Product Costing & MaterialLedger

Product Costing Overview Acquire an overall perspective of Product CostPlanning within R/3.Observe a product life cycle from the perspective ofProduct Cost Planning.Acquire an overall perspective of product cost objectcontrolling within R/3.Understand the period oriented product costcontrolling.Obtain an understanding of the functions in thematerial ledger.Analysis of product costs.

Material Ledger Overview Obtainan understanding of the actual costingfunction in the material ledger. Know how to revaluate inventories of semi finishedproducts, and finished products with calculatedactual costs or accrue variances. Analysis of actual product costs.

Why utilize Product Costing? Product Costing is the backbone of a strong standard costsystem. This is the process by which production activitiesare recorded at standard values and variances from actualcosts are isolated. For planning purposes, the corporation wants a preliminarytarget of what they think it will cost to produce X units of aproduct. To set attainable standards by which efficiencies within theproduction operations can be measured. To provide feedback to management on the actualperformance of the production process in relation to thosetargets. Identified variances may indicate inefficiencies thathave to be investigated. Corrective action may have to betaken.

Costing MethodologyMaterial MasterPrice ControlMoving average price(V- Price)- Adjusted with every receipt- If at all, only to be used for rawmaterials and materials procuredexternallyStandard Price(S-Price)- Constant- Recommended for all materialtypes

Costing MethodologyPrice that changes in consequence of usageand entry of invoices. Calculated bydividing the value of material by the quantityin stock. Automatically recalculated basedon activity.Constant price without considering usage orinvoices. Material stock valued at the sameprice over an extended period. Pricevariances are posted to price differenceaccounts; not affecting the standard price.The method of valuing inventory of amaterial is determined whenextending/creating the material master.

Moving average price – Stock Coverage1.Begin. inventory: 100 PC at 1.002. Goods receipt: 100 PC at 2.003. Invoice receipt: 100 PC at 3.004. Goods issue: 150 PC at 2.00Qty10020020050Stk. Val100300400100Stock1.1002.2003100GR/IR Account300 4.Consumption4.300V price1.001.502.002.00If the invoice receipt isfor 100 units, the stockcoverageis 200 units:all differences goes onstock3.200200 2.Vendor3003.

Moving average price: Stock shortage1. Begin. inventory:2. Goods receipt: 100 PC at 2.003. Goods issue: 150 PC at 1.504. Invoice receipt: 100 PC at 3.00Stock1002005050Stock Value10030075125V Price1.001.501.502.50A delayed invoice receipt results in price differencedue to stock shortageStock1.1002.2004.503.GR/IR account2254.ConsumptionPrice difference4.503.225200200 2.Vendor3004.

Characteristics of Price Control VMoving average priceAdvantages: The stock value is adjusted each time goods are receivedReal-time price fluctations are posted to stockPrice difference postings only take place in exceptional casesDisadvantages: Price fluctuations cannot be adjusted to the finished products of higherlevels (S price) Only recommended for raw materials or goods procured externally (realtime price for goods receipt known) False entries with severe consequences (compounded errors) Danger of incorrect valuations with delayed invoice receipt

Posting Example: Standard PriceStockStock ValueStandard Price1004004.002 Goods receipt: 100 at 52004004.003 Invoice receipt: 100 at 4.502004004.001Opening stock:Stock14002400GR/IR account3Price difference2100505005002Vendor34503

Characteristics of Price Control SStandard PriceAdvantages: All stock postings take place at the standard price Prices remain constant throughout at least one period Price fluctuations do not debit/credit the cost objects (e.g. orders) Calculation of the standard prices with cost component splits Recommended for all material typesDisadvantages: Price differences cannot be subsequently adjusted to the endinginventories or the consumed products (sales, productionwithdrawals)

Costing MethodologyValuation Method by Material:Finished GoodsStandard w/ MLIntermediatesStandard w/ MLRaw MaterialMoving Average ActualPackagingMoving Average Actual

Valuation AreaOrganizational unit dividing up a company for thepurpose of valuating stocks in a standardized andconsistent manner. Level at which material value is managed. The valuation area may is defined:- by plant

Product Cost FlowManufacturing CostQualityCCACOCCAMM: ctvProductionCost CenterCOPCActvVAR.VAR.COPAF. GoodsInventory

