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# Settlement Options in Refurbishment Order !

It is a common understanding that Settlement of a Refurbishment Order happens on Material. This is true, but not always.

It depends upon whether the price control indicator for the Batch material in material master is Standard (S) or Moving average price (V).

Batch material refers to the material with Valuation types C1/C2/C3. So if the price control indicator of Batch material is:

1. V: Settlement happens on the Material Master.
2. S: Settlement doesn’t happen on Material Master, but on price difference account.

Scenario 1: Consider material 795, with Batch material’s price indicator = V

Have 1 unit each of batch C1, C2, C3. Therefore the material valuation = (200+80+10)/3 = 96.67

Created a Refurbishment Order for this material (for C3) using IW81. Done GI. Done GR using IW8W.

After GR, we have 1 unit of C1 and 2 of C2.

Therefore, Material valuation = (1*200 + 2*80)/3 = 360/3 = 120

Cost incurred in WO: 10 for GI of 1 unit of C3 and -80 for GR of 1 unit of C2.

So the balance amount on WO is -70.

Settlement: Since batch material price indicator is V, therefore settlement of balance amount happens on material.

So the settlement happens on GL Spare Parts, against material master.

Since the settlement happens on material, therefore material valuation also changes as:

1*200 + 2*80 = 360

360-70 (for settlement on material) = 290 /3 = 96.67

Scenario 2: Consider material 796, with Batch material’s price indicator = S

Have 1 unit each of batch C1, C2, C3. Therefore the material valuation = (200+80+10)/3 = 96.67

Followed same steps as above. Create Refurbishment Order, GI, GR. Skipped the screenshots.

Valuation of material after GR, but before settlement.

Therefore, Material valuation = (1*200 + 2*80)/3 = 360/3 = 120

Settlement: Since batch material price indicator is S, therefore settlement doesn’t happen on material, rather on Price diff account.

So the settlement happens on GL Price Diff account and not on material master.

Since the settlement doesn’t happen on material, therefore no change in material valuation:

1*200 + 2*80 = 360

360 – 0 (for settlement) = 360 /3 = 120

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16 Comments
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Good information. Will be useful to Refurbishment users. Thank you for sharing.

Regards

KJogeswaraRao

Piyush Gupta
Blog Post Author

Thanks Jogeswara Sir.

Hi Piyush,

Good document on refurbishment i have read so far. ðŸ™‚

Regards

Terence

Piyush Gupta
Blog Post Author

Thanks Terence for appreciating !!

nice document..

Clear the costing in Refurbishment order.

thanks

Piyush Gupta
Blog Post Author

Thank you Rakesh.

Good document on Settlement of Refurbishment orders.

Thanks for Sharing.

Piyush Gupta
Blog Post Author

Thanks for your kind words Kiran.

Dear Piyush,

Good document very informative,

REgards

Anand

Piyush Gupta
Blog Post Author

Thank you Anand for your appreciation.

Regards,

Piyush

Dear Piyush,

Thank you for the good information.

Could you please explain how actually the settlement rule gets defined here in this case?

Will it be defined in the allocation to Material alone?

Piyush Gupta
Blog Post Author

Hello Vijaya,

Even I had the same doubt when I exploring this concept.

In both the cases, the S Rule is defined for the material only.

The system tries to settle the cost to material. But if the Batch material is at standard pricing, then the settlement is automatically routed to the price diff account, in place of material valuation.

So invariably, the S Rule object is material in both the cases.

Thanks,

Piyush

Thanks Piyush...

excellent doc

Hi Piyush,

Thanks this is excellent information.Â

Thank you for this great doc. I have a question and hopefully this blog is still active.Â  what will happen with the settlement if material (with V price control) was moved before the settlement is done? if there is inventory and if there is no inventory.Â  thank you in advance for your input!