The value of a goods movement depends primarily on the price control that is defined for the material in the material master at plant level. SAP S/4HANA Cloud Public Edition offers the following two valuation procedures (transaction based - see note below):
- The moving average price procedure
- The standard price procedure
The moving average price method calculates a new material price after each receipt. This price is calculated by dividing the total stock value by the total quantity of the material in stock. When valuating with the moving average price, receipts are posted with the external receipt values (for example, purchase price multiplied by purchase quantity) and issues are valuated with the price from the product master record.
When a material is valuated at standard price, the standard price is constant for at least one period. The standard price is usually the result of a standard cost estimate for the material. When you valuate a material using the standard price, all stock postings are made using this constant standard price. The current stock value is the product of the standard price and the current stock quantity.
Note
With SAP S/4HANA Cloud Public Edition, the Material Ledger is active.
The Material Ledger (ML) is a sub-ledger accounting for materials. It collects all information relevant to stock and valuation. On the basis of this data, ML determines prices for the valuation of these materials. It forms the basis for actual costing and, in addition to multiple currencies and valuations, provides several methods of price determination:
Transaction-Based price control determination: the price control options standard price and moving average price are available as described above.
Actual costing with Single-Multilevel price control determination. The material is valuated with a preliminary valuation price (standard price). All variances are collected during a posting period. At the end of the period, these variances are assigned to the ending inventory quantity and the material consumption during the period. In multilevel price determination, additional price differences, such as those from raw materials, are rolled up to the semi-finished products and, in the next step, to the finished products. When the closing in the ML is complete, these results can be transferred to inventory valuation.