Cost Object Controlling

Cost Object Controlling

Solution Management ERP FinancialsSAP AG

© SAP AG 2009. All rights reserved. / Page 2

Part A – Make-to-Order ControllingPart B – Valuated vs. Unvaluated Sales Order StockPart C – Subcontracting on Production Orders with Valuated Sales Order StockPart D – Intercompany Transactions with Sales Order

Agenda

Make-to-Order ControllingOverview and Comparison of Available Scenarios

Legal Disclaimer

This presentation is a preliminary versionand not subject to your license agreement orany other agreement with SAP. Thisdocument contains only intended strategies,developments, and functionalities of theSAP® product and is not intended to bebinding upon SAP to any particular course ofbusiness, product strategy, and/ordevelopment. Please note that this documentis subject to change and may be changed bySAP at any time without notice. SAPassumes no responsibility for errors oromissions in this document.


1. Introduction2. The valuated sales order stock

1. Value flow2. Benefits

3. Special Make-to-Order (MTO) Scenarios1. Unvaluated sales order stock2. Valuated sales order stock with Cost object on sales order item3. Make-to-Order with Product Cost Collector4. Valuated Sales order stock with Material Ledger

Agenda

Benefits of mySAP Financials

SAP Financials ...

helps them to reduce their total cost of finance

provides them and their company with a complete picture of the businessthrough improved financial integration

helps them to innovate in core finance and in business performancemanagement and to add value to the core business and for management

is the most complete financials solution on the market

SAP is with SAP Financials a proven and long term trusted adviser for itscustomers in the finance area

Make-to-Order Controlling withvaluated sales order stock

Basic Make-to-Order scenarios provided by SAPValuated sales order stock (without CO-Object)

Unvaluated sales order stock

Valuated sales order stock with CO-Object

How to distinguish?

When to apply which?





Agenda

Customizing - Requirement Class

For valuated Sales order stock use:Account Assgt. Cat. M

Valuation M

Sales Order Stockwithout

Product Cost by Sales Order

Customizing – Account Assignment Categories

Valuation strategy for valuated sales orderstock

Dynamic creation of the Sales Order / Project SegmentValuation strategy for the first goods receipt is hard codedIn the requirement class you can specify, that special stock is always valuated with thestandard cost estimate

Sales Order ItemSales Order ItemMarked Cost EstimateMarked Cost Estimate

Production OrderProduction OrderPlanned CostsPlanned Costs

Standard PriceStandard Price(Standard Cost Estimate)(Standard Cost Estimate)

Customer ExitCustomer ExitCOPCP002COPCP002

Valuation of sales order stock takes place in table EBEW not MBEW

Example: Valuated sales order stock

BOM

FIN-I

SEMI-I RAW-C

RAW-I

PPPP

SD Order 4711

Item 10 FIN-I 1 PC

SDSD

Materials used

• FIN-I: Finished Product Individual requirement

• SEMI-I : Semi-Finished Product Individual requirement

• RAW-I : Raw Material Individual requirement

• RAW-C: Raw Material Collective requirement

No sales order cost estimate is calculated

Materials Requirements Planning

SD Order 4711Item 10 FIN-I 1 PC

SDSD

Planned CostsSEMI-I 150 $RAW-C 10 $ACTIVITY 40 $

Actual Costs

PP Order 1 PCFIN-I 4711 / 10

PPPP

Purchase order

RAW-I 4711/10

MMMMBOM

FIN-I

SEMI-I RAW-C

RAW-I

PPPP

With valuated sales order stock:The components with individual

requirements are valuatedaccording to the valuation strategy

Planned CostsRAW-I 60 $ACTIVITY 40 $

Actual Costs

PP Order 1 PCSEMI-I 4711 / 10

PPPP

Expense Stock change

Customers Vendors

GR/IRStock

FIFI

Goods Receipt / Invoice Receipt RAW-I

Purchase order

RAW-I 4711/10

MMMM

RAW-C100 PC 10 $

SEMI-I

FIN-I

Stock: Quantity / Valuation

Invoice Verification

1 PC RAW-I 60

RAW-I4711/10 1 PC 60 $

Goods Receipt

1 PC RAW-I 60


SDSD

Externally procured materialsof individual requirementscan be valuated

According to the valuationstrategy (standard price)

With the purchase order price(moving average price)

Goods Issue: RAW-I


Actual Costs


PPPP


CustomersSales

Revenue

CreditStock

FIFISD Order 4711Item 10 FIN-I 1 PC

SDSD

RAW-I 60 $

RAW-C100 PC 10 $

RAW-I4711/10 0 PC 60 $

MMMM

SEMI-I

FIN-I


Goods Receipt :SEMI-I


Actual CostsRAW-I 60 $ACTIVITY 120 $


PPPP


CustomersSales

Revenue

CreditStock

FIFI

RAW-C100 PC 10 $


RAW-I4711/10 0 PC 60 $

MMMM

FIN-I


SDSD

Valuation strategy:

production orderplanned costs SEMI-I

4711/10 1 PC 150 $

Factory output -150 $

Goods Issue: SEMI-I / RAW-C

RAW-C99 PC 10 $


RAW-I4711/10 0 PC 60 $

MMMM

SEMI-I4711/10 0 PC 150 $

FIN-I


SalesRevenue

CreditStock

FIFI

Customers


SDSD


Actual Costs


PPPP

SEMI-I 150 $RAW-C 10 $





PPPP

Goods Receipt: FIN-I

RAW-C99 PC 10 $


RAW-I4711/10 0 PC 60 $

MMMM

SEMI-I4711/10 0 PC 150 $


SalesRevenue

CreditStock

FIFI

Customers


SDSD


Actual CostsSEMI-I 150 $RAW-C 10 $ACTIVITY 50 $


PPPP

Valuation strategy:

