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Purchase price variance in standard costing

Former Member
0 Kudos

Hello,

We are valuating raw material at standard price. Hence stock of raw material is valuated at standard cost. A purchase price variance account is maintained to account for any difference between Std price - purchase order price and invoice price.  The requirement is to include the PPV cost of the raw material in the standard cost.How to achive this?

If I create costing sheet, the Raw material Consumption accounts are posted with standard price. Hence I canot consider this as a base. Secondly, for raw material X for which PPV account is posted with say 100 $ and raw material Y for which PPV account is posted for 300 $ ,If I consider PPV account as base in costing sheet and apply some percentage , I will be unnecessarily loading more cost on material X even though the actual portion of PPV is less than that for Y.

How to include this PPV account amount in standard cost estimate?

Please guide.

Regards,

makrand

Accepted Solutions (1)

Accepted Solutions (1)

former_member198650
Active Contributor
0 Kudos

Hi Makrand,

Why do not you maintain the price as moving average price for the material?

Regards,

Mukthar

Former Member
0 Kudos

Hi Mukthar,

Thanks for the reply...

It's policy decision of the client hence changing the price control from S to V is not possible.

Regards,

makrand

former_member198650
Active Contributor
0 Kudos

Hi,

Create a BOM for the material, here you have to select the same material as component. In the valuation variant of the costing variant, select the moving average price as a first strategy. After that run costing for the material, then system will update the standard price which includes PPV also.

Regards,

Mukthar

Former Member
0 Kudos

Hi Mukthar,

Hearty Thanks for the answer. By changing the strategy in costing variant,the PPV can be included.

Regards,

Makrand


Answers (0)