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sfg and FG @ MAP

Hi Experts,

We have a classic problem of highly fluctuating raw material costs for manufacturing SFG and FG. We also have considerable stock aged more than a couple of years 9and this scenario might continue also) . Since the standard costing estimate mark and release procedure will valuate entire inventory at standard price, this will create a huge notional profit as on the Balance sheet date. Even though this will get reversed during the next period, we have auditing issues and hence SFG and FG needs to be valuated at actual costs. Since we are using AFS package in SAP, material ledger cannot be activated. (Please confirm if I'm right on this point). Can you please suggest a material valuation/consumption process which is a best practice in the situations of volatile raw material prices? I have already considered moving average price for SFG and FG which have serious repurcussions, but have no other option than to go ahead with the same and place some controls in the system during production order settlement. Please suggest if there is a better way out.

Best Regards

Vimal

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  • Best Answer
    Posted on Apr 18, 2011 at 02:23 PM

    Hi Vimal,

    That really sounds like you shoud use Material Ledger / Actual Costing. And there is no restriction against usage of AFS and material ledger. The restriction is in the combination of retail and material ledger, not AFS.

    If you found something that indicates they are not compatible give me a hint.

    best regards, Udo

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    • Hi Vimal,

      I investigated with the colleagues of the AFS solution. It is correct that there are some restriction concerning usage of split valuation and joint productio, but in general material ledger and AFS are compatible.

      If you want to align you may contact me directly as Udo.Werner at SAP.com.

      best regards,

      Udo

  • Posted on Apr 18, 2011 at 03:46 PM

    Hi

    ML is the best solution for your situation, provided its technically possilbe and you are willing to do it

    I would strongly advise against MAP for SFG/SFG... Refer SAP Note 81682, which strongly advices against it with an example

    I had a similar situation and I used a work around... This is to be used when you are sure that Qty variances are not much in your case... The Main cause of variances is Price variances

    a. Create a New Costing variant, with Costing Type = Release to Prices other than Std Cost

    b. The Valuation Variant settings must be as below

    For Materials - Strategy J (Price as per Price Control as of Last Period)

    For Activity prices - Actual Price of Previous Period

    c. At month end, once you calculate Actual Activity price, you can create a Costing Run in Ck40N

    The Costing date can be 01.Apr.2011, if you are running the Cost Estimate for March 2011

    d. The price calculated to be stored in Plan price 2 field of the Material Master or Tax price field

    You can get a comparison of original Std cost and the revised std cost.... If need be, you can pass a JV in FI for the Stock (x) Revised price - Original Std price

    5. If need be, you can also revaluate the COGS in COPA using this std cost estimate

    br, Ajay M

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