AC040 Cost Management and

Controlling
AC040

R/3 System Release 46C 13.11.2001

0
 AC040 Cost Management and Controlling

AC040

Cost Management
and Controlling
 SAP AG 1999
 SAP AG

 R/3 System
 Release 4.6B
 March, 2000
 Material number: 500 33541
 Copyright

Copyright 2001 SAP AG. All rights reserved.

No part of this publication may be reproduced or transmitted in
any form or for any purpose without
the express permission of SAP AG. The information contained
herein may be changed without prior notice.

All rights reserved.

 SAP AG 2001

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respective companies.
Controlling

Level 2 Level 3
AC412 2 days
Cost Center
Accounting:
Extended Functionality
AC410 3 days AC415 2 days
Cost Center Overhead Orders
Accounting
AC420 2 days
Activity Based Costing
AC040 5 days
AC510 3 days
Cost Management Cost Object Controlling
and Controlling for Products
AC505 4 days AC515 3 days
Cost Object Controlling
Product Cost Planning for Sales Orders
AC605 5 days AC530 3 days
Actual Costing /
Profitability Analysis Material Ledger
AC610 2 days AC650 2 days
Profit Center Transfer Prices
Accounting
AC615 4.6B 2 days AC620 4.6B 2 days AC625 4.6B 1 day
Executive Information Executive Information Executive Information
System (EIS) 1 - System (EIS) - Setting System (EIS) 3 -
Reporting up the System Business Planning
 SAP AG 1999
Prerequisites:

 Recommended:
 SAP20 - SAP R/3 Overview
 Basic knowledge and experience in
Cost and Managerail Accounting
 Working knowledge of the Windows operating environment

 SAP AG 1999
Target Group

 Implementation Project
Managers, Project Team
Leaders and Project Team
Members who have the
appropriate background in
Management Accounting
 Management and Support
personnel who have a need to
know what R/3 Management
Accounting can do

 SAP AG 1999

Notes to the user

- The training materials are not teach-yourself programs. They complement the course
instructor's explanations. On the sheets, there is space for you to write down additional
information.
 Introduction: Unit Contents

 Course Goals
 Course Objectives
 Course Contents
 Course Overview Diagram
 Main Business Scenario

 SAP AG 1999

(C) SAP AG AC040 1-1

 Course Goals

This course will enable you to:

 Understand the components of the R/3

Controlling (CO) module
 Understand the Integration between CO and
other R/3 modules
 Understand the various Costing Options that are
used in CO
 Decide which R/3 tools to use within your
business depending on the chosen Costing
Options
 Understand the SAP terminology and vocabulary
 Clarification of, and preparation for, additional
training needs

 SAP AG 1999

(C) SAP AG AC040 1-2

 Course Objectives

At the conclusion of this course,

you should be able to:

 Execute core CO functionality

 Identify which components of CO are used to
address different business requirements
 Show and explain the integration within CO
 Show and explain the integration between CO
and other R/3 modules
 Explain SAP terminology and vocabulary
 Define various Costing Options and explain the
differences between them
 Decide which R/3 CO tools to use in given
business situations
 SAP AG 1999

(C) SAP AG AC040 1-3

 Course Contents

Preface

Unit 1 Introduction Unit 7 Postings To CO From

Other Modules
Unit 2 Getting Started
Unit 8 Event-Based Postings
Unit 3 Overview Of Controlling In CO
Unit 4 Reflecting Your Business Unit 9 Period-End Postings In
in CO CO
Unit 5 Reporting Tools Unit 10 AcceleratedSAP
Unit 6 Planning And Plan Unit 11 Course Review
Integration

Exercises
Solutions

 SAP AG 1999

(C) SAP AG AC040 1-4

 Course Overview Diagram

FI
MM CO
HR
$$ CO
+ABC SD AA 1 12
$
Planning and Postings to CO 
t Plan Integration From Other Modules $
Event-Based
Reporting Tools
Postings in CO

AC040 1 12
OM PC Profit
OM PC Profit FI CO
Reflecting Your Period-End
Business in CO Postings in CO

INT EXT
OM PC Profit “Which
FI MM HR AA SD
Button?”
Overview of CO AcceleratedSAP

Getting Started Course Review

 SAP AG 1999

(C) SAP AG AC040 1-5

 Main Business Scenario

 You work in your company’s cost accounting department.

The company has recently implemented a number of the
R/3 application components, including FI and CO.
 You have been temporarily assigned to a special project
having a dual purpose. First, as a form of quality review,
you are being asked to analyze how effectively CO is
meeting your company’s management accounting
requirements. And, in conjunction with this, the newly
engaged CPA audit firm is conducting an operational
review to learn about your company’s business. You have
been asked to serve as a liaison for their review.
 This assignment will require your involvement in all
aspects of CO. Since you have no experience with the R/3
CO component, your initial priority will be to learn about
CO’s capabilities.

 SAP AG 1999

(C) SAP AG AC040 1-6

 Navigation

Contents:
 Navigation in the system
 User-specific settings
 Navigation in the mySAP.com Workplace

 SAP AG 1999

(C) SAP AG AC040 2-1

 Navigation: Unit Objectives

At the conclusion of this unit, you will be able to:

 Identify the elements of a typical window

 Navigate in the system
 Personalize your user settings
 Describe and use the mySAP.com Workplace

 SAP AG 1999

(C) SAP AG AC040 2-2

 Navigation: Business Scenario

 New users need to familiarize themselves with the

screens in the system and define their personal
default settings

 SAP AG 1999

(C) SAP AG AC040 2-3

 Logging On to the System

User System Help

SAP R/3
New Password

If you have problems logging on,

Client
contact Donna Moore, x486
User
Password

Language

You can place your own text on

the initial screen: See SAP Note 205487

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 SAP AG 1999

 SAP R/3 Systems are client systems. The client concept enables the parallel operation, in one
system, of several enterprises that are independent of each other in business terms. The components
SAP Business Information Warehouse (BW) and SAP Knowledge Warehouse (KW) are exceptions
to this: in these cases only one client is used. During each user session you can only access the data
of the client selected during logon.
 A client is, in organizational terms, an independent unit in the system. Each client has its own data
environment and therefore its own master data and transaction data, assigned user master records and
charts of accounts, and specific Customizing parameters.
 For a user to log on to the system, a master record must exist in the system for that user. To protect
access, a password is required for logon. The password is hidden as you type (you only see
asterisks).
 SAP R/3 Systems are available in several languages. Use the Language input field to select the logon
language for each session.
 Multiple logons are always logged in the system beginning with SAP R/3 4.6. This is for security as
well as licensing reasons. A warning message appears if the same user attempts to log on twice or
more. This message offers three options:
 Continue with current logon and end any other logons of the same user in the system
 Continue with current logon without ending any other logons in the system (logged in system)
 Terminate current logon attempt
 You can place your own text on the initial screen in a number of ways. For more information, see the
SAP Note mentioned above. The GuiXT (covered at the end of this chapter) offers a further option.

(C) SAP AG AC040 2-4

 Screen Elements

Command Field Standard Toolbar

Menu Edit Favorites Extras System Help

System Function Name: Activity

Choose Save

Input field
Application
Tick Toolbar
Selection 1
Selection 2
Selection 3 This screen is made up of
Selection 4
Checkboxes various screen elements. It
Options Radio Buttons does not match an actual
Option 1
Pushbuttons screen in the system.
Option 2
Option 3
Overview
Option 4
Option 5
Positive
Display Edit Neutral

Tab Page
System Message T70 (1) (400) iwdf5070 INS Status Bar

 SAP AG 1999

 Command field: You can use the command field to go to applications directly by entering the
transaction code. You can find the transaction code either in the SAP Easy Access menu tree (see the
page User-Specific Personalization) or in the appropriate application by choosing SystemStatus.
 Standard toolbar: The icons in the standard toolbar are available on all SAP R/3 screens. Any icons
that you cannot use on a particular screen are dimmed. If you leave the cursor on an icon for a
moment, a QuickInfo appears with the name (or function) of that icon. You will also see the
corresponding function key. The application toolbar shows you which functions are available in the
current application.
 Checkboxes: Checkboxes allow you to select several options simultaneously within a group.
 Radio buttons: Radio buttons allow you to select one option only.
 Tabs: Tabs provide a clearer overview of several information screens.
 Status bar: The status bar displays information on the current system status, for example, warnings
or error messages.
Other elements are:
Menu bar: The menus shown here depend on which application you are working in. These menus
contain cascading menu options.
Title bar: The title bar displays your current position and activity in the system.

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 SAP Easy Access - Standard

Menu Edit Favorites Extras System Help

SAP Easy Access

Other Menu Create Role Assign User Documentation

Favorites
SAP Menu
Office
Logistics
Accounting
Human Resources
Information Systems
Tools

You are greeted by your logo

in the right-hand part of the window.

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 SAP AG 1999

 SAP Easy Access is the standard entry screen displayed after logon. You navigate through the
system using a compact tree structure.

 You can include an image on the right-hand side of the screen such as your company logo. This
image can only be entered systemwide, and is a cross-client setting. Assuming you have the
appropriate authorization, you can find a detailed description of the necessary settings by choosing
Extras  Administration Information. Note that this image is stored in the system and transported to
the SAP Frontend every time it is called by SAP Easy Access. Although this transfer is compressed,
the image for the initial screen should not be bigger than around 20 kB. You can prevent this image
being called either by using the setting Low Speed Connection in the SAPLogon program (see SAP
Note 161053), or by switching off the calling of the image under ExtrasSettings. See also User-
Specific Personalization.

