Valuated Sales Order Stocks 

Use

You use a valuated sales order stock if you want the goods movements to have corresponding postings in Financial Accounting (FI).

A sales order stock is assigned exclusively to a particular sales order and sales order item and cannot be used for other sales orders or sales order items. Sales order stocks can be for independent requirements as well as for the dependent individual requirements of the individual requirements material (finished product). For this reason, the material components can only be used to manufacture the material ordered by the customer and listed in a particular sales order item, and the material manufactured can only be delivered to the customer in the context of the sales order item.

As a manufacturing enterprise, you can use the valuated sales order stock in:

Complex make-to-order production

In this case you use the functions of Product Cost by Sales Order.

Mass production environments using sales orders

In this case you use the functions of Product Cost by Order or Product Cost by Period (refer to: product cost collectors in sales-order-related production).

You can also use the valuated sales order stock for external procurement (trading goods). There are two types of trading goods:

Mass trading goods

Here you analyze the profitability for specific markets in Profitability Analysis (CO-PA) (such as for the consumer goods industry).

Trading goods specific to the sales order

Here you use the functionality of Product Cost by Sales Order.

Prerequisites

If you are using a valuated sales order stock or a valuated project stock, an accounting view must have been created for the individual requirements material.

If you are using configurable materials and want the individual requirements materials to be valuated, do not use material type KMAT because in the standard system this material type does not allow accounting views to be created (or open the accounting view for material type KMAT). Use any other material type with an accounting view and set the Material is configurable indicator in the basic data view of the material master record if applicable. You can specify this indicator as a default value in Customizing. To do this, go into Customizing for Logistics General under Basic Data Material Control Data Define attributes of material types.

You have specified that the sales order stock should be valuated in Customizing for Product Cost by Sales Order under Control of Sales-Order-Related Production Check Requirements Classes in the Valuation field. You select this requirements class through the requirements type (refer to: Control of Requirements Type Determination). You can:

Carry only the quantity of the sales order stock separately from the make-to-stock inventory

The sales order stock is valuated together with the make-to-stock inventory. Here you enter A in the Valuation field in the requirements class. The individual requirements material is valuated according to the valuation of the make-to-stock material. You view the inventory quantity and inventory value of all sales order stocks that are manufactured with valuation indicator "A" in the material master record.

You are in an order-related production environment and are collecting the actual costs of production on a product cost collector.

o If you valuate the sales order stock separately, then when you settle, the system dynamically generates a distribution rule with equivalence numbers in accordance with the delivery quantity and settles the balance of the product cost collector proportionally to the different stock segments.

o If you only carry the quantity of the sales order stock separately from the make-to-stock-inventory, the delivery value of the valuated sales order stock is included with the delivery value of the make-to-stock-inventory Settlement is performed in the same value segment.

Carry both the quantity and the value of the sales order stock separately from the make-to-stock-inventory

The system valuates the sales order stock separately. The valuation is performed in accordance with the indicator Without valuation strategy in the requirements class. If you specify in the valuation strategy that the sales order stock is to be valuated on the basis of the standard price of the material manufactured for the make-to-stock inventory, the Valuation indicator in the requirements class should have the setting for only quantity-based separate valuation (entry A).

The Accounting 1 view includes the following fields:

Valuation class

You always enter a valuation class in this field.

Sales order stock VC

If you want to assign the valuated sales order stock in FI to a different account than the make-to-stock-inventory, enter an additional valuation class in this field.

Project stock VC

If you want to assign the valuated project stock in FI to a different account than the make-to-stock-inventory, enter an additional valuation class in this field.

The system uses this valuation class together with automatic material account determination to find the account to which the inventory values of the valuated sales order stock are updated.

Features

A valuated sales order stock provides a number of benefits such as efficient cost management in sales-order-related mass production environments, simplified inventory processing with individual requirements materials, and comparable processing in sales-order-based and make-to-stock production environments.

Valuated sales order stocks have the following advantages:

The full costs are available at each manufacturing level. All goods movements are immediately reflected in Financial Accounting.

Goods receipts result in automatic capitalization of the costs of the finished products that are relevant to inventory valuation; goods issues result in a corresponding inventory reduction. The flow of quantities and values is the same as in make-to-stock production. With goods issue postings for delivery to the customer, the sales order item is debited if you have flagged the sales order item as carrying costs and revenues (refer to: Sales Order Items That Carry Costs and Revenues).

For trading goods procured externally, the goods receipt is posted to the valuated sales order inventory. If you have flagged the sales order item as carrying costs and revenues, the sales order item is not charged until the goods issue posting for delivery to the customer.

The costs for externally procured raw materials are only debited to the sales order item when the goods issue for delivery of the finished product to the customer is posted.

If you are using the cost-of-sales accounting in Financial Accounting, the cost of sales is updated to Financial Accounting immediately rather than when results analysis is carried out.

