Business Scenario
You are an experienced business user and skilled employee in The Bike Company using SAP S/4HANA Cloud.
You know the exact processes in your specific department, and you have a comprehensive overview of the integrated processes in the entire company. In addition, you use applications available for key users to help business users streamline their work processes.
As part of the team that determines process implementation, you need to know what options are available for the configuration of production accounting. However, you won’t be directly involved in setting up the system.
You have already familiarized yourself with product cost planning, the basics of production accounting, and sales-order-related production (make-to-order scenario).
In The Bike Company, a specific bike model is only produced when a customer places an order. This is called sales-order-related production, which is also referred to as the Make-to-Order (MTO) scenario in production accounting.
Products that are manufactured based on a sales order are called individual requirements materials. Production accounting provides an insight into the cost of goods manufactured for these products, so that you can control the manufacturing costs during the production process.
In sales-order-related production, the controlling focus is on the ordered product size. Costs are collected and analyzed for the specific lot the customer ordered. For that, the production accounting method product cost by order is used.
The costs related to producing the particular quantity of a product in a sales order item are collected in an event-based manner and analyzed on a manufacturing order, which is the cost object. This can be either a production order or a process order, depending on whether manufacturing takes places in lot-based discrete production or batch-based process manufacturing.
The manufacturing order is created with reference to the respective sales order item. Once the ordered quantity is produced, the manufacturing order is completed. The produced quantity is then transferred to the valuated sales order stock. A sales order stock is assigned exclusively to a particular sales order. Materials related to the specific sales order are assigned to the respective sales order stock.
If material is externally procured for the sales order item, the materials are assigned to the sales order stock at the time of the goods receipt. Materials in this sales order stock cannot be used for other sales orders or anonymous stocks. When the ordered production lot or parts of it are delivered to the customer, they are withdrawn from the sales order stock. In MTO, the sales order item is only used for logistical reasons and not as a cost object.
