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Cost Accounting Basics

IBM

Agenda

Workshop approach
Cost Accounting Basic Concepts
SAP specifications
Master Data

Workshop approach

CO Basic Concept, Organisational structures,


Master data, Plan data, Reporting
Actual data, Internal orders, reporting
Closing, Reporting

CO Basic concept

Who are the Customers of Managerial Accounting?


- Corporate Management
- Division, Business-Unit (Division/BU-Managers, Controller)
- Local Financial Management (Controller, Financial Manager)
- Local Operational Management (Plant Manager, Sales Manager, )
- Specific Corporate and Local Functions

(Quality, Product-Industrialization)

Necessity to meet various customer requirements,


but from one systems databasis.

Financial Accounting and Managerial Accounting

Identity

Management
Reports

Accounting Concepts

Reporting Concepts

Standards

Group

Group

Fullfill
Legal
Requirem.

Statutory

Accounting Processes

Local Reporting Needs

Financial
Reports

Support
Decisions

Agenda

Workshop approach
Cost Accounting Basic Concepts
SAP specifications
Master Data

Process overview overhead management

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

SAP organization in controlling

Regional SAP system


One Operating Concern
One Controlling Area
Company Code 1

Company Code 2

Company Code 3
Company Code n

SAP organization in controlling

An operating concern represents an organizational unit in your company for


which the sales market has a uniform structure. It is the valuation level for
Profitability Analysis (CO-PA)
Controlling area is an organizational unit in an organization that
represents a closed system used for cost accounting purposes. A
controlling area may contain one or more company codes, which can
operate in different currencies, if required. The company codes within a
controlling area must all use the same operational chart of accounts. All
internal allocation transactions refer only to objects from the same
controlling area.

CO Components
Profitability Analysis

CO
OM

Overhead Cost Controlling

How can we

How profitable are individual


market segments ?

rein in our overhead ?

Are the responsibility areas working


efficiently ?
How high are the costs of organizational
activities ? Do they keep to their budgets ?

CO
PC

ECPCA

Product Cost
Controlling

What are the


manufacturing
costs of a
product ?

How can we optimize the internal


processes ?

CO
CEL

Cost Element Accounting


What costs occur within our organization

Profit Center Accounting

CO
PA

How profitable
are individual
enterprise areas ?
R

Controlling area settings

Agenda

Workshop approach
Cost Accounting Basic Concepts
SAP specifications
Master Data
Closing

Process overview overhead management

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.

Secondary cost elements


Naming convention and types

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

2 Machine Hour Costs


3 Energies & Supplies
4 Waste Treatment/ Disposal/ Waste Water

4 Order Settlement
5 Accrual/Deferral

1 Labour Hour Costs

5 QC/ QA
Other Services 1 R&D

per Surcharge

2 Technical Services
3 IT Services

6 Accrual/Deferral

4 Human Resources

per debit = actual

5 Others
PM/ PS

1 All

XX
Ongoing
number
10-99

Cost element groups

Cost element groups collect cost elements with similar characteristics.


Standard cost element groups are used for reporting
e.g. for cost centre sheet (module CCA)
- A cost element standard structure should be defined and maintained at
corporate level
Standard cost element groups are used for settlement purposes (assessment):
e.g. to define cost elements on cost centre settled to CO PA or any other
costing object

Cost element groups


Naming convention

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

Merck Belgium, Cost Centre with


personnel cost (6)

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.

Knots are named globally.

S01

Naming Convention
The highest node of the standard hierarchy is always called S01 for each region.

S4150

The next level is defined as follows: Sxxxx (xxxx = company code).

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

Identical Naming Conventions apply, only A instead of S is used.

A4150-xxx...

AXXXX

Activity types

Purpose:

Determination of plan cost and thereby cost centre variation.

Allocation of plan/actual cost between controlling objects (cost centre, internal


order).

Analytical planning: Determination of cost factors per activity type unit ( =


marginal cost ) and of activity type quantity.
Utilization for

LDC

MDC

Material

Naming Convention
A list of all activity types will be defined globally.

Statistical key figures

Purpose:

Allocation of fix cost on cost centres or internal orders.

Distinctions to Activity Types:

Utilization only convenient for fix cost.

Maintenance within master data.

