adding fixed cost in production order and creating liability

[former_member600294]

Dear All,

We are manufacturing one of our grade of material in a plant which we do not own.We pay some fixed charges to the owner of that plant @ Rs150 PMT produced in that plant.This  fixed charges is to be included in the production order and at the same time liability for that  fixed charges is also to be created so that payment can be made to that vendor.

For charging this expenses to the production order we have created one activity type and one secondary cost element.But with this the liability can not be created.

Please advice how to proceed in this circumstances.

Regards,

Shivaji

[gsgiri · Accepted solution]

Hello Shivaji

There are two ways to handle this requirement:

1. If the activity performed by the 3rd party is a step in production process then you can handle it using external processing  of operation in Routing definition with a vendor for whom you can receive invoice and pay.

External Processing of Operations - Production Orders (PP-SFC) - SAP Library

2. If you are sending material and it requires transformation or value addition in the vendor location then use subcontracting process in SAP.

Regards

Giri

[kamalkumar_biswas2]

hi

I am following this thread...but want to add some views on this..

As I understood from your requirement that you are sending this material to a third party for some conversion with a fixed charge...so you must have a conversion contract with that party. In my views the process should be...

1. Conversion contract with the party (MM)

2. Material will be received from third party with conversion cost at the time of GR (MM)

     Example... Original cost + fixed conv cost = GR value

3. Invoicing ... MIRO ..Party will be credited at fixed conversion cost

4, When the same material is issued to another prod order the GI will be at cost as per sl.2

   Please revert back if you have any question

   Kamal 

[Former Member]

Hi,

You can create that as an operation with external activity. You can enter the expense GL account through which this expenses is to be booked and also the rate (150) in the operation item. The ideal way is when you save the order it should create a PR / PO. The production order will be automatically assigned as the CO object in the PO. When the production is over and service confirmation is done, it will create the GR for the service entry and then it will follow the normal AP route.

Take the help of you PP exprt in this... let me know if you need further details.

Hope this helps.

Regards

R C Sabat

[former_member600294]

Hi Sabat,

Thank you for your reply.As per your suggestion it seems this charges will be booked as a expenses.But as per  the requirement if that charges is added to the value of the product then the same can not be booked as a expenses.

Regards,

Mohanty

[Former Member]

Hi,

Please note that evern raw material consumption is an expense. As you can see my response the production order number is automatically updated in the PO as the CO object. That means, when GR is booked it will post the cost to the production order and not to a Cost Center (what you call an expense). What I meant is, for an external operation you can define the VENDOR number, expense GL ACCOUNT (say, manufacturing charges or bottling charges or processing charge) and the RATE. If I remember correctly, you can direct this to an Info Record as well - please check as I am in front of the system now to confirm. These set of information is used at the cost estimate and also for PR/PO creation.

Regards

RCSabat

[former_member600294]

Hi sabat,

Thank you for your reply.Can you please guide me how to create operation with external activity.

Regards,

Shivaji

[Former Member]

Idealy this is in PP area so you can take help from a PP consultant. You do not have one, start exploring after creating a control key in OP67 for external operation (SPRO > Production> Basic Data > Routing > Operation Data...

Rgds

RCS