MTS – Product cost by order scenario – valuation of closing inventory

[Former Member]

Dear Experts,

• We are following the (Make to stock scenario-product cost by production order)
• For Raw materials – we are maintaining price control – V For SFG & FG – maintaining Price control – S
• Overheads we are tracking through activity types.
• We are doing material cost estimate for all the SFG and FG materials.
• We are placing the production orders in different plants.
• We are closing the production orders by following month end activities.
• We can able to track the production order variances material & Order combination.

• Business requirement is closing inventory should be valued at actual prices.
• We suggested them to re-run the material cost estimate after order closing process.
• But It is appears that the material value is at standard price not at actual prices.

Without implementing Material Ledger is there any approach to get the closing inventory should be valued at actual cost…?

Thanks & regards..............

Surya

[Former Member]

Hi Surya,

In one of our implementation, similar to your requirement client told that they don't want ML but they want inventory to be valued at actual price during year closure.

What the solution we gave was, we presented the presentation showing the limitation of system in giving the actual cost without ML and system is showing the moving average price in Material Master in addition to standard cost.

We suggested to pass JV in the year end and we convinced their auditor (PwC) also now their are following JV method.

Regards

VSN

[michael_savarimuthu]

Hello Surya,

As Kamal put it, there is no easier way to achieve actual cost of inventory except through ML.

Having said that, when I worked for a defense contractor who did not implement ML because their inventory was extremely high in number and their processes highly complex, they did internally develop an actual costing program.  They had to implement actual costing because government contracts required them to.  They did create a monster of a program to restate costs, inventory at actual cost.  As far as I can remember they had all sorts of issues with it.

Why reinvent the wheel?  Actual costing in ML is a highly complex routine.  Look at the number of OSS notes that have been issued and you'll get the idea.

Good luck!

Cheers,

TD

[Former Member]

I do not suggest ML for my scenarios.

Scenarios are complex..........Production orders are valid for more than 6 - 8  months...

Example on complexity:

PO created for X Material : PO validity 8 months.

At the time of creation of PO there is a cost estimate for material :"X" with  BOM component of "Y" material.

But at the time of closure/ confirmation of that production order ...."X" material having a BOM component of Material "Z".

But this will happen (Changes in BOM) as per their business requirement.

So.....Plan Vs Actual results obviously give inconsistent results.

How to resolve the issue..............

Thanks& Regards,

[kamalkumar_biswas2]

Hi Surya

   In SAP no......

  Kamal