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 Selecting Functions

... using the transaction code in the command field

Menu Edit Favorites Extras System Help

Create session
End session
SAP Easy Access - Enjoy User Menu profileUser
Services
Utilities
List
Favorites Services for object
Enjoy User Menu Object history
URL - SAP Notes (User / PW req.) Own spool requests
Accounts Receivable Own Jobs
FD02 -Change Customer (Account Short Message
Materials Management Status...
Sales and Distribution Log off
Tools

... using the menu path

... using SAP Easy Access and Favorites

 SAP AG 1999

 You can select system functions in the following ways:

 Use the mouse to choose: Menu options, Favorites, and SAP Easy Access options
 Use the keyboard (ALT + the underlined letter of the relevant menu option)
 Enter a transaction code in the command field:
A transaction code is assigned to each function in SAP R/3 Systems. You can access the assigned
transaction code from any screen in the system. For example, to display customer master data,
enter /n and the appropriate transaction code (in this case /nfd03). You can find the transaction
code for the function you are working in under the Status option of the System menu. Other
possible entries:
- /n ends the current transaction.
- /i ends the current session.
- /osm04 creates a new session and goes to the transaction specified (SM04).
 You can also use the keyboard to go to the command field. Use the CTRL + TAB key combination
to move the cursor from one (input) field group to the next.
Use TAB to move between fields within a group.
 By entering search_sap_menu in the command field, you can search for and display the menu
path for an SAP transaction. You can also search for text strings.

(C) SAP AG AC040 2-7

 Role-Based User Menu

Menu Edit Favorites Extras System Help

SAP Easy Access - Enjoy User Menu

Other Menu Create Role Assign User Documentation

Favorites
Great Transactions
SM50 - Prcoess Overview
Favorites chosen by the user
VA01 - Create Sales Order
Interesting WWW Pages reduce navigation time
URL - The Herald Tribune
URL - Time Magazine
Important Files
URL - Vacation Planning
Enjoy User Menu
URL - SAP Notes (User / PW req.)
Accounts Receivable
FD02 - Change Customer (Accountin
Materials Management
Sales and Dsitribution
Tools

A role-based menu contains the activities

that the user can execute based on the
role assigned to the user in the system.
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 SAP AG 1999

 A Role describes a set of logically linked transactions in the system. These represent the range of
functions users typically need for their work.

 User roles (previously “activity groups”) have to be set up using the Profile Generator so that SAP
R/3 System users can work with user-specific or position-related menus.

 The authorizations for the activities listed in the menus are also assigned to the users using user
roles. With Release 4.6, predefined user roles from all application areas are included in the standard
system.

 Users who have been assigned a user role can choose between the user menu and the SAP standard
menu.
 The above screen shows the role-based user menu for a user with the name "Enjoy". You can find
roles that are supplied in the standard SAP R/3 System by choosing Other menu on the SAP Easy
Access initial screen.
 Every enduser can personalize the initial screen using Favorites. You can create your own Favorites
list containing the transactions, reports, files, and Web addresses that you use most often.
 You can add favorites either by choosing Favorites or by using the mouse to “drag & drop” items
into the Favorites directory.

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 Field Help: F1 and F4

Customer Edit Goto Extras Environment System Help

Display Customer:
Customer: Initial Screen

F1 Help: Displays the Meaning of

Customer
Fields and Technical Information
Company Code Customer account number

A unique key is used to clearly identify the customer within the SAP

System.

Procedure

When creating a customer master record, the user either enters the

account number of the customer or has the system determine the

number when the record is saved, depending on the type of number

assignment used. The account group determines how numbers are

Restrictions
assigned.
Customer 1000
Entries Found
Company Code
Restrictions
Company Name

City
F4 Help: Displays
Currency Possible Entries
Co... Company Name City Cur...
Restrict Number to SAP A.G. Walldorf EUR
IDES AG 1000 Frankfurt UNI
IDES Canada Toronto CAD
IDES AG Frankfurt UNI

 SAP AG 1999

 For help on fields, menus, functions, and messages, use F1.

 F1 help also provides technical information on the relevant field. This includes, for example, the
parameter ID, which you can use to assign values for your user to input fields , which have to refer
to these parameter IDs.
 For information on what values you can enter, use F4. You can also access F4 help for a selected
field using the button immediately to the right of that field.
 If input fields are marked with a small icon with a checkmark, then you can only continue in that
application by entering a permitted value. You can mark many fields in an application as either
required entry fields or optional entry fields. You can also hide fields and preassign values using
transaction or screen variants or Customizing.

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 SAP Library
SAP Library - SAP Library

Contents Index Search

SAP Library
SAPLibrary Release 4.6C, March 2000

You can access the

complete online
documentation for the
IDES system using the SAP
Getting Started Library
Release Notes

Implementation Guide

Glossary

 Copyright 2000 SAP AG

All rights reserved.

 SAP AG 1999

 SAP R/3 Systems provide comprehensive online help. You can display the help from any screen in
the system. You can always request help using the Help menu or using the relevant icon (the yellow
question mark).
 You can access the SAP Library quickly and comfortably by using the SAP Service Marketplace.
There you can find the SAP Help Portal under Knowledge and Training, where you can not only
access Help in HTML format, but can also perform efficient full-text searches in the SAP Library. If
you have the SAP Library installed, you also have, of course, these opportunities within your
company.
 You can access the Help Portal directly at http://help.sap.com

(C) SAP AG AC040 2-10

 Menus: System and Help

Menu Edit Favorites Extras System Help

Create Session Application help
End Session SAP Library
SAP Easy Access User profile Glossary
Other Menu Services Rolle anlegen Release Notes
Benutzer zuordnen Documentation
Utilities SAPNet
Favorites List Feedback
SAP Menu
Office Services for object Settings...
Logistics Object history
Accounting Own spool requests
Personnel
Own jobs
Information Systems
Tools Short message
Status...
Log off

Both of these menus are available on every screen

and always offer exactly the same options.

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 SAP AG 1999

 The System menu contains, among others, the following options:

 Create/End Session: Allows you to create and end sessions. The maximum number of sessions can
be set to a number between 2 and 6 by the system administrator using the parameter
rdisp/max_alt_modes.
 User profile: This is where you can enter user-specific settings. For example, you can use
Parameter IDs in Own Data, in order to set default values for specific user-dependent fields in the
system (for example the company code field).
 List: Contains important list functions, such as searching for character strings, saving in PC files,
printing, and so on.
 Status: Enables you to display important user and system data.
 Log off: Ends the R/3 session with a confirmation prompt.
 The Help menu contains, among others, the following options:
 Context-sensitive Application Help
 Access to the SAP Library (see previous page)
 a Glossary
 ...

(C) SAP AG AC040 2-11

 User-Specific Personalization

Menu Edit Favorites Exrtas System Help

Administration Information Ctrl+Shift+ F8
Assign user Options ...
SAP Easy Access Display Documentation Shift+ F6 Generate Graphic
Other Menu Technical Details Ctrl+Shift+Benutzer
Rolle anlegen F10 zuordnen Dokumentation
Create Shortcut ...
Settings Shift+ F9 Activate GuiXT
Favorites Set Start Transaction
SAP Menu Shift+ F7 Default Size
Office Hardcopy
Logistics
Accounting Quick Cut and Paste
Human Resources About...
Information Systems
Tools

Settings

This is used to specify settings

Display favorites at end of list

Do not display menu, only display favorites
Do not display picture
Display technical names

Different Settings options make

working with the system easier
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 SAP AG 1999

 The end user has many possibilities for personalizing the system. Some are described below:
 You can alter the layout of your initial screen under Extras  Settings, for example by switching
off the image in the right-hand part of the window or by turning on the option to display the
technical names (transaction codes) in the SAP Easy Access Menu.
 Among other things, you can activate a quick cut and paste in the Options menu. Using Options
you can change the reaction speed of the QuickInfo that is displayed when you hold your mouse
cursor over an icon or a push button.
 By following the path System User profile Own data, you can set personal standard values.
You can choose the tabs Address, Defaults, and Parameters. As an example, the setting of
Parameters is explained here:
- Parameters: Here you can set defaults for frequently used input fields. In order to be able set a
default value for a field, it must have been assigned a Parameter ID.
Procedure for finding the Parameter ID: Go to the field for which you wish to set a default
value. Select the F1 help, and then choose Technical Info. The system displays an information
window that contains the relevant parameter ID under the heading Field Data (as long as the
field has been assigned a Parameter ID).

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 Table Settings - Example

Parameters Value Text

Sales order type
Company code
Processing group
Bank key

Table Settings

Choose Variants

Current setting My variant

Standard setting Basic setting

Maintain Variants

Variant
Use as standard setting
Create

Delete

Save Administrator

 SAP AG 1999

 Use the Table Settings function to change, in the table control, the individual basic table settings that
are supplied with the system. This is particularly useful for tables where you do not need all the
columns. You can use the mouse to drag & drop column positions and widths, or even make the
column disappear.
 Save the changed table settings as a variant. The number of different variants you can create per
table is not restricted.
 The first variant is called the basic setting; the SAP System defines this setting. You cannot delete
the basic setting (you can delete the variants you define yourself).
 The table settings are stored with your user name. The system uses the variant currently valid until
you exit the relevant application. If you then select the application again, the system will use the
standard settings valid for this table.
 Note: you can change table settings wherever you see the table control icon in the top right-hand
corner of a table.

