Part-1 on SAP S/4HANA Universal Parallel Accounting (UPA)
In this blog, we look at side-by-side comparison table, with emphasis on how cost-plus (manufacturing markup) and sales-minus (commercial margin) scenarios are configured
| Area | ECC Transfer Pricing (Classical ERP) | S/4HANA UPA (2022+) |
|---|---|---|
| Data Model | Separate ledgers/tables: • Legal view in FI/CO • Group valuation in Material Ledger (ML) • Profit Center valuation in PCA ledger (8A) | One Universal Journal (ACDOCA): all valuations (Legal, Group, PC) in same line item, no reconciliation |
| Activation | IMG: CO → Transfer Pricing → Activate views (01 Legal, 02 Group, 03 PC). ML must be activated for inventory. | UPA activated in Finance → Parallel Valuation. No PCA ledger needed; all flows go into ACDOCA. |
| Valuation Views | 01 = Legal 02 = Group 03 = Profit-Center | Same, but embedded in ACDOCA → always in sync across FI, CO, ML, and AA |
| Valuation Strategy | Configured in CO: which price type (Std/Actual/Transfer) applies for each view. | In UPA, Valuation Strategies integrated with costing variant and settlement rules → same CO object produces multi-valuation results. |
| COGM (Manufacturing Cost) | Only Legal COGM in product costing. Group/PC COGM derived in ML, limited scope. | Multi-valuation COGM possible directly: • Legal COGM (with markup if transfer price applied) • Group COGM (true cost) • PC COGM (with intracompany margin). |
| COGS (Cost of Sales) | Legal COGS always posted. Group & PC COGS simulated in ML/COPA, not integrated in FI. | Real-time COGS in all valuations posted to ACDOCA at goods issue. No reconciliation needed. |
| Cost-Plus (Manufacturing Markup) | Config via Valuation Strategy: Legal uses std cost + markup → posted as IC Sales. Group valuation removes markup in ML. PC valuation shows markup across profit centers. | Config in Transfer Pricing Variant (TPV) under UPA: • Define markup rules (e.g., 20%) at manufacturing company level. • Applied automatically to Legal view postings. • Group view strips markup, PC view re-allocates margin. |
| Sales-Minus (Commercial Margin) | Possible but cumbersome: requires special condition types in SD pricing and COPA enhancements. Group/PC handling only in reporting, not in FI. | Integrated in UPA: • Sales-minus TP configured in TP Variant. • Commercial org sells at external market price → margin applied automatically across valuation views. • All postings flow into ACDOCA (Legal, Group, PC). |
| Reporting | Fragmented: FI for Legal, ML for Group, PCA for PC. Reconciliation effort high. | One place: ACDOCA. Multi-valuation Profitability Analysis (Margin Analysis) available real-time with no reconciliation. |
| Limitations | • Mandatory ML • Limited to materials • No true group COGM for CO objects (orders, WBS) • Reconciliation effort high | • Works for all CO objects (orders, projects, sales orders) • True end-to-end TP across supply chains • Automatic elimination of IC profit in group view |
Example: Cost-Plus (Manufacturing) vs Sales-Minus (Commercial) under UPA
Scenario:
- Company A (Manufacturing): Cost = 80 → adds 20% markup = Legal TP = 96.
- Company B (Commercial): Sells externally at 100 → keeps sales-minus margin of 4.
Postings in ACDOCA (simplified):
| View | Company A (Mfg) COGM | IC Sale | Company B (Comm) COGS | Final Sales | Profit |
|---|---|---|---|---|---|
| Legal | 96 (includes 20% markup) | 96 | 96 | 100 | 4 |
| Group | 80 (true cost) | 80 | 80 | 100 | 20 |
| Profit-Center | 80 | 96 | 96 | 100 | Split: Mfg 16, Comm 4 |
✅ Markup and margin are fully tracked, reconciled automatically in ACDOCA.
✅ Group view eliminates markup (true cost basis).
✅ Profit-center view shows responsibility split.
⚡ In short:
- In ECC, cost-plus and sales-minus TP required Material Ledger, SD/COPA tricks, and reconciliation between ledgers.
- In S/4HANA UPA, both methods are standard, integrated, and real-time — COGM and COGS reflect transfer pricing consistently across Legal, Group, and PC views.
MP's S/4HANA 