Using Costing Keys for CO-PA Reporting (Part 1)

In simple terms, Costing Keys are used to determine which cost estimate will be used to calculate a value field in CO-PA. It is commonly used to valuate the cost of sales amount into its corresponding cost components. For example, if you have a cost of sales value of $100, which is made up of $50 Labor, $30 Materials and $20 Overhead, then the costing key will represent the costing variant (using a standard, actual or sales order cost estimate) which was used to calculate the $100 cost of sales amount. It is important to note this because there could be several costing keys which could represent different cost estimates. You could have one for your standard costs, one for your actual costs based on Legal Valuation, one for your actual costs based on profit center valuation, etc.

When costing keys are created, using transaction KE40, you simply need to enter a 3 –digit key, give it a name and specify which costing estimate that you want to transfer to CO-PA. The options are as below:

  • Standard Cost Estimate
  • Sales Order Cost Estimate
  • Production Order Cost Estimate

If you are using a Standard Cost estimate then you would need to assign the costing variant that is used to calculate the standard cost, to the costing key. You also need to specify a “Period Indicator” which tells the system which standard cost estimate it should use. This indicator is very important particularly if you update your standard costs regularly. For example, if a goods issue for a sales order is made at a particular standard cost, but the billing document is posted in a different month with a different standard cost estimate, then the values in the cost of sales G/L account (posted upon goods issue) and the cost of sales value field in CO-PA will be different. If this is the case then I would recommend that you choose the Period Indicator “Released Standard cost estimate matching goods issue date”. If you use an auxiliary cost component split (configured in transaction OKTZ) then you can check the box “Transfer aux. CC split” so that you can also pull this cost component split into CO-PA (as well as the main cost component split).

If you are using a material ledger for actual costing, then you need to go to the configuration menu path: Controlling -> Profitability Analysis -> Master Data -> Valuation -> Set up Valuation Using Material Cost Estimate -> Define Access to Actual Costing/Material Ledger. You can then enter a 3-digit key and specify which Valuation view that you want to transfer to CO-PA (for example, if you use transfer pricing and therefore have valuation views for Group and Profit Center Valuation, then you will need to set up a costing key for each of these valuation views). You also need to specify the type of valuation that you want to transfer to CO-PA. You have the choice of transferring the total actual cost or the breakdown into its cost components, or both. If you choose “Transfer cost component split and actual cost”, then you would need to enter a value field to capture the total actual cost (by double-clicking on the folder “Val.Fld Allocatn for Periodic Moving Average Price” and assigning a value field) and assign value fields to cost components using transaction KE4R (explained further in a subsequent blog). If you use an auxiliary cost component split then check the box “Transfer auxiliary cost component split”.

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