Professional Documents
Culture Documents
IBM
Agenda
Workshop approach
Cost Accounting Basic Concepts
SAP specifications
Master Data
Workshop approach
CO Basic concept
(Quality, Product-Industrialization)
Identity
Management
Reports
Accounting Concepts
Reporting Concepts
Standards
Group
Group
Fullfill
Legal
Requirem.
Statutory
Accounting Processes
Financial
Reports
Support
Decisions
Agenda
Workshop approach
Cost Accounting Basic Concepts
SAP specifications
Master Data
Controlling
General
settings
Processes
Organizational
units
Master data
management
overhead
controlling
Master data
management
profitability
analysis
Sub
Processes
Master data
management
profit center
accounting
Archiving
Planning
Cost and
activity
planning
Plan
calculation
product
Planning
profitability
analysis
Actual cost/
revenue
clearing
Overhead
allocation
operation
based
Profit
Settlement
of Article
Interface
Sales and
Distribution
Operation
based
allocation cost of sales
accounting
Actual
processes
product cost
controlling
Period end
closing
Reporting
Period end
closing cost
centers
Reporting
overhead
controlling
Period end
closing
internal
orders
Reporting
product cost
controlling
Period end
closing
product cost
controlling
Period end
closing
profitability
analysis
Period end
closing
profit center
accounting
Year end
closing
Reporting
profitability
analysis
Reporting
profit center
accounting
Company Code 2
Company Code 3
Company Code n
CO Components
Profitability Analysis
CO
OM
How can we
CO
PC
ECPCA
Product Cost
Controlling
CO
CEL
CO
PA
How profitable
are individual
enterprise areas ?
R
Agenda
Workshop approach
Cost Accounting Basic Concepts
SAP specifications
Master Data
Closing
Controlling
General
settings
Processes
Organizational
units
Master data
management
overhead
controlling
Master data
management
profitability
analysis
Sub
Processes
Master data
management
profit center
accounting
Archiving
Planning
Cost and
activity
planning
Plan
calculation
product
Planning
profitability
analysis
Actual cost/
revenue
clearing
Overhead
allocation
operation
based
Profit
Settlement
of Article
Interface
Sales and
Distribution
Operation
based
allocation cost of sales
accounting
Actual
processes
product cost
controlling
Period end
closing
Reporting
Period end
closing cost
centers
Reporting
overhead
controlling
Period end
closing
internal
orders
Reporting
product cost
controlling
Period end
closing
product cost
controlling
Period end
closing
profitability
analysis
Period end
closing
profit center
accounting
Year end
closing
Reporting
profitability
analysis
Reporting
profit center
accounting
Cost elements
The Global Chart of Accounts contains all accounts of Financial Accounting. The chart
of account is used by the Financial Accounting (FI) and the Cost and Revenue Element
Accounting (CO-OM-CEL).
The expense and revenue accounts in FI can be transferred to primary cost and
revenue elements in CO.
Secondary cost elements can only be created and administrated in Controlling. They
portray internal value flows, such as internal activity allocation, overhead calculation and
settlement transactions.
Primary cost elements and secondary cost elements will be created and maintained
globally.
Numbering of Primary Cost Elements is defined by the corresponding G/L account number
Naming Convention Secondary Cost Elements:
Secondary cost elements will be named according to the following pattern:
1 Activity Allocation
1 Production
2 Assessment
2 Other Services
3 Overhead Costs
3 PM/ PS
C
Production
4 Order Settlement
5 Accrual/Deferral
5 QC/ QA
Other Services 1 R&D
per Surcharge
2 Technical Services
3 IT Services
6 Accrual/Deferral
4 Human Resources
5 Others
PM/ PS
1 All
XX
Ongoing
number
10-99
Naming Convention
First Digit
Second Digit
R
Reporting
Structures
Cost Center
Accounting
Internal Order
Accounting
P
Costing
Product
Profitability
Analysis
Assessment
Alternative local groups can be created by putting the 4-digit company code number in front of the
group
Cost centre
Naming convention
Cost centre
Naming:
X X X X
= Company Code
X X X X X
X = free
Example:
4
1 5 0 6 6
2 0 0
Standard hierarchy
Per controlling area a cost centre hierarchy has to be set up comprising all cost centres for a given period and thus
representing the whole enterprise. This hierarchy is known as the standard hierarchy.
The standard hierarchy is structured according to decision-making area, area of responsibility, or management area.
S01
Naming Convention
The highest node of the standard hierarchy is always called S01 for each region.
