WIP calculation on the basis of reporting point qu (SAP Library

WIP calculation on the basis of reporting point quantities or

Description

Release 3.0 provides two methods for the valuation of work in process.

Work in process is valuated with the actual costs of the order (from Release 2.1 onwards)

The value of work in process is the difference between the actual costs incurred and the settled costs (that is, the difference between the debits for material withdrawals, internal activity allocations, external activities and overhead and the credits for the material receipts).

Work in process is valuated with the planned costs of the material produced (from Release 3.0 onwards)

WIP calculation valuates the quantities confirmed on the individual reporting points or for the individual operations with the standard price calculated in the standard cost estimate.

In both cases, work in process is calculated according to a retrograde method at the end of the period. The portion of work in process which can be capitalized is passed on to financial accounting.

The type of variance calculation is determined by the method you use.

If you want to calculate cumulated variances at the end of the prodution process, you valuate work in process using actual costs until the order is finally delivered. When the order has the status "delivered", WIP calculation cancels the remaining work in process. Variance calculation assigns the order balance to variance categories.

If you want to calculate variances by period along with scrap and work in process, you valuate work in process with the planned costs. The system determines the following for each period:

which materials were delivered to stock

which materials were confirmed at the reporting points or in the operations

At the end of the period, the quantities are valuated with the planned costs according to the standard cost estimate.

If this quantity was delivered to stock in the course of the period, the calculated work in process is cancelled immediately.

If this quantity was not yet delivered, the value calculated is displayed as work in process.

The value of work in process and of scrap is deducted from the actual costs posted on the order to calculate control costs. The control costs are compared to the target costs to calculate variances.

For run schedule headers with production cost collectors, you have to use this method of WIP calculation. You can also use this method for production orders and process orders.

Change system parameters in customizing

To be able to calculate work in process on the basis of the quantities, you have to define a valuation method for the results analysis key in the order master record. This valuation method has to valuate work in process according to planned costs (results analysis type "S"). For more information, see the Implementation Guide for Product Cost Accounting.

Order-related production

Define calculation using plan costs

Process manufacturing

Define calculation using planned costs

Repetitive manufacturing

Define valuation method

For repetitive manufacturing you must also specify a repetitive manufacturing profile in the material master record that allows reporting point confirmations.

Check confirmation data for repetitive manufacturing profiles

Changes in procedure

You have to start WIP calculation before scrap or variance calculation.

WIP calculation according to planned costs requires a standard cost estimate for the material produced. This standard cost estimate must be released.

WIP valuation happens on the basis of planned costs for each operation. This means you must make sure the

material components are assigned to the operations properly

standard cost estimate is valid at the time of WIP calculation