

THE INTRODUCTION:
The company in question is one of India’s largest consumer electronics companies, producing a wide range of consumer durables, including speakers, IT accessories, mobile accessories, personal care appliances, and medical products. It has sold over a billion products and services across 20,000+ pin codes in India.

THE PROBLEM:
To develop a detailed and comprehensive product costing substructure mechanism that embeds into the overall product cost management (PCM) [1] structure. Thus, the PCM framework will form part of the comprehensive management information system (MIS), facilitating a decision support system for the management to make well-informed decisions.
Re-configure the product costing framework into the SAP-ERP system (SAP-CO-PC) to enable its alignment with MIS and SAP systems.

THE SOLUTION:
Product costing is assigning costs to products based on the principle of cause-and-effect. Given below is a framework for deriving costs for each cost element:
Cost element | SAP tcodes | Data Source and Validation Rules |
Raw material |
|
* Actual Material Consumption = Material Opening Stock + Quantity Purchased – Material Closing Stock
Standard Material Consumption = Product BOM recipe X FG quantity produced (using MCRP tcode) |