Inventory Accounting (FIN-BAC-INV) 

Prerequisites

You have activated SAP Catch Weight Management (SAP CWM) in the current client.

Purpose

Inventory Accounting (FIN-BAC-INV) is a tool for managing and monitoring inventories. As a subledger of the FI general ledger in classic SAP Accounting, it provides detailed information on goods movements, warehouse inventories, and work in process (WIP).

Inventory Accounting produces detailed lists of materials (warehouse inventories), WIP, and goods receipts/invoice receipts (GR/IR):

·        Materials (warehouse inventories)

¡        Inventories are valuated at the inventory price.

¡        Inventory values are provided for individual materials or batches, which is more exact than the usual account-level reporting in the general ledger.

·        Work in process (WIP)

¡        Work in process is reported by transaction rather than as an overall periodic value. All goods issues for production are transferred from materials inventory to WIP as an accounting exchange on the assets side.

¡        Activity allocations and overhead for manufacturing orders are posted directly to WIP.

¡        WIP is updated whenever postings are made in the FI general ledger. This eliminates the need for periodic WIP calculation runs.

·        Goods receipts/invoice receipts (GR/IR)

¡        Goods receipts and invoice receipts are posted to the GR/IR clearing account.

¡        If the goods receipt does not have the same value as the invoice receipt, the GR/IR clearing function assigns the difference either to inventory (if the valuation procedure is the moving average price), to the price difference account (if the valuation procedure is the standard price), or to the corresponding account assignment object (with account assignment).

The system valuates all goods movements using the valuation unit in the material master, which can be defined independently of the base unit of measure.

Integration

If Catch Weight Management (CWM) is active, Inventory Accounting is based on the material master data in Logistics. The logistical processes are valuated in Inventory Accounting.

For more information, see:

§         SAP Catch Weight Management

§         Goods movements

Business Processes

Function	Classic SAP Accounting	Inventory Accounting	Transaction
Inventory valuation		x	All goods movements are valuated with the inventory price. The inventory price is determined with one of the valuation procedures: ·        Standard Price ·        Moving Average Price (MAP) Valuation is always based on the valuation unit of measure. To correct variances between the actual quantities on hand and the book inventory, a physical inventory can be taken on key dates. Inventory differences are entered in the Logistics components, while valuation takes place in Inventory Accounting.
Valuation of the procurement process		x	Goods receipts are valuated at the purchase order price. The way differences are handled depends on the valuation procedure: ·        Standard price: The GR/IR clearing function posts any differences between the purchase order price and the invoice price to the price difference account at the time of the goods receipt. ·        MAP: Differences are assigned to inventory.
Production		x	Make-to-order production and process manufacturing (PP-PI) are supported as production scenarios. Both make-to-stock production and make-to-order production scenarios are possible. Planned, actual, and target values can be compared against each other at the order level. Product Cost by Sales Order is not supported.  Production confirmations post the consumption of activities and materials for production orders and process orders. As an alternative, a central entry function for goods movements (MIGO) can be used to record and update goods receipts and goods issues for orders. The period-end closing activities allocate overhead and clear the work in process for completed orders by allocating the differences to production variances.
Sales	Sales Management in SD       Billing documents	Valuation and posting of goods issues for sales orders	Invoicing is triggered by SD and posted in classic SAP Accounting. Sales revenues and the cost of sales can be analyzed in Profitability Analysis in classic SAP Accounting (CO-PA).
Controlling	x		Overhead Cost Controlling (CO-OM) is still part of classic SAP Accounting. All functions continue to be available with the exception of actual price adjustments to production orders or process orders.

High-Level View

FI documents provide the high-level view of the valuation of goods movements.

Detailed View

Inventory Accounting generates line items that provide more detailed information on business transactions:

·        Warehouse inventories and work-in-process inventories

·        GR/IR (goods receipt/invoice receipt allocation)

Interface to Logistics

Inventory Accounting separates processes from their valuation.

Subsequent processes such as clearings can be triggered on the basis of the logistical processes valuated in Inventory Accounting, making the relevant information available to managers.

In addition to valuating logistical processes, Inventory Accounting generates line items.

Product Cost Planning

The system creates cost estimates based on the valuation unit. BOM quantities are converted using the planned conversion factor in the material master in accordance with the valuation unit.

Constraints

The following functions are not supported once you activate Inventory Accounting:

·         Repetitive manufacturing

·         Product cost collectors

·         CO production orders

·         Rework

·         Preliminary settlement for joint production

·         Derivation of business and functional areas for postings in Inventory Accounting

·         Active ingredient management (possible if active ingredients are not valuated)

·         Material Ledger in classic SAP Accounting:
Inventories are only updated in one currency and valuation, so there are no transfer prices. Subsequent adjustment of variances to higher production levels is not possible, so actual costing is not supported.

·         Template allocations (Activity-Based Costing) are not supported for plan costing and production orders.

·         Product Cost by Sales Order; only valuated sales order inventories possible

·         Subsequent allocation to production and process orders

·         Order-related billing documents (exception: third-party order processing)

·         Cost object hierarchies

·         Account-based profitability analysis (only costing-based profitability analysis is supported)

·         With the moving average price, goods issues with an external value are not supported.

·         Actual activity confirmations of the costing variant are not read. Activity allocations are always valuated at the planned price of the period.

·         Currency types 10, 30, 40, 50, and 60 are supported. The settings for multiple currencies must be identical for all company codes.

·         The following BAPIs cannot be used for costing:

¡        Update of Prices in Material Master (method: CostEstimate.UpdatePrice)

¡        Marking Standard Cost Estimate (method: CostEstimate.Marking)

¡        Release of Marked Standard Cost Estimates (method: CostEstimate.Releasing)

¡        Determine Organizational Measures (method: CostEstimate.AllowMaGet)

¡        Grant Marking Allowance for Costing (method: CostEstimate.AllowMark)