Product Cost under Moving Average Price

Hi Sapians,
Please guide me how to configure Product Costing & the users steps to test the same. Here client wants to work in Moving Average Price.
Regards,
Vikas

Hello Viki,
This question can not be answered in this forum simply because its not issue based and we can't help you with each step. Yes product costing can be done using moving average price and you can do so in the Valuation and Account Assignment section in materials management. However, moving average is not a recommended approach for internally manufactured goods and it may result in allocation of the previous period's variance on the valuation of the products in the next period. You can find more on this on SAP Library and you can download the SAP's best practices configuration guides from the SAP website for help on configuring.
Kind Regards // Shaubhik

Similar Messages

Product Costing using Moving Average Price of FERT & HALB

Dear Experts,
My client wants to use Product Costing functionality by using Moving Average Price instead of Standard Price on Finished Goods & Semi Finished Goods and as per my understanding, SAP recommends to use Standard Price on FERT & HALB.
I know if we use moving average price instead of standard price than there will be no concept of variances. Can anyone tell me more about what are the pros and cons of using moving average price instead of standard price in Product Costing?
Thanks in advance.
Regards,
Zain Bashir

Hi Zain
Let's take an example
You have V for Mat A
You create 3 Prod orders in a month
Order 1 - Qty 10 - variance 100
Same for Order 2 and 3..
At month end, you sold 20 pieces and 10 is in stock..
When you settle order 1, system will compare order qty and stock.. It will match I.e. 10 = 10... Hence variance of 100 will be posted on stock
Same will happen for Order 2 and 3... Ideally, only 100 should have posted on stock... but in this case 300 of variance will be posted on stock...
This is what the note mentioned by Arturo tells, but not so clearly
Hope this helps
Br. Ajay M

Product Costing with Moving Average Price

Dear Experts,
Please guide me solution of my below scenario :
- FG Material (500013) Process Order Created of 1000 units at 1st August.
- FG Material (500013) Process Order confirmed and GR posted at 3rd of August.
- All stock of FG Material (500013) sold at 25th of August <Stock Out>.
- Now at month end, when we execute actual activity price calculation, what would be the impact of revaluation of actual activity price where no material existed in stock ?
Please guide?
Regards.
Zain Bashir

Hi
Probably I am not getting your question exactly. Based on my understanding of query I would like to state as under. If I missed your concern, kindly revert.
Based on actual activity prices when you will revalue process order the activity cost on that order will come on actual prices and when you will calculate variance and settle it, the same will be settled to production variance account. Please check and verify in test system.
Regards
Rajneesh

Production Planning at Moving Average Price

We do very little manufacting, in fact, I would call it "re-packaging". All our compnay does is take products from one package size and convert them to another package size, for example, we take bulk gallons and repackage it to 5 gallon pails. The only materials involved is a 5 gallon pail and the 5 gallons of material that go into that pail. We want the finished products moving average price (MAP) to be equal to the MAP of the inputs. I know that finished products should not be carried at MAP, but we manufacture on such a small scale that I don't think we will have huge issues carrying finished goods at MAP. We are not interested in knowing what the product cost vs. what the product should have cost to produce, all we want to happen is have the finished product=cost of inputs.
Is there anyone that has done this? If so, what is the best way to configure our system.
Thanks in advance,
Scott

The basic issue with moving average price for manufactured items is getting all the costs on the production/process orders before the finished items is consumed out of stock. For example, make 10 items with costs of $100, so moving average price is $10 each. 9 of the finished items are then consumed leaving 1 in stock. An additional cost is incurred on the production/process order of $50 (i.e. missed goods issue, COGI error, etc.) the single item in stock will now have a moving average price of $60 ($10 + $50). If the finished item is fully consumed then the $50 goes to a production variance account.
With standard price you consume for the same price (subject to periodic recalcalution) and analyis your production variances.

