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SAP Note 

Header Data

Symptom 

Unrealistic valuation prices for semi-finished products and finished products

Other Terms 

Production order, moving average price, period-end closing, material ledger, CNACT

Reason and Prerequisites 

SAP strongly recommends that you do not select price control V for semi-finished products andfinished products, because doing so will very easily cause the calculation of unrealistic valuationprices. SAP recommends: Price control V for raw materials and trading goods; price control S forsemi-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 (thatis, the inventory at the end of the period is smaller than the total of aquisitions fromproduction orders) and if, in addition, several production orders belonging to a material werefinished in this period, and the production order settlement calculates variances at the end ofthe period. Every single production order carries out an inventory coverage check and maytherefore cause the moving average price to be changed. However, the individual productionorders do not check whether the inventory available at the end of the period has already beendebited by another production order.

Example: on 20 workdays in the period, 1 piece of material xyz was produced for each dayand delivered to the warehouse at a price of USD 1000. At the end of the period there is 1 piece atthe warehouse. Since an activity price of a participating cost center was higher than planned, everysingle production order calculates cost of goods manufactured of USD 1100 during the settlement.Every single one carries out a inventory coverage check and finds out that the variance can beposted completely to the inventory. That is, the ending inventory of one piece is debited with USD20 x 100 and it consequently receives a price of USD 3000.

2. A settlement is carried out although not all costs have yet been posted to the order. Thiscan even result in a price of 0 for the delivered product.

3. No period check of the costs is carried out on the order, that is, costs from previousperiods may be settled.

4. Settling orders is already possible in the 'Delivery completed' status.

Solution 

Standard price for products together with possible manual price changes.If you are required to valuate semi-finished and finished products with actual prices thatcorrespond to the costs of the actual production, SAP recommends you use the function of thematerial ledger for this. Here, a periodic actual price is created that is calculated on a much morereliable basis than the moving average price. A so-called price limiter quantity is used which makessure that in the above example price differences are proportionally taken into account (95% of thetotal price differences) when valuating the 19 pieces withdrawn from material xyz which results in aperiodic actual price of 1100 USD. In addition, it is possible as of Release 4.5 to even take intoaccount the variances of the actual prices of the raw materials in the valuation of the semi-finished and finished products that are manufactured from it.

Validity

This document is not restricted to a software component or software component version

References

81682 - Pr.contr.V for semi-finished and finished products 

Version  8 Validity: 18.12.2002 - active Language  English

Released On  18.12.2002 14:29:43

Release Status Released for Customer

Component  CO-PC-ACT Actual Costing/Material Ledger

Priority  Recommendations / Additional InfoCategory  Consulting

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This document refers to:

SAP Notes 

This document is referenced by:

SAP Notes (3) 

398942 INFO: CO-PC-ACT (material, balance sheet valuation) 

440815 Valuation of reversal of goods receipt for production order  

119423 Settlement of production orders for MAP 

119423 Settlement of production orders for MAP 

398942 INFO: CO-PC-ACT (material, balance sheet valuation) 

440815 Valuation of reversal of goods receipt for production order