If you create rework orders in logistics, you must settle the costs for the rework orders to the original orders. The costs for the rework are settled to the original order with the function Preliminary Settlement for Co-Products, Rework.
The following functions should always be performed after the rework costs have been charged to the original order:
For this reason, you always perform the Preliminary Settlement for Co-Products, Rework function before you perform the above functions.
The original order is specified as the receiver in the settlement rule of the rework order.
It is recommended that settlement not be performed according to the original cost elements. Settlement according to original cost elements can result in multiple application of overhead to these costs if the period-end closing activities are performed more than once.
Raw materials costs are posted on a production order under cost element 400000. Material overhead is calculated on the basis of cost element 400000 and allocated to the production order. Overhead is also calculated on the basis of raw materials costs for a rework order assigned to the production order. The rework order settles the costs for raw materials to the production order under original cost element 400000. You then calculate the overhead again (for reasons that are too involved to explain here). Overhead is reapplied to the costs for raw materials allocated to the production order.
It is therefore appropriate to use settlement cost elements to settle rework orders. You control whether settlement is performed using the original cost elements or using settlement cost elements in Customizing for Product Cost by Order under Period-End Closing® Settlement. You carry out the following steps:
You can specify in the allocation structure whether settlement should be on the basis of the original cost elements. If you decide not to settle using original cost elements, enter the settlement cost elements in the allocation structure.
If you are working with settlement cost elements, then you must include the settlement cost elements in the Customizing settings for WIP calculation and settlement.
Enter the allocation structure in the settlement profile.
Then go into Customizing for Product Cost by Order under Manufacturing Orders® Check Order Types for Manufacturing Orders (PP and CO). Specify the settlement profile in the order type that you use for rework orders.
Settling under settlement cost elements also has the advantage that the variance calculation process allows you to recognize the cost overrun incurred by the rework as a resource-usage variance under the settlement cost element.
The rework order settles as follows:
See also:Production Orders in Cost Object Controlling Integration of Rework for Production Orders Product Cost Collectors Representing Rework in the System Rework Operations and Rework Quantities Rework and Confirmations
The following section provides additional information, particularly on the generalized worklist:Preliminary Settlement for Co-Products, Rework