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SAP AG 1999

Additional Slides for Detailed Display of:

Currency and Valuation Examples

Calculation of Exchange Rate Differences

Details for Determination of the Costing Sequence(Multilevel Actual Costing)

Contents:

Appendix

© SAP AG AC530 9-1

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SAP AG 1999

Example of a Single Currency

Enterprise with Headquarters in the USALocal Currency

Requirements

US dollars

Settings in FI

10: US dollars

Settings in CO

10: US dollars

Requirements

US dollars

Settings in FI

10: US dollars

Settings in CO

10: US dollars

Company: Detroit

Material Ledger

1 data record

Material Ledger

1 data record

Price / material

10: 100 USD

Price / material

10: 100 USD

Company: Chicago

Actual CostingActual Costing

In this example, an enterprise has its headquarters in the USA. Two companies are a part of this enterprise. One is in Detroit, the other in Chicago.

The enterprise‘s headquarters must generate their closing in US dollars, in accordance with the legal requirements applying in the USA.

Because both companies are in the USA, no other currency is necessary. The same valuation method is valid for the enterprise headquarters and both companies. Only one valuation method is necessary.

For this reason, only one currency is necessary in the SAP components Financial Accounting and Controlling. This currency is of currency type 10: local currency, legal valuation.

With this, you can use actual costing in the material ledger to calculate actual costs for materials and, if necessary, revaluate in legal valuation.

© SAP AG AC530 9-2

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SAP AG 1999

Example of Parallel Valuation

Enterprise with Headquarters in the USALocal CurrencyGroup CurrencyHard Currency

Requirements

US dollars

US dollars

Settings in FI

10: US dollars

31: US dollars

Settings in CO

10: US dollars

31: US dollars

Requirements

Mex. pesos

US dollars

Settings in FI

10: Mex. pesos

31: US dollars

40: US dollars

Settings in CO

10: Mex. pesos

31: US dollars

Company: Mexico City

Material Ledger

2 data records

Material Ledger

3 Data records

Price / material

10: 100 USD31: 90 USD

Price / material10: 800 MXN31: 90 USD40: 110 USD

Company: Detroit

Actual CostingActual Costing

This slide shows you an enterprise with headquarters in the USA. One company of this enterprise is located in Detroit, another in Mexico City. As in the previous example, the enterprise headquarters generates its closing in US dollars, according to the legal requirements applying in the USA.

The company in Detroit must generate its closing in US dollars, according to the legal requirements applying in the USA. At the same time, the company reports its closing to the enterprise that consolidates the individual closings of all the companies. The currency used for the consolidation is called the group currency. In the process of consolidation, all internal profits are eliminated. The resulting valuation approach is called group valuation.

The company in Mexico City must generate its closing in Mexican pesos, according to the legal requirements applying in Mexico. As with the company in Detroit, along with generating its closing according to the the legal requirements applying in the country, the company in Mexico City must also report its closing to the enterprise. This reporting must take place in the currency of the enterprise, the group currency (USD). In addition, the closing must also be generated in a hard currency according to Mexican law, for inflation reasons.

For the SAP system, this means that both companies define the local currency as currency type 10 (Detroit: USD, Mexico: MXN). Additionally, both companies define a group currency (currency type 31) in USD for group valuation. The company in Mexico City also defines a hard currency (currency type 40) in USD.

© SAP AG AC530 9-3

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SAP AG 1999

Calculation of Exchange Rate Differences (WithPlanned Exchange Rate)

MXN

USD

260 280

P TypePlan exch. rate valid at IRMXN 100 = USD 10

M TypeExchange ratevalid at IRMXN 100 = USD 12

GR price IR price

33.6

Exch.rate diff.: USD 5.601.

"True" price difference: USD 2.40(MXN 20 * 0.12)

2.

28.0

Price difference: USD -3.20(- Exch. rate diff. + "true" price difference)

3.

31.2GR price

Planned exch. rate drop

IR price

This example explains how exchange rate differences are calculated using exchange rate type P. The numbers are based on the optional exercise in the exercise scenario of the course participants.

Explanation:

1) The invoice receipt of MXN 280 shows a price difference of MXN 20. Since the planned exchange rate takes into account a fall in the exchange rate (MXN 100 drops from USD 12.00 to USD 10), an exchange rate difference of USD 5.60 is reported in the material ledger: (280 * 0.12) - (280 * 0.10) or USD 33.60 - USD 28.0 = USD 5.60.

2) The price difference actually translated (the "true" price difference) is USD 2.40 (MXN 20 * 0.12).

3) The "true" price difference less the exchange rate difference results in a remaining price difference of USD -3.20. This price difference is reported in the material ledger.

© SAP AG AC530 9-4

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SAP AG 1999

Costing Sequence in the Costing Run

One-way level

One-way level

One-way level

Cyclical level

Cyclical level

...

...

...

...

One-way level

Under Determine sequence, the system determines the sequence in which costing is later performed. This internal function is the lower level for multilevel actual costing. Actual data concerning movements and transactions from all areas of Logistics (Materials Management, Production Planning, etc.) is collected in the background for quantity structure determination.

Quantity structure determination results from a preparation of actual data in order to guarantee the prerequisites for multilevel actual costing. As opposed to the planned quantity structure, the actual quantity structure consists of the objects (materials, routings, BOMs, etc.) that were used during production. From the input data, the quantity structure tool creates a process model, which contains materials, processes and procurement and consumption alternatives. This process model is condensed to a predecessor/successor model, which only contains relations (that is quantity flows) between materials. In a final step, the predecessor/successor model is split up into a level model, which describes the sequence in which materials have to be processed. The update of movements and transactions for actual costing is controlled through the controlling level of the component Actual Costing/Material Ledger.

In the result, you see a list of the production levels (for example, Level 1 raw materials, Level 2 semi-finished products, etc.) with information concerning the respective materials determined by the system displayed in hierarchy form. From the level overview, you can branch to the material list that contains detailed information on the material in question. From the material list, you can branch directly to the material ledger data.

© SAP AG AC530 9-5