Product Costing Order Settlement
Product Costing Order Settlement
For repetitive manufacturing (stable and continuous production), since the production of
one material is the main priority over a long period of time
When you want to calculate WIP at target costs
When you want to calculate WIP (at target costs) and variances at the same time.
Settlement type
In the plant settings for the order type, you need to select settlement type PP1.
This means that all production orders for this order type and this plant have the
settlement rule with the FUL settlement type.
In the order, the settlement type determines in which of the following scenarios
the production order is processed:
Product Cost by Order (FUL) or in Product Cost by Period (PER).
Status control
If the order has been technically completed (TECO) or delivered (DEL), then WIP is
not created, but is broken down if it exists. However, WIP is only posted to FI
when the order is settled.WIP cannot be calculated at target costs.
Variance determination
Variances can only be determined once the order has been delivered (DEL) or
technically completed (TECO), as the quantity actually delivered is fixed.
This quantity determines the target costs of the production order and thus the
variances per piece.
This means that WIP and variances cannot be calculated at the same time.
WIP is only calculated for released orders (REL) and variances for orders that have
been technically completed (TECO) or delivered (DEL)
If you are using Product Cost by Sales Order with the unvaluated sales order stock,
you cannot reliably determine any variances for the assigned production orders
and process orders.
Therefore, in this case, the system does not support the variance determination,
and you need to use the valuated sales order stock instead.
Order settlement
The status of a production order in this scenario determines whether that
production order is settled and thus credited or not.
The actual costs of the production order are only settled if the order has been
technically completed (TECO) or delivered (DEL).
For orders that have been released (REL), settlement only posts the WIP to FI (if
any WIP was determined).
Lot-size-independent costs
Product Cost by Order enables you to analyze costs at production lot level. You
can use it for make-to-stock production and sales order-related production.
In sales order-related production, you can use Product Cost by Order for sales
order-related mass production and as a supplement to Product Cost by Sales Order.
In Product Cost by Sales Order, you use manufacturing orders (production orders or
process orders) as cost objects.
The costs that are updated on the manufacturing order are analyzed by lot and
then settled.
This means that variances of the cost analysis are only determined once the whole
quantity that was planned for production has been delivered to the warehouse.
Determine and analyze plan, target and actual costs for production orders and
process orders
Update or determine the inventory of unfinished products (work in process) and
finished products
Transfer work in process and production variances to Profit Center Accounting (EC-
PCA)