In sales-order-related production, materials are manufactured with reference to a sales order item. Such materials are also called individual requirements materials. Individual requirements materials can also be manufactured for a project stock.
There are two types of sales-order-related production:
You sell different variants of a configurable material. The sales order item contains the characteristic value of the configurable material. The focus of cost management is on the cost of the product, rather than the cost of the sales order item.
You are a computer manufacturer:
Customer A orders a computer with a 21" monitor and 1.2 GB hard disk. You create sales order number 4711 with item 10.
Customer B orders a computer with a 17" monitor and 1.2 GB hard disk. You create sales order number 4712 with item 10.
Cost accounting on the two sales order items would not deliver meaningful results, since the costs in each case depend on the particular combination of monitor and hard disk. A more useful approach would be to analyze the costs of the products:
The cost object can be a manufacturing order (production order or process order) or a product cost collector. A requirement is that you are using a valuated sales order stock.
You can use either the Product Cost by Order component or the Product Cost by Period component.
You manufacture a product specially for a particular customer, or make customer-specific changes to variants. In this case you are interesting in planning and monitoring the cost situation for this particular product.
The cost object is the sales order item that carries costs and revenues. You use Product Cost by Sales Order (usually in addition to Product Cost by Order and/or Product Cost by Period).
See also:Product Cost by Period Product Cost by Order Product Cost by Sales Order Valuated Sales Order Stock Sales Order Item That Carries Costs and Revenues
For information on engineer-to-order, refer to the document Product System.