MC Training November 2010

MC TrainingCO Module

November 2010

Agenda• Introduction to CO• Master Data• Costing

• PCE’s, analysing, Activity rates, updating etc.• Integration – PP, MM, PM, FI Integration.xlsx• Cycles• Inter BA balances• Period ends – checklists, processes

Introduction to CO

Agenda

• Overview

• Components within CO

Overview

• Controlling is the “Management Accounting” module within SAP and provides you with information for management decision-making.

• It facilitates the monitoring and optimisation of processes, involving recording both the consumption of activities (Prod. Lines/hours) and the services (QA, Ops planning etc.) provided.

• As well as documenting actual events, the main task of controlling is planning

– Actual vs. Plan data = VARIANCES.

• These variance calculations enable you to control business flows. – analyse and use to improve performance.

• Contribution margin statements (PA Income Statement) are used to control the cost efficiency of individual areas (product, channel, customer etc.)of an organisation, as well as the entire organisation(Company, plant, BA etc.)

Overview cont….

• Internally focused (FI is external)

• Measurement tool

• Facilitates management by exception (variances)

• Planning - “What if” scenarios

• Facilitates strategic decision making

• Information System - Reporting

Overview cont….

External AccountingSAP Financials

Internal AccountingInternal AccountingSAP ControllingSAP Controlling

External reporting - FI

Costcentrereports

Productcostingreports

BudgetreportsProfita-

bilityreports

Profit & loss

(P&L)

BalanceSheet

Cashflow

statementRetainedearnings

report

Internal Internal reportingreporting - -

COCO

Overview cont….

Financials (FI) Controlling (CO)

Balance Sheet

Income Statement

Cost Centre Accounting

Production Controlling

Orders Product Costing

Profitability Analysis

Secondary Cost Elements

Chart of

Acc's

Primary Cost Elements

FinancialFinancialAccountingAccounting

•General Ledger•Accounts Payable•Accounts Receivable•Fixed Assets•Treasury

ControllingControlling

•Cost Centre Accounting•Internal Orders•Product Costing•Profitability Analysis

Cost Element vs. GL Account

Chart of A

ccountsC

hart of Accounts

BalanceBalanceSheetSheet

AccountsAccounts

AdjustmentAdjustmentAccountsAccounts

Cost E

lements

Cost E

lementsSecondarySecondaryCostCost

ElementsElements

IncomeIncomeStatementStatementAccountsAccounts

PrimaryPrimaryCostCost

ElementsElements

No Balance

No Balance

SheetSheet

Accounts in

Accounts in

Controlling

Controlling

All primary

All primarycost elements

cost elementslinked to

linked to

Income Statement

Income Statement

Accounts

Accounts

No Secondary

No Secondary

Cost Elements

Cost Elements

In Financial

In Financial

Accounting

Accounting

Introduction to CO

• Overview

• Components of CO

Components of CO

• Cost Centre Accounting

• Internal Orders

• Product Costing

• Profitability Analysis (PA)

Components of CO

• Cost Centre Accounting

• Cost Centre

• Responsibility Accounting

• Follows structure of CCS

• Support Cost Centres

• Production (Line Cost Centres)

• Overhead Cost Centres

• Cost Element Cost Elements list.xlsx

• A cost element classifies/groups costs consumed within a Controlling area.

• Primary Cost Element - costs that originate outside the company; relate directly to the income statement in FI (1 to 1) and must be included in the FI Chart of Accounts.

• Secondary Cost Element - costs that result from internal allocation activities; NO relation to G/L accounts in FI. These accounts are exclusively for cost accounting and are only maintained in CO. They are used for cost allocation, assessments and settlements.

Components of CO

• Internal Orders

• 2 Types : Real Orders & Statistical Orders

• Real Orders

• Collect “Real” postings

• Settled at period end to Cost Centres

• Eg. Maintenance orders – ZPMO, Capex orders - ZCAP

• Statistical Orders

• Information postings

• Not settled to Cost Centres at period end

• Eg. Projects - DME

Components of CO

• Product costing

• Able to establish a Unit Standard Costs (PCE) using standard material prices, quantities, times, activity rates, scrap rates.

