Inaccurate Gross Profit

[Former Member]

Hi,

Here is the situation we are dealing with.

When our system went live, Gross Profit was based on Pricelist 10

Administration> System initialization > Document Settings > General Tab > Base Price Origin was set to Pricelist 10

At some point shortly after implementation we switched from using Pricelist 10 as our item cost to using Pricelist 02 for our item cost.

When we do sales analysis it seems the numbers are still being based off of pricelist 10 (which in most cases gives us a 100% gross profit).

We are trying to find a way to get the sales analysis to pull numbers from the new pricelist.

Is this possible?

[Former Member · Accepted solution]

Hi Steve--

Using Item Cost for gross margin is dynamic in the sense that it reflects the current cost at the time a document is added. So if you enter a sales order at a time when an item's average cost is $10.00, but by the time it is delivered the cost has changed to $12.00, the gross margin on the delivery will be based on the $12.00 cost.

However, if you use a price list to determine the gross margin, then the price on that price list will be entered as the GM base price when you enter the original order and it will stay there as the document is copied to other forms. Even if the price list is changed in the interim, the GM will not be recalculated by the system. You can force it to recalculate by going into the gross margin screen and changing the base price list and then changing it back to the list you want - but you must do this before the document is added.

I hope this helps.

Marcia

[K_Pauquet]

Hi Steve,

the system will take the base price from the source you specified in the Document Settings. However,

unless you use 'Item Cost' as base price, B1 will always copy the base price from the base document. When using item cost, this is dynamically recalculated & hence updated when you draw a document to a target document.

Example 1:

Base Price is PL10

Create sales order -> Base price taken from PL10

Change base price to PL02

Create delivery from sales order -> Base price taken from PL10

Create new sales order -> Base price taken from PL02

Example 2:

Base pirce is item cost @ EUR 1.00

Create sales order -> Base price is EUR 1.00

Item cost changes to EUR1.50

Create delivery from sales order -> Base price is EUR 1.50

Unfortunately, once a document has been saved, the base price cannot be changed anymore & thus the GP calculation cannot be amended. For existing documents you can therefore only use manual calculation of actual GP.

There are 2 Expert Empowerment Sessions about GP in the archives, the first one explains how exactly GP works in B1 & the other gives tips & tricks for (perceived) error analysis.

[Gross Profit I|http://service.sap.com/~sapidb/011000358700000271752007E.zip]

[Gross Profit II|http://service.sap.com/~sapidb/011000358700000555712007E.zip]

All the best,

Kerstin

[Former Member]

Thank you everyone, this all makes sense now!

Kerstin,

I am still unable to download the EES's you linked to. Even after I enter my user ID and pass, it gives me an access error. Probably because I do not have a partner based userid?

Error Message - Access denied (R/3)

What happened?

You do not have permission to access this Object

Many Thanks,

-Steve

Edited by: Steve Blake on Sep 17, 2008 8:04 AM

[Former Member]

Hi Steve,

You can check these threads to see some useful info:

Thanks,

Gordon

[Former Member]

Gordon,

The links to understanding GP in the threads you linked I cannot get to. It gives me an r/3 access error.

Can anyone possibly clarify a few things for me.

If I have Base Price Origin set to "Item Cost" when I run the Sales Analysis it should pull item cost numbers from "Item Cost" on the Inventory tab of Item Master Data and use that number to calculate gross profit. Is this correct? Is this done dynamically? Meaning if I change Base Price Origin, will the numbers also change in a sales analysis?

Can anyone explain to me exactly where "Item Cost" under Inventory tab is being pulled from? This I am still unclear about.

Is it based on the prices input into a purchase order?

Also, are sales analysis numbers generated dynamically or does it pull those numbers from Invoice tables (i.e. - The numbers can't be changed and our problem isn't that our settings are incorrect now, just that we can't reverse what numbers were put into the database?)

Trying to figure out where this Item Cost value is coming from.

Many Thanks,

-Steve

[Former Member]

Item cost is a calculated field based on your inventory valuation method. In most cases, it is related to Last Purchase Price in a moving average fashion. You need to check how Last Purchase Price updated to have better understang of item cost updating.

The Sales Analysis report will pull the "fixed" item cost from your A/R Invoice table. It is not dynamic. The field name is GrossBuyPr in INV1.

Thanks,

Gordon

[former_member583013]

Steve,

The gross profit in the marketing documents is calculated based on your Items valuation method. In case you are using Moving Avg or Standard Cost..you would be able to see the Cost (Item Cost) in the Item Master Inventory Data tab.

Running the Inventory Audit report could also give you a good understanding of the Inventory flow and the costing.

When you run the Sales Analysis Report... depending on the document you select (Sales Order / Del / Invoice) the Line Total's and Row level Gross Profits for that document are picked for this Report.

Suda

[Former Member]

Hello Steve,

Which version of SBO and patchlevel do you have?? (in top of the sboscreen click help - info)

I could be a bug in a patchlevel. Did you check this? On the sbo portal, where you can download the patches, there 's a info file for each patchlevel which contains solved bugs.

Hope this helps.

Regards,