SAP Material Ledger has two basic functions:
- Carry inventory in multiple currencies and valuations
- Actual Costing
In this blog we discuss Actual Costing in detail:
Actual costing generates a material ledger document for all goods movements at standard price (preliminary valuation). At period-end, the actual price is calculated for each material based on the actual costs of the period. The actual price is called the Periodic Unit Price (PUP) and can be used for the following at period-end:
Revaluate inventory: The material stock account is debited with the proportional price differences, and the price differences account is credited with the same amount. You can use the actual price as the standard price for the next period.
Do not revaluate inventory: Price differences are posted to an accrual account. The amount that you would have posted to the material stock account is posted to another price difference account.
You decide to revalue inventory or not according to which financial accounts are posted to during automatic account determination with configuration Transaction OBYC. If you want the system to calculate a PUP for your materials based on the actual costs incurred in a period, you activate actual costing in addition to activating the material ledger.
You activate actual costing with the following IMG menu path:
Controlling • Product Cost Controlling • Actual Costing / Material Ledger • Actual Costing • Activate Actual Costing
The screen shown in Figure 1 is displayed.
Figure 1: Activate Actual Costing
In this step, you activate actual costing for materials and activity consumption update in the quantity structure. Here's an explanation of each of the fields:
Act. Costing (3rd column)(Activate Actual Costing): If you work with multilevel price determination in the Actual Costing component, you must select this checkbox so that the actual quantity structure is updated.
ActAct (4th column)(Update of Activity Consumption in the Quantity Structure): Actual costing determines what portion of the variance you debit to the next-highest level using material consumption. The actual Bill of Material (BOM) enables variances to be rolled up over multiple production levels all the way to the finished product.
Left-click then right-click the field and select Possible Entries to display the list at the right in Figure 1. The possible entries are explained as follows:
0 No activity update: Update is not active
1. Activity update not relevant to price determination: Update is active but not relevant to price determination. Consumption is updated in the quantity structure but not taken into account upon price determination.
2. Activity update relevant to price determination: Variances between the activity prices/process prices posted during the period and the actual price at the end of the period are adjusted subsequently. In addition, you must set multilevel price determination 3 in the Accounting 1 view.
You must use standard price for all materials that you use in Actual Costing.
After you activate actual costing you’ll need to carry out an actual costing run each period-end with Transaction CKMLCP. The functionality of the actual costing run screen is similar to the standard cost estimate costing run screen. First, assign plants to the actual costing run, and then follow the rows.
When working on Actual Costing and SAP Material Ledger we recommend you work with our ERPCorp SAP experts. Learn more about ERPCorp Coaching & Consulting. We can help you navigate through SAP Material Ledger and Actual Costing.