Co-Products: One Process, Two Valuable Outputs and Cost Apportionment
A separation process yields two products that both matter. Unlike a by-product, a co-product carries a share of the order's cost: an apportionment structure splits costs 70/30, both outputs are received with 101, and settlement distributes the order's costs to them.
Educational content. SAP behaviour varies by configuration and release. Spotted something off? Report it.
Digital twin
01Two outputs, one cost split
FG-4100 is flagged as a co-product; the apportionment structure splits costs 70% to FG-4000, 30% to FG-4100.
Business scenario
Process order 1500010 refines 1,000 KG of crude oil base (RM-4000) into 600 KG of light fraction FG-4000 and 400 KG of heavy fraction FG-4100. Costing splits costs 70/30 by equivalence numbers.
All companies, numbers and documents are fictional demo data.
Step-by-step flow
- 01
Two outputs, one cost split open in twin
FG-4100 is flagged as a co-product; the apportionment structure splits costs 70% to FG-4000, 30% to FG-4100.
Both outputs are valuable, so both must carry cost — the question is how much each.
- 02
By-product or co-product? open in twin
The heavy fraction sells for real money and drives production decisions. How should it be modelled?
The choice changes the product cost of both materials.
- 03
Main product carries everything open in twin
As a by-product, FG-4100 would credit the order at a fixed price; FG-4000 would absorb all remaining cost and look far more expensive than it is.
It suits minor outputs like offcuts, not a second main product.
- 04
Run the separation open in twin
1000 KG RM-4000 consumed (261): ₹1,00,000; resource time ₹20,000.
It is not yet known which output 'caused' which cost — that is what apportionment decides.
- 05
Receive both outputs (101) open in twin
FG-4000 +600 KG, FG-4100 +400 KG. Both are received with 101 against the same order.
Their value at receipt and the later settlement depend on price control and configuration — with standard prices equal to the apportioned cost, there is no variance (as here).
- 06
Settle by apportionment open in twin
₹1,20,000 split 70/30: ₹84,000 to FG-4000, ₹36,000 to FG-4100.
Product costing, pricing and margin analysis for both fractions depend on it.
- 07
Both products costed open in twin
FG-4000: ₹140/KG; FG-4100: ₹90/KG.
Co-products are common in chemicals, food (e.g. dairy, meat) and refining.
SAP documents
Stock impact
| Step | Plant / SLoc | Stock type | MvT | Change |
|---|---|---|---|---|
| Run the separation | 1000 / 0002 | Unrestricted use | 261 | −1,000 KG |
| Receive both outputs (101) | 1000 / 0001 | Unrestricted use | 101 | +600 KG |
| Receive both outputs (101) | 1000 / 0001 | Unrestricted use | 101 | +400 KG |
Accounting impact
Feedstock consumption
TypicalRun the separation
- Dr Consumption — order 1500010 (GBB/VBR)₹1,00,000
- Cr Inventory — raw materials (BSX)₹1,00,000
Standard order consumption.
Resource time
ConceptualRun the separation
- Dr Order 1500010 — resource hours₹20,000
- Cr Cost center — activity allocation₹20,000
Activity allocation to the order.
Settlement to co-products
Configuration dependentSettle by apportionment
- Dr Cost assigned — FG-4000₹84,000
- Dr Cost assigned — FG-4100₹36,000
- Cr Order 1500010 — settlement₹1,20,000
The order's costs are distributed to the co-products according to the apportionment structure (equivalence numbers). How this posts — via material settlement and price differences or material ledger — depends on configuration.
Typical conceptual flow. Actual G/L accounts and posting behaviour depend on material valuation, automatic account determination and system configuration.
Movement type
Costs joint production fairly when one process yields several valuable products, by splitting the shared cost with an apportionment structure.
Transactions & Fiori apps
- CS02 — BOM with co-product item
- COR1 — Create Process Order
- MIGO — Goods Movements
- CO88 — Settlement
- Manage Process OrdersAvailability depends on release and scope
Differences by SAP version
Co-product indicator, apportionment structures and joint production costing.
Same model; material ledger always active.
Joint production availability depends on scope.
Configuration
Apportionment structure
Configuration dependentEquivalence numbers decide each co-product's share of cost.
Joint production in costing
Configuration dependentCost estimates for co-products use the same apportionment.
Prerequisites
- Co-product indicator on the material (MRP 2) and BOM item
- Apportionment structure with equivalence numbers
- Settlement to the co-products
Master data
- Material master (co-product indicator)
- Marks the material as a co-product.
Organizational structure
- Plant 1000
Tables
| Table | Description |
|---|---|
| STPO | BOM item with co-product indicator |
| AFPO | Order items — one per co-product |
Integration
- COJoint production costing and settlement.
- MMReceipts of both products.
Common errors
“Settlement puts all cost on the main product”
Likely causes: No apportionment structure; Co-product indicator missing
Where to look: Material master · Order settlement rule
Troubleshooting
Something went wrong? Work through these checks in order. They are diagnostic questions, not configuration instructions — confirm changes with your system owner.
CHECK 1
Settlement
- Apportionment structure assigned?
- Settlement rule includes all co-products?
Interview questions
By-product vs co-product?
A by-product is a minor output, received with 531 at a fixed price that credits the order. A co-product is an equally valuable output: it is an item of the order, received with 101, and the order's costs are split between the co-products by an apportionment structure (equivalence numbers) at settlement.
Quiz
References
- SAP SE — SAP Help Portal: Co-Products and By-Products (source)
- SAP SE — SAP Help Portal: Joint Production (source)
Explanations are original. They summarize standard behaviour; always validate against your system's release and configuration.
Version history
| Version | Change |
|---|---|
| 1.0.0 | Initial version. |