Standard Cost Estimate in SAP S/4HANA

In this article, we will learn how to create the Standard Cost Estimate in SAP S4 HANA Finance.

What is Standard Cost Estimate in SAP S/4HANA?

The Standard Cost Estimate is the process of calculating the standard cost of finished and semi-finished materials under SAP Controlling. We also call it Material Cost Estimate in SAP too.

We can create a standard cost estimate (or material cost estimate) with Transaction CK11N (Tcode) or by following the navigation path.

Navigation Path of Material Cost Estimate with Quantity Structure

Accounting => Controlling => Product Cost Controlling => Product Cost Planning => Material Costing => Cost Estimate with Quantity Structure => Create

How to create a Cost Estimate with Quantity Structure in SAP Standard Cost Estimate?

Material Cost with quantity structure is an important part of the Standard Cost Estimate in SAP. Its creation in S4 HANA Finance involves some steps with the use of certain transaction codes (Tcodes). To explain this, I have put some relevant SAP Screen images below.

Firstly, you need to enter the essential data required to create a cost estimate. Then, the first two fields you need to fill in our Material and Plant.

Costing Data Tab

Under the costing data tab, there are four fields. All have relevance in the cost estimate creation.

1. Costing Variant

The costing Variant contains the configuration required for cost estimates to determine the planned price. In the example, I have used “TE9” as the costing variant which I have customized as per my requirement.

2. Costing Version

You can create different costing versions that can be useful for scenario analysis. Please note, we can only allow costing version-1 cost estimate to release to update inventory valuation.

3. Costing Lot Size

The costing Lot size Field determines the quantity on which you base your cost estimate calculations. This field should be set as close as possible to actual purchase and production quantities to reduce lot size variance.

Further, if you leave the Costing Lot Size blank, the cost estimate retrieves the costing lot size from the corresponding field in the Material Master costing version-1 view.

4. Transfer Control Field (in SAP Standard Cost Estimate)

The Transfer Control field refers to a costing variant component that requires a higher-level cost estimate to use recently created standard cost estimates for lower-level materials.

Furthermore, if you leave the Transfer Control field blank, a transfer control from the costing variant will be taken default into this field (if present). You can also make this field non-modifiable through configuration settings in the Quantity structure tab of the costing variant.

Related: Product Costing- All that You Should Know

Dates Tab

After completing the fields in the costing Data tab, Press Enter to display the screen.

Here, four default dates appear based on the date control component of the costing variant. You can either accept the default dates or change them if the date control component of the costing variant allows.

1. Costing Date From

The Costing Date from the field determines the valid start date of the cost estimate. Please note, you cannot mark and release the cost estimate in SAP to adjust inventory valuation until you reach the start date.

Further, you can change the date to a previous date and create the cost estimate. However, you cannot save, mark or release a standard cost estimate with a start date in the past.

2. Costing Date To

This field determines the valid finish date of the cost estimate in SAP. Please note, the Variance calculation requires a standard cost estimate which is valid for the entire fiscal year. Thus, we set this date to the latest possible date.

3. Quantity Structure Date

This field determines which Bills of Materials (BOM) and routing you select for the cost estimate. Since these can change over time, selecting a particular BOM or routing by date is particularly useful.

4. Valuation Date in Standard Cost Estimate in SAP

The Valuation Date determines which material and activity price you select for the sap cost estimate. Also, purchase information records can contain different prices quoted by the vendor for different dates.

Likewise, you can plan different activity prices per period. For instance, you may find it useful to hold the valuation date constant while changing the quantity structure date. This you do to isolate the cost effect of changing the structure of BOM (Bank of Material).

Press Enter to create the cost estimate, check the image below.

The Execution Result

After executing the above actions you will get the following result.

The System creates a cost estimate

A calculated multilevel Bill of Materials displays at the left of the screen. Even though we initially created a cost estimate for material 315 as shown in the image, the system also creates a cost estimate for all underlying components and subassemblies. With this, the system indicates cost estimates by the Cost Estimate icons in the calculated BOM.

If you double-click any cost estimate in the multilevel calculated BOM, it causes the information on the right of the screen to be the corresponding individual cost estimate.

SAP HANA Product Costing Training – Know More

After doing all this, you need to transfer the price to the material master by using the marking and release process. Now, learn how to do this.

Marking and Release Process in SAP Standard Costing

If saved without errors, you can mark a standard cost estimate with Transaction CK24 or by following the menu path.

Accounting => Controlling => Product Cost Controlling => Product Cost Planning => Material Costing => Price Update

You can mark and release cost estimates with this same selection screen. Therefore, mark a cost estimate by completing the posting Period (Fiscal Year), Plant and Material Fields and then click the Execute icon.

Checkpoint for Successful Marking

A green light icon, together with Costing Status VO, indicates that the standard cost estimate is successfully marked.

There are no inventory revaluations or account postings during marking. The system copies the proposed standard price to the Cost Estimate – Future column of the material master Costing version 2.

Important Facts for the standard cost estimate in SAP

• You can create and mark standard cost estimates many times before release.
• Within the same fiscal period, new standard cost estimates overwrite existing cost estimates that are not released. Thus, if you don’t want to overwrite a standard cost estimate, create it with a different costing version.
• You may not able to release cost estimates created with different costing versions; however, they are only for your reference.

Watch Related Video on- Marking and Release Process in SAP

The Final Step in SAP Standard Cost Estimate

Finally, after you have successfully marked a cost estimate, check if the proposed standard price is correct. To release it, click on the release button and then click the execute icon.

Checkpoint for Successful Release

• A green light icon with the costing Status “FR” indicates that you have successfully released the standard cost estimate.
• You can display the price change document by clicking the underlying Document Number.
• Furthermore, if there is valuated stock, you can re-evaluate inventory and financial posting will occur during release.
• The system moves the Future Standard Price to the current Planned Price and Standard Price field of the material master costing version-2 views.
• Please note that when you release a standard cost estimate, the previous standard cost estimate moves to the previous column to the right of the current column.