standard price for raw materials

[Former Member]

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

[Former Member]

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

[former_member184655]

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

[Former Member]

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,