Select the Right
Valuation for Your
Materials

  • by Mark van Hoving, FI/CO Consultant, Oxygen Business Solutions
  • August 15, 2007
Compare the three methods for assigning value to materials — moving average price, standard price, and split valuation — by looking at how R/3 and SAP ERP Central Component calculate each type of value.
Key Concept
Moving average price (MAP) reflects the actual value of the materials in stock. You determine the MAP by dividing material value by the quantity of the in-stock material. Standard price is a value that remains constant, which allows you to compare prices across different areas and calculate variations from the actual price. Split valuation lets you assign different values to the same material.
In today’s world it is important to control the costs of stockholdings, especially for businesses in which margins are low or the costs of procured materials fluctuate. Keeping good track of the price development is the key for running a profitable business.

SAP offers two basic ways of recognizing the value of materials and stock: moving average price (MAP) and standard price. In some cases, neither option provides enough information to correctly manage stock. In these cases SAP also offers the option of periodic unit price or valuation based on user-defined criteria (split valuation), using valuation types. I’ll describe the basic characteristics of these options in R/3 and SAP ERP Central Component (ECC) to help you choose the best method to valuate your stock.

Mark van Hoving

Mark van Hoving is a FI/CO consultant with Oxygen Business Solutions, a specialist SAP consulting firm. Mark has been working with SAP since 1998, focusing on the FI/CO modules with emphasis on Product Costing, Cost Center Accounting, CO-PA, and cross-module integration to FI/CO. He also has experience with PP, MM, ABAP, and BW.

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