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Moving average price for New MM Code

Dear Experts,

Could you please explain how an organization maintains Moving average price for Newly Coded Materials.

Here is the scenario we have around 80% of our total MM code without moving average price and due to this missing information, it is very difficult to calculate a budget for future procurement.

1. May i know what is the industry standard to maintain the moving average price of MM.

2. Also, who is responsible for maintaining Moving average price for Newly Coded Materials

Thanks,

Regards,

Kavvya

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2 Answers

  • Best Answer
    May 22, 2017 at 02:44 PM

    you either have moving average or standard price valuation.

    When you create new materials you can use a best guess to enter a price. It does not really matter as 0 quantity * 1000$ is still zero.

    The first goods receipt with reference to a purchase order will create the new average which is then updated with every new goods receipt or invoice receipt or price adjustment.

    Best practice is to have standard price valuation for own manufactured materials and moving average for externally procured material.

    Responsible for maintaining the initial value is obviously the one who has the authority to maintain the accounting view which is most likely someone fro the accounting department.

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    Former Member
    May 22, 2017 at 03:04 PM

    Kavvya,

    Business rule:

    Raw materials are set to at moving average price; & Finish goods are set to standard price;

    or things we buy from someone else to use it produce the final product are raw material & set on moving average price.

    If we understand above point. we initialize the moving average price of raw material during material master creation; but later on its managed by the system based on Goods Movement from PO/ GR/ Invoice/ Inventory Adjustments.

    You set the moving average price for Newly Coded Materials based on right valuation of the material.

    Anand

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