production orderplanned costs

FIN-I4711/10 1 PC 200 $




Factory output –150 $


PPPP


SalesRevenue

CreditStock

FIFI

Customers

Delivery to Customer

SD Order 4711

Item 10 FIN-I 1 PC

SDSD

Delivery

Item 10 FIN-I 1 PC

RAW-C99 PC 10 $

MMMM

SEMI-I4711/10 0 PC 150 $

RAW-I4711/10 0 PC 60 $

FIN-I4711/10 0 PC 200 $



SalesRevenue

CreditStock

FIFI

Customers

Invoicing to Customer

Profit. Segment

Revenue 500

Cost of Sales 200


SDSD

Delivery

Item 10 FIN-I 1 PC

Invoices

10 FIN-I 1 PC 500 $

from table EBEW

COCO--PAPA

FIFI


PriceDifferences

CreditStock

Customers

Settlement of Variances

Profit. Segment

Revenue 500 $

Cost of Sales 200 $


Actual CostsSEMI-I 150 $RAW-C 10 $ACTIVITY 50 $



PPPP


PPPP



Factory output -150 $ 30 $30 $

10 $10 $

Variance FIN-I 10 $Variance SEMI-I 30 $

COCO--PAPA

Cost estimation of the sales order item

Within customizing in CO-PA it is determined that the sales order item costestimate is taken

An additional single unit cost estimateis not taken into account

The cost estimate has to be marked inorder to be taken in the valuation(check status)

A separate costing run is available sinceRelease 4.7

Up to Release 4.7 the cost estimate iscreated when the sales order itselfis created or changed

Cost EstimateSales Order Item

Cost Estimate COPAMat. Labor OH Process

Pricing of the EBEW - Segment

Price changes possible with MR21 onlySupplementary sales order cost estimates and price release does notchange the price in the EBEW-Segment

Be careful with changes after goods issues, the delivery or the customerinvoice

Consistency to FI and CO-PA will be lost!





Agenda

Main benefits of valuated sales order stock (I)

Goods movements of customer individual materials generate postings in FinancialAccounting (sales order stock / cost of sales)Simplified inventory processing with materials in sales order stockAll assembly costs shown on each level in a multilevel Make-to-Order production;variances can be determined for these production ordersIdentical processing with sales-order-related production and Make-to-StockproductionStandard cost accounting possible for Make-to-Order manufacturers using valuatedsales order stock. Not possible when using unvaluated sales order stock

Main benefits of valuated sales order stock (II)

Lean scenariosNo period-end closing activities for the sales order itemsNo checking of the sales order items neededReduction of data in controlling

More opportunities in the logistics processInventory can be easily transferred and used by other sales orders withoutinconsistency problems

SAP recommends thevaluated sales order stock

without CO-Object!

Valuated sales order stock - When to use?

Production controlling focuses on product groups and products similar toMake-to-Stock production

Summarized sales controlling in CO-PA is used. No sales order controllingnecessary

Bill of material and routing can be determined at the beginning of the salesprocess

ExamplesAutomotiveHiTec (PC production)High Production Volumes





Agenda

Unvaluated sales order stock – value flow

No valuation of sales order stockCosts of production orders are settled to the sales order item directlyInvoice verification of Make-to-Stock raw materials are posted to the sales order item directly

Revenues from sales order billing are posted via FI to the sales order itemdirectly

To calculate WIP and cost of goods sold it is necessary to run Results Analysisfor the sales order item at period-end closing

Planned values are necessary

The settlement of the sales order item posts periodically...Revenues and cost of goods sold to CO-PAWIP to FI

Problems with unvaluated sales order stock (I)

No postings in Financial Accounting with goods movements (cost of sales)No Standard Cost AccountingActual costs of the semi finished products are incomplete;variances cannot be calculatedInventory valuation: No individual valuation in Results AnalysisSeparation of flow of values and flow of quantities:Posting of stocks not reflected in Controlling

Problems with unvaluated sales order stock(II)

Complex processing in Controlling required with Results Analysis and settlement ofsales ordersNot appropriate for mass processing since the period-end closing process is verytime consumingCosts at each level cannot be determinedStock reposting in logistics (one sales order stock to another) is not possibleNo split of sales & distribution(no standard costing / no production variances)

When to use unvaluated sales order stock

Use in very special scenarios only

Quantity structure at the time of the sales order receipt not available or not complete, sono sales order costing is possible

Valuation is uncertain and therefore the usage of the valuated sales order stock is too difficultAll actual costs have to be collected on the sales order for all levels . Also special direct costsare needed.





Agenda

Value flow on a sales order with CO-Object

Differences to the valuated sales order stock without CO-Object occur with thedelivery:

The goods issue of the delivery is posted to the sales order itemThere is no settlement of the production orders to the sales order itemThere is no information about the cost elements on the sales order item - only the stock change isvisible (no cost component split)

The customer invoice posts the revenues to the CO-Object of the sales order item (sameprocedure than in the scenario with unvaluated sales order stock)The whole period-end closing for the sales order item is necessary (same procedure than inthe scenario with unvaluated sales order stock)The settlement posts the revenues and the costs – without cost element information – to CO-PA

Problems with the valuated sales order stockwith CO-Object

Because of the (additional) CO-Object period-end closing is slow and data volumeis highNo appropriate information of actual costsNew problemValuation in CO-PA : Settlement takes only summarized stock changes intoaccount (no cost component split)

When to use valuated sales order stockwith CO-Object?

