SAP Sales Order Costing, which is a concept used in Sales Order Management + Controlling (CO) in SAP, primarily relevant when you’re dealing with make-to-order (MTO) or engineer-to-order (ETO) production scenarios. Let me break it down for you:
🔹 What is Sales Order Costing in SAP?
Sales Order Costing is a cost management and profitability tracking process at the level of an individual Sales Order (SO).
It allows companies to:
- Estimate costs (planned cost of fulfilling the order: materials, labor, overheads, subcontracting, freight, etc.).
- Track actual costs (captured during procurement, production, delivery, billing).
- Compare planned vs. actuals at the sales order item level.
- Calculate contribution margin (Revenue – Costs) per sales order.
This is crucial in industries where each customer order is unique (customized products, projects, or configurations).
🔹 Where is it used?
- Make-to-Order (MTO) production
- Engineer-to-Order (ETO) projects
- Variant Configuration scenarios
- Large projects/contracts with order-specific BOMs and routings
🔹 How does it work? (Process Flow)
- Sales Order Creation (VA01)
- A Sales Order is created.
- If it’s MTO/ETO, the system creates a Sales Order Cost Object (CO Object) linked to each line item.
- Sales Order Costing (CK51N / CK52N)
- You run costing for the sales order item (Product Cost by Sales Order).
- System pulls data from BOM + Routing + Costing variant.
- A Planned Cost Estimate is generated.
- Cost Capture during Fulfillment
- Procurement costs (PO → GR → Invoice).
- Production costs (confirmation, goods issue, overheads).
- Delivery costs (outbound freight).
- Revenue Recognition (Billing)
- Actual revenue is posted against the sales order.
- Settlement (CO → FI)
- Actual costs and revenues are settled to COPA (Profitability Analysis) or FI at period-end.
- Reporting
- Planned vs. Actual cost comparison at sales order item level.
- Profitability analysis by sales order.
🔹 Key Transactions
- CK51N / CK52N → Sales Order Costing (Planned Cost)
- KKAX / KKAS → Work in Progress (WIP) calculation for sales orders
- VA01 / VA02 / VA03 → Sales Order processing
- CO88 → Settlement of Sales Order
- KE30 → Profitability Reporting
🔹 Example
Suppose you receive a customer order for a customized machine.
- Planned cost: ₹100,000 (materials ₹70,000 + labor ₹20,000 + overhead ₹10,000).
- Actual cost: ₹105,000.
- Billing revenue: ₹130,000.
- Contribution margin: ₹25,000.
This is tracked per sales order item via Sales Order Costing.
✅ In short: SAP Sales Order Costing helps in planning, monitoring, and analyzing costs & revenues for customer-specific orders, ensuring better profitability tracking.
MP's S/4HANA 