Material Master

[Former Member]

In Material Master Accounting 1 tab

we have to maintain standard and moving average price.

1 what is the difference between the standard and moving average price.

2 why we have to choose them

[Former Member]

Standard Price is normally used for Finished Product. Incase of Standard Price, the cost is assumed to be Fixed & the same price will be picked irrespective of whatever the actual cost may be.

Moving Average Price will be governed by the purchase price & will vary from time to time. It is normally used for Raw Material & Semi-Finished Product.

Regards,

Rajesh Banka

[former_member184555]

Hi

If it is a standard price the value is taken from the Material Master and if the value is Moving average then it will be picked from the Purchase Information Records (maintained by MM).

The setting for the value to be accessed is controlled in the configuration of the condition type VPRS. In the field condition category you can select the values G,H or S. S always takes Standard price from Mat Master(if the value is not maintained the system will not determine the price even though the moving average price is maintained), H takes the moving average price and if G is selected, the system first looks for the Std price and if not available then goes for the moving average price.

I'm not sure about the H and G, it could be either way also.

Thanks,

Ravi

[Former Member]

Hi,

Standard price are used for products that do not fluctuated frequently. It is usually used for finished or semi finished products.

Moving average price are used mainly for raw materials that are purchased externally. The advantage of using moving average price for your raw materials is that your inventory costs will always reflect the current market cost.

SAP strongly recommends that you do not select price control V for semi-finished products and finished products, because doing so will very easily cause the calculation of unrealistic valuation prices.

SAP recommends:

Price control V for raw materials and trading goods; price control S for semi-finished products and products.

If you nevertheless select price control V, take care in the following situations:

1. Unrealistic prices occur if materials are produced and also retire during one period (that is, the inventory at the end of the period is smaller than the total of aquisitions from production orders) and if, in addition, several production orders belonging to a material were finished in this period, and the production order settlement calculates variances at the end of the period.

Every single production order carries out an inventory coverage check and may therefore cause the moving average price to be changed.

However, the individual production orders do not check whether the inventory available at the end of the period has already been debited by another production order.

regards,

Siddharth.

[Former Member]

Dear Rohith,

Normally for Finished goods we take the indicator as S - Standard and for semi-finished/ raw materials, we take the indicator as V - moving average price.

Thus the moving average price constantly gets updated with incoming and outgoing stocks. i.e. with Goods issue and Goods receipt.

However the Standard price remains constant and depends on the standard cost run carried out periodically for the finished good. In standard cost run, the prices of all the BOM items and other cost elements get captured as per the master records maintained.

Hope this will give you some idea for your requirement.

Regards,

Peeyoosh.

[Former Member]

if u choose standard price then material is always valuated on that price irrespective of what u enters in PO

if u choose moving average price it is calculated by:

total value/total stock

now if ur current stock is 10 and MAP is 100 and now if u take 10 material in @ 8 rs , the MAP will be 180/20

[Lakshmipathi]

Dear rohith

Valuation using a standard price has the following features:

=> All inventory postings are carried out at the standard price

=> Variances are posted to price difference accounts

=> Variances are updated

=> Price changes can be monitored

If a material is assigned a standard price (S), the value of the material is always calculated at this price. If goods movements or invoice receipts contain a price that differs from the standard price, the differences are posted to a price difference account. The variance is not taken into account in valuation.

Valuation using a moving average price results in the following:

=> Goods receipts are posted at the goods receipt value.

=> The price in the material master is adjusted to the delivered price.

=> Price differences occur only in exceptional circumstances.

=> Manual price changes are usually unnecessary. However, they are possible.

If a material is assigned a moving average price (MAP), the price is automatically adjusted in the material master record when price variances occur. If goods movements or invoice receipts are posted using a price that differs from the moving average price, the differences are posted to the stock account; as a result, the moving average price and the value of the stock change.

The moving average price displayed in the material master record is rounded off. For valuation calculations, the system always uses the exact price (stock value / stock quantity).

Thanks

G. Lakshmipathi