Square meter for example is a statistical key figure, maybe for


facility cost

Naming Convention

Mainly the SAP-standard statistical key figures should be used.

Profit Centre
Naming convention

Profit centre business field


Naming:
X X X X
Example:
2 2 1 3

Merck business field number


(already existing 4 digit number)
Pigments cosmetic actives

Profit centre common division


Naming:
X X X X
Example:
2 2 9 9

Merck division number (already


existing 2 digit number) + 99
Pigments

Profit centre common company


Naming:
9

Same number for each company code


(each posting includes the company code information)

Profit Centre groups


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

Profit Centre account groups

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

R for reporting structures


A for allocation (settlement, assessment)

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

Process Overview Controlling


Controlling

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

The period-end closing of cost centers and internal orders


contains several closing steps executed in a certain sequence
Period-end closing Period-end closing cost centers / internal orders
Period end
closing

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

Period-End Closing Cost Centers/ Internal Orders / COPEC_BP_CCIO

Basics
Pre-requisites for closing a period (examples)

Payroll accounting must have taken place

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.

CO-PEC_BP_CCIO_ACCODI: Actual Cost Distribution


(optional)

Cases for the use of cost distribution (examples)

Fire and security insurance

Salary specials for executive managers

Salary of upper management

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

CO-PEC_BP_CCIO_ACCODI: Actual Cost Distribution


(optional)

px = primary cost
element (= FI
P&L account
transferred to
CO)

SAP R/3
FI

CO

P&L Expense fire


+ security
insurance (p1)
1

z,-

Pool cost center

Balance sheet
1

z,-

p1

z,-

z,-

p1

Receiver cost center 1


2

p1

x,-

Receiver cost center 2


2

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.

CO-PEC_BP_CCIO_ACCOAS: Actual Cost Assessment


(optional)

Cases for the use of cost assessment (examples)

Social benefit for staff stocks

Fees for telephone

Container transportation

Return of packaging materials

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

CO-PEC_BP_CCIO_ACCOAS: Actual Cost Assessment


(optional)

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

Pool cost center


a,-

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,-

Receiver cost center 2

Receiver cost center 1


P&L Expense
account 3

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.

Overview allocation methods


SAP R/3
s = secondary cost element

CO
1. Direct
activity
allocation

p = primary cost element

s
Sender cost center

+6h

Receiver cost center 1

Sender hours
Entered manually

- 10 h
s

+4h

Allocation keys to receivers

Receiver cost center 2

-Fixed amounts

Sender hours

2. Indirect
activity
allocation

s
Sender cost center

+6h

Receiver cost center 1

- 10 h

Entered manually
Allocation keys to receivers
- Fixed percentages

+4h

Receiver cost center 2

- Fixed amounts
- Based on statistical key figures
Sender values

3.
Distribution

p
Sender cost center

+ 60,-

Receiver cost center 1

Already posted values of all or only of


dedicated cost elements
Allocation keys to receivers

- 100,p

+ 40,-

Receiver cost center 2

- Fixed percentages
- Fixed amounts
- Based on statistical key figures
Sender values

4.
Assessment

s
Sender cost center

+ 60,-

Receiver cost center 1

Already posted values of all or only of


dedicated cost elements
Allocation keys to receivers

- 100,s

+ 40,-

Receiver cost center 2

- Fixed percentages
- Fixed amounts
- Based on statistical key figures

CO-PEC_BP_CCIO_REFICO: Reconciliation Financial


Accounting/Controlling (optional)

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

Cost allocation from CMG A to B within


controlling only
Postings back into FI at month end*

FI - CMG B
P&L account
expenses**
2

Process steps

Cost center 1

CO CMG B
Accounts Payables
clearing account
2

The postings into FI are triggered by the


so called SAP reconciliation ledger

Cost center 2
1

** Accounts are not created


as cost element and are
therefore not posted into CO

The cross company posting within controlling needs to be reflected as well in finance accounting.

