(11) Inventory Determination, Without Planned Costs, With Milestone Billing 
Use
You can use the method Inventory Determination, Without Planned Costs, With Milestone Billing for:
Sales orders
Projects
You can use the method Inventory Determination, Without Planned Costs, With Milestone Billing to:
Calculate inventories in the amount of the actual costs if the actual revenue is zero
Calculate the cost of sales in the amount of the actual costs of the period if the actual revenue is not zero
The inventory is canceled as soon as actual revenues are received. If actual costs are incurred in a subsequent period but no actual revenues are received, the system again creates inventory in the amount of the actual costs of the period.
Note the following:
You cannot create reserves.
You can use this method with milestone billing.
There is no proportionality between cost of sales and revenue:
As soon as revenue is received, the actual costs are considered cost of sales in full. In other words, the cost of sales is not proportional to actual revenues as with the revenue-based method, nor is it proportional to the quantity sold as with the quantity-based method.
You do not need any planned data.
Sales and administration costs are reported as cost of sales.
Prerequisites
Choose a results analysis method in simplified Customizing for
Product Cost by Sales Order
under
Period-End Closing
Results Analysis
Valuation Method
.
Features
R(PA) = R(a)
C(PA) = 0 if R(a) per = 0
If R(a) per <> 0 then C(PA) cum = C(a) cum
If R(a) per = 0 then C(z) = C(a) cum
Cum = cumulative values since the last actual revenue
Per = results analysis period
Example
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:
Cost of sales affecting net income of USD 0
Revenue affecting net income of USD 0
Capitalized costs of USD 20,000
You then settle the following:
Capitalized costs to FI and EC-PCA
No cost of sales and no revenues to CO-PA
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:
Cost of sales affecting net income of USD 80,000
Revenue affecting net income of USD 100,000
Capitalized costs of USD 0
You then settle the following:
Cost of sales to CO-PA
Revenues to CO-PA
The cancellation of the capitalized costs to FI and EC-PCA
The following values are reported in CO-PA:
Profitability Analysis
Revenues (actual revenues) |
100,000 |
Cost of sales (actual costs) |
80,000 |
Profit |
20,000 |
The income statement shows the following values:
Income Statement
Expense |
Revenue |
Actual costs 80,000 |
Actual revenues 100,000 |
Profit 20,000 |
|
100,000 |
100,000 |
Period 03
In period 03 actual costs increase to USD 90,000. No billing takes place. In results analysis, the system calculates the following data:
Cost of sales affecting net income of USD 80,000
Revenue affecting net income of USD 100,000
Capitalized costs of USD 10,000
You then settle the following:
Cost of sales to CO-PA
Revenues to CO-PA
The capitalized costs to FI and EC-PCA
The following values are reported in CO-PA:
Profitability Analysis
Revenues (actual revenues) |
100,000 |
Cost of sales (actual costs) |
80,000 |
Profit |
20,000 |
Caution
This results analysis data was already settled to CO-PA in period 02.
The income statement shows the following values:
Income Statement
Expense |
Revenue |
Actual costs 90,000 |
Actual revenues 100,000 |
Profit 20,000 |
Capitalized costs 10,000 |
110,000 |
110,000 |
Period 04
In period 04 actual costs increase to USD 130,000. 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:
Cost of sales affecting net income of USD 130,000
Revenue affecting net income of USD 200,000
Capitalized costs of USD 0
You then settle the following:
Cost of sales to CO-PA
Revenues to CO-PA
The cancellation of the capitalized costs to FI and EC-PCA
The following values are reported in CO-PA:
Profitability Analysis
Revenues (actual revenues) |
200,000 |
Cost of sales (actual costs) |
130,000 |
Profit |
70,000 |
The income statement shows the following values:
Income Statement
Expense |
Revenue |
Actual costs 130,000 |
Actual revenues 200,000 |
Profit 70,000 |
|
200,000 |
200,000 |
The profit on your sales order is USD 70,000.