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standard cost or variable cost on the material mastet

Hi Gurus,

Can anybody please explain me this. on the material master we put standard price or moving average price. so whatever price we mainain on the material master is the price at which we buy the material right? For finished materials, if there is price maintained there, what does that mean? Is it the ourchase price or the sale price? Please help me clear the confusion



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3 Answers

  • Best Answer
    Posted on Sep 22, 2009 at 07:43 PM


    Some times finished goods will get purchased and resold. Or finished goods will get produced and sold.

    What ever may be the material type price which is mentioned in the accounting view is the material at which it is valuated in the plant in which it is maintained when purchased and and made GR ,the price in the sale view ( PR00 price ) is the sale price.

    The above posts clearly explanns the pricing of the material.

    however please find the standard write up given by SAP.

    Standard price

    Standard price of the material


    The valuation of material stocks at standard prices means that all goods movements are valuated at the same price over an extended period.


    Price variances (for example, purchase price higher than standard price) upon goods receipt or invoice receipt are posted by the system to price difference accounts. This does not affect the standard price.

    Moving average price/periodic unit price

    Price of the material. This can be one of the following:

    Moving average price

    Periodic unit price (only if the material ledger is activated for the material)


    The system calculates the moving average price automatically by dividing the material value in the stock account by the total of all storage location stocks in the plant concerned. It changes the price with each valuation-relevant movement.

    The system changes the periodic unit price if you settle the material ledger and then save the data.

    The valuation of stocks at moving average price or periodic unit price means that the price of the material is adapted to the continual fluctuations in the procurement price.


    If the material ledger is activated for the material, the material's settlement control determines whether this price is the moving average price or the periodic unit price.


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  • author's profile photo Former Member
    Former Member
    Posted on Sep 22, 2009 at 06:11 PM

    Price for finished goods in MMR arrived by adding Raw materialoperationaloverheads+profit.

    Note:Taxes and frights will not be included

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  • author's profile photo Former Member
    Former Member
    Posted on Sep 22, 2009 at 06:27 PM

    Yes materials purchased from outside are kept at Moving Average Price as you want to monitor the value of the inventory as it is purchased.

    In case of SFGs and FGs which are produced in house, several factors of cost (as detailed in the above post) may get added. So, to arrive at this cost Standard Cost run is done. The result of this run gives you the Standard Price. This is the price that you maintain in the material master and this price is used for valuation of your inventory.

    The selling price is of FGs is again different. For e.g. your company may spend $100 to produce 1 piece of FG and it may sell it to customers after profit at $125 per pc.

    So here your Standard price would be $100 and selling price would be $125.

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