If the valuated sales order stock is absolutely necessary for you and you wantthese features:

Allocating sales overhead to the cost object of the sales order itemAllocating sales process costs to the sales order itemSpecial direct costs of sales have to be charged to the sales order item

Recommendation:Check whether special direct costs can be charged directly to CO-PACheck whether allocating overhead and process costs directly in CO-PA can be used





Agenda

Line

amam--120120

amam--200200

amam--line1line1

amam--110110 amam--210210 amam--220220

amam--100100

Repetitive Manufacturing (I)

When to Use?High volume productionStable and continuous productionNo individual lot oriented cost control neededRepetitive production

Product Cost Collectors in Make-to-Orderproduction can only beused for Repetitive Manufacturing

Product Cost Collectors with productionor process orders assignedcan not be used in Make-to-Orderproduction

Repetitive Manufacturing (II)

Production Line Production Line

Make-to-Order

Make-to-Stock

Sales Order

SDSD

DemandManagement

Production Line Production Line

Creation Sales Order and Planned Order

CreationCreationSales OrderSales Order

CreationCreationSales OrderSales Order Material Requirement Planning/

Assembly Processing

SDSD

Production Line

Planned OrderPlanned OrderPlanned OrderPlanned OrderHeader

MaterialQuantityDate

Items

Scenario: Mass Production with Sales Orders

SD-Order

SDSDSD-Order

SDSDSD-Order

SDSD

valuatedSales Order

Stock$

MMMMvaluated

Sales OrderStock

$

MMMMvaluated

Sales OrderStock

$

MMMM

COCO--PAPA

+ Motor CyclesFreight vehicles

Cars

Class AClass B

Product Group Actual

+-

Sport carsConvertiblesLimousines

34,40034,40047,00047,00063,90063,90013,50013,50022,50022,50027,90027,90011,00011,00015,00015,000

COCO--PCPC

RevenueCost of sales

Profit

ProductProductCost CollectorCost Collector

Make-To-Order with Product Cost Collector and valuated stock

Material Master - MRP View

Must be a material forRepetitive Manufacturing

Creation Sales Order

4710 / 10 FIN4710 / 10 FIN--II4710 / 10 FIN4710 / 10 FIN--II

SDSD


SDSD

Material Labor OH Process

100 150 80 120 450


150 200 100 150 600

Creation Planned Order


SDSD


SDSD

Planned Order4710 /10

Material QuantityComponent-1 2Component-2 3

... ....



... ....


100 150 80 120 450


150 200 100 150 600

Goods Receipt for Sales Order Stock

Sales OrderStock

4710 / 10450

MMMMSales Order

Stock4720 / 10

600

MMMM

Debit

Credit

Stock Change -450

Product Cost Collector

Stock Change -600


SDSD

4720 / 10 FIN4720 / 10 FIN--II4720 / 10 FIN4720 / 10 FIN--IISDSD



... ....



... ....


100 150 80 120 450


150 200 100 150 600

Goods Issue

Debit

Credit

Stock Change -450


Stock Change -600

Material 270


SDSD


SDSD



... ....



... ....


100 150 80 120 450


150 200 100 150 600

Activities

Debit

Credit

Stock Change $ -450


Stock Change $ -600

Material 270

Labor 300

Material 10

Labor 25

Surcharge 15

Process 10

Total 60

Standard Cost Estimate


SDSD


SDSD

Cost CenterCost Center

Direct activityallocation

CO-PA Reporting

Total Revenues 50.003.004 203.406.973Quantity Discounts 103.700 807.910

Customer Discounts 890.630 1.203.980 .

.

.Total Discounts 1.000.320 2.105.600

Net Revenue 49.002.684 201.301.373

Raw Materials 25.340.480 110.200.260Labor Costs, var. 6.100.340 23.600.140

Machine Costs, var. 1.100.320 3.000.540Production Process Cost, var. 800.520 900.720

Total Variable Production Cost 33.341.660 137.701.660Contribution Margin 1 15.661.024 63.599.713

Labor Costs, fix. 3.500.340 15.600.140Machine Costs, fix. 3.100.320 17.000.540Production Process Cost, fix 4.200.660 16.600.680Total Fixed Production Cost 10.801.320 49.201.360

Total Overhead Surcharges 1.000.000 4.000.000

Contribution Margin 2 3.859.704 10.398.353

Administration Process Cost 600.300 1.204.500Marketing Process Cost 760.600 1.708.000

Total Period Cost 2.450.700 3.205.050

Contribution Margin 3 1.409.004 7.193.303

Vans Motor Bikes

Material

Labor

OH

Process

Make-to-Order and Product Cost Collector:Important points

No reporting point backflush is possible for Make-to-Order and therefore no WIPcalculation availableFor variance calculation with target version 000 make sure that a cost estimate forthe configurable material exists





Agenda

Make-to-Order and Material Ledger: Actualcosting

Material Ledger functionality for valuated sales order stock is not availableuntil Release 4.0

Material Ledger functionality is only available for valuated sales order stockFor valuated sales order stock, the following Material Ledger functionality is available fromRelease 4.5

Parallel valuationParallel currenciesSingle-level actual costing

From Release 4.6 multi-level actual costing is available for valuated sales orderstock

From Release 4.6c actual component split is available (also for the valuatedsales order stock)

Quantity Structure for Make-to-Orderproduction

Sales Order Stocks

Materials(Withdrawals)

Procurement Alternative

Procurement Process

Production processes and procurement alternatives include the sales order thematerial is produced for.

The material price determination and the re-valuation of material does not takeplace for the material, but for the sales order stock.

