You use this function if you want to distribute the differences calculated in a material ledger (ML) costing run to the products delivered to the warehouse and to the work in process (WIP) in proportion to the quantities. This means that the differences to be assigned to the WIP are not included in the determination of actual prices of their semifinished and finished products. In contrast to the valuation of WIP in Cost Object Controlling (CO-PC-OBJ), which is based on standard prices, this function valuates WIP at actual prices.
The work-in-process inventory is determined in Cost Object Controlling. For more information, see Work in Process in Product Cost by Period or Work in Process in Product Cost by Order and WIP Quantity Documents.
· The material ledger is active.
· Actual Costing is active. This enables you to revaluate WIP materials at actual prices.
· To be able to revaluate WIP activities at actual prices in ML instead of in OBJ, the following setting must be made: In Customizing under Controlling → Product Cost Controlling → Actual Costing/Material Ledger → Actual Costing → Activate Actual Costing, set the activity update indicator to 2 (Activity Update Relevant to Price Determination).
· WIP Revaluation is active.
· For joint production, you have made all of the settings required for creating error-free order cost estimates. However, an order cost estimate does not have to exist. For more information on the prerequisites for order cost estimates, see Preliminary Costing of CO Production Orders or Preliminary Cost Estimates for Manufacturing Orders.
Activating WIP revaluation has the following effects:
· The WIP quantities for the materials and activities are determined for an order or product cost collector during period closing in Cost Object Controlling. This occurs in both Periodic and Order-Based Product Controlling. For more information, see WIP Quantity Documents.
· The actual quantities are adjusted in the material ledger so that they take WIP into account.
· Multilevel price determination takes place using the adjusted actual quantities in the costing run. This means only the differences that should be assigned to the delivered semi- or finished goods in the actual period are actually assigned to these products. The differences that should be assigned to the WIP are not included in the calculation. In addition to this, the differences for the consumed WIP from the older periods are assigned to the finished products (delivered to the warehouse). The WIP revaluation process then allocates the differences to WIP.
The revaluation process assigns these differences according to the periods concerned. The differences that occur in the closing period are assigned to the WIP that was newly created in this period. Differences from the closing period cannot be assigned to WIP that still exists from the previous periods.
· The differences assigned to the newly created WIP are posted to WIP accounts when the closing entries are made in the costing run. The WIP accounts are determined using keys WPM and/or WPA. The differences for the consumed WIP from older periods are posted from the WIP accounts to ML price difference accounts. These price difference accounts are determined using keys PRM and/or PRA. From here, these differences are posted to the price and exchange rate difference accounts for the product. For more information on these transaction keys, see the IMG documentation under Materials Management → Valuation and Account Assignment → Account Determination → Account Determination without Wizard → Set up Automatic Postings.
If you use WIP revaluation, the revaluation amounts from the closing entries are always posted to FI. It is not possible to prevent this posting.
You can archive WIP quantity documents, period information, and actual quantity structures for the WIP. For more information, see Archiving CO Material Ledger WIP Quantity Documents (CO-PC-ACT) and Archiving Material Ledger Period Data for WIP (CO-PC-ACT).