Production Settlement for Production Orders

This module distributes actual indirect costs across completed production orders to support reliable product cost analysis.

❓ Introduction

The Production Settlement for Production Orders module enables periodic settlement of actual indirect costs (e.g., energy, maintenance) to completed production orders. This gives you true product costs instead of planning estimates and enables pricing decisions based on factual data.

🔍 How it works

The system automatically distributes actual indirect costs between production orders based on the selected calculation method.

  1. Retrieving orders - system imports completed orders from the last month:

    • Order A: value 75,000 USD, time 15 hours
    • Order B: value 25,000 USD, time 5 hours
    • Total value: 100,000 USD

  2. Entering actual costs - you enter actual indirect costs:

    • Electricity: 2,000 USD
    • Production supervision: 1,500 USD
    • Total cost to settle: 3,500 USD

  3. Automatic calculation - system calculates proportions based on method:

    • Value method: Order A gets 75% of costs (2,625 USD), Order B gets 25% (875 USD)
    • Time method: Order A gets 75% of costs (2,625 USD), Order B gets 25% (875 USD)

  4. Cost update - after approval, production orders show true costs instead of planned ones.

Production cost settlement view with indirect costs distributed across production orders

🚀 How to enable the module

  1. Go to Search and enter Production Variance Settlement Setup.
  2. Open the settings page and complete the required fields described in Settings.
  3. Save the settings.

🧾 How to use

Periodic settlement process

  1. Go to Production Variance Settlement for Production Orders and perform the actions in sequence.

  2. Get production orders:

    • Click Get Production Orders action
    • Starting Date — lower limit for the Value Entry posting date filter
    • Ending Date — upper limit for the Value Entry posting date filter
    • Posting Date — date on which variances are posted
    • Location Code (optional) — filter for the registered production location

  3. Calculate current amounts

    • Click Refresh Lines / Calculate Costs action
    • System will recalculate all amounts posted so far for displayed orders

  4. Enter actual costs:

    • In Variance Amount to Settle field enter actual amounts
    • System will proportionally settle costs according to set method

  5. Distribute costs to orders:

    • After filling Variance Amount to Settle field use Split Cost to Orders action
    • System will fill Cost to Posting column proportionally based on existing cost and Variance Amount

  6. Approve settlement:

    • Click Revalue Selected Orders to post revaluation of Cost to Posting amount for selected Production Orders