Sub-contracting charges to be capitalised

Dear All,
Kindly give your input on the following,
One of my client who is manufacturing Circuit Board, this activity is done both in-house production as well as sub-contracting.
i. they are producing circuit board in In-house, as per the BOM component and costing CK11n, the price of the Circuit board will be updated in the Material master as standard price, but
some time they will give to sub-contract, (material + labour) and they want to capitalise the sub-contracting labourcharges (job work charges) to the cost of the material,
One material code with standard price and when i try to do MIGO from sub-contractor , i dont know how the system will behave
How do i do and capitalize the labour charges to the cost of material (material code is only one)
Kindly give me your valuable input which will help me to solve this issue
Thanks and regards
Elan

Thanks for your input.
Correct me if am wrong
As per your input,
if the Material Master is Standard Price "S"
I created Sub-contracting PO and when I receive the goods against the PO (MIGO), system will check the price in the material master and price in the MIGO, if any difference it will post price difference account in FI , Material master price with "S" will be remain same.
In such case, am not capitalising the job work charges to the material is it?
Kindly clarify the same
Regards
Elan

Similar Messages

How to calculate or capture the Sub-Contracting Charges

In CK13N, How the Sub-Contract rate is derived.
Kindly the tell the derivation methodlogy for SubContract Rate.
Thanks in advance
K.Natarajan

Dear Natarajan,
1.For Sub-sontracted products ,the cost of that product = Raw-materials cost (which are sent to the third
party) + External processing cost(as per the cost mantained in ME11 for sub-contracting).So if the raw
materials cost is Rs 10 & the processing charges are Rs 25 means then the sub-contracted product cost
= 10+25 = Rs 35.
2. For sub-contracted Product you will be getting only the sub-contracting cost and not the manufacturing
cost.It will be having only raw material cost and sub-contracting charges.
Or do you want in this way?say X is a sub-contracted part and its made up of raw materials X1 & X2 and
once X is received ,its used for manufacturing Y ,So if you check the cost of Y it will having the sub-
contacted item (X) cost + Internal processing cost (operation cost for producing Y),so if you check for Y it
should show the split up of internal activity cost + sub-contracting charges +raw materials cost ?
3.For your information,if you check CK13N for your finished product which is produced using the Sub-
contracted product,then after giving the input and press enter ,then press F5,now you will get the exact
split up in which you were looking for.like processing cost ,conversion cost + material cost.
check the link - [Product Costing for Sub Contracted material|Re: Product Costing for Sub Contracted material]
Check & Revert back.
Regards
Mangalraj.S

Sub Contracting GR Accounting Entries

Hi All,
I am posting GR for sub contracting PO and found the following entries in the accounting document of GR:
1. Stock Acct. of Finished product
2. GR/ IR Clearing Acct
3. Sub Contracting Charges
4. Change in Sub Contracting Stock
However, I did not see the accounting entries for:
1. Stock Acct. of Spare parts
2. Consumption Acct
Please suggest how to corrent the same?
Rgds,
KK

Hi,
Check in GR Document whether line item for component consumption exists with MvT 543, if yes then check whether MAP of material is ZERO.
If line with MvT 543 doesn't exist then you might have forgot to activate "Item OK" indicator for component line item during GR in MIGO. Confirm this by checking componet stock in MMBE for special Stock "O" for Vendor. Just cancel the GR Document and Post GR again.
During GR against Subcontracting PO (In MIGO), following A/c Entry should get posted;
BSX     Assembly Stock A/c          Dr     5000.00
BSV     Change in Stock A/c          Cr     5000.00
FRL     Subcontracting Charges A/c     Dr     1000.00
WRX     GR/IR Clearing A/c          Cr     1000.00
GBB-VBO     Component Consumption A/c     Dr     4000.00
BSX     Component Stock A/c          Cr     4000.00

Sub contracting- A/C postings

hi all,
posting GR(101) for subcontracting item against subcontracting PO resulted posting to a 'change in stock' account (Tr.Event.Key BSV) with a value ( SC item value+SC service charge).
If i want this value to be posted to consumption account what should i do.
Is BSV is Tr.Event.Key for offesetting entry??
What 'change in stock' account generally stands for?