(C) SAP AG AC040 2-13

 Personalizing the Frontend with GuiXT

FD03 without GuiXT FD03 with GuiXT

Example from http://www.guixt.com

 SAP AG 1999

 SAP R/3 Systems offer numerous options for settings and adjustments:
 Define default values for input fields
 Hide screen elements
 Deactivate screen elements (dimmed)
You can do this by, for example, defining transaction variants.
 SAP offers GuiXT, as of SAP R/3 Release 4.6. In addition to all of the above functions, you can
now:
 Include graphics
 Convert fields and add pushbuttons and text
 Change input fields (or their F4 help results) into radio buttons
 GuiXT scripts are stored on the Frontend. In accordance with local scripts (which can also be stored
centrally), the GUIXT scripts determine how data sent from the application server is displayed.
These scripts can be standard throughout a company, or they can be different for each Frontend.
 NOTE: The GuiXT will support the mySAP.com Workplace only as of the end of the year 2000.
This means that until then you should use either the SAP GUI for the Windows Environment and the
GuiXT or the mySAP.com Workplace with the SAP GUI for HTML (or the SAP GUI for Java or the
SAP GUI for Windows).

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 Navigation: Unit Summary

You are now able to:

 Identify the elements of a typical window

 Navigate in the system
 Make personal system settings
 Describe and use the mySAP.com Workplace

 SAP AG 1999

(C) SAP AG AC040 2-15

Navigation - Exercises

Unit: Navigation
Topic: Basic Functions

At the conclusion of this exercise, you will be able to:

 Log on to an SAP R/3 System
 Find transaction codes
 Access the SAP Library
 Use F1 help to find field information
 Use F4 help to search for possible field entries

As a new user of an SAP R/3 System, you begin to navigate the system
using the menu paths and transaction codes. You also begin to access the
various types of online help.

All menu paths in the exercises refer to the SAP standard menu.

1-1 Logging on to the system

Select the appropriate system for this course. Use the client, user name, initial
password and logon language specified by the instructor. The first time you log on,
you will get a prompt in which you must enter your new password, which you
choose yourself, twice. Make a note of the following:

Client: _ _ _ User: _ _ _ _ _ _ Password: ____________ Language: _ _.

1-2 What is the maximum number of sessions (windows in the SAP R/3 System) you
can have open simultaneously? __

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 1-3 Identify the functions and find the transaction codes that correspond to the
following menu paths in the SAP standard menu.

1-3-1 Tools Administration  Monitor  System Monitoring User

Overview

Name of function: ___________________________________________

Transaction: _________________________________________________

1-3-2 Accounting  Financial Accounting  Accounts Receivable

Master Records Display

Enter Customer 1000 and Company Code 1000 to go to the next

screen.

Name of function: _____________________________________

Transaction: ___________________________________________

1-4 Help

1-4-1 If you choose Application help in the SAP Easy Access initial screen
(System menu), which area of the SAP Library does it take you to?

_________________________________________________________

To answer the questions below, you will need to go to the Display

Customer: Initial Screen.

1-4-2 Use F1 help on the Customer field. What is this field used for?
Write a brief summary of the business-related information.

______________________________________________________

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 1-4-3 Use the F1 help on the Company code field. If you choose the Application
help icon from the F1 help screen, which area of the SAP Library does it
take you to?

______________________________________________________

1-4-4 Which icon do you need to use on the F1 help screen to find the parameter
ID for the Company code field?
Hint: See the notes on the slide User-Specific Personalization

______________________________________________________

1-4-5 Use F4 help on the Customer field to find the customer number for Becker
##. To do this, use the Search term "Becker*" after calling the F4 help.
Note: ## corresponds to your assigned group number.

___________________________________________________

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 Unit: Navigation
Topic: User-Specific Settings

At the conclusion of this exercise, you will be able to:

 Set a user parameter for a field
 Set user defaults
 Maintain your favorites
 Select a start transaction of your choice

You begin to set various user-specific settings.

Exercises marked * are optional.

2-1 Setting user parameters.

2-1-1 Assign a parameter value for the Company code field to your user profile.
Note: The instructor will tell you what parameter value to enter (for example
1000). For information about defaults, see the notes on the slide User-
Specific Personalization.

Parameter ID: ___ ___ ___

Parameter value: ___ ___ ___ ___

2-2 Defining User-Specific Settings using System  User profile  Own Data
2-2-1 In your user profile, set your logon language to the value used for the
course.
2-2-2 In your user profile, set the decimal notation and date format of your choice.

(C) SAP AG AC040 2-19

 2-3 Defining your favorites

2-3-1 Insert at least one new folder under the Favorites folder.
2-3-2 Add any two of your favorite transactions to the corresponding folders.
2-3-3 Add the Internet address http://www.sap.com with the text SAP
Homepage.

2-4* Setting a start transaction using the Extras menu.

2-4-1 Enter a transaction of your choice as the initial transaction. You will then
need to log off and on again for the change to take effect.

Note: If desired, you can change the initial transaction back to the default
value simply by deleting the transaction code that you entered.

(C) SAP AG AC040 2-20

Navigation - Solutions

Unit: Navigation
Topic: Basic Functions

1-1 Log on to the system specified by the instructor and change your initial password.

1-2 To open and close sessions, choose System  Create session (or use the
appropriate icon) or System  End session.
The maximum number of sessions you can have open simultaneously is six (6),
depending on your system settings.

1-3 To find the transaction code, choose System  Status. These function names and
transaction codes correspond to the menu paths:
1-3-1 Transaction: SM04 for Function Name: User list
1-3-2 Transaction: FD03 for Function Name: Display Customer: General Data

1-4 Help
1-4-1 The section of the unit Getting Started that deals with using SAP Easy
Access is displayed.
1-4-2 Suggestion: The customer is a unique key (account number) used to clearly
identify the customer within the system.
1-4-3 FI – Accounts Receivable and Accounts Payable
1-4-4 To find the Parameter ID: BUK, choose Technical Info
1-4-5 Customer ## (## corresponds to your assigned group number)
When you select F4 in the Customer field, the Restrict Value Range window
appears. You can explore the various tabs to see the different search criteria
available. Find a tab that includes the Search term field and enter the
following:

Field Name Value

Search term Becker*
Choose Enter. A window appears listing the customer account numbers that
match your search criteria. Select the line that corresponds to Becker ##,
then choose Copy. This automatically copies the customer account number
into the Customer field.

(C) SAP AG AC040 2-21

 Unit: Navigation
Topic: User-Specific Settings

2-1 Setting user parameters.

2-1-1 To assign a parameter value to a field you will need the parameter ID of the
field. First you need to select a transaction that contains this field. For
example, Company code can be found in transaction FD03. Next, place the
cursor on that field (click it with the mouse). To display the required info,
choose:
F1  Technical Info  Parameter ID
gives you the required information. For the Company code field, the
parameter ID is BUK.
Finally, enter the parameter ID and desired value in your user profile:
System  User profile  Own data
On the Parameter tab page you enter the parameter ID and value that you
want to be entered into the field. Save your entries.

2-2 Setting user defaults.

2-2-1 To set the logon language, go to your user profile:
System  User profile  Own data
On the Defaults tab page, enter the language of your choice in the Logon
language field.
2-2-2 To set the decimal notation and date format, remain on the Defaults tab in
your user profile. Select the indicator adjacent to the notation and format
you desire. Save your selections.

2-3 Defining favorites of your choice.

2-3-1 Favorites  Insert folder
Type any name for the folder then select Enter. You can add as many
folders as you desire. Once created, folders can be dragged and dropped to
position them where you want.
2-3-2 To create favorites, select specific applications (transactions) that you need
as favorites for your daily work from the menu tree of the SAP standard
menu. Add them to your Favorites list by selecting them and choosing
Favorites  Add from the menu bar. Alternatively, use the mouse to drag &
drop favorites to a folder. You can also use the menu path Favorites 
Insert transaction to add using a transaction code.. Finally, you can move
existing favorites to different folders later by choosing Favorites  Move
or using drag & drop.
(C) SAP AG AC040 2-22
 2-3-3 Create Internet addresses by choosing Favorites  Add Web address or
file. When you select SAP Homepage from your favorites, an Internet
browser will open and you will be connected to SAP’s homepage.

2-4 Setting a start transaction.

2-4-1 Extras  Set start transaction
Enter a transaction of your choice then choose Enter. Notice the system
message on the status bar indicates that your selected transaction has been
set as the start transaction. The next time you log on, the system will go
directly to your start transaction.
Note: To change back to SAP Easy Access as the initial screen, follow the
menu path again, delete the transaction code and select Enter. The next time
you log on, SAP Easy Access will be the initial screen.

(C) SAP AG AC040 2-23

 Overview Of Controlling: Unit Contents

l General Tasks of Controlling

l The Components of CO
l Integration
l Transfer Prices

 SAP AG 1999

(C) SAP AG AC040 3-1

 Overview Of Controlling: Unit Objectives

At the conclusion of this UNIT,

you will be able to:

l Explain the differences between Internal and

External Accounting.
l Explain how CO helps manage a business, and use some
standard CO reports .
l List the components of CO and explain their purpose.
l Explain the basic integration points between the
components of CO.
l Explain the basic integration points between CO and
other R/3 modules.
l Explain the Transfer Price Concept in R/3.

 SAP AG 1999

(C) SAP AG AC040 3-2

 You Are Here!

