Moving Average Price

[prabhjotsingh_nayyar]

Hello SAP Gurus,

What is the basic criteria for deciding about the price control procedure for a particular material type.

And if for raw material the price control procedure is moving average (V) then what would be it's initial price at the time of creating material master. And what would be the initial price in case of price control procedure for a material type is opted as Standard (S)

Regards

Prabhot Singh

[Former Member · Accepted solution]

HI,

The concept of Standard price and M.A.P is as below.

Standard price when maintained it remains same through out.

The valuation cannot be maintained at different prices through out the plants. It thus remains same thro out.

eg: Finished goods etc the price remains more or less same.

In case of raw materials the price keeps on changing continously hence it is recommended that the Price control should be 'V'.

Once the price control is set as Moving average price the stocks can be valuated at different prices through out the pant level.

The system will always calculate the revised MAP as Total stock/Total Qty and will update the price in the MMR.

hence when the valuation is done at the plant level it is always recommended that the system should follow the MAP procedure.

Hope it helps.

Regards,

Prasanna

Award pls if helpful

[prabhjotsingh_nayyar]

Thanks a lot for your wonderfull reply.....This really helped me solve my problem.

Once gain....Thanks a ton

[Former Member]

Hi

Regards

Ram

[Former Member]

Hi Prabhjot,

Please find the explanation about Price Control 'V' & 'S'

Standard price(S): A constant price at which a material is valuated without taking goods movements and invoices into account.

All the goods movements are valuated at the same price over a certain period.

It is suited for the products that do not fluctuated frequently. It is usually used for finished or semi finished products.

Also during invoicing with variances, the difference will be posted to 'Price Difference Account'

Moving average price: A price that changes in consequence of goods movements and the entry of invoices, and which is used to valuate a material.

The moving average price is calculated by dividing the value of the material by the quantity of material in stock. It is automatically recalculated by the system after each goods movement or invoice entry.

It is mainly used for raw materials that are purchased externally. The main benefit of using this moving average price is that the inventory costs will always reflect the current market costs.

Also during invoicing with variances, the difference will be posted to 'Stock Account' if there is a sufficient stock coverage else to ' Price Difference Account'.

Sap recommends

Price Control 'S' - - - Semi finished and Finished Products

Price Control 'V' - - - Raw materials and Trading Goods

( Note: For both S & V, the initial price will not vary. Any way initial price will be quoted while creating MMR)

[Former Member]

In general ROH - raw material types have price control V ie MAP

it gets updated with the first GR or while doing the initial stock upload you get populate the MAP by enterin the price in the feild "amount in local currency".

FERT or HALB - Finish and Semi finish has price control indicator S ie Std price it can be populated while initial stock upload using the feild "amount in local currency"

there is no thumb rule by which we can say which material type will have which price indicator but in general all input material are mantaine with price contol indicator V MAP and output materials are mantained as S Std price.

Hope this helps

Regards

Sujoy

[Former Member]

Dear Hi,

Raw material is external material for we.

We purchase raw material from other company to manufacture our product.

So the price of raw material is always change due to this reason we maintain moving average price and price control V in raw material.

While in case of finish product we maintain S price control and also at the time of material creation we not maintain material standard price.

Because finish product is our in- house product. So the price of finish product is decide by we.Due to this the rate of finish product is maintain in material master by run costing of material.

In which all charges is include for raw material, ppm, spm materials.

An at the time of costing run system update standard price for material.

Regards,

Mahesh Wagh