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Ross Christoph is responsible for processes and solutionsSpeaker Badge for SAP product costing at Eli Lilly and Company on a global basis. Eli Lilly has manufacturing plants in 13 countries, and products marketed in 125 countries. Ross has been with Eli Lilly since 1999 and participated in the implementations of SAP product costing and other...

Ross Christoph is responsible for processes and solutionsSpeaker Badge for SAP product costing at Eli Lilly and Company on a global basis. Eli Lilly has manufacturing plants in 13 countries, and products marketed in 125 countries. Ross has been with Eli Lilly since 1999 and participated in the implementations of SAP product costing and other CO functionality in plants and countries around the world. Previously Ross worked at other manufacturing companies focused on internal accounting and financial roles since 1979 and become involved with SAP projects in 1992. Ross has been a Certified Management Accountant since 1981.

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GR/IR (Goods Receipt / Invoice Receipt) Processing

GR/IRoss Christoph 2017R is the SAP process to perform the three-way matchpurchase order, material receipt, and vendor invoice.  You use a clearing account to record the offset of the goods receipt (GR) and invoice receipt (IR) postings.  Once fully processed, the postings in the clearing account balance.

Clearing is performed at the purchase order (PO) line item level based on quantity entered. Price variance and exchange rate variance are calculated.  You can write off small differences using transaction MR1.

Purchace Price Variance
This discussion assumes you are using standard price control (S)  for purchased materials. The quantity and amount on the GR and IR postings are important. You must have posted GR to record purchase price variance (PPV). There is no PPV posting for just IR. There can be additional variance postings on IR after GR is posted for differences between PO price and actual price paid.

When posting GR, the price variance is based on the PO price, unless IR has already been posted, then it is based on actual price paid. If IR has already been posted, the GR will be based on the IR up to the quantity of the IR, after that is will use the PO price again.

After all postings to a PO line item, the net PPV posted will be the difference between the actual price paid and the standard cost of the material.

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John Jordan
You're welcome. What other areas interest you in SAP that we could provide information on?
Saturday, 22 June 2019 20:19
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SAP Mixed Costing Functionality

Within the Product Costing module SAP offers Mixed Costing functionality. This functionality provides the ability to cost a material using multiple alternative methods, for example when a material is produced with different internal processes.  For companies running the PP-PI module that is specified through separate production versions, which would use different master recipes. When executing a cost estimate the system calculates the cost for each production version, then calculates an average unit cost using weighting factors provided manually. With the Cost Estimate display (CK13N) the system shows the total cost of each procurement alternative and has the ability to view the detail of each.

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Enhancement Pack 4 Functionality for Outsource Manufacturing or Subcontracting Operations

Ross Christoph ResizedWith Enhancement Pack 4 SAP provided additional functionality for processing Outsource Manufacturing or Subcontracting operations.

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SAP ERP Group Costing and Valuation Tips

In addition to the calculation of standard costs at the company code level, SAP ERP also includes functionality to calculate standard costs across the entire corporation.  These are referred to as group costs. Instead of using legal transfer prices, which is the basis for company code standard costs, group costing performs complete across company costing.

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