Generated by Jive on 2015-08-26+02:001

Settlement Options in Refurbishment Order !

It is a common understanding that Settlement of a Refurbishment Order happens on Material. This is true, but

not always.

It depends upon whether the price control indicator for the Batch material in material master is

Standard (S) or Moving average price (V).

Batch material refers to the material with Valuation types C1/C2/C3. So if the price control indicator of Batch

material is:1. V: Settlement happens on the Material Master.2. S: Settlement doesn’t happen on Material Master, but on price difference account.

Scenario 1: Consider material 795, with Batch material’s price indicator = V

Settlement Options in Refurbishment Order !

Generated by Jive on 2015-08-26+02:002

Have 1 unit each of batch C1, C2, C3. Therefore the material valuation = (200+80+10)/3 = 96.67

Settlement Options in Refurbishment Order !

Generated by Jive on 2015-08-26+02:003

Created a Refurbishment Order for this material (for C3) using IW81. Done GI. Done GR using IW8W.

After GR, we have 1 unit of C1 and 2 of C2.

Therefore, Material valuation = (1*200 + 2*80)/3 = 360/3 = 120

Cost incurred in WO: 10 for GI of 1 unit of C3 and -80 for GR of 1 unit of C2.

So the balance amount on WO is -70.

Settlement Options in Refurbishment Order !

Generated by Jive on 2015-08-26+02:004

Settlement: Since batch material price indicator is V, therefore settlement of balance amount happens on

material.

So the settlement happens on GL Spare Parts, against material master.

Since the settlement happens on material, therefore material valuation also changes as:

1*200 + 2*80 = 360

360-70 (for settlement on material) = 290 /3 = 96.67

Settlement Options in Refurbishment Order !

Generated by Jive on 2015-08-26+02:005

Scenario 2: Consider material 796, with Batch material’s price indicator = S

Settlement Options in Refurbishment Order !

Generated by Jive on 2015-08-26+02:006

Have 1 unit each of batch C1, C2, C3. Therefore the material valuation = (200+80+10)/3 = 96.67

Followed same steps as above. Create Refurbishment Order, GI, GR. Skipped the screenshots.

Valuation of material after GR, but before settlement.

Settlement Options in Refurbishment Order !

Generated by Jive on 2015-08-26+02:007

Therefore, Material valuation = (1*200 + 2*80)/3 = 360/3 = 120

Settlement: Since batch material price indicator is S, therefore settlementdoesn’t happen on material, rather on Price diff account.

So the settlement happens on GL Price Diff account and not on material master.

Since the settlement doesn’t happen on material, therefore no change in material valuation:1*200 + 2*80 = 360

360 - 0 (for settlement) = 360 /3 = 120