Material Stock Valuation

[Former Member]

Material Stock Valuation:

I purchased 100 kgs at 100 Rs per kg of raw material. So the moving avg was 100 Rs.

Then the price of material went up. I purchased another 100 kgs at 200 Rs per kg. So the moving avg was 150 Rs.

Say there is no other cost involved while selling this material. Since the customer was very important one. I sold him 100 kgs of old material stock at 120 Rs and hence made a profit of 20 Rs per kg.

Now the new material stock I am selling him at 170 Rs and hence thinking that I am still making profit as per the moving average price, but actually speaking I am making a loss as this material was originally purchased at 200 Rs/kg. So I am making loss of 30 Rs/kg.

How to prevent this?

Pl consider the above situation with huge quantities also, as well as when the price of raw material goes down drastically. This is impacting P&L directly.

There is no split valuation as of now in the system. If split valuation can work, pl let me know how the purchase and issue to production as well as sales has to be done with split valuation. How selling price will be determined?

Do send some documentation if you have.

Awaiting your early response.

Rgs,

AK

[former_member217082]

Hi Avi

As you have already raised the billing document to that customer also . then later on intimate to him that prices have been increased . So you raise a debit memo with reference to the billing document . then the price can be manged by adjusting by raising the debit memo

Regards

Srinath

[Former Member]

hi srinath,

pl try to understand the scenario first.

its real time business sir.

co is making profit only. but sap's p&l is wrongly hit.

i hope u will understand.

rgs,

ak

[former_member217082]

Hi Avi

As you said you have 100 kgs at 120 Rs per kg of raw material. So the moving avg was 100 Rs.and as per the KUNNR requirement i think here there should be no loss . But when you purchased again I purchased another 100 kgs at 200 Rs per kg. and the moving avg was 150 Rs. but you have sold to the KUNNR at Rs170.

So there are only two options .but preferably give debit memo to the KUNNR. as we have a genuine reason to raise the debit memo also

1) Give him a Debit memo for the loss amount that we are facing

2) Secondly change the moving average price to 220 then there should not be any problem .Take help of your MM consultant.

Regards

Srinath

[Lakshmipathi]

Dear AK

First of all, I am not sure, whether your PR00 (selling price) is nothing but your VPRS in your pricing procedure.

If so, as and when you generate invoice, system will consider the price what is maintained in material master and this being the case, I dont understand how can you sell the material at below cost.

In order to give a better explanation, please let me know the details about your pricing procedure as to what condition types you have maintained so that it will be easy to propose a suitable solution.

thanks

G. Lakshmipathi

[Former Member]

Hi Lakshmipathi,

This is a real time case. As all of us know that the commodity prices have gone down drastically, so what is happening is companies have started selling the material which they had purchased at high price at low prices and hence making loss.

I have taken exactly reverse the case.

PR00 cond is a manual one. VPRS is taken for ref in pric proc.

When the 1st 100 kg which were purchased at 100 rs is sold at 120 rs, VPRS still shows 150 rs. But actually (practically if u c out of SAP) co has done profit of 20 rs. But the 2nd 100 kgs even if the co sells at 170 rs, its making loss becoz instead of the map being 150 rs, system should have shown as 200rs.

I hope I am able to explain u the scenario properly.

Rgs,

AK

[Former Member]

your ? is not clear when u say moving average prize 15 then how can u say u can sell in 120