5 SAP CO Level-1 Training

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Transcript of 5 SAP CO Level-1 Training

Page 1: 5 SAP CO Level-1 Training

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Welcome

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SAP Controlling Module

By:Kishore Sunkara

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FI and CO:

CO

FI

Internal AccountingCost Accounting

Managerial Accounting

Different Valuations Flexibility

Taxaudit

External AccountingFinancial Statements

Legal RequirementsStandards

Controlling

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CO Organizational Structure

Profit Center(master data)

Profitability Segment(master data)

A A

A

Operating Concern

Controlling Area (s)

Company Code

Sales organization

Focus on External Markets

Focus on Controlling andInternal Accounting

Focus on External Accounting

Focus on Sales

PlantFocus on Manufacturing 4

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Company Code and Controlling Area

Company Code

Company Code

Controlling Area Company Code

Controlling Area Company Code

One to Many Relationship

One to One Relationship

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Components of controlling

• Cost element Accounting• Cost center Accounting• Profit center Accounting• Internal Orders• Product Costing • Profitability Analysis

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How can we reduce our overhead? Are the responsibility areas working efficiently? How high are the organizational activity costs? Are they within their budgets? How can we optimize our internal business processes?What costs occur within the organization?

COOM

What are the Manufacturing

Costs of a product?

COPCA Product

CostControlling

Profitability AnalysisHow profitable are individual market segments?

Profit Center Accounting

How Profitable are Individual areas ?

COPA

ECPCA

ssj06816
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Integration with Other Modules

Overhead Cost Controlling

Product CostControlling

Cost Center Acc.

OverheadOrder

Accounting

CostObject

CO

Profitabilitysegments

ProfitabilityAnalysis

FI AA

FI MM PP

HR

FI SD

SD

PP

ProfitCenterAcc.

ProfitCenter

PrCtrPrCtr 1 1

PrCtrPrCtr 3 3

PrCtr 2

PrCtrPrCtr 4 4

PrCtrPrCtr 5 5

Cost

& R

even

ue E

lem

ent

Acco

untin

g

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Master Data in Controlling

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Activity Type

StatisticalKey

Figure

Cost Center

Master Data in CCA

Cost Element

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Cost Elements

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Cost element accounting

Cost element is the cost carrier.

• Primary cost elements

All P&L accounts Will be created as primary cost elements. It’s the Integration between FI and CO

• Secondary cost elements

Secondary cost elements will used for transferring cost from one cost object to another cost object

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Cost Centers

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Cost center accounting

• Cost center is the cost collector where actually incurred the expenses

• Cost centers can be created at any level either at department level, location wise, division wise, functionality wise and product group wise etc. or the combination of the above.

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Cost Center Hierarchy

• Cost Centers are Structured into Organizational and/or Functional Hierarchical Groups .This is known as the Cost Center Hierarchy.

• The Hierarchy created for Operational Management is called the

Cost Center Standard Hierarchy • Multiple Alternate Hierarchies can be created for Functional

Management. These are simply called Cost Center Groups

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Cost Center Hierarchy Cont Area.

Corporate

1710Marketing

Prodn 1 Prodn 2 Support1300Press Shop

1201Auto

1502R&D

1301Quality

1202Gears

1504Projects

1330Testing

1232Maint - Mod

1520Purchase

Plant 2

Plant 3

Assembly

9010

Sales

9000

Finance

Plant 1

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• The primary costs are posted from FI via the primary cost element.

Examples:– FI - Posting of primary costs through FI entries.

Assignment to cost object at time of FI posting.– AA - Assignment of asset made to cost center. Post to

CC at time of depreciation or gain/loss calculation.• Two documents are created when primary costs are posted to

CO from FI:– The original document in FI.– A parallel document in CO that displays the data from a

cost accounting viewpoint.

Cost Center Actual Postings

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Activity Types

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Cost Center Cost Object

Activity TypeActivity types define functions or services performed by a cost center, and are used

to allocate that center’s costs to other cost objects.(Prod order)

Ex. Machine , Labor and cleaning etc.

Activity Types are assigned to Production Cost Centers representing the activity performed there.

Activity types are frequently used in the allocation of overhead to production.

AllocationActivity Types

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Statistical Key Figures

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Statistical key figure • Statistical key figures will be used as a base for allocation of cost

from one cost center to another cost center.

