Define Assignment

You assign the cost elements under which the order is debited and credited, or under which the costs are written in the standard cost estimate, to line IDs here.

There are two different methods:

Valuation Using Actual Costs

The line IDs put the costs incurred for the order into specific groups, such as:

The category indicates whether the cost elements under which the different postings are made are debits or credits for WIP calculation.

You can use the debit/credit indicator to separate the costs that are written under the same cost element. This information is needed for WIP calculation to treat the withdrawal of a semifinished product from stock as a debit and the delivery of a semifinished product to stock as a credit.

The fixed/variable indicator allows you to treat the fixed costs for internal activities and overhead differently than the variable costs. The costs for the semifinished materials with standard price control are are also split according to fixed and variable costs.

Valuation Using Target Costs

The line IDs put the costs incurred for the material to be produced into specific groups such as:

These groups should be based on the structure for the cost of goods manufactured in the cost component layout (see Maintain cost component layout and Define cost components).

This category indicates whether the cost elements under which the costs are written in the standard cost estimate are relevant to WIP calculation.

Capitalizing Work in Process

In the assignment, you define whether the process that must be shown as a result of these costs is to be capitalized and in what amount. For example, you can specify that:

You also define the validity dates for the assignment.

You assign the cost elements combined in line IDs to one of the following groups:

You then define:

This assignment is taken into account in the posting rules. There are three categories in the posting rules that are created from this assignment:

WIPR Work in process with requirement to
capitalize costs
WIPO Work in process with option to
capitalize costs
WIPP Work in process with prohibition to
capitalize costs

You will normally 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 (P+L).

Work in process is capitalized according to this assignment.

Remember:

Transfer Prices

In the Product Cost by Order component, if you are using multiple valuation views in the calculation of work in process at actual costs, the system automatically assigns the line IDs defined in the results analysis version of the operational valuation view to the results analysis versions of the multiple valuation views referencing the operational results analysis version.

Requirements

You must already have defined the following:

Standard settings

The standard system contains predefined line IDs. You have to assign the cost elements in your cost element list to these standard line IDs before you can calculate work in process.

Actions

1. Find out which cost elements you have to assign to line IDs. To display the cost elements valid in your controlling area, go into Cost Center Accounting and select Reporting -> Master data index -> Cost elements.
2. Enter the controlling area, your results analysis version and, if necessary, your results analysis key.
3. Enter the cost elements, as in your cost element list, under which the primary postings are to be written to the orders, or to the standard cost estimate. With material consumption accounts, you can also enter an origin.
You can mask these entries.
4. Enter the secondary cost elements under which internal cost allocations are written to the orders or the standard cost estimate. With secondary cost elements, you can also enter a cost center and an activity type.
You can also mask these entries.
5. Set the following indicators as required:
You can also mask these entries.
6. Enter the validity dates of the assignment.
7. Enter the following:
Requirement to capitalize
Option to capitalize
Prohibition to capitalize
8. Enter the cost elements, as in your cost element list, under which debits from deliveries and partial deliveries are posted.