Product Cost FlowPlant Cost ViewMfg. Cost tionTrainingDirectConversionInsur. & TaxesLaboratory/QCWaste TreatmentShops & StoresGeneral ServicesIndirectConversionTotal Product CostSales & Mktg. ViewProcess OrderBOMRaw Mat’l 1Raw Mat’l 2Pkg Mat’lRoutingPAProduct Unit Cost(Profitability Analysis)(Cost Component View)(SAP Value Fields)Cost of Goods SoldCost of Goods Mfg.Raw Mat’l 1 CostsRaw Mat’l 2 CostsPkg. Mat’l CostsRaw Mat’l 1 & 2 CostsPkg. Mat’l Costs(Activity Types)Mach. Hrs.orlbs.ProducedLab testsSetup Hrs.RoutingMach. Hr. CostsLab Tests CostsMach. Setup CostsFixed & Variable CostThree Views Available:1. Cost Component2. Cost Element3. Cost ItemizationCosts to ProduceProduct testing costsChange Over costs(setup costs)Fixed & Variable Cost

Product Costing At A GrpProduct Cost PlanningQuantitystructurein PPcreatedActivitytypeplanningcompletedAdjust costingmaster data/parametersExecute costingrunNot OKOverheadcostplanningcompletedPlan pricesof wforYesApprovalOKMark StandardCost EstimateAutomaticReleaseofStandard PriceStandardprice hasebeenreleased

Product Costing At A GrpProduct Cost Allocation - Simultaneous CostingCostestimatehas beenreleasedManufacturing orderhas beenreleasedCost objecthas beencreatedSimultaneousYesCostingProduct costareallocated

Product Costing At A GrpPeriod End Closing Product CostingProductcost areallocatedRevaluationactivity types atactual pricesCalculation ofWIPYesPeriodicVaraiancecalculationSettle costobjectPE ProductCosting hasbeen done

Product Costing At A GrpMaterial Ledger/Actual CostingGL PostingsRevaluateStockMM GoodsMovementsRecordedMaterial PriceDeterminationAllocation ofFollow up Coststo sPrice Update inActual CostingProvisionalPostingGL Postings &ReversalMaterialM,asterUpdates

Product Cost Planning: OverviewFunctions of Product Cost Planning: Product Cost Planning with reference to cost object; Product cost planning with quantity structure – with structuresprovided by PP (Production Planning) module Determination of the cost of goods manufacturedProduct Cost Planning supplies information for othermodules:; Update of prices in a material master; Update of the cost of good sold with the detailed structure ofcost component (grouped cost elements); Standard (material) cost estimate as the base for calculationof production variances

What is a Product Cost Estimate?A tool for planning costs and establishing prices formaterials. It is used to calculate the cost of goods sold foreach product unit.Cost Estimate With Quantity StructureUtilizes a Bill of Material (BOM) and routing, I.e. Master Recipe for costingpurposes. Integrated with Production Planning (PP).Cost Estimate WITHOUT Quantity StructureUtilizes a material master data and activity types entered manually into costestimate.AdditiveYou use additive costing to enable you to manually add costs that cannotbe calculated by the system to a material cost estimate.

Product Costing: nce(onceaayear)year)Create Cost estimate with quantitystructureMark cost estimate with quantity structureRelease cost estimate with quantity structure

Concept of Cost Roll Up¾ The purpose of cost rollup is to include the cost of goodsmanufactured of all the materials in a multilevel productionstructure within the costs of the material located at the top ofthe structure. The costs are rolled up automatically using thecosting levels.

Costing VariantCostingCosting VariantVariantQuantity tiesCost of goodsmanufactured

Costing VariantCosting SheetDetermination of:- prices updatein material masterStrategy fortransfer ofthe existingcost estimatesCOSTINGVARIANTValuation control for:- materials- internal activities- external activities- subcontracting- overheads viacosting sheetDetermination of :- Bills of Material- RoutingDefaulted dates forcosting

Quantity Structure for Product Cost PlanningQuantity Structure of Product Cost Planning:¾ Material Master¾ Bill of Material¾ Work Center/ Resources¾ Routings¾ Master Recipe¾ Production Version¾ Procurement Alternative/ Mixing Ratios

Quantity Structure for Product Cost Planning Material master data ; Accounting views; Costing views; MRP views BOM - Bill of Material; Recipe header; Operations; Materials list ; BOM type & identification; BOM header; Material data Routing - tasks list; Routing type & identification; Routing header; Operation dataMaster RecipeWork Centers / Resources; Basic data; Costing Production Version; Validity Period; Production line

Quantity Structure: Material Master DataMaterial Master Data: Material Master Data is an object in SAP that consistsall relevant data for raw materials, semi-finished andfinished products divided into views. Important Views relevant for product costing:; Accounting; Costing; MRP

Quantity Structure: Production Version; Production versions combine a specific BOM alternativewith a specific routing/recipe; For one material, you can have several Productionversions for various validity periods and lot size ranges; Production version facilitate different situationsProduction using different resourcesProduction using different procedures

Quantity Structure: Procurement Alternatives; Quantity structure determination for mixed cost estimate.

