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Internal Orders in Costing

 An internal order is used to accumulate cost for a specific project or task for a specific time period. Aninternal order is therefore used for a short period with a specific deadline.

Your internal order will usually settle to cost centers (and not vice versa) according to the settlement rulein the order setup.

 An internal order can therefore be used to group all the expenses incurred to plan and hold a conferenceover a 3 month period. The order can be settled on a monthly basis to cost centers.

When the conference is finished the order can be settled finally. The cost of the conference will then bespread over 2 or more cost centers, but can be viewed in total on the internal order when needed.

Example:

Internal Orders are temporary cost collectors. Internal Order inherits all the properties from the Order 

Type. Order Type will have settlement profile, allocation structure, budget profile, status profile and

planning profile etc. Internal Order will have different system statuses.

1. Create

2. Release

3. Technically Completed

4. Closed

Based on each status, you will have different transactions allowed to post. These costs are settled back

to different settlement valid receivers which are maintained in settlement profile. You will maintain the

settlement rule on internal order master.

Let me take this example.

There is an earth quake happened in your Organization and your top management has approved to

create an internal order.

 All the costs relating to internal order will be booked to internal order. For example after 3 months of all

the works completed, there are 100000 INR on your internal order. You cannot leave that internal order 

like that. Now you want to settle that internal orders to various cost centers. Management will decided

how this needs to be settled between cost centers (in which ratio). You will maintain the same ratio insettlement rule of internal order master data (KO02). Once you run the settlement run in KO88, the costs

on the internal order will become ZERO (assumed that you are settling 100%) and will be distributed to

cost centers.

WBS elements are lower nodes or project.

For example if there is a project 0001

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You will have different WBS elements

0001.A - Mechanical Works

0001.B - Civil Works

0001.C - Erection Works

0001.D - Road and Buildings etc.

You will caputure these costs on WBS elements. You can settle these costs to Assets Under Construction

or assets. You can also maintain the settlement strategy for this. You will do settlement the WBS

elements by using CJ88.