|When is it useful to use the price control V or S
in Material Master?
Do I have to follow the SAP standard setting in the material type for the following material types:
- ROH (Raw materials) -> moving average price
- HALB (Semifinished products) -> standard price
- FERT (Finished products) -> standard price
In which case and why is useful to change these standard setting in material type?
What is difference between standard price and moving average price?
When and how to use it?
Standard price are used for products that do not fluctuated frequently. It is usually used for finished or semi finished products.
Moving average price are used mainly for raw materials that are purchased externally. The advantage of using moving average price for your raw materials is that your inventory costs will always reflect the current market cost.
SAP strongly recommends that
you do not select price control V for semi-finished products and finished
products, because doing so will very easily cause the calculation
of unrealistic valuation prices. SAP recommends:
If you nevertheless select price control V, take care in the following situations:
1. Unrealistic prices occur if materials are produced and also retire during one period (that is, the inventory at the end of the period is smaller than the total of acquisitions from production orders) and if, in addition, several production orders belonging to a material were finished in this period, and the production order settlement calculates variances at the end of the period. Every single production order carries out an inventory coverage check and may therefore cause the moving average price to be changed. However, the individual production orders do not check whether the inventory available at the end of the period has already been debited by another production order.
Example: on 20 workdays in the period, 1 piece of material xyz was produced for each day and delivered to the warehouse at a price of USD 1000. At the end of the period there is 1 piece at the warehouse. Since an activity price of a participating cost center was higher than planned , every single production order calculates cost of goods manufactured of USD 1100 during the settlement. Every single one carries out a inventory coverage check and finds out that the variance can be posted completely to the inventory. That is, the ending inventory of one piece is debited with USD 20 x 100 and it consequently receives a price of USD 3000.
1. A settlement is carried out although not all costs
have yet been posted to the order. This can even result in a price of 0
for the delivered product.
Standard price for products together with possible manual
If we select standard price for any type of material or moving average price and then make po, it will pick from material master or what?
The Purchase Info Record have the FIRST priority. When no PO info record is found, the Purchase Order will pick the user LAST enter price. The PO module do not pick up any price from material master.
Pricing Determination in Purchasing
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