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MATERIAL VALUATIONS

IN SAP

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Stock value = stock quantity x

material price

The stock value increases in

goods receipt, decreases in goods

issue

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Valuation area

Valuation area is the organizational level inwhich the material is valuated

SAP recommends valuation area at plant level

Generally valuation area is already assigned toplant in customizing as default

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Valuation area

Valuation area in plant level is mandatory

for production planning and or product

cost accounting

Once decided the valuation level in

customizing it is difficult to revise

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Valuation class

Valuation class is used to determine which

stock account need to be updated during

goods movement A valuation class is assigned to a material

type in customizing

Valuation class can also be assigned toseveral material types

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Valuation class

Valuation class enables to manage the

stock of several material in a stock

account Valuation class is a mediator to access the

General ledger account

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Standard price

Stanard price is a constant price ofmaterial.

Will not update the price in material masterrecords, after calculation of each andevery invoice.

The difference in standard price and actualinvoice price will be posted to pricedifferences account

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Standard price

Even if standard price selected, systemcalculates moving average price for analysis

Material type determines which valuationprocedure is selected

We can analyze the price difference account andmake necessary changes in standard pricebased on merit and requirement

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Moving average price

The system calculates price after every

movement of the material

Updates value in the master records

The difference of value if any after

procurement, the same is directly posted

to the stock account

This process will amend the existing price