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Former Member
Apr 14, 2014 at 09:11 AM

ML Actual Costing - Activity Update 2 (revaluation in ML).

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Dear Colleagues,

My question regards activity price revaluation in ML (Activity update relevant to price determination).

Business scenario:

Some externally purchased materials are issuedto Cost Centre A rather than to production orders (e.g. diesel, gas).

This cost centre allocates costs (purely via activities) to Cost Centre B. The second Cost Centre B allocates cost to production order.

We'd like to valuate our materials (both externally procured and produced) at actual cost using ML.

Issue:

If we set both externally procured and produced materials as ML relevant (3S) we have an issue of over/under absorption on Cost Centre B as ML will allocate any procurement variances to Cost Centre A only after actual activity price calc - KSII.

So one way around is to define externally procured materials as moving average "V".But that solution of course brings all the limitations and issues associated with moving average.

Question:

Can the issue be resolved by setting update of activity consumption in the quantity structure (view V_T001W_MV) to 2 - "Activity update relevant to price determination"?

With this setting activity prices are calculated together with material prices during ML closing. So any variances between planned and actual activity prices find their way to material inventory (or inventory consumption) valuation.

But will this work also in both directions: will any material variances (procurement variances) find it's to activity price so in turn those activity variances can find it's way to produced materials?

Regards,

Szymon