This scope item enables actual costing for material inventory. Initially, all goods movements in a period are valuated based on standard price. All price and exchange rate differences for the material are collected in the material ledger. Similarly, all confirmations are valuated based on a standard activity rate.
At the end of the period, an actual price (called the periodic unit price) is calculated for each material based on actual costs within the period and an actual activity rate is calculated based on the actual costs for the cost center.
This calculated actual price can then be used to revalue inventory at period end. After you enter the activity actual rate manually, the actual activity price calculation supports revaluation of COGS and WIP.
For actual costing, to calculate the periodic unit price for your materials, you need to activate actual costing in addition to material ledger. You also need to choose single-level/multilevel price determination for your materials and use price control standard price for all materials you want to use in actual costing.
This scope item is excluded from standard scope as this enables actual costing, a more complex costing method that is only required by some businesses.
This Scope item is used in the following way: