How to calculate moving average price(MAP) when price variance in IV

[Former Member]

Hi All,

My current stock for a material is 39 and MAP is 0.8 GBP.

A purchase order is created for the material for a quantity of 1 at price of 0.8 GBP per unit.

Invoice is posted for the above PO at price of 1.74 GBP.

What will be the new MAP for the material now??How to calculate MAP when there is a price variance in Invoice?

Please suggest ASAP.

[Former Member]

Hi All.

My queries with ref. to this Moving Price updation. Suppose One material is getting stock transfer to other plant. At both the plant the same material is with diff. Moving Avg. Price. i,e at Plant X, Stock Qty-Q1 and Stock Price is P1 So Inv. Value is = Q1xP1. And similarly at Plant Y, Stock Qty- Zero, but the moving Price is P2, So at Plant Y Inv. Value is Zero.

Now when executed STK the Inv. A/c of Plant Y got Debited with (Q1xP1) value and simultaneously Plant X got credited with (Q1xP1) value. Now, in Plant Y, what will be the Price of material.

Rgds,

CS

[Former Member]

Hi,

My queries with ref. to this Moving Price updation. Suppose One material is getting stock transfer to other plant. At both the plant the same material is with diff. Moving Avg. Price. i,e at Plant X, Stock Qty-Q1 and Stock Price is P1 So Inv. Value is = Q1xP1. And similarly at Plant Y, Stock Qty- Zero, but the moving Price is P2, So at Plant Y Inv. Value is Zero.
Now when executed STK the Inv. A/c of Plant Y got Debited with (Q1xP1) value and simultaneously Plant X got credited with (Q1xP1) value. Now, in Plant Y, what will be the Price of material.

When you move the material to Plant Y, the stock value will be

(Q2 X P2 ) + (Q1 X P1) / (Q1+Q2).

But, since Q2 = 0, the Value will be P1. So, the MAP for the material in Plant Y will be same as Plant X.

[Former Member]

Hi,

Goods Issue will always take place with the current MAP.

[Former Member]

I think u are asking about the PRD at the time of LIV

current status before LIV is 39 qty and MAP 0.8

and u have all ready done a GR of 1 qty at 0.8

not u are doing LIV for that PO with qty 1 and price 0.8

and in LIV u r changing 0.8 to 1.74

right if this is what u asking than th MAP will be calculated as

(38 * 0.8) + (1*(1.74-0.8)) / 39

will be 0.80359 according to calculation but only 2 places can be shown so MAP will be shown as 0.8

take the bigger values u able to understand better

hope this helsp

[Former Member]

Hi,

The Procedure for calculating MAP is :-

Case 1 :- PO at different price

If in Material Master your MAP is 0.8GBP & closing stock of 30Nos, value is 24GBP

In PO if the price is 0.9GBP & qty is 10nos, then after Goods Receipt Total Value of the GR i.e. Qty * Price + any other delivery cost will be added to the material stock value. Qty is also updated. New Total Value / New Stock Qty will be MAP.

In this case Qty received 10 & price is 0.9 that means value would be 9GBP.

Total Value becomes 24GBP (Present Stock) + 9GBP (Goods Receipt) = 33GBP

Total Qty becomes 30Nos + 10Nos (Goods Receipt) = 40Nos

MAP becomes = 33GBP / 44Nos = 0.75

Case 2 : Invoice Posting (MIRO) at different price than PO

While doing MIRO is we post at different price system will check whether sufficient stock posted in GR is available. In the above case it is 10Nos,

If it is there, then the above logic as in case 1 will take place

If not available, to the extent of stock availability system will post the different value & adjust MAP & remaining is posted to Price Difference Account.

In your case it would be like this :

1. MAP 0.8 for 30Nos (Value would be 24GBP)

2. Invoice Posting 1.74GBP for 1No. That means value would be 24GBP + 1.74GBP = 25.74GBP

Qty would be 30+1 = 40

MAP = 25.74 / 40 = 0.64GBP

Hope this clarifies your doubt

regards,

JP

[Former Member]

Hi

Total Value = 39 x 0.8 GBP = 31.2GBP

At the time of GR =40 qty with total value 32 GBP (MAP 32/40=0.8 GBP)

Stock Account Debit for 0.8 GBP

GR/IR account Credit for 0.8 GBP

At the time of IR ( Considering GI is not done for 40 nos) = Total Value for 40 nos =

Vendor account credit 1.74 GBP

GR/IR account Debit 0.8 GBP

Stock account Debit ( 1.74 -0.8 = 0.94 ) GBP

Hence total value for 40 nos 32+0.94 =32.94 GBP ( MAP 32.94/40 = 0.8235)

If GI is done then instead of stock account it goes to price differance account for insufficient stock coverage

[Former Member]

So whatever may be the price quoted for the material in purchase order,you mean to say we have to consider the price posted during invoice to calculate new MAP.Is my assumption correct?

[Former Member]

Yes... Absoultely..

[Former Member]

Sanjay,

Below is one more case.

Now the stock is zero for a material.A Purchase order is raised for a quantity of 74 at price of 0.8 GBP.

Before an invoice is posted for this purchase order, Goods issue of 35 happened at price of 0.8 GBP.

Later to this GI, Invoice is posted for an amount of 74.2 GBP for the above PO.This means there is a price variance.

How will the MAP be calculated now??

Regards

[Former Member]

Hi

At the time of GR

Stock account Debit (74 * 0.8 GBP = 59.2 GBP ) Hence MAP is 59.2/74 = 0.8 GBP)

GR/IR account credit with 59.2 GBP

GI Valuation = 35 x 0.8 GBP = 28 GBP to consumption account

Total stock value 59.2-28 = 31.2 GBP ( MAP 31.2/74-35 = 0.8 GbP)

At the time of IR

Vendor Credit 74*1.002 ( 74.2 GBP)

GR/IR account Debit 59.2 GBP

PRD account Debit ( 1.002-0.8= 0.202 * 35 = 7.07 GBP)

Stock account Debit (0.202 * 74-35= 7.878 GBP )

Total stock 39 with value 7.878+31.2 = 39.078 GBP

Hence MAP = 39.078/39 = 1.002 GBP

[Former Member]

Sanjay,

Thanks a lot for your valuable reply.

So in case for the next Goods issue should we consider MAP of 0.8 GBP or 1.002 GBP.

Regards

[Former Member]

Hi

For next goods Issue before any material document ( GR.TR etc) is MAP 1.002 GBP

[Former Member]

Hi

The MAP is calculated as (Total Value of Stock) divided by (Total Qty of Stock).

In your case, your toal stk value before PO id 39 x 0.8 = 31.2 GBP.

If new stock comes at the rate of 1 x 1.74 = 1.74

So Now the total Qty is 40 and Total Stk value is 32.94 GBP. So, MAP is 32.94 / 40 = .824 GBP.