Hello Satish
The change in stock account (BSV) should not go to consumption account.
I will give an example in which we are providing components for Rs.450 and the sub contracting charges is Rs.500
At the tome of goods receipt:
GR/IR clearing account(WRX)             500 -
External service account(FRL)           500 +
Stock account: end product(BSX)           950 +
Change involving stocks(BSV)             950 -
Stock account: comp.(BSX)             450 -
Consumption account(GBB)            450 +
And for your question, the consumption a/c will be a P/L account which will be reflected in the balance sheet. And so if you put the change in stock a/c also in the consumption a/c then in the balance sheet it will show high consumption value when the real consumption value is not that much.
Thats why this is configured like this in standard SAP system.
Hope this helps
Regards
Gregory Mathews

Not able to create Free of charge Sub contracting PO

Hi,
When I am trying to create Sub contracting PO with "FREE" tick system is asking me to tick GR based IV (It is not mandatory in config) then tick to IR Receipt and then net price.
My requirement is no SC charges.
Thanks in advance,
Prasad

Welcome to the Oracle Forums. Please take a few minutes to review the following:
<ul>
<li>Before posting on this forum please read
<li>10 Commandments for the OTN Forums Member
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First, As you are dealing with an upgrade issue to Oracle Enterprise Business Suite (EBS) 11i application, I strongly suggest you submit a Service Request with Oracle Support instead of asking for support here in the Forms Forum. If you had a contractor perform the upgrade, then you could also persue the upgrade issue with the contractor.
Second, this forum is for general Oracle Forms questions. Please post your question in the General EBS Discussion forum. If you have a general Forms question, by all means, ask it here! ;-)
Craig...

Sub-Contract Price Charges

Hai,
I have created a Sub-Contract Order for Finished Product, with some Components(Semi-Finished Products) the same is send to the Vendor.
The vendor assembled Finished Product by Using free issue of Stock from my company and the same way he consumed his own Stock to assemble the Finished product.
Now my question is, the payment we are doing to the vendor is Service Price or Material Price(Vendor Consumed for Assembling the finished product) or both.
Regards
JC

Hi JC,
As you told you are supplying sub -components materials to vendor, the supplied material will be own by your company .Only the stock will updated as "stock provided to vendor".When you do the GRN against your subcon PO the components will be consumed will be consumed and what are all the value used for subcon process and material value will loaded to your FG account.
So as components are owned by you you should be only for processing charges which is negotiated between you and the supplier which you will putting while creating the subcon PO.
Aside of this if the subcon vendor also adding some materials to process the FG , it depends how you had tied with your supplier whther he will be charing you the service charges including the charges of added materials.
By the by i don't think so why he is adding the material extra.As alreday you are sending the components which are necessary to produce the FG material.
Hope this is clear to you.

Sub-contracting PR

Hi,experts,
My scenario is like this - I want to send some components to outside vendor for repairing purpose and sometimes along with some spare parts also.
My requirement is to create sub-contracting PR from any maintenance order and in the line item of the PR , the component which I want to get repaired should come . From that PR , MM will create sub-contracting PO , assign some spare parts to that PO and send these to vendor.Is there any option available in SAP to map this scenario?Also while receiving the repaired material the price should be the summation of damaged one plus service charge plus spare parts consumed.Can it be done by refurbishment order??
Please guide me.
thanks in advance
rgds
rajib

hi
In standard SAP for PM you cannot create sub contract PR from Maintenance order ,since the indicator sub contracting indicator is only available for Aerospace and defense.
since standard PR doc type is specified in the IMG settings for order category if you create separate PR type for subcontracting and assign the same it will reflect to the entire order types .
regards
thyagarajan

Sub Contracting Service PO - Reg.

