The questions which you have raised deserve a preety long discussion. But I will try to explain in short:
1) MTO-Made to Order-(in PP) will eventually mean Product Costing based on Sales Order.
2) MTS-Made to Stock-(in PP) will mean Product Costing based on Process/Production Order.
3) Repetitive Manufacturing(in PP) will mean Product Costing based on Period.
I assume that you are already aware of the concepts of PP.
All the 3 are different concepts in the configuration for Cost Object Controlling.
Product Cost by Process Order/Production Order:Product cost by order is recommended in lot-based production environments. Typical applications of product cost by order are in order-related production or batch-based process manufacturing. The production process is based on manufacturing orders where the focus of production and cost analysis is on a particular quantity (production lot size).
Settlement Rule
In product cost by order, the settlement rule must specify settlement type ful (full settlement).
To do this, go into customizing for product cost by order under define default values for order types and enter default rule pp1 (production material full settlement). When you create an order for the order type with default rule pp1, the system generates a settlement rule with settlement type ful (full settlement).
WIP
In lot-based cost controlling, the work in process is calculated at actual cost. The work in process is calculated as the difference between the debit and credit of an order as long as the order does not have the status dlv (delivered).
Variance
In the product cost by order component, variances are not determined until the order has the status dlv (delivered) or teco (technically completed). When the order has that status, the system no longer interprets the difference between the debit and the credit as work in process but as a variance.
Co-existence of WIP & Variance
In product cost by order, orders never have work in process and variances at the same time.
Product Cost By Period:The product cost by period method is recommended for products that have relatively high design stability and are manufactured over an extended period of time. If you are manufacturing your products in a repetitive manufacturing environment, you always use product cost by period. Product cost by period may also be appropriate in order-related production or process manufacturing environments. A prerequisite for successful use of the product cost by period method is that you are focusing on manufacturing a product over an extended period of time.
In product cost by period you normally collect the costs on product cost collectors.
If you cannot (or do not want to) assign costs to particular product cost collectors, you can use a cost object hierarchy. You can then collect costs at levels above that of the product, such as product groups or areas of responsibility.
Settlement Rule
In product cost by period, the settlement rule must specify settlement type per (periodic).
To do this, you enter the following in customizing for product cost by period under define default values for order types:
u2013 for product cost collectors, you enter default rule str (with strategy for tracing factor determination).
u2013 for manufacturing orders, you enter default rule pp2 (production material periodic settlement).
On the basis of these default rules, when you create an order the system generates a settlement rule with settlement type per (periodic).
WIP
In product cost by period the work in process is calculated at target costs. In repetitive manufacturing, you must enter reporting point backflushes or, for manufacturing orders, confirmations for the operations. Confirmed quantities that are not scrap are valuated at target costs when the wip is determined.
Variance
In the product cost by period component, variances are calculated by period. To determine the total variance, the actual values confirmed in the period are compared against the target values. The work in process is deducted from the difference between the actual values and the target values to determine the variance.
Co-existence of WIP & Variance
In the product cost by period component, therefore, there can be both work in process and variances on an object at the same time.
Product Cost by Sales Order:
The cost object is the sales document item (item in a customer inquiry, quotation, or sales order), for which planned costs and actual costs and revenues are calculated. Product Cost by Sales Order can be used in complex make-to-order environments.
In Product Cost by Sales Order, costs are normally collected on sales order items. (See also Sales and Distribution)
a)If you are not using the Sales and Distribution component (SD), you can collect the costs in make-to-order production on an internal order. (See Internal Orders)
b) If you are using the Project System (PS), you can collect the costs on a project. (See Project Management).
For each sales order item, you can plan the cost of goods manufactured or the cost of goods sold. The costing results can be used as a basis for pricing in the SD component.
To be able to plan costs for sales orders, you must do the following:
1) Define a costing variant and a valuation variant.
2) Define a costing sheet for the calculation of overhead rates.
3) Make sure that the MRP group in the MRP 1 view of the material master record specifies a requirements class that has account assignment category "E" (make-to-order) and that allows costing.
4) In the requirements class, use the "Costing" indicator to specify that costing is allowed or updated and whether the planned costs are updated.
5) In the requirements class, you also specify whether your sales order stock should be valuated or nonvaluated with the "Valuation" indicator.
Results analysis at the end of the period is only required if you are using a nonvaluated sales order stock.
In the Product Cost by Sales Order component, settlement serves the following purposes:
Settlement:
To transfer the revenues, the cost of sales, and possibly the reserves for imminent loss to Profitability Analysis
a) If you are using a nonvaluated sales order stock, settlement transfers the work in process to Financial Accounting and Profit Center Accounting.
b) If you are using a valuated sales order stock, settlement transfers the inventory of delivered but not invoiced goods to Financial Accounting and Profit Center Accounting.
Settlement transfers the reserves for unrealized costs, the reserves for the costs of complaints, and the reserves for imminent loss to Financial Accounting and Profit Center Accounting. You flag a sales order item as carrying costs and revenues in the account assignment category.
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