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 Example for Work in Process That Can Be Capitalized Locate this document in the navigation structure

You have specified the following in Customizing for Product Cost Controlling :

  • 100% of the work in process that was calculated from the costs for raw materials (direct material costs) can be capitalized.

  • 80% of the work in process that was calculated from the material overhead and the production costs can be capitalized

  • None of the work in process that was calculated from the production overhead can be capitalized.

The following actual costs have been incurred for an order:

  • Raw materials: USD 100

  • Material overhead: USD 10

  • Production costs: USD 100

  • Production overhead USD 10

The work in process totals USD 220. The work in process that can be capitalized is USD 100 + USD 8 + USD 80 = USD 188.

You can call up reports in the Product Cost Controlling Information System that show the total work in process for the order (in this case, USD 220). The second settlement passes the WIP of the order to Financial Accounting (FI). USD 188 is capitalized in FI.