Make-to-Order and Material Ledger:Cost Object Controlling

The usual cost objects can be used if valuated sales order stock is usedtogether with Material Ledger functionality

The following cost objects can be assigned to production processes:Production orders and process ordersProduct Cost Collectors

Make-to-Order and Material Ledger :Production Order

SD-Order SD-Order SD-Order

Production order Production order Production order

valuatedSales Order

Stock$

valuatedSales Order

Stock$

valuatedSales Order

Stock$

COCO--PAPA


Profit

For analysis, use reports fromCO-PACO-PC-ACTCO-PC-OBJ

MMMM

SDSD

COCO--PCPC

Make-to-Order and Material Ledger:Product Cost Collector

SD-Order SD-Order SD-Order

valuatedSales Order

Stock$


Profit

ProductProductCost CollectorCost Collector

valuatedSales Order

Stock$

For analysis, use reports fromCO-PACO-PC-ACTCO-PC-OBJ

valuatedSales Order

Stock$

COCO--PAPA

MMMM

SDSD

COCO--PCPC

Cost Management & Make-to-Order

For further information check the

Cost-Management & Make-to-Order Knowledge Base

on SAP Service Marketplace

http://service.sap.com/co-mto



Agenda

Valuated Sales Order Stock vs. Unvaluated SalesOrder Stock

Contents

Problems with current design

Functionality of valuated sales order stocksApplication area

Scenario 1: sales-order-related mass productionScenario 2: complex make-to-order production– Make-to-Order– Engineer-to-Order

Problems with Unvaluated Sales Order Stock

No postings in Financial Accounting with goods movements(U.S. customers: cost of sales)Actual Costs of semifinished materials incomplete:cannot calculate variancesInventory valuation: no individual valuation in Results AnalysisWhen all actual Costs passed on to SD order:no separation of production and sales with standard cost accountingSeparation of flow of values and flow of quantities:reposting of stocks not reflected in ControllingComplex processing in Controlling required with results analysis and settlement ofSD order

Functionality of Valuated Sales Order Stock

When the sales order stock and the project stock are valuated, goods movementsfor these stocks result in corresponding postings in Financial Accounting.The valuation of the sales order stock and the project stock is therefore reflectedimmediately in Financial Accounting.Revaluation in Controlling is not required. The valuated goods movements result inoffsetting credits and debits on the affected objects .The basis for pricing the materials in the sales order or project stock can be a salesorder cost estimate or a production order cost estimate.

Functionality of Valuated Sales Order Stock(II)

Each production level in make-to-order therefore has the complete Costs.This provides more informative Controlling data and enables variances to becalculated for the affected production orders or collective orders.

-2.000,-

Production Order 5 pc.Product-X 4815 / 10

PPPP

Sales Order 4815

Item 10 Product-X 5 pc.

SDSD

Goods ReceiptProduction Order

Goods IssueDelivery

Delivery

Item 10 Product-X 3 pc.

SDSD

Stock Stock Change

Financial Accounting

FIFI

2000,- 2000,-

1200,- 1200,-

Sales Order Cost Estimate

MaterialProductionOverhead

1.100,-300,-600,-

2.000,-

Material Management

MMMM

1.1.

1.1.2.2.

2.2.

Material: Product-X

Sales Order StockItem Quantity Value

4711 10 1 450,-4711 30 3 1.500,-4783 20 2 900,-4815 10 5 2.000,-4815 10 2 800,-

COCO--PCPC

Overview

Scenario 1: Make-to-Order with MassProduction

StrategySales order processing as with make-to-stockWithout cost collector for sales orderWith valuated sales order stock

Target GroupMass producers with make-to-orderProduction orders with short life spanWhen the main concern is to control product Costs

Scenario 2: Complex Make-to-Order Prod.

StrategyDirect cost collection on sales order/project possibleWith cost collector / project for sales orderWith valuated sales order stock / project stock

Target GroupMake-to-order manufacturer / engineer-to-order manufacturerProduction orders with long life spanPlant engineeringWhen the main concern is to control the Costs of sales orders

Planning unvaluated sales order stock

SD order 4711

Item 10 FIN-I 1 pc

SDSD PPPP

BOM

FIN-I

SEMI-I RAW-C

RAW-I

PP orderSEMI-I 4711 / 10

Plan Costs

ACTIVITY 100.00

Actual Costs

MMMM

Purchase order

RAW-I 4711/10

RAW-C 10.00100 pc

Qty / prices

PPPP

Plan Costs

RAW-C 10.00ACTIVITY 40.00

Actual Costs

Stock

PP order 1 pcFIN-I 4711 / 10

Planning valuated sales order stock

SD order 4711

Item 10 FIN-I 1 pc

SDSD PPPP

BOM

FIN-I

SEMI-I RAW-C

RAW-I


Plan CostsRAW-I 50.00ACTIVITY 100.00

Actual Costs

MMMM

Purchase order

RAW-I 4711/10

RAW-C 10.00100 pc

Qty / prices

PPPP

Plan CostsSEMI-I 150.00RAW-C 10.00ACTIVITY 40.00

Actual Costs

Stock


Goods Rect/Invoice Rect RAW-I - unvaluatedStock

SD-Order 4711

Pos 10 FIN-I 1pc

SDSD MMMM

Purchase order

RAW-I 4711/10

Goods receipt 1 pc.1 pc 60,-

Invoice verificationRAW-I 4711/10

1 pc 60,-

FIFI

Stock

Stock change

Debit Credit

Expense

RAW-I 4711/101 pc

RAW-C 10,-100 pc

Qty / Valuation

PP-Order 1 pc.SEMI-I 4711 / 10

Plan CostsACTIVITY 100,-

Act. Cost

Stock

PPPP

Plan CostsRAW-C 10,-ACTIVITY 40,-

Actual Costs

Stock

PP-Order 1 pc.FIN-I 4711 / 10

CO-Object

Plan. Rev Act. Rev.500,-

Plan. Cost Act. CostRAW-I 60,- RAW-I 60,-

...

