Material valuation is one of the “must-known” topics for all SAP Material Management (MM) learners, especially for MM consultant, FI consultant, and FI & MM administrator in a company. In a company, the material valuation procedure must be determined together with accounting department. It determines, among other things, how a material transaction recorded in accounting journal.
The first thing that we should know in material valuation is the Valuation Area. It is the organizational level at which material is valuated. In SAP R/3 system, there are two possible organizational level at which material is valuated:
When stock is valuated at plant level, we can valuate a material in different plants at different prices. Valuation must be at this level in the following cases:
- If we want to use the application component Production Planning (PP) or Costing
- If our system is a SAP Retail system
When stock is valuated at company code level, the valuation price of a material is the same in all of a company’s plants (that is, in a company code).
SAP recommends that we set material valuation at Plant level.
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