Quantity Structure: Mixing Ratios; Quantity structure determination for mixed cost estimate; Validity period for mixing structureProduct FERT or HALB Mixed ProductCost Estimate

Costing StructureCosting Structure for Product Cost Planning:Material MasterCost CentersActivity TypesCost ElementsCost Component Structure

Costing Structure for Product Cost Planning Material master data Accounting views Costing views Cost Centers Validity period Category Functional area Activity Types Validity period Activity unit Allocation cost element Cost Elements Validity period Category

Costing StructureActivity types define the type of activity that can be providedby a cost center (work activity, production hours, and so on).

Activity Price CalculationCost center:MachineCost centerPlanned costs:430000 (salaries)44,000440000 (miscl.)10,000473120 (telephone)30,0001Planned costs: 84,0001PDH01100 hPlan activity qty: 100 h2:Activity PriceCalculationApportionment of cost center coststo activity types according toparticular criteriaCalculatedPrice: 840

Costing StructurePlanning9103000Utilities (Common)3 Cost SplittingProductCost Estimate1. Assign CC 9103004 to SplittingStructure Z9 Steam service2. Perform cost splitting2Product91000045 - TEGSteam service91030041UTSTF Steam - fixed1UTSTV Steam – var.943954 UT: Steam fixAAl ctilo v i94 ca ty39 tioRo via 54 nuting .niout CErib alstnDi rigiO91030005 .1Primary costs planning on allCost Centers.4 Planned Price CalculationPrices for 1UTSTF arecalculated.Product91000060 - LLDPEActivity Types Used:1UTSTF Steam - fixed

Cost Component StructureCOPCCOOMPrimary cost elementsProduct Cost PlanningZ9A Grp-PrimaryRaw MaterialsRaw MaterialsCost CentersUtilitiesPersonnel Exp.DepreciationStructure of sonnel Exp.DepreciationStructure ofprimarycosts

Product Costing: OverviewCreate Cost estimate with quantity once(onceaayear)year)Mark cost estimate with quantitystructureRelease cost estimate with quantitystructure

Price update¾ Standard price99999999Only one validated standard price per product per period,The price represents most desired (or most likely) costsOnly one price per product over the year (recommended)Determined during costing runs for Z9P1 costing variants - standardcost estimate is populated in appropriate valuation viewsIncludes variable and fix cost elementsBase for variances calculation; which is then posted to FI and COPAUsed for stock valuation of finished goods and semi-finishedproductsStored in material master data (accounting view) in Legal, Groupand Profit Center valuation views after releasing the cost estimate

Price update¾ Future price9 Future standard price9 Stored in material master data (accounting & costing view) in Legal,Group and Profit Center valuation views after marking the costestimate.¾ Previous price9 Replaced standard price by current one due to releasing the costestimate9 Stored in material master data (accounting & costing view).

Price updateAnalysis of Costing ResultsMaterial Master DataStandard PriceExisting StdMarking StandardCost EstimateReleasing StandardCost EstimateFutureCurrent Previous10Future15Current Previous10Future Current Previous1510Stock Revaluation

Costing run¾ Costing run9 You can use the costing run to process mass data. It enables you tocost, mark, and release more than one material at the same time.9 Every processing step involved in costing with quantity structure isperformed by the costing run, from the same screen.¾ Costing run consists of:99999General data (organizational units, selection criteria)Selected materialsExploded BOMsCosting run resultsPrice update results

Costing runCosting Run CreationCompany CodeCosting variantDatesORSelectionofall materialsPartial selectionof materialsBOM explosionExecute costing runMarking and releasing costing run results(price update)

Product Costing: OverviewPreparePrepareCostCostObjectObjectCreate cost objectPreliminary costingPost Materials inishedFinishedStocksStocksDebit Secondary costCredit Production OutputWIP CalculationMonthMonthEndEndClosingClosingVariance CalculationSettlement

Cost Object Controlling: OverviewFunctions of Cost Object Controlling: Supporting make-or-buy decisionsDetermining price floorsPerforming complex cost analysisDetermining inventory values

Cost Object Controlling: OverviewCost Object Controlling Scenarios: Product Cost by Period; Product Cost by Period is used for recurring periodic costcontrol of products that are manufactured in the same wayover a longer period of time. Product Cost by Order; Product Cost by Order is mainly used to control the costs ofindividual production lots.

