Understanding Mark and Release

Objectives

After completing this lesson, you will be able to:

List the different price fields in the material master
Carry out the mark and release for a cost estimate

Prices in Material Master

The image lists various types of material master prices, including planned prices 1,2, and 3, tax-based prices, commercial prices, and price control, highlighting the standard (S) price and its link to standard cost estimates.

Material Master Prices: Explanation

The material master prices are as follows:

Planned prices 1, 2, and 3:
Planned prices 1, 2, and 3 are used for raw materials and purchased parts, and to valuate the materials in the cost estimate.
Tax-based and commercial prices:
Tax-based and commercial prices are entered for purchased parts in inventory costing to determine values such as lowest value. An inventory cost estimate can use these prices for valuation, and then update the costing results for finished and semi-finished products in the material master.
Price control:
Price control is an indicator that controls which price is used to valuate the inventory of a material. The available options are standard price and moving average price.
These prices are used to valuate goods movements within the SAP S/4HANA application and to valuate inventories.

A standard cost estimate is used to update the standard price. You can branch from the accounting and costing views to the results of standard cost estimates. These results update the standard price.

Update of Prices in the Material Master

The image depicts the process of updating prices in the material master, illustrating various cost estimate levels like inventory cost estimate, current cost estimate, modified standard cost estimate, and standard cost estimates, alongside quantity structures, planned and actual activity prices, and inventory/activity prices.

You can analyze the different cost estimates and write the results to price fields in the material master depending on the purpose of costing.

The costing type determines which, if any, price field in the material master you can update with the results of the cost estimate.

You can update price fields in the material master with the following results:

The result of the standard cost estimate as the standard price.
The result of the modified standard cost estimate or the current cost estimate as planned prices 1, 2, and 3.
The result of the inventory cost estimate as commercial prices 1, 2, and 3 or tax-based prices.

In the valuation strategy, you can refer to different prices in the material master so that you can use these prices in other cost estimates.

The standard price is updated in the material master by first marking and then releasing a standard cost estimate.

Integration: Standard Price and Standard Cost Estimate

The image illustrates the integration of standard price and standard cost estimate, showcasing their roles in inventory valuation, valuation of goods movements, serving as a benchmark for cost object controlling/variance calculation, and their use in profitability analysis to determine cost of sales by valuating the quantity billed.

When you create a cost estimate, it has status KA or KF. When you execute a marking transaction for a cost estimate, the system updates the material master future standard price field and changes the cost estimate’s status from KA to VO. The release program checks the status to determine whether the cost estimate is available for releasing. Once the program releases the cost estimate, the status is changed to FR.

It is possible to repeatedly mark a future standard for a material, the system will issue a warning stating that a marked standard exists. However, once the release program releases the cost estimate, the system will not allow you to create another cost estimate for the same period/costing variant/version. If the release program releases a cost estimate in error, it will be necessary to delete this entry from the database. There is a standard program that reviews the variance and revaluation impact of a costing run compared to either another costing run, or a price field from the material master. This program should be executed, to look for potential errors before releasing a cost estimate.

Price control plays a crucial role in material valuation. When the price control indicator is set to S, the system valuates the material inventory at standard price. In addition, goods movements are valuated directly in the SAP S/4HANA application using a price selected in accordance with the price control indicator.

In Cost Object Controlling, standard price updated by a standard cost estimate is used for costing. The system can use the itemization of standard cost estimates to determine the target costs for manufacturing orders. You can analyze the difference between target cost and actual cost at the level of variance categories, such as quantity or price variances. The saved itemization provides the basis for the variance calculation.

In profitability analysis, you can use standard cost estimates (or other material cost estimates) to compare the revenues of the billed quantity with the cost component split of the product.

A standard price is also required in the material ledger to determine the actual price.

Explain Price Fields in the Material Master

ExerciseStart Exercise

Update Standard Price: Mark & Release

The image outlines the step-by-step procedure for updating the standard price, including executing the material cost estimate, checking for errors, correct quantity structure and content order, verifying update permissions, marking material cost estimate, and releasing material cost estimate, with notes emphasizing requirements like error-free cost estimates and non-repeatable release actions.

The procedure for updating standard price is as follows:

Execution of material cost estimate:
Use a costing variant that is applicable to a standard cost estimate (costing type).
For example, in December 2022, you create a new standard cost estimate for January 2023, that is, a validity date of 01.01.2022 valid until 12.31.9999.
Accuracy of costing results:
The system cannot detect content errors, such as incorrect prices or quantities. Check the error status and verify separately that the quantity structure and content order are correct.
Allow update:
You can specify per company code, plant and material range whether marking is allowed for the fiscal year and period.
Marking:
After you have carried out the steps 1 to 3, you can mark the material cost estimate. The future planned price is updated in the material master and linked to the standard cost estimate.
Release standard cost estimate:
You can only release cost estimates once. The release date cannot be earlier than the valid from date of the cost estimate.

