Introduction

When selling items internally it is common to keep some internal margin in the selling company. Intercompany Logistix offers different options to automatically apply this calculated value to the internal sales. This document descibes the options and the strategy behind transfer pricing in Intercompany Logistix.

Scenarios

There are four different options when dealing with transfer pricing. The preferred choice is set on subsidiary level, which means that different choices can apply to different subsidiaries. It is always the selling company that calculates and rules the price used.

The following different options are available:

• Item Unit Cost
• Item Standard Cost
• Customer Price Group
• Last Direct Cost

Item Unit Cost

When using "Item Unit Cost", the unit cost field on the item card is fetched from the subsidiary legal company. This is done when the original document is posted and the intercompany transactions are created. This means that if the adjust cost job is run at a later time in the legal company, the intercompany transaction will not be affected or adjusted. Also if the any source transactions are re-evaluated and the values are adjusted, the intercompany transactions will remain the same. If the unit cost value changes alot, the sales amount on the internal intercompany transactions will also change accordingly.

Item Standard Cost

The same principal as with "Item Unit Cost" applies to standard cost. If the standard cost is re-calculated in the legal company, the intercompany transactions will not be affected.

Customer Price Group

The customer price group option is based on an internal price list. This option is recommended if it is required that the internal prices remain the same in a structural way. The downside of this option is that the price list requires maintenance. Also, if new items are missing in the price list the postings will fail.

Last Direct Cost

The same principal as with "Item Unit Cost" applies to last direct cost, which equals the price on the last received purchase invoice. If this value is changed or updated, the corresponding intercompany transactions will not be affected.