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Former Member
Sep 06, 2007 at 01:10 PM

Valuation of raw material or purchased items

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Dear all,

We are configuring one scenario of product costing for manufacturing company.

In their legacy system they are valuating raw material on the basis of first in first out i.e. FIFO.

When material is issued from stores to production it takes cost which is entered at first.

e.g.

the inventory is made up of Item A

Receipt date 1.08.2007 Invoice price per unit 10 Qty 10 Total Value Rs.100

Recept date 5.08.2007 Invoice price per unit 15 Qty 10 Total Value Rs.150

Now when we have to issue material to production order with required quantity is 15

Then issue is made at 10 X Rs. 10

& remaining units 5 at Rs. 15

This is their standard practise from last 40 years.

They dont want to choose another since it will change into accounting policy.

Please suggest which valuation strategy should be followd in Valuation Variant??

or There is any option.

thanks

Ranjeet