Logic of price difference posting

Hi Experts,
I want to understand a scenario where:
1. we have a price variance due to insufficient stock at IR for a PO related to Raw material. ( it hits the Price Difference(P/L) A/c (PRD))
2. The raw materiel has insufficient stock since it has been issued to production order and not sold as yet but we are booking a gain or loss in P/L.
Now the question is that is inline with correct accounting since we are realizing a gin or loss even though the item still lies in our books? Shouldn't this price difference value put an impact on production order instead so that the product cost is more accurate?
Please help me understand as this point has been raised by Finance Dept.
Thanks,
Safi

Hi,
1. When you issue material to production order, what entry gets posted? its Consumption A/c -- dr and Inventory a/c -- cr
now as far as inventory is concerned qty issued to production has lost its identity since it has been issued.. it need not be 'sold'.
In Inventory Valuation you can valuate only that inventory which is not issued and intact in Balance Sheet.
so, this perception is completely wrong that inventory is issued to production but still not sold so can be considered for other calculations.
2.
Lets look at the scenario why difference has occurred. let's take a example
1. PO -- Qty. 10 @ $ 100
2.GR -- Qty. 10 @ $ 100
with this entry Material MAP = $ 10.
3. Issued to production - Qty. 2 @ $ 10.
4. Stock available at this stage is Qty. 8 @ $ 10.
5. IR. -- Qty 10 @ 120 -- now system will post price difference of (qty 2 * diff $ 20).
Now, at stage 3 you have issued qty to production order so its been consumed, now at IR you realized a difference in PO price and IR price. (understand the time difference during all transactions) but this difference has occurred for Qty. 10 where as to cover that difference you have only Qty 8 left in your stock hence the price difference to the extent of qty 2.
Stock price will be very unrealistic if you load difference to the extent of Qty 2, on the Qty. in stock which is Qty. 8.
By far this is the correct way accounting..
In SAP terms this is called as "Material with MAP without Stock Coverage"
http://help.sap.com/saphelp_46c/helpdata/en/a8/b994d9452b11d189430000e829fbbd/content.htm
I hope it clarifies..
Regards,
Sayujya

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Price difference posting at the time of IR based on GR

Hi,
I had a PO for 10 pieces @ 10, GR for 10 pieces @10, but i got a invoice from vendor for 10 piece @12.
so what can be the possible entries at the time of IR for Price difference; like, it should be posted to material account / it should post to price difference account. How can we configure the same? is price control indicator do play any roll here?
Please try to give as much as information as you can.
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Hi
While posting invoice through MIRO, system takes into acccount either Stock or Price differences. To understand more.....
If the stock is available, then the system transfer that amount to inventory. if the stock is not avaiable system transfers that amount to price differences account.
If the stock is partly available, then system generates 4 line items. while doing invoice in the moving Avg price(V)
GR/IR Account               DR
Inventory acccount        DR (In Case of Price increase due to escalation clause)
Price diff. account          DR (In Case of Price increase due to escalation clause)
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          To Inventory acccount        DR (In Case of Price decrease due to escalation clause)
          To Price diff. account          DR (In Case of Price decrease due to escalation clause)
In the above entry only one will be applicable regarding diffrences posting either price decrease or price increase.In the case of Oil (HSD)these fluctuations are very common.
Edited by: ANJIREDDYA on May 31, 2010 11:36 AM

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cdproducerz wrote:
I was wondering why it costs over $250 more to buy logic studio from the Australian store?
In the U.S it costs $499 USD which converts to $492.15 AUD as of this time i am posting this.
I know there are shipping fees but $250 worth?
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You did not post the Australian price... only the converted US price.
Cheers

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Hi ,
We are facing an issue for exchange rate difference posting during MIRO.
PO creation , GR posting & IR posting done on same date. Vendor in PO has different currency than company code currency. Exchange rate maintained in OB08 for this period is taken in PO.
PO value & GR value is same. Due to raw material cost there was price difference posted during GR posting.
(i.e. Raw material cost - GR/IR value = Price difference amount)
During posting MIGO, 3 accounts got posted.
Raw material cost account got debited & offset credit to GR/IR account & price difference account (in vendor & company code currency also)
During posting MIRO, 4 accounts got posted.
Vendor account got credited with GR/IR amount & offset to GR/IR account debit.
Exchange rate difference account got credited & offset to price difference account (in company code currency only)
Since PO creation , GR posting & IR posting done on same date, then why system has posted exchange rate difference account in local currency only during MIRO posting ?
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there is a setting in configuration of logistics invoice verification where you can control the calculation and posting of exchange rate differences. If you had the setting active that exchange rate differences are calculated against a planned exchange rate, that might lead to the kind of postings you describe. Please check.
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Entry is posted to price difference account if IR is processed before GR

Hi Experts,
The user is facing the following issue " whenever the Invoice Receipt is recorded before the Goods Receipt, the total amount is booked on price difference account. This is in case of inter company transactions.
Please share your thoughts
Warm regards,
Murukan Arunachalam

Hi
Please, see SAP Note 308008 - FAQ: Posting logic: GR/IR clearing account,
It says in question 1.
"Remark: Invoice receipt before goods receipt
If no goods receipt has occurred yet, the entire invoice value is posted to
the GR/IR clearing account.
GR/IR clearing value = GR value/GR quantity * IR quantity."
I hope this helps you
Regards
Eduardo