CO-PEC_BP_CCIO_REFICO: Reconciliation Financial


Accounting/Controlling (optional)
Cases for the use of cross company postings within CO for example

Technical Orders

Patent cost

Costs for Telephone

R&D cost

Testing cost

Facility cost

Common administration cost

Different IT cost

Requirements
-

Companies belong to the same tax consolidation (if not, tax differences needs to be
considered)

Usually defined service level agreement


* If PM/PS is used, also PMorders or WBS-elements

The cross company postings can be used between cost centers and internal orders*

CO-PEC_BP_CCIO_SUOFCC: Surcharges of Cost Centers


(mandatory)

Cases for the use of surcharges

Technical material handling cost

Packaging material cost

Administration cost

In general: surcharges are used to allocate overhead costs through percentage-based


or quantity-based overhead rates to the receivers cost object.

* If PM/PS is used, also PMorders or WBS-elements

Surcharges can be used between cost centers and internal orders*

CO-PEC_BP_CCIO_SUOFCC: Surcharges of Cost Centers


(mandatory)
SAP R/3
MM

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,-

*PM-order in case of use of the module PM

The calculation base for the surcharge are the primary postings on the receiver object.

CO-PEC_BP_CCIO_SUOFIO: Surcharges of Internal Orders


(optional)

The Surcharges of Internal Orders are treated according to


the description of surcharges in cost center accounting
(see chapter CO-PEC_BP_CCIO_SUOFCC: Surcharges
of Cost Centers)

CO-PEC_BP_CCIO_SEINOR: Settlement of Internal Orders


(Overhead Cost Order) (mandatory)

Cases for the use of CO internal orders (= order types*)

CO-order general cost collector

CO-order accruals

CO-order dummy (not be settled)

CO-order R&D general

CO-order capital investment

CO-order to CO-PA

CO-order statistical cost collector (statistical)

CO-order promotion media

In general: CO internal orders are used in order to collect temporarily costs on a


separate cost object
* If PM/PS is not used, additional CO-internal order types will
be needed in order to absorb maintenance and project cost

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.

Internal Order - Training

IO type used for training


Order type YC00 (customizing transaction KOT2_OPA)
Settlement profile YC00
Allocation structure Y0 (cost element group YC0, settlement cost element 650000)

Settlement to cost center

CO-PEC_BP_CCIO_SEINOR: Settlement of Internal Orders


(Overhead Cost Order) (mandatory)
Settlement of internal orders examples
SAP R/3
FI

CO

Example: Other selling expenses

Expenses
y,-

Vendor
2

y,-

Real Internal order


or cost center
y,- 3
y,2
3

Profitability segment
(VF sales costs)
y,3
Settlement to
different
business
fields/SBUs

VF = value field

If the costs can


directly be
assigned to the
target COobjects, a direct
posting to the
target objects is
possible

CO-PEC_BP_CCIO_SEINOR: Settlement of Internal Orders


(Overhead Cost Order) (mandatory)
Settlement of internal orders examples
SAP R/3
FI

CO

Example: External services for R&D


External services
1
x,-

Vendor
1

x,-

(Real) internal order*


x,- 2
y,1

Profitability segment
(VFs R&D)
y,2

2 Settlement

Cost center
x,1

Optional: statistical
posting to cost center

* At time point of creation change of settlement


parameters accordingly (in order to hit correct value field)
* WBS-element in case of use of the module PS

VF = value field

CO-PEC_BP_CCIO_SEINOR: Settlement of Internal Orders


(Overhead Cost Order) (mandatory)
Settlement of internal orders examples
SAP R/3
MM

FI

Example: asset under construction

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

**If PM/PS is used, also PM- orders /


WBS-elements possible

BACK-UP

BACK-UP

Standards as Basis for Management Decisions


Full Costing is basically Corporate Standard

Activity Based
Costing (ABC)

Direct Costing

Full Costing

e.g. USA, Sweden

(Kaplan/Cooper)

All Costs are


included

reconciliation to
financial records

duplication of costs
can be avoided

inflexible full costing


(no target costs)

No clear variations

Risk of over- / underpricing due to variabilization of fix


costs

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)

center not clear

Marginal cost (straight


line)
Analytic planning
- Measurement/
consumption studies
Separation of different
variations
- price-variation
- over-consumptions
- change in standard
- change in calculated
method of production