• Standard cost allow for planning Standard GP etc. into the future

• Standard costs provide comparisons to actual costs – variances to monitor and improve performance

• Stock valuation

• Includes

• Raw Materials (include railage inward)

• Packaging Materials

• Manufacturing Overheads

• Machine

• Labour

• Crates Full of Bottles(CFB’s) – zero value

• Excludes

• Transport between plants

• Warehouse, Distribution, Selling and Admin

Components of CO

• Profitability Analysis

• Evaluate market segments

• Country

• Region

• Products

• Brands/Flavor/Pack Size

• Customers

• Activity Cluster/Trade Channel

• Any combination of above

• Provide Sales/Marketing info

• Multi-dimensional

• The aim of Profitability Analysis is to analyze the flows of costs and revenues and to provide all levels of management with information on the profitability of market segments, products, as well as the overall profitability of the company.


• PCE’s, analysing, Activity rates, updating etc.• Integration – PP, MM, PM, FI• Cycles• Inter BA balances• Period ends – checklists, processes

Master Data

• Cost centres

• Cost centre groups

• Cost Element Groups

• Material Master

• Material Price & Additives

Master Data – Cost Centres

• KS03:Check active date, open for posting, hierarchy, plant…..

Master Data – Cost Centre Groups

• KSH3:Check CC which group – assist in reporting

Master Data – Cost Elements Groups

• KAH3: Check groups available for reports, see what accounts fall into which groups

Master Data – Material Master

• Access via transaction MM03

• Key areas to check: Do not cost, Origin Group, Costing lot Size



• Key areas to check: Planned Price, Standard Price, price Control, Valuation Class



• Key areas to check: Procurement Type – E or F

Master Data – Material Prices & Additives

• Receive data from procurement

• Update via Template – send to BSC (includes bought FG’s)

• Must follow-up regularly with Procurement to ensure latest prices are in system• If not then large price variances will occur

• Std cost will be incorrect

Material Plant Planned price 1 Date 1 Planned price 2 Date 2 Planned price 3 Date 3

Sugar Z050 100.6528.02.2010 108.0530.06.2010 115.6831.12.2010

Sugar Z051 100.6528.02.2010 108.0530.06.2010 115.6831.12.2010

Sugar Z200 100.6528.02.2010 108.0530.06.2010 115.6831.12.2010

Sugar Z300 110.2528.02.2010 112.6730.06.2010 119.2331.12.2010

Material Number Plant Costing Lot Size Costing from date Costing to date Valuation date Quantity

Price in entry currency Price unit Cost Element Orig

Sugar Z050 1000.0 01.01.2010 30.06.2010 01.01.2010 1000 12.67 kg

Sugar Z051 1000.0 01.01.2010 30.06.2010 01.01.2010 1000 12.67 kg

Sugar Z200 1000.0 01.01.2010 30.06.2010 01.01.2010 1000 12.67 kg

Sugar Z300 1000.0 01.01.2010 30.06.2010 01.01.2010 1000 12.67 kg


• PCE’s, Activity rates, Prod. Variances & Recoveries• Integration – PP, MM, PM, FI• Cycles• Inter BA balances• Period ends – checklists, processes

Costing• We use a Standard Costing system which is a control technique comparing Standard costs to

Actual costs, generating variances, which are analysed and used to stimulate performance.

• A Standard Cost allows you to accurately forecast into the future – Planning.

• A Standard cost is a predetermined unit cost for each cost unit, it contains the standard quantity and price of each resource used to produce the finished product.

• Allows us to calculate Total Cost of Manufacture for COGS and Stock Valuation for our monthly/annual financial reports.

• Compare costs with competitors(difficult) and benchmark across plants, regions and countries.

• Standard Cost : Product Cost Estimate – PCE• BOM

• Rate Routing (standard time and cost centre)

• Activity Rates (Production Costs, Volume, Hours)

• Material Master

• Standard Material Prices

Costing – Key transactionsKey transactions in Product Costing

CK11N Create a PCE CK13N Display a PCE CK33 Comparison of Itemizations CK24 Price Update with Cost Estimate - Mark & Release CK40N Create and Execute a Costing Run CK74N Additive costs - Create CK75N Additive costs - Change Can be sent in a upload file to BSC for mass uploadCK76N Additive costs - Display CA23 Display Rate Routing std time, rating etc.CS03 Display BOM MM03 Display Material Master - Costing2: Planned Price if RM etc. Can be sent in a upload file to BSC for mass upload - Costing1: "Do not Cost" Unchecked for costing to work - Costing 1: Origin Group Sugar, Concentrate, Packing mat, Grp Mnf - Trf in = must be maintained - Costing1: Costing Lot Size Must be maintained = generally 1,000.000 -MRP2: Procurement Type Must be maintained = generally E or F

