What is moving average cost in SAP SRD-FIN-INV - FIN-Inventory?

SAP Term: moving average cost

• Component: SRD-FIN-INV

• Component Name: FIN-Inventory

• Description: A cost method where the unit cost of the material can change with each transaction such as goods movements, GR/IR clearing with externally procured materials, and order settlement for materials manufactured internally. The moving average cost is calculated by dividing the total value of the inventory by the quantity received into inventory.

Smart SAP Assistant

• Key Concepts: 
  Moving average cost is a method of inventory valuation used in SAP. It is based on the average cost of goods purchased or manufactured over a period of time. This method is used to calculate the cost of goods sold and the value of inventory on hand. 
  
  How to use it: 
  In SAP, moving average cost is calculated by taking the total cost of goods purchased or manufactured during a period and dividing it by the total number of units purchased or manufactured during that period. This calculation is then used to determine the cost of goods sold and the value of inventory on hand. 
  
  Tips & Tricks: 
  When using moving average cost in SAP, it is important to keep track of all purchases and sales during a period in order to accurately calculate the cost of goods sold and the value of inventory on hand. Additionally, it is important to ensure that all costs associated with purchasing or manufacturing are included in the calculation. 
  
  Related Information: 
  Moving average cost is one of several methods used for inventory valuation in SAP. Other methods include FIFO (First In First Out) and LIFO (Last In First Out). Additionally, there are several other components within SRD-FIN-INV FIN-Inventory Management that can be used to manage inventory in SAP.