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In this document Am going to share about functionality of Product Costing ETO-Scenario - Results Analysis – POC method using Progress Version core configuration and Earned Value calculation Results.
1. Illustration introduction
2. Customizing details
3. User Activities
4. Report
ETO-Scenario - Results Analysis: (07) POC Method Using Progress Version (132)
Use
You can use the method POC Method on Basis of Progress Version for projects.
This results analysis method calculates the percentage of completion (POC) on the basis of the project’s progress version.
The POC method is often used in Britain and North America. Since German law does not allow unrealized profits to be reported, the POC method is used in Germany only for internal information purposes.
1. Customizing details
Status: REL
Status: TECO
Status: FNBL
Just would like to show you the Project Structure CJ20N & WBS Hierarchy
WBS Hierarchy flow:
Illustration Example:
You have planned revenue of EUR 200,000 and costs of EUR 120,000 for a sales order. The planned order quantity is 100 units. The base quantity is the invoiced quantity.
Period 04:
In period 04, you have actual costs of EUR 20,000. You have not billed the customer.
In results analysis, the system calculates the following data:
- No costs affecting net income
- No revenue affecting net income
- Capitalized costs using the formula: Capitalized Costs = Actual Costs – Cost of Sales (= costs affecting net income)
- You then settle the capitalized costs to FI and EC-PCA
Note: Just for quick reference about the calculated values in the MS Excel.
At month-end, the following transactions need to be executed in sequence in order to calculate the Recognized Revenue and Unearned Revenue
1- CNE1 – Calculating the Project Progress
This step measures the project progress based measurement method defined in the WBS element. The project progress result is stored in the progress analysis version “132”.
2- KKA2 – Calculating the Project Revenue and Cost
This step valuates the WBS element according to the setting of Results Analysis
T-Code: KKA2
Period: 5
In period 05 actual costs increase to EUR 80,000. You deliver to your customer and send him a milestone invoice for EUR 100,000. The invoiced quantity is 40 units. The order is partially delivered and partially billed.
In results analysis, the system calculates the following data:
- Revenue affecting net income of EUR 80,000
- Costs affecting net income of EUR 48,000
- Capitalized costs of EUR 32,000
- Surplus revenue of EUR 20,000
T-Code: KKA2
Progress Analysis in Detail: Earned Value Calculation result
Progress Analysis: Earned Value Report
Period 06
In period 06 actual costs increase to USD 90,000. You deliver a second amount to your customer and send him a second milestone billing for USD 90,000. Total revenue is USD 190,000. The total invoiced quantity is 80 units. The order is partially delivered and partially billed. In results analysis, the system calculates the following data:
- Costs affecting net income of USD 96,000
- Revenue affecting net income of USD 160,000
- Reserves for unrealized costs of USD 6,000
- Surplus revenue of USD 30,000
No capitalized costs. The capitalized costs calculated in the prior period are canceled in period 05.
T-Code: KKA2
7th Period
In period 07 actual costs increase to USD 130,000. You deliver the remaining goods and send the customer the final invoice for USD 10,000. Total revenue is USD 200,000. The total invoiced quantity is 100 units. The order is now fully delivered and fully invoiced. In results analysis, the system calculates the following data: Costs affecting net income of USD 130,000 Revenue affecting net income of USD 200,000
The income statement shows the following values:
T-Code: KKA2
Progress Analysis Report: Earned Value Details.
Conclusion: Your comments are welcomed to improvise this blog.