Cement Plant 'Commisioning' phase cost to AuC

[former_member206852]

Dear Experts

My client has cement manufacturing plant which is mapped to SAP. Now they are setting up another production line to increase the output quantity. This new production line will be tested for 3 months under 'commissioning period' Business want to capitalize (to AuC) the entire cost of 3 months manufacturing of the cement. During these 3 months earlier production line will work normally.

I need your expert guidance on how we can setup the system?

For better understanding, let me tell you that this new plant will below steps;

Step1: Manufacturing of Raw Mill (Inputs will be all crushed raw material, i.e. Limestone, sand, Iron Ore etc)

Step 2: Confirmation of Raw Mill (Semi Finished Goods) for manufacture of Clinker (SF Good) and so on.

Business does not want their P/L to be effected for any of the consumption neither they want COGM to used.

Please help.

Regards

Syed Zia Abbas

[kamalkumar_biswas2]

Hi

In my suggestion..you may capture cost/revenue in a CO production order ( without any PP relevancy) and settle the net cost to AuC G/l....which I think may be fulfilled the conditions.

Kamal

[former_member206852]

Dear Kamal

Can you please elaborate more in detail?

Our process includes Raw Mill --> Clinker --> Cement --> Bulk Cement

How do I see each SFG cost and Inventory position in your option?

Regards

[kamalkumar_biswas2]

Hi

In each process level create CO prod order just like Internal order...but this CO order has got no link with PP,,,so you need not to be worried about COGM etc..only will be used to book your cost of production process and settle it in required GL instead of material level which actually you want..

May be tried...as an option

kamal

[former_member206852]

Dear Kamal

Thanks for your reply.

Can you share little more detail about CO Production Order, as what config is required to use this function? I created one order and when I did Goods Issue with this order, system generated a material document but when I try to see the the document, it says, this material document does not exist.

Also, here we are using Weighted Avg Cost method (and not Standard Costing). Can we still use this CO Pr Order?

Regards

[former_member206852]

Any update?

Regards

Abbas

[kamalkumar_biswas2]

Hi

See more in the link below:

Preliminary Costing of CO Production Orders - Cost Object Controlling (CO-PC-OBJ) - SAP Library

   Kamal

[former_member200703]

Hi

For the accounting point of view .. the entity is allowed to capitalized the production cost of the testing period but be aware also that the IFRS dictate that the proceeds from the sale of this production start up sample has to be deducted from the asset value ..

i have an idea you may study it may helps.. the production orders that will be processed on this new production line, you need to assign them to settle on intermediate account "balance sheet account ", which you can also assign the proceeds of sale such production in order to reach the net amount that allowed to be capitalized on the new production line..

Regards

Mahmoud EL Nady

[former_member206852]

Dear Mahmoud

Thanks for your reply

I agree with you. Infact we need to consider the revenues also and the net amount (Total Cost Less Revenues) need to be capitalised via AuC.

As a process I cannot assign the GL into Production Order settlement rule, as it by default has to settle on Material.

More inputs needed..!!!

Regards