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 principle

Full Costing represents the concern-wide cost accounting standard

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

Full costing principle


Fix and variable parts

Cost Splitting into Fix and Variable Parts


Fix/variable method is used by companies with production according
to their local reality. Generally all costs that are directly occurring for
the production process and are planned and charged with a variable
and fix cost part to the product.
At least all material and manufacturing costs should be split into fix
and variable.
Examples for cost that usually have a considerable variable part:
* direct personnel costs
* maintenance
* direct energies, waste treatment/removal
Example for costs that usually are fix:
* QC
* depreciation
* overheads

Direct and indirect parts

Cost Splitting into Direct and Indirect Parts


Direct costs are expenses that are readily identifiable with a particular activity or unit,
and as such, can be directly and accurately attributed to it. Examples include specific chemicals
Needed for a research project, or the salary of a member of staff recruited solely
to teach a particular module.
Production- and product-related cost are included into product costs. This includes also all

internal service from other cost centers, projects, etc.


Examples: IT administration or project performance, Maintenance, HR services like hire, pay increas
Indirect costs cannot be easily identified with a particular activity or unit. Indirect costs
are attributed to activities using a form of estimation since tracking the actual usage
is often non-productive and too expensive.
costs that are not related to production or product are
Marketing, Sales, Promotion, Logistics, R&D, Administration
costs

Primary and secondary costs

Primary Costs

Secondary Costs

Costs that arise through the


consumption of goods and
services that originate from
outside the company. E.g.
* Material costs
* Personnel costs
* External services
* Depreciation

Costs that arise through the


consumption of goods and
services that originate from
inside the company. The
secondary costs are posted
by either
* Assessment (allocation) or
* Activity costing (SAP only)

Standard cost flow

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
:
:
:

= Profit after Tax

Cost centre I

Cost centre Types:

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 categories


Allocation centre
Dummy cost centre

Cost centre II

Allocation centres are used to pursue three objectives:

collection of variances,
Various
CO-Objects

AC (e.g. Mat PV)

COPA

comparison of calculated and actual cost and


AC (e.g. Accruals)
FI

COPA

settlement to CO-PA.
AC (e.g. to SBU)
Various
CO-Objects
COPA

CO-PEC_BP_CCIO_ACALCC: Accrual Calculation in Cost


Center Accounting (Percentage Method) (mandatory)

Cases for accrual calculations (examples)


Employees expenses:
- Gratification
- Employees liability insurance association
- Pension fund (without interest part)
- Jubilee
- Social expenses
- Labor rate increase (only for planning)
- Vacation pay
Fees:
for rail tracks, waste water and environmental protection
- Insurances:
for pharmaceutical products, fire, cars, accidents, machines
- Leasing of IT resources
- Property taxes

In order to get harmonized processes, accruals should be used for the above mentioned cases.

CO-PEC_BP_CCIO_ACALCC: Accrual Calculation in Cost


Center Accounting (Percentage Method) (mandatory)

Technical solutions for accrual calculations

Case 1

Case 2

Accruals calculated
manually + posted
via FI into CO

Accruals calculated and


posted to CO +
settlement into FI

Case 2a

Case 2b

Percentage
method

Target = actual
method

It is up to the single CMG to choose an accrual method

CO-PEC_BP_CCIO_ACALCC: Accrual Calculation in Cost


Center Accounting (Percentage Method) (mandatory)
Case 1: Accruals calculated manually + posted via FI into CO
SAP R/3
CO

FI
1. Accrual month Jan.
Accrual wages/
Salaries (P&L)*
1 10,-

Balance sheet
Accrual
1
10,-

Cost center
10,-

2. Accrual month Febr. - Nov. accordingly


3. Accrual month Dec. + actual costs/reversal
Balance sheet
Accrual

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,-

* Different accounts for plan and actual

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-PEC_BP_CCIO_ACALCC: Accrual Calculation in Cost


Center Accounting (Percentage Method) (mandatory)
Case 2: Accruals calculated and posted to CO + settlement into FI
SAP R/3
FI

CO

1. Accrual month Jan.


Internal order

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,-

3. Accrual month Dec. + actual costs/reversal


Balance sheet
Accrual

2 Settlement

2. Accrual month Febr. - Nov. accordingly

Accrual wages/
salaries (P&L)*
4 10,-

10,-

10,-

Internal order
120,-

120,6

120,-

Bank
7

125,-

* Different accounts for plan and actual

The accruals can be calculated within CO based on the percentage or target = actual method.

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