FI
MM CO
HR
$$ CO
$
+ABC SD AA 1 12
Planning and Postings to CO ü
t Plan Integration From Other Modules $
Event-Based
Reporting Tools
Postings in CO

AC040 1 12
OM PC Profit
OM PC Profit FI CO
Reflecting Your Period-End
Business in CO Postings in CO

INT EXT
OM PC Profit “Which
FI MM HR AA SD
Button?”
AcceleratedSAP
Overview of CO
Getting Started Course Review
 SAP AG 1999

(C) SAP AG AC040 3-3

 Overview Of Controlling: Business Scenario

l Your initial focus is to gain an understanding of the purpose

of CO, and how FI and CO work together to provide both
financial and management information.
l You learn that CO has several different major components,
each having a particular purpose. You also learn that these
different components are integrated with each other, as well
as with other R/3 components.
l In order to get some exposure to the output of CO, you
volunteer to assist in running and analyzing some reports for
a subsidiary of your company. These reports focus on
operating results for the CO controlling area for the
subsidiary. They illustrate integration between the General
Ledger (FI),), Cost Center Accounting (CO), and Profitability
Analysis (CO) components.

 SAP AG 1999

(C) SAP AG AC040 3-4

 General Tasks of Controlling

At the conclusion of this TOPIC,

you will be able to:
l Explain the differences between Internal and
External Accounting within the R/3 System.
l Explain some of the ways in which Controlling
can help to manage a business.
l Use some standard CO reports to perform a
typical business analysis.

 SAP AG 1999

(C) SAP AG AC040 3-5

 Accounting Architecture

EC

Enterprise
Controlling
Management Business
Profit Center EIS Consolidation Planning

TR FI CO

TREASURY FINANCIAL CONTROLLING

ACCOUNTING
lCash lG/L l Overhead
lTreasury lReceivables / l Product cost
lFunds Payables l Profitability
lAssets Management

FI
IM Investment and financing
 SAP AG 1999

n The general term “Accounting” can be used to describe numerous different functions and business
processes. The R/3 system provides an architecture of specialized accounting components to address
these varied functions.
n The Treasury component (TR) focuses on functions such as cash management, treasury management
(including money market funds, foreign exchange, derivatives and securities), loans, and market risk
management.
n The Financial Accounting component (FI) focuses on General Ledger accounting (G/L), Accounts
Receivable and Accounts Payable processing, and Fixed Asset accounting.
n The Investment Management component (IM) provides functions to support the planning,
investment, and financing processes for capital investment measures.
n The Enterprise Controlling component (EC) includes Profit Center Accounting, the Executive
Information System (EIS), Business Planning (for group-wide business plans at a high level), and EC
Consolidation.
n The Controlling component (CO) provides a variety of tools that can be used to provide operational
information to the management of a company to support business analysis and decision-making. The
Controlling component is the focus of this course. The major CO components (Overhead Cost
Controlling, Product Cost Controlling, and Profitability Management) will be examined in some
detail in this course.

(C) SAP AG AC040 3-6

 FI and CO: Standards versus Flexibility

EC-
PCA

CO Controlling Internal Accounting

Profit Center Accounting

Cost Accounting
Managerial Accounting
Management Accounting
Different Valuations
Flexibility

IA External Accounting
FI Financial GA S Tax
Financial GO A Financial Statements
Accounting B P audit Legal Requirements
Accounting Standards

 SAP AG 1999

n The R/3 System application component Controlling (CO) contains all accounting functions necessary
for effective controlling. If an organization divides accounting into internal and external viewpoints,
CO represents the internal accounting perspective, because it provides information for managers -
those who are inside an organization and are charged with directing and controlling its operations.
CO includes cost and revenue accounting. Together with the Enterprise Controlling (EC) application
components Profit Center Accounting (EC-PCA) and Executive Information System (EC-EIS), CO
covers all aspects of managerial accounting. It offers a broad selection of functional tools that can be
used to provide managerial accounting information without being limited to legal requirements.
n Financial statements required for external reporting purposes (e.g. balance sheet and P&L statement)
are created in FI. These external reporting requirements are typically established by general
accounting standards like GAAP or IAS, as well as various legal requirements mandated by
regulatory authorities.

(C) SAP AG AC040 3-7

 Reporting Requirements

External reporting
Cash
Balance flow
Sheet statement Retained
External Accounting Profit &
loss earnings
(P&L)

Internal Cost
center
reporting reports
Contri-
Product bution
cost Profit margins
Internal Accounting reports center
reports

 SAP AG 1999

n While there are often different accounting information requirements for internal and external users,
much of the underlying data may be relevant for both purposes. But that same data can be presented
in very different ways to satisfy the different requirements.
n Standardized accounting intended for external users is sometimes termed “financial accounting”.
The term “management accounting” generally refers to the non-standardized accounting approach
that supports the management decision-making process.
n Financial accounting reports typically required include the income statement (or profit & loss
statement), and balance sheet. Management accounting reports can be completely unique, although a
common example could be departmental actual vs. plan costs for the current accounting period.

(C) SAP AG AC040 3-8

 Controlling Architecture

CO Profitability
PA Profitability segment EC-
EC-
Analysis PCA

CO Overhead CO Product Cost

Profit Center Accounting

OM Cost Controlling PC
Controlling
Process Material
Cost Valuation
Center Internal Production
Order Order Material Labor OH Process

Cost
Cost Element
Element Accounting
Accounting

Financial
Financial Asset WIP Stock Revenue
FI
Accounting
Accounting

HR Human Procure Produce Move Stock Sell, Bill

Resources
 SAP AG 1999

n This diagram illustrates the basic architecture of CO. The various components of CO are shown, with
several black arrows indicating typical flows of costs and activity type quantities (such as hours of
labor) between these components. For example, the black arrow pointing from CO-OM to CO-PC
shows that costs can flow from Overhead Cost Controlling to Product Cost Controlling. As we will
explore in more detail later in this course, these costs could be in the form of overhead allocations to
a production order. They could also be in the form of hours of direct labor charged to that same
production order, with the labor cost calculated by multiplying the number of hours by a standard
hourly rate.
n Similarly, costs can flow from Overhead Cost Controlling (OM) and Product Cost Controlling (PC)
to Profitability Analysis (PA), where they can be used together with revenue data to calculate
operating results, and determine how well various segments of the business are performing.
n As we will also see later in more detail, other R/3 components can initiate cost or revenue postings to
CO. The blue arrows illustrate interactions between Financial Accounting (FI) and CO. For
example, FI expense postings would create cost postings in the OM component of CO. Or FI could
make a direct revenue posting to the PA component. Cost flows also take place between FI and the
PC component, in the form of raw material costs consumed in the production process. And then
there is a return flow to FI, when production costs are capitalized as finished goods or WIP (work in
process).
n Other R/3 components, such as Human Resources (HR) and Logistics (Materials Management, Sales
& Distribution and Production Planning) also integrate with CO, as indicated by the Logistics
process flow (procurement, production, stock movements, selling and billing) at the bottom of the
diagram.

(C) SAP AG AC040 3-9

 Introduction to the Controlling Method

Cost allocation according to source of costs

Overhead Cost Object Profitability

Cost Controlling Controlling Analysis
Typical Controlling Activities

Overhead Cost Preliminary Sales Planning

Planning Costing
Drill- down-
Activity price Simultaneous Reporting
calculation Costing
Activity Final Costing
allocation
Calculation of
- fixed Actual Costs
- variable of Goods
Manufactured
Distribution
Assessment

 SAP AG 1999

n The diagram above contains several lists of typical CO transactions and functions that are commonly
performed in the three major components of CO. These various transactions will be addressed later
in the course. At this point, only the basic concept of cost flow is important.
n There is a general cost flow pattern within CO, as various functions and postings are performed.
This begins with planning, and continues with actual cost postings from period to period throughout
the year. This general flow pattern begins with costs in the Overhead Cost Controlling component,
which are then passed along to Cost Object Controlling (the area of CO-PC that tracks actual
production costs) and to Profitability Analysis, as appropriate. Cost Object Controlling also passes
production cost information along to Profitability Analysis.
n The Overhead Cost Controlling component of CO (CO-OM) has a primary focus of tracking where
costs are incurred in the organization, typically with cost centers and overhead orders. During the
planning process, costs and activity type prices are planned. Then, for example, as activities are
performed during the year by production cost centers for the manufacturing area of the business,
related costs flow from OM to the Cost Object Controlling area of Product Cost Controlling (CO-
PC). These costs are calculated by applying the planned activity type prices to the number of labor
hours performed for the production process.

(C) SAP AG AC040 3-10

 The Components of Controlling

At the conclusion of this TOPIC,

you will be able to:
l List the components of CO.
l Explain the basic purpose of
each of these components.

 SAP AG 1999

(C) SAP AG AC040 3-11

 The Components of CO

l Cost and Revenue Element

Accounting
l Overhead Cost Controlling:
n Cost Center Accounting
n Internal Orders
n Activity-Based Costing
l Product Cost Controlling:
n Product Cost Planning
n Cost Object Controlling
n Actual Costing/ Material Ledger
l Profitability Management
n Profitability Analysis
n Profit Center Accounting
 SAP AG 1999

n The various CO components can be classified into different groups. The classification indicates the
general purpose of a given component.
n Management of an enterprise requires the use of different tools for different situations. If you want
to analyze profit, for example, then you need a tool appropriate to the view you wish to take (e.g.: by
product or by responsibility center). The Profitability Management component group has two tools
(components) that are available for addressing this business need (Profitability Analysis and Profit
Center Accounting).
n Similarly, the Overhead Cost Controlling and Product Cost Controlling component groups offer tools
appropriate to other types of business requirements.