S4150
SXXXX
All lower levels can be defined freely after starting with Sxxxx-
S4150-xxx...
Parallel Hierarchy (for companies using not BW for Cost centre reporting)
A parallel hierarchy enables to group cost centres together on the basis of other criteria. For
example, the reporting structure can be presented in the form of cost blocks.
A01
A4150
A4150-xxx...
AXXXX
Activity types
Purpose:
LDC
MDC
Material
Naming Convention
A list of all activity types will be defined globally.
Purpose:
Naming Convention
Profit Centre
Naming convention
First Node
Merck
Second Node
Business Area
C
Chemical
Pharmaceutical
Third Node
XX
Merck Division
Number
Alternative local groups can be created by putting the 4-digit company code number in front of the
group
The PCA account groups are only created for balance sheet items, because PCA is only
used for reporting the net operative assets
The PCA account groups collects values with similar characteristics
The PCA account group structure should be defined and maintained at corporate level.
The PCA account groups are used for the report net operative assets
The PCA account groups are used for allocation purposes (distribution):
e.g. to define PCA accounts on the common profit centres which needs to be allocated
to the final business field profit centres with a certain allocation key
Naming Convention: - one digit only
Alternative local groups can be created by putting the 4-digit company code number in front of the
group
Agenda
Workshop approach
Cost Accounting Basic Concepts
SAP specifications
Master Data
Closing
Business
CO General
settings
CO-01CO
Organizational units
CO-04 Cost
and activity
planning
CO-02 CO
Master Data
CO-05
Planning
profitability
analysis
CO-03 CO
Archiving
Business
Processes
CO Planning
CO-06 Plan
calculation
products
CO-07 Plan
Profit Center
Accounting
CO Actual
cost/
revenue
clearing
CO Period
end closing
CO-08
Overhead
allocation
operation
based
CO-12
Period end
closing cost
centers/inter
nal orders
CO-09 Profit
Settlement of
Article
Interface
Sales and
Distribution
CO-13 Period
end closing
product cost
controlling
CO-10
Operation
based
allocation
(cost of sales
accounting)
CO-11 Actual
processes
product cost
controlling
CO-14 Period
end closing
profitability
analysis
CO-15 Period
end closing
profit center
accounting
CO
Reporting
CO-16
Reporting cost
center
accounting
CO-17
Reporting
product cost
controlling
CO-18
Reporting
profitability
analysis
CO-19
Reporting
profit center
accounting
Period end
closing cost
centers /
internal orders
Period end
closing product
cost controlling
Period end
closing
profitability
analysis
Period end
closing profit
center
accounting
Abstract
The process period end closing cost centers /
internal orders contains several process steps
The accrual calculation calculates and posts
accrual to smooth non-periodic costs in
controlling
The actual cost distribution allocates costs by
keeping the original cost account on the receiver
object
The actual cost assessment allocates costs with
secondary controlling cost accounts
Surcharges are calculated and posted to cost
centers or internal orders
Internal orders (projects) are settled to the
receiver cost objects
The controlling data are reconciled with the
financial accounting data
Month end
closing
Process
steps
Year end
closing
Accrual calculation
in cost center
accounting
Actual cost
distribution
Actual cost
assessment
Surcharges
Settlement of internal
orders
Objectives
Smooth costs for non-periodic costs
Allocate costs between cost centers and / or
internal orders
Ensure reliable controlling data by reconciling it
with financial accounting
Reconciliation of
financial accounting
vs. controlling
Basics
Pre-requisites for closing a period (examples)
In Sales and Distribution (SD), all the invoices have been created and passed on to Financial
Accounting
The vendor and customer accounts have been locked against postings in the period to be
closed
In general: all postings in Financial Accounting (FI) that are relevant to Cost
Accounting must have been carried out
One common FI/CO closing calendar will be defined, in which all steps, dependencies and dates are
mentioned.
Staff stocks
In general: for cases where the direct cost assignment to a cost center is not possible
or would be too time-consuming + the original cost elements should be kept at
the receiver cost centers
Usually the distribution is used within the cost center accounting only
px = primary cost
element (= FI
P&L account
transferred to
CO)
SAP R/3
FI
CO
z,-
Balance sheet
1
z,-
p1
z,-
z,-
p1
p1
x,-
y,-
p1
= Cost distribution
Sender receiver
information is kept in
the CO line item
The original cost element (primary cost element) is kept at the receiver cost centers.
Container transportation
etc.
