Recommendations for Multilevel Price Determination
Due to the high level of complexity and the wide range of problem situations, there is no single best method of performing multilevel price determination. This section contains information that will assist you in finding a strategy that is suited to your particular situation.
First perform multilevel price determination, specifying that if threshold values are exceeded, the system should issue warning messages only. Then look at the warning messages in the log. In the costing results, sort the material list by variance between actual price and standard price. You can also use the layout material list: materials with receipts from multilevel processes in the results list of the costing run. For example, you can switch to the layout of the material list price analysis to see the materials sorted by variance.
Search for the materials whose variances are not acceptable, and decide whether you want to make adjustment postings. If you cannot make any adjustment postings, or if the adjustment postings do not remove the errors, set an error limit and execute the run again for all materials. When you do so, turn on automatic error correction so that the system can remove the errors that are resulting in the threshold values being exceeded.
Automatic Error Correction by the System), all receipts from multilevel processes are ignored.
- Also check whether the warning and error limits you set for single-level price determination were exceeded. If you did not set any limits, or if the set limits were not exceeded, any new errors are due exclusively to multilevel price determination and can be removed with automatic error correction. The worst that can happen is that in the reduced BOM (see
- If there is a large number of materials, you may want to set an error limit right from the start. It is then possible to determine the materials that have errors using the report Materials by Period Status. In some cases this may be easier than searching through the warning messages of multilevel price determination.
- When you process materials that have errors, you always start with the lowest costing level, since errors at this level are reproduced at the higher levels. However, it is possible for variances at different levels to cancel each other out. For example, if a material at the lowest level has large negative variances, such variances may cancel out variances at higher levels. If you remove the variances at the lowest level by means of correction postings or error correction, new errors may appear at the higher levels.
If you first execute a costing run and generate warning messages for values that exceed the threshold value, and then set error limits, you must repeat the entire costing run with the error limits for all materials. You should not limit the run to materials for which you have set error limits.