Effects of Transfer Prices on Cost Element Accounting in CO

One basic principle of the Controlling applications in the SAP system is that all the quantity flows in the Logistics applications are reflected in real time as value flows in Financials.

If you use multiple valuation approaches in your system, you also need to store these valuation approaches in Controlling, that is to say, in Cost Element Accounting. This means that, for example, when you use a material for a production order, separate goods usage postings are stored in parallel according to the different valuations.

You can manage up to two more valuation approaches in parallel in addition to the legal valuation approach. Which valuation approaches are managed with which currency type is defined in the currency and valuation profile.

The multiple valuation approaches are updated in one of more ledgers of the universal journal entry.

For more information about using multiple valuation approaches in Cost Element Accounting, see classic Profit Center Accounting.

Multiple Valuation Approaches in Overhead Cost Controlling

Multiple valuation approaches are also used in Overhead Cost Controlling.

This means that you can post materials usage to cost centers using different valuation approaches.

You cannot use transfer prices nor multiple valuation approaches for activities. This means that activity allocations are valuated the same in all valuation approaches, and that you can only calculate planned activity prices and planned overhead in the leading valuation.

You can calculate up to three actual prices in parallel. In this way, valuation can be carried out in all three valuation approaches. If you do not use actual price determination, the system uses the plan price to valuate actual data. You should not view the multiple actual prices as transfer prices for activities. Actual price determination only takes into account the different primary costs that arise as a result of transfer pricing for goods movements.

Nevertheless, multiple valuation approaches are supported for all secondary allocations, thus ensuring that the value flows are complete.

For more information about using multiple valuation approaches in Overhead Cost Controlling, see:

Multiple Valuation Approaches in Overhead Cost Controlling

Multiple Valuation Approaches in Cost Object Controlling

Cost Object Controlling has the task of making multiple valuation approaches available for the settlement production variances to Financial Accounting and the material ledger. This applies to those cost objects that are settled to material stock ‑ production orders, process orders, and run schedule headers.

The controlling functions in Cost Object Controlling, such as the variance calculation, are still limited to the leading valuation approach. This applies to the calculation of overhead, variances, and variance categories. Only goods movements are posted using multiple valuation approaches. Consequently, the actual costs for a single valuation approach are always taken from the material costs in that view plus the activities and overhead costs from the operational version.

Before you can settle your costs for the three valuation views, you need to calculate work in process for each approach. For this purpose, the valuation approach stored in the currency and valuation profile needs to be copied to the results analysis version. This makes it possible to use multiple valuation approaches for posting the work in process to FI and for settling the production variances. The production variances in this case are the difference between the actual costs, inward stock movements and work in process using each valuation approach.

For more information about using multiple valuation approaches in Cost Object Controlling, see:

Work in Process in Product Cost by Period

Work in Process in Product Cost by Order

Results Analysis

Product Cost by Sales Order

Transfer Prices in Cost Object Controlling

Transfer Prices in Profitability Analysis

The Profitability Analysis (CO‑PA) application component represents all external sales with customers outside the group and other companies within the group. These external sales could be analyzed from the point of view of internal organizational units in reporting using the characteristic “Profit Center”. However, goods movements between profit centers in the same company code were not considered.

By using transfer prices in Profitability Analysis, you can analyze all internal goods movements between profit centers in addition to the external sales from the company code view, and post them in Profitability Analysis. This enables you to display - in addition to the result of each profit center - the contribution of an individual product to the result of that profit center.

For more details on transfer prices in Profitability Analysis, see:

Multiple Valuation Approaches/Transfer Prices in CO-PA