New in Production Accounting – Event-Based Production Cost Posting

What’s new in Production Accounting in SAP S/4HANA Cloud?

In this blog post we’ll explore the recent changes in Production Accounting and establish how these changes can benefit you. We will also introduce the concept of event-based production cost posting for product costs by order.

Pic #1: Enhanced Production Accounting

The new features of Event-Based Production Cost Posting in Production Accounting in SAP S/4HANA Cloud, (as shown in the picture above) enable real-time insights and enriched information, to follow simplified period-closing processes for production cost control.

The new features also enable parallel valuation for group and local accounting standards by using Parallel Accounting. It helps you by answering relevant production accounting questions in an intelligent way.

Product Cost by Period and Product Cost by Order are two different functions for the analysis of product costs. Product Cost by Period enables the periodic analysis of costs at the product level. Product Cost by Order enables you to analyze costs at production order and process order level. Please note, this blog post focuses on the introduction of the newly available event-based production cost postings made for Product Cost by Order.

Pic #2: Footprint of Event-Based Posting

The above picture shows you the footprint of enhanced Production Accounting including the features for Parallel Accounting, which are planned to be delivered with SAP S/4HANA Cloud in 2021.

What is event-based production cost posting?

Pic #3: Overall Process of Event-Based Posting

In Product Cost by Order, the production orders and process orders are the cost objects. Costs charged to production orders and process orders are usually analyzed and settled by lot. In the past, the values for WIP (work in process) and variance were calculated in Product Cost by Order at period end. As shown in the above picture, event-based production cost posting (including event-based WIP and event-based variance posting) is now available to calculate WIP and variance immediately, instead of waiting for period close. Event-based posting links cost posting to business events, such as goods issues, goods receipts, and operation confirmation.

To be more precise, Event-based WIP is posted as a separate journal entry during business events, such as goods issues and operation confirmation. The costs of event-based WIP can be reviewed in the Fiori Apps Event-Based Work in Process, Event-Based Production Costs and Event-Based Order Costs. Event-based variance is posted as a separate journal entry during business events, such as final goods receipt or complete technically. The event-based variance can be reviewed in the Fiori Apps Event-Based Production Costs and Event-Based Order Costs.

Event-based production cost posting combines transparency with a better view of gain or loss from production, while also reducing workloads and costs in period-end closing. Additionally,  it enables reports on cost information at a more detailed responsible area (for example, work center/operation).

The scope item for event-based production cost posting is 3F0. This scope item supports both the Make-To-Stock and Make-To-Order (valuated sales order stock) scenarios for production and process orders with the order types YBM1, YBM2, YBM3, YBM4, YBM5, YBM9, YBW1, YPK1, YQ01, YQ02. The key roles are Cost Accountant-Production and Plant Controller.

To understand what the event-based production cost posting offers in more detail, watch the video ‘Introducing Event-Based Production Cost Posting’.

This video demonstrates how to do the following:

1. Create a production order using the Create Production Order app
2. Confirm your production order operations with the Confirm Production Operation app
3. Check WIP costs in the Event-Based Production Costs app
4. Post goods issues for your production order in the Post Goods Movement app
5. Check WIP costs in the Event-Based Production Costs app
6. Post final goods receipts for your finished production in the Post Goods Movement app
7. Check both variance and cleared WIP in the Event-Based Production Costs app

What are the key features?

Pic #4: Event-Based Posting End-to-End Process

As shown in the picture above, the key features of event-based production cost posting are the following:

• Event-based posting (including event-based WIP and event-based variance)
• Event-based posting error and exception handling
• Reporting on event-based WIP, event-based production costs and event-based variance

You can access the features of event-based production cost posting using the following SAP Fiori apps:

• Event-Based Production Costs
  See up-to-the-minute production cost information, compare plan or target costs against actual costs, view costs by cost component group, and see a variance split for non-joint production orders after orders are delivered or technically completed.
• Event-Based Order Costs
  See a full breakdown of event-based production cost postings for production orders.
• Event-Based Work in Process
  See detailed work-in-process data, with KPIs giving insight into recent trends.
• Postprocess Event-Based Postings – Product Costing
  Review and resolve errors, and make additional manual postings as required.

How does event-based production cost posting work?

Pic #5: Event-Based Production Cost Posting Configuration

As demonstrated in the picture above, you can set up event-based production cost posting using the Event-Based WIP and Variance Posting configuration step in SAP S/4HANA Cloud to make the following settings:

• Define event-based result analysis keys and account determination rules
• Define event-based costing sheets
• Assign event-based costing sheets to planned valuation variants per plant
• Assign order-type-dependent parameters

Note: For new SAP S/4HANA Cloud customers, the event-based results analysis key and event-based costing sheet is set as default. Existing customers who are currently using BEI need to manually switch the settings to event-based production cost posting.

For more details about the configuration path and guidance please check here (SAP Help Portal). Please follow the 3F0 scripts to complete the set-up on the logistics side in order to make sure the end-to-end process runs smoothly.

After making all required settings in the configuration steps, event-based production cost posting is initiated when you create order master data.

Pic #6: Order Master Data

During the creation of the event-based production cost posting, make sure to select RSEBW in the RA Key (results analysis key) field. The Event-Based Posting checkmark will be derived automatically as shown in the picture above.

Where to get more information about event-based production cost posting?

• Online help in SAP Help Portal
• What’s New in SAP S/4HANA Cloud 2102 Release
• Scope Item 3F0 in SAP Best Practices Explorer
• SAP Blog: On-the-Fly Target Cost Calculation in SAP S/4 HANA Cloud 
• SAP Blog: Taking Accounting to the Next Level with Universal Parallel Accounting in SAP S/4HANA
• SAP Note 2737228: FAQ: SAP Product Costing: Event-Based Work in Process in S/4 HANA Cloud
• SAP Note 2910083: FAQ: SAP Product Costing: Event-Based Variance in SAP S/4HANA Cloud
• SAP Note 2618359: FAQ: Product Costing: On-the-Fly Target Cost Calculation in S/4 HANA Cloud
• Book ‘Controlling with SAP S/4HANA: Business User Guide’ by Janet Dorothy Salmon and Stefan Walz (to be published in August 2021)