material valuation

[Former Member]

hi, All, i am learning MM by myself. and as non commerce back ground very hard for me to under stand

i got a doubt in material valution. It says valution depends on price control and when we are using standard price S, the receipts are posted at standard price and any differneces between order price and standard price are posted to price difference account.etc.............fine

My doubt is

1. when the price is fixed as standard , how can u order a material at different price ?

2. once the vendor agrees with ur price then only he can supply know. so when u order a vendor at a price, how can he supply at different price in goods receipt?

3. How can vendor charge u diferent price in invoice?

i could not understand those scenarios, please any one can explain.. thanks in advance

regards,

srini

[Former Member · Accepted solution]

My doubt is

1. when the price is fixed as standard , how can u order a material at different price ?

We will order at the agreed price, but bcz of market Conditions the price may vary at the time of Delivery..

2. once the vendor agrees with ur price then only he can supply know. so when u order a vendor at a price, how can he supply at different price in goods receipt?

Yes, The Vendor has to supply on the agreed price , but the price changes drastically & there is no other vendor to supply the same material

for that Price in that case you need to accept the price quoted by Vendor..

Ex: Cement, the price varies from day to Day

3. How can vendor charge u diferent price in invoice?

Basing on the Market fluctuation he will quote the New rate in his invoice..