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product cost by sales order - conceptual clarity required

Hi,

We are a manufacturing company with both Make to Stock and Make to Order Scenarios. In cost object controlling, we have made the settings for product cost by order. Now, the question is whether product cost by sales order is a mandatory setting in MTO scenario. I understand this is a conceptual question but i never got the clarity after reading help files, threads and blogs.

I'll put down my understanding - pls correct me.

If i do the product cost by sales order, there will be a statistical cost object ie sales order. Now every cost incurred (with a component split) will be recorded stastically in the sales order in case of production orders created from S.O.s

If I don't do the setting i cannot get a component wise split for the cost of sales order to do any analyses. but still I'll have the COGS which i'll capture to COPA and take the profitability.

Can you please give me some more clarity on this scenario? Are there any other factors/ advantages/mandates in product cost by sales order?

Best Regards

Vimal

Former Member
Former Member replied

Hi

CASE A: You still need to do config under Prod Cost by Sales Order... i.e. You need to configure Requirement Class and assign Acct Assgn Catg M in it so that Prod Qty is tagged to Sales order

Just creating a Prod order w.r.f sales order wont work.. Req Class Settings are MUST

CASE B: Your understanding is correct... Just a small correction....

Costs dont lie on SO statistically... They initially lie on Prod order and then Prod order settles the values to sales order (KO88)

Hence, costs on SO are REAL and not STATISTICAL

This is used where your Prod is completely MTO like Ship Making or Car making... you dont keep in stock after it is mfd...

RA can be done based on planned costs or revenues (WIP)

CASE C: Your understanding is correct... Just a small correction same as above.. SO will collect COGS not statistically, but REAL

In CASE A: Normal CK11N Std cost is used for inventory valuation

In CASE B: Sales order cost estimate is done for info sake.. Though Stock is not valuated

In CASE C: Sales order cost estimate is done... Stock valued using Sales order cost estimate, not CK11N price

br, Ajay M

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