What is internal value added in SAP CO-OM-ABC - Activity-Based Costing?

SAP Term: internal value added

• Component: CO-OM-ABC

• Component Name: Activity-Based Costing

• Description: An indicator of whether a business process is relevant to, or has a decisive influence on, the production of a product or service from an internal standpoint. The degree of influence on the value added is indicated by means of a ranking order.

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• Key Concepts: 
  Internal value added is a term used in Activity-Based Costing (ABC) within the Controlling (CO) module of SAP. It is a measure of the value that a company adds to its products or services through its own activities. It is calculated by subtracting the cost of purchased materials and services from the total cost of production. 
  
  How to use it: 
  In SAP, internal value added can be calculated using the CO-OM-ABC Activity-Based Costing module. This module allows users to track and analyze costs associated with specific activities, such as production, marketing, and research and development. The module also provides tools for analyzing the cost of each activity and calculating the internal value added for each activity. 
  
  Tips & Tricks: 
  When calculating internal value added in SAP, it is important to remember that only costs associated with activities that are directly related to the production of a product or service should be included in the calculation. Costs associated with activities that are not directly related to production, such as administrative costs, should not be included in the calculation. 
  
  Related Information: 
  For more information on Activity-Based Costing in SAP, please refer to the official SAP documentation at https://help.sap.com/viewer/product/SAP_ERP_6.0_EHP7/6.0/en-US/f3d8f9a2b7c14e5f9a8d3c2b7e4d9f1a.html