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Former Member

standard price for raw materials

How does standard price gets caliculated for raw materials using product costing , If it is externally procured ( By purchase order)? or should we always using moving average price for externally procured materials?

Please throw some light

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3 Answers

  • author's profile photo Former Member
    Former Member
    Posted on Sep 21, 2008 at 05:16 AM

    Hi, If you want the system to calculate the standard price thorugh current standard cost estimate, the raw material shall have quantity structure(BOM) even if it is externally procured also. Further, it is a best practice and as per accounting standard, to have MAP for externally procured materials. Trust this helps much! Cheers,

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  • Posted on Sep 22, 2008 at 05:00 AM

    Dear Steve,

    1.Raw materials will be having V as the price indicator and it will be valuated using the Moving average

    Price.

    for your understanding.

    Product Cost = Materials Cost(ROH + HALB Materials Cost)Activity Cost (Operation Cost)Overhead

    Cost.

    1.Raw materials cost are generally entered as Planned price along with the valid from date in Costing 2

    view,and price control indicator is "V".

    2.For HALB Materials Price control indcator will be S & V for Inhouse manufactured and externally

    processed materials respectively.

    3.Activity cost is the cost incurred in performing individual operation.This cost is captured via the work

    center which we mention in each operation.A Cost centre and an appropriate activity type

    is assigned in the work centre.

    4.Proper Cost should be assigned for the combination of Activity type and Cost centre.

    5.Overhead cost is the indirect cost that we capture according to the customer's requirement.

    6.If particular items for certain products alone should not be considered for costing means,then we can

    achieve this using costing relevancy indicator for the BOM items.

    Overhead group is aasigned in Costing1 view.

    Related T codes are CK11N,CK40N,CK24.

    Regards

    Mangalraj.S

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  • author's profile photo Former Member
    Former Member
    Posted on Sep 22, 2008 at 08:22 AM

    Hi,

    It is not mandatory to have MAP (V) for raw materials.You can use S pricing control. In that scenario, you need to maintain PIR (Purchase Info Record) to fetch the value while executing Std cost estimate. So, value differnce while performing GR and IR will go to Price difference account instead of hitting Inventory account.

    I hope, it helps

    Vijayanand Sankaran

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