Standard Cost and Valuation PriceThe standard cost is calculated for an item and enterprise unit combination. Standard cost The standard cost is calculated by using a price calculation code, and is based on standard structures, for example, routing and BOM. The purpose of the cost calculation is:
The standard cost is situation-independent (fixed price). Valuation price The valuation price calculation is done by using a valuation method ( fixed transfer price (FTP), last in, first out (LIFO), first in, first out (FIFO), moving-average unit cost (MAUC), or lot costing) and is based upon economic value. The valuation price calculation is situation- and transaction-dependent. The valuation price calculation is done on the basis of:
The purpose of the valuation price calculation is to facilitate financial transactions and accounting. Two different prices occur within the valuation price. This depends on the moment when LN books the surcharge, which can be during the receipt or during the issue of an item. The calculation of this so-called receipt valuation price and the calculation of the issue valuation price are different. The calculations are expressed as follows: For the receipt valuation price calculation of item A in warehouse 001, LN determines:
The issue valuation price is equal to the receipt valuation price plus:
| |||