Profit calculation variations COGS

I found that in SAP B1 the profit calculation varies and it depends on where you look and the different settings allowed. For instance:
I am talking about the calculation method of COGS:
1. In System Initialisation/Document Setting one can set the workings of Profit on say Last Calculated Price
2. In individual (say Item Code ABC) Item Master Data one can set the calculation method on FIFO
3. In another Item Master Data (say Item code FGH) can be set on Average Cost method
So now we have 3 ways of calculating COGS in the same system - so how can one achieve consitency?
My understanding is that setting 1 is not taken into account when the system charges COGS, so does anybody what is the purpose of this setting?
Thank you
Robert
I am trying to debate this in order to confirm my understanding

thanks Kerstin
I will look up the paper you suggest, but I was hoping that somone would know the specific answer to the Document Setting profit calculation. Perhaps the answer is that this is a Theoretical Profit calculation that has nothing to do with the Real calculations set or Accounting purposes ie FIFO calculation. However, I am only 90% sure of my answer, hence I posted this question.
thanks for the info
Robert
If my answer is correct than some settings in SAP b1 should clearly indicate that they do not influence the Accounting Process

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A/R Credit Memo Gross Profit calculated incorrectly

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Gordon,
I totally agree with you. I told them to not do this any more.
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Hello
I create sale Invoice having Qty 2 unit price 150 & tax code is VAT@4% then Base amount is 300 & Total Bill
amt is 312.
My purchase price for the same item is INR 100 so my Gross profit show on Bill is INR 100 & profit percent
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Hi
There is some problem in sales analysis report in some of the sap versions. Refer the following documents.
[https://websmp130.sap-ag.de/sap(bD1lbiZjPTAwMQ==)/bc/bsp/sno/ui_entry/entry.htm?param=69765F6D6F64653D3030312669765F7361706E6F7465735F6E756D6265723D3030303130313637303426]
[https://websmp130.sap-ag.de/sap(bD1lbiZjPTAwMQ==)/bc/bsp/sno/ui_entry/entry.htm?param=69765F6D6F64653D3030312669765F7361706E6F7465735F6E756D6265723D3135383735363826]
[https://websmp130.sap-ag.de/sap(bD1lbiZjPTAwMQ==)/bc/bsp/sno/ui_entry/entry.htm?param=69765F6D6F64653D3030312669765F7361706E6F7465735F6E756D6265723D3136363835363426]
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Picking DUMMY Profit Center in COGS line item

Dear All,
My Client is on ECC6 and document splitting is activated.
My problem is, in current month we have created on Finishd good(Material) and done PGI but dont know why system is picking dummy profit center in line item of COSG only, in line item of material profit center is proper.
1. Profit center is assigned in Material Master.
2.No User Exit is applied
3. No Validation & Sub-situation done.
4. No FAGL3KEH setting is done.
COGS Ac Dr 100 PC Dummy
To Inv of FG 100 PC 2000
Other material created in same valuation class is working properly.
Regards,
Shayam
Edited by: Shayam_210 on Aug 23, 2011 9:13 AM

Hi, to find bugs like these is always "triggy" and I am afraid that there are no easy solutions!
You could try to go in TC GGB1 - go down to the substitution in "Create sales order" and there "activate total trace" or perhaps Expert trace - set breakpoint. After you done those go in and create the sales order again in the same session.
In order to be successful here ... will you need the help of an ABAP'er.
I believe the error to be related to master data as itu2019s usually are u2026 but sometimes are there a bug in the system.
Good luck
René V. Nielsen

Weighted avg Unit Cost calculation for COGS

Hi friends,
Has any body done weighted avg unit cost calculation for inventory valuation and COGS calculation. In a way we need to mirror ECC material ledger functionality based on the APO data in side the planning tool.
Any ideas on the above!!!
Kind Regards,
Krish

Hi Jerry,
Thanks for the tip. I actually needed to clean the spreadsheet up and put bogus values in to comply with company policy. Anyhow, here is a sample of the spreadsheet
http://dl.dropbox.com/u/7499586/junk.png
Just imagine about 100 products and several hundred raw materials, a dozen types of labor and about 30 types of packaging. It's a monster spreadsheet.
The "units" under each product is the number of units per batch. You can see each product has two columns. One where you put in how much of a raw material, package type, and labor type go into each batch, the next calculates the cost for each item. Then it gets summed at the top for the total unit cost for that product.
Let me know if you have any other questions about it. Thanks so much for your help!

