product Cost Planning > Material Cost Estimate with Quantity Structure > Costing Variant: Components > Define Valuation Variants (Figure 17) to configure the valuation variant material valuation strategies. On this screen, configure the strategy sequence and sub-strategy sequence with all priorities  for the material costing as described earlier. Figure 17 shows three priorities for strategy sequence and one priority for the sub-strategy sequence price from purchase info record. For the current solution, the first strategy that reads the purchase info records is used by the system.

Under customizing, follow menu path Controlling > Product Cost Controlling > Product Cost Planning > Material Cost Estimate with Quantity Structure > Costing Variant: Components > Define Valuation Variants to configure the valuation variant for subcontracting strategy, as shown in Figure 18.

Figure 18

Define Valuation Variant (Subcontracting costing)

This concludes the configuration elements. Using these configurations allows the product costing and the actual inventory movement postings to absorb the overhead assigned to the purchase info records. These overhead accounts can be configured to be P&L accounts (as shown in Figures 10 and 11), with posting going to a cost center per plant. This helps to track the actual cost (actual spending or allocated costs) at the cost center, with absorption coming in through the goods receipts. You can then manage the under/over recovery in this cost center.

Examples of Transactions

The following section walks you through some examples that demonstrate the above concepts.

Step 1. Create a Purchasing Info Record

To create a purchasing info record for a regular purchased material, use transaction code ME11. To display purchase info record conditions (as shown in Figure 19), use transaction code ME13, enter a purchase info record, press Enter, and then select the conditions button. Figure 19 shows a regular purchase info record at the plant level with various conditions. The price condition PB00 is the vendor-approved base price used by purchasing. ZPB0 is the cost accounting budgeted base price, which remains fixed during the year. (The ZPB0 condition for costing base price is optional for this overhead allocation solution to work. This just demonstrates a complex scenario if such a requirement arises.) ZMB1 is the material-related overhead.

Figure 19

Pricing conditions in the purchase info record

In Figure 19, the PB00 condition is $1000/1000 EAs. The budgeted costing base price is $950/1000 EA, and the material burden is equal to $100 (fixed amount).

Step 2. Maintain the Source List for the Material

Use transaction code ME01 to maintain a source list manually. In this transaction, you create a source list for a material in a plant. A source list can also be created automatically after all purchase info records are created. Details of this step are beyond the scope of this article.

Enter a material number for a plant in transaction code ME01 and press Enter to get to Figure 20. This shows the source list that is maintained by the purchasing department. The main function of a source list in product costing is to determine the correct vendor if the purchasing department uses multiple vendors. In the case of multiple sources/vendors, a fixed vendor can be identified for use in product costing by checking the check box shown in Figure 20. Costing transactions then read the purchase info record for this fixed vendor. If there is just one vendor for the material purchase, then the source list maintenance is optional.

Figure 20

Source list for the material

Step 3. Create a Standard Cost for the Material

The transaction code CK11N is used to create and save a cost estimate for a material in the plant. Transaction code CK24 is used to mark and release a standard cost. Usually organizations will use the CK40N transaction code to do mass costing which can create, mark and release costs. The details of CK24 and CK40N have not been shown here, as these do not influence the current solution.

Select transaction code CK11N with a material and plant and costing variant and after pressing Enter key, you can get to the screen in Figure 21. Figure 21 shows that the condition type ZPB0 and ZMB1 have been picked up automatically by system to create the cost estimate. This has been picked up from the purchase info record maintained earlier. Even if the purchase info record (Figure 19) had three conditions, only ZPB0 and ZMB1 are used by system due to the configuration maintained in Figure 16.

Figure 21

Create Material cost estimate with quantity structure

Select Costs and Display Cost Components from the pull-down menu in Figure 21. The screen that appears includes the details of the cost components for the cost estimate that you create (Figure 22). (This is just another view to look at the costs.) It shows that the two condition types have been mapped to separate cost components. The configuration to show the separate mapping of origin groups to cost components structure is beyond the scope of this article.

Figure 22

Cost Component Details in the transaction code CK11N

Step 4. Display a Regular Purchase Order

Use transaction code ME23N to display a purchase order. In this transaction code, use a purchase order to call up the screen shown in Figure 23.

Figure 23 shows a regular purchase order with the same material and vendor as shown in the purchase info record. You can see the vendor and material and other details in this screen.

Figure 23

Display a regular purchase order

In the lower half of the screen in Figure 23, click the Conditions tab to call up the screen shown in Figure 24. Figure 24 shows the condition level details of the purchase order item.

Figure 24

Condition details for the purchase order item

Figure 24 shows the vendor base price has been maintained as $1000/1000 EAs, the budgeted cost price is $950/1000 EAs, and the material burden is $100/1000 EA. All these have been copied over from the purchase info record, which is shown in Figure 19.

Step 5. Display Goods Receipt Accounting Document

Use transaction code FB03 to display the accounting document for goods receipt. In this transaction code enter the accounting document number, company code, fiscal year and press the Enter Key, to call up the screen shown in Figure 25. This transaction code lets you check the accounting posting that occurred after the post goods issue step for the regular purchase order, shown in Figure 23.

Figure 25

Accounting document for Goods receipt for a regular purchase order

Figure 25 shows that the separate GL account (550000), which was configured in Figure 11, has been used to absorb the material overhead. In this example, this GL account has been defaulted to a cost center, per the plant. The purchase account (540000) washes out (balances to zero) in this example. This accounting posting applies to all countries in which the purchase account is not needed for legal reporting.

