How is Work in Process (WIP) calculated on a product cost collector?

While standard cost estimates are a basis for target costs, WIP calculation is NOT independent of valuation variant settings; the valuation variant specifically defines how target costs are determined for WIP.

WIP is based on target costs but the specific valuation method for these target costs (and thus WIP) is determined by the valuation variant, not directly by the order type settings. The order type settings link to the valuation variant.

WIP is not calculated based solely on actual cost; it involves a comparison of actual costs with target costs to determine the value of unfinished goods.

WIP calculation for product cost collectors generally compares actual costs incurred to the target costs for the quantity produced or processed. The target costs themselves are typically derived from a standard cost estimate, and the valuation variant specified in the WIP calculation settings determines how these target costs are valued (e.g., at standard cost, planned cost, or another method).