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COPA V vs. S

COPA V vs. S

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Published by Prashant Kumar

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Published by: Prashant Kumar on Jun 04, 2012
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06/04/2012

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CO-PA

Accounting and reporting with standard price vs. MAP

Copyright © 2007 Accenture All Rights Reserved. Accenture, its logo, and and High Performance Delivered trademarks of Accenture. Copyright © 2007 Accenture All rights reserved. Accenture, its logo, High Performance Delivered are are trademarks of Accenture.

• With this scenario.CO-PA Challenge in current scenario • Currently HOBI have two different legal entities one is HOBI and another is RA • All the manufacturing activities taking place in HOBI only • All the Domestic sales taking place in RA only. and there is no direct domestic sale from HOBI • HOBI is transferring the Finished goods to RA with some margin on it. . • For RA the cost of product is transfer price from HOBI to RA plus the SCT charged on transfer price. in COPA reports system is showing the inflated figures for Revenue as well as Cost. also SCT and VAT charged on the transfer price.

CO-PA Challenge in current scenario Example HOBI Cost of product HOBI to RA Selling Price SCT Applicable VAT Payable Total RA Cost of product RA Selling Price VAT Payable Total 80 TL per Piece 100 TL per Piece 10 TL Per Piece 10 TL Per Piece 120 TL Per Piece 110 TL per Piece 150 TL per Piece 10 TL per Piece 160 TL per piece COPA Document & Reporting for profitability (Sales price minus cost and SCT or VAT) a)Cost 80 TL a) Cost 110 T b) Revenue 100 TL b) Revenue 150 TL c) Profit (b-a) 20 TL c) Profit (b-a) 40 TL Group Profitability a)Cost b) Revenue c) Profit (b-a) 190 TL (Inflated Cost) 250 TL (Inflated Revenue) 60 TL .

800 800 . Dr. Cr. Cr. 800 800 At the time of goods issue from HOBI to RA : In HOBI: COS a/c To Inventory a/c In RA: Inventory a/c Price Diff a/c To GR/IR a/c Dr.CO-PA Accounting with price control V vs. 800 400 1200 Dr. S (RA Finished goods price) Moving Average Price Example: Cost in HOBI Margin in HOBI Sale Price SCT VAT Total Invoice Value 800 200 1000 200 200 1400 Example: Standard Price Cost in HOBI Margin in HOBI Sale Price SCT VAT 800 200 1000 200 200 Total Invoice Value 1400 At the time of goods issue from HOBI to RA : In HOBI: COS a/c To Inventory a/c In RA: Inventory a/c To GR/IR a/c Dr. Cr. Cr. 1200 1200 Dr.

To VAT Payable a/c Cr. In RA GR/IR a/c Input VAT Dr.CO-PA Accounting with price control V vs. Dr. To VAT Payable a/c Cr. 1400 1000 200 To SCT Payable a/c Cr. In HOBI Customer a/c (RA) Sales a/c Dr. Cr. Dr. S (RA Finished goods price) Moving Average Price At the time of Invoice . To Vendor a/c(HOBI) Cr. In HOBI Customer a/c (RA) Sales a/c Dr. To SCT Payable a/c Cr. Cr. . 200 1200 200 1400 To Vendor a/c(HOBI) Cr. 1400 1000 200 200 1200 200 1400 Standard Price At the time of Invoice . In RA GR/IR a/c Input VAT Dr.

Standard Price At the time of standard cost estimate run . Dr. In HOBI: Revaluation a/c To Inventory a/c In RA: In RA no need of standard cost estimate run./Cr. Dr./Cr./Cr.CO-PA Accounting with price control V vs./Cr. Revaluation a/c To Inventory a/c Dr. S (RA Finished goods price) Moving Average Price At the time of standard cost estimate run . so no accounting entry will happen Dr. In HOBI: Revaluation a/c To Inventory a/c In RA: Dr./Cr./Cr. Dr. .

to get a consolidated report of profit analysis and cost analysis. Price difference hit will not come at the time of moving the goods from HOBI to RA • With Moving average price. additive cost calculation and updation will not be required in RA • With Moving average price. • With Moving average price. itemization of cost will not be available in RA . Revaluation hit will not come in RA at the time of standard cost estimate run . Cost analysis will be available at HOBI company code only. • With Moving average price.CO-PA With Price Control V • With Moving average price. • With Moving average price. profitability analysis will be available at the group level and also at the company code level. excel work will be required.

Price difference a/c hit will come with every transaction at the time transfer of goods from HOBI to RA ( If transfer value not equal to the standard price in RA) • With Standard price. . (Additive cost will be equal to margin at HOBI and SCT charged by HOBI from RA) • Additive cost calculation will be done out of system manually •With standard cost. • With Standard cost. additive cost calculation and updation will be required in RA every month for all the materials.CO-PA With Price Control S • With Standard price. revaluation a/c hit will come every month in RA also at the time of standard cost estimate run. Profitability analysis and cost analysis reports will be available from the system without manual work in excel.

• HOBI margin will be captured in one of the condition in SD at the time of transferring the finished goods from HOBI to RA • COPA Consolidation report will have the total sale (excluding inter-company) – total COGS (excluding inter-company) .CO-PA Proposed Solution • Finished goods should be managed at moving average price in RA • It would be preferred if HOBI margin could be fixed in terms of percentage.

CO-PA Proposed Solution (Example) HOBI Cost of product HOBI to RA Selling Price SCT Applicable VAT payable Total 80 TL per Piece 100 TL per Piece 10 TL Per Piece 10 TL Per Piece 110 TL Per Piece RA Cost of product RA Selling Price VAT Payable Total 110 TL per Piece 150 TL per Piece 10 TL per Piece 160 TL per piece COPA Document & Reporting for profitability (Sales price minus cost and SCT or VAT) No COPA Document created here Customization is done at this level b) SCT 10 TL a) Cost of HOBI 80 TL b) SCT applicable in HOBI 10 TL c) Revenue 110 TL c) Revenue in RA 150 TL d) Profit (c-(a+b)) 20 TL d) Profit (c-(a+b)) 60 TL Group Profitability a) Cost b) SCT c) Revenue d) Profit (c-(a+b)) 80 TL 10 TL 150 TL 60 TL .

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