Goods Rect / Invoice Rect RAW-I - valuatedStock

SD order 4711

Item 10 FIN-I 1 pc

SDSD PPPP

BOM

FIN-I

SEMI-I RAW-C

RAW-I

MMMM

Purchase order

RAW-I 4711/10

Goods receipt 1 pc1 pc 60.00

Invoice verificationRAW-I 4711/10

1 pc 60.00

FIFI

Stock Stock change

Debit Credit

GR/IRStock

RAW-I 4711/10 60.001 pc

RAW-C 10.00100 pc

Qty / valuation

Price differenceswith std price

PP order 1 pcSEMI-I 4711 / 10

Plan CostsRAW-I 50.00

ACTIVITY 100.00 ActualCosts

Stock

PPPP


Actual Costs

Stock


Valuation strategy:

Order value

Goods Issue RAW-I - unvaluated Stock

RAW-I 4711/100 pc

RAW-C 10,-100 pc

Qty / Valuation

SD-Order 4711

Pos 10 FIN-I 1pc

SDSD

PP-Order 1 pcSEMI-I 4711 / 10


Act. Costs

Stock

PPPP


Actual Costs

Stock


CO-Object

Plan. Rev Act. Rev.500,-

Plan. Cost Act. CostRAW-I 60,- RAW-I 60,-

...

FIFI


DebitSales

revenues

CreditStock

MMMM

Goods Issue RAW-I - valuated Stock

SD order 4711

Item 10 FIN-I 1 pc

SDSD PPPP

BOM

FIN-I

SEMI-I RAW-C

RAW-I

FIFI


DebitSales

revenues

CreditStock

RAW-I 4711/10 60.000 pc

RAW-C 10.00100 pc

Qty / valuation



Actual CostsRAW-I 60.00

Stock 60.00

PPPP

Plan CostsSEMI-I 150.00

RAW-C 10.00ACTIVITY 40.00

Actual Costs

Stock


MMMM

Goods Receipt SEMI-I - unvaluated stock

SD-Order 4711

Pos 10 FIN-I 1pc

SDSD



Actual CostsACTIVITY 120,-

Stock 120,-

SEMI-I 4711/101 pc

RAW-I 4711/100 pc

RAW-C 10,-100 pc

Qty. / Valuation

PPPP


Actual Costs

Stock


CO-Objekt

Plan Rev. Act. Rev.500,-

Plan Costs Act. CostsRAW-I 60,- RAW-I 60,-

...

