SAP CO Module Month end closing process (Step by Step)

SAP S4 HANA - Product Costing Process

SAP S4 HANA CO Period End Closing Activity: -

These are basis on practice experience which are majorly followed by the organizations.1.??Standard cost estimation & rollover: This process helps to marking and release standard cost estimation for next period. 

At two valuation level we need to release.?
1. Legal Valuation?
2. Profit Center Valuation        

2.??Validation of Purchase Price variance:?Its validation of all variances which posted in PPV GLs . It’s a difference between Standard price v/s Actual PO price for Raw and Packaging material. With help of standard cost estimate we can easily find out if something had happened incorrect at PO level like wrong PO price, Wrong UOM, Wrong currency updation and many more practical error which cause to posting higher variance in PPV GL’s hence its mandatory to get those variances validated before going to next step. Here we need to ensure standard cost estimates should be as per market trend so that it would be more helpful to identify error at PO level.        

3.??Validation of Production order variance:?It’s a difference between Standard v/s actual and applicable only for FG and semi-FG products. Standard will drive through BOM & Master recipe and actual drive from production floor how much they actually consumed against production order. Difference between will be calculated and get posted as production order variance. It’s an extra cost which will be uploaded to material level to get actual cost of material. Need to validate this variance as well to avoid extra cost upload into material level.        

4.??COGI: This stands for Controlling Goods Issued. It’s a transaction used to correct errors in automatic goods movements during production order confirmations.        

5.??Validation of Cost center MFG exp: here we ensure all Mfg related cost have been correctly booked into cost center level. Like accruals, reclass and adjustment entries needs to be captured before going to next steps.        

6.??Actual Assessment and calculation of actual activity rate: in these steps basis upon expenses booked under Mfg cost center, cost allocation cycle will be executed, and all cost booked under indirect cost centers to be allocated into Direct Cost centers. here Direct Cost center means where actually production process is happening. Here secondary cost element will be used to allocate this cost from Indirect supporting CC to Direct CC.        

7.??WIP simulation and posting in this step first WIP order will be identified by system and then settlement will be posted into production order level.        

8.??Actual Costing/Material ledger closing: This is final steps once above all steps has been executed. The Material Ledger in SAP is a powerful tool used for managing material prices and actual costing.         

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