Production order settlement

[rajesh_sutar2]

Hi Experts,

Will anybody please tell me,

1.Why do need to settlte production order.

2.What customization setting require for settlement of production order.

3.How to carry out settlement.

Raja.

[Former Member · Accepted solution]

Hi Raja,

Here I'm trying to meet your expectations on Settlement.

1. Why do need to settle production order.

Settlement is carried as month end step in PEC; settlement is necessary after all goods issue to stock from production order, need to make sure is there any variance is (WIP (if incomplete delivery)/Variance ( if complete delivery) from different reasons respectively in which area e.g. material or labor or machine etc). This variance analysis will help to control the production process effectively. If we wont perform settlement the cost accountability not be visible and production order remains with balances.

2. What customization setting require for settlement of production order.

settlement profile to be created, cost element to be maintained, allocation and source structure need to be maintained (considering the scope) and number ranges need to be maintained.

3. How to carry out settlement.

Settlement can be done KO88 u2013 Individual order, CO88 u2013 Collective processing

At KO88:- Give the below inputs and execute

Order:

Period:

Fiscal year: and allow the defaulted check box, perform test run and see the result if your satisfy go for real time run.

Thanksu2026Vyas

[rupesh_brahmankar3]

Dear,

You need to settle the production orders because the goods receipt made with respect to production order are valuated in Inventory as per the standard price in the material master and not on the actual cost occurred.

You might have produced at a lower cost or at a higher cost, But the inventory value will be same as you mentioned in the material master. So there will be difference in cost of actually produced and the inventory cost. If you settle the production order this difference will go to the cost element (Loss/Gain due to production) which updates your Profit and Loss accordingly.

Standard cost estimate and release will be done through CK40N and the normal production will be carried out. On completion of production order goods receipt You have to technically complete the production order. then you can do the settlement.

Also refer this link,

http://www.sap-img.com/financial/what-is-production-order-settlement.htm

Regards,

R.Brahmankar