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Material Ledger serves for recording of real costs of purchased materials and products that are being
produced and at the same time it takes into consideration and records all factors effecting price
fluctuation. The use of functionality of Material Ledger in the system SAP R/3 enables faster and more
effective decision taking on all purchase and sale management, controlling and production levelsc
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ëpon ascertaining of real prices of purchased materials, the price of raw materials, commercial goods and
overhead material is influenced by purchase prices and expenses for the sole purchase transaction. In
addition to this the real price of products and semi-finished products is composed of real costs connected
to production or as the case may be with further processing of raw materials and material. c
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Multinational companies can use Material Ledger for recording of inventory in up to three parallel
currencies, with the possibility of recording historical exchange rates:cc

y in the currency of accounting area ± valuation according legislation of the given country with
connection to financial accounting c
y in the currency of the group ± valuation within the groupcc
y in the currency of the profit centre ± another valuation for goods exchange between profit centres
within the company.c

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The information system SAP R/3 generally supports two methods of stock valuation, i.e. valuation by
means of standard or variable prices. Material Ledger combines advantages of both methods ± static and
stability of standard prices suitable for costing of products with dynamics and flexibility of variable prices,
which more faithfully reflect the reality. At the same time the history of real and standard prices gets
recorded in time. The tool Material Ledger provides also the possibility of revaluation of stock on the basis
of real calculation, which is required by valid legislation in some countries.c
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y ascertaining of real costs for procuring of material and resulting from this support of decision
taking 





 

 


 from the aspect of timecc
y decision taking on selection of suppliers with the purpose of 


 


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made easier c
y possibility of keeping records of inventory in up to three parallel currencies and from this resulting




 



within the companies belonging to multinational holdings and
groups; support in decision-taking on the selection of the most advantageous currency in
purchase of materials and semi-productscc
y support of decision taking in selection of the manner of valuation of stock, this will  
   


  


 , and at the same time it will finally   
 

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y supporting material  
     from the point of view of
real production costs according to individual products (covering contribution for the production of
the product)cc
 y supporting material for  



 




  from the point
of view of production costs and supporting material for negotiation with suppliers and clients on
provided discounts and bonuses c

FROM SAP ± IMPortant

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This component can be used for the following purposes in material valuation:

y ësing multi-level actual costing to recalculate material consumption for semifinished and finished
products based on price differences.

y Maintaining different valuations based on different methods of price control:

y Standard price (the result of a standard cost estimate, for example)

y Moving average price

y Activating planned prices for material valuation

y Valuating materials in up to three currencies - the values are determined at their historical
exchange rates at the time of the transaction

y Valuating materials with independent valuation views (multiple valuation)

The amounts in the three currencies can portray different valuation views (such as legal, group or
profit center valuation).

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This component is important if one or more of the following situations apply to you:

y You want to perform actual costing for materials.

y You want to carry your material stock in multiple currencies.
y You want to valuate your material stock each posting period.
y You are active as a corporate group in several countries and you use multiple valuations.

For more information, see Installation: Actual Costing/Material Ledger.c

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The graphic shows how valuation-relevant data from Logistics and Accounting is gathered and managed
in the Material Ledger, and how this data is used for both balance sheet preparation in Financial
Accounting as well as for internal evaluation purposes. (The three different currencies can also represent
different valuations.)

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When using the standard price as the method of price control, you can value material movements with a
preliminary standard price. Differences between the actual prices and the standard price (such as price
and exchange rate differences) that arise through valuation-relevant transactions, are posted to price
difference accounts and exchange rate difference accounts, and collected in the material ledger. At the
end of a posting period, you can settle the variances between the actual prices and the standard price,
determine new valuation prices, and adjust the valuation for the closed period. The price differences are
transferred to the balance sheet account.

Therefore, you can calculate periodic unit prices each posting period based on actual data and apply any
price and exchange rate differences to the 
 
 . ësing the multi-level actual costing functions,
you can determine the actual quantity structure of a material and apply price differences to 
 
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V
  is simply an accounting term for a book. A ledger provides the framework for the presentation of
transaction figures for specific reporting or evaluation purposes.

The material ledger is a subledger for materials that have a material master record in the R/3 System.

The Material Ledger contains master data for materials. The materials are clearly identified with their
material number in conjunction with their valuation area and valuation type (in cases of split valuation).
Data from all valuation-relevant movements are collected in the material ledger data in order to calculate
valuation prices for the materials. Material ledger data contains prices in up to three currencies and
valuation views.

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If you want to employ this component simply to use the    

/  


functions;
you can have your materials valuated with the standard price or the moving average price without using
the material ledger. If this is the case, work with transaction-based material settlement.

If you want to use this component to perform actual costing, you will valuate the materials and material
movements - on a preliminary basis - with the existing standard price. You then have the opportunity to
valuate the material stock in the closed period using the periodic unit price. In this case, you work with
single-/multi-level material settlement.





The following 

 are
supported by this component at this time:

y ALE scenarios (Application Link Enabling) with separate Materials Management and Financial
Accounting functions

The following 

are supported by this component 

 
:

y Deactivation of the material ledger

This is only possible if the valuation area was not set as productive.

y LIFO and FIFO Valuation

This only possible using one currency.

The following 

 are
 supported in connection with this component:

y J
 

y Accounting-Invoice Verification

However, Logistics Invoice Verification is supported.