Here you define parameters for settlement . Settlement transfers the actual costs assigned to the order to one or more receivers (normally the material being manufactured). The variances between the original inventory valuation and the actual costs are transferred to Financial Accounting, Profit Center Accounting and Profitability Analysis.
When you settle, the work in process is transferred to Financial Accounting and Profit Center Accounting. Work in process is always settled by period.
Full settlement is used for production orders and process orders in the Product Cost by Order component.
Each goods receipt results in a preliminary valuation of the inventory.
When the order is completed (status delivered), settlement performs the following functions:
The settlement rule for this settlement is generated from the default rule PP1 for the relevant plant in the parameters that depend on the order type.
Depending on the price control, the system debits either the balance sheet account (price control indicator V) or a price difference account (price control indicator S) with the difference during settlement. The material account determination determines the primary cost element (such as for semifinished products or finished products) under which the credit is updated on the order.
In standard cost accounting, this difference is analyzed in variance calculation and a second posting is made for the variances in Profitability Analysis.
If the order doesn't have the status Delivered at the end of the period, you can calculate the work in process and make postings for the work in process in Financial Accounting when you settle. From period to period you calculate the change against the previous period using WIP calculation and settle the amount of the change to Financial Accounting.
For full settlement, you specify the default rule "PP1 Production orders (full settlement)" in the parameters that depend on the order type for the relevant plant.
Periodic settlement is used for
product cost collectors and cost object hierarchies in the Product Cost by Period component. It can be used for production orders and process orders in the Product Cost by Order component.
A preliminary valuation of the inventory takes place with every goods receipt.
At the end of the period, the run schedule header carries both variances and the cost of the work in process.
When you settle at the end of the period, you can:
For the periodic settlement of manufacturing orders, you specify default rule "PP2 Production orders (periodic settlement)" in the parameters that depend on the order type for the relevant plant.
For the periodic settlement of product cost collectors, you specify default rule STR (with strategy for tracing factor determination).
You can use full settlement and periodic settlement for the settlement receiver "material" for materials that are:
If you are using a valuated sales order stock in sales-order-related production, the flow of quantities and values is the same as in make-to-stock production.
If you are using a
nonvaluated sales order stock in sales-order-related production, goods movements are not valuated. Instead, the costs are settled to the sales order and then to Profitability Analysis. No variances are calculated.
The settlement rule for the manufacturing order assigned to a sales order item is generated using the default rule PP1 (full settlement) in the parameters that depend on the order type.
The settlement rule for the sales order is generated automatically if Profitability Analysis is active. If Profitability Analysis is not active, you must manually create a settlement rule to a G/L account.
You can specify in the
allocation structure whether the settlement to the sales order should be made under the original cost element or under a settlement cost element.
If you are using a nonvaluated sales order stock, you can only use full settlement for the manufacturing orders assigned to a sales order item. At the end of the period, the costs are settled from the manufacturing orders and process orders assigned to the sales document item to the sales document item. The inventory values are calculated on the sales document item when you perform results analysis. You then settle the inventory values calculated in results analysis to Financial Accounting and Profit Center Accounting.
Settlement requires a settlement rule for the order. When the order is created, the system generates a settlement rule from the default rule in the parameters that depend on the order type:
This settlement rule determines the settlement receiver (such as a material or sales order). The settlement rule is linked to the following parameters:
The standard system contains settlement profiles, allocation structures, source structures, and PA transfer structures.
If you want to use these parameters, do the following:
If the predefined parameters don't meet your requirements, you can change the existing parameters or create new ones.
The following settlement profiles are provided in the standard system:
The settlement profiles are linked to the allocation structure A1 . This settlement structure must contain all the cost elements to be settled (including the results analysis cost elements). If you don't settle to a material, you must also specify whether settlement should be made under a settlement cost element or under the original cost element.
If you want to pass variances with these settlement profiles to Profitability Analysis, you must do the following:
To define different equivalence numbers in joint production depending on the type of cost (such as material costs or production costs), you must create a source structure and specify it in the apportionment structure of the material master record.
Note the following in the
Product Cost by Sales Order component:
If you want to make postings for the work in process in Financial Accounting, you must do the following:
To be able to use the parameters in the standard system, you must: