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SAP Product Costing Overview

Updated Jun 19, 2024

SAP Product Costing is a comprehensive tool used for planning, tracking, and analyzing production costs within the SAP system. It enables businesses to estimate the cost of goods manufactured (COGM) and cost of goods sold (COGS) for each product unit.

SAP Product Costing is a tool used to plan, monitor, and analyze production costs on the SAP system. It allows businesses to calculate the  cost of goods manufactured (COGM) and cost of goods sold (COGS) on each product unit.

There are two different types of material costing processes in the SAP system:

  • Material Cost Estimate with Quantity Structure: Utilizes a combination of Bill of Materials (BOM) and Routing to determine costs.
  • Material Cost Estimate without Quantity Structure: Estimates costs without relying on BOM and Routing.

Integrating with SAP Modules

Product Costing can be integrated with various SAP modules for data origin like:-

  • Material Management (MM) for details from material master records and purchase information records.
  • Production Planning (PP) for relevant data from BOM, routing and work center records. -
  • Cost Center accounting (CO) for cost centers, activity types connected with work centers as well as necessary costs to arrive at manufacturing conversion costs.

By integrating with SAP Product Costing these modules guarantee precise total cost accounting and control.

Process of Costing Run (CK40n)

  • Create Material Selection:  Define materials to be costed in a plant
  • BOM Explosion: Selecting Materials Before Explosion of BOM
  • Costing: The system triggers the BOM/routings as per the costing variant.
  • Analytical steps: Evaluate the costing run results and write the cost estimate.
  • Posting: Change the moving average price in the material master to the new standard price.
  • Release: Update the cost estimate to the material master as the new standard price, updating the value stock and having the new standard price active 

Product Costing: Best Practices 

  • Update BOMs and Routings regularly.
  • Do a review and tweak the costing variants wherever applicable.
  • Analyze using fine-grained cost component structures.


SAP Product Costing is one of the important tools used to find out the product cost during final results after production. With proper configuration and continuously updating of the data, you can trust your figures and manage your business to make the right strategic decisions and improve your profitability.