PCEs : Own Manufactured Goods

Standard Cost

Sugar xxx

Concentrate xxxx

Crown x

Bottle xx

O/H – Labour xx

O/H – Machine xxx

TOTAL xxxxx

$

CO Costing Sheet

Sugar Material MasterConcentrate

Material MasterCrowns

Material MasterBottle

Material Master

MM Master Data

BOM unitsSugar xxxConcentrate xxCrown xBottle x

PP Master Data

Routing hrs1. Cleaning & San.2. Flavour change3. Size change4. Gross bottling time

CO Master Data

Labour Activity PriceMachine

Activity Price per hr

Costing – PCE (CK13N)

Costing – Cost Sources

• Material Cost• BOM gives material and standard quantity

• Standard quantity (includes scrap allowance) x Standard Price(material master) = Material Cost

• Labour and Machine Cost(Overheads) • Labour cost

• Depreciation (plant & containers)

• Maintenance costs

• Overheads (Caustic, stationery, Forklift, etc.)

• Service Cost centres – assessed

• 4 Activity types• Labour (hours)

• Machine (hours)

• Maintenance (hours)

• Volume (units)

Costing – Rate Routing (CA23)

2000 cases is the installed Manufacturers rated speed to run 1 pack, 1 flavour – perfect operating conditions in I Hour

Plan time = 2.186 hours, therefore running at 45.7% of rated speedPlan activity for activity rates based on 45.7%

BOM (CS03)

Costing – Labour & Machine Costs

• Labour• KP06 : Use layout: DF, Activity Type: LABOUR

• Machine (Overheads) • KP06 : Use layout: SAPALL, Activity Type: MACH

• Plan maintenance costs on predetermined Settlement orders

• Depreciation – from the run in FI and forecast

• Cycles – CCA & PA• Must review cycles (KSU3 & KSU9)

• Cycles must represent the current/future conditions – volume, mix, effort, usage, etc.

• Must reverse cycles when revising rates

Costing – Activity Rate

• Rate achieved : Total cost for line(direct and allocated) / Planned Hours(volume)

1. Reverse PA and CCA Cycles – KEUB and KSUB

1. The PA cycle must only be run after the activity rates are calculated and confirmed as correct

2. Update your RE costs - costs on the lines, costs on service cost centres – KP06.

3. Update RE costs in settlement orders for PM

4. Check Equivalence numbers are correct for each production line – KP26 - It must be a “0” for LABOUR and a “1” for MACH.

5. Ensure LTP process has been run so you have the latest volumes, which give you the latest hours in “Act. Sched” column

6. Run KPSI to move the hours from Scheduled to Plan. The calculation uses Plan hours so it is important to run this transaction and to check that it is correct.

1. The schedule hours and plan hours must be the same for Labour and Mach – do not continue if different.

2. You must run KPSI before Assessment cycles are run as some cycles use Plan hours to allocate/split costs of Service Cost Centres

7. Run Settlement orders , KO9G, to get maintenance costs into cost centres(view costs are in via transaction KSBL )

8. Run CCA cycles – KSUB, to get Service cost centre cycles onto lines

9. Run KSS4 – splitting of costs taking all Labour costs for Labour rate and all other costs to machine rate calculation

10. Run KSPI – price calculation, then - Do a recon to check: rate x hrs = cost

11. Once you have checked your rates and costs reconcile , Run PA cycles – KEUB

1. Prior to running , an Over/Under difference will exist, this will now move to account 720000 – Cost Assessed to PA.

2. Run S_ALR_87013611 to further check – there should now be the Labour value, machine value and a very small value assessed to PA = Over/Under should be = 0

12. For Syrup room, it will have volume allocation.

Costing – Activity Rate (KSBL)

Correct

Costing – Activity Rate (KSBL)

Incorrect

Costing – Activity Rate (Recon)

Costing – Activity Rates :Labour

Labour cost 248 473 / 118.633 Hr = 2094.47/Hr (why different to labour above?)

