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Changing the WIP Calculation Basis on

Manufacturing Orders
by Paul Ovigele

August 7, 2011 Ovigele Consulting

Paul Ovigele,

If you use the Cost Object Controlling submodule of Product Cost Controlling then you probably calculate
Work-in-Process (WIP) on a periodic basis. WIP basically takes the difference between the debits and
credits (if any) on an incomplete order and books the balance to a balance sheet account and an offsetting
profit and loss account. I have used the term “Manufacturing Orders as a generic term that encompasses
the different types of cost objects used in manufacturing such as production orders, process orders, cost
collectors, etc. The standard logic for WIP calculation (using a “Product Cost by Order Scenario”) is as
follows:

Status Status Description System Action

PREL Partially released WIP is calculated on the basis of

actual costs

REL Relea sed WIP is calculated on the basis of

actual costs

DLV Delivered WIP is canceled and a variance is

calculated

TECO Technically completed WIP is canceled and a variance is

calculated

The above statuses are set on the manufacturing order at certain points during the production process. As
shown, WIP is only calculated when an order has a status of (PREL) partially released or released (REL), YOU MAY ALSO LIKE THESE
otherwise a variance is calculated. Some companies however, want to have more control over the ARTICLES FROM
calculation of variances and therefore only want a variance calculation to take place when an order is set to
the status TECO (technically complete). In order to achieve this you would therefore need to change the
system action of the status DLV (delivered) so that WIP is calculated instead of a variance. To do this you
need to go to transaction OKG3 or via the following menu path:

Controlling -> Product Cost Controlling -> Product Cost by Order -> Period End Closing -> Period End SAP S/4HANA Finance: What's in a Name?
Closing -> Work in Process -> Define Valuation Method (Actual Cost).
What's Ahead for SAP HANA and the
Note however, that a limitation of the above IMG menu path is that you cannot drill into the different lines. Universal Journal
You should therefore use the transaction code instead. You then see will see the screen “Change View
The Evolution of Security Concerns
“Simplified Maintenance of Valuation Methods”: Overview. Locate the relevant results analysis key for WIP
calculation (the standard “product cost by order” results analysis key is: “000002 – WIP Calculation at
Actual Costs”, but this could vary depending on the setup in your company so make sure you us the correct
RA key that is linked to your order type - see transaction OKZ3). Double-click on relevant line (make sure
you activate the “Expert Mode” indicator” if it is not active) and you will be taken to the screen “Change View
Valuation Methods: Overview”, where you will see the four statuses mentioned above, assigned to the RA
Key. Double-click on the line that has status DLV and you will be taken to the screen “Change View
Valuation Methods: Details”. Go to the “RA Type” field in this screen and change it from “Z - Cancel Data of
WIP Calculation and Results Analysis” to “F - WIP Calculation on Basis of Actual Costs” and save your
settings. You will then be able to calculate WIP on manufacturing orders that have a status of DLV and only
calculate variances on orders with a status of TECO.

For more infrormation on how to optimize your SAP Financials landscape, I've put together my top tips in
the book 100 Things You Should Know About Financial Accounting with SAP which is published by SAP
Press:
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GeertP Monday, February 12

10/28/2015 1:42:20 PM Conferences & Seminars: Financials
Log in 2018
Hello Paul, Same remark as Brad below. I managed to suppress the error message 363 and to calculate
the WIP amount. But when calculating the production variances, SAP calculated variances as well for the
order because it was in status DLV. When posting the settlement, as well WIP Conferences & Seminars: GRC 2018
Don't have anas variance were
account? Sign posted.
up Do
you have any further suggestions? This is a requirement I regularly get from my customers. Regards, Geert.
Monday, February 26
Conferences & Seminars: Basis & SAP
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BodineBrad

5/28/2015 7:48:41 AM Conferences & Seminars: BI & HANA

2018
Hello Paul - I appreciate this informative article. We have a business requirement to post to WIP while the
process order is in DLV status, and only settle the variance and final settlement at the TECO order status. I See more »
tried setting DLV status in OKG3 to "F - WIP Calculation on Basis of Actual Costs". However, when running
the WIP Calculation, I still get the error message "363: Production Order has status DLV/TECO: Set "cancel
WIP"". Do you have any further suggestions? Many thanks, Brad

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