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In make-to-stock production manufacturing orders collect costs. Materials are produced based on a production plan by material requirements planning (MRP), not based on customer demand.
Accounting documents are posted throughout the month to both overhead and production cost centers in a plant. These are known as direct postings.
When SAP introduced the concept of enhancement packages and packaged functionality in business functions, administrators were relieved that they would not have to test everything when they upgraded. However, it made some business functions difficult to locate.
One of the major tasks for functional SAP professionals is configuration. You configure SAP to perform properly based on business requirements during the realization phase. On your first SAP project, it can be overwhelming to know where to start when configuring a module.
Controlling 2014 was my 3rd year in a row attending the Controlling conference. I thought I would take a moment to provide a perspective from someone who has implemented SAP Controlling at Rockwell Automation for ten years and just recently went back to the business to support Operations Finance and transition to an SAP end user.
New users have traditionally struggled to understand the way SAP separates Financial Accounting and Management Accounting where most legacy systems see the two as one. While it’s easy enough to understand how a payroll account flows from the profit and loss statement into cost center accounting because the account information stays the same, the situation becomes more challenging as a revenue account flows into profitability analysis and is transformed into a value field, or a cost of goods sold account becomes multiple value fields depending on the cost components involved. In its latest product release, SAP is bringing the two worlds closer together.
How do you back track from a costing sheet to find out where it is actually used? Unfortunately, there is not an easy way to verify this without going through configuration screens or table data. This is also complicated because costing sheets can be attributed to material masters or orders. I recommend you use two tables in Transaction SE16 or SE16N to determine where costing sheets are used in a standard cost (table KEKO, field KALSM) or on an order (table AUFK, field KALSM).
This question was posed specifically about project systems, but this applies to all cost objects in SAP that require settlement: Production orders, process orders, sales orders, and internal orders.
Settlement occurs at month end so the remaining balance on cost objects can be offset and the variance can post to a final resting place on the financial statement. During settlement, the difference between the debit and credit of the order is transferred to the cost center based on the finished good material’s profit center. Each cost object in Controlling has a settlement rule to determine where and how the remaining costs should settle. The settlement rule is generated based on the settlement profile assigned to that order type.
The settlement profile configuration determines if the order is settled in full, can be settled, or not, what receivers are valid, what allocation structure is relevant, along with many other settings. This is the key piece of settlement configuration that links together other elements like the allocation structure. A different settlement rule is generally required for each cost object.
The allocation structure determines what source cost elements are posted to what settlement cost centers. For example, you can group together material costs to see them separately from labor costs and service costs. You can also settle those costs to different settlement cost elements to have more visibility to that level of detail during settlement.
To learn more about settlement rules and other SAP FICO topics please visit our SAP FICO Learning Center please click here.
An allocation structure allocates the costs incurred on a sender by cost element or cost element group, and it is used for settlement and assessment. An assignment maps a cost element or cost element group to a settlement or assessment cost element. Each allocation structure contains a number of such assignments.
A process order is a manufacturing order that is used in process industries. A master recipe and materials list are copied from master data to the order. A process order contains operations that that are divided into phases. A phase is a self-contained work-step that defines the detail of one part of the production process using a primary resource.
In process manufacturing, only phases are costed, not operations. A phase is assigned to a subordinate operation and contains standard values for activities, which are used to determine dates, capacity requirements, and costs.
A production order is used for discrete manufacturing. A BOM and routing are copied from master data to the order. A sequence of operations is supplied by the routing, which describes how to carry out work-steps.
A sales order is a customer request for delivery of goods or services at a certain time. A sales order line item can be a real cost object if you are using nonvaluated inventory.
A settlement profile contains the parameters necessary to create a settlement rule for manufacturing orders and product cost collectors and is contained in the order type.
When does the activity type on someone’s personnel record trump the rate on a material or routing?
How does SAP determine costs from material master through production orders, and settlement (including WIP settlement) including material, labor and overhead costs?