Ex:• No of employees• Square feet• Light points• No of telephone lines

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Type 01: Telephone sets

Dept. 01 Dept. 02 Dept. 03

Type 02: No of employees

Dept. 01 Dept. 02 Dept. 03

50% 33%17%

14%28% 58%

Statistical Key Figures

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Primary Cost:Telephone Expense

G/L #467000

Common Cost Center:#995000

Planned Telephone Expense:

$12,000

Distribution Rule:

Cctr. #11500040%

Cctr. #18700025%

Cctr. #14500020%

Cctr. #18900015%

#467000 $4,800

#467000 $3,000

#467000 $2,400

#467000 $1,800

#115000 #187000 #145000 #189000Cost Ctr:

Distribution

Distribution

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Activity rate calculation

PRODUCTION COST CENTER 1010

Activity type LABOUR

Planed activity hours(per month) 1000 (hr)

Primary costsWages (In Rs.) 100000

Salaries (In Rs.) 200000

Total cost 300000

Activity rate per hour 300

Activity rate of Prod c.center =Total cost /Total activity hours

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Profit Center Accounting

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Profit center accounting

Profit center is a management-oriented organizational unit used for internal controlling purposes.

PCA lets you analyze internal profit and loss for profit centers. This makes it possible for you to evaluate different areas or units within your company. You can structure profit centers according to region (branch offices, plants), function (production, sales), or product (product groups).

Profit Center Accounting is a component of the "Enterprise Controlling" module.

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All the business transactions in the R/3 System which are relevant for cost and profits are monitored in the profit centers at the same time they are processed in the original module, and organized according to cost and revenue elements. This transforms all the flows of goods and services within the company into exchanges of goods and services between profit centers.

It is also possible to treat a profit center as an investment center. In addition to the flows of goods and services, you can transfer selected balance sheet line items (fixed assets, payables and receivables, material stocks, and work in process) to profit centers on a periodic basis. This makes it possible to calculate such key figures as profit on sales, return on investments and cash flow.

Responsibility Accounting

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Master Data in Profit Center Accounting

Profit Centers

Profit Center Groups

Accounts P&L, Balance Sheet Items

Statistical key figures

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Address / Communications

Data Basic data

Company CodeAssignment

Master Data – Profit Center

Validity Period

Profit Center

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Cost center

Internal order

Sales order

Material

Asset

Production order

Profit Profit CenterCenter

Profit Center Assignments

Profit center

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Flow of Actual values in Profit Center Accounting

– Flow from Profit and Loss accountsFlow from materials managementFlow from sales and distribution

– Flow from Balance Sheet items – Period end closingFlow from Asset ManagementTransfer of Material StockTransfer of Work In ProcessFlow from Accounts payable and receivable

– Flow from controlling – Period end closingFlow from Overhead Cost ManagementProfit Center Document EntryAssessment & Distribution

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Internal Orders

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Internal orders

Internal orders will be used to monitor the cost of specific jobs, events or short terms activities.

Internal orders support planning ,collecting actual cost and allocation of costs.

Ex: Official parties , Marketing exhibitions, Asset under construction etc.

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Function of Orders

Planning CostsBudgeting Costs

Posting Actual CostsSettling Costs

Evaluating Costs34

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Internal Orders: Overview

Cost Accounting Functions

Internal Orders

Orders withrevenues

Investment ordersOverheadorders

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Timeframe of Orders

One-Time

Activity

Regular

Activity

IndividualOrder

StandingOrder

SmallRecurring

Jobs

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Account Assignment Logic:

1 TrueCost Object

(… the rest are just statistical)

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REAL and Statistical Orders

Statistical Order

“Real”Posting

Real orders

Document

StatisticalPosting

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Product Costing

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Product Cost Controlling - Benefits

Legal Requirements

l Valuation of:

n Raw Materials

n Semi finished Goods

n Finished Goods

l Work-in-Process

Management Requirements

l Support cost reductionconcepts

l Strategic Decision Support

n which products

n where or how to produce

l Operating Decision Support

n pricing of products

n effectiveness of manufacturing

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What can Cost Object Controlling do for me?

• What actual costs did we incur in our area in the current period?

• What costs were we expecting based on the quantities manufactured?

• Are some product groups performing significantly better than others?

• What is causing these variances?• What are the scrap costs of our new line?• Did continuous improvements show cost

effects?

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Overview – Product CostingProduction Planning

RM Requisition to Stores

Procure material

RM issue to Production

Material available in stock

Process the Materials

Quality check of SFG / FG Produced

Return to production for reprocess

Delivery of SFG /FG to stores

Customer order Inventory

Despatch to Customer

No

No

No

Yes

Yes

Yes

Direct Material

Direct LabourDirect Utilities

Procurement OHs

Storage OHs

Indirect Material

Indirect LabourIndirect Mfg OHs

Selling & Distr OHs

Quality Overheads

• RM = Raw Material• SFG = Semi Finished

Goods• FG = Finished Goods• OH = Overhead

Direct cost

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Overview : Flow of data for Valuating a MaterialMM

PP

Raw Material rates from Material Master

Raw Material Quantities from Bill of Material

Activity units ( Hours / KWH)from Routing specifying details of work centers which are attached to Cost center

CO

Activity unit Rate from Activity rates for the period / fiscal year specified cost center wise

Overhead Rates (% or Qty based overheads basing on Direct costs)from Costing sheet / Costing Variant

