Simple Overview of Product Costing

SAP Product Costing deals with Plan Costing + Actual Costing of Finish products or Services.

CO comprises Product Costing + cost accounting integrated with FI.

It uses Integrated Cost Accounting.

Product costing also has 2 phases depending on the Mfg Scenarios. If you are a normal mfg comp, making goods to stock & sale, you have to first do planning of the costs of products initilally as a STD COST of a product. This is used in many phases in SAP CO acounting. In simple terms, you cost a product by different methods depending on different LIFE CYCLE phases of product. These are Development of new product. Growth stage by modifying it. Mature stage (mass prod). Decline Retirement of that product from Mfg+Mktng)

The whole CO process starts with this PLANNED costs of products & ends with totalling the STD Costs for Actual Production.

This is a simple Std cost Accounting system, in which the end result is calculating Variance bet Planned & Actual & analysing those for further corrective actions.

Product costing is well integrated to FI, but only where overhead cost accounting is used. Otherwise normally it used only for settlement.

All these actual costs of Prod are finally settled/offset to FI or Profitability segments.

SAP CO is a very vast & complicated module of all. It needs deep understanding of the subject.

This give you an overview glimpse of SAP CO.