Initially my company used to manufacture a particular component in-house so that material was assigned to a particular valuation class in the material master records. But now they have started externally procuring that component in which case the valuation class should change from RM component manufactured category to bought out component category.

By : Venky

You use the Transaction Code : MMAM

Go to MMAM  and then give the material and give the new valuation class and execute it.  That material have change from old valuation class to new valuation class.

Example:  You create material No: 678 under the Finished goods. Finished goods valuation class is 7920 is assigned in Accounting Tab 1. You want to change "678" material  to Raw Material.

Go to T.Code : MMAM

Material                                : 678
New Valuation Class             : Raw Material ( Select from F4)
                                               Which Valuation area you want
Old Valuation Class              : Finished goods ( its under gray mode
                                                                          i.e can not change)

Then click execute it (F8)

678 Material automatically change from Finished Goods to Raw Material. Raw Material Valuation Class : 3000, is automatically updated in the material "678" in the accounting tab 1.

Related:
Split Valuation for Materials

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