Transfer Prices in Cost Object Controlling

Transfer prices are used to valuate the transfer of goods and services between the business units of a corporate group. The value of a good can be updated in up to three different valuation approaches.

The valuation approaches provide different perspectives on business transactions from the point of view of the individual company, of the corporate group, and of the profit center. You can define the following views in multiple valuation:

Legal valuation view
Group valuation view
Profit center valuation view

Features

If you are using transfer prices, certain data can be updated in parallel with the leading valuation approach in the group view and in the profit center view.

Transfer prices can be used in Cost Object Controlling in the following manufacturing environments:

Make-to-stock production
Sales-order-related production with a valuated sales order stock

The following functions of Cost Object Controlling support transfer prices:

Preliminary cost estimates for manufacturing orders
The planned costs calculated in a preliminary cost estimate for a manufacturing order can be updated in up to three valuation views. You create preliminary cost estimates for manufacturing orders in Product Cost by Order.
You create preliminary cost estimates for manufacturing orders in Product Cost by Order.
Work in Process at Actual Costs
You can update work in process at actual costs in up to three valuation approaches in parallel. You can calculate work in process at actual costs in Product Cost by Order.
Distribution for co-products
The costs of a joint production process collected on the order header of a manufacturing order are distributed to the co-products at the end of the period. You can perform this distribution in multiple valuation approaches.
Collective orders with automatic goods movements
Cost controlling of collective orders with automatic goods movements is carried out in the Product Cost by Order component.
Sales order costing
When you create a sales order cost estimate in Product Cost by Sales Order, the calculated planned costs can be updated in multiple valuation approaches.
Results analysis
When you perform results analysis in Product Cost by Sales Order, the calculated results analysis data can be updated in multiple valuation views.

Please note the planned costs used to calculate the results analysis data are not always available in multiple valuation approaches. For example, if the results of a sales order cost estimate updated to the sales order item are used to calculate the planned costs, these planned costs are on the sales order item only in the leading valuation approach.
Update of inventory values of finished products
When products are received into inventory (goods receipt posting) and when the difference between the debit and credit of orders is settled, the values can be updated in multiple valuation approaches.
Settlement
At the end of the period, the difference between the debit and credit of manufacturing orders and product cost collectors can be settled to Financial Accounting (FI), Profit Center Accounting (EC-PCA), Profitability Analysis (CO-PA), and Actual Costing/Material Ledger (CO-PC-ACT). You can perform this settlement in multiple valuation approaches.

Constraints

Variances on production orders result automatically from the inventory receipt for each valuation approach. These variances are posted to the price difference account.

The variance calculation function, which breaks down the total variance into variance categories, is only supported by the operational valuation approach. You should take this into account if you are using the application component Profitability Analysis and want to transfer these variance categories into Profitability Analysis. The variances for the additional valuation approaches, too, can be transferred into Profitability Analysis through automatic account assignment, but these variances can only be transferred as a total and not broken down into variance categories. Variances from the group view are not transferred into CO-PA.

More Information

Implementation Guide (IMG)

Controlling General
Product Cost by Order
Actual Costing/Material Ledger

For detailed information on transfer prices, refer to the following:

Transfer Prices

and in the section Transfer Prices in the following sections.

For information on valuated sales order stocks, refer to the following section:

Valuated Sales Order Inventory

For information on preliminary costing for manufacturing orders, refer to the following section:

Preliminary Costing of Manufacturing Orders

Preliminary Costing of CO Production Orders

For information on distribution for co-products, refer to the following section:

Distribution for co-products

For information on work in process at actual costs, refer to the following section:

Work in Process in Product Cost by Order

For information on collective orders with automatic goods movements, refer to the following section:

Collective orders with automatic goods movements

For information on costing sales orders, see the following section:

Sales order costing

For information on results analysis, refer to the following section:

Results Analysis

For information on settlement, refer to the following sections:

Settlement in Product Cost by Order or Period

Settlement of Sales Order Items

For general information on updating the inventory values of finished products in multiple valuation, refer to the document Actual Costing/Material Ledger.

For special information on displaying material ledger data in multiple valuation, refer to the following section:

Display Material Ledger Data