Material Valuation is basically controlled by two factors:

• System settings
• Material master record

By customizing the SAP System, you adapt Material Valuation to the requirements of your company. Below are some of the questions you answer when you configure the system:

• At which level are materials valuated?
• Which types of goods movements are relevant for valuation?
• Which accounts must be posted to during a transaction?

As a rule, a material master record is created for every material. The information contained in this record includes valuation data for the material. When maintaining the material master record, you must decide the following:

• Whether a particular material should be valuated at all
• Whether different sub-stocks of a material should be valuated differently
• Whether the stock of a material should be valuated at a constant price (standard price) or whether the price should change in accordance with the delivered price (moving average price)
• Which G/L account the stock value of a material should be managed in

The stock quantity and value of a material and the material price are also recorded in the material master record.