Make-to-Order : Cost Object

[former_member218048]

Dears

In a make-to-order scenario, what should be the Cost Object normally ?

I think it is 'Sales Order'.

Is it necessary that make-to-order should always have Sales Order as Cost Object ?

What is the benefit of making SO as a Cost Object in make-to-order ?

Please clarify to ward of my confusion.

Thanks

[Former Member · Accepted solution]

HI Nikki,

In nutshell MTO scenario work like this,

1) MTO scenarios can be with sales order as cost object and with /without sales order stock (special stock) meaning stock can be specific to sales order or normal stock.

2) MTO can be with production/process order as cost object with /without sales order stock (special stock)

3) In some Complex MTO Production,where sales order alone does not provide all functions,you can combine the sales order with other cost objects, such as projects or networks. This is especially recommended for complex make-to-order production scenarios. In such cases Projects becomes your cost object and sales order will be only a logistical object.

So there is no hard and fast rule to keep sales order as cost object. It only depends up on the business requirement.

BR
Karthikeyan

[former_member218048 · Accepted solution]

Ok. That is nice.

In our case I found that Sales Order is not a Cost Object from OME9 settings.

Also, when we tried to do a consumption posting of raw materials against a Sales Order, system is giving the error that "..GL account requires an assignment to CO object" eventhough the Sales Order and Item is given in the document fields.

If Sales Order was a Cost Object in our case, this error would not have happened. Right ?

[Former Member · Accepted solution]

your understanding is correct in terms of had sales order been cost object, this error would not have happened. But I suspect whether still configuration for sales order to be cost object is in place or not.

I would rather suggest to re look your idea of using sales order as cost object if your stock is valuated because it not recommended by sap to use sales order as cost object if stock is valuated. you may also check the below link for your reference.

It would be better if you let us know the purpose of defining only sales order as cost object.

Regards

Karthik

[former_member218048 · Accepted solution]

Hi

You mean to say Sales Order should not be a cost object if it is 'non-valuated' stock ?

For the query, whey we should have SO as cost object, please see:

We produce goods based on the Customer orders.

Hence we would like to manage the sales order related stocks.

Also we may sometimes want to post the expenses also directly on the Sales Order.

In that case, I think we should have our 'Sales Order' as a Cost Object. Correct me if I am wrong.

[kamalkumar_biswas2 · Accepted solution]

Hi Nikki

I want to add 2 points here;;

1. SO must be cost object when MTO scenario is absolutely customer driven in complex scenario where stock is manufactured for specific customer and you want to track all its costs and revenue and this stock can be used for other purposes

2. SO may be or may not be a cost object where stock is valuated ...basically used in mass MTO scenario

[former_member218048 · Accepted solution]

Hi

So, what you suggest in our case : SO as Cost Object or not ?

Ours is not a 'complex' kind of scenario. But we need to have valuated SO Stock and expense postings to orders.

[kamalkumar_biswas2 · Accepted solution]

Hi Nikki

If you want to post costs then SO will be defined as cost object but as a valuated stock as your scenario is not a complex one.

[Former Member · Accepted solution]

Nikki,

Going by your business scenario using sales order as cost object looks ok. But just do one complete cycle meaning after creating sales order do goods issue and goods receipt and make SO settlement and just check whether all your requirements are met in this process. If CO-PA is also active, just check whether how the cost and revenue appears in CO-PA as well.

our people have given lot of ideas to configure the sale order as cost object. So just check it so that you can finalize on this on your own. Please do share your end results with us.

All the best.

BR

Karthik

[former_member218048 · Accepted solution]

One more clarification please :

Is settlement necessary for a Sales Order (1) Sales Order is Cost Object (2) Sales Order not cost object ?.

What is the settlement receiver if SO is settled : Material ?

If material already delivered to customer and billed, how we need to treat the settlement ?

Thanks

[Former Member · Accepted solution]

Hi Nikki,

If sales order is cost object, then it is always advisable to do settlement. Not sure whether you have co-pa in place. If it is so, then you MUST do sales order settlement in order to ensure value flows to co-pa. Till you do settlement both the cost and revenue will be at sales order only, Its only after settlement, value flows to co-pa and settlement receiver will be co-pa characteristics.

If co-pa is not active, then you can settle to material or any other object depending up on requirement, If sales order is not cost object, I think its not necessary to settle sales order.

Regards

Karthik

[kamalkumar_biswas2 · Accepted solution]

Hi nikki

    Why do we make settlement that's the issue to be decided first....

    1. In case of SO is a cost object that means we have posted costs and revenues in SO to get the details of costs/revenues in specific sales order items....

       Now if you want to get these data to be used for profitability analysis ie if CO-PA is in place it is required to settle these data to CO-PA...which is the standard practice.

