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SAP CO Workshop

Controlling
Material Ledger
OVERVIEW OF THE WORKSHOP – Day 2

Controlling – Actual Costing / Material Ledger


1. Material Ledger – Basics
2. Companies with / without Material Ledger
3. Results from Implementing Material Ledger
4. Costing Flow
4.1 Material Ledger – Flow – Product Cost Estimate
4.2 Material Ledger – Flow – Process Order
4.3 Material Ledger – Flow – Final ML Impact
1. Material Ledger - Basics

 Actual Cost by Cost Component by Product


 Actual Cost of Material by Product
 Actual Cost of Labor by Product
 Actual Cost of Depreciation by Product
 Actual Cost of Sales
 Actual Cost Component

 During the accounting period all material movements are valued at a


moving average for Raw Material / Packaging and Standard Costing
for Semi Finished and Finished Goods and recorded by material in the
material ledger

 Price Differences (Variances) for each material movement are


recorded

 At the end of the period an actual cost (periodic unit price) is calculated
for each material though out multiple levels of product produced

 Revaluation of Inventory (Semi Finished / Finished Goods)


 Revaluation of COGS
 Distribution of Usage variance is allocated to product
2. Companies with / without SAP Material Ledger

•SAP - Without Material Ledger •SAP - With Material Ledger


 No Traceability of Actual Material Cost by  Traceability of Actual Material Cost by
Product Product
 Purchase Price Variance  Purchase Price Variance
 BOM Usage Variance  BOM Usage Variance
 Production Usage Variance  Production Usage Variance
 COGS at Actual Price  COGS at Actual Price
 No Traceability of production efficiency by  Traceability of production efficiency by
product product
 No Report Standard & Actual value of  Report Standard & Actual value of
Inventory by Product Inventory by Product
 Inaccurate Product Level Profitability /  Accurate Product Level Profitability / Gross
Gross Margin Reporting Margin Reporting
3. Results from Implementing Material Ledger

•Results Positive from Implementing •Results Negative from Implementing


Material Ledger Material Ledger

 Impact of Actual Cost on Monthly Profit  Massive volume of data


and Loss
 Increased time to close by at least 1
 Actual Cost to support the Standard day may be more
Cost Scenario of the company
 Distribution of usage variances
 See Actual Cost of Inventory without extremely time consuming
impacting the previous inventory cost
 Difficult to Validate the accuracy of the
 Ability to see actual product line posting at a high level
profitability
 Difficult for casual / non users to
comprehend
4. Material Ledger – Costing Flow
4.1 Material Ledger – Flow – Product Cost Estimate
(Will be performed once a year)
4.2 Material Ledger – Flow – Process Order
(Actual Costing)
4.3 Material Ledger – Flow – Final ML Impact
(Variances and its adjustment)
End of Session