Well, have fun. Hopefully, this means something to you.
- The Material Ledger is activated by Plant. Ideally, all materials within a plant are treated consistently across the board (Bottom Up). Once activated and used for a Plant/Material combination, this functionality cannot be deactivated easily without a great deal of effort.
- In Finance, the periodic unit price value of MM Inventory is expressed across two GL Accounts, one displaying at standard price and one displaying the periodic unit price adjustment.
- Actual costing evaluates all goods movements within a period at the standard price (preliminary valuation). At the same time, all price and exchange rate differences for the material are collected in the material ledger.
- At the end of the period, using the "Actual Costing Run" an actual price is calculated for each material based on the actual costs of the period. This actual price is called the periodic unit price and can be used to revalue the inventory for the period to be closed. In addition, you can use this actual price as the standard price for the next period.
- Actual costing determines what portion of the variance is to be debited to the next-highest level using material consumption. The actual BOM enables variances to be rolled up over multiple production levels all the way to the finished product.
- The process of posting the effects of differences between the standard price and the periodic unit price is known as the "Closing Entries". This entails the posting of the revaluation of consumption as well as the inventory at every level of the process. Revaluation of consumption posts directly to the price difference accounts as additional variances. This is as opposed to the consuming PP orders requiring subsequent settlement.
- Additional accounts are used to post the effects of this parallel accounting methodology i.e. the standard MM posting processes, and therefore the assigned accounts, are NOT used. Essentially this means that table T030 will have been updated with additional account assignments per process.
- Using the "periodic unit price" (moving average) as the new 'Standard Price" is optional, as indicated above. Hence, to implement the choice, the applicable materials must be marked and released in the same way as for product costing.
- As a result, subject to inventory quantity an accounting posting will occur between the assigned MM control account and price difference accounts.
Originally posted: Jun 22,2012 12:17
Earlier this year (2016), I had the pleasure of experiencing the full greenfield implementation and execution of the Material Ledger from the ground up. This was speckled with a few unprecedented mishaps, resets and restarts, all of which went a long way to deepening my understanding.
There are definitely a number of definitive insights for those who can understand. As with all my projects, I created and retained detailed evidence in spreadsheet and word format from precipitation to outcome and aftermath; followed by debrief and other unexpected continuing surprises/outcomes.
I guess that I shall write about this, though circumspectly, in due course.