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Former Member

Material Ledger & Variant Configuration

Dear Experts,

I am working on a proposal whereby the client is considering activating Material Ledger to for actual cost calculation.

This client has a make-to-stock, assemble-to-order (with sales order costing) and is also using variant configuration in their current LIVE SAP environment.

Right now, I am evaluating the complexity in activating Material Ledger in ATO and VC environment.

I would appreciate if you could provide any guidance on this for example:

- What are the considerations in the context of this environment?

- Does ML works with Sales order costing and variant config?

- How does ML handle work-in-process?

- How is opening stock at actual cost migrated?

Any other areas which I need to take into considerations would also be helpful.

Many thanks!

TL

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2 Answers

  • Best Answer
    Posted on Apr 12, 2010 at 03:10 PM

    Hi Teck,

    generally ML and the environment you speak of fit quite well together. As plan-actual variations are often big or an accurate plan is often not known in advance we see a lot of customers relying more on the retrospective look of actual costing instead of comparing revenues against plan costs.

    > - Does ML works with Sales order costing and variant config?

    yes it does. Actual costs will be collected on the level of a sales order item. E.g. if you enter CKM3 the centarl display of material ledger you will see costs and collected material movements only related to material + plant + sales order item. Also the month end closing will use that level of detail

    > - How does ML handle work-in-process?

    very good question. Up to release4.7 that was a real gap. If major value were sitting in WIP and consumptions fro production often did not happen in the same period as the receipts from production, major disformations in the costs would have resulted.

    With 6.0 this problem is resolved

    [SAPhelp|http://help.sap.com/erp2005_ehp_04_sp/helpdata/en/0d/92ca83c6764e4f9c0193d2454b1b87/frameset.htm]

    [http://www.financialsexpertonline.com/article.cfm?id=4897]

    > - How is opening stock at actual cost migrated?

    This enters actual costing with the valuation price it had before. No transactions from before the ML activation will be taken into account. So generally it takes a couple of months until actual costs refelect the reality, depending on the production lifecycle length

    best regards,

    Udo

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  • author's profile photo Former Member
    Former Member
    Posted on Apr 10, 2010 at 05:50 PM

    Dear TL,

    In actual costing upto period end(say for a month) costs of RM,WIP,FG etc are to be maintained under standards costs only, after closing the month end activities ie. your have to do Actual cost Run at the month end, then the variances(diff between actual and standard) are to be settled to the respective material, then the stocks will be treated as actual costs. Generally many organisations will follow last month actuals will be current month standard month, then the variance also will not be more. But my sincere suggestion is to follow Standard Costing only instead of going for Actual Costing.

    Regards,

    MP Kumar.

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