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Product Costing

Hi Sapians,

As a user please tell me the different processes which a user has to do and the impact of these processess in material ledger and financial books.



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    author's profile photo Former Member
    Former Member
    Posted on Sep 21, 2010 at 07:52 PM

    I can tell you some basics about Material Ledger (ML) after going through the development and use for several years now. This functionality is one of the best features in SAP from a FICO standpoint. The major steps are listed all in a row in the IMG. From a user perspective, I will describe how things happen and what you do at month end.

    During the period, all material transactions are recorded at standard cost estimate values. This is great for planning, forecasting and quick reporting at standard. When the production orders are settled, they will push the variances for Make parts to inventory or technically settlement category = MAT. This means that the normal variances will happen and go to selected accounts and out of orders. Now orders that are in TECO or DLV status are zero balance. (This all depends on many things being configured consistently like Results Analysis and Material Ledger). Anyway, the variance gets attached to the part number produced by the order for ML to later record a Financial entry back to wherever the inventory now resides at month end. Run CKMLCP through stage Post Closing Entry and this will happen but only for the previous period. You can review what will happen to any given part in t-code CKM3N. Purchased parts are similar but simpler. The standard is again used throughout the period, but the Purchase Order value can create a variance if different than the standard. An invoice can create another layer of variance as well. If using multiple currencies, ML will handle the variances related to the currency changes also.

    Example-We have a part with no quantity that has a standard of $10 each. We receive a purchase order for 100 qty at $15 each. This creates a difference (PPV) of $500. Now assume we sold 50 units an have 50 left at month end. ML will split the PPV $500 to inventory ($250) and Cost of Sales ($250). Another way to see this is it allows Logistics to use standards for everything while FICO gets to also overlay Actual Costs for financial statement purposes.

    Here are two quotes from respected people I have worked with in the past related to ML:

    "This is like an investigator running around the system tracking every movement and variance and then fixes virtually everything like magic."

    "Material Ledger is the most bullet-proof functionality in our SAP system."

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