Internal order

[Former Member]

Dear gurus,

What is the main purpose of internal orders. Bcoz we have cost centers to track costs. Then why are we using this internal orders.

Pls clarify my doubt

I'll assign full points

N.M.B

[Former Member · Accepted solution]

Hi,

I will explain with an example. Lets take the example of Nano car launched by Tata. Nano was launched in the Auto expo in New Delhi and it needs to book slot in the expo. So this comes under advertising of the car. We can consider this as a project. So all the advertising expenses incured in doing so needs to be tracked. As this is advertising it can be included in Marketing Cost center. If the management wants an analysis of the cost incurred for each auto expo organized by the marketing department how would they get the info?

Here Internal orders are used. If you try to retrieve the information from the cost centers the information is not available as all the costs are posted to the cost center.

SAP, therefore provides the facility of using internal orders which comes in real handy in such situations. In the above scenario the controlling department would then need to create an internal order for each of the auto expo organized. The cost incurred for each of the auto expo will be posted to the internal orders during the month. At the month end, these costs which are collected in the internal order will be settled from these orders to the marketing cost center. Thus the controlling person is now in a position to analyze the cost for each of the trade fair separately.

Thus internal order is used to monitor costs for short term events, activities. It helps in providing more information than that is provided on the cost centers. It can be widely used for various purposes . If used intelligently it is a real handy tool.

Thus Internal order is basically a cost object which is used to monitor cost of a time restricted job. There are various types of internal order the common ones being a Real order where you collect costs and settle it at the month end. Ther others are statistical orders and we also have capital orders for capital projects.

Hope this gives you a comprehensive explanation about internal orders.

Regards,

Giri.

[Former Member]

Hi ,

IO are short term based orders which are used to collect the short term costs .these are 2 types,Staastical and Real IO

You use the true order to collect costs and distribute them later to different cost centers or other

objects. In the initial posting, the costs are updated to the true order. During periodic order settlement, you allocate the costs to the actual controlling objects. You can settle portions of the order costs to objects a large number of.When you create a truel order, you must assign the order to a company code. If you have selected business area balance sheets in FI, you must also assign the order to a business area.

You use statistical orders to evaluate costs that cannot be itemized in detail in Cost Element

Accounting or Cost Center Accounting. You achieve this by assigning the costs to both the statistical order and the responsible cost center, which directly displays the costs on the order (statistical, for information purposes only) and the cost center (real costs). The cost center to which you want to post costs can be stored in the master data. This enables the system to find the cost center automatically. Normally you need to specify the cost center and the order so that the posting document is complete. You also have the option on a statistical order whether to record a company code and business area on the order master record. If you make these assignments, you can only post transactions to controlling objects, such as cost centers, which belong to the same company code and business area.For cross-company code or cross-business area controlling, do not assign a company code or business area to the statistical order. You can neither settle statistical orders nor apply overhead to them.

Parthu

[Former Member]

My dear Parthu,

Thanks for your reply.

N.M.B