Costing – Activity Rates : Machine

Machine cost 1,824,075 / 118.633 Hr = 15375.78 / Hr

Costing – Activity rates (KP27)

Note:Price Unit – must check if per 1, 10 ,100, etc.Equivalence number – 0 for labour, 1 for machinePlan activity = Act. sched

Costing – Activity Rates (CK13N)

Costing – view costs for a period (S_P99_41000111)

Costing – CK13N options

PA Income Statement allocation to the value fields for COGS

Costing – Production Variances & Overhead Recovery

•Backflushing

•Product Cost Collector

•Variance Analysis

•Overhead Recovery

Costing – Production Variances

Backflushing

•Assembly backflush – when finished product comes off line

•Component backflush – consumption of raw materials

•Activity backflush – consumption of activities (hours)

•Backflushing has to happen timeously:– Stock available in Warehouse (transferred ex Production)– Raw material stock quantities updated– Updates cost collectors (daily) & therefore reporting

•Standard (PCE) required

Costing – Prod Var : Product Cost Collector

Costing – Production Variances

Product Cost Collector: Order 700007 , FG 1012

Net EffectComponent Backflush : consume raw materials DR CR Order 700007

DR Product Cost Collector: std price x actual quantity used CFB - - CR Stock - CFB - DR Product Cost Collector: std price x actual quantity used Closures 55 205.19 55 205.19 CR Stock - Raw materials -55 205.19 DR Product Cost Collector: std price x actual quantity used Water 6 253.21 6 253.21 CR CCA - Water Recovery -6 253.21 DR Product Cost Collector: std price x actual quantity used CO2 11 507.63 11 507.63 CR Stock - Raw materials -11 507.63 DR Product Cost Collector: std price x actual quantity used Final Syrup 1 235 326.00 1 235 326.00 CR Stock - Raw materials -1 235 326.00

Activity Backflush : consume activities

DR Product Cost Collector: std price x actual quantity used Machine 761 101.11 761 101.11 CR Machine Allocation in CCA - Recovery -761 101.11 DR Product Cost Collector: std price x actual quantity used Labour 103 676.28 103 676.28 CR Labour Allocation in CCA - Recovery -103 676.28

2 173 069.42 Assembly Backflush - Issue to Warehouse FG Stock

DR Stock - Own manufactured (Account 181200) 2 155 507.20 CR Product Cost Collector: PCE x units produced -2 155 507.20 -2 155 507.20

------> Variance : Account 420020 DR/(CR) 17 562.22

Costing – Production Variances (FS10N)

Production variances (KKBC_HOE)

Costing – Production Variances & OH Recovery

Costing – Overhead Recovery

From KKBC_HOE – Product cost collector : Actual Hours x Std Activity Rate for Labour & Machine Recovery less the Actual costs in the Cost Centre, the difference get posted directly to the PA Income Statement in COE’s as Under/Over Recovery

Costing – Variances

• Understanding variances

• Target Cost – Actual Cost = Production variance

(Target quantity x Std Activity rate) – (Actual quantity x Std Activity Rate) = Production variance.

• Variances must be seen in conjunction with “Prod Over/Under” costs from Actuals assessed to PA.

• If a production variance occurs it means the plant has not produced to Std, therefore it has either been inefficient (taken longer/shorter vs. the Std time), incurred more or less money than it should to produce the actual quantity.

• Factory Output @ Std

• Rounding difference

• Actuals posted @ two decimal places

• Target posted @ PCE value per 1000 units therefore effectively @ 5 decimal places

• Note : Material variance

• Target uses PCE and Actual uses the Standard from the Material Master

• Therefore you cannot change the planned prices for the current month once PCE’s are marked and released

• There will be a difference on materials with no unit variance ???

