Production order settlement in SAP PP is the process of transferring the costs of a production order to one or more receivers, such as finished goods, work in progress, or cost centers. In a standard costing scenario, the production order is valued at the planned costs, which are based on the standard cost estimate of the product. If there are no variances between the planned and actual costs, the production order settlement can be done without any adjustments. However, if there are variances, they need to be allocated to the receivers before the settlement.
This PDF document outlines the following list of key steps required for production order settlement without variance and WIP in SAP Production Planning:
- Configure PP settings in SAP – Define order types [OPL8], MRP views for finished goods and raw materials [MM01], work scheduling views, order control parameters [OPJK], valuation variants [OPK9].
- Create purchase orders and receive goods to bring raw materials into stock.
- Create and release production order for finished goods.
- Issue raw materials to production order.
- Confirm production order activities and quantities produced.
- Book actual overheads.
- Transfer finished goods to stock.
- Calculate variances – will be zero since planned equals actual.
- Settle production order at month end.
- Close settled production order.
The key steps covered are configuring PP parameters, issuing materials, confirming production, settling and closing the order. Since planned costs equal actual costs, there are no variances or WIP generated. This demonstrates production order settlement in a standard costing scenario without variances.