Material Valuation at Company Code Level

Material Valuation at Company
Code Level
Summary
This article explains the process Material Valuation at Company code level. I.e. all the materials are to be
maintained at the same price across the all Plants which are assigned to that Company code
For more information, visit the Enterprise Resource Planning homepage.
Author:
Ravi Kumar Chennupati
Company: Intelligroup Asia Pvt. Ltd.,

Created on: 2 March 2009
Author Bio
Ravi Kumar Chennupati is a Qualified Chartered Accountant and Certified SAP Solution Consultant
Financials Management Accounting working as a Sr. Consultant with Intelligroup and has been part of
SAP FICO competency since March 2007.
SAP COMMUNITY NETWORK

2009 SAP AG
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Material Valuation at Company Code Level
Table of Contents
Introduction .........................................................................................................................................................3
Business Requirement ....................................................................................................................................3
Solution ...............................................................................................................................................................4
Conclusion Notes:.............................................................................................................................................10
Disclaimer and Liability Notice..........................................................................................................................11

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Introduction
Valuation area specifies, the level at which the material are valuated. SAP has two options for valuation one
is at Plant level and second is at company code level.
Valuation at Plant Level:
All the materials are valuated at Plant level only. I.e. the same material can have different prices in each
different plant.
Valuation at Company code Level
All the materials are valuated at Company code level only. I.e. the same material can have same price
across all plant which are assigned to the company code.
Business Requirement
Client is in the Trading business across 3 different locations, all the locations are strategic business units
where the profitability to be monitored. The manager of each Business unit is responsible for that location
and individual financial statements to be generated at each of that location.
The main business requirement is to maintain the same price for the material across each plant.
Structure
Company Code
: 1000
Controlling Area
: 1000
Plant
: 1000, 1100 & 1200
Profit Centers
: 1000, 1100 & 1200
One company code and controlling area is considered to represent the Legal entity
Three locations are created as three plants in SAP from Logistics prospective
Three Profit Centers created to represent the three locations from Finance prospective.
Expectations / Requirements from business users
From Logistics all the materials are tracked at each location wise and stock movement to be
monitored at each plant level.
From the Finance prospective, financial statements to be generated at each location wise and all the
materials are to be maintained at the same price across the all Plants which are assigned to that
Company code.

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Solution
Step 1) Maintain the Valuation area at Company code level.
Note:
1.
The selection of valuation level should be decided before assignment of any Plant to company code. If the plant
was assigned then this screen would be gray out will not allow for any changes.
2. This selection is at Client level. So all the company codes in that client should follow the same
valuation method.

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Automatically the screen in T code OMWD where we do grouping of valuation areas system picks the
Company code as Valuation area. So, one or more company codes can be assigned to the Valuation
grouping code.
Step 2) Assign all the plants 1000, 1100 & 1200 to company code

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Step 3) Create Material Master
While creating the material master, system proposed the company code as additional organizational element
since it expects the valuation at company code level.

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In the accounting 1 tab, system displays the Company code as the valuation area instead of plant.
Profit center has to be assigned in the Plant data/ Stor 2 tab.
Note:
1.
2.
While extending the same material to other plants like 1100 & 1200 system would not propose for any
accounting views because accounting view is maintained at company code level.
Relevant Profit centers are assigned to same material at different profit centers in Plant data/ stor 2 tab.
Step 4) Procure Raw Materials in to all the plants.

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There are 3 procurement transactions as follows:

1. 100 PC @ 12 each in Plant 1000
total Value 1200
2. 100 PC @ 12 each in Plant 1000
total Value 1200
3. 200 PC @ 16 each in Plant 1000
total Value 3200
Now system displays the moving average price of 14 each by taking cumulative stock of 400 and value of
5600.
For all logistics purpose, the stock would be shown at each plant level, but the same valuation would be
maintained across all plants.

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Step 5) Transfer Material from one plant to another plant

Stock of 100 PC is transferred from Plant 1000 to 1200. Being valuation at company code level, system
transfer stock at the same price.
But in Financial Accounting to have full-fledged financial statements, Zero Balance concept is activated and
system posted an entry to the above transaction in the following manner.
So all the material movement like issues, consumption, transfers & delivery is accounted at the same price
across all plants.

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Conclusion Notes:
By activating the valuation at company code level, one can maintain the same price for one material across
different plants and can get the full fledged financial statements at each profit center level.
Valuation must be at Plant level in the following cases:
If you want to use the application component Production Planning (PP) or Costing
If your system is a SAP Retail system
The functions like standard cost estimate and others in product costing is only possible if valuation level is at
Plant level.
It can be used for trading companies and not suggestible for manufacturing organizations.

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Disclaimer and Liability Notice

This document may discuss sample coding or other information that does not include SAP official interfaces and therefore is not
supported by SAP. Changes made based on this information are not supported and can be overwritten during an upgrade.
SAP will not be held liable for any damages caused by using or misusing the information, code or methods suggested in this document,
and anyone using these methods does so at his/her own risk.
SAP offers no guarantees and assumes no responsibility or liability of any type with respect to the content of this technical article or
code sample, including any liability resulting from incompatibility between the content within this document and the materials and
services offered by SAP. You agree that you will not hold, or seek to hold, SAP responsible or liable with respect to the content of this
document.

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Material Valuation at Company

Ravi Kumar Chennupati

Company: Intelligroup Asia Pvt. Ltd.,

SAP COMMUNITY NETWORK

SDN - sdn.sap.com | BPX - bpx.sap.com | BOC - boc.sap.com