SAP Material Ledger Period-End Closing

By John Jordan

The three period-end options you have when you activate SAP Material Ledger are:

•  No period-end processing
  
  
•  Single-level price determination
  
  
•  Multilevel price determination

Here's details of each option

No Period-End Processing

If you’ve activated SAP Material Ledger, and you’re not using actual costing, there is no period-end processing. A Material Ledger document will post for every inventory-related transaction in the legal valuation approach in company code currency. Activating SAP Material Ledger, in this case, gives you additional inventory reporting that you can access with Transaction CKM3 or the following menu path:

Accounting • Controlling • Product Cost Controlling • Actual Costing/Material Ledger • Material Ledger • Material Price Analysis

The screen in shown Figure 1 is displayed.

Figure 1: Material Price Analysis Screen

This screen allows you to access all material transactions in a period. Transactions are grouped by Category, which you can progressively expand to display all transaction documents within a Category. Now let’s look at the next level of period-end processing.

Single-level price determination

Single-level refers to an individual material and its procurement process. A simple example with three levels within the material ledger includes purchased materials, subassemblies, and finished products. When you use actual costing, all materials are valuated with a preliminary periodic unit price that remains constant during a given period. This price can be, for example, a standard price or an actual price from the previous period determined by the material ledger.

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During a period the material ledger posts differences to a price difference account and updates them separately for each material. At the end of a period, you can use single-level price determination to assign the variances for each material. This allows the cumulative price differences to be assigned proportionally to the ending inventory quantity and the material consumption of the period.

To carry out period-end processing in the SAP Material Ledger you create an actual costing run with Transaction CKMLCP or via menu path:

Accounting • Controlling • Product Cost Controlling • Actual Costing/Material Ledger • Actual Costing • Edit Costing Run

The screen shown in Figure 2 is displayed.

Figure 2: Edit Actual Costing Run

The the actual costing run screen is similar to the standard cost estimate costing run screen you run with Transaction CK40N. You first assign plants to the actual costing run, and then you follow the rows listed in the Flow step column on the left. To carry out single-level price determination, you first carry out the Selection and Determine Sequence steps and then the highted Single-Level Price Determination step.

The system calculates periodic unit prices for the period and updates them in all valuation approaches in the material price analysis. The system also updates the price in company code currency in the material master for the period.

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Multilevel price determination

During multilevel price determination you assign the differences calculated during single-level price determination progressively to the next-highest levels of the production process using a multilevel actual quantity structure, which is a type of actual bill of material (BOM). For example, purchase price variances PPV for raw materials are rolled up to subassemblies and then to finished products.

The system calculates periodic unit prices for the period and updates them in all valuation approaches in the material price analysis. The system also updates the price in company code currency in the material master for the period.

At period-end during actual costing, you can either:

  - Revaluate inventory with the actual price - Periodic Unit Price PUP
The material stock account is debited with the proportional price differences, and the price difference account is credited with the same amount.

  - Don't revaluate inventory and post price differences to an accrual account. If you don't revalue inventory with the actual price, the amount that would have been posted to the material stock account is posted to another price difference account.

Price differences allocated to consumption remain on the price difference account at this point. You decide to revalue inventory or not according to which financial G/L accounts are posted to during automatic account determination with configuration Transaction OBYC. To proceed with multilevel price determination, execute the remaining steps following single-level price determination shown highlighted in Figure 2.