Agenda

• Introduction to CO• Master Data• Costing


Cycles

• There are 2 types of Cycles – CCA & PA

CCA• CCA Cycles assess costs that are not directly allocated to the Prod. Lines – Indirect production costs like Service Cost

centres eg. Ops Planning, Quality etc. to the Prod. Lines • These costs must be included in the Activity rate calculation for stock valuation and to ensure full recovery of the

costs.• CCA cycles use Secondary cost elements to collect and allocate the costs to the Prod. Lines. PA• PA Cycles assess costs from CCA to the PA income Statement to Value Fields. PA Value fields.xlsx• PA Cycles allocate costs to PA that are not Recovered via the Production Lines (Activity rates) or any Manual Adjustments

or postings• Manual postings include Discount Adjustments, Revaluation, Price variance• Costs that are not recovered via the Production Lines activity rates include MD, HR, Finance etc.• The costs above must get allocated to a value filed in the PA income statement as they do not form part of the “Cost of

Sales @ Std” which gets automatically posted. See KE30.

• Cycles must be reviewed at least 2wice a year to ensure that the allocation of costs still represent what is actually happening

or what is planned to happen• Cycles must be reversed when doing a new RE, if costs change and journals are processed, when re-calculating the Activity

rates: Numbers will remain as per the last cycle if not reversed.

Cycles – CCA Cycle

Overhead Assessment Rules

Southern Region 2010 Assessment Rules

Z050 (Lakeside) Assessment

Rule Line 1 Line 2 Line 3 Line 4 SR

LOD

Bottles Fixed % 60% 40% 100%

Crates Fixed % 24% 16% 60% 100%

Ops Plan Hours

Boiler Fixed % 40% 40% 10% 10% 100%

Sorting - PE Fixed % 60% 40% 100%

Quality Fixed % 25% 20% 20% 25% 10% 100%

Eng -Main Fixed % 30% 15% 25% 25% 5% 100%

Fact O/H 1 Fixed % 0%

Water Treatment Fixed % 38% 9% 12% 41% 100%

Raw Material Store Hours 0%

Operating Supply Store Hours

CyclesASSESSMENT CYCLES

CCA & PA Cycles - Actual & Budget/RE

CCA (LOD to Prod Lines, Service to Prod Lines)

Actual RE/Budget KSU1 Create Create Actual assessment cycle KSU7 Create Create Plan Assessment cycleKSU2 Change Change Actual assessment cycle KSU8 Change Change Plan Assessment cycleKSU3 Display Display Actual assessment cycle KSU9 Display Display Plan Assessment cycle

KSU4 Delete Delete Actual Assessment cycle KSUB ExecuteIndirect Planned Production Overheads transferred to Production Line cost centres

KSU5 ExecuteIndirect Actual Production Overheads transferred to Production Line cost centres

KSU6 OverviewActual Assessment Overview - what & when run

PA (Adj. to Disc, Act non-cash, Act to PA)Actual RE/Budget KEU1 Create Create Actual assessment cycle KEU7 Create Create Plan Assessment cycleKEU2 Change Change Actual assessment cycle KEU8 Change Change Plan Assessment cycleKEU3 Display Display Actual assessment cycle KEU9 Display Display Plan Assessment cycle

KEU4 Delete Delete Actual Assessment cycle KEUB ExecuteAll planned cost centre costs are transferred to Profitability Analysis.

KEU5 ExecuteCost centre actual costs are transferred to Profitability Analysis

KEU6 OverviewActual Assessment Overview - what & when run

Display - Cycle Overview(segments, sender/receiver etc)

Actual RE/Budget KEUD Execute KEUE Execute

Cycles – CCA : KSU9

Cycles – CCA :KSU9

Cycles – PA : KEU9

Agenda



Inter BA balances

• Controlling Area will balance but business areas will not balance – cannot proceed with month-end as FI & CO will not balance.

• In almost all instances it is an error from a maintenance order – an expense(repair hours) are posted in one BA for an Asset(equipment) in another BA

• Require a CCA journal to fix : KB21N, before doing journal all cycles must be reversed - PA & CCA

• Run report S_ALR_87013611 – select account 730400

• Check which BA does not balance, double click on the Over/under line

• Go into “line items”

• Change variant to show TPBA (Trading partner BA) and sort

• Once found a CCA journal must be processed to correct – KB21N: using the hours to correct, move the expense to the asset BA

Agenda



Period ends

• Refer to the Group issued “2010 Month-end Checklists and Data Checks”

• 2010 Month end Checklists and Data Checks.xlsx

• Workshop issues

MC Training November 2010

Documents

Transcript of MC Training November 2010