Calculating IC Profit/Loss to be Eliminated (SAP Library

Calculating IC Profit/Loss to be Eliminated

The system calculates the IC profit/loss to be eliminated using the following procedure:

A

Book value

B

Depreciation

C

= A + B

Inventory value

D

Incidental costs as a percentage of invoiced amount

E

= C * 100 / (100 + D)

Invoiced amount

F

IC profit/loss of supplying company
(see the following methods 1 and 2)

G

= E - F

Production cost of supplying company

H

Production cost gains or losses as percentage of invoiced amount

I

= G + H

Group production cost

J

= A - I

IC profit/loss to be eliminated

First, the system calculates the invoiced amount. To do this, any value adjustments made to the book value are reversed. The result is the inventory value of the asset. The incidental costs, entered as a percentage of the invoiced amount, are deducted from the inventory value and you arrive at the invoiced amount.

Based on the invoiced amount, the production cost of the supplying company is calculated by deducting the IC profit/loss contained in the invoiced amount.

The group production cost can be determined by adjusting the production cost of the supplying company by the production cost gain/loss necessary from the group point of view.

The IC profit/loss to be eliminated is the difference between the book value and the group production cost.

It is important to note here that the incidental costs and the gain or loss from production cost are treated equally. In the table of group inventory, you only enter a percentage of the incidental costs incurred in relation to the invoiced amount. This percentage is also used to calculate the production cost gain/loss.
The calculation method is based on the assumption that both values are equal as regards content.

For future releases, separate entry of incidental costs and production cost gain/loss is planned.

You can choose between two alternatives for automatically calculating the IC profit/loss contained in the invoiced amount (marked with F in procedure):

Method 1

This method calculates the IC profit/loss using a percentage which you enter in the table of supplier data. There are two variants here:

The percentage is treated as a markup. The IC profit/loss is considered to be a percentage included in the invoiced amount.

The percentage is treated as gross earnings on sales. The IC profit/loss is considered to be a percentage separate to the invoiced amount.

Percentage rate of IC profit/loss

20 %

Invoice amount

2500

Using the percentage rate as a markup results in the following IC profit/loss:
2500 x 20 / 120 = 417

Using the percentage rate as the gross earnings on sales results in the following IC profit/loss:
2500 * 20 / 100 = 500

Method 2

This method calculates the supplying company’s production cost by multiplying the quantity of group inventory by the production cost per unit. So this procedure differs from the above as far as item G is concerned.

Method 1 has priority for the system. This means that if a percentage appears in the table of supplier data, the system automatically applies method 1.

A		Book value
B		Depreciation
C	= A + B	Inventory value
D		Incidental costs as a percentage of invoiced amount
E	= C * 100 / (100 + D)	Invoiced amount
F		IC profit/loss of supplying company (see the following methods 1 and 2)
G	= E - F	Production cost of supplying company
H		Production cost gains or losses as percentage of invoiced amount
I	= G + H	Group production cost
J	= A - I	IC profit/loss to be eliminated