E.g. : Purchase new material $22 quantity = 2 pcs
During Goods Receipt
Dr. Inventory Account $22
Cr. GR / IR Account $22
During Invoice Verification
Dr. GR / IR Account $22
Cr. Vendor Payable $22
Price Control V - Moving Average Price (MAP)
If current MAP of Material Master is $8 , quantity = 1 pc
Now we Purchase additional material $22 quantity = 2 pcs
During Goods Receipt
Debit Inventory $20
Credit GR/IR $20
New Moving Average Price = ( $22 + $8) / (2 + 1)
During Invoice Verification
Debit GR/IR 20
Debit Inventory 2
Credit Vendor 22
SAP recommends: Price control V (MAP) for raw materials and trading goods; price control S (Standard) for semi-finished products and products.
MAP are used mainly for raw materials that are purchased externally.
The advantage of using MAP for your raw materials is that your inventory costs will always reflect the current market cost.
SAP strongly recommends that you do not select price control V for semi-finished products and finished products, because doing so will very easily cause the calculation of unrealistic valuation prices.
If MAP is used, you have to be very careful with Invoice Verification, as Invoice price discrepancies affect the stock account and MAP.
The following example demonstrates this;
A Material is ordered at $1 , then received and posted to the inventory account.
If clerk entered for $10 for this PO by mistake, it will be blocked for payment,
BUT, $9 will be posted to the inventory account and the MAP will change to $10.
Any issues that occur until the correction is made will be at the inflated price and will NOT be automatically corrected when the credit note is received or the Invoice is reversed/cancelled.
(Because of this problem that you get the warning messages in InV. and POs stating that the MAP will change by more than X percent.
It is warning you that you will be corrupting the MAP).
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