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Material Ledger - Inventory valuation question


We are investigating the use of material ledger / actual costing in SAP.

Our raw material prices have large fluctuations and can change our product cost by as much as 20% in a single month. We have many warehouses that would be represented as plants is SAP. We are concerned that slow moving inventory will have a significant, undesirable effect on our monthly COGS and downstream reports due to the same product being sold out of multiple warehouses/plants at different costs.

Could anyone in a similar business scenario tell us how they handled this? Is this a non-issue? Did you create custom reports or modifications?



Edited by: Jimmy Brush on Nov 11, 2009 10:36 PM

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  • author's profile photo Former Member
    Former Member
    Posted on Nov 12, 2009 at 09:52 AM

    What is your exact requirement.

    What exactly you are looking for.

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    • Former Member


      Thanks for your response.

      Our requirement is to get accurate, explainable costs in our monthly cost of goods sold and financial reports.

      We are worried that due to the extreme volatility of our raw material prices and the fact that some of our products have low volume or slow turnover in some warehouses, our cost of goods sold in SAP using material ledger / actual costing will be difficult to explain and not reflective of actual conditions.

      For example, if a product is placed in Warehouse A in month 1, receives very little new product in months 2-4, and then we sell a lot of that product from warehouse A in month 4, the cost of those goods will be very close to the month 1 cost. Due to our volatile raw material cost, that could be a huge difference. We are worried about how that will affect our cost of goods sold.

      We would like to hear from other companies that have similar conditions to see if this really causes any problems using actual costing / material ledger.

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