While posting MIRO price difference account is not determimg for price vari

Hi Sapients,
Please solve the production issue which we have faced yesterday while doing month end closing
In one P.O 4 items are there,User has posted entries in below sequence
Material type is TRADING GOODS
1)first MIRO with QTY 10 @100$ each,Later
2)MIGO has done with QTY 10 @100$
Raw Material account -
1000$
to GR/IR CLEARING ACCOUNT -
1000$
2)User has reverse the MIRO transaction with QTY 10 @ 100$ each.(with refer to step1)
3)Finally he post MIRO with QTY 10 @ 90$ each, so here ther is no qty variance has come only price variance has come, so when posting the difference is not going to price difference and the entry is paasing like this
GR/IR CLEARING ACCOUNT -
900$
TO Vendor 900$
If u see in step 2 GR/IR having 1000$, but in step 3 while MIRO posting GR/IR as 900$ so for the remaing balance 100$ not going to price variance .I Belive the entry in step will be like this
GR/IR CLEARING ACCOUNT -
1000$
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TO Price difference 100$.
Kindly give solution why it is not going to price difference it was happening only for item 2 & 3 only for 40 iem it is posting correctly to price difference account.Please advice me why system behavig differently for each item.
Thanks & Regards
YSR

Hi Padmasri,
Thanks for your explanation. Ok. if the price is maintained in S, does that mean the price difference would get posted only to PRD. In other words, if price indicator is V, is that the only time when the price difference gets posted to stock account. In case if there is no sufficient stock or if there is negative stock at that time, that's when the amount would get posted to stock loss or gain account. Please suggest if I've understood the concept right.
Hi,
The PRD will trigger when the standard price maintained in the material mater record is different from the price in MIGO . The other chance is the material is maintained with MAP and MIRO done before GR ,The value of the quntity (not available in stock )
will get posted to PRD. I hope this will resolve your issue. Thanking you
You had suggested: The other chance is the material is maintained with MAP and MIRO done before GR ,The value of the quntity (not available in stock ) will get posted to PRD. I hope this will resolve your issue.
You are right: I forgot to mention that the price indicator is V. The other point is we purchase the materials from an internal vendor, as and when the materials are dispatched from the main storehouse in Sri Lanka, there is an advice that is created in the system and that is interfaced and parked in the system. However, normally until the GR is done IV will not happen. But there could be a chance, as the advice gets created within 24 hours. However the material to reach the godown in our warehouse will take more than 24 hours as the goods have to be shipped from SL, so IV is possible before GR.
Regards,
Soujanya

Price difference account posting for return of goods using MR11

HI SAP Expert
When we are running MR11 for goods receipt transaction system is posting reversal document to price difference account instead of inventory account.
In this case relevant details are :-
Price control for Material is S .
PO QTY 190( Purchase order is of M category with sales order linked)
GR qty 190
IR qty 20
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With Regards
A N

HI,
check you have material qty in system check in MMBE or MB5B on givin date
if dont have any qty system will hit PRD account its sap stander
Regards
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We have a problem regarding posting foreign exchange rate difference at the time of GR.
We are costing materials at the beginning of year, and purchases made during the year as per PIR will result in legitimate price difference which is posted to price difference account. Thatu2019s working alright.
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Nirav

Hi,
Thanks for your replies.
We have already maitained exch.rate GL OBYC-KDM, which is successfully posted with the exch.rate diff.arising out of GR & IV at the time of IV.
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As I know, in Account Automatic Posting, the transaction key PRD is for Cost price Difference.
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Hello,
What is price difference.
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For you example, you have you are having PO with Freight (F) and Insurance(I), these are called pallned delivery costs, not Price difference,
so create two different condition type for Freight and insurance and assign two different G/L accounts for these condition types in account determination.
While posting system will hit perticular G/L acconut.
Regards
Mahesh Naik

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Hello Gurus,
Can anyone please suggest me on the systems unknown behaviour given below.
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Exchange rates are perfectly ok. when we create another scheduling agreement with the same data(as old scheduling agreement) it is working fine. now I am not able to find out where the problem is, can anyone suggest on this.
Thank you,
Srinivas

Hi Srinivas,
This will happen normally when the price in MMSA difference from the current standard cost estimate in material master. The difference between these two will post to Price difference account normally.
Check what is the last costing period/year for that material. Complete the costing run for current period and post now. It solves your problem
~Thanks!
Rajesh

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Hi Experts,
Need your help urgently.
I gone through many threads but i did not got the solution.
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Please suggest.

Hi,
It is standard behavior when stock value in document currency is not equal to the clearing value in document currency. The posting logic is well explained in the note: 191927 - Posting logic: GR for foreign currency PO and 308008 - FAQ: Posting logic: GR/IR clearing account Question 12
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AKPT

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Hello Gurus,
Can anyone please suggest on the systems unknown behaviour given below.
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Check the standard cost of the material, looks like something is terribly wrong like it is per 1 instead of per 1000 or something like that which might explain the huge posting you see to the price difference account during invoicing. I am sure it will be there in the GR accounting document too..

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Hi
A question on price differences.
We currently post our price differences at goods receipt (PO price - Std price).
And secondly at invoice receipt (PO price - Actual price)
In order to be able to analyze easier, we want to post goods receipts always against standard price.
At invoice receipt the full price differences should be posted then.
Does anyone know if and how this setting is possible in SAP ?
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Hi
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Hi
A question on price differences.
We currently post our price differences at goods receipt (PO price - Std price).
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Logic of price difference posting

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