Month End Closing, Settle Production Order by batch - CO88

Received Quantity-> transaction CO03 - click Goto -> Goods Movement - total all the posting for movement type 101

ACTUAL FACTORY OUTPUT = CURRENT MOVING AVERAGE COST * PLAN QTY
(ACTUAL VALUE OF INVENTORY AS AT RECEIVING DATE)

ACTUAL FACTORY OUTPUT = ACTUAL COST OF PRODUCTION = ACTUAL INVENTORY VALUE

ONCE THE JOB IS CLOSED, THE SYSTEM WILL UPDATE THE INVENTORY TO REFLECT THE ACTUAL COST OF INVENTORY DURING MONTH END CLOSING.
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Example 1

STOCK BALANCE AT Month End - MM03
STOCK VALUE AT Month End - MM03

DIFFENCE BETWEEN ACTUAL AND RECEIVED QUANTITY = Actual Value in Cost Analysis Job A - Value of Received Quantity
RECEIVED QTY FOR JOB A = Goods Movement - total all the posting for movement type 101
THE ACTUAL DIFFENCE UPDATED TO INVENTORY =
PERCENTAGE OF STOCK (STOCK QUANTITY / RECEIVED QTY * DIFFERENCE )
STOCK BALANCE AT Month End / RECEIVED QTY FOR JOB A * DIFFENCE BETWEEN ACTUAL & PLAN
= Inventory Amount A (Accounting Document - Inventory)
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STOCK BALANCE AT Month End - MM03
STOCK VALUE AT Month End - MM03

DIFFENCE BETWEEN ACTUAL AND RECEIVED QUANTITY = Actual Value in Cost Analysis Job A - Value of Received Quantity
RECEIVED QTY FOR JOB A = Goods Movement - total all the posting for movement type 101
THE ACTUAL DIFFENCE UPDATED TO INVENTORY =
PERCENTAGE OF STOCK (STOCK QUANTITY / RECEIVED QTY * DIFFERENCE )
STOCK BALANCE AT Month End / RECEIVED QTY FOR JOB B * DIFFENCE BETWEEN ACTUAL & PLAN
= Inventory Amount B (Accounting Document - Inventory)

THEREFORE THE TOTAL VALUE OF INVENTORY ADDED TO THIS PART =
JOB A Inventory Amount + JOB B Inventory Amount + STOCK VALUE = Total Value of Inventory
UNIT COST = Total Value of Inventory / Stock Balance at Month End
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Example 2

IF RECEIVED STOCK IS NOT TRANSFER OUT (THAT IS TOTAL RECEIVED IS STILL IN STORE)

JOB VALUE WERE TO BE DIVIDED BY TO TOTAL RECEIVED QTY

JOB A = Actual Value in Cost Analysis Job A / Actual Quantity in Cost Analysis Job A = Job A Unit Price

JOB A = Actual Value in Cost Analysis Job B / Actual Quantity in Cost Analysis Job B = Job B Unit Price

TOTAL STOCK
QUANTITY = Actual Quantity in Cost Analysis A + Actual Quantity in Cost Analysis B + STOCK BALANCE AT Month End = Total QUANTITY
VALUE = Actual Value in Cost Analysis A + Actual Value in Cost Analysis B + STOCK VALUE AT Month End = Total VALUE

IF RECEIVED STOCK IS NOT TRANSFER OUT, THE NEW
UNIT COST = XXXXX will be lower -> Total VALUE / Total QUANTITY

HOWEVER, BECAUSE THERE IS LESS STOCK THAN JOB QUANTITY, THE EXTRA COST INCURRED BY EACH JOB ARE ACCUMULATED AND BEAR BY THE REMAINING PART IN STORE RESULTING IN HIGHER MOVING AVERAGE COST.

To conclude, if you are using control 'V' for your finished goods (FERT) and your production orders involve numerous process, it would be advisable (only a suggestion) to train your people to do a settlement once the production orders have been fully received into store (System status DLV, TECO). This will helps to control the moving average price from wide fluctuations as the moving average price is update before any goods is issue out to customers. If you happened to found any errors after settlement during the same period, you still can do a settlement reverse. However, if the settlement period is different, any error have to be done using the manual journal entries.