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what does valuation mean



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In profitability and sales accounting, it is particularly important to have quick access to recent profitability information for sales-related business transactions, and this information should be as complete as possible. To this end, you use valuation for cost-of-sales accounting purposes, completing the information on units sold as well as the price and discount information for your marketing system.

Valuation can be used, for example, to calculate:

Sales deductions that do not appear in the invoice (such as cash deductions, rebates, and commission)

Costs of sales (sold products * standard costs of goods manufactured)

Calculated direct costs, referred to as the special direct costs for sales (such as transportation costs, packaging or insurance)

In what follows, the various valuation options are described, along with the different cases for which you can calculate anticipated values in costing-based Profitability Analysis (CO-PA). Unlike costing-based CO-PA, account-based CO-PA only posts values that are reconcilable with Financial Accounting (FI). This means that the valuation functions described here can only be implemented for costing-based CO-PA.

You can use the valuation options described in this section for actual data as well as for planning data. While you usually valuate your business transactions just after they have occurred (that is, when they are posted), you can also perform a revaluation of your profitability information, to take into account, for example changed costs of goods manufactured.

Valuation Methods

Profitability Analysis offers you the following methods of valuation:

Valuation Using Material Cost Estimates :

Valuation using

material cost estimates lets you determine the cost of sales when you post a sales transaction to Profitability Analysis. For this, the quantities of products sold are multiplied by the standard costs of goods manufactured, thereby including in the contribution margin analysis detailed fixed and variable cost components for the cost of goods manufactured in the individual contribution margins.

Moreover, you can use the actual cost estimate from Material Ledger to valuate your sales quantities during periodic revaluation.

Valuation Using Conditions and Costing Sheets :

You can use the condition technique to calculate values in CO-PA that, although relevant for analysis purposes, such as calculating a contribution margin at each level, are not yet established when the document posting occurs. This means in particular that you can determine anticipated sales commissions, discounts, or shipping costs that are not yet known at the time of billing, and use this information to analyze your sales transactions.

Conditions are typically used in the case of percentage or absolute additions/deductions, for example, that are stored in CO-PA according to criteria that you can select (as in the case of price determination in SD).

Valuation using customer-defined valuation routines ( Customer Exits: Valuation). :

Customer-defined valuation routines are available for cases where anticipated valuation approaches cannot be determined using either of the two preceding methods. This means that you can implement your own valuation logic.

The value fields in the following contribution margin scheme are filled with data partly from the relevant sales system, and partly from valuation using conditions and valuation using material cost estimates:

Category: Taxes

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