In Product Cost Controlling, you can use multiple valuation approaches to calculate standard prices according to the legal, group and profit center valuation view.

With the group costing function, you can calculates the group cost of goods manufactured.

Materials purchased from companies within the group are displayed as material expenses for the receiver company, even though these expenses include direct costs, overhead, and the profits of the sender company. If the production process has several steps, more and more costs become material costs. You can display shares of the value added and internal profits separately.

From the profit center valuation viewpoint, the use of transfer prices for internal sales means that the sender profit center’s cost of goods manufactured is replaced by the transfer price in the receiver profit center’s point of view.

The structure of a group cost estimate adds together the cost component split (including profits) of all the steps involved in the production process without losing the cost component splits of the previous steps. In addition, the split is shown separately by supplying company codes and profit centers. Likewise, the profit markup of the supplying company codes and profit centers is also displayed.

This information forms the basis for the calculation of the group cost of goods manufactured (without internal profits) and the cost of goods manufactured from the profit center valuation view according to the relevant transfer prices.

For more information on using multiple valuation approaches in material costing, see Group Costing and Multiple Valuation Approaches.