Price Control V or S in material type (Price Control in material master)

When is it useful to use the price control V or S in material master?
Do I have to follow the SAP standard setting in thematerial type for the following material types:
-Roh (raw materials)-> moving average price
-Halb (semifinished products)-> standard price
-Fert (Finished Products)-> standard price
In which case and why is useful to change these standardsetting in material type?
What is difference between standard price and movingaverage price?
When and how to use it?

Standard PriceAreused for products that do not fluctuated frequently. It is usuallyused for finished or semi finished products.

Moving Average priceAre used mainly for raw materials that are purchased externally. The advantage of using moving average price for your raw materials is thatyour inventory costs will always reflect the current market cost.

SAP stronugly recommends thatyou do not select price control V for semi-finished products and finishedproducts, Because doing so will very easily cause the calculationof unrealistic valuation prices. SAP recommends:
Price Control V for raw materials and trading goods; price control S for semi-finished products and products.

If you nevertheless Select Price Control V, take carein the following situations:

1. unrealistic prices occur if materials are producedand also retire during one period (that is, the inventory at the end ofthe period is smaller than the total of acquisitions from production orders) and if, in addition, several production orders belonging to a materialwere finished in this period, and the production order settlement calculatesvariances at the end of the period. every single production order carriesout an inventory coverage check and may therefore cause the moving averageprice to be changed. however, the individual production orders do not checkwhether the inventory available at the end of the period has already beendebited by another production order.

Example: On 20 workdays in the period, 1 piece of materialxyz was produced for each day and delivered to the warehouse at a priceof USD 1000. at the end of the period there is 1 piece at the warehouse. since an activity price of a participant cost center was higher thanplanned, every single production order calculates cost of goods manufacturedof USD 1100 during the settlement. every single one carries out a inventorycoverage check and finds out that the variance can be posted completelyto the inventory. that is, the ending inventory of one piece is debitedwith USD 20x100 and it consequently es a price of USD 3000.

1. A settlement is carried out although not all costshave yet been posted to the order. This can even result in a price of 0for the delivered product.
2. No period check of the costs is carried out on theorder, that is, costs from previous periods may be settled.
3. Settling orders is already possible in the 'deliverycompleted' status.

Solution:

Standard Price for products together with possible manualprice changes.
If you are required to valuate semi-finished and finishedproducts with actual prices that correspond to the costs of the actualproduction, SAP recommends you use the function of the material ledgerfor this. here, a periodic actual price is created that is calculated ona much more reliable basis than the moving average price. a so-called pricelimited quantity is used which makes sure that in the above example pricedifferences are proportionally taken into account (95% of the total pricedifferences) when valuating the 19 pieces withdrawn from material XYZ whichresults in a periodic actual price of 1100 USD. in addition, it is possibleas of release 4.5 to even take into account the variances of the actualprices of the raw materials in the valuation of the semi-finished and finishedproducts that are manufactured from it.
 

If we select standard price for any type of materialor moving average price and then make po, it will pick from material masteror what?

The purchase info record have the first priority. When no po info record is found, the purchase order will pick the userlast enter price. The po module do not pick up any price from materialmaster.

Price Control V or S in material type (Price Control in material master)