Dear All,
I want send the Equipment or Gauge (Having Material Code - Stock or non stock Item) to the outside vendor for repairing or calibaration purpose through RTP(returnable Gate Pass) and for that Service charge and Tax I need to provide in the PO.
Here Service and Subcontracting is coming together for the same material, Kindly inform how to handle this situation.
Regards
Srinivasan

Hi
Sub-Contracting http://help.sap.com/bp_blv1600/V5600/BBLibrary/HTML/138_EN_IN.htm
Regards
Ram

Any configuration required from SD about Sub-contracting PO

Dear All,
Need your assistance.I am SD connsultant.
1.   MM team can directly create an outbound delivery from ME2O now.
2.    It creates an outbound delivery and delivery note in the system
3.    The create delivery process is not reducing any inventory in the system until and unless you are not doing any “Post goods issue”.
Now I have some question –
1.    This delivery is an open delivery and we are not posting PGI against this delivery. So what are the next steps should be to handle this delivery?
So from SD point fo view any configuration is required.. Because this has involvement for both SD and MM.
Thanks
Sits

   this delivery is an open delivery and we are not posting PGI against this delivery. So what are the next steps should be to handle this delivery?
So from SD point fo view any configuration is required.. Because this has involvement for both SD and MM.
Don't know where did you read that SD involvement is required in Subcontracting PO.
This is purely related MM.
If you had posted this in MM forum then you would have been answered correctly whether SD involvement is required or not.
Subcontracting PO process is something like we provide raw materiel to the Vendor and he will do the finishing and make a Finished a product and send it to us and for this company pay some labour charges, in this case raw material is kept at Vendor location but the stock is validated in the books of company.
1.Basic requirement for this is BOM should exist in system and we create this using t code CS01.Item category is L in PO and special stock type is O.
2. Maintain info records in ME11 by checking the field sub contracting.
3.Create PO for the finished good with item category L
4. in ME20 Issue the raw materials to Vendor, the move type 541( issue raw material to vendor).
once the raw materials issued then the qty will be shown at Vendor this you can observe in the same t code or you can check this MBLB t code.
5. in MIGO we do receipt (mov type 101) with ref to PO here when the Vendor provide the finished good the raw material gets consumed this happens with mov type 543. This you can observe in MIGO against this raw materials.
This is what exactly Subcontract process happens, in this where exactly you will come across the SD involvement?
Please let me know if you are talking about something different?
thanks,
Srinu.

SUB CONTRACTING ACCOUNTING ENTRY - DOUBT

Hi,
the blw is the a/cing entry for the sub contract process , here pls tell me how the a/c detemination for Rs 1000 is picking i.e for BSX & BSV..
i knew that FRL & WRX picked based the po price say Rs .200
and GBB & BSX is picked based on the mat master value of the ram mat, which we send to subcontractor.. say Rs 800
i need to know , how the BSX and BSV value is picking?? pls clarify
BSX- stock account finished -
1000(+)
BSV- change in stock -
1000(-)
FRL-external service----
200(+)
WRXGR/IR clearing acct--
200(-)
GBB_VBO- consumption acct raw material sent to vendor-----800(+)
BSX- stock account--
800(-)

in your case , Your Finished material is valuated at MAP with price control "V" , so the total value of material produced will be the sum of the Raw material components consumed and the subcon charges.
Change in stock account is hit when you receive any material from subcontracting .
so BSX entry is "Stock debit " 800 +200 = 1000 (sum of Components consumed and Subcon charges)
BSV Entry is for "Change in stock " credit = 1000 (equivalent to Finished material value)

Mb1b (sub contract)

while doing MB1b ( for sub contract)
error is
G/L account 799999 does not exist in company code AAA
i tried
fs00
g/l account - 799999
c,code - aaa
the following error comes
" Account 799999 does not exist in company code AAA
and
Account 799999 blocked for creation in chart of accounts INT
what to do
ali