FIFI


DebitSales

revenues

CreditStock

MMMM

Goods Receipt SEMI-I - valuated stock

SD order 4711

Item 10 FIN-I 1pc

SDSD PPPP

BOM

FIN-I

SEMI-I RAW-C

RAW-I



Actual CostsRAW-I 60.00ACTIVITY 120.00

Stock 30.00

FIFI


DebitSales

revenue

CreditStock

SEMI-I 4711/10 150.001 pc

RAW-I 4711/10 60.000 pc

RAW-C 10.00100 pc

Qty / valuation

PPPP


Actual Costs

Stock


Valuation strategy:production order cost

estimate

MMMM

Goods Issue SEMI-I/RAW-C - unvaluated Stock

SD-Order 4711

Pos 10 FIN-I 1pc

SDSD


PP-Order 1 pcFIN-I 4711 / 10PPPP


Actual CostsRAW-C 10,-ACTIVITY 30,-

Stock 40,-

Plan CostsRAW-I 50,-ACTIVITY 100,-

Act. CostsRAW-I 60,-ACTIVITY 120,-

Stock 150,-

SEMI-I 4711/100 pc

RAW-I 4711/10 60,-0 pc

RAW-C 10,-99 pc

Qty / Valuation

CO-Object

Plan Rev Act. Rev500,-


FIFI

Expense

Stock change

DebitSales

revenues

CreditStock

MMMM

Goods Issue SEMI-I/RAW-C - valuated Stock

SD order 4711

Item 10 FIN-I 1 pc

SDSD PPPP

BOM

FIN-I

SEMI-I RAW-C

RAW-I



PPPP


Actual CostsSEMI-I 150.00RAW-C 10.00ACTIVITY 30.00Stock 190.00



Stock 30.00

FIFI


DebitSales

revenues

CreditStock

FIN-I 4711/10 200.00

SEMI-I 4711/10 150.000 pc

RAW-I 4711/10 60.000 pc

RAW-C 10.0099 pc

Qty / valuation

MMMM

Goods Receipt FIN-I - unvaluated Stock

SD-Order 4711

Pos 10 FIN-I 1pc

SDSD


PP-Order 1 pcFIN-I 4711 / 10

PPPP


Act. CostsRAW-C 10,-ACTIVITY 30,-

Stock 40,-


Act. CostsACTIVITY 120,-

Stock 120,-

FIN-I 4711/101 pc

SEMI-I 4711/100 pc

RAW-I 4711/100 pc

RAW-C 10,-99 pc

Qty. / Valuation

CO-Objekt



FIFI


DebitSales

revenue

CreditStock

MMMM

Goods Receipt FIN-I - valuated Stock

SD order 4711

Item 10 FIN-I 1 pc

SDSD PPPP

BOM

FIN-I

SEMI-I RAW-C

RAW-I


PP order 1 pcFIN-I 4711 / 10PPPP


Actual CostsSEMI-I 150.00RAW-C 10.00ACTIVITY 30.00

Stock -10.00



Stock 30.00

FIFI


DebitSales

revenue

CreditStock

FIN-I 4711/10 200.001 pc

SEMI-I 4711/10 150.000 pc

RAW-I 4711/10 50.000 pc

RAW-C 10.0099 pc

Qty / valuation

Valuation strategy:production order cost

estimate

MMMM

Delivery FIN-I - unvaluated stock

SD-Order 4711

Pos 10 FIN-I 1pc

SDSD


PP-Order 1 pcFIN-I 4711 / 10PPPP



Stock 40,-



Stock 120,-

Delivery

Pos 10 FIN-I 1 pcFIN-I 4711/10 200,-

0 pc

SEMI-I 4711/10 150,-0 pc

RAW-I 4711/10 50,-0 pc

RAW-C 10,-99 pc

Qty / Valuation

CO-Object

Plan Rev Act. Rev.500,-


FIFI


DebitSales

revenues

CreditStock

Result Analysis /Settlement (Period End)

SD-Order 4711

Pos 10 FIN-I 1pc

SDSD



PPPP



Stock 40,-



Stock 120,-

FIFI


DebitorSales

revenues

KreditorStock

FIN-I 4711/100 pc

SEMI-I 4711/100 pc

RAW-I 4711/100 pc

RAW-C 10,-99 pc

Menge / Bewertung

Work in ProcessWork in ProcessCO-Object



WIP 220,-

Invoice - unvaluated Stock

SD-Order 4711

Pos 10 FIN-I 1pc

SDSD

PP-Order 1 St.SEMI-I 4711 / 10


PPPP



Stock 40,-



Stock 120,-

FIFI


DebitSales

revenues

KreditorStock

Delivery

Pos 10 FIN-I 1 pc.FIN-I 4711/10 200,-

0 St

SEMI-I 4711/10 150,-0 St

RAW-I 4711/10 50,-0 St

RAW-C 10,-99 St

Qty. / Valuation

Invoice

CO-Object

Plan Rev Act. Rev500,- 500,-


Result Analysis /Settlement (after Invoice)

