Standard or Moving Average Material Cost

If we have PO price / costs plus shipping costs....can we use these to calculate the product cost whether standard or moving average?
Thanks in advance
Message was edited by:
Satish A Kumar

The Moving Average Price (MAP value) = Total Valuated Stock value / Total stock quantity.
At any point of time, If you do a Goods receipt for a Purchase Order, the MAP value is re-calculated at the price at which the goods are inwarded.Thus the MAP value is subject to changes from time to time.
The standard price is however unaffected by this.
The Product costing,therefore, for materials with price type "V" is linked to the MAP value of material. Where as for materials with Price type "S" - i.e standard price, the product costing is not affected.

Similar Messages

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

Report on Standard Prices & Moving Average Prices

Hi,
Would like to have a report on List of Materials with Standard Price & Moving Average Price per plant?
Though we use Standard Price, since material master also gets updated with Moving average Price.
Regards,
Vengat

Hi,
Try MM60 tcode, see if it is suitable to you.
It shows you both (average / standard price)
Best Regards,
Natan

Changing of Inventory Valuation: Standard to Moving Average Price

I work at a service-based company and have also been asked to research the impact involved with switching our inventory from standard price to moving average price.
Scenario: Change material type TRAD (trading goods) from standard price to MAP.
Process: Change settings in SPRO at the level of u201CDefine Attributes of Material Typesu201D. Currently, this is set for u201CStandard priceu201D with the indicator u201CPrice ctrl mandatoryu201D set. Upon change to u201CMoving average price/periodic unit priceu201D, Iu2019m thinking I need to de-activate the u201CPrice ctrl mandatoryu201D field so any current materials with an u201CSu201D in the Price control field on the Material Master Accounting 1 tab can be changed to u201CVu201D. Is this correct? Also, is there a program that already exists to mass update the Price control field on the Material Master? If not, I was looking to create a CATT for this changeu2026.any other ideas? In some of the forum posts it was mentioned to use t-code MR21 however, even with the u201CPrice ctrl mandatoryu201D field de-activated, the Price control column is grayed out.
It was mentioned in a previous post that all open documents (PO to IR) need to be completed before changing the price control setting, at what point does this stop the process? Does SAP generate a system error message?
Also, any suggestions as to when this price switch is best to take place like after inventory?
Are the above mentioned areas the only areas I should be concerned about or am I missing some areas that should be addressed?
P.S. We do not use have our ML (material ledger) activated or use split valuation.
Thanks~
Dawn

Hi,
If you want to change material from standard to moving average price, Follow the below process
1)first the material quantity and value should be zero
2)if you want to keep value and quantity and want to change price control in future you have to create new material with price control "V' and lock the previous material for posting.
Regards,
Sreekanth

Standard vs Moving Average Price

Dear SAP Gurus
Can anybody pls explain the significance of Moving avg and Standard price of Material.
Thanks & Regards
Shalini

The standard price or moving average price in material master is used to determine the value of the inventory.
Standard price are used for products that do not fluctuate frequently. It is mainly used for FG 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 raw materials is that the inventory costs will always reflect the current market price.
If the material is valued at a standard price,
the difference between the purchase order price and the standard price will go to a price difference account.
If the material is valued at a moving average price, the difference between the purchase order price and
the moving average price will NOT go to a price difference account. The moving average price will simply be adjusted.

Standard Price & Moving average Price

please give some detailed info about:
1. where we use the price control " Standard Price".
2. where we use the price control " Moving average Price".
regards
Piyush

Hye
Goods Receipts/Invoice Receipts for Purchase Order
Transaction OMW1 allows you to set whether the Price Control is a mandatory "S" or "V".
V indicate that you want the system to value the stocks with the latest price.
S indicate that you want the system to value the stocks with a fixed price method.
Price Control V - Moving Average Price
Assume Material Master current price is 10
Goods Receipts for Purchase Order - Movement Type 101
u2022     Material Document Posting created - inventory increases
u2022     Accounting Document Posting created
o     Debit      12345   Inventory      12
o     Credit     67890   GR/IR          12
o     New Moving Average Price = ( GR value + Total value ) / ( GR quantity + Total stock )
Invoice Recipts for Purchase Order - MR01
u2022     Accounting Document Posting created
o     Debit      67890    GR/IR          12
o     Debit      12345    Inventory     3
o     Credit     45678   Vendor        15
o     New Moving Average Price = ( Inventory difference of 2 + Total value ) / ( Total Stock)
Price Control S - Standard Price
Material and Accounting Document is the same.
The one with the lower value will be posted with a price variance entry.
Goods Receipts for Purchase Order - Movement Type 101
u2022     Material Document Posting created - inventory increases
u2022     Accounting Document Posting created
o     Debit      12345   Inventory           10
o     Debit      23456   Price Variance   2
o     Credit     67890   GR/IR               12
o     No change in Standard Price
Invoice Recipts for Purchase Order - MR01
u2022     Accounting Document Posting created
o     Debit      67890    GR/IR                 12
o     Debit      23456   Price Variance     3
o     Credit     45678   Vendor                15
o     No change in Standard Price
General Ledger Account Configuration
Transaction OMWB - Automatic posting for inventory
Inventory posting                                     BSX
Goods receipt/inv.receipt clearing acct     WRX
Cost (price) differences                            PRD
Transaction XK03 - Account Payable Vendor Master
Tick Accounting info. and hit the Enter key
Field name    Reconcil.acct     45678
thx

