Moving Average price, Std price and FIFO

Hi folks,
It seems our client wants to use FIFO valuation for its items rather than Moving Average because FIFO gives them an actual price for their Finished Goods (the client does not have any manufacturing).
I beleive the question the client wants answered is: Can they can use the FIFO valuation within COPA-AB (account based) instead of costing based.
The client manager seems extremely sure that this can be done in COPA. Can it be done? If so, how would we go about it? My understanding is that COPA only captures the cost with the revenue. It captures the cost the moment you ship a product.
I think CO-PC handles this, however I think you need PP implemented as well and the client is not implementing PP at this time. I could also be totally wrong about all of this.
Hopefully this all makes sense. Unfortunately I cannot upload an example of what I mean.
Appreciate any thoughts on this.
Thanks!

You are absolutely correct.
COPA is used for reporting cost & revenues for internal use. It has nothing do with inventory valuation.
It is product costing which is used for material valuation in manufacturing scenario. As you mentioned, that products are not manufactured. there is no need to implement PP & product costing.
In SAP material is valuated either at moving average price or standard price a sper price control in material master. However, there are functionality in SAP where materials can be re valuated at period end for legal reporting. Explore the functionality in MM -> balance sheet valuation (do not remember the exact path). In this materials can be re-valuated as per various principles or can be done via user exits.
Hope it helps.

Similar Messages

Moving Average price & Std price

Hai friends,
Any body tell me the difference bet Moving Avg Price & Std Price...
Actually why we are entering the Std or MAP in Material master..
What is the Impact in PO...
Thanks
Ros

Hello Roshan,
Difference bet Moving Avg Price & Std Price...
Material price in Material master is represented by Material price Indicator, The main purpose of material price is to valuated the material stock for financial transaction in company. There are two procedures available in the standard system:
Valuation at standard price : The price is decided by the organization (Costing / Finance / Purchasing / Marketing dept) which is fixed for material, it will not be changed by any inventory or financial transaction, but you can change it with special price change procedure.
This std price is represented with price indicator S
Valuation using a standard price has the following features:
- All inventory postings are carried out at the standard price
- Variances are posted to price difference accounts
- Variances are updated
- Price changes can be monitored
Valuation at moving average price or (if the material ledger has been activated) periodic unit price : This price is not decided by any organization (but in come case it will decide i.e. to upload the initial stock) but it will automatically updated by the Invnetory transactions (i.e. Goods receipt, Invoice receipt) or financial transaction (Debit/credit material). It will keep changes automatically when there is price difference.
This MAP is represented with price indicator V
Valuation using a moving average price results in the following:
- Goods receipts are posted at the goods receipt value.
- The price in the material master is adjusted to the delivered price.
- Price differences occur only in exceptional circumstances.
- Manual price changes are usually unnecessary. However, they are possible.
Actually why we are entering the Std or MAP in Material master..
We are maintaining material price for material stock valuation and inventory transaction valuation.
What is the Impact in PO...
The material price does not have impact on PO, but definately it has impact on inventory transactions i.e. GR, GI, IR debit/credit material.
more info, <a href="http://help.sap.com/saphelp_46c/helpdata/en/47/60ff0749f011d1894c0000e829fbbd/frameset.htm">Price Control</a>
Hope this helps.
Regards
Arif Mansuri

Distribute moving average or standard price via ALE/IDoc

Dear experts,
do you see any way to distribute the moving average price via ALE? It is inside the material master IDoc but it won't update in the receiving system.
We need it for a decentral WM so that people can see the valuation of the material when they do inventory counting (to judge differences in LX22).
Any idea how to unlock the material master for update?
Gunter

Dear Amit,
yes - I understand how the system calculates the MAP. However, the receiving system is a SAP WMS - In WM there is no inventory management nor FI/CO. The valuation would always be zero. So I'm interested how can I update it via ALE?
It works for the first time if I have no valuation (accounting) view in the material and I send an IDoc with the view definition segment and a value for VERPR. But updating isn't possible.
Gunter

Shifting from Moving average to standard price

Hi all
Presently we are following for all our Inhouse produced materials with Moving average price,we want to change all the materials to Standard price,is it possible to change & if in case if stock is there we will not be able to change,Shall we have to create New material codes with price control S.
whats the best solution
Thanks
Sandeep patil.

Dear,
ML is meterial ledger.
It is used in following cases.
- You have mutliple currencies and to see the stock in differnt currancies.
- You want to see the variances to be carried to different levels of BOM and see the periodic price of the product even though the price control is S.
Hence system will count all the variances and during ML closing steps calculate the variances and send to the higher level of BOM after chaning the periodic price of that raw materil. Hence at higest product level you will come to know exact production cost as well as level by level subassembly cost.
With this cost you can revaluate the material so that the S price will change to this periodic price.

How to view impact of making Moving Average ?