Efficient cost management in mass production environments using sales orders Simplified inventory processing with sales order or project inventory materials Standard costing for make-to-order manufacturers This is particularly recommended in mass

production environments. Calculation of variances

In multilevel make-to-order production, you can calculate variances on manufacturing orders and collective orders because you can report the full costs for the manufacturing orders assigned to the sales order item.Variance calculation determines the difference between the valuation of the goods receipt and the actual costs, and explains how the variance occurred.

You can view the funds commitment in the valuated sales order inventory on the sales order item as statistical actual data.

You can view the valuated sales order stock in the menu Inventory Management (refer to: Displaying Valuated Special Stocks).

You can settle the variance of a manufacturing order or product cost collector that produced an individual requirements material to Actual Costing/Material Ledger (CO-PC-ACT).

Posting Goods Movements

All goods movements for materials produced in-house that are assigned to a sales order take place on the sales order stock.

With a valuated sales order stock, goods movements result in postings in Financial Accounting just as with make-to-stock inventories.

Quantity and Value Flow with Valuated Sales Order Stock

 

External Procurement with a Valuated Sales Order Stock

The system generates a purchase requisition from the sales order.

When you are using a valuated sales order stock, externally procured individual requirements materials are assigned to the sales order stock at the net order price at the time of the goods receipt. The net order price is updated as the standard price. If the sales order item is flagged as carrying costs and revenues, then when the goods issue for delivery to the customer takes place, the sales order item is debited with the costs of the externally procured material. If there are differences between the standard price (the net order price) and the actual costs, and if the sales order item is flagged as carrying costs and revenues, the price differences are posted to the sales order item.

In-House Production with a Valuated Sales Order Stock

See also:

Valuated Sales Order Stock: Valuation

Standard Price with Valuated Sales Order Stock

Example for Valuated Sales Order Stock Without Product Cost by Sales Order: Quantity and Value Flow

Variances with a Valuated Sales Order Stock

Product Cost by Sales Order: Scenario

Example for Product Cost by Sales Order with Valuated Sales Order Stock: Quantity and Value Flow

Transfer Prices

If you are using transfer prices with a valuated sales order stock, you can update data in multiple valuation views.

See also:

For more information on valuated sales order stocks, refer to the following sections:

Valuated Sales Order Stock: Valuation

Standard Price with Valuated Sales Order Stock

Displaying Valuated Special Stocks

Product Cost Collectors in Sales-Order-Related Production

Variances with a Valuated Sales Order Stock

For information on mass production on the basis of sales orders, refer to the following documents:

Cost Object Controlling: Mass Production on the Basis of Sales Orders

Product Cost by Order

Product Cost by Period

For information on complex make-to-order production, refer to the following section:

Cost Object Controlling: Complex Make-to-Order Production

For information on automatic material account determination, refer to the Implementation Guide (IMG) for Materials Management under Valuation and Account Assignment Account Determination Create Automatic Postings.

For information on goods movements, refer to the following section:

Actual Costs in Cost Object Controlling

For information on updating data in multiple valuation views when using a valuated sales order stock, refer to the following section:

Transfer Prices in Cost Object Controlling

For information on analyzing profitability for specific markets, refer to the document Profitability Analysis (CO-PA).

 Cost Analysis in Complex Make-to-Order Production 

The central feature of complex make-to-order environments is that products are modified or even completely redesigned in response to particular orders. The manufacturer needs to be able to plan and monitor the costs and revenues of such production environments effectively.

Different processing methods are available for this scenario:

Cost management directly through the sales order item (make-to-order).

This method has the following options:

o You can use a valuated sales order stock in conjunction with sales order items that carry costs and revenues.

This is the type of processing recommended by SAP.

o You can use a nonvaluated sales order stock in conjunction with sales order items that carry costs and revenues.

Cost Object Controlling for projects (engineer-to-order) for complex manufacturing such as plant engineering. This method has the following options:

o You can use a valuated project stock in conjunction with WBS elements that have costs and revenues.

This is the type of processing recommended by SAP.

o You can use a nonvaluated project stock in conjunction with WBS elements that have costs and revenues.

See also:

Selected Logistical Processes and Cost Objects

For information on mass production on the basis of sales orders, see the following section:

Cost Object Controlling: Mass Production on the Basis of Sales Orders

For more information on Cost Object Controlling in complex make-to-order environments, see the following section:

Product Cost by Sales Order

See the following section in particular:

Sales Order Item That Carries Costs and Revenues

For detailed information on managing costs in engineer-to-order environments, see the documentation Project System.

 

Example for Valuated Sales Order Stock Without Product Cost by Sales Order: Quantity and Value Flow 

Prerequisites

In the following example, the sales order item does not carry costs and revenues. For this reason, no actual costs are allocated to the sales order item. That is, the functions of Product Cost by Sales Order are not used.

A valuated sales order stock is used.

If you use a valuated sales order stock, in many cases you will not need a sales order item that carries costs and revenues.

Example

BOM of Individual Requirements Material FERT X

 

The above illustration shows the BOM of finished product FERT X. FERT X is an individual requirements material, which means that it is manufactured for a specific customer rather than for the normal make-to-stock inventory. FERT X consists of individual requirements material HALB Y and collective requirements material HALB Z. HALB Z, in turn, consists of two collective requirements raw materials ROH A and ROH B. HALB Z is manufactured on the basis of a production order created independently of sales orders. This production order delivers the material to the make-to-stock inventory.