Gross Profit Calculation for Documents

Hi,
Can anyone tell me the SQL for calculating the Gross Profit for a document? I have a requirement to create an alert when the Gross profit % is below 20% or greater than 70%.
Many Thanks
Martin

Try this:
SELECT T0.DocNum, T0.CardCode, T0.DocDate, T0.DocTotal, T0.GrosProfit, (T0.GrosProfit/T0.DocTotal) * 100 'Profit%'
FROM ordr T0
WHERE (T0.GrosProfit/T0.DocTotal > 0.7) OR (T0.GrosProfit/T0.DocTotal < 0.2)
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Calculating Profit of COGS - different ways of calculating

I found that in SAP B1 the profit calculation varies and it depends on where you look and the different settings allowed. For instance:
I am talking about the calculation method of COGS:
1. In System Initialisation/Document Setting one can set the workings of Profit on say Last Calculated Price
2. In individual (say Item Code ABC) Item Master Data one can set the calculation method on FIFO
3. In another Item Master Data (say Item code FGH) can be set on Average Cost method
So now we have 3 ways of calculating COGS in the same system - so how can one achieve consitency?
My understanding is that setting 1 is not taken into account when the system charges COGS, so does anybody know what is the purpose of this setting?
Thank you
Robert
I am trying to debate this in order to confirm my understanding

Robert--
The basic rule to understand in B1 is that specific settings take precedence over general settings. The company-wide default settings that you find in the System Initialization screens set the general parameters for the system. But they may be overridden on specific records - like the Item Master or BP Master. On these, company policy may determine that certain items or business partners do not fit the general rules and should be treated differently in some regard. So an authorized user may change the default settings for these records, either during the initial entry of the record or afterwards (if changes to the specific fields are permitted). Similarly, users may change some settings on specific documents if they represent an exception situation that should not be forced to follow the usual rules.
The other consideration - which should make accountants happy - is that settings that affect journal postings generally cannot be changed once they have been used. So for example, a customer's AR control account number cannot be changed once there are any transactions for that customer. An item's valuation method cannot be changed while there are quantities in the warehouse or open documents that may have caused journal postings. These rules may not represent consistency, as you wish for, but they do enforce an integrity in the accounting process.
The place where these restrictions cause problems is if records are imported from a legacy system without regard to the system defaults. Since these records are brought in and saved in a single process, they can have whatever settings are specified in the import process, which may or may not be the same as the system defualts you wanted. Once these records are created and then used in transactions, it is very difficult to make them conform to what you wanted. Changing the system defaults will never cause retroactive changes to existing records.
If you are having continuing problems with settings on new records, I would consider restricting authorization for adding or editing new records to those people who understand what the ramifications are. Additional training for your personnel may also be helpful, now that you have a better understanding of how the system works.

'Calculated Result' (profit/loss) is not displayed in BW query (NW04s)

The hierachy for financial statement item (0GLACCEXT) contains the folowing nodes:
-> Stocholder's Equity
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> Calculated profit
> Calculated loss
> Calculated loss (0COA/0BSRESULT+)
When I run a balance sheet query against virtual cube 0FIGL_V11, I don't get any data for nodes 'Calculated profit' & 'Calculated loss'.