Hi,
For subcontracting process you need to set up following
If Material has Price Control as "V" (MAP)
(BSX) Stock A/c of Assembly - Dr
(BSV) Change in Subcon Stock - Cr
(FRL) Subcontracting Charges - Dr
(WRX) GR/IR Clearing A/c - Cr
(BSX) Stock A/c of Components - Cr
(GBB-VBO) Consumption A/c of Components - Dr
If Material has Price Control as "S" (Std. Price)
If Material is having Price Control as "S" then Price Difference A/c will also in picture.
This depends on configuration; SPRO > MM > Inventory Management and Physical Inventory > Goods Receipt > Price Differences for Subcontract Orders at Goods Receipt
Price Differences for Subcontract Orders at Goods Receipt
In this step, you configure for each valuation area whether price differences are generated for a Subcontract order at the time of a goods receipt if the manufactured material is managed at standard price and the standard price varies from the receipt value (externally performed service + value of components + delivery costs).
Example
Finished product: $400 (value at standard price)
Subcontract order:
o Ext. service : $250
o Components : $100
Posting schema without price differences:
Stock account FERT : 400 +
Stock change : 400 -
GR/IR clearing acct : 250 -
External service acct : 250 +
Compon. stock account : 100 -
Consumption account : 100 +
Posting schema with price differences:
Stock account FERT : 400 +
Stock change : 350 -
Price difference : 50 -
GR/IR clearing acct : 250 -
External service acct : 250 +
Compon. stock account : 100 -
Consumption account : 100 +
And cost center is mandatory for subcontracting process
the accounts for the BSX FRL and GBB-VOB needs the cost elements
Thanks
Diwakar

Sub contract po coproduct issue

Hi All,
In sub contracting process one(raw material) material is supplying to vendor .During single punching the process we are getting 2 products & scrap.For this process we are paying some amount to sub contractor.
While raising the Sub contarctor PO, raised aganist one product .Here iam able to maintain job charges for one product only .But at the same time it should apporinate to coproduct also.
I have maintained a bom for one product (header material) & i maintained second product as coproduct,raw material & scrap .In bom & material master for that material i maintained as coproduct
After maintaing this price is not apporinating to co product.Pls guide me how to solve this issue.
Regards
Vr

close not ansered

Sub contract in sales

I need sub contract in sales.
Ex:
Customer sent material to plant they need some process in our plant for that I need scenario and configuration.
How we allow customer material into plant?
After finished work how to deliver products to customer and billing also.
Please help me any one

