In this article, I would like to share a successful experience with a business challenge in the context of FI Reporting of how to split WIP ( Work in Progress) to separate GL accounts for Material and Overhead costs during WIP settlement of Production Orders/Process Orders at Period Closing in S/4HANA.
The business requirement:
Split the WIP to separate P&L and B/S accounts for Material and Overhead to comply with FI reporting needs.
Material and Added Value costs and to be assigned to different line items in WIP posting during the Process Order/Production Order settlement:
Each line item is settled in financial accounting using separate P&L and Balance sheet accounts
Negative WIP is settled in financial accounting using another set of P&L and B/S accounts
The technical solution:
To deliver the business need, a standard S/4HANA configuration can be used.
First, you need to create Result Analysis key and RA version: Do not forget to activate the box Transfer to Financial Accounting.
Furthermore to Create Line IDs in order to assign to source cost elements:
COP for Material Costs
COS for the Overhead ( Added Value Costs)
The next step is to map mask cost elements for WIP and Result Analysis:
What you need to do additionally is the configuration step Update of WIP calculations and Result Analysis where you assign the cost elements to be used in the target structure:
Finally, you define Posting Rules for WIP where the split is configured for P&L and BS accounts:
As a result, when you run WIP calculation for Production / Process orders at Period Closing via transaction KKAO and then during Production / Process order settlement, the system will post WIP to separate GL accounts for Material and Overhead costs.
Here is an example of an FI document posted during the settlement via CO88 in Universal Journal in S/4HANA:
This config enables WIP to be split into separate accounts for Material and Overhead costs for better analysis of the production costs recognized as WIP and reporting different production costs for different lines in the BS and P&L.
Using this feature customers can maintain a different GL account for different production costs recognized as WIP at Period End Closing,
Please, feel free to share your thoughts and if you have any queries by writing in the comments section below.