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In a settlement hierarchy, the most important settlement is at the top of the hierarchy. Cities are at the top of the hierarchy because of their high populations and their many goods and services. Hamlets and villages are at the bottom of the hierarchy. There will be many more hamlets and villages compared to cities.

KO88 is a transaction to settle the Order (Production order, Internal order, QM order, PM order, etc). In case of Production order, if there is any balance lying in the order, it would be on account of WIP or variances.

Creating a Settlement Rule Choose Settlement rule in the master data maintenance for the relevant sender object. ... You maintain settlement rules in Customizing under Controlling Internal Orders Actual Postings Settlement Maintain Settlement Profiles . Choose Edit New rule or enter the value directly.

Use. When a production order is settled, the actual costs incurred for the order are settled to one or more receiver cost-objects (for example, to the account for the material produced or to a sales order).

Creating a Settlement Rule Choose Settlement rule in the master data maintenance for the relevant sender object. ... You maintain settlement rules in Customizing under Controlling Internal Orders Actual Postings Settlement Maintain Settlement Profiles . Choose Edit New rule or enter the value directly.

The settlement rule includes one or more distribution rules for the production order. The distribution rule consists of a cost receiver, a settlement share and a settlement type: The settlement receiver determines to which cost object the actual costs of the production order are to be settled.

For making it Zero we run the settlement of order through the T code KO88 or KO8G , which settles the cost from the plant maintainece order to the settlement receiver maintained in the settlement rule .

To create the rules you can go to KO02, enter the order and then click on settlement rule. Each line of the distribution rule specifies the percentage, equivalence number or amount of the orders costs to be settled to a particular receiver.