    2. If SO is not a cost object...not any reason to settle because it just a statistical object

     I think you can decide now

[rajneesh_saxena · Accepted solution]

Hi Nikki

If SO is not a cost object then prod orders assigned to the sale orders are cost objects. Means all costs will be collected and further processed at prod order levels.

This means that the prod orders will be settled to the intended receivers may be the COPA or else as the case may be and not the SO itself.

Rajneesh

[former_member218048 · Accepted solution]

Hi

"Till you do settlement both the cost and revenue will be at sales order only....." :: Does this mean that no CO-PA document will be generated at any stages of SO processing like PGI, Customer Invoice, etc. ?

[Former Member · Accepted solution]

Hi Nikki,

Yes. your understanding is right. When sales order is co object, till we do Sales order settlement both revenue and cost will not flow to copa. No COPA document also will not be generated. It is only during settlement co-pa document will be generated.

Hope this clarifies.

Regards

Karthik

[rajneesh_saxena · Accepted solution]

Hi

Variances will flow only at settlement

Rajneesh

[rajneesh_saxena · Accepted solution]

Hi

Variances will flow only at settlement

Rajneesh

[former_member218048 · Accepted solution]

Dears

Thanks to all of you for your valuable inputs.

Regards,

[kamalkumar_biswas2 · Accepted solution]

Hi Rajneesh..

   What do you mean by "Variance will flow only at settlement"

   In SO as cost object and execution of PA ..variance is not calculated and that is the only constrain.

Can you explain little more...

   In my view variance is calculated at Manufacturing order level & then settle to SO...

[former_member218048 · Accepted solution]

May I ask one more doubt :

If SO is not a cost object, what about the stock reserved for Sales Order ?

I hope we can keep the special stock as 'sales order stock' even if SO is not a cost object.

(I presume, we need to select the 'E'-spl stock in the Req Class settings).

[kamalkumar_biswas2 · Accepted solution]

Hi nikki

...yes you can do...

[rajneesh_saxena · Accepted solution]

Yes

Rajneesh

[Former Member · Accepted solution]

Hi Nikki, Irrespective of whether sales order is cost object or not, you can use sales order stock (special stock). Regards Karthik

[former_member218048 · Accepted solution]

Thank you.

[former_member218048 · Accepted solution]

Thank you.

[Former Member]

Hi Saju,

There is not standard cost object for any order, its purely based on the requirement we can set the cost object.

[Former Member]

Hi Saju,

1. In MTO Production order is the cost object if your SO is not a cost object. If your SO is cost object then SO and Production Order will become the Cost objects.

2. It is not necessary to SO as a object in all the cases.

3. If your SO is a cost object then you can book exences at SO level, if not you cant book expendure against your sales order.

Regards,

Ram

[former_member218048]

How can I check (which setting) whether in our case, Sales Order is a cost object ?

[rajneesh_saxena]

Hi Nikki

It is Account Assignment Category which tells system that sale order is a cost object or not. In AAC check 'consumption posting' box if that is filled with 'E' or 'Q' that means SO is a cost object.

As rightly said by Rama, if you want to post some expenses directly to your SO then it has to be cost object.

Regards

Rajneesh Saxena

[former_member218048]

Dear

I am new to Make to order settings. Where can I check the 'account assignment category' for the Sales Order to see whether it is cost object ?

[former_member198650]

Hi Nikki,

Check the t.code. OME9.

Regards,

Mukthar

[rajneesh_saxena]

Hi Nikki

T code is already provided by Mukhtar.

Actually there is a reverse line to find out your AAC. Go to order-select material and check 'procurement tab. There you will find 'req type. Then from this RT find out requirement class using OVZH, and from requirement class you will come to know the AAC.using OVZG.

Hope this helps.

Regards

Rajneesh

[former_member218048]

Thank you Rajneesh.

Please see the settings I found here and advise me. I found account assignment as 'M'. I did not understand what is 'M' stands for ? Is M indicates that our Sales Order is a Cost Object ?

[rajneesh_saxena]

Hi Nikki

check OME9 and there click 'M' at next screen see if 'consumption posting' field is filled that means your SO is a cost object.

Regards

Rajneesh

[former_member218048]

Hello Rajneesh

I found the consumption field as blank:

So I think, in our case SO is not a cost object. In that case we have the Production Order as Cost Object ?

[rajneesh_saxena]

Yes

Rajneesh

[former_member218048]

Dear Rajneesh

I did not understand what exactly is the purpose of Account Assignment Category 'M' - Individual Customer w/o KD-CO. What exactly does this mean ?

[rajneesh_saxena]

Hi Nikki

For understanding please see below links

Check Account Assignment Categories - Product Cost Controlling - SAP Library

Regards

Rajneesh

[former_member218048]

Dear Rajneesh

Thanks. But I could not find the explanation of 'w/o KD-CO'. If you don't mind, can you please tell me what does that mean ?