In this step you assign the cost elements under which costs are
updated in the cost estimate used as a basis for valuating work in
process and scrap (preliminary order cost estimate or
version-specific cost estimate to line IDs.
The line IDs sort the costs for the material to be produced into
groups such as the following:
Direct material costs
Note that for WIP calculation you must ensure that the results
of the cost estimated that was used for the valuation of work in
process are updated in the form of cost elements.
The category flags the cost elements under which costs are
updated in the standard cost estimate as relevant or not relevant
to WIP calculation. The category is specified in the step Define
For costs that are relevant to valuation (such as direct
material costs), you must create line IDs of category K
For costs for which no work in process is to be created (such
as production overhead), you must create line IDs of category N
(ignore). If you do not create line IDs for these costs, an error
message will be issued during WIP calculation.
Capitalization of work in process
In the assignment, you specify how the process that must be
shown due to these costs should be capitalized. For example, you
can specify that
100% of the work in process that was calculated from the direct
material costs can be capitalized
80% of the work in process that was calculated from the
overhead can be capitalized
You also specify the validity period of the assignment.
You assign the cost elements that have been grouped into line
IDs to one of the following groups:
What percentage of the costs cannot be capitalized and
For what percentage of the costs you can choose whether the
costs must be capitalized or cannot be capitalized
This assignment is taken into account in the posting rules.
Three categories in the posting rules are created from this
WIP with requirement to capitalize costs
WIP with option to capitalize costs
WIP with prohibition to capitalize costs
You will usually define a posting rule that assigns the work in
process with requirement to capitalize costs to the G/L accounts
for unfinished products (balance sheet) and stock changes
Note the following:
The line IDs with a requirement to capitalize costs and the
line IDs with a prohibition to capitalize costs contain costs for
which no differentiation is made for the purposes of commercial law
or tax law.
The line IDs with an option to capitalize costs contain costs
that have to be handled differently for the purposes of commercial
law than for the purposes of tax law.
You must already have carried out the following steps:
The standard system contains predefined line IDs. However, you
must assign the cost elements in your list of cost elements to the
standard line IDs before you can calculate work in process.
1. Determine what cost elements you
must assign to line IDs. To display the cost elements that are
valid in your controlling area, go to Cost Center Accounting and
choose Information system -> Master data index ->
2. Enter the controlling area, your
results analysis version and, if necessary, your results analysis
3. Enter the cost elements according
to your cost element list under which primary costs are updated in
the standard cost estimate. With material consumption accounts you
can also specify an origin.
You can mask your entries.
4. Enter the secondary cost elements
under which internal activity allocations are updated in the
standard cost estimate. With secondary cost elements you can also
specify a cost center and an activity type.
You can mask these entries too.
5. If necessary, set the
The debit and credit indicator is of
no significance for the production cost collector.
6. Specify the validity period for
7. Specify the following:
One line ID per line in one of the following columns:
requirement to capitalize costs
option to capitalize costs
prohibition to capitalize costs
a percentage for the costs with a prohibition to
a percentage for the costs with an option to capitalize