Selected Logistical Processes and Cost Objects 
You can use Cost Object Controlling in conjunction with a wide variety of logistical processing types.
Features
Customer-Specific External Procurement
You procure a material (such as a raw material used in a semifinished or finished product in individual requirements, or a trading good) specially for a particular customer. The externally procured material is carried in individual requirements.
The system generates a purchase requisition from the sales order.
If you are using a Valuated Sales Order Stock, the externally procured material is carried in the valuated sales order stock.
If the raw material being processed is an individual requirements material, the costs for the raw material go into the semifinished product or finished product when it is used.
If you are using a Special Case: Nonvaluated Sales Order Stock the externally procured material is assigned directly to the sales order item that carries costs and revenues when the goods receipt is entered.
Customer-Specific External Activities
The costs incurred by an external activity can be assigned directly to the sales order item that carries costs and revenues. In this case, the purchase order updates to the sales order item that carries costs and revenues.
Production with Material Requirements Planning
You can use material requirements planning both with individual requirements materials (sales-order-related production) and with collective requirements materials (make-to-stock production). In material requirements planning:
Planned orders for materials produced in-house are generated, which are converted into manufacturing orders
Purchase requisitions for externally procured materials are generated, which are converted into a purchase order
Stock transport orders are created for stock transfers of finished materials
Material requirements planning is multilevel. That is, planned orders, purchase requisitions, and stock transport orders are also generated for secondary requirements.
The cost objects can be manufacturing orders and product cost collectors as well as cost object hierarchies and sales order items.
Assembly Processing
If you want to trigger the assembly of individual parts or assemblies into a finished product right when you create a sales order, use assembly processing. This enables you to skip over material requirements planning and materials planning for the sales order, and generate the following orders directly from the sales order:
A manufacturing order (also called an assembly order)
An assembly order is thus a request to assemble prefabricated parts and assemblies into a finished product for an existing sales order. An assembly order can be a production order or process order.
A planned order in repetitive manufacturing
For more information, refer to the text below under the heading Sales-Order-Related Production with Planned Orders.
A service order in maintenance tasks
The logistical order is assigned to the sales order item.
In assembly processing, the dependent requirements are usually taken from inventory. That is, the materials that go into the finished product are collective requirements materials. However, you can also use assembly processing in conjunction with dependent requirements that are controlled by individual requirements. You can also use collective orders in assembly processing (see above).
In assembly processing, the cost object can be the following:
With a valuated sales order stock, the cost object can be the manufacturing order or product cost collector for the individual requirements material.
In this case you use the functions of Product Cost by Order or Product Cost by Period.
The sales order item, for the purpose of analyzing the costs and revenues of the product manufactured for a specific customer
In this case you use the functions of Product Cost by Sales Order in addition.
Variant Processing
From the large number of possible variants of a product (configurable material), the desired components are selected in the sales order item by valuating the characteristics of the product. This creates a specific, manufacturable product variant (configured material) in the sales order item. Selecting a particular characteristic value may bring up other required characteristics that must be selected (such as dependent components or operations). The relationships between the components and the operations are stored as object dependencies in variant configuration.
The product variant is manufactured with a manufacturing order or planned order (see below). In variant processing, the cost object is:
Only the manufacturing order or product cost collector if you are mainly interested in the cost of the product. This is the case in Cost Analysis in Mass Production on the Basis of Sales Orders.
In this case, you use the functions of Product Cost by Order or Product Cost by Period.
The manufacturing order for the configured material contains only those material components and operations that were selected in the configuration process.
The sales order item in addition to the manufacturing order if you are mainly interested in the cost of the sales order item. This is the case in Cost Analysis in Complex Make-to-Order Production. In variant manufacturing, order-specific changes to the variant would have been made, for example. Only in this case do you use the functionality of Product Cost by Sales Order.
You specify whether the material can be configured in the Basic Data view of the material master record.
Note
You can simulate the BOM explosion of the configured material in advance in the sales order item. The actual BOM explosion is made during materials planning. The primary requirement refers to the characteristic valuation. This ensures that the BOM can be exploded in accordance with the specification in the sales order item.
See also:
For information on the special features of planned cost calculation in variant processing, see the document Product Cost by Sales Order.
Collective Orders
In multilevel production structures you can link manufacturing orders for collective requirements materials or individual requirements materials into a Collective Order. You can use collective orders in conjunction with assembly processing.
