Automation of Actual Costing Run (CKMLCP) in Material Ledger

Introduction:
In Material ledger, Actual Cost calculation is an important part, which includes multiple steps that need to be executed by the business controllers. These steps include production/process order closing, overhead cost calculation, execution of assessment/distribution or indirect activity allocation cycles, actual cost split, actual activity price calculation and the most important CKMLCP execution in material ledger.
CKMLCP includes multiple steps that took many hours to get executed.  If we take an example of a MNC organization presence all over the world, then execution of period end closing took more than 10 to 15 hours. In this document, I will explain how we can atomize the execution of CKMLCP and reduce the execution of time.

Period End Closing CKMLCP Overview:

CKMLCP is executed to calculate Period Unit Price (PUP), which basically represent average actual cost for material or semi finished goods. Execution of CKMLCP includes the below steps:

Automation of Standard Cost Estimate (CK40N)

Introduction:
Calculation of standard cost is the annual event generally done at the beginning of financial year during Planning & Budgeting activities, which result into calculation and release of standard cost estimate.
CK40N is a powerful tool provided by SAP to calculate cost estimate with high level of accuracy for in-house produced material and material procured from outside. CK40N is executed in multiple steps from selection of material to release of cost estimate, which generally took of time to get executed. The purpose of this article is to specify how we can use the standard functionality of SAP to automate CK40N, for calculating cost estimates.

Automation of CK40N:
Product cost estimate through CK40N includes the below steps:

• Selection
• Structure Explosion for in-house produced materials
• Costing for all the materials at structure explosion
• Analysis for cost estimates
• Marking for cost estimate as future standard cost
• Release of future cost estimate as current standard cost estimates

Understanding the Standard Product Cost Estimate

Product costing is one of the key areas in Manufacturing and process industries. It is used for estimating and valuating the internal cost of a product.Product cost planning is used for estimating/predicting the cost incurred in producing a Finished Product . This estimate is also used for budgeting purpose . When the material is actually produced, the actual cost is incurred and the variance between planned cost and the actual cost is calculated. Based on the magnitude of variance, decision is taken to re-estimate the cost of the materials.

Standard Cost estimate is the basis of product cost planning . This is nothing but the estimation of cost of a particular product, being manufactured.

Before getting in to SAP terminologies, let’s relate it with a very simple practical scenario, so that it is more clear and understandable.
Suppose a company is manufacturing glass containers. The components used are

1. The Glass
2. The Cap