Adopt selling cost structure - examples

Location A manufactures subassembly 1001 and sells it to location B. Subassembly 1001 is transferred in a warehouse transfer to location B. The intercompany trade scenario is Internal Material Delivery. Location B uses subassembly 1001 to manufacture end item 1101, which is to be sold to an external customer. The table displays the total costs, the cost structure, the total revenue and the intercompany trade profit margin for location A.


Subassembly 1001	Cost component	Amount EUR
Material	MATX	100
Operations	OPSX	200
Surcharges	SURX	50
Total COGS		350
Revenue		500
Intercompany trade profit margin	ITMRX	150

The transfer price is EUR 500, which includes the profit margin of EUR 150 for location A. In the following table, the cost component structure of subassembly 1001 is not adopted by location B.


Location B	Subassembly 1001	Cost component	Amount EUR
	Material 1001	MAT	500

If location B adopts the cost structure from location A, a more detailed cost breakdown is displayed for subassembly 1001. In the following table, the intercompany margin cost component ITMRX is specified. ITMRX is part of the effective cost component structure of subassembly 1001:


Location B	Cost component type		Amount EUR
Subassembly 1001	Material	MATX	100
	Operations	OPSX	200
	Surcharges	SURX	50
	Intercompany trade profit margin	ITMRX	150

In the following table, ITMRX does not belong to the effective cost component structure of subassembly 1001. ITMRX is of cost component type Material Costs. Consequently, the amount of the intercompany trade margin is aggregated to cost component MATX:


Location B	Cost component type	Cost component	Amount EUR
Subassembly 1001	Material	MATX	250
	Operations	OPSX	200
	Surcharges	SURX	50

In the following table, ITMRX does not belong to the effective cost component structure of subassembly 1001. ITMRX is of cost component type Obsolete. Consequently, the amount of the intercompany trade margin is aggregated in cost component SURX:


Location B	Cost component type	Cost component	Amount EUR
Subassembly 1001	Material	MATX	100
	Operations	OPSX	200
	Surcharges	SURX	200