(C) SAP AG AC040 3-12

 CO Components

CO How profitable are individual

PA Profitability Analysis EC-
market segments? PCA

CO CO
OM Overhead Cost Controlling PC Product Cost

Profit Center Accounting

Controlling
How can we reduce our overhead? What are the
l Are the responsibility areas working
manufacturing
efficiently? costs of a
product?
l How high are the costs of organizational
activities? Are they within their budgets?
l How can we optimize our internal
business processes?

How profitable
CO Cost & Revenue Element Accounting are individual
CEL
What costs occur within our organization? enterprise areas?

 SAP AG 1999

n How do we reduce our overhead costs? Overhead Cost Controlling (CO-OM) is the CO
component that provides tools to help answer that question. In many organizations, overhead costs
have taken a huge upward jump, including costs which the organization cannot assign directly to
either products or services. While production areas often display great progress in controlling costs
and optimizing processes, overhead continues to display little cost transparency, so it is difficult to
get a clear picture of why these costs are incurred.
n What costs occur within our organization? Cost Element Accounting (CO-OM-CEL) classifies
the costs and revenues that are posted to CO, and provides the capability for reconciliation of costs in
CO with the Financial Accounting (FI) module.
n What are the manufacturing costs of a product? Product Cost Controlling (CO-PC) has two
major areas of focus. It is used to develop estimates of what it will cost to produce a product (or
even a service). It also has capabilities to track the actual costs of production, and provides extensive
tools for cost analysis.
n How profitable are individual market segments? Profitability Analysis (CO-PA) provides a focus
on the results of a company’s doing business with the external marketplace. It provides the ability to
define which aspects or segments of that market are relevant for analyzing operating results, such as
profit by customer, product, geographic area, sales organization, etc. And it offers multi-
dimensional drill-down reporting, to provide extremely flexible views of operating results.
n How profitable are individual enterprise areas? Profit Center Accounting (EC-PCA) provides a
focus on internal areas of a company that have responsibility for achieving certain profit or
productivity goals.

(C) SAP AG AC040 3-13

 Cost & Revenue Element Accounting

Overhead Cost Controlling Profit

Cost &
FI Internal Center
Revenue
Order Accounting
Element
Cost Center
Accounting
AA Business
Process
Answers
the
MM Product Cost
question:
Controlling Cost
Object
CO Profit
SD Center
Which costs Profitability
were Analysis
HR incurred?

Profitability
segment
 SAP AG 1999

n Cost and Revenue Element Accounting (CO-OM-CEL) is part of the Overhead Cost Controlling
component group. It provides the structure for assignment of CO data through the classification of
transaction line items according to the nature of the cost or revenue being posted to a given
controlling object (e.g. cost center, internal order, etc.).
n The cost flows in CO can lead to the need for reconciliation between internal and external
accounting in certain cases. Cost and Revenue Element Accounting is the CO component providing
functionality that supports this possible requirement. The Reconciliation Ledger provides reporting
capabilities for identifying the differences in costs between FI and CO, as well as a tool for creating
reconciliation postings to FI, if desired.

(C) SAP AG AC040 3-14

 Overhead Management (CO-OM)

l Overhead Cost Controlling:

n Cost Center Accounting
n Internal Orders
n Activity-Based Costing

 SAP AG 1999

n Overhead Cost Controlling has three components. Each addresses certain aspects of analyzing and
controlling overhead costs. Overhead costs are defined as costs that cannot be assigned directly to
cost objects (e.g. production orders, etc.).
n The percentage of overhead in total costs has risen sharply in recent years. The number of workers
employed in overhead areas grew from 25-30% in the 1950's to more than 50% today. Overhead has
grown in both manufacturing and service organizations. Research in the United States revealed that
overhead makes up approximately 80% of the costs in the machine and electronics manufacturing
industries. As overhead grows, the proportion of directly assignable production costs shrink.
Consequently, it is becoming increasingly important to analyze and control overhead costs.
Similarly, increasingly sophisticated tools are needed to facilitate the application of overhead to
production orders and other cost objects.

(C) SAP AG AC040 3-15

 Cost Center Accounting

H1 H2100
H2100
H2000 IDES Europe Portugal
H2000
UK H1000
H1000 H2300
H2300
Germany
Spain
H1010
Corporate
H1200
H1110 H1120 H1400
Finance &
Executive Corporate Administration Technical
Board Services Department
1110 1000
H1210 H1220 H1230
Executive Corporate
Board Services Admin. Human Purchasing
H1300
1200 Resources
Canteen
2100 2200 2300 Sales &
1210 Finance & Human Purchasing Marketing
Telephone Admin. Resources
1220
Motor Pool
1230
 SAP AG 1999 Power

n The Cost Center Accounting component (CO-OM-CCA) tracks where costs occur in your
organization. The cost center is an organizational unit in a controlling area. Cost centers can be
defined according to several different design approaches. A typical approach could be for an
enterprise to define a cost center for each low-level organizational unit that has responsibility for
managing costs. As costs are incurred, they are assigned or posted to the appropriate cost center.
These costs could include payroll costs, rent and utility costs, or any other costs assignable to a given
cost center.
n Each cost center is assigned to a category, e.g. Administration cost center, production cost center,
etc. Each cost center master record has a field for the name of the person responsible for the cost
center.
n The posting and assignment of costs to cost centers not only makes managerial accounting possible;
but is a vital step for utilizing the other Controlling components. As noted above, cost centers can be
set up according to different design approaches, including functional requirements, allocation
criteria, activities or services provided, geographic location and/or area of responsibility. But
whichever approach is selected, it should be consistent throughout the enterprise.
n Cost centers can be grouped together to provide summary cost information. In fact, a fundamental
requirement for implementing Cost Center Accounting is the creation of a standard hierarchy for a
controlling area. The standard hierarchy includes all cost centers in that controlling area, and
provides the ability to analyze summary costs at each node of the structure. This will be described in
greater detail in the next Unit.

(C) SAP AG AC040 3-16

 Internal Orders

FI MM CO

Internal Orders
Overhead Investment Accrual Orders with
orders orders orders revenues

Revenues Costs

n Order n G/L Account n Profitabil. segment n G/L account

n Profitabil. segment n Cost center n Profitabil. segment
n Cost center n Asset n Sales order
n Project n Project n Billing element
n Orders with revenues
Cost Accounting Functions
n To any receiver

 SAP AG 1999

n An Internal Order is an extremely flexible CO tool that can be used for a wide variety of purposes to
track costs and, in some cases revenues, within a controlling area. Internal orders provide
capabilities for planning, monitoring, and allocation of costs.
n Internal orders may be used for a variety of purposes, and can be grouped into four general
categories:
Ÿ Overhead orders: Used to monitor overhead costs incurred for a particular purpose, such as
conducting a trade fair, or tracking costs for maintenance and repair work.
Ÿ Investment orders: Used to monitor costs incurred in the creation of a fixed asset, such as building
a storage facility.
Ÿ Accrual orders: Used to offset postings of accrued costs (costs calculated in CO) to cost centers.
Ÿ Orders with revenue: Used to replace the cost accounting parts of SD customer orders if SD is not
being used, so that both costs and revenues can be tracked; or to monitor revenues not affecting
the organization's core business (such as miscellaneous revenues).

(C) SAP AG AC040 3-17

 Model of Activity-Based Costing

Processes Processes Processes

CO-ABC

Products ABC Product Families

A
Customers
CO

-P
Distribution Channels

CO
-PC

...

CO-CCA

 SAP AG 1999

n Traditionally, overhead costs are allocated from cost centers to cost objects through various methods,
such as surcharges and activity allocations.
n By contrast, Activity-Based Costing assigns costs to business processes, without regard for which
organizational units may be involved in generating those costs. A process is a cross-functional
object, which can pull resources from any cost center in a controlling area.
n ABC has been implemented in R/3 as an enhancement to the cost management functionality. All
overhead costs are still assigned to cost centers. The cost centers that utilize resources in carrying
out a process allocate the cost of those resources to the process. (Example: a Purchasing cost center
would allocate costs it incurred in preparing and distributing a Request for Quotations to a
Procurement business process.) The processes are then consumed by cost objects (such as
production orders) and the related costs are allocated to those cost objects. Process costs not related
to cost objects are passed along to CO-PA in order to provide a more accurate and complete
accounting of overhead costs.
n Cost Center Accounting answers the question of where costs occur, whereas Activity-Based Costing
answers the question of why (for what purpose) costs occur.

(C) SAP AG AC040 3-18

 Product Cost Controlling (CO-PC):

l Product Cost Controlling

n Product Cost Planning (PCP)
n Cost Object Controlling (OBJ)
n Actual Costing / Material Ledger (ACT)

 SAP AG 1999

n Product Cost Controlling is concerned with all aspects of planning the cost of producing products or
services, as well as tracking and analyzing the actual costs that are incurred in the production
process. Product Cost Controlling consists of the following components:
n Product Cost Planning is used for preliminary costing and can answer the following questions:
Ÿ What will be the cost of producing a certain product or service?
Ÿ Is external procurement less expensive than in-house production?
Ÿ What are the costs of production, if we assume an ideal situation? This estimate could then be
used as a baseline against which we can compare other “real world” production scenarios.
n Cost Object Controlling focuses on tracking the actual direct costs of production and the period end
closing process.
Ÿ Actual production costs are accumulated as raw materials are issued and labor is performed. This
information allows detailed comparisons between the planned cost and the actual cost of any given
production phase.
Ÿ Period end closing procedures include the application of overhead costs, calculation and posting of
the value of goods still in production (work in process), calculation of variances between standard
and actual costs, and settlement of variances to the CO-PA, EC-PCA and FI modules.
n Actual Costing / Material Ledger is used to calculate actual costs for each material at the end of
the period. Materials and their movements are valued with a standard price during the period. Any
variances from this standard are collected in the material ledger when invoices are received or orders
settled. During period end closing these variances are used to calculate an actual price for the
material in the closed period. Postings can be made in FI to reflect this price.

