wip booking

[Former Member]

Dear All,

Production order created and consumption of Rs.50000/- in the month of Oct. I made 10000/-worth of GR in Oct. My october wip is 50000-10000=40000

WIP for October will be

WIP(Balance sheet) Debit 40000

WIP(P&L) Credit 40000

1 What tcode to do this posting?

2 May I know what is the purpose of the WIP p&l account which is credited? How will it impact the profit and loss? Is it just an adjustment account?

Thanks

[former_member674271]

Hi srina yaya,

Yes, the WIP p&l account is a adjustment account. This posting is to elaborate WIP value on B/S report.

To know this account, you should know the difference between manual cost accounting and SAP cost accounting.

In manual cost accounting, WIP is generally calculated at period end, and the WIP value is posted in G/L as Dr: WIP(B/S) Cr: Stock or Dr: WIP(B/S) Cr: AP.

In SAP cost accounting, any cost related posting will post to P/L account real-time, so the cost will be post to cost (P/L) account immediately instead of WIP (B/S) account. At the same time the cost is copied to CO module by cost elment where lots of tools are available for cost allocation and analysis. At period end if a company still requires WIP value elaborated on B/S report as manual does, SAP provides the WIP calculation and posting (by settlement) as in your question like Dr: WIP (B/S) Cr: Invetory change/WIP (P/L). This will not impact cost posted to CO, that is why the inventory change/WIP (P/L) is not a cost element.

[Former Member]

Dear All,

Thanks. 1 last question.

Why wip p&l is not cost element? then how to make the wip cost in copa?

thanks

rgds

[Former Member]

Hi Srini,

change in WIP (P/L account) is not required in COPA(costing based) because COPA gives the profitability by deducting COGS from the revenue. COGS can be further split in to cost components and varianecs but in any case change in stock or change in WIP doesn't have to come to COPA.

I feel Change in WIP is not a cost element because it is not required to be carried in any cost object in controlling.. meaning no where it is used in CO.

Best Regards

Vimal

[Former Member]

WIP is not a cost element because you do not zero out the Controlling balances for WIP...

The intent of the WIP P&L posting is to offset the debit P&L postings that were recorded and not matched with deliveries to stock and manufacturing variances...From an FI perspective:

Inputs:

Materials consumption (net of returns)

Conversion expenses (labor & Overhead)

Outputs:

Deliveries to stock

Settlement of variances

Difference should be WIP and the goal on the P&L for a fiscal period is to sum all of the above P&L accounts and net to zero.

As for WIP in COPA...never should happen.

[Former Member]

Excute KKA1 (RA for orders) and then do Settlement CO88.

[Former Member]

Dear all,

May I know what is the purpose of the WIP p&l account which is at credit and not cost element? How will it impact the profit and loss? Is it just an adjustment account?

thanks

[Former Member]

Hello,

According to me WIP in P&L is Just an Adjustment Account since if you keep both the accounts in the (Stock) Asset Side of Balance sheet it will generate a Zero Balance and it makes no sence. This is only my opinion, may be the experts can give us more insight to this

Best Regards,

Ravi

[Former Member]

Dear,

Thanks alot. I think so but I would like to have more confirmation of this WIP p&l account which is at credit and not cost element.

What is the purpose of this p&l account.

Any advices?

Thanks

[Former Member]

Hi srina,

Standard cost accounting works like this, whenever manufacture happens inventory (B/S) is debited and change in inventory (P/L) is credited. Now when the system is having WIP, u first run KKAX /KKA1 as per your config and then settle the order through KO88 or CO88.

This will post the entry

WIP Dr 40000

Change in WIP Cr 40000

Once the order is completed (let's say in next month end) , you again run the same tcodes. then system posts the entry

On confirmation , (eg CO11n)

FG (inventory) Dr 400000(or std price of the FG)

Change in FG Cr 400000(or std price of the FG)

On KKAX and CO88

Change in WIP Dr 400000

WIP Cr 40000

Variances A/c Dr xxxx

To Change in FG Cr xxxx (of there are variances)

Hope you are clear. WIP in P/L will get reversed when you settle the order after completion of production.

Best Regards

Vimal