Dear gurus,
I am searching to solve the same issue you Raynald reported...
Unfortunately, despite the 0BAL_DEPEND information correctly updated, this note 0COA/0BSRESULT+) does not appear.
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Substituting Cost of Goods Sold Account Profit Center

Hi
I am using Sales Order substitution to change the Profit Center according to Sales Org + Product Hierarchy + Customer Group + Acct Asst Grp. This perfectly replace the Profit Center in Sales Order. The Profit Center from Sales Order is perfectly flowing to Outbound Delivery.
While doing PGI, in accounting document, Cost of Goods Sold line item is not getting the profit center from outbound delivery. It post COGS line item with Material Master profit center. We want profit center of Cost of Goods Sold line item is same as Sales order / Outbound Delivery.
I checked SCN, everyone provided the solution of using FI Substitution to change the Profit Center of COGS line item.
Is it any other way it can be achieved? if FI Substitution is only the way, can anyone provide the sample code, so that it can be developed fast.
Thanks
Venkat Ramachandran

For those who may need an answer to this, our solution was the following:
1)       Created new types for SO, SO Item, Sched. Line, Delivery, Delivery Item, Billing type
2)       Created new Pricing procedure
3)       Created new movement type Y61/Y62 modeled after 601/602
4)       Mapped Y61/Y62 to account modifier ZAX.
5)       Mapped GBB/ZAX to the new account.
Benefits, they now have better view of the orders going inter-company. It is flexible enough to adjusting prices for intercompany separate from standard orders, even though for now it is a straight copy of cost. They are able to remove the sales/use tax, from the calculations. They are able to plan with these orders separated out. Plus, this will standardize their process for inter-company.
Hope this helps someone.
Cheers!
Rick

COGS details

Dear All,
Need some clarification on Sales Processu2026
We have F.G. which has a cost of 7400/- (as per Material Master & Std Cost estimation).
PGI (sales delivery) FI document the entry was COGS Dr 9800/- F.G. 9800/-
Billing (sales Billing) FI document..Entry was Customer Dr. 11000/- and Revenue Cr 11000/-.
Now question is how the system does calculated the COGS value and where can I find the logic & value (stored in any document) for the system to calculate the COGS.
Do suggest.

Hi,
Can you check that following steps are followed. In MTO will follow the below steps,
1. Create a Sale order for the Header Material.
2. Run MRP for the Header Material, so the procurement proposals will generate for the BOM items.
3. Do the procurement for the components.
4. Once all the component stock is in place, convert the Header Material Planned order to Production order through MD04/CO08.
5. Issue the components from Inventory to Shop floor (261).
6. Confirm the Production order and receive to stock (101).
7. Now the assembly is in sale order stock.
8. Create delivery to the customer (VL02N).
9. Create billing (VF01).
10. Close the order (TECO).
For MTO the cycle will start from Customer order / Sale order and end with the same.
Check out ur scenario and u shuld be able to get cost
Regards,
Atul

Problem with Profit Center Report

On my client i m populating profit center and COGS profit center field on (A/R Invoice + Payment) screen. The problem is that while posting the transaction system apart from populating revenue and COGS with the profit centers it also populates in front of stock account. (JE posted by A/R Invoice).
Please tell me how to remove that.

Hi Tahir,
The profit center will populate all accounts in the Journal Entry that has account type 'Sales' or 'Expenditure'.
Please go to the Chart of Accounts and check your Stock Account. If it is set up as 'Sales' or 'Expenditure' change it to type 'Other'.
By default all Balance Sheet Accounts (like Stock) are set as 'Other' as they are not considered relevant for Cost Accounting.
Hope it helps,
Jesper

Wrong Gross Profit

Hi All,
I have created an A/R Invoice, now when I see the gross profit report it shows wrong base price (zero) and wrong gross profit.
Base Price By was Last Purchase Price.
I am using Manage by Batch No. option.
While A/R Invoice I have selected respective Batches.
But the system has picked up the base price from one transaction which I did not select in Batch selection.
For particular Item there were 3 Incoming trasactions, 2 were opening balance with respective value and last was also opening balance but with value zero.
The valuation method is FIFO.
Can anyone explain me
1.Why the zero value has been picked up in the gross profit calculation and
2.How can I correct this value to have correct base value and correct gross profit ?
Thanks,
Samir Gandhi
Edited by: Samir Gandhi on Dec 5, 2008 5:57 PM

