What is net realizable-value method in SAP CO-PC - Product Cost Controlling?

SAP Term: net realizable-value method

• Component: CO-PC

• Component Name: Product Cost Controlling

• Description: The method used in joint cost situations to determine the cost of the primary product. This method calculates the cost of goods manufactured of the primary product by subtracting the cost of the by-products from the total cost of the process.

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• Key Concepts: 
  The net realizable-value method is a cost accounting method used in SAP's CO-PC Product Cost Controlling component. It is used to determine the value of inventory items by subtracting the estimated costs of selling and disposing of the item from its expected selling price. This method is used to calculate the value of inventory items that are expected to be sold in the near future. 
  
  How to use it: 
  The net realizable-value method is used to calculate the value of inventory items that are expected to be sold in the near future. To use this method, you must first determine the expected selling price of the item. Then, you must subtract any estimated costs associated with selling and disposing of the item from this expected selling price. The resulting figure is the net realizable-value of the item. 
  
  Tips & Tricks: 
  When using the net realizable-value method, it is important to consider all costs associated with selling and disposing of an item. This includes costs such as shipping, handling, and storage fees. Additionally, it is important to consider any taxes or other fees that may be applicable when calculating the net realizable-value of an item. 
  
  Related Information: 
  The net realizable-value method is one of several cost accounting methods used in SAP's CO-PC Product Cost Controlling component. Other methods include standard costing, actual costing, and moving average costing. Additionally, SAP offers a variety of tools and resources to help users understand and utilize cost accounting methods more effectively.