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Is it possible to have a three-level intercompany setup with different markup/interco charge?

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Posted on by Community member 2
Apologies in advance if this doesn't make sense or is a little confusing!
 
Currently we have Company A (US-based) that will send product to Company B (Asia-based) with a 25% markup for tax purposes. Company B will further manufacture the product then send it at maybe 1% markup to Company C (UK-based) where the product is finished and sold to the customer (or sold back to Company A). All of this is being done in AX 2009, but we are integrating into 2012 end of April (with expectations of then moving everything all at once to D365). As of right now this is how it looks as an example:
 
Company A costs product XYZ at $10. Company A then sells to Company B with the 25% markup at $12.50. Company B will use the marked up price as their standard cost and when done with their portion of the manufacturing (building BomItem) will sell the BomItem to Company C at 1% inclusive of the marked up product XYZ of $12.50 + other direct material/labor/overhead (we will say $5 material, $2 labor, $4 OH) making the final cost to Company C $23.735 (($12.50 of the original marked up product + $11 for other direct material/labor/overhead) * 1%).
 
If possible we would like to maintain the same standards in all companies so Companies A & B would have a standard of $10 for product XYZ and Companies B & C would have $21 for BomItem ($10 of product XYZ + $5 other direct material + $2 labor + $4 OH).
 
Wondering if it's possible to have an intercompany setup for 3 different companies in AX 2012 with different markup without causing the middle company to basically /eat/ the inter-co charge? Is there a systematic way of doing this based on the sales order flow? Would we have to calculate the markup between B & C to be higher in order to pass along the original markup from A to B? Our concern with that would be when Company B & C have any sales between each other without Company A kicking off the process.
 
Edit: To clarify, we know how to setup the three-level intercompany, but going through the documentation states nothing about inter-co charges which is what this question is regarding. In our AX 2012 setup, we have several different companies and each company interacts with the others in some way, but usually at a two-level intercompany setup so all standards are the same for the same product no matter the company (product XYZ is $10 in Companies A, B & C, product ZYX is $16 in Companies D & E, etc.). However, with one of our business units being integrated, their manufacturing process is a little more complicated in that a product will start in Company A > product will be used in a new build in Company B > be completed in Company C and sold to the end customer. So, the problem we are trying to solve is: once we sell product XYZ to Company B with the 25% charge (they receive it in at standard of $10 causing a PPV of $2.50), how do we avoid Company B basically losing the $2.50 since they will only sell to Company C at 1%? As far as we can tell, there is no way to have the system pull in total sales cost (which includes the inter-co auto charge) when calculating a BOM cost which I believe should be happening in order to pass along the $2.50 to the final Company. Hopefully this helps clear some things up.
  • Community member Profile Picture
    Community member 2 on at
    Is it possible to have a three-level intercompany setup with different markup/interco charge?
    Hi Andre,
     
    I edited my question above to hopefully give some clarification. What we are trying to achieve is for Company B to be able to pass on the original markup and not have it hit their P/L.
     
    In an ideal environment we would want Company B to be able to calculate a BOM cost utilizing total sales cost of a component that is sourced from Company A (which would include the inter-co charge) that way the inter-co charge on that specific material isn't taken as a hit to Company B's P/L.
     
    In the screenshot you will see the Total Standard which is just Mat/Lab/OH and the Total Mark up which is the inter-co charge of A to B and B to C. In the Ideally table, the A to B charge is included in the BOM calculation and passed into the Total Mark up giving the overall total inter-co charge to Company C 12% & 5%; whereas in the AX Currently table, no inter-co charge from A is included in the BOM calculation and cannot be passed on to Company C even though Company B bought the items XYZ and HGF for $12.50 & $0.94 respectively, the standard cost remains the same for those products in the BomItems BOM cost calculation so Company B loses $2.69 when selling BomItems to Company C.
     

  • Suggested answer
    Judy Profile Picture
    Judy Microsoft Employee on at
    Is it possible to have a three-level intercompany setup with different markup/interco charge?
    Hi,
     
    To have a three-level intercompany setup with different markup/interco charge in Dynamics AX, you can refer to the Microsoft Document about Three-level intercompany chain:
    Hope it can help.
     
    I hope you can mark my answer verified if it is helpful! If you have any questions, please feel free to contact me.
    Best Regards,
    Judy
  • André Arnaud de Calavon Profile Picture
    André Arnaud de Cal... 291,253 Super User 2024 Season 2 on at
    Is it possible to have a three-level intercompany setup with different markup/interco charge?
    Hi Community member,

    Your question definitely makes sense. Thanks for using the forum. Can you explain what exactly you mean by "an intercompany setup for 3 different companies in AX 2012 with different markup without causing the middle company to basically /eat/ the interco charge?"?
    Maybe you can add an example of the required outcome.

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