SAP- CO : Some of the Product Cost Approaches

§ Finished Goods Inventory in Production Plant AAAA

• Valuation at moving average price per batch (FIFO batch valuation) 
• A new batch number will be generated for each production order (work order) producing the finished product
• Each batch will have a unique material cost
• The material cost of a batch is calculated from semi-finished goods and raw materials that are directly constituting to the finished product according to the BOM

§ Semi-finished Goods Inventory in Production Plant AAAA

• Valuation at standard price updated from standard cost estimates
• All inventory of each semi-finished product will be valuated the same (at the defined standard cost)
• The standard cost can be updated either: 1) manually, or 2) automatically from the cost roll-up (can be using weighted average) of the lower levels of the BOM and can be selectively updated only for certain semi-finished products.
• Re-valuation of existing inventories for semi-finished product will happen whenever the standard cost is updated.  The gain or loss will post to the P/L accounts

§ Raw Materials Inventory in Production Plant AAAA

• Raw materials will be valuated for each batch of the receipts of purchase using the purchase order price.
• The batches of raw materials will be issued to production orders at FIFO.
• No re-valuation of raw materials will be required.

§ All Inventory in Branches

• Inventory will be valuated for each batch of the receipts of STO using the STO price (transfer prices plus the landed costs).
• The batches of goods will be delivered to customers at FIFO.
• No re-valuation of inventory will happen.