Show TOC

Define Assignment

Here you assign the following cost elements to line IDs:

• Cost elements under which an order is debited and credited

• With work in process at target costs , all cost elements that are included in the cost estimate on which the calculation of target costs for the valuation of work in process is based (such as all cost elements in the for the product cost collector.

Work in Process at Actual Costs

The line IDs put the costs incurred for the order into specific groups such as:

• Direct material costs

• Production costs

• Indirect costs

These groups should be based on the structure of the cost of goods manufactured in the cost component structure (see Maintain Cost Component Structure and Define Cost Components).

In the Update, the category indicates whether the cost elements under which the different postings are made are debits or credits for WIP calculation.

• You must assign all debits (such as for material withdrawals) internal activities, external activities and overhead, to line IDs of category K (costs).

• You must assign all credits (such as for material issues and order settlement) to line IDs of category A (settled costs).

See also: Define Update

You can use the debit/credit indicator to separate the costs that are written under the same cost element. This information is needed for WIP calculation to treat the withdrawal of a semifinished product from stock as a debit and the delivery of a semifinished product to stock as a credit.

Work in Process at Target Costs

In the Update, the category indicates whether the cost elements under which the costs are updated in the cost estimate on which target cost calculation for the valuation of work in process is based are relevant to WIP calculation.

• Create line IDs of category K (costs) for costs relevant to valuation (such as, direct material costs).

• Create line IDs of category N (do not take into account) for costs for which no work in process is to be created (such as production overhead). If you don't create line IDs for these costs, the system will issue an error message.

Assigning Fixed and Variable Costs to Different Line IDs

The fixed/variable indicator allows you to assign fixed and variable costs (such as costs for internal activities or for semifinished products) to different line IDs.

Capitalizing Work in Process

In the Assignment, you also define whether the in process that must be shown as a result of these costs is to be capitalized and in what amount. For example, you can specify that:

• 100% of the work in process calculated from the direct material costs can be capitalized

• 80% of the work in process calculated from the indirect costs can be capitalized

You also define the validity dates for the assignment.

You assign the cost elements combined in line IDs to one of the following groups:

• capitalize (ReqToCap)

• Costs with an option to capitalize (OptToCap)

• capitalize (CannotBeCap)

You then define the following:

• What percentage of the costs cannot be capitalized

• For what percentage of the costs you can choose whether the costs must be capitalized or cannot be capitalized

This assignment can be taken into account in the posting rules. There are three categories in the posting rules that are created from this assignment:

WIPR	Work in process with requirement to
	capitalize costs
WIPO	Work in process with option to
	capitalize costs
WIPP	Work in process with prohibition to
	capitalize costs

You will normally define a posting rule that assigns the work in process with requirement to capitalize costs to the G/L accounts for unfinished products (balance sheet) and stock changes (P+L).

Work in process is capitalized according to this assignment.

Remember:

• The line IDs with requirement to capitalize and the line IDs with prohibition to capitalize combine the costs that are treated the same according to commercial and tax law.

• The line IDs with an option to capitalize costs combine the costs that are treated differently by commercial law than by tax law.

Transfer Prices

In the Product Cost by Order component, if you are using multiple valuation views in the calculation of work in process at actual costs, the system automatically assigns the line IDs defined in the results analysis version of the operational valuation view to the results analysis versions of the multiple valuation views referencing the operational results analysis version.

Requirements

You must already have defined the following:

• Define results analysis version

• Create results analysis keys

• Define line IDs

Standard Settings

The standard system contains predefined line IDs. You have to assign the cost elements in your cost element list to these standard line IDs before you can calculate work in process.

Activities