Material Ledger

More effective decision taking in the area of records and management of production material costs.

Material Ledger serves for recording of real costs of purchased materials and products that are being
produced and at the same time it takes into consideration and records all factors effecting price
fluctuation. The use of functionality of Material Ledger in the system SAP R/3 enables faster and more
effective decision taking on all purchase and sale management, controlling and production levels
.
Real Costs
Upon ascertaining of real prices of purchased materials, the price of raw materials, commercial goods
and overhead material is influenced by purchase prices and expenses for the sole purchase
transaction. In addition to this the real price of products and semi-finished products is composed of
real costs connected to production or as the case may be with further processing of raw materials and
material.

Parallel Currencies
Multinational companies can use Material Ledger for recording of inventory in up to three parallel
currencies, with the possibility of recording historical exchange rates:

• in the currency of accounting area – valuation according legislation of the given country with
connection to financial accounting
• in the currency of the group – valuation within the group
• in the currency of the profit centre – another valuation for goods exchange between profit
centres within the company.

Stock Valuation
The information system SAP R/3 generally supports two methods of stock valuation, i.e. valuation by
means of standard or variable prices. Material Ledger combines advantages of both methods – static
and stability of standard prices suitable for costing of products with dynamics and flexibility of variable
prices, which more faithfully reflect the reality. At the same time the history of real and standard prices
gets recorded in time. The tool Material Ledger provides also the possibility of revaluation of stock on
the basis of real calculation, which is required by valid legislation in some countries.

Benefits of Material Ledger can be summed up as follows :

• ascertaining of real costs for procuring of material and resulting from this support of decision
taking on optimising of amount and kinds of material inventory from the aspect of time
• decision taking on selection of suppliers with the purpose of elimination of price variances is
made easier
• possibility of keeping records of inventory in up to three parallel currencies and from this
resulting advantages in consolidation within the companies belonging to multinational
holdings and groups; support in decision-taking on the selection of the most advantageous
currency in purchase of materials and semi-products
• support of decision taking in selection of the manner of valuation of stock, this will effect
structure and value of the company assets, and at the same time it will finally effect the
profits of the company
• supporting material for setting the optimum portfolio of the products from the point of view
of real production costs according to individual products (covering contribution for the
production of the product)

• supporting material for decision taking on the manner of valuation of products from the
point of view of production costs and supporting material for negotiation with suppliers and
clients on provided discounts and bonuses