Material Ledger Training

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 Material Ledger (ML) Functionality

 ML is normally activated to achieve the

following functionality:
 Multiple Valuations in several currencies
 Actual Costing of materials using Periodic Unit
Price (PUP) or Moving Average Price (MAP)

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 Multiple Valuations in two currencies
 Mainly used for Inter-company and intra-company transfers of goods
and services between or within company codes.
 Can also be used for transfer between profit centers.
 Three valuations:
 Legal Valuation (0) With Markup for transfers between legal
entities
 Group Valuation (1) Without Markup at group cost for transfers
between legal entities
 Profit Center Valuation (2)for transfers between profit centers

 Two Currencies:
 Company Code Currency (10)

 Group Currency (30)

 Transactions happen in all valuations simultaneously.

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 Currency and Valuation Profile
 Define the combination of valuations and currencies.
 Legal Valuation in company code currency is mandatory and

defaulted.
 Additionally, we can define two valuations, Group Valuation and

Profit Center Valuation, each either in company code currency or

group currency depending on the currency of the controlling area.
 Profit Center valuation is possible only if EC-PCA (Enterprise
Controlling-Profit Center Accounting) module is active.
Legal Valuation (0) Group Valuation (1) PC Valuation (2)
CC Curr (10) Mandatory - default Option A Option A
(preferred)
Grp Curr (30) Option B (preferred) Option B
CO Area Cur CC Cur (10) – Op A No dependency??
Grp Cur (30) – Op B

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Currency and Valuation Profile - Configuration

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 Actual Costing – PUP or MAP

 MAP is Moving Average Price for actual

costing of materials.
 MAP updates price in material master on
each transaction. Uses Price Control V.
 PUP is Periodic Unit Price for actual costing
of materials
 The material is valued at standards during
the month.
 Variance are collected during the month
and settled at month end.

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 Variances on Manufactured items

 Variances on account of Lower Level Materials in

BOM on production order.
 Variances from Activities on operations in
routings on Shop floor such as Labor, Machine
hours (Activity price from cost center accounting)
 Flows as part of month end process to calculate
variances by plant. This process can run
daily/weekly. Posts to FI and COPA upon
production order settlement

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 Variances on Purchased items

 At the time of GR
 Diff between Standard cost and PO Price

 At the time of IR
 Diff between PO price and Invoice Price

 Posted at the time of transactions

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 PUP – What happens…(1)

Actual Costing (AC) in simple terms

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 PUP – What happens…(2)
AC during the month – Value flows to Material Ledger (ML)

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 PUP – What happens…(3)

AC month end – Value flows from ML

Material Ledger

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 PUP – How it happens…During the month
AC during the month – Value flows to ML
All Postings at Standards
 All ML updates and data collection is done automatically real-time.
 Values collected from:
 Material Movements

 Purchasing

 Invoices

 Production order settlement

 Debits/Credits

 Actual Quantity Structure in ML

 GI to Production Order

 Activity confirmation on Production Order

 GR on Production Order

 Material Transfers

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PUP – How it happens…During the month
AC during the month – Value flows to ML
All Postings at Standards - Example
Preliminary Price
Quantity Price
valuation difference

Beginning inventory 1000 250 25.00

Receipts 1000 250 30 28.00

Other receipts/consum 0 0 0

Cumulative inventory 2000 500 30 26.50

Consumption 1300 325 25.00

Ending inventory 700 175 25.00

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PUP – How it happens…at month end (1)
AC at month end – Value flows from ML
Variances are cleared – Single Level

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PUP – How it happens…at month end (2)
AC at month end – Value flows from ML
Variances are cleared – Multiple Level

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 PUP – How it happens…at month end (3)
AC at month end – Value flows from ML
Variances are cleared – Cost Center Actual Activity Price

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PUP – How it happens…at month end (4)
AC at month end – Value flows from ML
Variances are cleared – Summary

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 PUP – How it happens…at month end (5)
AC at month end – Value flows from ML
Variances are cleared – Example
- Status: Determined Multi-Level
- Price control: S-Price
- Standard price: 25.00 MXN/100 PC
- Stock value: 175 MXN
- Periodic Unit Price: 26.50 MXN/100 PC
Preliminary Price
Quantity Price
valuation Diff.
Beginning inventory 1000 250 25.00
Receipts 1000 250 30 28.00
Other receipts/consum 0 0 0 26.50
Cumulative inventory 2000 500 30 26.50
Consumption 1300 325 19.50 26.50
Ending inventory 700 175 10.50 26.50

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 PUP – Revaluate Options

 Revaluate Materials:
 Price control in Material Master is changed from

S(Standard) to V (Moving average) for previous period.

 Standard price is updated with New Actual Price in the

“Moving average” field in Material Master.

 The stock value is update in Material Master with new

Actual Value.
 The old standard price in the “standard price” field does

not change.
 Do not Revaluate Materials:
 The Price control in material master remains as S in the

previous period.
 The system posts the price difference to a clearing

account specified and NOT to Material Stock/Inventory

Account/COGS.

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 PUP – Other Options

 Mark and Release the new Actual price.

 The new Actual price becomes the standard

price for the next month.

 Actual Cost Component split
 The system updates the Cost components

with Actual values in FI and PA based on

actual quantity structure.

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ML reporting – 1 Actual Price by Cost Components

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ML reporting – 2 Price Analysis by Material

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ML reporting – 3 Procurement/Production Alternatives

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ML reporting – 4 Actual Quantity Structure

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