The Hamburg plant manufactures chocolate from the raw materials cocoa and milk.
If the purchase order takes place in a foreign currency, price and exchange rate variances can arise if, for example, the exchange rate varies between the purchase order and the invoice receipt.
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Example: Price and Exchange Rate Differences
For period 1, single-level price determination takes place for the material.
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Example: Single-Level Material Price Determination
In addition to single-level price determination, multilevel material price determination and a closing entry take place for period 1.
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Example: Multilevel Material Price DeterminationExample: Closing Entries