Can anyone please explain me the how the Costing takes place for the Production Orders.

Actually, I am new to this package , In Other Package (RAMCO ERP) 
(The Process is like follows: 
a. Production Work-Order Resource Cost Posts to Finance directly 
b. Material Consumption postings happens from OSV(Order Settlement Variance) of MAC Module(Management Accounting).
  
Please somebody explain me as above in SAP.
 

The following are considered in costing,
 
1) cost of materials that you have issued for order 

2) activity you have performed in terms of labour hours that you entered while confirming the order (the rates for the labour are defined in the activity planning tables of controlling module)..which is generally associated with a formula key and attached to a workcenter that is linked to a cost center also 
 
3) overhead as applicable with respect to that cost center based on a predetermined cost center planning and its rate...

Anil
 

Costing updation in production order

How is costing updated for production order? 
After goods issue, conformation & GR, we do TECO. 
Before closing the order, costing details should be updated. Is it not? 
Could you please guide me as to how this is done? 
Also, what is the transaction code to be used? 
 

Planned cost is caculated if you click 'cost calculation' in production order. GI go production order will update actual material cost. Confirmation of production order will update actual activity cost. You can settle cost once production order has status TECO or DLV. From PP side, the transction is CO02
 

In IMG we can define that when we calcu. the planned cost. 

There are 3 ways. 
- Determine planned costs when saving, 
- Do not determine planned costs when saving,
- Determine planned costs when saving if released. 

But the actual cost is posted when we draw the material, when we confirm the order......We can use co02 and click the calcu. cost to update the cost in the prd order. 
 

Error in Cost Calculation

I am using 4.7. When I was saving my production order, there was this error message that told me that there was an error in cost calculation. Do you have any suggestions what I couldn't have done? What can I do to fix this? 
 

Check the log file in the Production Order -> Goto -> Logs -> For costing 

Then take it from here....

Check whether the material for which you have created a production order has a price define in material master like Moving average price or Std price.

Fast Links:
Get help for your SAP PP Problems
Do you have a SAP PP Question?

SAP PP Books
SAP Production Planning Reference Books

Best regards,
SAP Basis, ABAP Programming and Other IMG Stuff
http://www.sap-img.com