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WIP: Settlement

Hello Everyone,

I have question regarding running of one cycle with WIP (Make TO Stock Scenario).

Suppose we have made one production order in the month of Jan for 2 finished goods. And end of month we have received only 1 finished goods and another one is in WIP.

1. I would like to know cycle of production order for the Month of JAN as well as in FEB

*In month of JAN:*

CO01 (Creation of Production order).

MB1A ( Issue of Raw material for PO)

CO15 ( Confirmation)

MB31 ( Receipt form Production Order )

KGI2 ( Calculation of OH)

KKAX (Calculation of WIP.

KO88 ( Settlement of WIP Entry: WIP B&S A/Cu2014DR

WIP P&L A/C---CR

In month of FEB:

MB31 (Receipt of Production Order for remaining goods).

KKAX ( Calculation of WIP)

KKS2 ( Caculation of Varience)

KO88 (Settlement of WIP Entry: WIP P&LA/Cu2014DR

WIP B&S A/C--CR

( Reversal entry for WIP in 1st month)

Price diference--DR

Change in Stock---CR

( Calcualtion of Varience)

Question

1 Should we settle the PO in month of JAN?

2. Are the above entries about Settlement in Jan and Feb are correct?

3. Do let me know correct process of WIP..

I would appreciate your reply!!!!!!

Thanks,

Sneha

Edited by: Sneha Latha on Mar 12, 2009 6:58 PM

Edited by: Sneha Latha on Mar 12, 2009 7:27 PM

Edited by: Sneha Latha on Mar 12, 2009 7:37 PM

Edited by: Sneha Latha on Mar 12, 2009 7:42 PM

Edited by: Sneha Latha on Mar 12, 2009 7:43 PM

Former Member
Former Member replied

Hi Sneha,

The main basis for the system to calculate WIP or doing Settlement is the Production Order "System Status".

If the Production Order status is either DLV or TECO, system will settle the Production Order. Once GR is made, DLV status is updated on the Production Order. Or, TECO is done, then also system will do settlement.

If the Status is neither DLV nor TECO, then, system will calculate WIP on the Order.

When you run KKAX, system only caluclates and shows you the value of WIP. Amount will be posted when you settle the Order only.

Now, coming to the sequence of steps, all the steps you have mentione are correct except the following...

In the Month of Jan:

1. Confirmation is normally done at Operation level..in CO11N (CO15 is header level confirmation)

2. You need to consider Actual Splitting, Internal Order Settlements, Actual Activity Price Calculation, Revaluation of Production Orders...as these steps will considerably effect the WIP/Settlement amounts on the Production Orders.

3. You have mentioned that 2nd finished product is received in the month of Jan ( I understand that it is GR). So, in that case, you need to run the Variance calculation in the month of Jan also, otherwise, you will not be able to settle that Production Order No.2

4. The entry you mentioned for WIP is only for finished product no.1 for which you have not done GR.

5.For finished product no.2, the settlement entry will be passed (which you mentioned in the month of Feb) and variances will flow to Price Diff Account and simultaneously to COPA.

In the month of Feb

1.In this month also, it may so happen that, materials will be issue, activities may be confirmed etc. So, MB1A, CO11N will come here alos.

2. Rest of the process is same.

Note: Pls understand that, there is no separate period-end closing procedure for WIP or Settlement separately. There are certain period closing activities to be done sequentially. Depending on the "Status" of the Prodution Order (REL, PREL, DLV, TECO etc), system will calculate WIP for those orders with neither DLV nor TECO status in KKAX and posts the amount to FI once you settle in KO88.

For example, you have 100 Production Orders (irrespetive of number of finished material) and you have done GR agains 44 Orders. That means, the status of these 44 Orders is DLV. So, when you run KKAX, system will calculate WIP for 56 Orders. When you run the settlement in CO88 system will automatically pass WIP entries for 44 Orders and Settlement entries for 56 Orders.

I hope I am clear, Pls revert back for further explanation...

Srikanth Munnaluri

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