Price Variance hitting PPV account even when there is stock.

Question

Dear Experts,
We have scenario where stock is transferred from one plant to another within the same company code. However the price difference between invoice and PO price is being posted to PPV account eventhough there is Material Stock.
Your advice is highly appreciated.
Regards
Adithya 

Answer 1

Hi Aditya,
Sorry for interupting between, please let me share some views on ML, anyhow consider Ajay's input as final.
Let us assume this way:
Present your RM price as 100 Rs.
Your PO is raised for 150 Rs and the stock is 20 KG
When you have your GR, the entry you might see is...
Dr. RM stock account (20*100)                        2000
Dr. Purchase price variance ((150-100)*20)    1000
Cr. GR/IR                                                        -3000
Still stock has not been issued to any production order or any cost center etc, so RM stock left with you is 20 KG
So this might be your scenario, and you are expecting the purchase price diffference should be posted to stock, instead of purchase price variance. Since price control you have made as S (that understood from earlier talk), it is the right behaviour of the system.
If you want to make the system to consider the difference to stock, then obvously you need to have ML.
Please have a look at ML process, how system is going to roll up the difference.
Again assume that inorder to manufacture a particular FG, you are using the above RM of 15 KGs.
So the RM left at stock after issue will be 5 Kgs
If you maintain all the settings related to actual costing (ML), at the month end we will be performing ML process, where we will be having different steps to go, among those for the time being these two are important as you want to see the diffence updation to stock.. (explaining only for purchase price differences, but in real system is going to have preliminary value, purchase price difference, production variance and exchange rate differences also)
single level price determination: by this system is going to calculate what is the amount have to be considered for the respective level (here it is RM) and how much amount to be distributed to next level
Since 5 Kgs of stock is left out, system is going to allocate at RM level (total difference amount * inventory remaining/total inventory) i.e. (1000*5/20) = 250
This amount of 250 will be added to RM stock
at the same time system is going to calculate what amount to be distributed to higher level also (becuase already we issued 15 kgs to FG manufaucturing and at the time of issue system has considered 100 Rs as issue price, but in real it should be issued considering PPV also)
so system is going to calculate and specifies what is the amount to be rolled up to higher level here it is (1000*15/20) = 750, but in this step system will not add 750 Rs to FG value
The adding of rollup actual costing is done in the next step i.e. multi level price determination
I hope you understand.....
Regards..
Jose