SAP MATERIAL VALUATION BASICS - 1

his series of articles give an overview of the determination of valuation levels for materials using the valuation area, and the two possible procedures for material valuation. These articles will also explain: The significance of the valuation area The function of the valuation class Material valuation with the moving average price Material valuation with the standard price In a company, most of the externally procured materials are stored before they are required for production or sales. The warehouse stocks of materials must be updated on a quantity and value basis.

Material Valuation General

In most goods movements in Inventory Management, the stock quantity and therefore also the stock value vary. In goods receipts, the stock value increases; in goods issues, the stock value decreases. The quantity and value of the material stock and the material price (=valuation price) are updated in the material master record. You therefore also need a material master record for warehouse material. The material valuation determines and maintains the stock value of a material. The following formula is used to calculate the stock value: Stock value = stock quantity * material price From this formula it follows that the stock value changes when the stock quantity or material price changes. During the valuation of a goods movement, not only the total value and, if necessary, the valuation price are updated in the material master record, but also the accounts in Accounting. Material valuation demonstrates a connection between Materials Management (MM) and Financial Accounting (FI) because material valuation accesses G/L accounts in Financial Accounting and updates them. Material valuation is essentially controlled by two factors: System setting (Customizing ) Material Master Record The material valuation is adjusted with SAP R/3 settings to meet the needs of your department . For system configuration, the following questions are defined: On which level are materials valuated? Which types of goods movements are relevant for valuation? Which accounts are posted to during a transaction? The following sections cover the questions about the valuation level and the settings in the material master record. The movement type determines which types of goods movements are relevant for valuation. The settings for automatic account determinati on determine which accounts are posted to during a transaction.

Valuation Level