cancel
Showing results for 
Search instead for 
Did you mean: 

Settle part of production order to cost center

Former Member
0 Kudos

When settling a production order, the balance of some accounts in the production order should be settled to a certain cost center (the rest of the order balance settle to material). The requirement is to settle the balance amount while settlement rule in a production order only allows settle by percentage or amount. Please let me know if there is any solution. Thanks~

Accepted Solutions (0)

Answers (3)

Answers (3)

Former Member
0 Kudos

hi sharon..

I think your requirement is not to allocate all costs booked in the order to material.

You can achieve this through the following steps :

1. Creat Reposting cycle in KSW1 and repost cost to cost centre which you do n't want to settle by executing KSW5

2. Now your order only having costs to be settled to mat.

kkumar

Edited by: kkbdsp on Mar 21, 2011 11:19 AM

Former Member
0 Kudos

Hi kkumar,

Thanks for your reply. However, the repost cycle doesn't accept "production order" as the sender or receiver.

Best regards,

Sharon

Former Member
0 Kudos

Hi Sharon ,

For a valuated Stock and in Make to Stock senario .. settlement rule is always a material .

This is becuase .. the journal entry for good receipt it ..

Inventory -


Dr

Process Order Settlement a/c -


Cr

Total cost need to be flown to material .. no question of any percentages ... as its normal logic..

Can you please let us know your business case .. so that workaround may be thought of.. What kind of senario you are haning with what kind of material..

Regards

Sarada

Former Member
0 Kudos

Hi Sarada,

Thanks for your reply. The case here is that the users wants to know the total cost of manufacturing a product.

But since the labor cost should be trated as RD expense as the job is performed by RD cost center.

We therefore need to settle the labor cost to RD cost center and the rest of the balance to MAT.

Thanks~

Best regards,

Sharon

ajaycwa1981
Active Contributor
0 Kudos

Hi Sharon

I dont know if this would be possbile because a Prod Order created for a Valuated Mat will always have MAT as settlement receiver

however, give a try as below

1. In your Settlement Profile - Assign a Source Structure

2. In the Source Str - Create 2 Assignments, say, 10 & 20

10 - Include all the Cost elements which should settle to Cost Center... Specify

20 - All others which should settle to MAT

3. In your allocation structure, allow both CTR/MAT as allowed receivers

4. While creating settlement rule in Prod Order - Create 2 settlement rules

a. In One settlement rule, Choose the Source Str Assignment 10 and Specify Cost Ctr as Settlement Receiver

b. In 2nd settlement rule, this will be auto generated by the system to MAT... Choose the Source Str Assgn 20 here

Br, Ajay M

Former Member
0 Kudos

Hi, Ajay,

Thanks for your reply. I have tried your solution before I post this question.

For the settlement rule MAT is created automatically, I added CTR as the second settlement object.

When I tried to settle the order, system settles all the balance to CTR.

I therefore got error message since I didn't maintain settlement cost element for balance that should be settled to MAT.

Best regards,

Sharon

ajaycwa1981
Active Contributor
0 Kudos

Hi

Maintain the settlement cost element in your allocation structure for both the groups i.e. for the cost elements that should be settled to cost center and those cost ele which should be settled to MAT

Br, Ajay M

ajaycwa1981
Active Contributor
0 Kudos

Hi

Maintain the settlement cost element in your allocation structure for both the groups i.e. for the cost elements that should be settled to cost center and those cost ele which should be settled to MAT

Note that, if RnD dept has supplied material, it should not receive a Debit Upon settlement... It should rather receive a Credit for the service i.e.

1. Your Operation for Labor conf should be attached to RnD Work center / cost center

2. The total cost upon settlemnt should be borne by the Mfg Dept and RnD will receive a credit upon operation confirmation

3. If you settle the Order on RnD Cost center for any cost, its wrong design... Cost Should be borne by Service receiver and Credit should be given to service giver

Br, Ajay M

Edited by: Ajay Maheshwari on Mar 21, 2011 3:33 PM

ajaycwa1981
Active Contributor
0 Kudos

Hi

Maintain the settlement cost element in your allocation structure for both the groups i.e. for the cost elements that should be settled to cost center and those cost ele which should be settled to MAT

Br, Ajay M

Former Member
0 Kudos

Hi Ajay,

I have added settlement cost element for costs settled to MAT in the allocation structure.

But the system settles both costs to RD cost center.

It seems that source structure and allocation structure don't work here.

Best regards,

Sharon

ajaycwa1981
Active Contributor
0 Kudos

Hi Sharon

I would like to emphasize again that your idea of settling the prod order costs to RnD (Service giver) is wrong as per prudent business practice also

The service giver is never settled upon.. The settlement receiver is always the service receiver i.e. the Mfg dept in your case.. So, settle the order upon MAT

Br, Ajay M

Former Member
0 Kudos

Hi Ajay,

Thanks for your reply.

I understand costs shouldn't be included in the production order then settled back to service cost center.

If the labor costs are not counted, the product cost is not complete.

Labor costs settled back to RD cost center only to increase the balance of RD expense so that the financial report looks good on the RD expense.

If a standard production order cannot meet customer's requirement, I might propose to use 2 production orders to serve both purposes.

Thanks!

Best regards,

Sharon