SD-Order 4711

Pos 10 FIN-I 1pc

SDSD


PP-Order 1 pcFIN-I 4711 / 10

PPPP



Stock 40,-



Stock 120,-

FIFI


Debitor

Stock

FIN-I 4711/100 pc

SEMI-I 4711/100 pc

RAW-I 4711/100 pc

RAW-C 10,-99 pc

Qty. / ValuationReserves

Profit. Segment

Revenue 500

Cost of Goods Sold 210

COCO--PAPA

CO-Object

Plan Rev Act. Rev500,- 500,-


WIP -200,-Rers.Costs 10,-

Delivery / Invoicing to Customer - valuatedStock

SD order 4711

Item 10 FIN-I 1 pc

SDSD



PPPP


Actual CostsSEMI-I 150.00RAW-C 10.00ACTIVITY 30.00Stock -10.00



Stock 30.00

FIFI


DebitSales

revenues

CreditStockDelivery

Item 10 FIN-I 1 pc

Invoices

MMMM

Purchase order

RAW-I 4711/10

FIN-I 4711/10 200.000 pc

SEMI-I 4711/10 150.000 pc

RAW-I 4711/10 50.000 pc

RAW-C 10.0099 pc

Qty / valuation

Profit. Segment

Revenue 500

Goods usage 200- Split according to

sales order costestimate -

Other Costs

COCO--PAPA

Settlement of Variances - valuated Stock

SD order 4711

Item 10 FIN-I 1 pc

SDSD



PPPP



Stock 0.00



Stock 0.00

FIFI


DebitSales

revenues

CreditStock

FIN-I 4711/10 200.000 pc

SEMI-I 4711/10 150.000 pc

RAW-I 4711/10 60.000 pc

RAW-C 10.0099 pc

Qty / valuation

SD order 4711

Revenue 500

Goods usage 200- split -

Variance semi 30Variance finish -10

Other Costs

COCO--PAPA

Pricedifferences

30.0010.00

10.0030.00

Scenario 2: Planning Sales Order Item

CO object

Plan revenue Actual rev.500.00

Plan Costs Actual CostsFIN-I 200.00

SEKV 10.00

SD order 4711

Item 10 FIN-I 1 pc

SDSD



Actual CostsRAW-C 10.00

100 pc

Qty / valuation

PPPP


Actual Costs

Stock


Unit Cost Estimate

Product Cost EstimateProduct Cost Estimate

Scenario 2: Delivery to Customer

SD order 4711

Item 10 FIN-I 1 pc

SDSD





Stock -10.00

Plan CostsRAW-I 50.00

ACTIVITY 100.00 ActualCosts

RAW-I 50.00ACTIVITY 120.00

Stock 20.00

FIFI


DebitSales

revenues

CreditStock

Delivery

Item 10 FIN-I 1 pcFIN-I 4711/10 200.00

0 pc

SEMI-I 4711/10 150.000 pc

RAW-I 4711/10 50.000 pc

RAW-C 10.0099 pc

Qty / valuation

CO object

Plan revenue Actual rev.500.00

Plan Costs Actual CostsFIN-I 200.00 FIN-I 200.00

SEKV 10.00

Scenario 2: Results Analysis/Settlement

SD order 4711

Item 10 FIN-I 1 pc

SDSD



PPPP



Stock -10.00



Stock 20.00

FIFI


DebitSales

revenues

CreditStock

FIN-I 4711/10 200.000 pc

SEMI-I 4711/10 150.000 pc

RAW-I 4711/10 50.000 pc

RAW-C 10.0099 pc

Qty / valuation

CO object

Plan revenue Act. revenue500.00


SEKV 10.00

WIP 200.00

Work in ProcessWork in Process

Goods on Sales OrderGoods on Sales Order

Delivery StockDelivery Stock

Scenario 2: Invoices

SD order 4711

Item 10 FIN-I 1 pc

SDSD



PPPP



Stock -10.00



Stock 20.00

FIFI


DebitSales

revenues

CreditStock

Delivery

Item 10 FIN-I 1 pcFIN-I 4711/10 200.00

0 pc

SEMI-I 4711/10 150.000 pc

RAW-I 4711/10 50.000 pc

RAW-C 10.0099 pc

Qty / valuation

CO object

Plan revenue Act. revenue500.00 500.00


SEKV 10.00

Invoices

Scenario 2: Results Analysis/Settlement

SD order 4711

Item 10 FIN-I 1 pc

SDSD





Stock -10.00



Stock 20.00

FIFI


DebitSales

revenues

CreditStock

FIN-I 4711/10 200.000 pc

SEMI-I 4711/10 150.000 pc

RAW-I 4711/10 50.000 pc

RAW-C 10.0099 pc

Qty / valuation

CO object

Plan revenues Act. revenues500.00 500.00


SEKV 10.00WIP -200.00Res. csts 10.00

Reserves

Profit. Segment

Revenue 500

Goods usage 210- split -

Other Costs

COCO--PAPA



Agenda

Subcontracting on production orderswith valuated sales order stock: Postings

Subcontracting with controlling on prod.orders

Purchasing

Purchaseorder

SCL ItemCompComp

PurchasingPurchasingPurchasingPurchasing

SubcontractingSubcontractingVendorVendor

SubcontractingSubcontractingVendorVendor

Production orderProduction orderfor SO 4711/10for SO 4711/10

Production orderProduction orderfor SO 4711/10for SO 4711/10

Storagelocation

SC VendorSC VendorProductionProductionSC VendorSC VendorProductionProduction

Provisionof

Components

InvoiceInvoiceVerificationVerification

InvoiceInvoiceVerificationVerification

SC VendorSC VendorSC VendorSC Vendor

InvoiceVerifactionSCL Item

CompComp

GR forservice

GI forcomponent

BOM ‘T-EX’

Operation 0030: Cover and paintExternal

ProcessingExternal

Processing

...

100-804 Color yellow(provided by us)

100-400 Pressure Cover(provided by customer)

Sub-contracting

Sub-contracting

Sub-contracting

...

Routing ‘T-EX’...

...

assignment

Subcontracting - Allocation Component Items

With the indicator „Individual/Collective“ from material master youdetermine if the input materials come from valuated sales order stock.

T-EX is the subcontracting material. The requirementclass and the account assignment type determine if thematerial is produced for valuated sales order stock.

Processing atsubcontractor

Flow of quantities

Delivering tosubcontractor

Color yellow

Goods receivedfrom vendor

Invoice

• subcontracting:painting the

pressure cover

Goods receipt


pressure cover

Flow of valuesRequisition

and purchaseorder


pressure cover

Goods issue

• yellow color

Actual costsincurred

Differencesassignedto orderPlanned Costs

Pressure cover to bepainted by subcontractor

Pressure cover painted by subcontractor

Actual costsincurred

Subcontracting on Prod. Orders - Process Flow

Info Record

Order Type

Standard value x Net quotation price = Costs (subcontracting)

ValuationVariant

Price Selectionfor subcontracting

CostingVariant

ProductionOrderProductionOrderfor SO 4711/10for SO 4711/10

CostingType

BOM

Routing

Op. 0030

Coloryellow

+ material costs

= total costs for operation

Preliminary Costing - Subcontracting

Subcontracting on Prod.Order - Goods Receipt

Stock Account forSemi-finished Products

Inv. Change Account forSemi-finished Products

Stock Account forRaw-Material

Consumption Account forRaw Materials

GBB / VBR

VendorGR / IR Clearing

External LaborFRL

( 1 ) Goods Receipt Service

- Valuation Price Raw Materials: 200- External Labor Costs: 300

Price Difference

( 1 ) 200 ( 1 ) 200 ( 1 ) 300

( 1 ) 300

Assigned to prod.orderAssigned to prod.order

Subcontracting with Controlling - Invoice

( 1 ) Goods Receipt Semi-finished Product- Standard Price ordered Semi-finished Product: 500

- Valuation Price Raw Materials: 200- External Labor Costs: 300

( 2 ) Invoice Receipt- Invoice Price Labor Costs: 320

Stock Account forSemi-finished Products

Inv. Change Account forSemi-finished Products

Stock Account forRaw-Material

Consumption Account forRaw Materials

GBB / VBR

VendorGR / IR Clearing

External LaborFRL

Price Difference

( 1 ) 200 ( 1 ) 200 ( 1 ) 300

( 1 ) 300

Assigned to prod.orderAssigned to prod.order

( 2 ) 300 ( 2 ) 320

( 2 ) 20

Postings on Sales Order

If you use valuated sales order stock with Sales Order Controlling, the SalesOrder Item will be debited with the delivery to the customer.

Before, you can display the subcontracting costs with the funds commitmentreport as statistical cost (cost element type 90).

For additional information, see the subcontracting document in the CostManagement & MTO Knowledge Base.