Post Author: izhar
CA Forum: Performance Management and Dashboards
Hi, group members I am working on BOXI R2. Following are the steps which i performed for making moving average according to the manual. I have selected "Monthly" from the Calendar option Move the "Moving Average" in Defined Transformation and in last changed the entries of "Number of Points and Offset" Changes are saved successfully. But not able to see the impact of it. Can any member guide me here, How to view the impact of it. Regards, Izhar

Post Author: Ferhat
CA Forum: Performance Management and Dashboards
hi,
moving average is a transformation which we use to remove the seasonality from the time series data.
we do it for to forecast based on just trend variability.
if there is already no seasonality in your data you shouldn't see any clear impact.

Moving average prices and std prices

hi friends,
i have a doubt abt prices...
which will b assigned for raw materials-standard price? or avg moving price? and why?
if possible explain clearly about avg.moving price and std.price
for spit valuation what price we will use??
help me out..
thanks in advance...
venkat

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:
Price control V for raw materials and trading goods; price control S for semi-finished products and products
We recommend that you only use price control V for materials procured
externally. Materials produced in-house should be subject to a
standard price control.
Generally all raw materials (ROH), spare parts (ERSA), traded goods (HAWA) etc. are assigned as moving average price (MAP) because of the accounting practice of accurately valuating the inventory of such materials. These materials are subject to the purchase price fluctuations on a regular basis.
The semi-finished goods (HALB) and finished products (FERT) are valuated with standard price because of the product costing angle. If these were to be MAP controlled, then finished/semi-finished product valuation would fluctuate due to data entry errors during backflushing of material and labour, production inefficiencies (higher cost) or efficiencies (lower cost). This is not a standard accounting and costing practice
For Split valuated material it is recommended to use Moving average price

FIFO with moving average price

we are using for own produced goods "moving average price" and Material ledger. At month end we setlle production variance . The system also creates an entry for ML "price variance" (which is the percentage of the prodcution variance for the remained stock).
When we run the document extract (MRF3), with the option of "Order settlement", the costs include not only the production variance but also the ML line. That is too high.
When we run it without selecting "Order settlement" the adjustement is the reversal of the price variance (the ML line item). That is too low.
The total costs should be only the total production costs.
One cannot exlude it by the material movement as both "price variance" and "production variance" is not part of a material movement.
Edited by: Hendrik585 on May 27, 2011 2:16 PM
Edited by: Hendrik585 on Jun 5, 2011 11:36 PM

hi,
We need to follow the steps if we need to valuate our inventory by means of FIFO Scenario :
1. In T-code OMWE, activate the balance sheet valuation as LIFO Valuation not active & FIFO Valuation active.
2. In T-code MRLH, FIFO Maintained at company code or plant level.
3. In T-code OMWL, set mean receipt price at valuation ares level if Plant or at company code level if at company code level.
4. Configure FIFO Valuation ares for teh respective year.
5. In T-code OMWP, Configure FIFO Method.
6. In T-code OMW4, Movemnet type settings for FIFO maintained. Generally, no chnages made.
7. Select material for FIFO in Tcode MRF4.
8. Execute FIFO Valuation- Tcode MRF1.
Hope it helps..
Regards
Priyanka.P

VMI and moving average price

Dear all
Please help us.
We will use moving average price as stock evaluation.
Also, we manage all inventory is VMI stock.
Our business process is the following procedure.
1. We will increase consignment stock (VMI) without reference to purchase order.
2. We will input sales order and allocate it to VMI stock.
3. We will post goods issue, movement type 601-K.
As you know, accounting documents post GR/IR at this time. Unfortunately, SAP does not calculate moving average price (MAP) in material master. ie. moving average price is zero.
We would like to calculate moving average price because almost stock is VMI.
How do you customize SAP?
Best regards.

You have to add one more step to handle this scenario as per my knowledge
which is before you issue the stock using 601 K you have to take the stock in you own inventory and than issue using movement type 601 not 601 k.
As per the std SAP the 601 K M type will never update the value because that's not are stock
you can see the setting below
601     K     L                   2             VAX
601     K     L          WA03     2     GBB     VAX
601     K     L     E              2             VKA
601     K     L     E     WA03     2     GBB     VKA
601     K     L     P              2             VKA
601     K     L     P     WA03     2     GBB     VKA
601     K     L     V              2             VAY

Standarad price and moving average price

What is the diff between Standarad price and moving average price ???
Somasundaram

Price Control V or S in material type
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:
Price control V for raw materials and trading goods; price control S for semi-finished products and products.
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 aquisitions 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.
2. No period check of the costs is carried out on the order, that is, costs from previous periods may be settled.
3. Settling orders is already possible in the 'Delivery completed' status.
Solution: Standard price for products together with possible manual price changes.
If you are required to valuate semi-finished and finished products with actual prices that correspond to the costs of the actual production, SAP recommends you use the function of the material ledger for this. Here, a periodic actual price is created that is calculated on a much more reliable basis than the moving average price. A so-called price limiter quantity is used which makes sure that in the above example price differences are proportionally taken into account (95% of the total price differences) when valuating the 19 pieces withdrawn from material xyz which results in a periodic actual price of 1100 USD. In addition, it is possible as of Release 4.5 to even take into account the variances of the actual prices of the raw materials in the valuation of the semi-finished and finished products that are manufactured from it.
If we select std price for any type of material or mav 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.
Regards,
Ashok

Std price and moving avg price

hii frends...in which scenario we hve to go for std price and moving avg price...
thnx in adv...

