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