(C) SAP AG AC040 3-19

 Product Cost Controlling - Overview

Product Cost Planning Cost Object Controlling Actual Costing /

Material Ledger
Quantity Structure: Preliminary Costing, Quantity Structure:
PP Master Data Simultaneous Costing Material movements
BOM Routing
Order
Planned
costs, Material $
Process
Actual Labor $
costs Overhead $
Process $
Total ... Value Structure
Value Structure

Final Costing Material movements

Prices for Materials
Period-End Closing
Prices for Activities
Prices for Processes Work in process
Overhead Material Ledger
Scrap
Variances
Settlement
Cost estimate: Material Settlement:
Standard costs Actual Costs

 SAP AG 1999

n Product Cost Planning refers to the creation of cost estimates for the production of goods or
services. If a quantity structure (Bill of Material and routing) is available in the PP (Production
Planning) module of the R/3 system, you can create a cost estimate automatically using the PP data.
If no quantity structure is available in R/3, the cost items can be entered manually by means of unit
costing, or can be transferred automatically from a non-SAP system using batch input.
n In Cost Object Controlling, the costs incurred in the production of a product or service are collected
on a cost object (such as a production order). Various types of cost objects can be used, depending
on your controlling requirements. These include production orders, sales orders, process orders or
product cost collectors. Cost Object Controlling also provides tools for calculating Work In Process,
scrap costs, and variances at period end close.
n Actual Costing is used to calculate actual product costs at period end close. The result may be
transferred to the material master as a weighted average price for the closed period. The values
connected with material movements are collected in the Material Ledger. Both single-level
settlement and multi-level settlement functions are available to calculate the actual material costs at
period end close.

(C) SAP AG AC040 3-20

 Product Cost Planning

l Costing results
n Cost of goods manufactured
n Cost of goods sold
l Pricing
l Productivity
l Comparison of alternatives
l Continuous improvement
l Comparison of plants
l Influences of primary costs
l Material valuation

 SAP AG 1999

n There are many commonly asked questions that Product Cost Planning can help answer. These
might include:
Ÿ How high are the cost of goods manufactured and the cost of goods sold?
Ÿ Is it currently possible to produce at this market price at all? What is our price floor?
Ÿ Is it cheaper to produce large or small lots?
Ÿ What does my cost structure look like? How much of the total cost is material and how much is
labor?
Ÿ What are the effects of improvements in the production process?
Ÿ Which organizational unit most influences the product costs?
Ÿ Which plant has the lowest production costs?
Ÿ What is the influence of machine depreciation and energy costs on my product (primary costs)?
Ÿ A standard cost estimate can be used to valuate the material stock.

(C) SAP AG AC040 3-21

 Cost Object Controlling

l What actual costs did we incur in

our area in the current period?
l What costs were we expecting
based on the quantities
manufactured?
l Are some product groups
performing significantly better
than others?
l What is causing these
variances?
l What are the scrap costs of our
new line?
l Did continuous improvements
show cost effects?

 SAP AG 1999

n Cost Object Controlling includes three principal steps: preliminary costing of the cost object,
simultaneous costing, and period-end closing.
n Preliminary costing refers to the calculation of planned costs for a cost object, such as a production
order. Planning variances can be determined by comparing the results of preliminary order costing
with the standard cost estimate for the quantity of material to be produced with the order.
n In Cost Object Controlling, as quantities of raw materials are issued for use in a production scenario,
either from inventory or from external purchase, their value is accumulated on the appropriate cost
object (such as a production order). Similarly, as an activity type is performed in the production
scenario (such as hours of direct labor), the cost of that activity is also accumulated on the cost
object. This process is termed simultaneous costing. It refers to the posting of cost to a cost object
by the same transaction that documents the material issue or activity completion. (The transaction
that is used to document the completion of units of an activity is called a confirmation.) The
simultaneous costing concept may sometimes be referred to as valuation of quantity flows to a cost
object.
n Period-end closing refers to a series of tasks performed at the end of each accounting period. This
includes calculating applicable overhead costs, calculation of work in process (WIP), calculation of
variances, and settlement (which passes information to Financial Accounting, Profit Center
Accounting, and Profitability Analysis).
n Various standard reports are provided to analyze the costs posted to cost objects.

(C) SAP AG AC040 3-22

 Actual Costing/Material Ledger

ds
inin shed Goo
te rials F
Raw Ma

ry
n ding Invento
E
aterials
Raw M
Valuation Period

t ri b u t ion of
Dis es
Varianc

= Variances

 SAP AG 1999

n Actual Costing uses the Material Ledger to store material prices in up to three currencies and
according to three valuation strategies (group, legal and profit center).
n Actual Costing aims to provide the actual costs for each material at period close. Each material
movement is recorded in the Material Ledger together with the preliminary valuation and any
variance (from invoice or order settlement). Material settlement is used to integrate this variance into
the material price at period close.
n Both single-level and multi-level material settlement are available. Multi-level settlement is used to
reconstruct the quantity structure based on the material movements for the period, and assign
variances for the raw materials to the finished and semi-finished products as follow-up costs.
n The actual price for each material can be updated to the material master for the closed period.

(C) SAP AG AC040 3-23

 Profitability Management:

l Profitability Management
n Profitability Analysis (CO-PA)
n Profit Center Accounting (EC-PCA)

 SAP AG 1999

(C) SAP AG AC040 3-24

 Aspects of Profitability Management

Responsibility Accounting Profitability Analysis by

Market Segments

Profitability
Revenue 2000 Revenue 2000
Salaries 468 Segments
Discounts 100
Material 230 COGS 460
... Contr.Margin 1440
Profit Advertising 230
ROI ...
...

Profit Centers

Procurement Production Distribution Sales

 SAP AG 1999

n Profitability Reporting:

Ÿ Profitability Analysis (CO-PA) lets you analyze the profitability of segments of your external
market. These segments can be defined according to products, customers, geographic areas, and
numerous other characteristics, as well as your internal organizational units such as company
codes or business areas. 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.

n Responsibility Reporting:

Ÿ 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, divisions). Profit Center Accounting is a component of the "Enterprise Controlling"
module.

(C) SAP AG AC040 3-25

 Typical Questions in Profitability Analysis

Contribution of Which are the largest and

Individual Market
fastest growing customers?
Segments

Margin goals of
Individual
Did the sales force reach their
Sales Entities contribution margin goal?

Success of
What was the success of the
Marketing most recent sales promotion
Activities for a product line?

Revenue
and
What is the impact of a pricing
Cost Structure strategy for a group of customers?

 SAP AG 1999

n Profitability Analysis (CO-PA) enables you to analyze profits and contribution margins for market
segments of your company. The objective of CO-PA is to support sales, product management, and
corporate-wide planning and decision-making, using an external view from a market-oriented
perspective.

(C) SAP AG AC040 3-26

 Profitability Analysis by Market Segments

Region Customer
Product
Business Unit Sales office
Sales Quantity
Sales Revenue Reporting Dimensions
Customer discount
Sales commission
Direct sales costs
Answers
Net revenue Analyze Profit by
Direct material costs Rev.
Variable production costs Market Segments
Contribution margin I fit
Material overhead Pro
Fixed production costs
Cost
Contribution margin II
Variances ss
Contribution margin III Lo
Overhead costs
Operating profit
 SAP AG 1999

n The market segments are defined in terms of characteristics such as products, product groups,
customers, customer groups, geographic areas, etc. For example, you may wish to analyze
profitability for a specific group of products that you sell to a particular customer (or group of
customers). When setting up CO-PA for use in your company, you will have broad flexibility to
choose whichever characteristics are relevant for defining your company's market segments. Each
unique combination of characteristic values (e.g. sales of product A to customer Y) defines a
profitability segment.
n You must also decide which specific values related to profitability should be analyzed for those
segments. These values are known as key figures. For example, you can define which types of
revenue and expense/cost categories should be used to determine a value for gross margin according
to your company's requirements. Here again, CO-PA gives you the ability to freely select whichever
values are relevant to the various users in your company. If different types of users define gross
margin differently (e.g. sales management vs. product management), it is possible to provide
separate gross margin figures for each, calculated according to their individual requirements.
n CO-PA provides a multidimensional reporting tool that can be used to design reports that analyze
data for any selected market segments, and any defined measures of profitability.

(C) SAP AG AC040 3-27

 Typical Questions in Profit Center Accounting

Contribution of What is the operating profit

an organizational
for a profit center?
unit

Return on What asset value is attributed

Capital to a profit center?

Which responsibility areas

Cost Management
exceeded their plan last month?

Management
of Internal
What goods and services are
Sales & Services exchanged within the corporation?

 SAP AG 1999

n A profit center is a management-oriented organizational unit used for internal controlling purposes.
Dividing your company up into profit centers allows you to analyze areas of responsibility and to
delegate responsibility to decentralized units, thus treating them as "companies within the company".
EC-PCA lets you set up your profit centers according to product (product lines, divisions),
geographical areas (regions, offices or production sites) or function (production, sales).

