What is moving average price in SAP FIN-BAC-INV - Inventory Accounting?

SAP Term: moving average price

• Component: FIN-BAC-INV

• Component Name: Inventory Accounting

• Description: Valuation procedure in which the inventory price can be changed by each business transaction such as goods movements, GR/IR clearing with externally procured materials, and order settlement for materials manufactured internally.

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• Key Concepts: 
  Moving Average Price (MAP) is a method used in SAP Inventory Accounting to calculate the value of inventory items. It is based on the average cost of goods purchased or produced over a certain period of time. The MAP is used to determine the value of inventory items for financial reporting purposes. 
  
  How to use it: 
  In SAP, MAP is calculated by taking the total cost of goods purchased or produced over a certain period of time and dividing it by the total quantity of goods purchased or produced during that same period. The resulting number is the MAP for that period. The MAP can then be used to determine the value of inventory items for financial reporting purposes. 
  
  Tips & Tricks: 
  When calculating MAP, it is important to ensure that all costs associated with purchasing or producing the goods are included in the calculation. This includes any taxes, shipping costs, and other related expenses. Additionally, it is important to ensure that all goods purchased or produced during the period are included in the calculation. 
  
  Related Information: 
  MAP can be used in conjunction with other methods of inventory valuation such as FIFO (First In First Out) and LIFO (Last In First Out). Additionally, MAP can be used to calculate inventory turnover ratios which can be used to measure a company’s efficiency in managing its inventory.