As the same account has been used in the configuration for the plant (Figures 12, 13, and 14), the balance of GL account 540000 is 0.00 in this case. For countries such as Spain and Belgium, where a purchase account is needed for legal purposes, you can use three different accounts (for the account keys EIN, EKG, and FRE) to help in legal reporting. Figure 25 also shows a purchase price variance (PPV) of $50 resulting from the difference between the vendor base price ($1000) and costing base price ($950) per 1000 EA.

Subcontracting Process

The next few steps demonstrate the subcontracting process.

Step 1. Display Purchase Info Record of Subcontracting Type

Use the transaction code ME13 to display the screen, as shown in Figure 26. Figure 26 shows the subcontracting type of purchase info record that is used for subcontracted materials. You can use this purchase info record along with a bill of material (BOM) to create a subcontracting purchase order which also provides the component to the subcontractor. For this article, the material TEST_ROH04 has a BOM with just one component, which is TEST_ROH05. I do not cover BOM maintenance in this article.

Figure 26

Display a subcontracting purchase info record

After pressing Enter, click the conditions button in the screen Display Info Record; General Data. Create the subcontracting purchase info record (Figure 27) with the following conditions:

• Standard pricing condition type PB00 (or a custom condition type as long as it is used by the purchasing department)

• Costing condition type ZPB1, which is used to offset the PB00 value for costing only (the statistical condition shown under the configuration in Figure 4)

Conditions types ZPB0 and ZMB2 are included to create the standard cost of $1100/1000 EA ($980 + $120) for this material TEST_ROH04. There is a different logic SAP uses to create a cost estimate for a subcontracting material. The valuation variant used to create the cost estimate can read a subcontracting type of purchase info record and add up all the conditions (configuration shown in Figure 18) to a cost component.

If there is a requirement to not use the base price maintained by the purchasing department (PB00 condition type, in my example), then one additional condition (ZPB1) is used to offset PB00. Thus, the system uses all conditions to create the cost estimate for the subcontracting material; but as ZPB1 offsets PB00, the net effect is that only conditions ZPB0 and ZMB2 are included in the cost.

Figure 27

Pricing conditions in a subcontracted purchase info record

Step 2. Display the Cost Estimate of a Subcontracting Material

Use transaction code CK13N with a material and plant and costing variant and press Enter, to display the cost estimate for a subcontracting material, as shown in Figure 28. This step shows that the costing step of material TEST_ROH04 is using a bill of material (BOM) that has one component (TEST_ROH05) ($1050) and a purchase info record of subcontracting type ($1100).

Figure 28

Cost estimate for a subcontracting material

Select Costs and Display Cost Components from the pull-down menu in Figure 28 to get to the screen shown in Figure 29. Figure 29 shows the cost component structure for the material cost. It also shows that, in case of subcontracting, all the various conditions values from the subcontracting purchase info record (from Figure 27) will be summed up (PB00 + ZPB1 + ZPB0 + ZMB2) and assigned to one of the cost components (i.e., Third Party, in this example).

Figure 29

The cost component view for the cost estimate

Step 3. Display a Subcontracting Purchase Order

In the transaction code ME23N, use a subcontracting purchase order to display the purchase order item level details and various condition types. Click the conditions tab available in the Item section to get to the screen shown in Figure 30. Figure 30 shows the various condition types that have been copied over through the subcontracting purchase info record; it shows the vendor base price, PB00, for purchasing, condition type ZPB1, which offsets the PB00 for costing only, and the other two conditions, ZPB0 and ZMB2. As described earlier, these conditions are transferred over from the subcontracting purchase info record.

Figure 30

Pricing conditions on a subcontracting purchase order

Step 4. Display Accounting Document for Goods Receipt for a Subcontracting Purchase Order

Use transaction code FB03 with goods receipt accounting document, company code and fiscal year and press Enter Key, to display the accounting document for the goods receipt against a subcontracting purchase order, as shown in Figure 31. In Figure 31 Clicking on “Purchase Order History” tab can also list all documents related to this particular the purchase order.

Figure 31

Accounting document for subcontracting goods receipt

Figure 31 shows the accounting document for subcontracting goods receipt. The posting shows the goods issue for the component (GL account 510085/134000 for $1050), which was part of the BOM, the subcontracting fees posting (GL account 650085/211200 for amount $1000), and the Finished goods receipt (GL account 134000/520085 for amount $2150). The material overhead has been absorbed with a separate account (550000 for amount $120). In this example, the material burden account 550000 has been mapped to a cost center, but how to track the under/over recovery is an organizational decision.

Surajit Mohanty

Surajit Mohanty is an independent consultant with more than 14 years of SAP Financials consulting experience. In the past he has worked with various consulting firms such as IBM, Deloitte, and BearingPoint. He has vast experience in SAP CO (Controlling/Management Accounting) and FI areas spanning across nine end-to-end implementations. He has delivered solutions to a broad range of clients with various roles in the areas of product costing, material ledger average costing, transfer pricing, profitability analysis, revenue recognition, accounts receivable and payable, sales and use taxation, SAP General Ledger, and integration of the SAP General Ledger with materials management, production execution, and sales and distribution areas. He lives in Schaumburg, IL, with his wife and son.

 

 

You may contact the author at surajit.mohanty@hotmail.com.

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