SUBCONTRACTING

[#1]

Hi experts,

wish you happy new year to all!

when i am doing subcontracting process with freight cost , i am getting the accounting documents for freight (during GR) generating two accounts, which is FR1 and FRN in same time debit and credit. I am not sure about the postings. Can any one explain , what will be the postings subcontracting with freight during GR?

Thanks in advance,

abi

[Former Member · Accepted solution]

it is wrong.

System should post the account assigned to FRN key in OBYC as credit and

Material account as debit

regards,

sujit

[Former Member]

Hi,

Sub Contracting Cycle

(1) You have a material that can be procured externally, and you have maintained BOM with components. Any waste generated and received during subcontracting process can be maintained as component with negative quantity.

(2) You create a subcontracting PO (PO with Item Category L). You can also maintain Purchase Info Record for Subcontract category for material and subcontractor.

(3) You make a transfer posting to issue components for SC PO. Material is sent to subcontractor. As material remains under your ownership, system does not make any value entry. But quantity is shown as "Material Provided to Vendor"

(4) You receive finished material against SC-PO. You also specify components consumed in manufacturing of finished goods. Additionally, if you have negative components in BOM, now you'll also receive subcontracting by-products. There are three events, so three accounting entries are generated:

DR FG Stock/ SC By-Product Stock

CR Change in Stock (FG/ SC By-Product )

(for finished goods received)

DR Subcontracting Charges

CR GR/IR Clg

(for moneys payable to Subcontractor)

DR Consumption (Components)

CR Change in Stock (FG/ SC By-Product )

(material provided to Vendor is now charged to expense)

(5) You do the IV for SC Invoice, and the process is complete.

Process of Subcontract in MM

Sub-contract business process:

You want to buy material from the supplier (processed material/ assembled item) , but for some reason (quality of certain item / price ) you will give some component to vendor .

Vendor shall process the item / use the item provided & supply the final item.

SAP process:

1.Create the finished goods material code.

2.Maintain the BOM for the material.

3.Create PO with item category as "L" .

4.Issue material to vendor with movement type 541

5.Receive the material against the PO with movement type 101.

6.MIRO to account for vendor's invoice for the service charge& material used by him.

Can anybody tell me how a process has to be given to subcontracting?

Suppose, I have 3 operations 1)weaving 2)dyeing 3)cutting & packing

if no 2 process (i.e Dyeing) has to be given to subcontracting, what process should i follow ?

The following process to be followed for subcontracting.

1. Item code(material master) to be created at the stage of before dyeing.

2. Item code(material master) to be created after Dyeing as subcontracted item.(F30)

3. Bill of material to becreated for the material(2) calling for material(1)

4. Inforecord and source list to be created for material(2) with the corresponding vendor

5. PO to be released for material (2)

6.Along with PO the material(1) to be issued to vendor

7.On receipt of material when GR is made the stock with vendor will get updated.

How to Create a Subcontract Order?

To create a subcontract order, proceed as follows:

Enter the material you want to order and the item category for subcontracting (L) in the order item.

Press ENTER to display the screen for component processing.

Enter the components that the vendor requires to manufacture the product.

Please note:

– You do not need to enter the date required for the components. This date is proposed by the system when you press ENTER.

It is calculated as follows:

Delivery date of the item - Planned delivery time

– If you do not want the quantity of the components to be changed if the order quantity of the end product is altered, set the indicator Fixed quantity (column F).

– You can determine whether the components are available on the date required by selecting Edit -> Availability check.

If you entered a bill of material as the material in the subcontract order, the components are created automatically.

If you want to determine the components in the bill of material at a later date (for example, if the bill of material is subsequently changed), choose Item -> Component -> New BOM explosion. The existing components are deleted and redetermined in the bill of material.

Hope it help.

Regards,

[kunal_ingale]

hi

as per ur configuration freight cost is get loaded on ur service cost

it is right as the freight cost will include ur total service cost

u can check our normal scenario aslo the freight get load on the material cost

now if u dont want to then change ut condition settings

now the accounting

If Material has Price Control as "V" (MAP)

(BSX) Stock A/c of Assembly - Dr

(BSV) Change in Subcon Stock - Cr

(FRL) Subcontracting Charges - Dr

(WRX) GR/IR Clearing A/c - Cr

(BSX) Stock A/c of Components - Cr

(GBB-VBO) Consumption A/c of Components - Dr

If Material has Price Control as "S" (Std. Price)

If Material is having Price Control as "S" then Price Difference A/c will also in picture.

This depends on configuration; SPRO > MM > Inventory Management and Physical Inventory > Goods Receipt > Price Differences for Subcontract Orders at Goods Receipt

Price Differences for Subcontract Orders at Goods Receipt

In this step, you configure for each valuation area whether price differences are generated for a Subcontract order at the time of a goods receipt if the manufactured material is managed at standard price and the standard price varies from the receipt value (externally performed service + value of components + delivery costs).

Example

Finished product: $400 (value at standard price)

Subcontract order:

o Ext. service : $250

o Components : $100

Posting schema without price differences:

Stock account FERT : 400 +

Stock change : 400 -

GR/IR clearing acct : 250 -

External service acct : 250 +

Compon. stock account : 100 -

Consumption account : 100 +

Posting schema with price differences:

Stock account FERT : 400 +

Stock change : 350 -

Price difference : 50 -

GR/IR clearing acct : 250 -

External service acct : 250 +

Compon. stock account : 100 -

Consumption account : 100 +