Moving Average Cost Value Calculation

There are two common ways to value a company's inventory: weighted average cost and

moving average cost. Weighted average cost sim ply takes the cost of goods available for

sale and divides by the total amount of goods to get a weighted average cost per unit that is

then multiplied to get your ending inventory cost. Moving average cost is a bit different in t hat

the cost of the material will change based upon price differences on incoming goods and

invoice receipts.

In SAP you assign the methodology you choose in the material master's Accounting 1 view

under Price control (MBEW -VPRSV). This setting i s made at the valuation area level. If you

activate the material ledger than you would have some other choices to make by selecting a

Price determination value.