Price Control V or S in material type
When is it useful to use the price control V or S in Material Master ?
A D V E R T I S E M E N T
Do I have to follow the SAP standard setting in the material type for the
following material types:
- ROH(Raw materials) -> moving average price
- HALB(Semifinished products) -> standard price
- FERT(Finished products) -> standard price
In which case and why is useful to change these standard setting in material
What is difference between standard price and moving average price?
When and how to use it?
Standard price are used for products that
do not fluctuated frequently. It is usually used for finished or semi finished
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.
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
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.
Example: on 20 workdays in the period, 1 piece of material xyz was produced
for each day and delivered to the warehouse at a price of USD 1000. At the end
of the period there is 1 piece at the warehouse. Since an activity price of a
participating cost center was higher than planned , every single 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 be posted completely to the inventory. That is, the ending
inventory of one piece is debited with USD 20 x 100 and it consequently receives
a price of USD 3000.
1. A settlement is carried out although not all costs have yet been posted to
the order. This can even result in a price of 0 for the delivered product.
2. No period check of the costs is carried out on the order, that is, costs from
previous periods may be settled.
3. Settling orders is already possible in the 'Delivery completed' status.
Solution: Standard price for products together with possible manual price
If you are required to valuate semi-finished and finished products with actual
prices that correspond to the costs of the actual production, SAP recommends you
use the function of the material ledger for this. Here, a periodic actual price
is created that is calculated on a much more reliable basis than the moving
average price. A so-called price limiter quantity is used which makes sure that
in the above example price differences are proportionally taken into account
(95% of the total price differences) when valuating the 19 pieces withdrawn from
material xyz which results in a periodic actual price of 1100 USD. In addition,
it is possible as of Release 4.5 to even take into account 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.
If we select std price for any type of material or mav and then make po,
it will pick from material master or what?
The Purchase Info Record have the FIRST priority. When no po info record is
found, the Purchase Order will pick the user LAST enter price. The PO module do
not pick up any price from material master.