Internal order - question

[Former Member]

Hi All,

I have a doubt in the concept about internal order :-

1) I have understood that internal order is meant for secondary costs only and the internal order is not tied to any G/L Account. Please correct me if my understanding is wrong here .

2) But if I have to post a payment to a vendor using the internal order, and if I have to post it to a specific G/L Account say Miscellaneous Expense account, I use the internal order as a reference and use the internal order as the cost object here . Please could someone help me in understanding internal order .

Regards,

Sushanth Hulkod

[prasad_yarra]

SS

Internal order system in SAP is very powerful tool to control the costs.

We use internal order to monitor the costs of a specific event.

Example: Advertisment Capaign, Small term project, Marketing event etc.

We use internal order as cost object for collecting the cost related to paricular event.

We can create plan costs/budget for each internal order and monitor the actual costs posted to internal order against the planned costs/budget.

At the completion of specific event/project or every period end we can settle the internal order costs to other Cost objects.

Your understanding of "Internal orders for secondary costs only" is not correct.

We post primary costs also to internal orders.

Hope you understand the internal order concept

Best of luck

Prasad

[Former Member]

Hi Prasad,

Thanks a lot for your reply.

I am an ABAP Consultant and not from a CO background. Infact we are learning CO as a part of process integration using ERP course in my MSIS Program at University of Cincinnati.

There's yet another question with respect to internal order. In an internal order we have a responsible cost centre and a requesting cost centre. When I call a cost centre as a responsible cost center of an internal order, are we allocating the costs with respect to the internal order to the responsible cost centre.

Regards,

Sushanth Hulkod

[Former Member]

Dear Mr.Sushanth Srinivas

there two type of objective in CO

Real cost objective and statistical cost objective

internal order act like a real as well as statistical

if u are selecting IO is real ther is no need post Cost center but if u select IO is statistical u have to assingn cost center as wel as IO

the majer difference is in Real we can settel the cost but in statistical It is not possible just we can use for information purpose

Regards

A.Guru Prasad

[Former Member]

Dear Guru ,

I'm not under stand the Internal order concept !!

1. Primary cost element created for Petrolling Expenses

1- A . As well as Internal order created for petrolling exp

when we entered f-02 (general posting) it captured cost of petrolling exp

Entry like Petroling exp a/c dr

To Bank a/c

At final we make a distribution cycle for Fixed cost ,a nd run the cycle and cost are transferred to service cost center to production cost center

That simple means that we send the cost to production bcz we capture the cost for the product , then we know the minimum price of the product

But what is the benefit of doing settlement of internal order of petrolling exp , what is its final effect

Another doubt

I think all primary cost element category 1 is a internal order (if we want to ceate)

Thanks,

Sahoo

[Former Member]

Hi All,

My question is pretty simple : If I call a cost centre as a responsible cost centre of an internal order, will the initial costs with respect to the internal order be allocated to this responsible cost centre .

Regards,

Sushanth Hulkod

[prasad_yarra]

If you post the cost to Internal order it is not necessarily be allocated to the responsible cost center.

If you want to be more clear please read the following

There are two types of Cost Centers in Internal Order Master Data

1. Responsible Cost Center

2. Requesting Cost Center

Responsible Cost Center is responsible for carrying out the order. The order is therefore organizationally assigned to the cost center.

This does not have to be the cost center to which the order settles its costs or allocated

Example

Scenario: The cost center "printing works" requires a new machine for folding newspapers. The cost center "site office" is responsible for implementing the construction.

The cost center "site office" is the responsible cost center.

The cost center "printing works" is the requesting cost center.

Hope now you are clear

Thanks

Prasad

[Former Member]

Dear Prasad,

Thanks for your reply.

My conceptual doubt about responsible cost centre is now cleared .

I have yet another doubt now. Suppose there is a meeting and if I create an internal order to monitor and track the costs of the meeting, to whom will the initial costs of the meeting be assigned .

I know that the costs of the meeting will be assigned to the internal order, but who will take up the initial costs of the meeting or the cost of arranging the meeting .

Regards,

Sushanth Hulkod