| To use margin control |  |
| If margin control is implemented, the following steps are completed when a sales order or quotation is entered: ERP LN searches the margin control parameters for the login code of the user who is entering the sales order or quotation. For each login code, margin control parameters determine the action(s) that must be taken when the sales price falls outside the margin. If no margin control parameters exist for the login code of a particular user, margin control is not used for sales orders or quotations that are entered by that user. ERP LN checks the item sales data and the sold-to business partner data for the allowed margin variances, which are defined as a percentage and compared against a target price or cost price depending on the type of margin being checked. ERP LN determines any of the following: For (price) margin control, the target price for an item. The target price can be the sales price, cost price, recommended retail price, or the price defined in the price structure. The target price is multiplied by the upper and lower margins, as defined in the item sales data to determine the margin range. For gross margin control, the standard cost of the item from the item costing data. The cost price is multiplied by the upper and lower margins, as defined in the item sales data or sold to business partner data. ERP LN checks the net price defined for the sales order or quotation line. If this price falls within the margins, the order is processed. If the price falls outside the allowed margin, ERP LN takes the action defined for the user in the Margin Control Parameters (tdsls0120m000) session. Sales orders or quotations whose margins are exceeded and that must be logged, can be viewed in the following sessions: Sales Orders below/above Allowed Margin (tdsls4518m000) Sales Quotations below/above Allowed Margin (tdsls1518m000) Sales orders whose margins are exceeded and that must be blocked, can be viewed in the following session: Blocked Sales Order (Lines) (tdsls4520m000) Logged instances of sales orders or quotations whose margins are exceeded can be deleted in the Delete Margin Log for Sales Orders below/above Allowed Margin (tdsls4218m000) session or the Delete Margin Log for Sales Quotations below/above Allowed Margin (tdsls1218m000) session if these margins are no longer required. Example For ITEM 1, the following is applicable: The target price, which is set to the sales price, is $500. The upper margin is 25%. The lower margin is 10%. The standard cost is $389. In addition, the following data is available: For ITEM 2, the standard cost is $317. For sold-to business partner NS Materieel, the upper margin is set at 20%, and the lower margin is set at –5%. NS Materieel places an order for 25 pieces of ITEM 1 at $600, and 25 pieces of ITEM 2 at $515. As a result, the following margin checks are calculated: (Pice) margin check for ITEM 1. The formulas for this check are as follows: Upper margin = target price * (1 + upper margin percentage) Lower margin = target price * (1 - lower margin percentage) Gross margin check on line level for ITEM 1. Gross margin check on header level.
(Pice) margin check for ITEM 1
Upper margin | 500 * (1.25) = $625
Lower margin | 500 * (.9) = $450
Because the net selling price is $600, margins are not exceeded.
Gross margin check on line level for ITEM 1
Upper margin | $389 * (1.25) = $486.25
Lower margin | $389 * (.9) = $350.10
Because the net selling price is $600, the upper gross margin is exceeded.
Gross margin check on header level
Standard cost of both items | $389 + $317 = $706
Upper margin | $706 *(1.2) = $847.20
Lower margin | $706 *(1.05) = $741.30
Net selling price for both items | $600 + $515 = $1115
Because the net selling price is $1115, the upper gross margin is exceeded. Related topics Overview of margin control Types of margin control Order blocking |