Valuation of Materials 

Use

The cost of goods manufactured of a product is composed of material, production and overhead costs. The material costs are displayed as follows:

  • In the itemization as items of type "M"
  • In the cost component split, in the cost component "Material costs"

To calculate the material costs, the materials required for production must be determined and valuated with a price. In material costing with quantity structure, the system determines the materials automatically using the quantity structure control. In unit costing, you enter the materials manually. They are then valuated with a price (see graphic below).

Integration

To valuate the materials, you can access various prices in the material master record and in the purchasing data, such as the following:

  • Future, current or previous standard price
  • Moving average price
  • Tax-based or commercial prices 1, 2 and 3
  • Planned prices 1, 2, 3
  • Quotation and purchase order prices

Prerequisites

In Customizing for Product Cost Planning, you define which price is to be used to valuate items such as raw materials and purchased parts. To do this, you define a valuation variant and assign it to the costing variant. The valuation variant contains a search sequence that has a maximum of five prices. For the cost estimate, the system searches in the sequence specified for these prices.

For prices from the purchasing info record, enter strategy L and create a separate strategy sequence for prices from purchasing data. You can access various prices, such as net or gross quotation prices, and net or gross order prices. For more information, see

Determining Vendors.

Features

Material Cost Estimate with Quantity Structure

The system first finds a valid BOM and explodes it from top to bottom. It then calculates the costs for the materials in the costing levels with the lowest number. Using the valuation variant and valuation date, the system selects a price for the materials. For further information, see

Multilevel BOMs, Date Control and Parameters for Quantity Structure Control.

The system then calculates the costs for the materials in the next highest level while including the costs for the materials in the previous level. For further information, see

Concept of Cost Rollup.

  • For materials that have already been costed, you can transfer values from earlier cost estimates provided you have defined the appropriate transfer control ID (see also
  • Transfer of Costing Data).
  • For specially-procured materials, you can transfer values from cost estimates in other plants provided you have defined the appropriate transfer control ID.
  • You can include the results of an additive cost estimate in an automatic cost estimate for the material provided you have made the setting in the valuation variant for additive costs to be included. (See also
  • Additive Costs)

    The price for non-stock items is taken directly from the BOM. (See

    Bills of Material in Costing)

    Unit Costing (Base Object Costing, Material Costing Without Quantity Structure, Additive Costing):

    If you create a unit cost estimate, you enter the costing items manually. For materials, you select item category M. Using the valuation variant, the system takes a price from the material master or purchasing. For further information, see

    Creating Costing Items and Valuation of Costing Items.

    See also:

    Implementation Guide (IMG) for Product Cost Planning

    If you use the Material Ledger component, you can find more information about valuating materials under Actual Costing/Material Ledger (CO-PC-ACT) in the following sections:

    For more information about material valuation in the SAP System, see

    Material Valuation in the SAP System.