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

Costing with Standard and Moving Average Price

Hello All,
I understand that SAP recommends Std Price for Semi Finished /Finished goods and MAP for trading goods and raw materials.
How does costing takeplace when it includes both the materials - semi finished and trading goods.
Is it possible at all?
Any suggestions will be helpful.
Thank You,
Andy

Hiya,
You may want to frame your question differently.
When what(?) contains SF and Trading Goods? BOM? Costing Run?
The Std Price and MAP you mentioned are the Price Control Indicators. These dictate the price to use and the treatment required for the material (realtime stock value updation during the month with GR/GI for MAP and no value updates for SP).
By itself, it does not affect the costing of (say) a BOM containing both these materials together... the system determines what price to use and costs the product accordingly.
Cheers.

Standard Cost vs Moving Average

Hi all,
I'm wondering if someone can explain with a bit more detail how SBO handles standard cost.
I know how to set it up and why it's there, but I'm curious how some clients use it and their procedures around managing it.
How do auditors react to it, does it require more work to maintain, is there anything in SBO to help manage the adjustment of variances?
If I switch some finished BOM inventory items to standard cost will there be any long term negative effects such as over/understated revenue?
TIA,
Mike

Hi Mike,
Revenue is not affected by the type of valuation method you choose for the Item, the Gross Profit as reported in the Sales Analysis might be affected if there is a large deviation between the standard and tha actual cost.
Either way, if you have set your accounts correct (= P&L accounts in the right place), in the long run the Gross Profit as it is reported in your income statement (profit and loss) will be correct (the same) with both Standard or Moving Average.
There might be a slight variance between the 2 depending on the cut off point and on the actual variance. You could expect a larger amount of the COGS (= variance being a part of COGS) being posted at the time of the purchase than when dealing with a Moving Average Item.
I hope that was somewhat clear...
Anything unclear, ask again.
Jesper

Standard Price Move Average Price

Hi guru:
Can anyone tell me the difference between standard price and move average pirce or what's the relationship between them?Does it affect posting for invoice receive/goods receive?

Standard vs Moving Average Price
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.
Refer to OSS note 81682 - Pr.Contr.V for semi-finished and finished products.
SAP recommends that standard price to be used for FERT and HALB. If actual price is required for valuation, make used of the functions of material ledger where a periodic actual price is created which is more realistic.
e.g. how SAP calculate the moving average price
Goods Receipt for Purchase Order
Balance on hand quantity + Goods Receipts quantity
Balance on hand value     + Goods Receipts value
New Moving Average Price = Total Value / Total Quantity
Invoice Receipt for Purchase Order
Invoice price more than Purchase Order price
u2022     additional value add to Balance on hand value then divided by Balance on hand quantity
Invoice price less than Purchase Order price
u2022     difference is deducted from the Balance on hand value (up to 0). The rest of the amount will becomes price variance. This will result in Balance on hand value is zero while there are Balance on hand quantity. If the Balance on hand value is enough to deduct, then the remaining value will be divided by Balance on hand quantity.
When your Goods Issue price is constantly greater than your Goods Receipt price, it will result into zero value moving average price.
OSS note
185961 - Moving Average Price Calculation.
88320 - Strong variances when creating moving average price.
Never allow negative stocks for materials carried at the moving average.
Hope thil will help you.
Cheers,
Parag Mahajan

Report for standard price of a material -

Hi ,
Could you please tell me the report, which gives the standard price/moving average price of material(s).
Thanks
Chandra

