effect of sttlement

[Former Member]

Dear Gurus,

We r using production order here. but not doing settlement of order.

can any body tell me what is the use of sttlement and what r the losses due to no settlement.

pl suggest...

Nilesh

[Former Member · Accepted solution]

Hi Nilesh

When a production order is settled, the actual costs incurred for the order are settled to one or more receiver cost-objects (for example, to the account for the material produced or to a sales order). Offsetting entries are generated automatically to credit the production order:

Losses for no settlement : Where a production order is not settled, the difference in the amount between the actual costs incurred for the order and the costs credited to the order may not be known.

Reward points if useful

Regards

Palaniappan

[Former Member]

please come back

[Former Member]

example-

your product as per std cost estimate let us say costs 10 USD.

But when actually produced, it may be costing 90 or 110 USD. Hence whatever the chnage + or - 10 has to be settled to material so that next time when you produce the variance will be less.

If you donot settle, then the extar/less cost incurred will not be reflected in material, hence cannot valuate the material with correct price at the end of production order or period.

[Former Member]

Hi

the settle ment is required to know the exact cost of production & profitability.

If you are not doing settle ment means you are not able to get either profit or loss.

finally you may not be able to do monthly closings.

It is a FI functionality.

pl. get in touch with your FI consultant .He may be able to better explain you what are pros & cons of it.

Regards

YMREDDY