Subcontracting is one of the procurement processes available in MM. In this process, components are shared to vendor to get the final product.
Steps to perform subcontracting:
- Create subcontracting Info record (Optional) – T Code – ME11
- Create subcontracting PO with item category L – T Code – ME21N Steps: ME21N —> Enter Item Category L –>, Material (End Product), PO Quantity, Delivery Date, Net Price, Plant –> Click on Item Details –> Tab Material Data — >Components, select Explode BOM –> Click on Components button –> Enter the sub components –> Go back & Save. Note: Components can be exploded through BOM (T Code CS01) or components can be given manually also.
- Create Transfer Posting with Movement Type 541 to issue the sub components to the vendor T Code -ME2O/ MIGO
- Goods Receipt for finished product – T Code -MIGO Note: During goods receipt, final product will be received with movement type 101 and components will be consumed automatically with 543 movement type
- Invoice Receipt for the services performed – T Code – MIRO
Accounting entries for subcontracting: Example: Components cost is 100 INR, Subcontracting Charges are 40 INR
There will be no account entries at transfer posting 541.
Accounting entries at the time of Goods Receipt 101 (&543) : Finished goods will be received with 101 and the Components will be consumed with Movement type 543.
Here Dr means Debit (+Ve) and Cr means Credit (-Ve)
(BSX) Stock A/c of Assembly – 140 Dr
(BSV) Change in Subcontracting Stock -140 Cr
(FRL) Subcontracting Charges – 40 Dr
(WRX) GR/IR Clearing A/c – 40 Cr
(BSX) Stock A/c of Components – 100 Cr
(GBB-VBO) Consumption A/c of Components – 100 Dr
Accounting entries at the time of Invoice Receipt :
(KBS) Vendor A/C – 40 Cr
(WRX) GR/IR Clearing A/C – 40 Dr
Accounting entries at the time of Payment :
Vendor A/C – 40 Dr
Company Bank A/C – 40 Cr
Regards
SAP-MM4U
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