Valuation Area in SAP – Key Insights & Best Practices

Understanding the Valuation Area in SAP

In SAP, the valuation area determines how material stocks are valuated within the system. Selecting the correct valuation area is crucial, especially when dealing with production costing and production planning (PP).

Question:

Your project uses production costing and production planning functionality. Which valuation area must be used?
a) Company code
b) Purchasing Organization
c) Plant
d) Client
Correct Answer: ✅ c) Plant

Explanation:

SAP allows you to set the valuation level at different levels, such as plant level and company code level. Here's why plant-level valuation is required:

Valuation at Plant Level

  • Plant-level valuation is necessary when:
  • Your system requires Production Planning (PP) or Costing functionalities.
  • You are using an SAP Retail system.

Valuation at Company Code Level

  • A decision to use company code-level valuation applies across the entire client.
  • However, SAP recommends plant-level valuation to allow more flexibility in stock management and production planning.

Key Takeaway

For projects involving production costing and production planning, the valuation area must be set at the plant level to ensure accurate cost calculations and efficient material tracking.
 

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See also
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