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Settlement of Production Orders.

Former Member
0 Kudos

Dear Gurus,

We following Moving Average Price in our company, i want one clarification in case of moving average price what will be the entry when i do settlement to production orders.



Accepted Solutions (1)

Accepted Solutions (1)

Former Member
0 Kudos

When you settle the production order: raw material cost and overhead cost (machine and labor cost) will be posted to material account.


Mateiral X: Initial stock qty: 100 Moving average price: 10 USD Total stock Value: 1000 USD

material X has BOM, it has materil A 1 Qty and material B 1 Qty. Cost of A is 5 USD and Cost of B is USD.

routing has to be maintained for this in order to calculate overhead cost. Let us assume Overhead cost for 1 Piece is 0.1 USD

and You are creating Production order for 100 pieces.

TO calculate you have to maintain routing with proper work center. In work center activity type has to be maintained for labor and machine activity. and Fixed and variable cost for the activity types have to be maintained in Kp26.

In production order, settlement category should be MAT and settle

When u settle the order

material cost A: 100x5 - 500 USD

material cost B: 100x5- 500 USD

Overhead cost for 100 EA - 10 USD

total production cost 1010 USD

When you settle the production order, the system debits material account by 1010 USD,

so the stock value become 2010 USD and when you receive the goods the qty become 200 EA (inital aty 100 + production order qty 100 EA)

Now the moving average becomes 2010 USD /200 EA -

> 10.05 USD

Answers (0)