Valuation: Example of Splitting a Structured Article

In a bill of material s (BOM), components are assigned to a display which is managed in the unit of measure "carton". The following table shows the components with their cost and retail price.

 Article Quantity Unit of measure Cost price Retail price Component 1 1 Piece 10.00 15.0 Component 2 2 Piece 20.00 30.00

The following table shows the current stock quantities, stock values and the moving average price (MAP = cost value / stock quantity ) for the components.

 Article Stock quantity Cost value MAP Retail value Component 1 10 100.00 10.00 150.00 Component 2 10 200.00 20.00 300.00

The goods receipt for a purchase order for one carton is posted for a display. The cost price for the display is 40.00. The system is configured so that the display is broken down into its constituent components at goods receipt (for further information, see Inventory Management: Structured Articles).

The cost value of the goods receipt is then distributed over the components proportionally based on the moving average price ratio, taking account of the BOM quantities.

 Quantity Unit of measure Article Movement type Cost value 1 Carton Display 101 + 40.00 + 1 Carton Display 319 - 40.00 - 1 Piece Component 1 319 + 8.00 + 2 Piece Component 2 319 + 32.00 +

Because the cost price of the display (40.00) is lower than the total of the cost prices of the components (total cost price of components = 1 ´ 10.00 + 2 ´ 20.00 = 50.00), the moving average price of the components is reduced.

The goods receipt, on the other hand, is valuated at retail using the current retail price of the components, giving the following stock quantities and values:

 Article Stock quantity Cost value MAP Retail value Component 1 11 108.00 9.82 165.00 Component 2 12 232.00 19.33 360.00