PP period-end moves cost collected on production orders to where it belongs in the accounts. The processing is really CO, but it depends on PP data being in order, so the two need understanding together.
The sequence
| Step | Activity | Code | What happens |
|---|---|---|---|
| 1 | Find unconfirmed orders | COOIS | Check for missing confirmations |
| 2 | TECO completed orders | CO02 / COHV | Mark finished production technically complete |
| 3 | Apply overhead | CO43 | Add overhead to direct cost |
| 4 | Calculate WIP | KKAO | Recognise unfinished work as work in process |
| 5 | Calculate variance | KKS1 | Split the difference from standard |
| 6 | Settle | CO88 | Post WIP and variance to accounting |
Steps 4 and 5 are mutually exclusive for a given order; SAP decides which applies from the order status.
Work in process
| Method | Calculation | Suited to |
|---|---|---|
| At actual cost | Order debits minus credits | Make to order, job costing |
| At target cost | Standard cost of confirmed operations | High volume under standard costing |
Variance
- Variance calculation requires TECO or DLV status
- Confirmation accuracy determines whether variances mean anything at all
- Scrap quantities must be recorded correctly for yield variance to be meaningful
Stale data to clear
| Check | Code | If ignored |
|---|---|---|
| Old unconfirmed orders | COOIS | WIP is overstated; MRP over-procures |
| Finished orders not TECOed | COOIS | Reservations persist and drive unwanted purchasing |
| Unconsumed PIRs | MD04 / MD62 | Excess production planning persists |
| Overdue planned orders | MD04 | Proposals that will never run distort requirements |
| Unsettled orders | KOB1 | Cost sits on the order and never reaches product cost |
Relationship to inventory valuation
Finished goods are received at standard cost, so inventory stays at standard and the difference becomes variance.
Where the Material Ledger runs actual costing, variances are apportioned at period end between inventory and cost of sales, moving valuation towards actual. Since the Material Ledger is standard in S/4HANA, this configuration is increasingly common โ and it makes the ordering of PP, CO and MM period-end steps even more important, because material ledger closing (CKMLCP) depends on order settlement having completed.