product costing by sales order

[Former Member]

Hi Gurus,

what are the sequence of activies to be done for product costing by sales order

How WIp and Variance calculated in this case

what happens in settlement

pls explain

Regards

ravi

[Former Member]

Hi,

Product Cost by Sales Order:

In the application component Product Cost by Sales Order, the sales document items (items in inquires, quotations, or sales orders) function as the cost objects for which you can determine costs and revenues in both planned and actual data.

In sales-order-related production, you use the functions of Product Cost by Sales Order to collect and analyze the costs in complex make-to-order production on the sales order item.

Cost management directly through the sales order item (make-to-order):

You would be using a valuated sales order stock in conjunction with sales order items that carry costs and revenues.

The Product Cost by Sales Order component enables you to do the following:

Calculate and analyze planned costs and actual costs by sales document item

Calculate and analyze planned revenues and actual revenues by sales document item

Calculate the value of goods that have been delivered to your customer but not invoiced

In the Product Cost by Sales Order component, settlement serves the following purposes:

To transfer the revenues, the cost of sales, and possibly the reserves for imminent loss to Profitability Analysis

If you are using a nonvaluated sales order stock, settlement transfers the work in process to Financial Accounting and Profit Center Accounting.

If you are using a valuated sales order stock, settlement transfers the inventory of delivered but not invoiced goods to Financial Accounting and Profit Center Accounting.

Settlement transfers the reserves for unrealized costs, the reserves for the costs of complaints, and the reserves for imminent loss to Financial Accounting and Profit Center Accounting.

A settlement rule is generated for each sales order item that is flagged as carrying costs and revenues. You flag a sales order item as carrying costs and revenues in the account assignment category.

The settlement receiver is normally a profitability segment. This profitability segment is created automatically from the characteristics in the sales order item (customer, material, and so forth).

The settlement profile is proposed through the requirements class. The default allocation structure and PA transfer structure are taken from this settlement profile.

You must also define posting rules for settlement to Financial Accounting.

Hope you will get some clarity on your queries.

Regards,

N.Sadashivan