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Purpose of "Purely Iterative Price" in versions

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Dear SAP Masters,

I would like to request your help to understand the below question..

What is the purpose of indicator "Purely Iter. Price" in the version under price calculation tab.? what would be the impact in costing point of view if we activate this indicator.

Could you please provide me the simple understanding logics.

I will be waiting for experts reply..

Thanks in advance

Gopal

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