Agenda

Processing Intercompany Transactions in Sales-Order-Related Production

What Does “Intercompany” Mean?

In intercompany transactions (IC transactions), a product is sold in a differentcompany code than the one which produced or supplied it.Billing documents for such transactions must be generated in both the producingcompany code and in the company code that sells the product to the end customer.Intercompany transactions are typically encountered in organizations whosesubsidiaries handle sales only.

Intercompany Transactions: Initiation

Intercompany transactions are triggered when the supplying plant in the salesorder item is assigned to a different company code than the sales organizationof the sales order.

Processing Intercompany Transactions:Process

The sales order in the selling company generates a requirement directly in theproducing plant/company code.Complex internal order processing with a second sales order isnot required from a logistical point of view -> advantageous with configuration.The product manufactured by the producing plant is delivered directly to the endcustomer – no stock transfer takes place.The selling company invoices the end customer just as with “normal” salestransactions.Now a second billing document for the producing sales organization/company codecan be generated. This document represents due (receivables) from the sellingcompany code.The internal condition can be created using predetermined transfer prices orpercentage overhead rates applied to the sales value used for sale to the endcustomer (PR00).

POS 10Supplying plant = 2000

Sales order costingfor TA = 4711/10

Sales order 4711External customer

Sales organization 1000Channel = 01 Division = 07

MRPProduction order

Plant 2000

Valuated sales ord. stockPlant = 2000TA 4711/10

DeliveryGI valuated

Conditions:PR00 revenues

PI02 cost of sales

CO-PACommon Operating Concern

Standard billingdocument transfer

Selling Company Code Producing/Supplying Company Code

GR for prod. order

Condition:Pi02 revenues

EK02 cost of sales

Second billing doc. IV tointernal customerCosting sheet 2


Intercompany - Integrated Processing with Make-to-Order Production and Valuated Sales Order Stock

Billing documentF2 to external

customerCosting sheet 1

Control of IC Transaction with Valuated SalesOrder Stock

A cost estimate can be created for the sales order item and used to valuate thesales order stock.

The GR for the production order is valuated with this cost estimate.As in make-to-stock production, the billing document for the external customer (F2) and theinternal billing document (IV) are transferred directly into CO-PA.

With the external billing document, the internal condition type PI01 or PI02 are transferredinto CO-PA as cost of sales.With the internal billing document, the internal condition type PI01 or PI02 are transferredinto CO-PA as cost of sales.

To enable the internal condition to be separated in CO-PA in the describedmanner, a second costing sheet should be used in SD for the internal billingdocument.

Item 10Supplying plant =

2000

Cost collectorfor TA = 4711/10Comp.Cd = 2000Sls org. = 2000

MRP

Sales order stockPlant = 2000TA 4711/10

Settlement Cost of goods mfd

DeliveryGI unvaluated

Conditions:PR00 revenues

PI02 cost of sales

Billing documentF2 to external

customer

CO-PACommon Operating Concern

Actual revenues

Settlement

Selling Company Code Producing/Supplying Company Code

Conditions:Pi02 revenuesEK02 cost of

sales

Second billing doc. IVto internal customer

Intercompany - Integrated Processing with Make-to-Order Production and Unvaluated Sales Order Stock

Production orderPlant 2000

GR for prod. order


Sales order 4711External customer

Sales organization 1000Channel = 01 Division = 07

Control of IC Transaction with Unvaluated SalesOrder Stock

The cost collector for the sales order item is created for the combination ofsupplying plant, sales organization and company code. The sales organization isdetermined from Customizing.The production order therefore settles to a cost collector (belonging to the salesorder item) of the company code and controlling area to which it belongs.As in make-to-stock production, the billing document for the external customer (F2)is transferred directly into CO-PA. The cost of sales is determined from the internalcondition type PI01/PI02.The second billing document IV is posted to the sales order item through FI.The sales order item therefore carries both costs and revenues of the supplyingcompany code, making results analysis necessary.

Intercompany - Master Data Maintenance

Material:Check supplying sales organizationSupplying plant in selling sales organizationSales data of internal customer must be created for the sales organization of thesupplying plant.The supplying company code is not sufficient!Otherwise the system does not recognize IC, and the external billing document (F2)will end up on the sales order item (with an unvaluated sales order stock).External customer only needs to be created in the selling sales organization.Condition records for new SD conditions/sales organization

Intercompany - Customizing

IC Customizing under Sales and Distribution -> Billing -> Intercompany BillingAssign a sales organization to the supplying plantAssign an internal customer to the selling sales organization

Assign sales organization/distribution channel -> plantAllow the supplying plant for the selling plant-> checks the internal customer

Copying control LF -> IV

Intercompany - Problems

Incorrect planned revenue -> NoteIncorrect status for results analysis -> NoteCost collector missing for allocation of special direct costs in selling company codeWIP would have to be created for SD items that have been billed in the supplyingcompany code but not in the selling company code.When results analysis required for the entire sales order (results analysis withrepresentative item) in the selling company code, the intercompany item is missingRepresentation of variable PI01 (such as with individual requirements tradinggoods)

Intercompany - Scenarios Supported

The following prerequisites are required in all controlling areas:Intercompany processing affects only the item being sold!The producing plant is also the supplying plant

Within a controlling area, a scenario in which the producing plant delivers to the selling plant“seems” to be possible. With a nonvaluated sales order stock, processing is as follows:

The production order settles to the sales order itemThe external billing document goes to the sales order itemThe internal billing document goes directly into CO-PA

Intercompany processing does not work when lower-level assemblies areprocured via intercompany transactions. In this case the internal billingdocument is missing.


Thank you!

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