 

Cost Estimates for Standard Price Calculation with Valuated Sales Order Stock: Valuation Basis

 

The above illustration shows the cost estimates for calculation of the standard prices of HALB Z, HALB Y, and FERT X.

The cost estimate of the collective requirements material HALB Z is a cost estimate with quantity structure that is created for the material. In this example, it is the basis for calculating the standard price of HALB Z.

For individual requirements materials, the standard price can be calculated in a sales order cost estimate or in a preliminary cost estimate for the manufacturing order, for example.

The cost estimate of the individual requirements material FERT X is a sales order cost estimate that is used to calculate the standard price for FERT X.

The cost estimate for the individual requirements material HALB Y is also a sales order cost estimate used to calculate the standard price for HALB Y.

The standard price calculated in this way serves the following purposes:

To valuate the sales order stock at standard cost To calculate the variances for the production orders of the sales order item

Valuated Sales Order Stock: Valuation

Quantity and Value Flow

Starting Point

Your customer orders 10 units of finished product FERT X. You create sales order number 4815. Item 010 of the sales order is for 10 units of FERT X and is marked as a cost object. On the basis of the sales

order item, the system generates production order number 01 for 10 units of FERT X. Since you are in an assembly processing environment, the production order is generated directly, and no requirements planning takes place nor are any planned orders generated. Since FERT X contains HALB Y which is also an individual requirements material, the system generates production order number 02 for 10 units of HALB Y through requirements planning.

Production order 4711 has no reference to the sales order. It was created to manufacture 20 units of collective requirements material HALB Z.

Business Transactions in the First Period

1. Production order 4711 transfers 20 units of HALB Z, valuated, to the make-to-stock inventory. The goods movement results in a corresponding inventory posting in Financial Accounting (FI) (the inventory account for HALB Z is debited and the inventory change account is credited).

2. Production order 02 produces 5 units of HALB Y and transfers them to the valuated sales order stock. The goods movement results in a corresponding inventory posting in FI.

3. Production order 01 withdraws 5 units of individual requirements material HALB Y from the valuated sales order stock. The production order is charged with actual costs. The goods movement results in a corresponding inventory posting in FI.

4. Production order 01 withdraws 5 units of collective requirements material HALB Z from the make-to-stock inventory. The production order is charged with actual costs. The goods movement results in a corresponding inventory posting in FI.

5. Production order 01 produces 5 units of FERT X and transfers them to the valuated sales order stock. The goods movement results in a corresponding inventory posting in FI. The production order is credited accordingly.

6. Assume you have arranged for partial delivery to the customer. Consequently, 3 units of FERT X from the valuated sales order stock are delivered to the customer (movement type 601).

The goods movement results in a corresponding inventory posting in FI. Inventory Change from Sale of Products is debited and Inventory is credited.

The sales order item is not charged with actual costs.

The inventory change account is found by the system through automatic account determination in Materials Management (MM). (Example: Account 893010 Inv. Change Cost of Goods Sold Without Cost Element.) No cost element exists for this account. The account is found through transaction GBB and account grouping code VAX. Account grouping code VAX is relevant when the sales order item does not carry costs and revenues. If the sales order item carries costs and revenues, account grouping code VAY is used (see also: Example for Product Cost by Sales Order: Quantity and Value Flow).

Note the following:

In sales order costing, there are a number of special processing requirements regarding the account grouping code. For information, see: Overhead in Sales-Order-Related Production.

No invoicing takes place in this period.

Explanations

Valuation of the Inventories

The inventories are valuated at standard price. In our example, the standard price is calculated in a sales order cost estimate.

Funds Commitment in Inventory (Statistical Actual)

The funds commitment in inventory cannot be shown because the sales order item does not carry costs and revenues.

Period-End Closing

WIP calculation at the level of the production orders

In the Product Cost by Order component, work in process is calculated at the level of the production orders. The work in process is calculated during the period-end closing process and settled to the material stock accounts for unfinished goods.

Our example has no work in process on the production orders.

Variance calculation

When you are using a valuated sales order stock, you can determine the variances at the level of the production orders. Variance calculation depends on the target cost version. Variances are the difference between the target costs and the control costs; for the total variance and the production variance, the control costs are the actual costs less the work in process and scrap.

Variances with a Valuated Sales Order Stock

Settlement of work in process and variances

The variances calculated on the production orders are settled during the period-end closing process for the Product Cost by Order component.

No data has yet been transferred to Profitability Analysis (CO-PA) because the actual revenues and the cost of sales are both zero. The actual revenues and the (standard) cost of goods manufactured of sales are transferred to Profitability Analysis when you invoice. Settlement of the production order also transfers the variances to CO-PA.

 

 

Inventory Postings in Financial Accounting

IC = Inventory change

The goods issue postings and goods receipt postings for the valuated sales order stock automatically result in corresponding postings in Financial Accounting in real time.