Hi Dharmananda rao
Sub Contracting Cycle :
(1) You have a material that can be procured externally, and you have maintained BOM with components. Any waste generated and received during subcontracting process can be maintained as component with negative quantity.
(2) You create a subcontracting PO (PO with Item Category L). You can also maintain Purchase Info Record for Subcontract category for material and subcontractor.
(3) You make a transfer posting to issue components for SC PO. Material is sent to subcontractor. As material remains under your ownership, system does not make any value entry. But quantity is shown as "Material Provided to Vendor"
(4) You receive finished material against SC-PO. You also specify components consumed in manufacturing of finished goods. Additionally, if you have negative components in BOM, now you'll also receive subcontracting by-products. There are three events, so three accounting entries are generated:
DR FG Stock/ SC By-Product Stock
CR Change in Stock (FG/ SC By-Product )
(for finished goods received)
DR Subcontracting Charges
CR GR/IR Clg
(for moneys payable to Subcontractor)
DR Consumption (Components)
CR Change in Stock (FG/ SC By-Product )
(material provided to Vendor is now charged to expense)
5) You do the IV for SC Invoice, and the process is complete.
Process of Subcontract in MM :
Sub-contract business process:
You want to buy material from the supplier (processed material/ assembled item) , but for some reason (quality of certain item / price ) you will give some component to vendor .
Vendor shall process the item / use the item provided & supply the final item.
SAP process:
1.Create the finished goods material code.
2.Maintain the BOM for the material.
3.Create PO with item category as "L" .
4.Issue material to vendor with movement type 541
5.Receive the material against the PO with movement type 101.
6.MIRO to account for vendor's invoice for the service charge& material used by him.
Can anybody tell me how a process has to be given to subcontracting?
Suppose, I have 3 operations 1)weaving 2)dyeing 3)cutting & packing
if no 2 process (i.e Dyeing) has to be given to subcontracting, what process should i follow ?
The following process to be followed for subcontracting.
1. Item code(material master) to be created at the stage of before dyeing.
2. Item code(material master) to be created after Dyeing as subcontracted item.(F30)
3. Bill of material to becreated for the material(2) calling for material(1)
4. Inforecord and source list to be created for material(2) with the corresponding vendor
5. PO to be released for material (2)
6.Along with PO the material(1) to be issued to vendor
7.On receipt of material when GR is made the stock with vendor will get updated.
How to Create a Subcontract Order?
To create a subcontract order, proceed as follows:
Enter the material you want to order and the item category for subcontracting (L) in the order item.
Press ENTER to display the screen for component processing.
Enter the components that the vendor requires to manufacture the product.
Please note:
You do not need to enter the date required for the components. This date is proposed by the system when you press ENTER.
It is calculated as follows:
Delivery date of the item - Planned delivery time
If you do not want the quantity of the components to be changed if the order quantity of the end product is altered, set the indicator Fixed quantity (column F).
You can determine whether the components are available on the date required by selecting Edit -> Availability check.
If you entered a bill of material as the material in the subcontract order, the components are created automatically.
If you want to determine the components in the bill of material at a later date (for example, if the bill of material is subsequently changed), choose Item -> Component -> New BOM explosion. The existing components are deleted and redetermined in the bill of material.
Save the purchase order.
When you print the purchase order, the components are printed per order item
Subcontracting - Key Points
Special Procurement Process.
Item category: L
Order type: NB
In info record vendor should be maintained as subcontractor.
Vendor (Subcontractor) receives the components used to manufacture a finished product directly from your company or through third party.
Your company should place a purchase order for the finished product. In this manually you can enter the required individual components or it can be determined via the explosion of BOM (if exists).
Stock check at vendor level: ME2O
Company stock check: MMBE
GR for individual components through movement type: 501 or 561 (if with out PO or without reference).
GI to subcontracting vendor: through movement type 541.
GR from sub contracting vendor: through movement type: 101
Movement type 543 is displayed to cancel the material cost account.
If the subcontracting order has to be generated through materials planning,the special procurement key has to be set in MRP 2 screen.
- To create the Subcon Info Record : Tcode ME11 - Info Category - Click Subcontracting
- To create Material BOM : Tcode CS01
- With the Info and Material Setup, you can then create the Purchase Order in Tcode ME21N
Reward if useful to u

Sub Contracting in Controlling

Dear CO Experts,
I have sub contract scenario in my client place. Scenario is as follow,
"Raw Material send to Vendor then Client received either FG/SFG material from Vendor Location. In between some expenses charged by Vendor through raising Purchase Order - Sub Contract".
Whether we have to add or not to Cost component Structure. If yes how to be map to Cost Component structure.
How to valuated in Accounting & Costing. (including Entries)
Is there any required for OBYC integration settings?
I am waiting for your favorable reply.
Regards,
KBR.

Hi,
Please check the below link for reffernce:
http://help.sap.com/saphelp_erp60/helpdata/EN/35/6e8ac0c27242558395188e1df0ec46/content.htm
In subcontacting pricing proccedure you will have expense condition type and agansit u will have transaction event key like "FRL", You can assign the cost element in OBYC T code in Transaction event Key FRL.
Please check and Confirm.
Thanks and Regards
Binioj M D

Sub-Contract Order Stock Issues

Dear All,
In Sub-Contract Order, i will create an Order for Finished product for X quantity & i maintain BOM(Semi-Finished Components) of Y quantity for the Finished Product. After approving the same the order was send to Sub-Contractor.
And Store In-charge issues these stocks to Vendor by 541 Mov-Typ in MB1B T-code.
In the same ways these Order's are placed to multiple Sub-Contractors.
Then how could i now, these stocks are issued to Vendor against these Sub-Contract Order's by Standard Reports.
Regards
JC

Thanks for your reply.
In MBLB report, i can see the stocks against Vendor Code. But if i place the same Materials for a single Vendor on Multiple Sub-Contract Order's. Then how come i verify the Stock report against Order's.
Regards
JC

Sub-contracting charges to be capitalised

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