Cost Conditions in R/3: Are You Sending Your Financials Team an Unpleasant Surprise?

  • by Mitresh Kundalia, Director — SAP Practice, Quality Systems & Software
  • January 1, 2005
Cost values sent to the R/3 General Ledger and the CO-PA ledger can be based on different logic if you do not properly maintain the cost and future price in the material master. The key is to understand the relationship between the R/3 future price feature and condition type VPRS.
Key Concept
VPRS is one the most well-known condition types used in typical pricing procedures. Although pricing procedures are generally used to calculate the selling price of the product to the customer, VPRS is also included in pricing procedures to determine the expected profit margin.

You probably know that VPRS is an R/3 condition type that determines the cost of the material, either standard or moving average depending upon the valuation of the product. However, you might not be aware that a feature in the R/3 material master called "future price" influences how the VPRS cost is determined. If you do not understand this relationship correctly, you risk posting different cost values in R/3 General Ledger (G/L) and the CO-PA ledger. This causes inconsistencies in financial reports. Even if you are not concerned about inconsistencies in financial reports, the VPRS condition type is one of the most important in most pricing procedures, and this information will help you to better understand how it works.

As the source of the transaction, the logistics team is responsible for maintaining consistency in this area. Understanding the mechanics of how all R/3 releases — and in particular the future price feature — determine the condition value of VPRS will help you avoid reconciliation issues. Let's review the R/3 components involved in determining product cost, and then I'll show you how easy it is to properly maintain them. I'll start with the basics of the material master view and VPRS.

Mitresh Kundalia

Mitresh Kundalia heads the SAP practice at Quality Systems & Software ( QS&S is a leading business and technology consulting firm that specializes in delivering superior IT solutions using SAP products. Mitresh is widely acknowledged as a leading SAP expert and has worked on various SAP assignments, including strategic planning, fresh implementations, upgrades, and post-go-live support projects. With an MBA degree in finance, Mitresh manages SAP projects with a special focus on customer-focused solutions, management reporting, profitability analysis, SAP General Ledger, and business intelligence. He is a regular contributor at SAP events and publications and technical advisor to leading journals.

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