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.

You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.