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RE:[sap-acct] Raw material purchase price variances in Production Order settlement!

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Posted by USER_1957868
on Jun 10 at 12:15 PM 		Mark this reply as helpfulMark as helpful
Any organization or enterprise needs to purchase products and services to support their operations and or maintain their business. Companies and government agencies alike need to purchase these commodities at the lowest price possible to generate a profit. Purchase price variance is the effect of not having up to date contract pricing information when items are purchased. The actual cost and the price being displayed at time the requester selects the item are different. Unfortunately this effect can cause wasted time and effort if reconciliation is necessary.

End users will go the path of least resistance when trying to find an item they are looking for usually an old paper catalog. These prices may have changed several times and of course are wrong when the actual Purchase Order is sent. E-procurement can have huge positive effect on this issue as the end user now goes to a single portal to review and select from all online pricing contracts established by the purchasing department. These online contracts can now be adjusted by the supplier or the purchasing department at will when pricing is re-bid or new contracts are established.

Gravity Gardener
http://gravitygarden.com/procure-to-pay/process-flow-chart.html

---------------Original Message---------------
From: ssateesh
Sent: Thursday, December 03, 2009 12:35 AM
Subject: Raw material purchase price variances in Production Order settlement!

> Hi costing gurus,
> I have a fundamental question on production order settlement. Does the variance calculation of production order include raw material purchase price variances as well, meaning does the calculation settle raw material purchase price variance from the production order to a cost center? Am I missing the concept here?
> Thanks,
> Sateesh

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