Entering content frameFunction documentation (12) Inventory Determination, Reserves for Follow-Up Costs, Without Milestone Billing Locate the document in its SAP Library structure

Use

You can use the method Inventory Determination, Reserves for Follow-Up Costs, Without Milestone Billing for:

You can use the method Inventory Determination, Reserves for Follow-Up Costs, Without Milestone Billing to:

In this case the system creates reserves for unrealized costs in the amount of the difference between the planned costs and the actual costs.

Note the following:

As soon as revenue is received in a period, the revenue is compared either with the cumulative actual costs incurred up to that period or with the planned costs. In other words, the cost of sales is not proportional to the actual revenues as with the revenue-based method, nor is it proportional to the quantity sold as with the quantity-based method.

Prerequisites

You have planned costs.

Choose a results analysis method in simplified Customizing for Product Cost by Sales Order under Period-End Closing ® Results Analysis ® Valuation Method.

Features

If R(a) = 0 then C(PA) = 0

If R(a) <> 0 and C(p) > C(a) then C(PA) = C(p)

C(r) = C(p) - C(a)

If R(a) <> 0 and C(a) > C(p) then C(PA) = C(a)

R(PA) = R(a)

If R(a) = 0 then C(z) = C(a)

If R(a) <> 0 then C(z) = 0

Example

Suppose you have planned costs of USD 120,000.

Period 01

In period 01 you have actual costs of USD 20,000 but no revenues. In results analysis, the system calculates the following data:

You then settle the following:

The following values are reported in CO-PA:

Profitability Analysis

Actual revenues

0

Calculated cost of sales

0

Profit

0

The income statement shows the following values:

Income Statement

Expense

Revenue

Actual costs 20,000

Inventory increase
Capitalized costs 20,000

20,000

20,000

Period 02

In period 02 actual costs increase to USD 80,000. You deliver to your customer and send an invoice for USD 100,000. The order is partially delivered and partially billed. In results analysis, the system calculates the following data:

You then settle the following:

The following values are reported in CO-PA:

Profitability Analysis

Revenues (actual revenues)

100,000

Cost of sales (planned costs)

120,000

Profit

-20,000

The income statement shows the following values:

Income Statement

Expense

Revenue

Actual costs 80,000

Actual revenues 100,000

Reserves for unrealized costs 40,000

 
 

Loss 20,000

120,000

120,000

Period 03

In period 03 actual costs increase to USD 130,000. You do not invoice. In results analysis, the system calculates the following data:

You then settle the following:

The following values are reported in CO-PA:

Profitability Analysis

Revenues (actual revenues)

100,000

Cost of sales (actual costs)

130,000

Profit

- 30,000

The income statement shows the following values:

Income Statement

Expense

Revenue

Actual costs 130,000

Actual revenues 100,000

 

Loss 30,000

130,000

130,000

Period 04

In period 04 actual costs increase to USD 140,000. You deliver to your customer and send an invoice for USD 100,000. Total revenue is USD 200,000. The order is now fully delivered and fully invoiced. In results analysis, the system calculates the following data:

You then settle the following:

The following values are reported in CO-PA:

Profitability Analysis

Revenues (actual revenues)

200,000

Cost of sales (actual costs)

140,000

Profit

60,000

The income statement shows the following values:

Income Statement

Expense

Revenue

Actual costs 140,000

Actual revenues 200,000

Profit 60,000

 

200,000

200,000

The profit on your sales order is USD 60,000.

 

 

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