SAP: CO03 – Analyzing Production Orders

In our wholesale distribution company, we have limited use for Production Orders, whereas a manufacturer might use them all the time. We do use Production Orders for assembling kits from various inventory items. This is a brief description of the process from a FICO perspective and how you might analyze the transaction history.

Process Overview (written specific to our implementation, but the theory should be portable):

  1. A production order is created and materials are moved (PGI) from inventory onto the order. This moves the inventory items out of the Inventory GL account into the Work-In-Procress (WIP) account.
  2. The materials are then assembled into a kit, which becomes a new inventory item (SKU). This new item collects the costs of its components. Additional costs may be added to the item for labor and supplies used in the kitting process.
  3. Once the kit is complete, it can be moved back to inventory and the production order is marked as complete (the proper status flags are set). A cost is set on the new inventory item, and this new amount is the amount that is credited to WIP and debited to Inventory.
  4. A difference might occur in the WIP account if the costed amount of the new item(s) is different from the costs that were initially moved into WIP. This difference will sit there until the production order is closed and the CO88 – Actual Settlement: Production/process order job is run.
  5. The CO88 job will settle the orders, tranferring any differences out of WIP to the account that the orders are configured to settle to, depending upon your SAP configuration, this account may be Purchase Price Variance (PPV) or something similar. If the costs of all the labor, depreciation, and supplies that were built into the new cost of the kit were moved onto the production order up front, PPVs could be avoided altogether…not the case with us. It still has the same effect on the Income Statement, so it is not a problem.

CO03 and Analyzing Production Orders

If the results of your CO88 Order Settlement run gives you an excessive difference, you may want to look into an order. T-code CO03 allows you to display Production Order. The steps for viewing Cost information follow:

  1. Go to CO03
  2. Enter order number and press enter. This takes you to the order header.
  3. From the order header, you can select the various tabs to see order informtaion.
  4. To see Cost information, click Goto/Costs/Analysis
    • This takes you to the Target/Actual Comparison screen, a summary of the costs by material on the order. The material number is in the Origin column. If you see a row that doesn’t have a material number in the origin column, this likely posting from the CO88 order settlement runs.
    • Once the order is completely settled, you should see a total of $0 in the Total actual costs column.
  5. You can drill in on the line items and see the individual transactions for each material and the settlement row. This takes you to the Display Actual Cost Line Items for Orders screen.
  6. Here, you can see the cost element that was hit and the offsetting account account…use the Change Layout (Rubik’s Cube) button to add columns.
  7. To see the account documents from this screen, click on a row and click on Environment/Accounting Documents.
  8. Drill in to see the original transaction docs…from there you can also view FI Documents

Using CO03, you can navigate through almost all of the documents and screens related to a production order. This should help when you have to recreate the history of an order.

10 Responses to SAP: CO03 – Analyzing Production Orders

  1. zsiger April 19, 2009 at 1:23 pm #

    Hi,

    i have a short question for this theme. If the prod order is finished, and the a cost are allocated for different cost elements, i see the following: The inventory (finished product) is updated with the standard price multi by qty. its ok, but the different cost elements have a different from the standard why is that??

    For example : Standard 10usd * 10qty = 100USD its the stock account.
    Labour : 60 usd
    material 50 usd its 110 usd. Where cam this 10 diff?

    Its a simplified example, but i have an excel sheet wich give more information for this probleme.
    I thought if, the standard is 100 the cost elements must be also 100.

    Please drop a mail, if you are interested about this issue !!!!

    Zsiger.

  2. Byron Bennett April 20, 2009 at 10:13 am #

    Hi Zsiger,

    I’m not sure I fully understand your situation, but the answer may be the Purchase Price Variance (PPV) account. Your PPV account should be set up to receive the difference between your Standard Price * Quantity and the sum of your inputs (Labour and Materials). So, you should probably see a posting like:

    DR $100 to Inventory
    DR $10 to PPV

    CR $60 to Labour
    CR $50 to Materials

    That should give you a balanced entry. Step # 5 in the Process Overview above (that’s the first list of steps), discusses the settlement process and dealing with any differences (PPVs).

    I hope that helps. Let me know if not.

    Cheers,
    Byron

  3. zsiger April 22, 2009 at 10:01 am #

    Hi, and thanks you answer firstly.

    Let me first clear this thing out, i try to explain the situation.

    SKu : A100 Standard price : 520 Produced qty : 10

    5XXXXXXX account number, on this you see this : -5200 = 520 * 10
    this is the account where the stock goes, (the finished products standard value)
    after that you see this :

    5XXXXXXX account : raw material account 3000
    5XXXXXXX account : labour 1000
    5XXXXXXX account : energy 800
    5xxxxxxxx account : freight and duty 350
    5xxxxxxxx account : other 150
    Total : 5300

    Standard for SKU A100 in KKPAN :

    : raw material account 290
    : labour 100
    : energy 80
    : freight and duty 30
    : other 20
    Total : 520

    So something like that.

    Maybe i dont take it in the count the price difference, its can be i will think about now.
    Please drop me answer, if you have understood the situation.

    Zsiger.

  4. Jacek July 16, 2009 at 3:30 am #

    Hi,
    Is it possibile to get the data like from CO03/Goto/Costs/Analysis but for more then one production order in one report?
    Regards,
    Jacek

  5. Byron Bennett July 16, 2009 at 7:55 am #

    Hi Jacek,

    You might try COOIS. In the toolbar, there is a Layout button that lets you choose from dozens of fields to bring back in the report.

    Hope that helps.

    Byron

  6. PCR November 3, 2009 at 3:03 pm #

    I’m very much impressed by seing your explination about the actual costs in the CO03 It would be great help if you explain the total target costs,

    My question is here, Could you pls also explain about the total target costs,

    For example we have one production order

    the values of the production order for one material is

    Actual cost ; 135
    totaly target cost :145
    planned cost 135
    why there is difference in total target cost and actual costs,
    Both are valuated at same standard price

    Could you pls explain the total target costs, how it is caluclated and where we can see the postings related to this , when i clicked on this total target costs amount, i can see only actual cost 135 not target cost 145

    Thanks
    PCR

  7. rakesh sinha May 23, 2010 at 10:33 pm #

    Hi, Experts

    my question is once we settle the prod. order to the material, is any cost left in prod order

  8. Byron Bennett May 23, 2010 at 11:01 pm #

    Hi Rakesh,

    I’m not 100% sure, but I don’t think any cost is left on the Order. There could be a difference, but this gets placed on the account that you configure for it, in our case, our Purchase Price Variance account.

    I haven’t looked at it in a long time, so I may be mistaken, but in general for orders (maybe not production orders), I think you can configure the Settlement Rules, where you specify a % to settle to some destination. You might be able to configure that to settle some % less than 100%, or it might have a catchall that gets the all the remainder.

    Hopefully someone with a little more recent experience can jump in.

    Cheers,
    Byron

  9. rakesh sinha May 23, 2010 at 11:39 pm #

    thaks for your reply Cheers,

    rgds,
    rakesh

  10. Harish July 22, 2010 at 5:03 am #

    Hi,

    Can anybody help me on one strange problem in the production order cost analysis report.

    RM consumption line shows the actual cost but doesnt show actual qty. When i look at the original document, qty is posted. Report shows plan qty(Requirement Qty) in another line but not the actual quantity. What could be the possible reasons for the same.

    Thanks in advance

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