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Purpose

You can cost products by order on the basis of various orders:

  • On the basis of production orders in PP (with quantity structure)

  • On the basis of production orders in CO (without quantity structure)

  • On the basis of process orders in PP-PI

You can link production orders with a quantity structure and process orders into collective orders.

Process Flow

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You calculate the planned costs of the material. You do this by creating a cost estimate with a quantity structure or a cost estimate without a quantity structure.

  1. You create a production order with or without quantity structure.

  • If you are using the Production Planning (PP) component, create the production order there.

  • If you are not using the Production Planning component, you can create a production order in Controlling (CO); this production order represents the PP production order from the cost accounting point of view. You can carry out all the functions of Cost Object Controlling for this order and you can create a goods receipt for the material produced.

You cannot carry out functions of Production Planning (such as scheduling or capacity planning) for this order.

  1. You create a preliminary cost estimate for the order.

  • If you are using the PP component, a preliminary cost estimate will be created when you create the order. This cost estimate calculates the planned costs for the order. The preliminary cost estimate can be created when the order is saved or released. This cost estimate uses the quantity structure of the order.

  • If you are using a production order without a quantity structure, you must manually enter the planned costs for the order.

  1. You enter actual costs for the order.

  2. You can post actual costs on the order when it is released. Actual costs arise when materials are withdrawn for the order or when activities are performed. You can look at the results of simultaneous costing at any time.

  3. You post a goods receipt.

  4. As soon as you enter a goods receipt, costs are passed on to stock. This goods movement is valued with a preliminary price (normally the standard price). The order is credited.

    In the case of process orders with co-products, the order item rather than the order is credited.

  5. You perform the period-end closing activities.

You perform the following activities at the end of the period:

  • Process cost allocation

  • Revaluation of activities at actual prices

  • Overhead calculation

  • WIP calculation

  • Variance calculation

  • Settlement

The remaining costs for delivered orders are settled at the end of the production process. The price control indicator in the material master record of the material being produced determines whether these costs are written to a material stock account or a price difference account.

In joint production settlement requires two steps: The following happens during settlement:

  • The costs collected for the process order in each period are distributed to the order items according to equivalences.

  • If the order item has the status Final delivery , the costs distributed to the order item are then settled to inventory.

  1. Archiving

When the production order has been completely settled, you can delete it or archive it.