Up to and including Release 3.1, the data in Profit Center Accounting was valuated from the point of view of the legally independent units (company codes). In Release 4.0, you can use transfer prices to valuate material inventories and goods movements from the group view and from the point of view of profit centers.

In Profit Center Accounting, you can choose one of these three views for each controlling area. You do this in Customizing for Profit Center Accounting.

As in Release 3.1, you can valuate business transactions in Profit Center Accounting using the same method as that used for the individual financial statements of the companies in the group.

Many groups valuate exchanges of goods between affiliated companies using a group cost of goods manufactured, i.e. without internal profits. The receiver profit center receives a semifinished product at cost. In this approach, profit centers only earn profits with nonaffiliated companies and not for internal transactions.

If you use your profit centers to monitor their internal profits, you need to activate transfer pricing for exchanges between profit centers. These transfer prices are automatically selected for goods movements (stock transfers, goods usage) between profit centers and shown as "internal revenue" and "internal costs" in Profit Center Accounting. Thus a goods withdrawal for a production order is shown as a sale in Profit Center Accounting, whereas the same transaction is a consumption posting when seen from the point of view of the company code.