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    When product costing is run in the system, it calculates the product cost using the bill of materials and overhead costs, but does not post any accounting documents. When the cost is marked, it updates the planned price in material master. At month end, when the cost is released, it copies the planned price to standard price and generates accounting documents. The documents credit the finished goods stock account and debit the price difference account. Additional transactions include debiting production orders for material and activity consumption, crediting inventory and cost centers. Upon goods receipt, the finished goods inventory is debited and cost of goods manufactured is credited. Variances are settled by debiting/crediting variance accounts and cost of production in FI and CO-PA

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    When product costing is run in the system, it calculates the product cost using the bill of materials and overhead costs, but does not post any accounting documents. When the cost is marked, it updates the planned price in material master. At month end, when the cost is released, it copies the planned price to standard price and generates accounting documents. The documents credit the finished goods stock account and debit the price difference account. Additional transactions include debiting production orders for material and activity consumption, crediting inventory and cost centers. Upon goods receipt, the finished goods inventory is debited and cost of goods manufactured is credited. Variances are settled by debiting/crediting variance accounts and cost of production in FI and CO-PA

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    8 views2 pages

    Entries

    Uploaded by

    kishoreb76
    When product costing is run in the system, it calculates the product cost using the bill of materials and overhead costs, but does not post any accounting documents. When the cost is marked, it updates the planned price in material master. At month end, when the cost is released, it copies the planned price to standard price and generates accounting documents. The documents credit the finished goods stock account and debit the price difference account. Additional transactions include debiting production orders for material and activity consumption, crediting inventory and cost centers. Upon goods receipt, the finished goods inventory is debited and cost of goods manufactured is credited. Variances are settled by debiting/crediting variance accounts and cost of production in FI and CO-PA

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    Accounting transactions while product costing Posted: Sep 7, 2009 2:12 PM hi gurus,

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    i need to know what are the various accounting transactions that are likely to get generated during the complete product costing procedure... regareds sayeed Prem Kumar

    Posts: 1,093 Registered: 2/16/07 Forum Points: 396

    Re: Accounting transactions while product costing Posted: Sep 8, 2009 6:22 AM in response to: sayeed bakhressa Hello Sayeed ,

    Reply

    when U do the costing Run system calculates only the product cost with BOM and overhead costs during that time system does not post the accounting document but when u mark the cost then system updates the plan price of material master and at the month end whenever u released the cost the system copies the plan price in to the standard price of the material and that time accounting document get generated. Finish Stock A/c Debit to Price Difference A/c Credit. These accounting entries passed only at the time of release cost.

    suryanarayana b...

    Posts: 531 Registered: 11/5/06 Forum Points: 1,146

    Thanks, Re: Accounting transactions while product costing Posted: Sep 8, 2009 8:40 AM in response to: sayeed bakhressa Hi, Please find below the various accounting transactions for Product Costing: 1. Material Consumption to Production Order - In FI: ROH consumption. A/c Dr (P&L) To ROH Inventory A/c Cr (BS) Same is the case with HALB In CO: Cost of Material is debited to Production Order 2. Activity Consumption to Production Order No FI Posting In CO:

    Reply

    Production Order is debited and Cost center is credited with activity cost 3. Goods Receipt from Production Order FG Inventory A/c Dr (BS) To COGM A/c Cr (P&L) 4. Revaluation of activities Only in CO Production Order and Cost Center will be debited or credited as the case may be 5. Calculation of WIP (if not delivered) In FI: WIP A/c Dr. (BS) To Change in WIP A/c Cr (P&L) If the Order is completed: In FI: Change in WIP A/c Dr (P&L) To WIP A/c Cr (BS) 6. Settlement of Variances In FI: Variances A/c and COGS Account will get debited/credited depending on whether they are positive or negative variances In CO: Variances are settled to COPA I am sure this will give you a very good understanding of the value flows in product costing Best Regards Surya

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