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Costing Part in Internal Subcontracting

Former Member
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Hi All,

We have requirement that our company (X) is doing subcontracting to sister company (Y)

(toll manufacturing).

Basically our sister company is supplying us the main raw materials (RM1 RM2 and RM3)and then we Manufacture FG1 (and deliver to Sister Company.

Configured and following below process.

1. Create a Sales order in Company X (Company Y is the Sister Concern)

(No VPRS value. Manually entered value as agreed upon between X and Y company.

2. Receive the raw material supplied by Company X against the sales order... Mvt Type 501 E.... (This would receive the stock in your books as Non valuated i.e. @ Zero value)

::No Accounting Entry as Non-valuated.

3. Create a Production order for the FG associated with the Sales order.. (CO08)

4. Issue the goods to the prod order / Confirm the operations

::No Accounting Entry as Non-valuated.

5. Do the GR from prod order... The GR will be Non valuated in Company A.... Only Qty will be updated in the stock.. No Value

::No Accounting Entry as Non-valuated.

6. Delivery Goods

::No Accounting Entry as Non-valuated.

7.Do the Billing, which will also post with the Sales order Value....

Now the Questions are as below.

A. Is the above process as per best practice?

B.Do I need to Calculate Costing for FG in X company?

C. What steps to be done with respect to COPA?

Thanks and Regards


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