Adopt selling cost structure

In large enterprises, various organizational entities can be involved in fulfilling an order or project for an external customer. For example, location A delivers subassemblies to location B, who use the subassemblies to produce an end item that is sold to the external customer. Internally, location A is the selling entity and location B is the buying entity.

For more insight into the costs of the item, the buying entity can adopt the cost component structure of the item or project of the selling entity. In the previous example, location B can adopt the cost structure of the subassemblies that location B buys from location A. Also, a specific cost component can be defined on which to book the intercompany trade profit margin of the selling entity.

Adopting the selling cost structure not only provides the buying entity with a detailed view of the costs, but higher management can also use this information for various types of analyses. For example, to analyze cost and profit margins for groups of business units involved in sales to particular customers or regions.

Supported scenarios and originating business objects

Adopting the selling cost structure and specifying a margin cost component is supported for most combinations of intercompany trade scenario and originating business object.

Process

Adopting the selling cost structure and specifying a margin cost component is done for the applicable intercompany trade order.

When the intercompany trade order is created, the values from the applicable intercompany trade agreement are defaulted to the Adopt Selling Cost Structure check box and the Margin Cost Component field of the intercompany trade order. You can modify these default settings if the order status is Open or Ready for Process.

The Adopt Selling Cost Structure check box and the Margin Cost Component field are available in these sessions:

• Intercompany Trade Orders (tcitr3100m000)
• Intercompany Trade Orders - Purchase (tcitr3100m300)
• Intercompany Trade Order (tcitr3100s000)
• Intercompany Trade Order - Purchase (tcitr3100s300)
• Intercompany Trade Order (tcitr3600m000)
• Intercompany Trade Order - Purchase (tcitr3600m300)

When the transaction lines are created, the cost component structure of the selling entity is adopted by the buying entity. The adopted cost structure is displayed in various sessions, such as:

• Sales Order Actual Delivery Line COS (tdsls4109m000)
• Inventory Receipt Transaction - Cost Details (whina1513m000)
• Integration Transactions (tfgld4582m000)

Setup

1. To use this functionality, select or clear the Adopt Selling Cost Structure check box in the Intercompany Trade Parameters (tcitr0100m000) session. This setting is defaulted to the Adopt Selling Cost Structure check box of the Intercompany Trade Agreements (tcitr1100m000) session.

2. For the applicable intercompany trade agreements, in the Intercompany Trade Agreements (tcitr1100m000) session:

   • Select the Adopt Selling Cost Structure check box.
   • Optionally, specify a profit margin cost component in the Margin Cost Component field.