Lesson 4 of 5
Close sequence
10 min
Listen to this lesson
Each controlling function in this course is simple on its own. The difficulty at month end is order. Allocations, activity prices, overhead, work in process, variances and settlement each read what the step before them wrote. Run them in the wrong order and the system usually does not complain; it just produces a different, wrong answer. The controlling close sequence is the plan that prevents that, and it sits inside the wider company close that finance and logistics share.
The standard order
- Day 0Logistics cut-offLast goods movements, confirmations and invoices for the period; materials period moved
- Day 1Cost center allocationsDistribution and assessment cycles in their dependency order; activity allocations complete
- Day 1Activity price calculation (optional)Actual activity prices from cost center costs and quantities
- Day 2Revaluation at actual prices (optional)Orders revalued at the actual activity prices
- Day 2Overhead calculationCosting sheet surcharges on orders; credits to cost centers
- Day 2Work in process and variancesWIP on open orders; variances on delivered or technically completed orders
- Day 2-3SettlementWIP and variances to finance and the material ledger; order balances to receivers
- Day 3Allocations to margin analysis and period lockRemaining cost center costs to market segments if designed; controlling period locked
SAP's own course material for product cost controlling sets out the manufacturing order steps in the same order: template allocation, revaluation at actual prices, overhead, preliminary settlement for co-products where used, work in process, target costs and variances, then settlement. Cost center allocations sit before that because orders receive activity and overhead credits from cost centers, and actual activity prices are only meaningful once the cost centers hold all their costs.
| Step | Classic SAP GUI | SAP Fiori route |
|---|---|---|
| Assessment / distribution cycles | KSU5 / KSV5 (create cycles with KSU1 / KSV1) | Manage Allocations, Run Allocations |
| Direct activity allocation | KB21N | Manage Direct Activity Allocation (or confirmations on orders) |
| Actual activity price calculation | KSII | Overhead accounting job templates |
| Revaluation at actual prices | CON2 (production orders) | Job templates, depending on release |
| Overhead on orders | KGI2 (one order), CO43 (production orders, collective) | Overhead job templates |
| WIP / variances / settlement | KKAO / KKS1 / CO88 | Job templates, Schedule Manager, Advanced Financial Closing |
| Controlling period lock | OKP1 | Period lock in the closing task list |
The controlling close steps with their classic SAP GUI transactions (Private Edition) and the Fiori route. Many companies schedule the same programs as application jobs; Public Edition uses the Fiori apps and job templates only.
What breaks when steps run out of order
| Wrong order | Symptom | Consequence |
|---|---|---|
| Assessment before late invoices post | Sender cost center still carries a balance after the cycle | Costs stay on Facilities or move next month; product costs understated |
| Settlement before overhead | Orders settled, then overhead posts | Overhead sits on orders until next settlement; inventory and variances misstated for the month |
| Variances before all confirmations | Variance on an order later changes | Reported variance wrong; rerun required |
| Overhead before revaluation at actual prices | Base for quantity-related overhead uses plan values | Overhead differs from design if the base includes activity costs |
| Period lock before settlement | Settlement fails with a lock message | Close delayed while someone reopens the period |
Common sequencing errors and how they show up.
Notice that most of these errors do not produce an error message. The system posts what it was asked to post. That is why the close sequence must be written down, owned and, for the first closes in the new system, rehearsed. In SAP's training material, work in process and variance calculation cannot both happen for the same order in the same period; which one applies depends on the order's status, so status changes such as technically completed are also part of the sequence.
- FinanceGR/IR, accruals and supplier invoices for the period posted
- ControllingAllocations, overhead, WIP, variances, settlement
- Material ledgerIf actual costing is active: costing run after settlement
- FinanceValuation, reclassification, reporting and period close
Two gates frame the controlling close. At the start, the logistics cut-off and the moved materials period make sure no more goods movements land in the closing period. At the end, the controlling period lock (maintained per controlling area, fiscal year and version, with transaction OKP1 in the classic GUI) blocks business transactions such as allocations or settlement for a closed period. Locking is selective: you can lock assessments and distributions while leaving settlement open for one more day. Write which transactions are locked, and when, into the close calendar, because a lock set too early is one of the most common reasons a settlement run fails on day 3.
Tools that hold the sequence
A sequence written in a spreadsheet is fragile. SAP offers the Schedule Manager, which SAP Learning mentions for period-end closing of manufacturing orders, and closing task lists in the Financial Closing cockpit or SAP Advanced Financial Closing, which encode dependencies so a step cannot start until its predecessors are complete. Universal allocation adds cycle run groups for allocations that can run in parallel. Whatever tool Contoso uses at go-live, the content is the same: a list of steps, each with a predecessor, an owner, a program or app, and the evidence it leaves.
What would you do?
On day 2 of the June close, the cost accountant has settled all Detroit production orders. Then the shop floor posts confirmations for four orders that were missed. What should happen next?
- Order: logistics cut-off, cost center allocations, activity prices, revaluation, overhead, WIP and variances, settlement, period lock.
- Out-of-order runs rarely raise errors; they post wrong numbers that look plausible.
- WIP and variances are mutually exclusive per order and period, driven by order status.
- Encode the sequence with predecessors and owners in a closing tool and rehearse it in test.
Check your understanding · not graded
Lesson check
1. Which step must come before production order settlement?
2. Why are sequencing errors in controlling hard to spot?
3. When does an order get variances rather than WIP?
4. Late invoices arrive after the facilities assessment ran. What do you see on the sender?