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 (www.QSandS.com), a consulting firm specializing in SAP S/4HANA, SAP General Ledger, and complex System Landscape Optimization (SLO)-type reorganizations. Mitresh is widely acknowledged as a leading SAP expert, with multiple publications and an SAP-PRESS book to his credit. He has published more than 50 peer-reviewed articles and white papers, and he has given presentations at various SAP conferences and events. Mitresh is the chief solutions architect of General Ledger Migration Optimizer (GLMO), a leading product to accelerate and jump-start the SAP S/4HANA and SAP General Ledger initiatives; SAP Data Reorganization Optimizer (SDRO), an SLO-type product for managing complex system landscape reorganizations; and Group Currency Activation and Conversion (GCAC), a product suite to manage introduction of parallel currencies and conversion of data in a live SAP system.

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