Calculation of the Group Cost of Goods Manufactured 
Calculation of the Group Cost of Goods Manufactured
Use
The calculation of the group cost of goods manufactured (COGM) is the basis for determining the interunit profit or loss to be eliminated. In accordance with the economic unit concept, this cost is determined for all subsidiaries of the group as if they were a single entity. Transportation costs for goods transferred within the corporate group, for example, are distribution costs from the point of view of the individual enterprise and part of COGM from the point of view of the group.
Prerequisites
The following data is required for calculating the group COGM:
Incidental acquisition costs – for example, group-internal transportation costs – are read from the additional financial data that reflects the trade relationship.
The system requires the following information from the additional financial data:
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Inventory Data |
Supplier Data |
|
Consolidation units involved in transaction |
Consolidation units involved in transaction |
|
Product group |
Product group |
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Book value |
Profit Margin |
|
Inventory quantity |
Rate of distribution costs (as % of sales) |
|
Valuation allowance |
Cost of goods manufactured (as % of sales or per unit of measure) |
|
Incidental acquisition costs |
Features
The system can calculate group COGM in the following ways:
Under the assumption that:
sales = book value + valuation allowance – incidental acquisition costs...
the group cost of goods manufactured are calculated as follows:
group COGM = sales * COGM percentage rate + incidental acquisition costs
group COGM = quantity * COGM + incidental acquisition costs
When you start the elimination task, the system translates the inventory data and supplier data from the local currency into the group currency to determine the interunit profit/loss.