Copy Standard Cost to Moving Average Price

Dear All,
We are maintaining the materials with price control as Standard Price and moving average price is updated and used only for statistical purpose.
I have a requirement of copying the standard price to moving average price field just after the standard costs have been released.
We have used CK40N to complete the calculation and release of standard costs.
Please let me know which SAP standard transaction can be used for the purpose.
Regards,
Manish Gupta

Hi
Whats the need to copy std price to moving price?
I dont think there is any such t code to copy it.. But a weird work around is, if u r on ECC 6.0, you can change the price control from S to V and again V to S.. In this process, your price will get copied from S to V
However, not a recommended way of doing... If you do, you shud do this at a shot and blocking all others users
Regards
Ajay M

MTS variances with moving average price

Hi expert,
Is it possible to satisfy this requirement for cost estimate and variances in make to stock scenario ?
-Actual cost at Moving average price for all article
-Calculate cost estimate for articles and write it on standard price field with strategy that read also standard price
-Calculate planning and production variances for all the Make to Stock PP order?but stock must be update with Moving average price.
My doubt is how can i have variances detailed if i manage article with Moving average price.
How can I have variances as "statistics" otherwise I would have double costs.
thanks

HI
If you manufacture some thing, its price control should never be V, else it ruins the inventory valuation forever
Consider the eg below if your price control is V
1. Your moving price in mat master is 100 USD
2. You Mfr on Jan 1 @ Actual cost = 110 in Prod order and Qty = 1.
Upon GR, GR will happen @ 100 and at period end if Qty is lying in stock, 10 variance will also be inventorized
BUT, now consider this
1. Your moving price in mat master is 100 USD
2. You Mfr on Jan 1 @ Actual cost = 110 in Prod order and Qty = 1.
Upon GR, GR will happen @ 100 and variance lying is 10 in prod order
3. You Mfr on Jan 10 @ Actual cost = 110 in Prod order and Qty = 1.
Upon GR, GR will happen @ 100 and variance lying is 10 in prod order
4. On jan 15, you consume Qty 1 and qty lying in stock is 1
5. In period end, when you do settlement, following will happen
a. For prod order 1: Qty Mfd 1 and Qty lying in stock 1 - Result: variance 10 will be inventorized.
Mvg Avg price will shoot upto 110
b. For prod order 2: Qty Mfd 1 and Qty lying in stock 1 - Result: variance 10 will be inventorized.
Mvg Avg price (MAP) will shoot upto 120
System wont check whether the qty lying in stock pertains to prod order 1 or 2... It will simply check if the Qty of prod order matches with qty lying in stock. hence, it will keep on inventorizing variance in this case.... and your MAP will touch the sky
Regards
Ajay M

Difference between Standard Pricing and Moving Average Price

Hi,
Would like to seek some advises on the difference between standard price and Moving average price.
also, how does it affect the account postings differently?
Thanks

Standard Price
Materials whose price control indicator is set to S are valuated in Financial Accounting (FI) at standard price.
This is recommended for semifinished products and finished products.
The moving average price is shown as a statistical value in the material master record.
The standard price is normally calculated using a standard cost estimate for the material. The standard price can also be calculated in a mixed cost estimate.
Moving Average Price
When materials whose price control indicator is set to V are received from in-house manufacturing processes, they are initially valuated with a value you defined (such as the standard price). When you settle, the material stock account is debited with the variances. This results in a new moving average price.
Valuating semifinished products and finished products with the moving average price is not recommended.
Regards,
Indranil

Moving average price of subcontracted material not picked for Cost estimation

Hi Experts
I have the below scenario:
Finshed Product A has components B, C.
C is a subcontacted material and it has its own BOM with components D & E.
We are maintaining moving average price for the subcontracted material C, (because the subcontracter is adding X & Y in addtion to the components D and E, which are sent from us).
In the mateial maste of C, Procurement type is F and Spl. procurement type 30 are maintained.
When i do costing for the Finished product A, moving average price of C is not picked up (where as system calculates the std cost for C by adding the values of D & E and purchase info record price).
Is there any way to Calculate Price of A by using the mvg avg price of C.
I maintained the below valuation variant settings.
If i remove the spl. procurement type 30 in the material master of C, it picks up the mvg. avg price. but it affects the MRP planning of items D & E.
Please advice.
Thanks in advance.
Regards
Bala

Hi Big choi
Thanks for your response.
I understand.
1. if we maintain spl. procureent key 30, system calculates standard cost based on raw material and service charges.
2. If we don't maintain spl. proc key, it considers the material as purchased and picks the mvg avg price from material.
But, is there any way to pick the moving avg price from material master eventhough i maintained the spl. procurement type 30?
Thanks
Bala

Moving average price in case of semifinished product.

