valuation area function

[Former Member]

Hi,

I would like to clarify the use of valuation area for plant.

May I know if valuation area is used to valuate the stock/material (inventory) cost? Meaning the buying cost but not the selling cost, right?

Thanks

Rgds

[Former Member · Accepted solution]

valuation area for plant is that ur material is valuated at plant level

ie single material can have diffrent value in diffrent plant.

valuation area = plant

material can be valuated diffrently based on plant. purchase and sales will afect in MAP only of that plant where u have purcased

and will not effect the other plants valuation

hope this helps

[Former Member · Accepted solution]

Hi,

Thanks.

But I still not so clear. It is used to valuate the material or inventory cost or selling value?

I need to know it is for purchases cost or meant for sales value.

Rgds

[Former Member]

Hi

Valuation area is the level where the valuation is carried out by the organisations. It can be either at company code level or at Plant level. This means if you have settings set as Plant as valuation level then your materials will be valuated at plant level. Each plat can have independent prices for the same material.

Now stock valuation is based upon the price indicator you have in the material master i.e if you have V then it will be valuated in MAP and if you have S then it will be valuated at standard price. So your valuation area has nothing to do with it. Please do not mix these two things. Now comes your query, buying cost i. e Purchasing ... what is the indicator you have? Generally speaking SAP std recommends to have MAP- i.e V as the price indicator so your materials will be valuated with weighted average price i.e each time you buy material the price will change in the master. Now if you issue the material then it will be issued with the existing MAP only.

Similarly finished products.. generally it will have S- (std price) as the indicator. Once set this does not change automatically unless it is changed manually or by cost run if applicablle that means you again do business with master price available in the material master and your stock/inventory will be valuated with that price only. Selling price will be always different than the master price for the reason that you will be adding you other expenses like margins and taxes etc etc.

Regards

[Former Member]

Hi Samuel,

You have pointed out a good point. I am confused of valuation area and stock valuation.

If the material in none valuation area plant, the material will still have stock valuation?

I still not clear what is the purpose of this valuation area for though with explanation given.

Thanks

[Former Member]

hi,

Yes, you are right, whenever the valuation area is plant level system will flow all the accounting entries in plant level of all the process including sales invoice.

Regards

Sridharan

[Former Member]

hi

function of valuation area is to define the valuation for the material at the plant level or in the company code level. if it is plant level each plant will have their own accounting entries in all the process (Ex: GR/MIRO/PGI/Sales Invoice). if it is company code level the accounting entries will be showed in company code level only. further al the accounting standards and rule will applicable at company code level only

hope you will understand

Sridharan

[Former Member]

Hi,

Can I say basically valuation area is not just only to know the purchasing cost of the inventory but also selling value?

Thanks