Cost Object Controlling: Overview Product Cost by Order or by Period; Full settlement (by Order)Actual costs Work in processActual costs Goods receipts Work in processActual costs Goods receipts VariancesPartial deliveryDelivered /TechnicallycompletedTimeReleasing anorder; Periodic settlement ( by Period)Actual costs Goods receipts Work in process VariancesActual costs Goods receipts Work in process VariancesActual costs Goods receipts Work in process VariancesPeriod 1Period 2Period 3Time

Cost Object Controlling: OverviewFunctionsFunkcjeType of erarchy ofCost ObjectsProduct Cost by OrderFULLWIP calculated on baseof actual costsVariance Actual Costs -Goods ReceiptsShould be periodicallyImpossibleProduct Cost by PeriodPERIODICWIP calculated on baseof target costsVariance Actual Costs Goods Receipts - WIPMust be periodicallyPossible

Cost Object Controlling: OverviewFunctions of Product Costs by Period: Create product cost collectors.Create a preliminary cost estimate for product costcollectors.Calculate and analyze target costs and actual costs forproduct cost collectors.Calculate or update the work-in-process inventory andthe finished goods inventory.Calculate and analyze variances for each period.Transfer data to: Financial Accounting, ProfitabilityAnalysis, Profit Center Accounting and MaterialLedger.

Product Costing: oduct Cost CollectorPreliminary costing

Objects in Cost Object Controlling Product cost collectors in the following productionenvironments:; In order-related production (that is, when you are usingproduction orders) when you want to analyze the costs byperiod rather than by lot; In process manufacturing (that is, when you are using processorders) when you want to analyze the costs by period ratherthan by lot; In repetitive manufacturing you always use product costcollectors as the cost objects.

Objects in Cost Object Controlling; Product Cost CollectorProduct FERT or HALB RoutingBill of Material Usage Alternative Group Group counterProduction Version ID, Production line, Validity period.Product CostCollector

Objects in Cost Object ControllingProductPROCESS ORDER 1Product Cost FERT or HALB CollectorPROCESS ORDER 2MasterRecipeOperationList/RoutingOperation 10Phase AOperation 20ResourceRequirementsMaterialsList/BOMMaterial XMaterial YProductionVersion

Preliminary costing¾ Costing variant PREM - preliminary costing:9 Created during product cost collector creation9 Created per each production version9 Provides split and balanced information of cost items, quantities andprices that are planned to occur during production of a product9 Variable costs coming from BOM and routing9 Result used mainly for actual activities postings9 May be used for further analysis up to cost managementrequirements9 May be changed all the time in the way of changing (updating)Product Cost Collector; i.e. different quantity structures allowed overthe period9 Changes in BOMs take effect immediately, i.e. cost estimate updatenot required9 Changes in routings take effect after cost estimate update

Preliminary costingProduct Cost CollectorItemPlanCaustic al activities2.500Overheads1.500Total8.000Actual

Simultaneous costing – actual costsProduct Cost CollectorItemPlanActualCaustic ials4,0004,600Internal activities2.500Overheads1.500Total8.0002.8007.400

Confirmation Types & Functions - Process OrdersConfirmation types IndividualconfirmationIndividual orderconfirmationCollectiveCollective tone confirmationProgress confirmationOrder confirmationConfirmation with referenceConfirmation functions OutputreceiptmovementConfirmgoodswith goodsDefaults for remaining timeBackflushcomponentsCheck operationsequenceCheck delivery tolerancesBackflushPlant data utilitiescollection ne actual costs

Final Confirmation & Technical Completion¾ Final Confirmation is made when every operation in the orderhas been completed¾ Technical confirmation is the order is prematurely terminated.Technical confirmation prevents further activities beingposted to the order.¾ Both the above confirmation can be settled.

