Using Internal Orders

Objectives

After completing this lesson, you will be able to:

  • Discuss the business purpose for overhead orders

Overhead Order Business Case

Your company needs a way to control one-time expenses related to marketing and other non-periodic activities. You are familiar with cost center accounting and overhead project accounting. Project accounting and internal orders have similar functionality but internal orders are slightly simpler to work with. Therefore, you need to understand how to maintain internal orders, monitor their activity, and settle them at the end of the month.

Your company participates in several trade fairs during the year. The expenses for all trade shows are charged to the marketing cost center and every year the budget is overrun but it isn't clear how much is spent for individual trade shows. Starting immediately, an internal order will be assigned to each trade show to provide transparency of the actual expenditures.

You are going to be responsible for managing internal orders from a master data perspective and so you need to understand how to maintain them. Since the trade show expenses will be posted to internal orders, you need to understand how internal orders are used as cost objects and what reports you can use to analyze the charges. At the end of each period, the internal orders are settled to the marketing cost center. You need to understand how to create settlement rules and how to run the settlement job.

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