1870818 - Wrong FIFO Amount in Journal Entry

After ran the Material Cost Accumulation and setting the cost of your material as FIFO cost, you notice system is using the wrong FIFO cost amount in the Journal Entry created for the Warehouse Confirmation ID you received.

 SAP Business ByDesign

These are your Warehouse Confirmations:
1º Warehouse Confirmation A = 1.500,00 USD _ Journal Entry X / 10 quantities
2º Warehouse Confirmation B = 4.500,00 USD _ Journal Entry Y / 20 quantities
3º Warehouse Confirmation C = 7.500,00 USD _ Journal Entry Z / 15 quantities

Your Sales Order has 17 units and you expect to see:
For the 10 first items the FIFO cost should be = 150,00 (1.500,00 / 10)
For the other 7 items the FIFO cost should be = 225,00 (4.500,00 / 20)

But system is using as FIFO cost the average of the Warehouse Confirmation:
7.500,00 + 4.500,00 + 1.500,00 / 45 = 300,00 USD

1. Go to Inventory Valuation work center.
2. Go to Periodic Tasks view.
3. Go to Material Cost Accumulation subview.
4. Show Material Cost Accumulation Runs in Update Mode.
5. Search for your Run ID, there are no errors.
6. Go to Execution Details tab
7. Click the Execution ID
8. Go to Processed Successfully tab
9. Source Document Item ID’s:
   1º Warehouse Confirmation A = 1.500,00 USD _ Journal Entry X
   2º Warehouse Confirmation B = 4.500,00 USD _ Journal Entry Y
   3º Warehouse Confirmation C = 7.500,00 USD _ Journal Entry Z

1. Go to Inventory Valuation work center.
2. Go to Master Data view.
3. Go to Material Unit Costs subview.
4. Filter your material ID.
5. It’s possible see the below Cost Type amounts:
   Cost Type = Inventory Cost / 300,00 USD as the cost
   Cost Type = Periodic FIFO Cost / 300,00 USD as the cost

System behavior is correct.

You have to distinguish between Perpetual Cost Method and FIFO Cost Determination. The system has two different kinds of Perpetual Cost Methods, Standard and Moving Average.

These methods are the basis of the maintenance of inventory costs. The perpetual cost method has strong impact of the valuation of goods movement.

System will always execute the valuated based on the inventory cost and never based on FIFO costs. FIFO Cost Determination is a periodical run with which FIFO Cost for materials can be set. This is statistical in the first place.

However, FIFO Costs can be used as new Inventory Costs via Update Inventory Cost.

Then the whole stock quantity is revaluated and adjusted to the FIFO Cost as new Inventory Cost. If you want to do this it is recommended to change your Perpetual Cost Method to Standard.

In this case, the posting done over the Journal Entry is correct as it is not possible to use FIFO to valuate the goods movements. For this you would need FIFO as a perpetual cost method and in SAP Business ByDesign, FIFO is not a Perpetual Cost Method.

FIFO; First In; First Out; inventory valuation method; cost type; material , KBA , SRD-FIN-INV , Inventory , How To