Use

Profit centers are responsible for their own costs and revenues and are treated as “independent units” within the legally independent company. They are judged by their profit or loss, just like independent companies.

Transfer prices have a coordination function on the “internal market” within the corporation. The transfer prices make employees into entrepreneurs, who enter into supplier-customer relationships with other units within the organization. Internal allocations using transfer prices lets you distribute the whole organization’s profits to the proper link in the value‑added chain.

It is therefore necessary to detach the management‑oriented corporate control from the legal structure of the organization.

You can portray profit center accounting in your system either by using classic Profit Center Accounting (EC-PCA) or by using New General Ledger Accounting, which incorporates Profit Center Accounting as an integral part.

Integration

See Parallel Valuations in Individual Applications .

Prerequisites

To store transfer prices in the profit center view, profit center valuation must be active in a valuation approach of a currency and valuation profile.

Features

For more information about using transfer prices in Profit Center Accounting, see:

Valuation Views in Profit Center Accounting

Determining Transfer Prices

Transfer Pricing Using the Conditions Technique

Posting Logic and Account Determination

For more information on planning using transfer prices, see: Quantity-Based Profit Planning