Multiple Valuation Approaches/Transfer Prices in CO-PA

 

In Profitability Analysis, all sales to external customers (outside the group) are represented from the point of view of the company code. This view only shows you the external sales, valuated using the legally oriented cost of goods manufactured.

If your organization uses profit centers, which operate independently on the market just like separate companies, you need to be able to see internal sales, such as goods withdrawals or deliveries, between profit centers if you want to be able to analyze the profitability of your profit centers. Moreover, you need to valuate both internal and external sales, not with legal valuation, but with a profit center valuation, that is, using costs of goods manufactured based on transfer prices.

If your organization valuates exchanges of goods between profit centers with transfer prices, you can update this information in costing‑based CO‑PA and thus evaluate your sales from both the legal viewpoint and the profit center viewpoint. The following valuations are possible:

For detailed information on transfer pricing and multiple valuations, see Multiple Valuation Approaches/Transfer Prices in the online documentation for Profit Center Accounting.

Prerequisites

To be able to update values with profit center valuation in CO‑PA, you system must meet the following criteria:

  1. Your system must valuate exchanges of goods between profit centers using transfer prices.

  2. A currency and valuation profile (in which at least one valuation approach uses profit center valuation) must be defined and assigned to the required controlling area in Customizing under Start of the navigation path General Controlling Next navigation step Multiple Valuation Approaches/Transfer Prices End of the navigation path, and multiple valuations must be activated.

In addition, you need to make some Customizing settings specific to CO‑PA:

  1. You must activate profit center valuation for at least one currency under Start of the navigation path Structures Next navigation step Define Operating Concern Next navigation step Maintain Operating Concern Next navigation step Attributes End of the navigation path.

  2. You must define accounts for internal goods movements between profit centers to value and quantity fields in CO‑PA and activate profit center valuation under Start of the navigation path Flows of Actual Values Next navigation step Multiple Valuation Approaches/Transfer Prices End of the navigation path.

  3. You must activate the characteristic Partner Profit Center (field PPRCTR) under Start of the navigation path Structures Next navigation step Define Profitability Segment Characteristics (Segment-Lvl Characteristics End of the navigation path.

    To be able to analyze the results generated between profit centers, you need to know which profit centers sold to which other profit centers. To enable you to do this, not just the characteristic Profit Center (PRCTR) is available, but also Partner Profit Center (PPRCTR). This gives you both profit centers as characteristics for analysis in CO‑PA, for instance where you have cross-profit center stock transfers.