Dear All,
Our client wants to go for moving average price in case of semifinished material, which is supposed to be normally standard price against our advice. The problem is that MAP is not getting updated after the GR against the production order. What settings I need to check in cusomization from PP point of view to solve this problem. Ideally the summation of cost of raw materials has to be the cost of semifinished material.
I did the settlement and the MAP got updated. There are few questions I want to ask u are?
1. What MAP should I keep when I create the semifinished material for the first time?
2. What the base to calculate the target cost in production order? Currently the target cost is zero for that the varience is huge which will be going to affect the MAP in a big manner after setllement? What should I do in that case?
Ur valuable inputs are awaited at the earliest. It's very very urgent.

Hi
There will not any big problem if your client insists upon MAP for the material instead of your suggestio for having S as per std. SAP suggestions. There will not be any change in material price during confirmation if you have V indicator but if you have S as indicator there will be change in price due to costing and settlement. It is not that system will not do anything for the materials having V indicator, check the field value for Standard price , it gets updated. Your costing calculation completely depends uopn the settings that has been customised in OPN2 i.e the settings available for valuation. You cancompletely control all these.
Pirce for your semifinished should include the inputs to it and any other parameters which you would like to add. You can always change the price manually with MR21 if you have Zero stock.
Best Regards

Moving average price for semi finished products

Hi
Could anyone light on this issue,
Our client maintain moving average price for the semi finished material, need clarification on below points
1) What is the advantages and disadvantages due moving average price,
2) Which price in the material master after the production order settlement,
3) Is there any impact of this on WIP calcaultions
Thanks in advance
Mohan M

Hi
there are no advantages of it, ONLY Dis Advantages!!!
That will ruin your inventory valuation forever.. Consider the eg below if your price control is V
1. Your moving price in mat master is 100 USD
2. You Mfr on Jan 1 @ Actual cost = 110 in Prod order and Qty = 1.
Upon GR, GR will happen @ 100 and at period end if Qty is lying in stock, 10 variance will also be inventorized
BUT, now consider this
1. 1. Your moving price in mat master is 100 USD
2. You Mfr on Jan 1 @ Actual cost = 110 in Prod order and Qty = 1.
Upon GR, GR will happen @ 100 and variance lying is 10 in prod order
3. You Mfr on Jan 10 @ Actual cost = 110 in Prod order and Qty = 1.
Upon GR, GR will happen @ 100 and variance lying is 10 in prod order
4. On jan 15, you consume Qty 1 and qty lying in stock is 1
5. In period end, when you do settlement, following will happen
a. For prod order 1: Qty Mfd 1 and Qty lying in stock 1 - Result: variance 10 will be inventorized.
Mvg Avg price will shoot upto 110
b. For prod order 2: Qty Mfd 1 and Qty lying in stock 1 - Result: variance 10 will be inventorized.
Mvg Avg price (MAP) will shoot upto 120
System wont check whether the qty lying in stock pertains to prod order 1 or 2... It will simply check if the Qty of prod order matches with qty lying in stock. hence, it will keep on inventorizing variance in this case.... and your MAP will touch the sky
Regards
Ajay M

Costing material having moving average price

HI
My client is having business where prices fluctuates a lot and he wants to use moving average price for all materials including semi-finished and finished material.
My question is in this senario how to do configuration of product costing and how will i be able to calculate cost as far as product costing is concerned. client doesnt want to use material ledger.
Regards
Invin

Hi,
You can not carry out period product costing activity if the material has moving average price control.
If you set moving average price control to material master, the following activities control the moving average price
1. GR (if the value is different from PO price) Entry in MIGO
2. IR (if the value is different from PO price) Entry in MIRO (invoice posting)
3. Price change using (MR21 Tcode)
4. Debit/Credit Material (MR22 Tcode)
Prerequisited for Product costing with quantity structure
1. Material ledger should be active
2. Product should be allowed for cost estimate (setting in Material Master)
3. The master should have Standard price Control in the material master.
If you want to change the price of the semifinished product with moving average price (due to price fluctuation) use MR21 or MR22. But this activity involves lot of human effort.

Is it possible to maintain moving average price u201CVu201Dfor HALB & Costing ?

Dear Gurus,
is it possible to maintain moving average price u201CVu201Dfor HALB Material which can procured from vendor & produced from plant in-house & costing the same ?
Kindly help

1. Yes, you can have price control as "V" for HALB material.
2. Split valuation is required to be maintained, if you want to use the same HALB material for procurement as well as inhouse production.
3. You can have standard cost estimates with price control as "V'. But, the same is not recommended by SAP. It can give a wrong picture in scenarios like settlement of a production order having GR quantity more than the Stock quantity.

