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Apr 20, 2017 at 07:32 PM

Production Order Splitting that spans multiple months and variance calculation


We do not use work order splitting functionality because they generate both favorable and unfavorable variances when the Orders close and swing the P&L back and forth if they span more than one month. The original Parent work order takes all of the costs of all materials issued before it is split. After the split the Child order only takes the costs at the operation where the split occurred and forward. When the Child order closes, which is generally does before the parent order closes, it will generate a favorable variance (because of parts going to stock at full standard cost and only getting partial costs charged to the child order). When the Parent order closes it will generate an unfavorable variance (because all material costs for all parts were issued to the Parent order, but only getting credit for those parts that did not split off when going to stock). Because of this, it is very difficult to account for these variance swings and would have to manually post journal entries to accrue and reverse these swings on those orders that span multiple months. We have about 1500 orders a month going through the shop floor.

Does SAP have a Process to capture and hold variances from split orders until the parent and child work orders from the split are all completed, such that there won’t be a favorable variance hitting the P&L one month when child orders close, and then swing to unfavorable variances hitting the P&L in the month the parent order closes?