WIP

[former_member7439]

Hello,

Even if prodcution is not complete ,why do i have to settle the prodcution order to calculate WIP.Is it conceptually correct.

Please advise.

[Former Member]

Hi,

Pls go thru the following, it may help you.

When ther Process Order (PO) is created, at that time there is no no accounting entry.

When there is goods movement for the PO, the entry is:

Consumption of RM/PM dr (P&L)

To stock of RM/PM cr(B/S).

When there is movement of SFG against PO:

Change in stock of sfg dr (P&L)

To stock of sfg (B/S)

At period end, at the time of WIP calcualation, there is no A/C entry.

When PO's are settled,

Stock of WIP dr (B/S)

To change in stock of WIP (P&L)

When a PO is completed (confirmation)

Stock of FG(B/S)

To change in stock (P&L)

At the time of calculating variances after the order is completed, there is no entry.

At the time of calculating WIP after PO's are completed, there is no entry.

Now when again settlling those orders which were settled earlier and are still in process (not closed) then,

Stock of WIP dr (B/S)

To change in WIP (P&L).

Now in the above entry, the Incremental WIP Value (WIP at the end or period – WIP already calculated and settled) will be calculated.N.B – if WIP is zero then it will be reversed, this is for stock in process/reactor.

At the time of settlement for PO's that are completed,

Price Difference Account Dr (P&L)

Change in Stock Cr (B/S)

At the time of settlemtent of PO's which are under process,

Stock of WIP Dr (BS)

Change in Stock Cr (P&L).

Now you can get the idea that at every stage of process it is necessary to have a accounting entry to track the status of inventory and its value and difference in valuation (if any). which can be done thru settlement & variances only.

Hope this would have clairifed your doubts. Pls revert in case of any further clarifications.

Regards,

Ankita

[Former Member]

Hi,

Through Settlement function SAP posts to FI. Whether it is posting of WIP entry or reverse of WIP entry and actual settlement to variance account.

This settlement has 2 functions.

It checks the status of the order and then it proceeds to wither chekcing for posting of WIP or calculation ove variance.

Hope it is clear.

Assign points if helpful

Regards

PK

[former_member7439]

Hi

Thx fo reply.Have one doubt.When can we settle a prodn order.

Is it possible even if prodn is not complete.

[Former Member]

Hi,

The process is

WIP - variance cal - Settlement

Yes.. if at all the Production order is not complete thenalso u can calculate settlemnt. then system will calculate and post the WIP entry.

This is the scenario for make to stock and make to order ( valuated sales order stock).

Assign points if helpful

regards

Pk

[Former Member]

hi

you can do WIP for order if it is not complete by change the order status to TECO

prodn ord --> Functions --> Restrict Processing -->Techinicaly Complete

now you can do WIP for this order

then you revert the order by, prodn ord --> Functions --> Restrict Processing -->Revoke Techinicaly Completion

if you not clear ,come back

Regards

Deva