Hi,
Go to MBEW table..
SE16 enter table MBEW
in the main screen
go to Settings> Field selection in that select fields
VMVER Moving price
VMSTP Standard price
and execute...
Thx
Raju
Edited by: Manohar Raju on Mar 14, 2008 1:49 PM

PROBLEM WITH MOVING AVERAGE PRICE

Hi,
Correct me if Im wrong, but from what I know the moving average price should only change or be recalculated when purchases or goods_recipts are made, otherwise items should be consumed at a FIXED moving average price (cost).
I´ve noticed when looking into the Inventory Audit Report that the moving average price is changing in my installations and I see that SAP BO recalculates it every time an issue is made. This last thing only happens when the total amount of the transaction is rounded or left with 0 decimals and the other types such as prices, rates, quantities, percent, etc. are left with 2 or 3 decimals.
Because of my country settings, the total amount has to have 0 decimals (I live in Chile and we dont have cents in our currency) and the moving average price of an Item should not change when an issue is made, can you help me with this?
Thanks and best regards to you all.
Fernando

Hi Nagesh,
Thank you for your quick response.
I understand what you say, but moving average price should not change when an issue is made and that´s what is bothering us.
The difference between what it shoud be and what SAP BO is calculating is our concern, ie: let´s say the number of transactions is 100, would that difference be negligible?
Here is an example:
Goods issue:
SO 8     11     -10,49     166,67     -1.748     99,35     16.559
SO 9     11     -10,49     166,673     -1.748     88,86     14.811
SO 10     11     -10,49     166,678     -1.748     78,37     13.063
SO 11     11     -10,48     166,684     -1.747     67,89     11.316
SO 12     11     -10,56     166,681     -1.760     57,33     9.556
Note that coma (,) is decimal separation and period (.) is the mile separator.
Where the 3rd line is the quantity of the goods issue, the 4th is the moving average, and the 5th is the total quantity of the issue.
So you see 10,49 x 1748 = 1748,39977= 1748(SAP) and then SAP BO recalculates the AVG. Price.
The problem I was talking about was the difference of the stock AVG Price with one hundred transactions or so... now the difference seems negligible (166,7 - 166,681 = 0,011).
Can you see it changes?, is that a bug?
Thank you
Fernando

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

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 and standard cost

Hi All,
I purchase raw material and trading item. assuming that my raw material is based on standard cost and trading item based on moving average.
1) if both item have no more inventory, the difference price between migo and miro will charge to price difference?
2) if raw material which base on standard cost still have inventory, may i know if there is a variance for migo and miro, the difference will go to where? if inventorise then what would happen to the standard cost.
3) if trading item which base on moving average still have inventory, the variance (between migo and miro) will be added to moving average. right?
4) for raw material which base on standard cost, may i know if freight cost, custom duty and some other miscellaneous cost need to add in, how possible it can add to the standard cost?
5) for trading item which base on moving average, may i know if freight cost, custom duty and some other miscellaneous cost also will be added in moving average price?
thanks

Hi,
1) if both item have no more inventory, the difference price between migo and miro will charge to price difference?
Yes, this is correct as per Accounting Standards
2) if raw material which base on standard cost still have inventory, may i know if there is a variance for migo and miro, the difference will go to where? if inventorise then what would happen to the standard cost.
Any difference between the Standard Price in Material Master and Purchase Value (PO Price) will debit or credit the Price Difference A/c no matter whether stock exits or not.
If Material Standard Price = 100 INR
And PO Price is = 120 INR
During MIGO;
Stock Account - Dr - 100 INR
Price Difference A/c - Dr - 20 INR
GR/IR Clearing A/c - Cr - 120 INR
3) if trading item which base on moving average still have inventory, the variance (between migo and miro) will be added to moving average. right?
Yes, it will debit or credit Stock Account and will update MAP of Material accordingly if enough Stock coverage is there.
4) for raw material which base on standard cost, may i know if freight cost, custom duty and some other miscellaneous cost need to add in, how possible it can add to the standard cost?
No, all will get posted to Price Difference Account as following;
If Material Standard Price = 100 INR
And PO Price is = 120 INR and Freight = 10 INR
During MIGO;
Stock Account - Dr - 100 INR
Price Difference A/c - Dr - 20 INR
GR/IR Clearing A/c - Cr - 120 INR
Price Difference A/c - Dr - 10 INR
Freight Clearing A/c - Cr - 10 INR
5) for trading item which base on moving average, may i know if freight cost, custom duty and some other miscellaneous cost also will be added in moving average price?
Yes, it will get added to stock and will update MAP accordingly if enough Stock coverage is there.

Standard or Moving Average Material Cost

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