Skip to Content
Product Information
Author's profile photo GNANASEKARAN RANGAN

Event Based Work in Process with Variance Spilt

The intent of this article is to cover the business process to calculate the variance, splitting the variance by category and posting to FI. The events include items such as goods issues, activity confirmation, goods receipts, or other manual bookings on production orders and goods receipts from the production, calculation variance and splitting the same. in the make-to-stock and make-to-order scenarios.

Blog Applicability


Target Audience

Business Users, Key Users, Consultants,

Target Industry


Business Scenario

One of the activities in period end closing is to calculate the WIP, Variance and settle the WIP and variance to FI. In ECC world customer must perform period end closing mandatorily to calculate and post the WIP and Variance to FI for the manufacturing orders.

Customer must wait till month end to calculate and post the WIP and Variance settlement. It also requires more time during month end closing, Due to this period end closing getting delayed.

Due to WIP calculation and Variance settlement during the period end, high volume production order, process orders need to be processed, that leads to the performance issue during period end closing.

To over come this issue SAP S4HANA developed solution called Event Based Revenue Recognition with variance spilt.

The process of calculating and posting the WIP for order was explained in the blog :

This blog intended to explain the process of Variance spilt posting as part of event-based posting only.

As a perquisite to calculate the Variance split along with WIP calculation at the production order level, an order type with RA key relevant for WIP and Variance spilt needs to be configured and assigned to the production order. As shown in the below screen shot.

All other configuration settings related with Source , GL assignment , GL account determination , Assignment of company code and document type etc are similar like explained blog : Event based WIP.


The RA key relevant for Event Based Revenue Recognition for the production order is assigned at the level order types (Define Order-Type-Dependent Parameters for Production Orders). (the RA key: RSEBW is assigned to order type). The assigned RA key can be seen in the production order master data under control tab. It is shown below in the screen short.

Variance Posting are shown below. in the earlier solution variance posted single GL account, now the variance are posted to multiple GL accounts by splitting based on category.

The actual cost is debited to production order by way activity confirmation and material issue, if there is overhead posting the same will be updated. In this case overhead not posted. During goods receipt from the production, the production is getting credited, the difference between debit posting and credit posting is called variance. The variance is spilt based on the variance category and posted to FI. It enables draw the detailed financial statement.

In the example above variance of 405.57 is spilt based on variance categories.



Credit Posting ( Goods Receipt)


Material Issue


Activity Confirmation




The GL assigned in the transaction OBYC for variance Posting using the account modification: PRF and off set entry determined using the transaction: PRQ

The FI document generated without having impact on financials. The off-set entry posted to respective profit and loss account. The variance spilt happened based on variance category.

Additional Learning

Reference FAQ Note: 2737228 – FAQ:SAP Product Costing: Event-Based Work in Process in S/4 HANA Cloud :


The outlined business contents in this blog is purely to leverage “Event based WIP calculation And all other related information provided in this article are purely testing purpose.

Assigned Tags

      You must be Logged on to comment or reply to a post.
      Author's profile photo Owen Liu
      Owen Liu

      Great blog, thanks GNANASEKARAN RANGAN !

      One question, what original posting will trigger the variance split posting?

      Author's profile photo GNANASEKARAN RANGAN
      Blog Post Author

      The Goods receipt from the production order triggers variance calculation and variance spilt.