Refurbishment WO - exclude moving average price from WO's costs

Hello Experts,
We have following problem. In refurbishment WO costs contains also moving average price of component which is under refurbishment.
From our point of view it is not proper since such a costs are not costs of repair.
We would like to exclude moving average price of component which is refurbished (moved to REPI storage location).
In SPRO there is only a possibility to exclude costs from WO which are assigned to particular cost elements or their group but it is not a case here, since we cannot assign all repairable materials to cost elements group defined in advance.
Do you have any idea how to do that?
Regards:
Łukasz Kurlit

Hi ,
In MM for split valulated material we can maintain cost /stock for each valution type of the material ..if a material has valuation V1,V2,V3 .. new material is bought at V1 valuation price and after usage it is valuated to V3 and then refurbished to V2 .. now for V1&V3 you can maintain Standard price or Moving average price as per MM02 accounting tab by changing the price control in that tab and maintaing price unit .. but for V2 i think we should have Moving Average Price because everytime refubishment takes place at different refurbishment costs .. finally you need to follow as per your clients requirement ..
regrds
pushpa

SAP allows release of Standard Cost for Material with Moving Average Price

Hi
We set our Raw Material to use Moving Average Price (V) and price determination 2 (single level). And we activated material ledger.
During mass calculation of standard cost (CK40N), If user accidentally forgot to restrict the Raw Material for being included in calculation, the system calculate standard cost anyway, even though I set it as Moving Average Price. And user is able to release it too without any problem.
Why the system does not restrict it? By giving error maybe. Although as for now I can not find the wrong effect from releasing standard cost for MAP material, by your experience, is there any side effect that I should be aware of?
Thanks

CK40n is mass release of all materials. The release is not dependent on price indicator of the material in the master. It will calculate standard cost of all the materials.
Releasing standard cost estimate of raw materials does not have any side effect as long your calculation is based on moving average price.
Regards
Divraj

Material Costing: Moving Average Price Issue

Hi Experts,
I have a issue regarding the Moving Average Price of the Material computed by the system (indent sales process):
The Material was created with Purchased Price .74PO Price x 10 items = 7.4 Amt in LC Posted into the system (PGR).
But afterwards, they reversed the Material Document with the same Price .74PO Price x 10 items.
This had been done last 2009.
Come 2011, they created another indent sale -> PO ->PGR for this material, now the price is .12 PO Price x 10 items = 1.2 Amt in LC Posted. However, the moving average price was computed 0.77
How does the system comes up with this computation? Is there inconsistencies in the system?

Thanks @jurgen. I checked-double-checked in MR21, there are no change documents under the material.
in MR51, added one Issue Document:
Material           Material Description                     CoCd ValA
Type DocumentNo Itm Pstng Date          Quantity BUn     Amount in LC Crcy
2A1E8113-20        COVER SHIFT                              1100 1110
WE   5000003540   1 25.02.2011               10- PC             1.15- SGD
WE   5000003534   1 23.02.2011               10 PC             1.15 SGD
WL   4900020403   5 17.09.2009               10- PC             7.35- SGD
WE   5000001968   5 17.09.2009               10 PC             7.35 SGD
In S_P00_07000139:
Start date :        01.01.2009                         0 PC                   0.00 SGD
    Total goods receipt                            20 PC                   8.50 SGD
    Total goods issue                              20 PC                   8.50 SGD
End date   :        28.02.2011                         0 PC                   0.00 SGD
SLoc S Date       Reference Doc.   GR/GI Slip MvT           Receipt             Issue            Amount Balance quantity Price/Unit (Bal.)    Balance amount Comment
WH01 E 17.09.2009 PL001427         5000026286 101           10.000             0.000              7.35            10.000              0.74              7.35 GR for sales ord.st.
WH01 E 17.09.2009 1121010049       4900227144 601            0.000            10.000              7.35-            0.000              0.00              0.00 GD delivery sls ord.
WH01 E 23.02.2011 2002381          5000048052 101           10.000             0.000              1.15            10.000              0.12              1.15 GR for sales ord.st.
WH01 E 25.02.2011 2002381          5000048120 102            0.000            10.000              1.15-            0.000              0.00              0.00 GR f. sls.or.st. rev
Still it's not tallied with the MAP = .77 in Material Master.

Product Cost under Moving Average Price

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