(C) SAP AG AC040 3-28

 Responsibility Accounting by Profit Center

Accounts
Reporting Dimensions
Sales Revenue
Sales Deductions
Cost of Goods Sold
Operating Profit Answers
Liabilities
Analyze Profit, Balance
Accounts Receivables and Financial Ratios by
Invested Capital in Assets Profit Centers
Inventory Profit
Cost of Capital ROI
Equity Turnover
Return on Investment Return on Sales
Invested
Capital

 SAP AG 1999

n Profit Center Accounting (PCA) allows you to calculate internal measurements of profitability. This
internal view of profitability, then, reflects the success of a given profit center at meeting the
profitability goal for which it was given responsibility.
n The Information System provides a tool for evaluating plan and actual data. Numerous standard
reports are provided, and you can create your own custom reports as well. Reports can be executed
for Profit Centers or Profit Center groups. Profit Center Accounting can report on selected balance
sheet items, such as Assets, AR/AP, Material Inventory, and Work in Process. This permits the
calculation of certain financial key ratios such as ROI (Return on Investment). Other reporting
capabilities include detailed information on the source objects (e.g. cost centers, internal orders) that
contributed costs posted to profit centers.

(C) SAP AG AC040 3-29

 Methods of Profitability Management

Cost-
Cost-of-
of-sales accounting Period accounting
Revenue Revenue
- Sales deductions - Sales deductions
- Cost of sales +/- Inventory changes
+/- Fixed Asset changes
+/- Changes to work in process

Gross results Total output

- Sales and Marketing costs - Material costs
- Administration costs - Personnel costs
- Research and development - Depreciation
- Interest

Net results Net results

 SAP AG 1999

n Two accounting methods can be used for generating profitability statements: the cost-of-sales
method and the period accounting method. Applying either method to a given set of business
transactions under a given set of accounting standards should yield the same bottom-line result
(profit), in concept. The difference is in how the overall profit and loss picture is presented.
n Companies must choose one of these methods for generating their external income statements. The
choice is often determined by country-specific legal requirements. However, the methods facilitate
two different types of analyses, both of which a company may find useful. So it may be worthwhile
to track information in both ways for internal profit reporting.
n Cost-of-sales accounting: With this method, the emphasis is on matching the revenues for goods
and/or services provided (the value that a company receives as a result of sales) against the related
costs/expenses for those items (the value that is lost when products are transferred out of the
company). This accounting method provides profit and loss information in a manner that is
particularly effective for various margin analyses. Consequently, it is especially useful for the sales,
marketing, and product management areas.
n Period accounting: With this method, the emphasis is on summarizing productive activity through
changes in the value of certain asset categories over the course of a period, for a given organizational
unit. This accounting method presents the revenues that have been recognized for the period, and
also the various period costs/expenses (such as personnel costs, depreciation, etc.). But it also
includes the changes for the period in inventory value, work-in-process, and fixed assets. As such, it
is useful as a measure of productivity for profit centers.

(C) SAP AG AC040 3-30

 Integration

At the conclusion of this TOPIC,

you will be able to:
l Explain the basic integration points between the
components of CO.
l Explain the basic integration points between CO
and other R/3 modules.
l Run a simple inquiry in the system on an FI
document and associated CO document(s).

 SAP AG 1999

(C) SAP AG AC040 3-31

 Integration Within CO - Value Flows (1)

Overhead Profit Center

Accounting

Accounting
Element Accounting

Cost Controlling
Cost Center

Internal Process
Order
Revenue Element
Cost & Revenue
Cost

Profit
Center

 SAP AG 1999

n There can be numerous interrelationships between the various CO components. Value flows can
occur for many different purposes.
n Within the Overhead Cost Controlling area, costs can be posted to cost centers and internal orders
from other R/3 modules (external costs). Cost centers can then allocate costs to other cost centers, to
orders, and to processes in Activity-Based Costing (ABC). Processes, in turn, can pass costs to cost
centers and orders. Internal orders can settle costs to cost centers and to processes in ABC (as well
as to other orders).

(C) SAP AG AC040 3-32

 Integration Within CO - Value Flows (2)

Overhead Profit Center

Accounting

Accounting
Element Accounting

Cost Controlling
Cost Center

Internal Process
Order
Revenue Element

Product Cost
Controlling Cost
Cost & Revenue

Object
Cost

Profit
Center

 SAP AG 1999

n There are also important cost flows that can occur between the Overhead Cost Controlling and
Product Cost Controlling components. Cost objects (such as production orders, etc.) can receive
direct cost postings from FI (such as when an invoice receipt is assigned to the cost object); allocated
costs from cost centers (as production activities are performed, or from assignment of overhead);
costs settled from internal orders; and costs allocated from processes in ABC.

(C) SAP AG AC040 3-33

 Integration Within CO - Value Flows (3)

Overhead Profit Center

Accounting

Accounting
Element Accounting

Cost Controlling
Cost Center

Internal Process
Order
Revenue Element

Product Cost
Controlling Cost
Cost & Revenue

Object

Profitability
Analysis
Cost

Profit
Profitability Center
segment

 SAP AG 1999

n Profitability Management components also are tightly integrated with Overhead Cost Controlling
and Product Cost Controlling. Profit Center Accounting, by virtue of its basic design, receives
statistical cost postings from virtually all other CO components.
n In addition to direct postings from FI, Profitability Analysis can receive cost assessments from cost
centers and ABC processes, settlements of cost from internal orders, and production variances settled
from cost objects.

(C) SAP AG AC040 3-34

 Integration With Other Modules (1)

Overhead Cost Controlling Profit

FI AA Center
Internal

Accounting
Element Accounting
Order Account.
Cost Center
Depreciation

Revenue Element Process

Product Cost
Vendor Controlling Cost
Object
invoice
& Revenue

Profit
Center
Profitability
Analysis
Cost &
Cost

Profitability
segment
 SAP AG 1999

n Other R/3 modules generate data that has a direct impact on CO. For example, when non-stock
consumable items are purchased, an expense is posted to the G/L. At the same time, the expense is
posted as a cost to the cost center (or other object in CO) for which the items have been purchased.
That cost center's costs may later be passed on as overhead to another cost center, a cost object, or
other object in CO.
n The Financial Accounting application area of R/3 is a primary source of data for Controlling.
Typically, expense postings to the General Ledger result in cost postings to CO. These expense
postings to the G/L could be manual journal entries, or initiated through accounts payable postings,
or through depreciation postings from Asset Accounting (FI-AA), or from other R/3 modules.
n Revenue postings to the G/L would also typically generate postings in CO to CO-PA and Profit
Center Accounting.
n Both expense and revenue postings from FI must specify an object in CO that will receive the cost or
revenue data.
n There are also several situations that will cause CO to create postings in FI. These would include
reconciliation postings initiated by the reconciliation ledger in CO, inventory postings caused by the
delivery of finished goods from production, and settlement of capital costs from the creation of fixed
assets.

(C) SAP AG AC040 3-35

 Integration With Other Modules (2)

Overhead Cost Controlling Profit

HR
Internal Center

Accounting
Element Accounting
Order Account.
Personnel Cost Center
costs
Revenue Element Process

Product Cost
Cost
Controlling Object
CO
& Revenue

Profit
Center
Profitability
Analysis
Cost &
Cost

Profitability
segment
 SAP AG 1999

n The Human Resources (HR) modules can generate several types of cost postings to Controlling,
including payroll and benefits. The HR system allows you to allocate the cost of labor to different
Controlling (CO) objects. In addition, planned personnel costs can be transferred to CO as input to
CO planning.

(C) SAP AG AC040 3-36

 Integration With Other Modules (3)

Overhead Cost Controlling Profit

MM
Internal Center

Accounting
Element Accounting
Order Account.
Purchase Cost Center
order
Revenue Element Process

Product Cost
Cost
Goods issue Controlling Object
posting CO
& Revenue

Profit
Center
Profitability
Analysis
Cost &
Cost

Profitability
segment
 SAP AG 1999

n The Logistics area of R/3 also has numerous integration points with Controlling. In the inventory
area of Materials Management, a goods issue transaction can create a cost posting in CO to
whichever object is specified (for example: cost center, production order, internal order). Looking
from the other direction, CO can cause a posting to inventory (in MM) resulting from the delivery of
finished goods from production. In addition, product cost estimates created in CO can update price
fields in material master records. Finally, the creation of purchase orders in MM can generate
commitment postings within CO.

(C) SAP AG AC040 3-37

 Integration With Other Modules (4)

SD
Overhead Cost Controlling Profit
PP
Internal Center

Accounting
Element Accounting
Order Account.
Cost Center
Production
order
Revenue Element Process

Product Cost
Cost
Controlling Object
Sales order
CO
& Revenue

Profit
Center
Profitability
Analysis
Cost &
Cost

Profitability
segment
 SAP AG 1999

n The Production Planning (PP) area of Logistics also works very closely with Controlling. Bills of
Material (BOMs) and routings, which are created in PP, can be utilized in Product Cost Controlling
in CO. In addition, PP production orders are one form of cost object utilized to track and control
production costs in Cost Object Controlling.
n Sales and Distribution (SD) is a primary source of revenue postings to CO via billing documents.
An SD sales order can also be used in conjunction with a make-to-order production scenario in CO,
in order to track costs and revenues and evaluate the profitability of fulfilling the order.