Generally all raw materials (ROH), spare parts (ERSA), traded goods (HAWA) etc. are assigned as moving average price (MAP) because of the accounting practice of accurately valuating the inventory of such materials. These materials are subject to the purchase price fluctuations on a regular basis.
Company generally uses moving average on purchased materials with small cost fluctuations. It is most appropriate when the item is easily obtainable. The impact on margins are minimized which reduces the need for variance analysis. Furthermore, the administrative effort is low as there are no cost estimates to maintain. The cost reflects variances, which are closer to actual costs.
The semi-finished goods (HALB) and finished products (FERT) are valuated with standard price because of the product costing angle. If these were to be MAP controlled, then finished/semi-finished product valuation would fluctuate due to data entry errors during back flushing of material and labor, production inefficiencies (higher cost) or efficiencies (lower cost). This is not a standard accounting and costing practice.
Hope this will help you.
Cheers,
Parag Mahajan

Moving Average Price for Sales stock and Project stock of a material

Hiya Gurus,
                 I am developing a report to display inventory details. My requirement is that I have to display the Moving average price of a material for all Valuation type. I also need to display the Moving average price if a material has got Project stock or Sales stock.
                 In MBEW table I can get the Valuation type and its Moving average price, but how can I find the moving average price for the same material if it has got Sales stock and project stock. Please let me know the table and field where I could get the relevant data.
                Kindly help me on this, it would be deeply appreciated.
Cheers,
ZIa

Hi
can you look at tables
EBEW                             Sales Order Stock Valuation
QBEW                             Project Stock Valuation
Nat

Moving average price and returns to vendor

Hello gurus,
Ive got a question concerning material valuation and returns to vendor.
E.g. we have got 200 pieces of a material with a moving average price of 2 $ each.
Now, what happens if I return 100 of those to my vendor who pays 2.10$ each for them?
In my view, there are several possibilities:
- Nothing happens, the moving average price is not changed at all, value of the goods is 200$ afterwards.
- New value of the goods is 400$ - (100 * 2.10$) = 190 $. This would mean that the moving average price is 1.90 $.
- Last delivered price was e.g. 2.20$, more than 100 pieces were delivered, so the new value of the goods is 400$ - (100 * 2.20$) = 180$, new moving average price is 1.80$.
So my question is: What is standard in SAP?
Thanks
Jens

This is what my thought is
When you return the material to vendor then system take the same valuation as your MAP
and when you buy new goods then it will count based on the
e.g. existing stock is 100 and value is 1000 means valuation is 10 a peice
in you but another 100 at 1200 then valuation is 2200/200 = 11
When a material is subject to moving average price control, the system calculates values for goods movements in the following way:
check this link
http://help.sap.com/erp2005_ehp_02/helpdata/en/8f/d1de34e4cb2300e10000009b38f83b/frameset.htm

Standard and Moving Average Price in Material Master

Hello,
Can any one please tell the basic difference between Standard and Moving Average price? both the cases how the Material Price is calculated?
And please provide the accounting entry's also.
Thanks

Dear S McIntosh,
You may check URL below that explain the difference between MAP and Standard price.
http://help.sap.com/saphelp_47x200/helpdata/EN/47/60ff0749f011d1894c0000e829fbbd/frameset.htm
Regards,
ian Wong

Standard and Moving average Price

Hi,
What is the Difference between Standard and Moving Avg Price, What are the Cases will we use Standard Price ,and what are cases shall we use Mov.avg Price, Please Explain me with Example.

Hi Lakshmi,
Moving average price is maintained for all the outside procured materials and standard price is maintained for all inhouse manufactured materials...
We need to run standard cost estimate monthly to update the prices of all the materials with price control S... Prices of materials with price control V will get updated as soon as we do GRN for the materials on the weighted average method...
Regards
Raj

Stock of material and moving average price for each valuation type

Hi
Is anybody aware of any standard report which will show the stock of material and moving average price of the material for each valuation type.
M5BL is one report but would like to check if there is any other report.
Regards
Vaibhav Mahajan

Hi,
Check MB52, select 'Display batch stock' option.
Batch is nothing but your valuation type.
You can see those details there.
Regards,
Piyush

Moving Average price, Std price and FIFO

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