Material Master – Price Control

Moving Average Price (V)

Standard Price (S)
Price that changes in consequence of usage and
Constant price without considering usage or
entry of invoices. Calculated by dividing the value
invoices. Material stock valued at the same price
of material by the quantity in stock.
over an extended period.
• Adjusted with every receipt • Constant across the period
• It is recommended to be used only for Raw
• Recommended for material types that produced
Materials & Materials procured externally
or manufactured within an Organization
Moving Average price – Stock Coverage

Quantity Stock Value V Price

01 Begin Inventory 100 PC at 1 100 100 1

02 Goods Receipt 100 PC at 2 200 300 1.5
03 Invoice Receipt 100 PC at 3 200 400 2
04 Goods Issue 150 PC at 2 50 100 2

Inventory A/C Dr. 100 Vendor A/C Cr. 300

Initial Upload
GR/IR Dr. 200
01 03 Invoice
Control A/C Cr. 100
Inventory A/C Dr. 100

Inventory A/C Dr. 200 Inventory A/C Cr. 300

GRN

02 04 Goods Issue
GR/IR Cr. 200 Cosumption A/C Dr. 300
Moving Average price – Stock Shortage

Quantity Stock Value V Price

01 Begin Inventory 100 PC at 1 100 100 1

02 Goods Reciept 100 PC at 2 200 300 1.5
03 Goods Issue 150 PC at 1.5 50 75 1.5
04 Invoice Reciept 100 PC at 3 50 125 2.5

Vendor Cr. 300

Inventory A/C Dr. 200
GR/IR Dr. 200
02 04
Inventory Dr. 50
GR/IR A/C Cr. 200
Price Difference Dr. 50

Inventory A/C Cr. 225

03

Consumption A/C Dr. 225

Advantages/Disadvantages of Price Controls

Moving Average Price (V)

Standard Price (S)
Advantages
Advantages
• Stock Value is adjusted each time goods are received
• All stock postings take place with Standard Price
• Real time fluctuation are posted to stock
• Price remain constant through out the period
• PRD posted only in case of exceptional cases
• Recommended for Material Types
Disadvantages
Disadvantages
• Only recommended for Raw Materials (procured
• Price difference cannot be subsequently adjusted to the
Externally)
ending inventories or consumed products (Sales,
• False entries with severe consequences
Production withdrawals)
• Danger of incorrect valuations with Delayed Invoice
Process Name : Product Cost Planning
Input Process Output

FG / SFG Work FG / SFG

PP

BOM Center Routing

Inventory Revaluation
document

Raw
MM

Material
Price New price updated
in material master

Activity
Price Selection
Resolve issues
(Plan) List (List Execute costing Review newly Mark cost Release cost
(if any) and re-
of run calculated price estimate estimate
CO

Valuation run costing run

Materials
Variant Costing to be
Sheet costed)

Inventory revaluation
entry passed in FI
FI

(automatically)
Process Name : Product Cost by Order
Input Process Output

Production Production
Production Setting production
Order Order
Order (FG) order status to TECO
release confirmation
PP

1) Activity cost (debit) 1) System calculates overheads, work

2) Goods issue (debit) in process, variance (in case order is
Actual activity price 3) Goods receipt (credit) complete).
Planned Cost Variance
calculation & Overhead WIP booked on production order 2) During settlement, the system
(activity type rates
CO

revaluation of Calculation calculation calculation

e.g. machine hour passes a) FI entry for WIP calculated
production order at * ** ***
rate, labour, power) b) debits the production order with
actual price Settlement
overheads calculated, c) settles
variance on material & in COPA.

1) Moving average Material document for RM

price for raw issued & FG receipt is
generated (automatically)
MM

materials (‘V’)
2) Standard cost
estimate for FG / SFG
(‘S’)

1) Entry for variance will

be posted in FI
Automatic 2) WIP entry will be
account Entry for goods receipt posted / reversed with
determination and issue flows into FI
FI

reference to production
settings (automatically) order
 Product Costing

BOM Explosion Rates Cost Component

Itemization
Structure

Raw Material Local (RMLO)

Raw Material Import (RMIM)
Semi Finished Product (SFG1) Material Master
Packing Material Local (PMLO) RML0 100
Packing Material Import (PMIM) RMIM 120
SFG1 070
PMLO 020
PMIM 030
Recipe Rates Power 004
Steam 002
Direct Cost 340
Prod Lab 001
Pack Lab 002 Utilities 017
Power Dep 005
Steam Fact OH 003
Production Labor Hours Planned Activity Prices
Packing Labor Hours for Period
Depreciation
Factory O/H

Product Costing
 Cost Component Cost Controlling Cost Cost Cost Name of Cost
Cost Component Name of Cost Component Area Element Element Component Component
Structure Component Structure
A1 1000 41000100 41000100 10 Raw Material Local
A1 10 Raw Material Local
A1 1000 41000101 41000101 20 Raw Material Import
A1 20 Raw Material Import

A1 30 Packing Matnr Local

A1 1000 41000102 41000102 30 Packing Matnr Local
A1 40 Finished Goods

A1 50 WIP IRM A1 1000 41000103 41000103 40 Finished Goods

A1 60 IRM A1 1000 41000104 41000104 50 WIP IRM

A1 70 IRM Granulation A1 1000 41000105 41000105 60 IRM

A1 80 Bulk FIGO A1 1000 41000106 41000106 70 IRM Granulation

A1 1000 41000107 41000107 80 Bulk FIGO

A1 90 Labor
A1 1000 99009003 99009003 105 Machine Time
A1 100 Power
A1 1000 99009004 99009004 90 Labor
A1 101 Over Heads
A1 1000 99009005 99009005 100 Power
A1 103 Steam
A1 1000 99009006 99009006 103 Steam
A1 104 Water
A1 1000 99009007 99009007 104 Water
A1 105 Machine Time