Price Determination and Price Control for Raw Material

[Former Member]

Hi Experts,

I would like to know if SAP recommends Price Determination 3 and Price Control S for Raw Materials and why?

I know that finished and semifinished products must to be 3S, but Raw Materials?

Thanks in advance for your help.

Regards,

José Luis

[marialuisa_munoz · Accepted solution]

Hi José Luis,

Please take a look at the Sap notes :

721360  MAP-controlled materials and actual costing

532932  FAQ: Valuation logic with active material ledger

which provides you a very useful information about this topic.

As the note 721360 explains the advantages of the price determination control 3  for raw materials exceed the disadvantages hence, SAP recommends the  price determination control 3 also for raw materials.

I hope this helps to clarify the issue,

Best regards,

Maria Luisa

[former_member9084]

Hi,

The basic reason is that in case of price control S and price determination 3 for raw material , all price differences going to PPV account for raw materials , can be loaded to higher level materials during actual costing.

In case of price determination 2 or price control V this is not possible and actual costing of FG/SFG will not be perfect if there are posting to PPV for raw materials .

Rajesh

[Former Member]

HI José Luis Rodríguez,

I can say pin in the above combinatin you have only getting the moving average price for information purpouse only not for actual costing ( Raw Material + Price Control S + Price Determinatin 3).  That is only for ML only not for Actual costing.  If you want then you can change in to this comibination. (Raw Material + Price Control V + Price Determination 3)

Regards

Raj

[Former Member]

Hi,

You are only using price control 's' and price determination '3' only for Actual costing material ledger.

This is the Actual costing requirement to consider material in actual costing.

But why for RM

Becoz the price differences of Rm will move to next level in month end based on consumption and ending inventory on Actual cost calculated by system.

This is the requirement of system(3 and S) in order to consider material under Actual costing.

You can Go for Price control 'v' as well .but which mean Rm will not consider for Actual Costing concept.

regards

Raman Rana

[michael_savarimuthu]

Jose,

As far as I know, the reasons for using price control "S" for raw materials are the same as for other material types:

1.  Stability of price affords comparability of cost of products that have the same components.

2.  Helps focus on the remaining variances while the PPV explains the material price variances.

3.  With moving average price control, errors of omission or commission will tilt the cost of goods issues incorrectly and the workarounds are not nice.

4.  Timing is of essence in moving average price.  If a goods issue is recorded after goods receipts for a material, the issues will be costed differently.  Case in point:  When you have COGI errors and the materials have not yet been issued to production, any delay in clearing the errors will impact the cost of goods issued especially when goods receipt is being done more frequently.

5.  If you use actual costing with material ledger, you use "S" for all materials.

Cheers,

TD