The image depicts the process of updating standard prices in inventory, illustrating the transition from current to future prices during marking and release stages, with emphasis on the impact on the material master showing an increase to a planned price from 10 to 15 units, affecting the overall inventory value from 100 to 150.

You want to update the standard price in a previously released standard cost estimate from 10 to 15. The material master is subject to S price control and inventory is valuated with 10 * 10 = 100.

The different phases of the update of standard price are as follows:

Marking:
The future planned price of 15 is set in the material master and a link to the new standard cost estimate established. No revaluation takes place.
Release:
Release converts the future standard price of 15 to the current standard price. The previous current standard price of 10 is now shown as the previous price and the future planned price is empty.
Revaluation:
If you update the price of a material that has inventory, the inventory is revalued with the new price. In this example, the inventory value is increased by 50 and a profit posting "Profit from revaluation" of 50 is posted. The valuation class and its account determination in the material master control how the system finds the balance sheet accounts and profit and loss accounts.

Mark and Release Example

The screenshot depicts the typical process for marking and releasing, outlining steps such as creating estimates, closing periods, allowing markings, and releasing standard prices within the initial days of the new year, with relevant interface screens showing the data entry points.

Releasing typically occurs a day or two after marking to allow time for analysis.

Note

The mark & release process is per valuation such as legal. If group valuation is also used, then the process would be carried out twice.

Note

The number of materials per document setting is based on customer requirements. A common practice is to leave it blank.

Note

Other transaction codes related to MMPV are MMRV (allow prior period postings) and MMPI (re-open period).

The screenshot illustrates the SAP material master interface for a Forklift FL12 product, showing standard cost estimates before marking, after marking, and after releasing, detailing the changes.

When the cost estimate is released, accounting documents will be generated if there is an impact on the inventory values.

The screenshot illustrates the process of configuring dynamic price changes, highlighting the timing for releasing cost estimates when goods movement occurs prior to release, using the dynamic feature to automatically release cost estimate. Otherwise the existing release estimate is used assuming its validity date is effective.

The dynamic feature automatically releases the most recent valid cost estimate when the first movement happens, no matter what day of the month. The alternative is to release the month previous, because it has to happen by 11:59 of the last day of the current month. Without dynamic, once you pass midnight you can’t change the cost estimates.

Without Dynamic, you release September prices by 11:59 on October 31. You settle ML (Material Ledger) the month of October, during the start of November. October prices are marked in November but not released until December

With Dynamic, you settle ML the month of October, during the start of November. October prices are marked in November. Any materials without GM will release October prices. Any materials with GM prior to marking will release materials marked in September.

Rules Regarding Dates

Date selections when creating cost estimates

Date	Rule
Costing Date From	Must be current or future date in order to save the estimate
	For next year's standard, this is typically set to 1/1/Next Year (but can be a prior date)
Costing Date To	Typically set to: 12/31/9999 (yearly cost roll-up)
	If monthly cost roll-up, use beginning - ending of the new month
Quantity Structure Date	For next year's standard, this is typically set to 1/1/Next Year (yearly)
Valuation Date	For next year's standard, this is typically set to 1/1/Next Year (yearly)

Note

The costing date from can be a date in the past but you cannot save the estimate, or mark and release it.

Note

Depending on the business scenario, the dates that are used can vary quite a bit. The table above is merely a high-level guideline.

Mark and Release Dates

Activity	Rule
Mark	You can only Mark in the current or future period.
Release	You can only Release in the current or future period.

The screenshot shows the KEKO table in SAP, detailing costing dates for product costing, including columns for the cost type, date from and validity dates, version, and other related data for each costing record.

Note

The costing date (configured in the costing type) in the KEKO table is always the 1st day of the period based on the Costing From Date for standard cost estimates.

For the standard cost estimate, you must update automatic costing with the Start of Period indicator. This ensures that the results of the standard cost estimate can be used as the standard price for that period.

For a given period:

Marking can be repeated as many times as needed.
Releasing can only be executed one time (unless you delete the estimate).
After releasing, a cost estimate for the same (mark & release) version cannot be created.
Release is only possible if the period is open (via the MMPV transaction code).

Update the Standard Price in the Material Master

ExerciseStart Exercise

Summary

Understand the different price fields in the material master, including planned, tax-based, and commercial prices.
Execute a Mark and Release process to update the standard price in the material master.
Ensure accuracy in costing results and verify quantity structure before marking and releasing.
Recognize the importance of price control in material valuation and inventory movements.
Follow rules for date selections and ensure the period is open for releasing cost estimates.

Next lesson