In general: for cases where the composition of the costs is not important for the
receiver original cost elements are not kept at the receiver cost centers
Usually the assessment is used within the cost center accounting only
px = primary cost
element (= FI
P&L account
transferred to
CO)
SAP R/3
FI
CO
P&L Expense
account 1
a,-
Balance sheet
account 1
1
p1
a,-
p2
b,-
p3
c,-
P&L Expense
account 2
2
b,-
Balance sheet
account 2
2
s1
a,- + b,-
s2
c,-
c,-
Balance sheet
account 3
3
c,-
b,-
sx = secondary
cost element
(exists only in
CO)
s1
a,- + b,-
s2
c,-
s1
a,- + b,-
s2
c,4
= Cost assessment
Sender receiver
information is kept in
the CO line item
The original cost elements are assigned cumulatively or in groups to the assessment (secondary) cost
elements. The original cost elements are not recorded on the receivers.
CO
1. Direct
activity
allocation
s
Sender cost center
+6h
Sender hours
Entered manually
- 10 h
s
+4h
-Fixed amounts
Sender hours
2. Indirect
activity
allocation
s
Sender cost center
+6h
- 10 h
Entered manually
Allocation keys to receivers
- Fixed percentages
+4h
- Fixed amounts
- Based on statistical key figures
Sender values
3.
Distribution
p
Sender cost center
+ 60,-
- 100,p
+ 40,-
- Fixed percentages
- Fixed amounts
- Based on statistical key figures
Sender values
4.
Assessment
s
Sender cost center
+ 60,-
- 100,s
+ 40,-
- Fixed percentages
- Fixed amounts
- Based on statistical key figures
Business process
SAP R/3*
FI - CMG A
CMG A
1
2
CMG B
Accounts Receivables
clearing account
CO CMG A
P&L account
Income**
1
2
FI - CMG B
P&L account
expenses**
2
Process steps
Cost center 1
CO CMG B
Accounts Payables
clearing account
2
Cost center 2
1
The cross company posting within controlling needs to be reflected as well in finance accounting.
Technical Orders
Patent cost
R&D cost
Testing cost
Facility cost
Different IT cost
Requirements
-
Companies belong to the same tax consolidation (if not, tax differences needs to be
considered)
The cross company postings can be used between cost centers and internal orders*
Administration cost
FI
CO
External service
1
Vendor
x,-
x,-
Maintenance
cost center
x,- 3
1
z,-
3 Direct activity
allocation (time
sheet processing)
Goods
Issue
MM doc.
Material
consumption
2
Stock
y,-
y,-
- Other expenses
Technical service
Internal order*
y,- 6 Y+z+s,2
3
z,-
s,-
e. g. production
cost center
u,6 Y+z+s,- 7
6 Settlement
7 Activity allocation
LABOR/MACHINE
4 Surcharge posting
e. g. Labor
5
Bank
5
w,-
w,-
Warehousing
Cost center
w,- 4
5
s,-
Process order
u,-
The calculation base for the surcharge are the primary postings on the receiver object.
CO-order accruals
CO-order to CO-PA
The (real) internal orders needs to be settled at month end to other cost objects, into the SPER-lines
(CO-PA) or into FI. The settlement-split-up to the receivers can be by percentages or by direct amounts.
CO
Expenses
y,-
Vendor
2
y,-
Profitability segment
(VF sales costs)
y,3
Settlement to
different
business
fields/SBUs
VF = value field
CO
Vendor
1
x,-
Profitability segment
(VFs R&D)
y,2
2 Settlement
Cost center
x,1
Optional: statistical
posting to cost center
VF = value field
FI
CO
Labor expenses*
x,-
Bank
1
x,-
Material
consumption
Material
consumpti
on
Material
document
y,-
Stock
2
y,-
Cost center
x,- 3
Activity
allocation
Internal order**
x,4 x,-+z,-
Balance sheet
4
x,-
P&L own
worked capitalized
4
x,-
z,-
z,Settlement
FI-AA
Asset under
construction
4 x,-+z,-
* Posted by payroll
BACK-UP
BACK-UP
Activity Based
Costing (ABC)
Direct Costing
Full Costing
(Kaplan/Cooper)
reconciliation to
financial records
duplication of costs
can be avoided
No clear variations
Var/fix cost
References
mainly only
labor
Definition
Var/fix cost
clear
References
detailed
Cost center
structure
rough
short term
structure
long run
Cost driver
Cost center
Standard cost
LDC / MDC
Planning standard
costs (Top down)
No clear separation of
different variations
(Usage)*
In variable cost lack
of information
concerning detailed/
different productioncost information (per
operation)
Corporate Standard
problems
Marginal Costing
Cost
Prozesskostenrechnung
Grenzplankostenrechnung (Kilger/Plaut)
Other
(Horvath)
Additional tool
to Marginal costing
(cost centers / var. /
fix. plan costs)
System to analyse
calculated activities
and cost-drivers in
fix cost centers
Not used in variable
cost centers
(Activities ->
operations)
operation codes
Process-cost could
be part of calculation system; currentand control standard
Tool for optimizing
activities (logistic,
purchasing, ...) in a
company
Live cycle
Costing
Target Costing
Full Costing method: basically all costs are allocated to cost object. Direct cost and
proportional overhead cost
Differentiation into fix and variable cost is according to the dependency on capacity
utilization or the immediate relation to output. Fixed costs are tied to the time period, generally
independent of the level of output; variable costs are tied to output or usage, generally
independent of the time period; mixed costs have both fixed and variable components
Principle of Cost Control: All cost that alternate with slight change in output are defined as
variable
The definition of cost as variable underlies the premise of a short-term time horizon.
