Order Settlement for Production Order

Order settlement for a production order means clearing the differences between the actual costs incurred and the credits that the order received from goods receipts. Order settlement demonstrates the close integration between Production and Management Accounting in mySAP ERP. Normally, a production order is settled when it is completed or before month-end closing. During settlement, you can post cost variances to one or more cost objects. For example, you can post variances due to excessive scrap to a scrap cost collector, and variances due to poor performance to a productivity problem cost collector. Alternatively, you can simply post the entire variance to inventory. The system posts an entry to the G/L price variance account when you work with standard costing.

You can analyze production costs at product level, for example, with the online variance reports. These reports show planned costs for the order, actual incurred costs, and calculated variances. The reports also show detailed costs per cost element. You can also select a report showing the corresponding quantities. You can interactively analyze the variances and use a drilldown technique to display individual cost allocations. You can access every single cost allocation item, including information about dates, quantity, and origin of the allocation transaction. You can use other standard reports that compare standard cost estimates for products with current production orders or production cost collectors. You can also define production order hierarchies, where you summarize orders for the same product or for product groups. The full power and flexibility of mySAP ERP Financials is available for analyzing production costs.