An internal order budget, or approved funds, are maintained at either an overall or annual level.
You activate availability control, which can issue warning or error messages based on defined tolerances. Let's look at how you create an internal order budget and activate availability control.
You maintain a budget profile with Transaction OKOB or via IMG menu path:
Controlling • Internal Orders • Budgeting and Availability Control
Double-click a budget profile to display the screen shown in Figure 1.
Figure 1 Internal Order Budget Profile
Activation Type 1 indicates Automatic activation of availablity control during budget allocation.
If the Overall checkbox is selected, availability control checks against the overall budget. If it isn't selected, availaiblity control checks against the annual budget.
Availability control works with controlling area currency, unless you select the Object Currency checkbox. You can assign the budget profile to an internal order type with Transaction KOAB or via the first menu path.
You maintain availability control tolerances via the following IMG menu path:
Controlling • Internal Orders • Budgeting and Availability Control • Define Tolerance Limits for Availibility Control
Left-click then right-click in an action field, select posible entries to display the screen shown in Figure 2.
Figure 2 Availability Control Tolerance Limits
The action field defines the messages and emails the system will send at specific degrees of budget overrun. In this example, when the budget is nearly consumed at 95%, a warning is issued with an automatic email to the persons responsible. Specify a budget manager with Transaction OK14, or the system will issue an error message. With a budget overrun at 105%, an error message is issued.
You enter an order budget with Transaction KO22 or via menu path:
Accounting • Controlling • Internal Orders • Budgeting • Original Budget
You can enter a budget as shown in the example shown in Figure 3.
Figure 3 Change Original Budget Annual Overview
The overall budget can be greater than the sum of the annual budgets, but cannot be smaller. The assigned amount of 95,000.00 is due to a manual journal entry and appears in an annual Budget row, because the Overall checkbox in the budget profile in Figure 1 is not selected.
The Planned Total Version 0 amount of 100,000.00 is the original budget. The current budget of 120,000.00 is greater because a budget supplement of 20,000.00 was posted with Transaction KO24 shown in Figure 4.
Figure 4 Internal Order Budget Sumplement
Just as cost centers can provide planned output services based on activity quantities with Transaction KP26, you can plan cost center activity input quantities from other cost centers with activity input planning using Transaction KP06.
An activity type identifies activities provided by a cost center to manufacturing
orders. The secondary type general ledger account associated with an activity type identifies the activity costs on cost center and detailed reports.
Actual costing determines what portion of the variance is debited to the next-highest level using material consumption. All purchasing and manufacturing difference postings are allocated upward through the BOM to assemblies and finished goods. Variances can be rolled up over multiple production levels and company codes to the finished product.
Actual costs debit a product cost collector or manufacturing order during business transactions, for example, general ledger account postings, inventory goods movements, internal activity allocations, and overhead calculation.
An allocation structure allocates the costs incurred for a sender by cost element or cost element group, and it is used for settlement and assessment. An assignment maps a source cost element group to a settlement general ledger account.
There can be multiple methods of manufacturing an assembly, and many possible bills of materials (BOMs). The alternative BOM allows you to identify one BOM in a BOM group.
Availability control enables you to control costs actively by issuing warnings and error messages when costs are incurred.
You use the controlling area currency for cost accounting. You specify the controlling area currency when defining the controlling area in customizing for Controlling . You can assign more than one company code with different currencies to a controlling area.
A cost center is master data that identifies where the cost occurred. A responsible person assigned to the cost center analyzes and explains cost center variances at period end.
A cost component identifies costs of similar types, such as material, labor, and overhead costs by grouping together cost elements in the cost component structure.
Cost component groups allow you to display cost components in standard reports. In the simplest implementation, you create a cost component group for each cost component and assign each group to a corresponding cost component. You assign cost component groups as columns in cost estimate list reports and costed multilevel BOMs.
The cost component split is the combination of cost components that makes up the total cost of a material. For example, if you need to view three cost components (material, labor, and overhead) for your reporting requirements, the combination of these three cost components represents the cost component split.
You define which cost components make up a cost component split by assigning them to a cost component structure. Within the cost component structure, you assign cost elements and origin groups to cost components.
Each cost component is assigned to a cost component view. When you display a cost estimate, you can choose a cost component view, which filters the cost components displayed in the cost estimate.
Cost elements are included as part of a general ledger account. Primary cost elements identify external costs, while secondary cost elements identify costs allocated within controlling, such as activity allocations from cost centers to manufacturing orders.
A cost estimate calculates the plan cost to manufacture a product or purchase a component. It determines material costs by multiplying BOM quantities by the standard price, labor costs by multiplying operation standard quantities by plan activity price, and overhead by costing sheet configuration.
A costed multilevel BOM is a hierarchical overview of the values of all items of a costed material according to the material’s costed quantity structure (BOM and routing). You display a costed multilevel BOM on the left side of a cost estimate screen. You can also view a costed multilevel BOM separately with Transaction CK86_99.
Costing BOMs are assigned a BOM usage of costing and are usually copied from BOMs with a usage of production. You can make adjustments to costing BOMs if you require them to be different from production BOMs. With system-supplied settings, standard cost estimates search for costing BOMs before production BOMs.
The costing lot size should be set as close as possible to actual purchase or production quantities to reduce lot size variance. Unfavorable variances may result if you create a production order for a quantity that is less than the costing lot size. You need setup time to prepare equipment and machinery for production of assemblies, and that preparation is generally the same regardless of the quantity produced. Setup time spread over a smaller production quantity increases the unit cost. This also applies to externally procured items because vendors typically quote higher unit prices for smaller quantities.
A costing run is a collective processing of cost estimates, which you maintain with Transaction CK40N.
A costing sheet summarizes the rules for allocating overhead from cost centers for cost estimates, product cost collectors, and manufacturing orders. The components of a costing sheet include the calculation base (group of cost elements), overhead rate (percentage rate applied to base), and credit key (cost center receiving credit).
The costing type determines if the cost estimate can update the standard price.
The costing variant contains information on how a cost estimate calculates the standard price. For example, it determines if either the purchasing info record price is used for purchased materials, or an estimated price is manually entered in the Planned price 1 field of the Costing 2 view.
The currency type identifies the role of the currency such as local or global.
An internal order monitors costs and revenue of an organization for short- to medium-term jobs. You can carry out planning at a cost element and detailed level, and you can carry out budgeting at an overall or annual level or with availability control.
Each object in Controlling, such as a cost center or internal order, may use a separate currency specified in its master data. When you create an object in CO, the default object currency is the currency of the company code to which the object is assigned. You can specify a different object currency only if the controlling area currency is the same as the company code currency. There is an object currency for the sender and an object currency for the receiver.
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