Changeover from total cost method to cost-of-sales method

Establish future-proof agile accounting in the company and use the potential of cost of sales accounting for successful corporate management

IBsolution Kontenplan

Converting chart of accounts


Redefining value flows


Adjusting reports

Why you should realign your reporting

In principle, companies in Germany have two options for preparing their income statements: the cost of production method and the cost-of-sales method. On a global scale, however, the cost-of-sales method is the international standard for accounting.

Particularly for companies with locations abroad and/or a high level of business complexity (project business, high structure costs for sales and development, etc.), the cost-of-sales method increasingly represents a central success factor for efficient corporate management and sustainable growth.

The cost-of-sales method provides an exact overview of the results of individual products/projects and combines financial accounting with management accounting. Based on a complete transparency of the profitability of individual orders and customers, a conscious prioritization of orders can be made. Overall, the cost-of-sales method supports rapid and strategically oriented company growth.

The advantage: Meanwhile, the cost-of-sales method is also possible within the framework of German GAAP. This means that a switch to IFRS is no longer necessary. As a result, companies save a massive amount of effort during the conversion to the cost-of-sales method.

Your contact person

Jana Murrweis IBsolution
Jana Murrweiss

+49 7131 2711-3000

IBsolution supports you holistically in the realignment of your reporting. We have the professional and technological know-how to implement the cost-of-sales method within the framework of German GAAP in your company – from the analysis of the initial situation to concept development and implementation.

How to benefit from the cost-of-sales method

Greater transparency

More transparency about value flows in customer projects and in the organization:

  • Integration of management accounting

  • Allocation of costs and services according to originator

  • Direct and detailed allocation of costs to the individual project/cost object

  • Visibility of individual value flows, e.g. allocations

Effective portfolio management

Effective and proactive portfolio management thanks to the mapping of a complete picture of projects and their profitability:

  • Direct comparability of individual projects

  • Simple margin check and easy co-calculation
    ⇒ Projects/products with high margins can be brought forward if necessary in order to settle projects with low margins that have to be delivered in the same period (business consistency)

  • More specific statement of the real value of a project

Increased efficiency & higher speed

Increased efficiency and higher speed in processes through simplification, standardization and automation:

  • More efficient processes through standardized accounting channels

  • Easier direct and thus originator-based attribution of costs based on allocations

  • Compensation for the matrix-like increase in complexity through automation potential in SAP processes

  • Visibility of capacity absorption (under/over) in the cost-of-sales method

Improved comparability

Better comparability with international competitors through harmonized accounting:

  • Use of the cost-of-sales method (IFRS) by all companies reporting internationally

  • Use of the cost of sales method (US GAAP) by all Anglo-Saxon financial closing

  • Easier determination of benchmarks with the help of the cost-of-sales method also in German GAAP

  • It’s easier to establish international networks because it’s easier to compare

  • Inorganic growth, mergers, easier integration of international acquisitions, easier formation and valuation of joint ventures

Cost-of-sales method | IBsolution

Successful corporate management with the cost-of-sales method

While the total cost method is a summary of the G/L accounts, the cost-of-sales method also includes the value flows and shows the results in functions. This makes it easier to analyze at first glance where deviations occur and where the strengths and weaknesses of the company are.



Total cost method vs. cost-of-sales method

Total cost method

  • Total cost method is only common in Germany

  • Lack of transparency about value flows

  • Profitability of the products is only visible via an additional calculation (cost-performance accounting)

  • Project-related reporting is not provided

  • Capacity utilization is not recorded

Cost-of-sales method

  • Worldwide standard, thus easy comparison with international competitors

  • Combination of accounting and cost-performance accounting requirements

  • Efficient management of portfolios through reporting of specific profitability

  • Better cost transparency at individual project level

  • Absorption can be quickly determined and evaluated

Use the conversion to cost-of-sales accounting as the basis for proactive management and profitable business growth. The new reporting structure helps to achieve your strategic objectives.

Our approach to the conversion to the cost-of-sales method


  • Determination of the current G/L accounts

  • Determination of value flows


  • Transparency about necessary changes in the chart of accounts

  • Allocation matrix of cost collectors to cost objects

  • Development of new mapping for reports

Cost-of-sales method | As-is analysis | IBsolution


  • Redefinition of the chart of accounts

  • Restructuring of the reports

  • Redefinition of the value flows


  • New chart of accounts that is capable of cost-of-sales method incl. accounts for cost-performance accounting

  • Installation and documentation of the new value flows

  • Creation of mapping for new reports

Cost-of-sales method | Concept | IBsolution


  • Implementation of the modified chart of accounts

  • Creation of the new reports

  • New setup of the value flows


  • Availability of the new chart of accounts and reports

  • New, smooth value flow

  • Identical result from cost-of-sales method and total cost method, but different presentation

Cost-of-sales method | Implementation | IBsolution


  • Simulation of a closure in the test system

  • Cross check to the legacy structure


  • Consistency of the two parallel prepared financial statements

  • Release of the cost-of-sales method financial statements


Cost-of-sales method | Testing | IBsolution


  • Release after successful testing

  • User training

  • Optional: Support during a complete closure


  • No more need for cost-of-sales method closures

  • Trained employees

Cost-of-sales method | Go-Live | IBsolution

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Cost-of-sales method | IBsolution

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