Recalling the Main Characteristics of the Event-based Production Process

Now, you would like to recap the different steps of an MTS production process. From an accounting perspective, this process includes the solution of Event-Based Production Cost Posting (which is provided by scope item 3F0 in SAP S/4HANA). You will analyze the different financial accounting postings that result from each of the production events.

Event-based Production Cost Posting in Production Accounting means that every production event triggers additional automatic financial postings. These event-based postings comprise e.g. overhead and WIP calculation for goods issues and activity confirmations, variance calculation for final goods receipt as well as order settlement. Thanks to Universal Parallel Accounting, these postings can be stored in parallel ledgers for each accounting principle of your group.

In this context, let’s detail how a product is manufactured, from creating an order through production operations to receiving the produced goods in stock, and understand the underlying impacts from a controlling perspective.

This can fit production or process orders, but we will focus here on a production order (production of framesets). Remember that you can check the postings for the different ledgers you use, at every step, mainly using the Event-Based Production Costs app.

The cycle in the figure above describes typical steps in event-based Production Accounting:

1. Select the cost objects that are most appropriate in terms of their functions or integration (production order or process order in this lot-related production).

2. Upon order creation, a preliminary cost estimate is created that saves plan values on the cost object.

   Note

   If the cost object has the Created (CRTD) status, it must be Released (REL) before you can make actual postings to it and calculate a preliminary cost estimate.

3. Withdraw the required materials from the warehouse (possibly referencing a bill of materials or resources).

   Note

   The sequence of the actual postings is not predefined; instead, it is derived from the business transactions.

4. Confirm activity output: It consumes internal activities from cost centers. You can post this activity output manually with the timesheet or confirmations. Costs are assigned to the order.

5. Enter goods receipt (partial receipt and then final goods receipt). When products are completed, you deliver them to the warehouse. As soon as you post the goods receipt, costs are passed on to stock. This goods movement is valued with a preliminary price (normally the standard price of the finished goods). The order is credited, and the inventory is debited. It can be a partial or final goods receipt. The order’s status will be set accordingly until the technically completed status.

6. Analyze run error handling reports: Since overhead, WIP and variance calculations are posted thanks to the event-based approach, it is necessary to check that each operation has been handled and has triggered the appropriate posting. A correction could be made.