Failed Transactions and Corrections Incorrect or missing data for components and activitiesprevents processing of the back flush transaction These errors must be corrected before postings can be madefor materials and activities When the errors have been eliminated, the theoretical yieldand consumption may be adjusted and the results recorded

Actual costs Production OrderStep 1 – Created and release- Maintenance of Master DataStatus - RELEASEDSTATUS- CREATEDSTATUS - RELEASEDThis status allows for actual postings

Actual costs Production OrderStep 2 – Goods Issue to Order- Actual PostingsStatus – GOODS MOVEMENT POSTEDFIRawMaterialsConsumed400000Order1.100,100 * 11 1.100,Inventoryquantity * price costRawMaterials1194001.100,-400000 1.100

Actual costs Production OrderStep 3 – Direct activity allocation- Actual PostingsStatus - RELEASEDOrder400000 1.100943201 7.500Cost Center / Activity150 * 50 7.500943201- 7.500,-quantity * price cost

Actual costs Production OrderStep 4 – Goods Receipt from Order into Warehouse- Actual PostingsStatus – PARTIALLY 0 1.100943201 7.500462001 - 5.000FinishedProducts1194305.000,-100 * 50 5.000,quantity * price value of the goods receiptsfrom order

Actual costs - Summary¾ The results from the output receipts, plus material & resourceconsumptions, update the stock records and providevaluation of production according to standard cost approach.

Product Costing: onVarianceCalculationSettlement

Period and year-end closing Production OrderStep 5 – Work-in-Process Calculation- Period-end closingStatus – RESULTS ANALYSIS CARRIED OUTOrder400000 1.100943201 7.500WIP Report:Work-in-Process8.600 - 5.000 3.600462001 - 5.000,-

Period and year-end closing Production OrderStep 6 – Settlementof - Period-end closingStatus – RESULTS ANALYSIS CARRIED OUTFIWork InProgress(WIP)462201Order400000 1.100943201 7.500462001 - 5.000,-3.600Work InProgress(WIP)1194603.600WIP is being updated on theorder as statistical value forinformation purposes.

Period and year-end closing Production Order – new periodStep 9 – Repetition of the steps from 3 to 7- Actual PostingsStatus – PARTIALLY DELIVEREDOrder400000 1.100943201 7.500462001 - 5.000,462001 - 7.000,-400000 5.000,-As a result of the actualpostings in the new periodthere is a new balance on theorder.

Period and year-end closing Production Order – period 2Step 7 – Work-in-Process Calculation (variant 1)- Period-end closingStatus – PARTIALLY DELIVEREDOrder400000 1.100943201 7.500400000 5.000WIP Report (cumulated):Work-in-Process13.600 - 12.000 1.600Work-in-Processin previous period8.600 - 5.000 3.600Cumulative:2.000462001 - 5.000,462001 - 7.000,-

Period and year-end closing Production Order – Period 2Step 11 – Settlement (variant 1)- Period-end closingStatus – RESULTS ANALYSIS CARRIEDFIWork InProgress(WIP)119460Order400000 1.100943201 7.5001.600462001 - 5.000462001 - 7.000400000 5.000Work InProgress(WIP)4622011.600As WIP is reported ascumulative value.

Period and year-end closing Production Order – period 2Step 12 – Calculation of Variances and Settlement (variant 2)- Period-end closingFIStatus – TECHNICALLY COMPLETEDPriceDifference ProductionDifference464018Order400000 1.100943201 7.5001.600462001 - 5.000462001 - 7.000400000 5.000ProductionOutput462001Negative variance:Actuals Plan.1.600WIP4622013.600WIP1194603.600As a result of a posting thebalance of the order wasposted to productiondifference account andcumulated WIP wasreversed.

Period and year-end closingVarianceCategoryCost Element Group PA AssignmentlinesValue Field

Period and year-end closingPeriodic CostsProduct Cost CollectorItemPlanActualCaustic ials4,0004,600Internal .000Revaluation%Overheads

Period and year-end closingPeriod-end closingPeriodiccostsProcess rk-in-ProcessPostingsFI/COSettlementScrapVariances

Material Ledger: OverviewFunctions of Material Ledger: Cost accounting using actual prices Storing values of stock in three different valuations(legal valuation, valuation for reporting purposes, andprofit center valuation) in multiple currencies.

Material Ledger: OverviewFunctions of Material Ledger: Cost accounting using actual prices Storing values of stock in three different valuations(legal valuation, group valuation for reporting purposes,and profit center valuation) in multiple currencies.

What is the Material Ledger/Actual Cost Concept?The Material Ledger(ML) is a tool within the COModule that collects all transactional data formaterials whose master data is stored in thematerial master. It acts as a subledger for selectedmaterials that captures all goods movements,invoice values, transfers and price changes. Onthe basis of this data, the material ledgercalculates and maintains the actual cost for thesematerials. This actual cost can then be utilized tovaluate the material stock accounts.