Principle of Cost Causation: Allocation of cost to those accounting units that are responsible
for the corresponding factor employment
Primary Costs
Secondary Costs
Financial
FIN. ACC.Acc.
INVENTORY
Material
Management
S&D
Sales
Invoice
Revenue
Revenues
Expense
Expenses
Prod.
Prod.Order
Order
P&L-STATEMENT (SPER)
Calculation
Sold
Actual
Quantity
*
Stand. Rate
Production
Cost Center
costs
Cost Element
Cost
Center
Cost
Center
PROFITABILITY
Profitability
Analysis
ANALYSIS
COST
Cost
ACCOUNTING
Accounting
806 Sales
Sales
- 807
CostCost
of Goods
of Goods
SoldSold
= Gross
809 Gross
ProfitProfit
Prod.Cost
Variance
+/-+/-810
Prod.Cost
Variance
(Over-/Underabsorbtions of.
(Over-/Under-absorptions
of.
Prod. Order and Prod. Cost Center)
Price Variances
= 813 Gross Margin
= Gross Margin
:
- Marketing
814-816 Field
and Force,
SellingSales
:
817 Logistics
:
- Administration
:
830 Administration
- R&D
:
:
+/- Expenses/income
:
+ sonstige Ertrge
:
:
:
Cost centre I
Cost centre
Cost centres serve as a cost collector being
- set up according to areas of responsibility,
- debited according to the principle of cost causation.
Kinds of Cost centres:
- mixed (fix+ variable) cost centres.
Various
CO-Objects
Cost centre
FI
PCE
SCE
SCE
Activity Types
Allocation
COPA
Cost centre II
collection of variances,
Various
CO-Objects
COPA
COPA
settlement to CO-PA.
AC (e.g. to SBU)
Various
CO-Objects
COPA
In order to get harmonized processes, accruals should be used for the above mentioned cases.
Case 1
Case 2
Accruals calculated
manually + posted
via FI into CO
Case 2a
Case 2b
Percentage
method
Target = actual
method
FI
1. Accrual month Jan.
Accrual wages/
Salaries (P&L)*
1 10,-
Balance sheet
Accrual
1
10,-
Cost center
10,-
Accrual wages/
salaries (P&L)*
12 10,-
12
Accrual wages/
Salaries /P&L)*
13 120,-
Cost center
10,-
12
10,-
Balance sheet
Accrual
13
120,-
Actual wages/
Salaries (P&L)
14 125,-
Cost center
14 125,-
Bank
14
13
120,-
125,-
The accrual posting via FI is more simple (case 1). However, the accrual value cannot be calculated
automatically based on specific costs like in case 2 within SAP.
CO
Cost center
Accrual wages/
Salaries (P&L)*
2 10,-
Balance sheet
2
10,-
10,-
Accrual wages/
Salaries /P&L)*
Balance sheet
Accrual
120,-
125,-
Internal order
10,4
Cost center
125,- 5
6 Settlement
10,-
4 Settlement
120,-
Actual wages/
Salaries (P&L)
Cost center
3
10,-
10,-
2 Settlement
Accrual wages/
salaries (P&L)*
4 10,-
10,-
10,-
Internal order
120,-
120,6
120,-
Bank
7
125,-
The accruals can be calculated within CO based on the percentage or target = actual method.
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