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Process Flow in Logistics

Actual costs of USD 2400 were incurred for a production order. Part of the order quantity was transferred into inventory. Because of this partial delivery, the order was credited with USD 1200 and the inventory debited correspondingly.

In the first period, the work in process for the order is USD 1200. Settlement allocates USD 1200 to Financial Accounting and Profit Center Accounting .

In the next period, additional actual costs of USD 1200 are incurred. Total work in process is USD 2400. When you settle, the difference of USD 1200 resulting from the previous period is allocated to Financial Accounting and Profit Center Accounting .

In the next period, the remaining part of the order quantity is transferred into inventory. Because of this delivery, the order is credited with USD 1200. The order balance is now zero. The status of the order is delivered . When the WIP is calculated, the remaining work in process of USD 2400 is canceled. Settlement cancels the previous work in process and settles the difference between the actual debits and the actual credits of the order to a price difference account.

Process Flow in Accounting

In the first period, the system performs the following postings:

  • On the basis of the goods issue:

  • The production order is debited with actual costs of USD 800

  • The inventory account of the withdrawn material is credited.

  • The consumption account in the income statement is debited

  • On the basis of the confirmation:

  • The production order is debited with actual costs of USD 1200.

  • The cost center that performed the activity is credited.

  • On the basis of overhead calculation:

  • The production order is debited with actual costs of USD 400.

  • The cost center whose costs were allocated by the overhead calculation process is credited.

  • On the basis of the goods receipt (partial delivery):

  • The production order is credited with USD 1200.

  • The following posting is made in Financial Accounting : The inventory account is debited with 1200 and the inventory change account (plant activity) is credited with 1200.

  • On the basis of the settlement of the work in process:

  • The following posting is made in Financial Accounting : The unfinished goods inventory account (work in process) is debited with 1200 and the unfinished goods inventory change account (work in process) is credited with 1200.

  • A posting is generated in Profit Center Accounting .

In the second period, the system performs the following postings:

  • On the basis of the goods issue:

  • The production order is debited with actual costs of USD 1200.

  • The following posting is made in Financial Accounting : The raw materials consumption account is debited and the raw materials inventory account is credited.

  • On the basis of the settlement of the work in process:

  • The following posting is made in Financial Accounting : The unfinished goods inventory account (work in process) is debited with 1200 and the unfinished goods inventory change account (work in process) is credited with 1200.

  • A posting is generated in Profit Center Accounting .

In the third period, the system performs the following postings:

  • On the basis of the goods receipt (final delivery):

  • The production order is credited with USD 1200.

  • The following posting is made in Financial Accounting : The inventory account is debited with 1200 and the inventory change account (plant activity) is credited with 1200.

  • On the basis of the settlement of the canceled work in process:

  • The following posting is made in Financial Accounting : The unfinished goods inventory change account (work in process) is debited with 1200 and the unfinished goods inventory account (work in process) is credited with 1200.

  • A posting is generated in Profit Center Accounting .

  • The remaining order balance is posted as follows:

  • The expense account (from price differences) is debited with 1200 and the inventory change account is credited with 1200.

  • A posting is also generated in Profit Center Accounting .