Home Management Accounting Enhancements in splitting the Cost of Goods Sold in S/4HANA 1809

Enhancements in splitting the Cost of Goods Sold in S/4HANA 1809

by Ugur Hasdemir
5 comments

In my previous post about Finance in S/4HANA 1809 I highlighted the innovations in Account Based Profitability analysis. One of the innovations is the enhancements in splitting the cost of goods sold. We will have a more detailed look at this new functionality in this blogpost.

What’s new in 1809?

In the previous release 1709 the COGS split functionality was already enhanced and new supported processes were added. In release 1809 the functionality for splitting based on Actual Costing is added.

Splitting based on Actual Costing

The splitting functionality based on actual costing is enabled in 1809. Now you can split the revaluation of COGS as well. Doing this you have 2 options. You can post the revaluated amounts to the same accounts under the same cost component structure. Or you can post the revaluated amounts to a specific cost component structure. The configuration is changed slightly to facilitate this. You can see the new checkbox in the print screen below.

Don’t forget to add your revaluation account in the “Source Account” sections of the customizing. This is the account configured in T030 account key COC.

Define Accounts for Splitting the Cost of Goods Sold

Perform the Split based on standard cost estimate

The standard cost estimate of the material used for preliminary costing during the period:

Create Material Cost Estimate with Quantity Structure

Sales order and delivery process

The splitting of the Cost of Goods sold during goods issue is a functionality which already available. You will see the enhanced functionality with splitting based on actual costing following the below example.

Posted accounting document during Goods Issue based on initial costing run:

Sales Order Delivery
Goods Issue Posting
Goods Issue COGS Split

The balances of the accounts in the financial statement App:

Display Financial Statement App

Alternatively, the amounts can be seen in the market segment analytics report as well:

Market Segment Actuals

Actual Costing and splitting the revaluation amount

In this example I have used a material valuated against standard price (S) with price determination Single Level/Multi Level (3). At month end I perform Actual Costing in CKMCLP:

Costing Cockpit Actual Costing
Costing Cockpit Actual Costing

There is a price difference of 2.45 USD:

Material Ledger Settlement
Material Ledger Settlement
Price Difference Posting
Price Difference Posting

As you can see the price difference of USD 2.45 is splitting based on the same cost component as the preliminary cost price.

Price Difference COGS Split
Price Difference COGS Split

The effect is visible in the Financial Statement app as well:

Price Difference in Financial Statement App
Price Difference in Financial Statement App

The benefits of having all dimensions on account level in ACDOCA is huge and the cons/disadvantages are disappearing with each new release. It is exiting to see that Account Based COPA is closing the gap. 

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5 comments

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Marivic Fetalvero August 2, 2019 - 03:18

This is such a very good explanation on the enhancement made on splitting of COGS. Many company will be happy about this functionality. This will facilitate the analysis in the management accounting area of finance.

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PDB August 3, 2019 - 05:17

In the above Cost Component Structure Production overhead is shown as 4,77 USD. But if user wants to know again the sub break of the above 4,77 USD, like how much towards Consumables, Stores or some others expenses. User wants to track some 10/15 exp heads under production overhead. How that can be achieved both in plan & actual ?

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Ugur Hasdemir
Ugur Hasdemir August 3, 2019 - 10:42

hi,
granularity depends on your configuration. It is possible to have more lines in your costing sheet for overhead calculation. These lines can post to different GL accounts and you can map those in your COGS split. This applies both to plan as actual.

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Ugin November 7, 2019 - 15:06

Hi Ugur.
Thanks for great explanation.
Do you know if it’s possible to split COGS based on auxiliary cost component sructure?
Regards,
Ugin

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PDB November 7, 2019 - 16:26

Hi thanks for your reply.
Actually during actual costing run the PPV in respect of purchases are not getting capturing correctly during consumption of SFG or FG. Suppose goods are purchased in 2 batches & PPV in respect of the same are 100 & 250 for 10 & 20 quantities respectively. Now while issuing for 7 quantities from batch 1, is it feasible by anyway to transfer only 70 as PPV ??
In the current scenario system is taking the average of PPV from both the batches & transferring the variances accordingly.

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