(A) Direct Material Cost

(B) Direct Activities Cost

(C) Indirect/ Overhead Cost

(A)+(B)+(C)=COGM

MM

SD

Up Material Master of SFG / FG for issuing SFG to PP and FG to SD modules respectively

PP

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Overview : Product Cost

Consumables

Maintenance

Labor

Depreciation

RAW MATERIALS

Electricity COMMON/SERVICE COST CENTER

BILLS OF MATERIAL

PRODUCTION COST CENTER

ACTIVITY TYPES

WORK CENTER /RESOURCE

ROUTING

PRODUCTION ORDER

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UOM Qty/Usage units Rate(Rs.) Cost / Cost/For a batch / lot size of 10 kgs Batch(Rs) Unit(Rs)Material cost:

Raw material 1 Kg 200 * 5 = 1000 100

Raw Material 2 Lts 500 * 4 = 2000 200

Raw Material 3 KG 300 * 10 = 3000 300

Total Material Cost (A) 6000 600

Direct Utilities:

Activity 1 Eg: Mach HR 80 * 5 = 400 40

Activity 2 Eg. Labour HR 100 * 1 = 100 10

Total Activities Cost (B) 500 50

Overhead 1 Eg. Mat Overhead (as a % to Total Mat Cost = (A)*10%) 600 60

Overhead 2 Eg. Manufacturing Overhead (Rs. 400 per 10 Kgs ) 400 40

Total Overhead Cost (C) 1000 100

Total cost of Manufacturing (A)+(B)+(C) 7500 750

Overview : Flow of data for Valuating a Material

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Stages of Production and the Flow of Costs

Raw MaterialsBeg. Inventory

Add: Purchases= Raw Materials

Available for Production

Less: Raw Materials Transferred to Production

= Ending Inventory

Work-In-ProcessBeg. WIP Inventory

Add: Raw Materials Transferred InDirect LaborAllocated Manufacturing Overhead

= Manufacturing Costs for the Period

Less: Goods Completed and Transferred to Finished Goods

= Ending WIP Inventory

Finished GoodsBeg. Inventory

Add: Goods Completed and Transferred from WIP

= Goods Available for Sale

Less: Cost of Goods Sold= Ending Inventory

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Profitability AnalysisCO-PA

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Profitability Analysis

– Profitability Analysis (CO-PA) lets you analyze the profitability of segments of your external market. These segments can be defined according to products, customers, countries, and numerous other characteristics, as well as your internal organizational units such as company codes (i.e. 9100) or distribution channels (I.e. direct, wholesale, e-Commerce). It is a multi dimensional analysis.

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Typical Questions in Profitability Analysis

customer

region

salesdivision

product

MarketMarket

CompanyCompany

u Who are the largest and fastest growing

customers ?

u How the sales and contribution margins have

changed in the last period for each product ?

u What are my worst and best performing

products in different regions ?

Billingdocuments

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Flows of Actual Values - Contents

• Flows of Actual Values• Transferring Data from SD• Transferring Cost Center • Settling Orders • Direct Postings from FI

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Sources of Value Fields

R

SDSD

CO-PCCO-PC

Cost CenterOrderProcess

Cost Estimate

General Ledger Posting

Billing Document

FIFI

CO-OMCO-OM

PSPS

CO-PACO-PA

WBS ElementNetwork Operation

Additional Costs

Quantity

Sales Revenues

Sales Deductions

Cost of Goods Sold

Variable Cost of Goods Mfd

Fixed Cost of Goods Mfd

Bonuses

Freight Costs

Sales and Administration Costs

Marketing Costs

Variances

Research & Development Costs

Cost Discounts

Cost Bonuses1996 1997 1998

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Transfer of Overhead - Overview

Process

Cost Center

Order

CO-CO-PAPA

Assessment, Process Allocation

Order Settlement

Assessment, Process Allocation

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PCA Vs COPA• Profitability Reporting:  

– Profitability Analysis (CO-PA) lets you analyze the profitability of segments of your external market. These segments can be defined according to products, customers, countries, and numerous other characteristics, as well as your internal organizational units such as company codes (i.e. 9100) or distribution channels (I.e. direct, wholesale, e-Commerce). It is a multi dimensional analysis.

– The aim is to provide your executive management, sales, marketing, planning, and other groups in your organization with decision-support from a market-oriented viewpoint.

• Responsibility Reporting:  

– EC-PCA lets you analyze internal profit and loss for profit centers. This makes it possible for you to evaluate different areas or units within your company. You can structure profit centers according to region (branch offices, plants), function (production, sales), or product (product groups). Profit Center Accounting is a component of the "Enterprise Controlling" module. It is a two dimensional analysis.

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Basic Report of profitability analysis

CharacteristicValues

Key Figures

Revenue COGS product

North

East

South

Region

You select the desired variables, characteristics, and key figures.

The selected characteristics form the dimensions of a multidimensional "data cube".

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Thank you……