SAP S/4 HANA : CO Product Costing flow for ETO Scenario

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Description: Engineer-to-Order (ETO) product costing flow in SAP S/4 HANA, which is often associated with the Project Systems (PS) module due to its project-oriented nature.ETO is a strategy where products are manufactured based on each specific customer's requirements. It involves unique designs and specifications for every order, requiring close integration of sales orders, design, manufacturing, and costing.A) ETO Production Process with Production OrderProject Creation: Upon receiving a sales order, a Work Breakdown Structure (WBS) element is auto-generated. This is achieved by having a standard project template with predefined WBS elements and networks.Design Phase: This includes designing the BOM (Bill of Material) and Routing, which lay out the materials required and the production steps, respectively.Production Order Creation: A production order is generated with reference to the WBS. This production order gets its BOM and routing from the ETO product.Goods Issue: Materials required for production are consumed. This process reduces inventory and books the costs to the production order.Activity Confirmation: The labor hours and machine hours used in the production process are confirmed, recording the actual time taken for each operation.Goods Receipt: Once the production is completed, the finished goods are received into stock. This results in capitalizing the finished product's cost.Variance Calculation: Differences between planned and actual costs are determined.Settlement: The costs accumulated on the production order are settled to the WBS element.Billing & Revenue Recognition: Once the product is delivered to the customer, billing is done. The revenue is capt
Category: Finance & Accounting > Finance > SAP FICO
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