The Price
Control Indicator is used by SAP to determine how a material will be valuated,
by default.
The indicator
can be set to:
Standard Price (S) or
Moving Average Price (V)
When you set the indicator to S, the system carries out all the inventory
postings at the
Standard price. The variances due to a different price of a material in
goods movement or invoice receipts if any, are all posted to price difference
accounts. As a result, the standard price remains the same, unless it is
changed intentionally by manual processing. This will be necessary only when
the difference between the standard and moving average prices becomes very
large. (While updating the price difference accounts, however, the system also
updates the moving average price with these variances, so that you get a chance
to adjust the standard price should the difference between the standard and
moving average prices becomes very substantial.)
Example:
1st April 2007
o Initial Stock : 1000
units
o (Standard) Price/unit
(A) : $5
o Initial Stock Value
(B) : $5,000
20th May 2007
o Goods Receipt : 1000
units
o GR Price/unit (A1) :
$6
o Stock A/c (Dr.) (C) :
$5,000 (=1000 X $5)
o Price Difference A/c
(Dr.) : $1,000 (=1000 X $1)
The amount of
$1,000 posted to the price difference A/c represents the variance
reflecting the
difference between the new price (A1) and the standard price (A).
o GR/IR A/c (Cr.) :
$6,000 (=1000 X $6)
o Stock Value, now (B1)
: $10,000 (=B+C) (i.e., 2000 units @ $5)
29th May 2007
o Goods Issue : 100
units
o Price/unit (same as
that of A) : $5
On the other hand, when you set the indicator to V then all the goods
receipts (GR) will be at the GR value. The system will then adjust the price in
the material master by the GR price. However, if there is a difference between
the moving average price of the material and the goods movement/invoice
receipt, then the price difference is moved to the stock account, and the price
of the material in the material master is adjusted accordingly.
Example:
1st April 2007
o Initial Stock : 1000
units
o (Moving Average)
Price/unit (A) : $5
o Initial Stock Value
(B) : $5,000
20th May 2007
o Goods Receipt : 1000
units
o GR Price/unit (A1) :
$6
o Stock A/c (Dr.) (C) :
$6,000 (=1000 X $6)
o GR/IR A/c (Cr.) :
$6,000 (=1000 X $6)
o Stock Value, now (B1)
: $11,000 (=B+C) (=2000 units @ $5.50)
At this point,
the price on the material master is adjusted upward from $5 (A) to $5.5
(A2) by the
system automatically, to reflect the new stock value.
o New Moving Average
Price (A2) : $5.50 (=B1/2000)
29th May 2007
o Goods Issue : 100
units
o Price/unit (A2) :
$5.50
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