BOM of Finished Product FERT X (Individual Requirements) and Valuation Basis of Semifinished Product HALB S (Collective Requirements)
The above illustration shows the BOM of finished product FERT X. FERT X is an individual requirements material, which means that it is manufactured for a specific customer rather than for the normal make-to-stock inventory. FERT X consists of individual requirements material HALB Y and collective requirements material HALB Z. HALB Z, in turn, consists of two collective requirements raw materials ROH A and ROH B. HALB Z is manufactured on the basis of a production order created independently of sales orders. This production order delivers the material to the make-to-stock inventory.
The above illustration also shows the standard cost estimate for the collective requirements material HALB Z.
Quantity and Value Flow
This flow of quantities and values results from the fact that with a nonvaluated sales order stock, individual requirements materials used in production orders are withdrawn from inventory unvaluated. Since the actual costs on production orders for individual requirements materials are therefore incomplete, all production orders created for the sales order stock (even those for lower-level BOM items) are settled to the sales order item during period-end closing. The sales order item therefore always shows the actual costs of the production orders belonging to the item, and not the planned costs of the material.
Since the update of planned costs is based on the update of actual costs for reasons of comparability, a standard cost estimate for material FERT X would not show the complete costs either. It would therefore be inappropriate to use such a standard cost estimate to calculate the standard price.
The inventories are valuated during results analysis.
The costs on the sales order item are calculated on the basis of the actual cost of goods manufactured.
Starting Point
Your customer orders 10 units of finished product FERT X. You create sales order number 4815. Item 010, which carries costs and revenues, lists 10 units of FERT X. The system generates production order number 01 for 10 units of FERT X from the sales order item. Because you are an assembly processor, the production order is generated directly and no requirements planning or associated generation of planned orders takes place. Since FERT X contains HALB Y which also is an individual requirements material, the system automatically generates another production order, number 02, for 10 units of HALB Y.
Production order 4711 has no reference to the sales order. It was created to manufacture 20 units of collective requirements material HALB Z.
Business Transactions in the First Period
Period-End Closing
Settlement of the Production Orders to the Sales Order Item
Results Analysis
To valuate the nonvaluated sales order stock, you perform results analysis at the end of the period. Results analysis uses the revenue-based method in this example.
Definitions:
POC = Planned revenue / Actual revenue
Calculated costs = POC x Planned costs
Calculated revenue = Actual revenue
Profit = Actual revenue – Calculated cost of sales
Capitalized costs = Actual costs – Calculated costs
The following values are calculated:
POC = 45 / 150 = 0.3
Capitalized costs = 75 – 36 = 39
Calculated costs = 0.3 x 120 = 36
Calculated revenue = Actual revenue = 45
Profit = 9
Settlement of Results Analysis Data
Postings in Financial Accounting
When the goods issues and goods receipts for the normal warehouse inventory of the collective requirements material are entered, the corresponding postings in Financial Accounting are made automatically.
With a nonvaluated sales order stock of the individual requirements material, the goods movements do not result in postings in Financial Accounting. The postings of the inventory changes are made here at the end of the period after results analysis and settlement of the capitalized costs. If there are a number of different materials in a sales order, they are valuated as a total. This total includes both finished products and semifinished products. With a nonvaluated sales order stock, you therefore perform a collective valuation at the end of the period. Individual valuation is not possible.