CO period-end processing pushes the cost collected during the period down to where it finally belongs. It runs alongside the FI close but has more internal dependencies.
The overall shape
The work falls into three blocks, executed in the direction cost flows.
| Block | Scope | Main activities |
|---|---|---|
| 1. Close cost centres | Cost centres | Actual activity rates, revaluation, distribution and assessment |
| 2. Close orders and projects | Production and internal orders, WBS | Overhead, WIP, variance, settlement |
| 3. Close profitability | CO-PA | Overhead allocation, top-down distribution |
The order matters because downstream depends on upstream. Order cost is not final until activity rates are, and what flows to CO-PA is not final until order cost is.
Closing cost centres
| Step | Activity | Code | Purpose |
|---|---|---|---|
| 1 | Apply overhead | Before KSII | Apply overhead rates where used |
| 2 | Actual activity rates | KSII | Actual cost ÷ actual activity |
| 3 | Revalue activity allocations | MFN1 | Correct plan-rate charges to actual |
| 4 | Distribution | KSV5 | Charge on, keeping primary cost elements |
| 5 | Assessment | KSU5 | Charge on via secondary cost elements |
Closing orders
Production orders and internal orders follow the same sequence.
- Overhead application (KGI2 / CO43): apply overhead rates on top of direct cost.
- Work in process (KKAX / KKAO): recognise cost on unfinished orders as WIP.
- Variance calculation (KKS1 / KKS2): split the difference from standard on completed orders.
- Settlement (CO88 / KO88 / KO8G): post WIP to the balance sheet and variance to the P&L or CO-PA.
Steps 2 and 3 are mutually exclusive for a given order: while it is in production it produces WIP, and in the period it completes it produces variance. SAP switches between them automatically.
Catching what was missed
The usual period-end failures are things not run. Checking these every period is worthwhile.
| Check | How | If ignored |
|---|---|---|
| Unsettled orders | KOB1 and settlement logs | Cost sits on the order, belonging nowhere |
| Dummy profit centre balance | Profit centre reports | Profit centre results are wrong |
| Cost centre balances after allocation | Cost centre actual reports | Unallocated cost never reaches product cost |
| Plausibility of WIP | KKAO result list | The WIP figure on the balance sheet is wrong |
Reconciling with FI
In ECC, FI and CO held separate data and had to be reconciled, with adjustment postings through KALC and dedicated reconciliation reports.
In S/4HANA the Universal Journal means both share the same data and the reconciliation disappears. Cross-company allocations, which generate intercompany postings, remain the one area needing attention.