What is the Costing Model?
Costing model is the process which explains the way fixed costs and depreciations are allocated to product costing in order to determine the cost of sales and inventory valuation.
When does it occur and how is it prepared?
Once a year (around November) the plant costing model is prepared for the next year. FRA (Finance Responsible Assigned) are in charge of preparing the costing model based on the budget using the respective template of WP2. FRA asks for the validation of the GCCO (GBU Costing Control Owner) and PM (Plant Manager).
All this process has to be completed before the validation of the Costing Run of 01.Year N+1.
Who performs the costing model in SAP?
SU MAC (Service Unit Management Accounting) receives the costing models prepared by each FRA of his/her zone and perform the respective update in SAP.
SU MAC is making sure that costing model has been reviewed and validated by the GCCO for each plant in the scope of internal control.
After Costing Model is uploaded in SAP, a consistency check has to be made between SAP and the excel file.
On a yearly basis (around the 10th of November), an email is sent to all FRA requesting to prepare the costing model for the next year.
The Costing Model is controlled in a google sheet, in order to cover all the information needed.
Costing Model overall process
The Costing Model process is composed by several main steps.
Useful links:
IAC 01.01. Costing model validation
Please take in consideration if it is a “normal year” with 365 days or a “leap year” with 366 days.
Validate all the information of the file in each sheet.
Confluence link: SBS-OP-DRTR-02-044 - IAC 01.01. Costing model validation
Steps:
- Upload the budget in SAP
- Check the budget & activity uploaded
- Create the budget assessment cycle(s)
- Run budget cycle(s)
- Check cost centers balance
- Calculate the standard hourly rate
- Compare the costing model with SAP
- Create the actual assessment cycle(s)
Upload the budget in SAP
Upload the budget
- Check sheet “2a-Activity Budget”
- Prepare the information of column “Normal capacity” using the function ROUNDUP, to round number upwards.
Upload the activity hours
- Check sheet “2b-Activity Hours”
Confluence Link: SBS-OP-DRTR-02-028 - I upload the budget information into the system
Check the budget & activity uploaded
Check the cost centers data are aligned on the budget file
Compare the data of the cost centers, in sheets “2a-Activity Budget” and “2b-Activity Hours”, with transaction code S_ALR_87013611, to check if they are matching.
Confluence Link: SBS-OP-DRTR-02-029 - I control the budget & activity uploaded
Create the budget assessment cycle(s)
After receiving the file, please check sheets: “2c-Activity Cycles” and “1-Cost centers”
The rule is cost center with codification PPPP-2* should be allocated to cost centres with codification PPP-1*.
After, create the budget cycle by using transaction code KSU7.
Confluence Link: SBS-OP-DRTR-02-013 - I create a budget assessment cycle
Run budget cycle(s)
After the budget cycle is created and the budget is uploaded in SAP, we can run the budget cycle.
Transaction code KSUB.
Confluence Link: SBS-OP-DRTR-02-026 - I run budget cost centers cycles
Check Cost Centers Balance
Check the cost centers are balanced.
Confluence Link: SBS-OP-DRTR-02-029 - I control the budget & activity uploaded
Calculate the standard hourly rate
After cycle run and the related cost centers are balanced, we need to calculate the standard hourly rates (activity rates) and after control the result
Transaction code KSPI
Transaction code KSBT
Confluence Link: SBS-OP-DRTR-02-035 - I calculate the standard hourly rate
Compare the costing model with SAP
After costing model is uploaded in SAP, we must compare the activity rates calculated in the system with what is in the file sent by the FRA.
Transaction KSBT
Excel file
Confluence Link: SBS-OP-DRTR-02-044 - IAC 01.01. Costing model validation
Create the actual assessment cycle(s)
Every year, January closing should be prepared with the creation of new cycles. After the validation of the budget cycle “PPPPBU”, we need to create the assessment cycle “PPPPCO” with reference of the new budget.
If you know in advance that no major changes are required for the new cycles, the “easiest” way to do this is to create the new cycle by copy of the one of previous year. After, you need to change the end date and the description of the cycle (if needed).
Confluence Link: SBS-OP-DRTR-02-027 - I create the actual assessment cycle
Cycle creation – Transaction code KSU1
If you know in advance that no major changes are required for the new cycles, the “easiest” way to do this is to create the new cycle by copy of the one of previous year. After, you need to change the end date and the description of the cycle (if needed).
Please take special attention to the percentages to be used in the new cycle and check if they changed, comparing with previous year.