Customer-Specific Services (Such as On-Site Assembly)
You provide a customer-specific service. You use the sales order item as the cost object (Sales Order Items That Carry Costs and Revenues). Because the product in the sales order item is a service, it does not have a quantity structure. Therefore no manufacturing order (production order or process order) is assigned to the sales order item. The preliminary cost estimate for the sales order item is created as a Unit Cost Estimates for Sales Order Items. To update and analyze the costs, you use the functions of Product Cost by Sales Order.
Sales-Order-Related Production with Planned Orders (Repetitive Manufacturing)
A lean processing scenario in sales-order-related production can be represented with the use of planned orders.
A planned order for an individual requirements material is created if the indicator repetitive manufacturing is set in the MRP view of the material master record of the material being manufactured.
If you want the planned order to be generated when you save the sales order, specify assembly type 1 (planned order: static processing) or 4 (planned order: dynamic processing) in the field assembly type in the requirements class.
If you don’t specify assembly processing in the requirements class, the planned order is generated in requirements planning.
The planned order lists the material components of the material being manufactured. The conversion indicator is not turned on in the planned order. This means that no purchase requisition and no manufacturing order (production order or process order) is created on the basis of the planned order.
If you want to stage the material for delivery to the customer, go to the Repetitive Manufacturing menu and enter a goods receipt for the sales order item with the function for Final backflush for sales order. This final backflush has the following effects:
With a nonvaluated sales order stock the sales order item that carries costs and revenues is debited with the costs for the material components.
With a valuated sales order stock the product cost collector for the material manufactured for the sales order is debited with the costs for the material components (see also: Product Cost Collectors in Sales-Order-Related Production).
To debit the sales order item or the product cost collector with the costs for activities performed, you have the following options:
You create a Standard Cost Estimate for Configurable Material. You can post automatic activity allocations for goods receipt postings of the finished product on the basis of this cost estimate.
You perform manual internal activity allocations.
See also:
Cost Object Controlling: Make-to-Stock Production
Cost Object Controlling: Sales-Order-Related Production
For more information on variants, see the documentation LO Variant Configuration Guide.
Subcontracting with a Valuated Sales Order Stock
Sales-order-related production can also support subcontracting. The following describes how subcontracting with a valuated sales order stock is processed.
The Individual/collective indicator in the MRP view of the material master record controls whether the provided parts come from the valuated sales order stock or from the subcontracting stock. If it is specified there that the material is an individual requirements material, the material provided is taken from the Valuated Sales Order Stock. If it is specified there that the material is a collective requirements material, the material is taken from the subcontracting stock. If the provided materials are to be taken from the valuated sales order stock, they must first be transferred to the valuated sales order stock. This is done as usual through external procurement or stock transfer.
When the goods receipt is posted for the subcontracted material, the system debits the inventory account and credits the inventory change account. The subcontracted material is posted to the valuated sales order stock. The other postings correspond to the normal procedure in classical subcontracting. This means that the goods issue of the provided materials and the subcontracting itself are posted at the same time as the goods receipt for the subcontracted material.
Posting record for goods issue of provided materials: The raw materials consumption account is debited and the raw materials inventory account is credited.
Posting record for the subcontracting itself: The subcontracting account is debited and the liabilities account is credited, or the subcontracting account is debited and the GR/IR clearing account is credited. The posting to the GR/IR clearing account is reversed later when the invoice is received by a posting to the liabilities account.
The sales order item is not debited with the costs of the subcontracted material until the product is delivered to the customer. This is the usual procedure with a valuated sales order stock. The debit amount is usually the standard cost of the subcontracted material, which is usually calculated in the cost estimate for the sales order. A previous debit of the sales order item with the expense incurred due to the withdrawal of the provided parts would result in a doubling of the reported costs. However, these costs can be reported as statistical actual costs if you create statistical cost elements (cost element type 90) for the inventory accounts. Statistical cost elements are reported for the sales order in the information system.
Note
The inventory change account (consumption account) that is addressed by the goods issue must exist as a primary cost element so that it is included in the cost estimate. To prevent the sales order item from being charged with the costs in the actuals, go into Customizing for Materials Management under 
Inventory Management 
Goods Receipt Define Screen Layout 
and make sure that no mandatory entry is required (hide) for sales orders in the screen control of movement type 543 E. If account assignment that is relevant to cost accounting is demanded at the time of the goods issue posting, this can be solved by the use of a dummy internal order to which the costs for the provided material are posted. The default account assignment can be specified with transaction OKB9.