Objectives of the Material Ledger1. Actual Costing.During the period, valuation of all goods movements is donewith the preliminary valuation price which is normally thestandard price. All variances from the preliminary valuation aremaintained in the ML. At period end, revaluation of endinginventory can be performed with the determined actual price.This is not mandatory. Actual prices can be calculated forstatistical purposes only.2. Parallel currencies and/or valuations of material stocks.All goods movements in the ledger can be maintained in 3currencies. The values are translated into other currenciesusing the historical exchange rates. Prerequisite for usage oftransfer pricing functionality.

Benefits of the Material Ledger Variances of Finished GoodsVariances from external procurement (purchase orders) as wellas from production activities are rolled up from raw and semifinished materials to the finished goods level. To provide support for procurement related decisions.Detailed reporting for procurement processes and sourcespossible. Make vs. Buy, Vendor A vs. Vendor B. Price History. Combines the benefits of Moving Average and Standard PriceStable prices used for controlling purposes (standard) and actualprices used for valuation purposes (average). Easy to use display and error finding by consolidating the views.Allows quick access to detailed views of material master,standard costs and documents

Benefits of the Material Ledger Relatively simple configuration and set up True Cost of Sales AccountingPurchasing and production variances for unsold stocks areinventoried. Contribution Margin with Actual Costs of SalesBy utilizing multi-level settlement, actual values for your costcomponent split can be attained. This can be transferred to PA

Single Level Settlement¾ The term single level always refers to one material andits procurement process; which means that all values andquantities that arise during a procurement for saidmaterial are stored single- level

Multi - Level Settlement¾The “multi-level” settlement functionality adds themost value because it passes the lower level variancein a production processes up to the final finishedproduct.¾ All the manufacturing variances can be included inthe total cost to manufacture the finished products

The ML updates the Material Master

The Integrated Material Ledger Display

Material Ledger OverviewActual CostingRevaluation of stock atactual prices or accrual ofvariances.Material LedgerMATERIAL STOCKParallel ValuationsParallel CurrenciesTranslation at historic rates(up to three)(Transfer Prices) Group Legal Profit Center

ML Overview – Parallel CurrenciesMaterial Ledger(Valuation Area / Plant) 10 Local currency 30 Group currencyFinancial AccountingControlling(Company Code)(Controlling Area) 10 Local currency 10 Local currency 30 Group currency 30 Group currency

ML Overview – Parallel Curr. in A Grp (1)Material LedgerValuation Area (Plant) 9100

Price controlMaterialMasterMoving average pricePrice ControlStandard Price(V Price)(S Price) Changed after every receipt Stable for long period Recommended for raw andexternally procuredmaterials. Recommended for finishedand semi-finishedproducts.

Price controlMoving average price9 The stock value is adjusted each time are received9 Real-time price fluctuations are posted to stock9 Price difference postings only takes place in exceptional cases: Price fluctuations can not be adjusted to the finished products of higher levels(in case S price): Only recommended for raw materials or goods procured externally (real-timeprice for goods receipt known): False entries with severe consequences (compounded errors): Danger of incorrect valuations with delayed invoice receipt

Price controlStandard Price999999All stock postings takes place with the standard pricePrice remains constant by at least one periodPrice fluctuations do not debit / credit the cost objectConsistent controlling with the standard price as a bench markEstimations of the standard prices with cost component splitRecommended for all materials types: Price differences can not be subsequently adjusted to the ending inventoriesor the consumed products (very important in the Cost of Goods Soldaccounting)

Price determination controlPrice controlSVVPrice determination2Transaction based3Single-/ multilevelprice determinationStandardpriceStandardndardpriceUnit periodicpriceMovingpriceCannot beactivatedmanually

Actual Values Overview¾ Setting 2 of transaction-based price determination functions in thesame way as the system without the material ledger, but has the addedadvantage of allowing you to carry standard prices and moving prices inmultiple currencies or valuations. This option is possible for materials withthe price control S or V.¾ With single-/multilevel material price determination (indicator 3 in thematerial master),a standard price is used for preliminary valuation, and a periodic unitprice is calculated for material valuation of the closed period. This optionis only possible for materials with the price control indicator S,

Material Ledger Overview Obtain an understanding of the actual costing function in the material ledger. Know how to revaluate inventories of semi finished products, and finished products with calculated actual cos