Goods Issues done with Purchase Price and not MAP

[Former Member]

I would like to know on the inventory valuation from moving average price (MAP)/ average the inventory value to First In First Out (FIFO) basis.

FIFO basis is where assumption made that inventory being sold is based on first come first serve basis i.e.

For example you have 1 pc of pen valued at RM 1 and then you buy another pen valued at RM 1.50, your total inventory value would be RM 2.50.

In FIFO basis, if you sold 1 pc of pen then the product cost will be RM 1.00 (i.e. purchase price) as it deemed that the first pen make a way first.

However, in MAP basis, if you sold 1 pc of pen, the product cost would be RM 1.25 as it average cost of both pen.

I have tried using the FIFO rules but it will only take the purchase price if the issuance/sales were done within the same posting period as the GR. If I were to make a GI in the current period, it will not take the purchase price but instead it will be MAP. And then there will be concern if the stocks were available across periods.

Really appreciate any ideas that you may be it standard customizing or enhancements required.

[Former Member · Accepted solution]

Dear,

You need to maintain Price control as "V-Moving average price/periodic unit price" in Material master under Accounting 1 Criteria.

Regards,

Sandesh Sawant

[Former Member]

Hi

If you want to apply FIFO rules in real-time basis (day to day operation), then my advice is you should use Batch Management and Batch Valuation features in SAP

If you activate Batch Management with Valuation, then every GR will be valuated differently

For example,

GR 1 on July 01, 2011 - 100 pcs @RM1.00 (batch 001)

GR 2 on July 03, 2011 - 100 pcs @RM1.50 (batch 002)

Then there is GI happening, for example :

GI 1 on July 04, 2011 - 10 pcs

In normal circumstances (without Batch Management), SAP will take the MAP (which is RM1.25) as the price of GI

But if you activate Batch Management with valuation, then you need to specify that you will do GI for batch 001, and SAP will take the price of RM1.00 as the GI price

To ensure FIFO principle, you can also use Batch Determination feature, and make SAP to propose the oldest batch when doing GI transaction in MIGO

Hope that helps

rgds

[Former Member]

Guys!!! thanks for the feedback. Really appreciate all the feedbacks.