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Why Internal Order is Required?

Internal orders describe individual jobswithin a controlling area. Orders support action-oriented planning,

monitoring, and allocation of costs. You can use internal orders to:

1. Monitor internal jobs settled to cost centers(overhead orders)2. Monitor internal jobs settled to fixed assets(investment orders)3. Offsetting postings of accrued costs calculated in CO (accrual orders)4. Display the cost controlling parts of Sales and Distribution customer not affect the core business of the

company (orders with revenues)

We can use overhead orders for detailed controlling for a particular object or activity. All costs related to this object

or activity are assigned to the relevant order. We can use orders as internal cost objects.

Internal orders are normally used to plan, collect, and settle the costs of internal jobs and tasks.The SAP system enables you to monitor your internal orders throughout their entire life-cycle;

from initial creation, through the planning and posting of all the actual costs, to the final

settlement and archiving.

An Internal Order is a self-contained mini project cost object, i.e. it's a collection of costs, but not

a full project with WBS and network relationships. The Internal Order should settle to FixedAsset, Project, Cost and/or Profit Centers at the accounting period (month) end. It's a process

similar to overhead allocation. In turn, the Internal Order can also be settled into and serve as an

interim placeholder for overhead costs.

nternal order is an virtual place of collecting/pooling the costs of a particular activity/task. i.e. it

is a method to collect those costs and business transactions related to the task/activity. It is a

means of tracking costs of a specific job, service, or task . Periodically the costs whichare pooled in an internal order can be settled to an asset or to a cost center or to a GL Account or

to an order. Thus, while recording you need not anlyse the costs. Just record and pool the costs ininternal order. After that (generally at the end of the month) these costs are analysed and settledto relevant elements (like asset or cost ceter etc).

This method of recording and settling the costs helps in analysing the costs cost center wise,profit center wise or cost element wise. This level of monitoring can be very detailed but allows

management the ability to review Internal Order activity for better-decision making purposes.

For example if the company participate in 2 trade fair to target new clients .

Without Orders , we post costs for the two trade fairs directly to the cost center responsible for supporting these

events. As external costs and internal activities have the same cost elements on the same cost center, we cannot

easily determine which event created which costs.This means that we cannot make any further analyses for

comparison purposes.

A further advantage is the wide variety of planning and budgetingfunctions provided for orders.

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As With Orders ,each event receives its own overhead order, the costs are collected separately. The settlement

function allocates the order costs to the cost center responsible for supporting the trade fairs, which provides you

with the organizational view of the costs. This enables us to analyze and compare the results of the trade fairs, even

after the settlement has been made.

Creating Internal Order

Enter Transaction code KO04 (Order Manager) in the SAP Command Field

In the next screen ,Press Create button in the application toolbar to create a new internal order

http://cdn.saptraininghub.com/wp-content/uploads/2012/08/Crinorder01.png

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In the next dialog box, Select the order type to be created

In the next screen, Enter the following data

1. Enter the Company Code2. Enter the Business area3. Enter the Object Class of the Order4. Enter the Profit Center5. Enter the Cost Center responsible for the internal order

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Press Save button in the SAP standard toolbar , to create the internal order

Check the status bar for the newly created internal order number

Read more athttp://www.saptraininghub.com/all-about-internal-order/#AM4lzDs3PKUl44rq.99

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