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SAP-Costing Variant – Part II (Costing Type)

SAP Costing Type

So as discussed in the earlier post, we will go further into this post for understanding Costing Variant.

If we carefully give a look at the screen of Costing Variant (refer Image 1.01), we can easily notice that the Costing Variant is basically divided into 6 logical tabs (or parts, we may say). SAP has done this in order to simplify and at the same time to provide more flexibility in product costing.

Costing Variant (Image 1.01)

Costing Variant (Image 1.01)

With discussion under this and upcoming posts, we will try to look into every component under all the tabs separately to facilitate deeper understanding. Now lets start with the first component “Costing Type”

For our understanding and analysis purpose, we will be considering the Costing Variant PPC1 and will try to discuss about others, once we are through with PPC1.

Costing Type

In this post, as heading of this post suggests we will look into the Costing Type component of Costing Variant.

Before we go ahead, first let’s go through the IMG Path required to be followed for creation of Costing Type

Implementation Consideration


IMG > Controlling > Product Cost Controlling > Product Cost Planning > Material Cost Estimate with Quantity Structure > Costing Variant: Components > Define Costing Types

We will start with the brief understanding of what is a Costing Type? But before that we will first understand how this Costing Type is structured.

SAP comes with various Costing Types, but for our understanding as said earlier we will consider Costing Type 01 assigned to Costing Variant PPC1 here

In the image 1.02, we can see the three tabs available under Costing Type.

Costing Type (Image 1.02)

Costing Type (Image 1.02)

This bifurcation in Costing Type is done by SAP to provide flexibility in configuration at the most granular level possible. While doing this, we also need to exercise caution while customising in order to not do too much in an attempt to achieve everything. Please try to understand that at lease in this world, everything can not be achieved.

On this positive note we will continue our discussion on Costing Type.

Explanation on all the Tabs

Price Update Tab

This tab contains configuration related to updating the results of cost estimate and is divided  into following  two parts:

Price Update

Under this tab we define whether the price calculated during the cost estimate is updated by the system. In the above screen (refer image 1.02) we can see that the standard Costing Type updates Standard price. This in other words mean, when a material cost estimate is released, it will update standard price in material master.

Given below is the list of options available for Price Update

ο   Standard Price

ο   Tax-Based Price

ο   Commercial Price

ο   Prices other than standard price

ο   No Update

Note: We also need to keep in our mind that standard system contains costing types that write to the material (standard price), and hence the system does not allow to create our own costing types to do this i.e. updating standard price.

Valuation View

You use valuation views to represent different ways of viewing business transactions in a company.

Save Parameters

This tab contains configuration related to updating dates when the cost estimate is saved and is divided  into following  two parts:

Costing Type (Image 1.03)

Cost Estimate with Quantity Structure

Here we have to select whether the date will be saved in standard cost estimate and following options are available for us to opt from:

ο   Without Date

ο   With date

ο   With Start of Period

Additive Cost Estimates

In this part, we define whether dates will be saved in the additive cost estimates.


This tab contains two parts as explained below:

Costing Type (Image 1.04)

Costing Type (Image 1.04)

Cost Portion for Overhead Application

This part works as a calculation base for calculating the overheads. Here we have to select the cost component  view that will be used for calculating overheads (Costing Sheet).

Partner Cost Component Splits

Key that uniquely defines a combination of partner and direct partner.

A word of caution: SAP has provided separate Costing Type for different types of costs for e.g. “Product Cost Collector” etc. which already contains relevant configuration to be opted for. Hence, it becomes very important to analyse requirement and try to find which standard costing type or costing variant provided by SAP will be fit for the scenario and go for it. If you do not find appropriate standard configuration, take a cautious approach while customising.

Note:  For the standard cost estimate, you must update automatic costing with the With start of period indicator. This ensures that the results of the standard cost estimate can be used as the standard price for that period. For the other costing types, you can update the costing results with the With date indicator, for example. In this case the current date becomes part of the key.

Advice: By defining the above information as per our requirement we can create the exact material cost estimate that suits business. But at the same time, care should  be taken not to do modifications to the standard costing types or variants, instead copy the standard and create a new one. But SAP has already provided various standard costing types which meet most of our requirements and hence should be referred to before taking a decision to create a customised one.

List of available standard Costing Types

  1. 01 – Standard Cost Est. (Mat.)

  2. 10 – Inv. Costing: Tax Law

  3. 11 – Inv. Costing: Comm. Law

  4. 12 – Mod. Std Cost Est. (Mat.)

  5. 13 – Ad Hoc Cost Estimates

  6. 19 – Product Cost Collector

With a hope that above information would help you in understanding various components under Costing Type and how they work. In the next post under this series we will continue our discussion by taking up next component i.e. Valuation Variant.


SAP Help on Costing Type

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You can see the visual demonstration of Costing Type in the following video:

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