Standard cost estimate process in S4 HANA

When you create a material cost estimate, you always specify a costing variant. The costing variant contains all the information needed to execute the material cost estimate. Costing variant is having the following parameters/components in the material costing
Costing type
- "Specifies the valuation view to be costed.
Legal valuation
Profit center and
Group valuation
- To know the purpose of costing and price update"
Valuation variant
"Specifies which prices are used to valuate the materials, activity types, subcontracting and external activities
specifies overhead costing sheet to be used"
Date control
Controls the validity period of the cost estimate, the quantity structure date, and the valuation date
Qty structure control
"Specifies the master data in Logistics (BOM and routing or master recipe).
Only used in cost estimate with quantity structure"
Transfer control
"Transfer of existing material cost estimate (future, current, and previous standard cost estimate) to other plants (within plants and cross plants)
Avoids the creation of unnecessary material cost estimate( no new standard cost estimate).
Prerequisites - both plants should use the same cost component structure"
Reference variant
Reference variants allow you to create material cost estimates or costing runs based on the same quantity structure for the purpose of improving performance or making reliable comparisons

Sub contracting
"1. Subcontractor receives material parts and manufactures the complete products.
Eg: material A issues and receives material B
2. The material moves out of the premises.
3. We have to pay to the subcontractor
4. BOM is required in subcontracting

Ex: sending bottles and caps and receiving fixing of these two into one

External processing
"1. No change in the material, only additional process is added.
2. Performs a process step.
3. No physical material movement outside the premises
4. No BOM is required"
Ex: Painting/ drilling/cutting

Cost component structure To see the breakup of cost components or to breakdown the cost components used in the standard cost estimate.

Primary cost component split "It is an alternative way of showing the COGM of a product.
This cost component split assigns the primary cost elements for the cost center or process to the cost components, which enables you to see the composition of the price for the activity type or the costs for the process.
Created in Cost Center Accounting when calculating the activity price"

by Ramana Katari.