Multiple Valuation Approaches/Transfer Prices in CO-PA (SAP Library

Multiple Valuation Approaches/Transfer Prices in CO-PA

Use

The Profitability Analysis (CO-PA) application component normally represents external sales with customers outside the group and other companies within the group. This allows you to analyze the external sales and valuate these using the cost of goods manufactured from a legal or group standpoint.

Organizations that want to handle profit centers as independently operating companies, however, need to be able to see internal sales between profit centers (exchanges of goods, goods issues, stock transfers, and so on) as well as external sales in order to analyze their profit centers correctly in this environment. Moreover, it may be necessary to valuate both internal and external sales from the viewpoint of the individual profit centers (costs of goods manufactured on the basis of transfer prices) in addition to the legal viewpoint.

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:

This graphic is explained in the accompanying text

For detailed information on transfer pricing and multiple valuations, see 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:

Your system must valuate exchanges of goods between profit centers using transfer prices.
A currency and valuation profile (in which at least one valuation approach uses profit center valuation) must be defined and assigned to the desired controlling area in Customizing under General Controlling ® Multiple Valuation Approaches/Transfer Prices, and multiple valuations must be activated.

In addition, certain settings must also be made for CO-PA Customizing.

You must activate profit center valuation for at least one currency under Structures ® Operating Concern ® Define Operating Concern ® Attributes.
You must define accounts for internal goods movements between profit centers to value and quantity fields in CO-PA and activate profit center valuation (Flows of Actual Values ® Multiple Valuation Approaches/Transfer Prices).
You must activate the characteristic Partner profit center (field PPRCTR) under Structures ® Define Profitability Segment Characteristics (Segment-Lvl Characteristics).

To be able to analyze the results generated between profit centers, you need to know which profit centers sold to which other profit centers. Consequently, each internal transaction has to have two profit centers, which are stored in the characteristics Profit center (PRCTR) and Partner profit center (PPRCTR). This gives you both profit centers as characteristics for analysis in CO-PA.

The characteristic Partner profit center is a fixed characteristic in the operating concern data structures, and must be active as a segment level characteristic.