Hi Samir,
Please give the dates of those 3 Incoming transactions. FIFO calculation will always pick the earliest possible transaction which haven't be offset yet.
Thanks,
Gordon

Negative Gross Profit figure - Sales Analysis by Employee

Forum,
I have a system on 8.81 PL08. When running the sales analysis by sales employee and select one employee in particular the gross profit figure is showing a negative value.
Why would this be negative?
The system is currently configured as follows:
GP calculated - Profit/Base Price
The block negative stock option is also selected.
Regards,
Juan

Hi Juan,
Negative value in the gross profit is due to wrong gross profit calculation in the document. If you get detail of the transaction, you will know why.
Thanks,
Gordon

CTRL-G on AR Invoice, show Blank Profit% for Sales Only Items

On SAP 8.8 PL15; when invoicing a Sales Only Item, it show Base price as 0.000, correct! Profit value corect!, but the Profit% blank, which cause the below 5% Alert to trigger. Help!

Hi,
In document setting (Administration u2013 System Initialization), there are two option for calculating gross profit.
Calculate gross profit as
1.Profit / base Price
a.In this option as per your scenario, you donu2019t have the base price. So system is not showing profit % in the gross profit for the invoice document.
2.Profit / Sale price
a.If you select this option in the document setting you will get the profit %. Because gross profit will calculate based on the sale price.
So, it is your wishes, how you want the gross profit % calculation should be. So, try to change from the Profit / base Price to Profit / Sale Price

Gross profit concept

Hi Experts,
Can you describe to me the GP concept in B1 ? is it changed from old version to newest version ?
Pls advice
Rgds,
RK

Hi,
Check the help document for gross profit i.e
SAP Business One lets you calculate the gross profit according to the method you define during application configuration. The gross profit for each document row is calculated and then totaled for the entire document.
To calculate the gross profit in a sales document, from the menu bar choose Goto Gross Profit .
Note
Gross profit calculation is only active if you have selected the Calculate Gross Profit checkbox in Administration System Initialization Document Settings General .
End of the note.
Gross Profit of Order Window Fields
Note
This topic includes explanations of some of the fields and other elements in this window.
End of the note.
Base Price By Displays the base price in accordance with the price list.
The default value is defined in Administration System Initialization Document Settings General Calculate Gross Profit Base Price Origin .
If required, you can choose a different price list.
Other additional prices are:
Last Purchase Price u2013 the last price at which you bought the item.
Last Evaluated Price u2013 the price calculated in the last run of the Inventory Valuation report.
Item Cost u2013 the current item cost in the relevant warehouse; see Item Master Data Inventory Data .
Gross Profit SAP Business One calculates the difference between the sales price and the base price for each item in the sales document. If the result is negative, the row is highlighted in red.
Profit % SAP Business One calculates the gross profit in percent.
When you configure the application, you can choose between two different calculation methods:
The gross profit can be displayed on the basis of the ratio of the gross profit to the sales priceof the item.
The gross profit can be displayed on the basis of the ratio of the gross profit to the cost priceof the item.
If you change data in this window, confirm your changes by choosing Update and OK.
Note
When you configure SAP Business One, you can set it up so that an internal mail is sent automatically to specific users when a particular gross profit is exceeded.
End of the note.
Note
If you manage stock using perpetual inventory and the base price calculations are set to Item Cost, the application recalculates the base price if the item cost changes when you copy a base document to a target document.
End of the note.
Note
If you manage perpetual inventory and use the FIFO valuation method, the application always takes the cost of the next available layer, regardless of the quantity.
End of the note.
Example
Qty = 15 Cost = 12 oldest layer (next layer to use)
Qty = 20 Cost = 40
Qty = 10 Cost = 9
If the quantity is 40, the item cost that SAP Business One uses for the gross profit calculation is 12.
End of the example.

Profit calculation variations COGS

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