Why settlement is needed after confirming production/Process orders?

[Former Member]

Hi,

PP Gurus.

After cnfming any Prod.order what is the convention of giving TECO status to complete the order. why it needs to settle errors in COGI, why we have to do settlement of prod. Order.?

Pls guide me.......

yogesh thorat......

[Former Member · Accepted solution]

Dear,

If TECO is done..we can not post any planned goos issue to order, practically we are annoucing that it can be settled. Hence if TECO partically it is finished from Production side, hence to be proceed on overhead calculation, variance calculation, settlement.

In COGI, we have error goods movements for that order, hence production people are expcted to finish all the component issue and GR, so that we can announce finance that we are completed.

Why settlement required?

Let us say the std cost of product is 10 USD. But after the production the actual cost of production is say 12 USD. It will remain in the production order. Now this has to be booked again either the product or against a variuance cost centre, so that from the variance cost centre we can book it to different cost centres.

Hence during the settlement if the material price control is V, then the difference cost i.e. in our example 2USD will be chared to material GL a/c during settlement.

If the price control is S, then the difference cost of 2/USD will be charged to variance GL a/c which is assigned to a variance cost center. This variance cost centre is zeroed out depending on the business rule.

Hence at the end of settlement, the production order net value is ZERO.

please come back if you need help.

[Former Member]

satisfied with the Solutions.....

[former_member189817]

Hi,

Settlement is need to done only after GR for Order(101).Not after Confirmation. When you performing settlement, Production cost will be settled (posted ) into material account and Variance(diffrence between planned and actual ) will be posted to Priece diffrence account.Before variance we need to set TECO status for order.Even after TECO also we can post the material.

Production Order is temprorary cost collector it need to posted to some G/L accounts.Thats why we are doing settlement.