SAP B1 blog

resource consumption is the systematic recording and evaluation of all materials and resources, The cost of materials used in the production process to manufacture an end product. It forms the basis for post-calculation and cost control in production.

In the production process, everything starts with a production order, which is based on a Production bill of materials based. This bill of materials defines which components and resources are required for an end product. The physical material consumption is then posted as a warehouse outflow - either manually or automatically.

Automation is Retrograde removal Available: The system automatically books consumption upon confirmation of completion. The manual method, on the other hand, records actual resource usage retrospectively. It is more accurate when times or quantities fluctuate, thus providing more precise post-calculation.

The consumption value results from the unit price multiplied by the quantity consumed. Financially, this has a direct impact: material costs increase (debit), and the stock of raw, auxiliary, and operating materials decreases (credit). At the same time, the production completion notification triggers the Work in Process (WIP) and transfers the costs to the finished product.

Correct consumption data also flows into MRP planning runs. This allows future material requirements to be forecast more precisely. In addition, the capacity evaluation of resources makes it possible to recognise bottlenecks in production at an early stage.

Consumption accounting falls into the category of production cost accounting, as distinct from pure inventory valuation. While inventory valuation reflects the current stock value, consumption accounting represents the expense per production order. It enables a direct comparison of standard costs (planned) and actual costs (realised), identifies deviations – such as through scrap or inefficient resource utilisation – and thereby creates the basis for cause-based cost allocation.

---