What is perpetual cost method in SAP SRD-FIN-INV - FIN-Inventory?

SAP Term: perpetual cost method

• Component: SRD-FIN-INV

• Component Name: FIN-Inventory

• Description: A method of valuating warehouse inventories. The cost method controls how the inventory cost of materials in stock is set. For example, the cost may remain fixed until it is changed manually standard cost method or it may change with each goods movement moving average cost method.

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• Key Concepts: 
  The perpetual cost method is an inventory valuation method used in SAP ERP Financials. It is used to calculate the cost of goods sold (COGS) and the value of inventory on hand. The perpetual cost method is based on the assumption that the cost of goods sold is equal to the cost of goods purchased. This method is used to ensure that the inventory value reported in the financial statements is accurate and up-to-date.
  
  How to use it: 
  The perpetual cost method can be used in SAP ERP Financials by setting up a valuation class for each material type. The valuation class contains information about the cost of goods purchased, such as the unit price, currency, and date of purchase. The system then uses this information to calculate the COGS and inventory value for each material type.
  
  Tips & Tricks: 
  When setting up a valuation class for a material type, it is important to ensure that all relevant information is included. This includes the unit price, currency, and date of purchase. Additionally, it is important to ensure that all transactions related to the material type are recorded accurately in order to ensure that the COGS and inventory value are calculated correctly.
  
  Related Information: 
  The perpetual cost method is one of several inventory valuation methods available in SAP ERP Financials. Other methods include FIFO (First In First Out), LIFO (Last In First Out), and Average Costing. Additionally, SAP ERP Financials also provides functionality for tracking inventory movements such as transfers, returns, and write-offs.