Skip to Content
Author's profile photo Beatriz Cruz

How to analyse the material price for the materials with price determination ‘2’, price control ‘V’ if you use the Material Ledger Solution.

If you are using ‘2V’ materials and analyse the material price with the transaction CKM3, you should use the ‘Price history view’.

I have realized that many customers use the view ‘Price Determination Structure’ for ‘2V’ materials in the transaction CKM3, and the results displayed seem to be erroneous. The main complaint is that the beginning inventory for a period does not fit with the ending inventory for the previous period.

 

For moving average price materials with price determination ‘2′ the default view in CKM3 is ‘Price History’, not ‘Price Determination Structure’ view.                                                              

‘Price Determination Structure’ is suitable for ‘3S’ materials, but the pattern does not fit well for ‘2V’ materials.                                                

For materials with price control ‘S’ and price determination ‘3’ (single-level and multilevel price determination) it is true that the ending inventory value of one period and beginning inventory value of the next period must be equal. For ‘2V’ materials this can only be achieved if there are no postings to the previous period.

The price determination structure is suited for materials with price determination control 3 (actual costing), because it explains how actual prices are calculated in single-level and multilevel price determination.                                                                                                                 

The definition of the beginning inventory in the price determination structure is as follows:                                                                      

Stock quantity and value at the time of the period shift (MMPV)                            

+/-  price changes                                                                            

+/-  backpostings (goods movements, invoices,… posted back to the previous period       

+/-  closing posting of ML

 

This definition together with the logic of the Material Ledger closing posting makes sure that for materials with price determination control ‘3′ the actual value of ending stock is always equal to the actual value of the beginning inventory (as defined above) of the next period, even if there are price changes at the beginning of the new period.                                                                                                                                                                        

For V price materials we have a different situation. There are some cases where the valuation of the beginning balance may indeed differ from the ending balance of the previous period.

This is an intrinsic effect of the V price posting logic, and not an error in Material Ledger. The reason is that with V price posting logic, the backpostings to the previous period may hit the stock in both periods in a different way.                                                                                                     

The difference may be a display effect in CKM3 due to the price change document posted. In this case, the beginning inventory preliminary valuation has to be adjusted to the new price.  

Example:                                                                                                                         

– Goods Receipt 100 pc in period 1                                        

– Goods Issue 60 pc in period 2                                           

– Invoice Receipt for 100 pc with 100 EUR price difference in period 2, posted back to period 1.                                                

In period 1, all the price differences are posted to stock, because there is a stock quantity of 100 pc. In period 2, only 40 EUR of the price differences are posted to stock, because there are only 40 pc in stock, and with 100 EUR the price would become wrong.                     

In this case the invoice posts different stock values to period 1 and 2, so ending stock of period 1 cannot have the same value as beginning stock in period 2.                                                              

You may look at all documents which are found under the beginning inventory in CKM3 for the current period. Go to the FI documents, and check the stock postings. These values should be shown in the column ‘Preliminary valuation’ in CKM3. In the example above, FI document for period 1 posted 100 EUR to stock, the FI document for period 2 posts -60 EUR from stock, so in CKM3 you should see +40 EUR as preliminary valuation in CKM3.

Assigned Tags

      Be the first to leave a comment
      You must be Logged on to comment or reply to a post.