During the SAP month-end closing process, the financial postings for Work in Progress (WIP) and variance calculations typically occur during the settlement Process.
Here's a detailed overview:
- All production orders with the status "REL" (Released) at the month-end are included in the WIP calculation.
- The WIP amount is derived from the difference between the actual debit and actual credit in the order.
- No financial (FI) entry is created during the WIP calculation; the system only calculates the WIP amount.
- Variance calculation is performed when the production order status is "TECO" (Technically Completed) or "DLV" (Delivered).
- The system cancels any previously created WIP and calculates the variance, which is the difference between the actual debit and actual credit in the order.
- No FI entry is created during the variance calculation; the system only calculates the variance.
Settlement of Production Orders
- During the settlement process, the system reverses or creates WIP and variance entries in FI.
- For WIP, the typical accounting entry is: Dr. WIP Account (Balance Sheet) Cr. Volume Variance WIP Account (Profit & Loss Account).
- The system nullifies the WIP entry once the order status changes to "DLV" or "TECO".
- When settling production orders, the system posts the variance to the Profit & Loss (P&L) accounts.
- The typical accounting entry for variance is: Dr. Cost of Goods Sold (P&L Account) Cr. Production Order (P&L Account).
- This ensures that the variance is reflected in the financial statements, impacting on the profitability of the organization.
These steps ensure that WIP and variance calculations are accurately reflected in the financial statements during the month-end closing process.
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