Valuation variant - Material Valuation strategy

[Former Member]

Hi,

I have the following strategy sequence for material valuation in the std costing variant

1. Planned Price 1

2. Standard Price

3. Moving Average Price

Could someone tell what are the pros and cons of having this strategy sequence. When would one use price from purchasing info record as the top strategy? Is having the price from purchasing info record as the top option, the best one?

Thanks for your help

Ram

[Former Member · Accepted solution]

Hi Ram

Please note following regarding material valuation strategies in costing variant

1) Having price from info record is definitely a good option but check with client on how accurate they are in thier material pricing. If they are not sure - then dont choose it. It is a gud option if they material prices are controlled affectively and monitored for variances

2) My suggestion would be same as yours

If the above clarifies your question on info record please assign points

[Former Member · Accepted solution]

Hi Sreedhar,

Thank you very much for your reply. I have assigned points

Let us say that Planned Price 1 is chosen as the top strategy. What would happen 6 months down the road during next costing run? How will the "planned price 1" of raw materials/SFG/FG will change?

For raw materials do we need to change the prices through MR21 before the next cost roll, and the prices of SFG & FG get changed during costing run automatically?

Thank you,

Ram

Message was edited by:

Ram R

[Former Member · Accepted solution]

Hi Ram

During first costing run planned prices entered thru MR 21 will be updated as standard prices. Which means planned prices = std prices.

If you wish to change the prices 6 months down the line = u need to MR 21 upload again and over the earlier planned price. Then u do costing run again. with this costing run, if there is diff in standard prices, system posts revaluation entry.

For Raw materials

Create a simple query which gives u moving avg price, current std price. Analyze the variances and consider revised prices as planned prices for the next 6 months. Next, do costing run and system revaluates the inventory values for raw materials.

If the situation is that prices of raw materials are highly volatile, do costing run level by level as earlier suggested.

But give a word of caution to client on how dynamically variances get recorded and revaluation entries get posted. Also tell them how it impacts not only raw material valuations but also finished and semi finished stock valuations.

Pls assign points if the above clarifies your requirement.

[Former Member · Accepted solution]

Thank you Sreedhar,

Your reply gives a better understanding.

When revising the planned prices of raw materials after 6 months, which transaction should we use?

I guess, after 6 months, this RM planned price revision need will be avoided, if we use price from purchasing info record as the top strategy, Is that correct?

What do you mean by costing run Level by LeveL, Does it mean first RM, then SFG, last FG?

Thanks again. I have assigned points.

Ram

Message was edited by:

Ram R

[Former Member · Accepted solution]

Hi Ram

You can revise planned prices after 6 months again thru MR 21

OR other option

Create a costing variant only for updation of planned prices, this is a work around

1) in the material valuation strategy for this variant give moving average price as first priority. System will find a price

2) In the update parameters, enter planned price 1.

Do costing run for raw materials. You can call this costing variant as RM costing variant

3) After this you run your normal standard cost estimate - costing variant thru costing run which updates the revised planned prices to standard prices and posts revaluation entries

Costing level by level means

Performing costing run level wise. You can set this in costing run. Your understanding is perfect

Again - pls assign points - thnx for assigning points to earlier clarifications.

Hope u noted my mail id

[Former Member · Accepted solution]

Hi Sreedhar,

This is awesome! Raw costing variant costing strategy is great!. I guess I will follow that instead of making the client use MR21, as it is kind of manual.

Thanks again. Have assigned points.

[Former Member · Accepted solution]

I have noted your email ID. Thanks!

[Former Member · Accepted solution]

Hi Ram

MR 21 is used only before go live. Authorization should be strictly restricted and controlled. Else, there is no control on prices and revaluations if someone mis ultiizes this

Discuss this with client and project manager and give authorization only to sensible and responsible guy from client side

Thanks a lot points assigned.