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Track correctly Transfer Price Variances

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edited Oct 30, 2019 2:12PM in Costing 1 comment

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Gurus, we have the following scenario and don't see a way to track accurately the Transfer Price Variances. Can you give a solution to the following scenario:

Operation: Transfer Order from Org A to Org B

Standard Costs Breakdowns: 

  • Org A:
    • Material = 11 $
    • Transport = 5 $ (Transport Cost to from Supplier to Org A) 
  • Org B:
    • Material = 10 $
    • Transport = 2 $ (Transport Cost to from Org A to Org  

Cost Component Mapping: Material Org A = Material Org B; Transport Org A NOT EQUAL Transport Org B (Since Transport Costs nature are different)

In the Cost Accounting event "Transfer Order Interorganization Receipt" we will have Inventory Valuation debited according to the standard cost of ORG B, we will have Transfer Price Variance of 1 $ in the Material Element, 

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