(C) SAP AG AC040 3-38

 Transfer Price Concept in R/3

At the conclusion of this topic you will be able to:

l describe the purpose of Transfer Prices
l understand how the Transfer Price concept is
implemented in the R/3 System

 SAP AG 1999

(C) SAP AG AC040 3-39

 Managing a Global Enterprise

USA E
J
III I I I
MEX

Executive Board
RA
l Globalization and international cooperation
l Stronger division of tasks among companies in a group
l Complex value-added chains
l Decentralization of responsibilities

 SAP AG 1999

n Particularly large corporations are often divided into a number of independent operating divisions or
companies that exchange large quantities of goods and services with one another. Transfer prices are
becoming an increasingly important method for controlling corporate units as the division of labor
between international operating units increases, value-added chains become more complex, and
responsibilities become more decentralized.
n By valuing the exchange of goods and services using transfer prices, you can significantly influence
the operating results of your corporate divisions or profit centers.
n Here is a simple example :
Company A sells a product to Company B, realizing a profit that must be included in its financial
operating results. But if Company A and Company B both belong to the same corporate group, from
the group point of view, this sale is only an internal inventory transfer, and no group (internal) profits
are realized as a result of the transfer. These internal profits can also arise when the exchange is
between two profit centers instead of two independent companies of the group.

(C) SAP AG AC040 3-40

 Different Views of a Corporation

Group Corporate
View
TP
Company
Companycode
code 11 TP
Legal view
Production Company
Companycode
code 22
Semifinished goods
Production Company
Companycode
code 33
Finished goods
Sales
companies
TP Internal
TP TP
Division
Division11 View
Profit center Division
Division22
Division
Division33 Division
Division44

 SAP AG 1999

n Different decision-makers in a company need different types of information.

n For this reason, those responsible for the individual companies in a group require profitability data to
be presented from the viewpoint of each company code, and to match the income statement used for
external reporting.
n For the group head office, the group as a whole is generally the most important view. This means
that the basis for decision-making requires the group to be represented as a consolidated business
unit, with inter-company profits eliminated.
n If profit centers are to be run as independent companies, each profit center manager requires
information comparable to that required for a company in the group. In that case, sales between
profit centers are treated as sales between two independent units, rather than an internal inventory
transfer.

(C) SAP AG AC040 3-41

 Parallel Valuation Views

Group

Group Legal Profit Center

Group
Company 1 Company 1 Company 1

Profit Center 1

Profit Center 2

 SAP AG 1999

n The view of the individual company and the valuation of business transactions according to legal
reporting requirements represents only one of several possible perspectives. Balance sheet and tax
considerations play an important role in the financial statements of the individual companies.
n In addition to this legal view, though, successful corporate and group management need information
that shows business activities from the point of view of the whole group or of individual profit
centers.
n Corporate controlling for the entire group requires you to value these business transactions using
group production costs. In many groups the management structures do not correspond to the
individual legal accounting units. Internal prices guide the activities of the individual profit centers
according to market principles. Consequently, value flows represented from the point of view of
profit centers are vital for the purposes of internal management and profitability.

(C) SAP AG AC040 3-42

 Overview Of Controlling: Unit Summary

Having completed this UNIT,

you should now be able to:

l Explain the differences between Internal and

External Accounting.
l Explain how CO helps manage a business and use
some standard CO reports .
l List the components of CO and explain their purpose.
l Explain the basic integration points between the
components of CO.
l Explain the basic integration points between CO and
other R/3 modules.
l Explain the Transfer Price Concept in R/3.

 SAP AG 1999

(C) SAP AG AC040 3-43

Exercise: Overview of Controlling
Data Used in Exercises
You will create most of the data you will use in the exercises. When creating
data, use the following key:

Where you see: Substitute:

## Your group number (01, 02, …, 19, 20)

Use the following additional information in the exercises:

Data Used in Exercises
Data Data in Training System Data in IDES System
Operating concern IDEA IDEA
Controlling area 1000 1000
Company code 1000 1000
Business area 9900 9900
Business area 1000 1000
Profit center 1010 1010
Profit center 1400 1400
CCtr standard HAC040
hierarchy node
Cost center 4230 4230
Cost center AC040-SERV
Cost center PROD00
Cost element group OAS OAS
Cost element 403000 403000
Cost element 415000 415000
Cost element 417000 417000
Cost element 420000 420000
Cost element 475000 475000
Cost element 800000 800000
Cost element 615000 615000
Cost element 631300 631300
G/L cash account 113100 113100
Activity type 1421 1421
Material T-F100 P-100

(C) SAP AG AC040 3-44

Material T-F1##
Material T-T200
Material T-SERVICE
Base planning object T-SERVICE
Order type 0400 0400
Statistical order type 1000 1000
Vendor 1000 1000
Purchasing 1000 1000
organization
Purchasing group 000 000
Plant 1000 1000
Storage location 0001 0001
Division 00 00
Division 01 01
Sales organization 1000 1000
Distribution channel 10 10
Customer 1000 1000
Personnel number 7017 7017
Contribution Margin AC040
Report

Record certain data which you create in the exercises in the table for reference in
subsequent exercises.
Participant Data
Description Number

Trade Fair Order ________________________________________

Production Order ________________________________________

(C) SAP AG AC040 3-45

 Unit: Overview of Controlling
Topic: The Components of Controlling

• Describe the purpose of each component of Controlling.

To provide data for different purposes and different users, you can use the
various components in Controlling to focus on the appropriate objects.

1-1 What components of Controlling (CO) and Enterprise Controlling (EC) were
discussed in this unit?
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________

1-2 Briefly, what is the purpose of each component?

______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
(C) SAP AG AC040 3-46
 ______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________

(C) SAP AG AC040 3-47

Solution: Overview of Controlling

Unit: Overview of Controlling

Topic: The Components of Controlling

• Describe the purpose of each component of Controlling.

To provide data for different purposes and different users, you can use the
various components in Controlling to focus on the appropriate objects.

1-1 What components of Controlling (CO) and Enterprise Controlling (EC) were
discussed in this unit?
Overhead Cost Controlling (CO):
- Cost and Revenue Element Accounting
- Cost Center Accounting
- Overhead Order Accounting
- Activity-Based Costing
Product Cost Controlling (CO):
- Product Cost Planning
- Cost Object Controlling
- Actual Costing/Material Ledger
Profitability Management:
- Profitability Analysis (CO)
- Profit Center Accounting (EC)

1-2 Briefly, what is the purpose of each component?

Cost and Revenue Element Accounting provides the structure for assignment of CO
data through the classification of transaction line items according to the nature of
the cost or revenue being posted.
Cost Center Accounting tracks where costs occur in your organization.
Overhead Order Accounting (internal orders) describes costs for individual jobs
(conducting a trade fair, building a storage facility) or ongoing activity (periodic
maintenance of Administration building, operating & maintenance costs for a
vehicle) within a controlling area.
(C) SAP AG AC040 3-48
 Activity-Based Costing provides a business process-oriented view of the organization.
It provides greater transparency (or visibility ) of the activities performed within your
company, and the associated costs of those activities.
Product Cost Planning is the tool used to create cost estimates for production of
materials or services.
Cost Object Controlling focuses on tracking actual production costs and performing
period-end closing activities related to the production effort.
Actual Costing/Material Ledger calculates actual costs for each material at the end
of the period.
Profitability Analysis enables you to analyze profits and contribution margins for
market segments of your company. The objective is to support sales, product
management, and corporate-wide planning and decision-making, using an external
view from a market-oriented perspective.
Profit Center Accounting allows you to calculate internal measurements of
profitability. This view reflects the success of a given profit center at meeting the
profitability goals for which it was given responsibility.

(C) SAP AG AC040 3-49

0
Reflecting Your Business in CO: Unit Contents

 Organizational Units and Structures

 Basic Data and Structures

 SAP AG 1999

(C) SAP AG AC040 4-1

0.2
Reflecting Your Business in CO: Unit Objectives

At the conclusion of this UNIT,

you will be able to:
 Identify the basic organizational structures
which are relevant to CO, and the relationships
between them.
 Name examples of master data which are
relevant to CO, and their purpose.
 List at least three ways in which groups of
master data can be used.

 SAP AG 1999

(C) SAP AG AC040 4-2

0.3
You Are Here!

FI
MM CO
HR
$$ CO
+ABC SD AA 1 12
$
Planning and Postings to CO 
t Plan Integration From Other Modules $
Event-Based
Reporting Tools
Postings in CO

AC040 1 12
OM PC Profit
OM PC Profit FI CO
Reflecting Your Period-End
Business in CO Postings in CO

INT EXT
OM PC Profit “Which
FI MM HR AA SD
Button?”
Overview of CO AcceleratedSAP

Getting Started Course Review

 SAP AG 1999

(C) SAP AG AC040 4-3

0.4
Reflecting Your Business in CO: BusinessScenario

 Each company has a given organizational structure that must

be reflected in the R/3 system. You are responsible for
reviewing the decisions made by the implementation team in
this area.
 Since your company has elected to utilize all CO components,
you must familiarize yourself with the basic organizational
structures available in CO. Your analysis must focus on
whether the appropriate relationships have been defined to
support the company’s key information requirements.
 This analysis will begin with the relationship between
controlling area and company code, and continue with the
definition of areas of responsibility, such as cost centers and
profit centers. It will also include the production function, and
the analysis of profitability for key market segments. This will
require an understanding of the various types of master
records used in CO.

 SAP AG 1999

(C) SAP AG AC040 4-4

0.5
Organizational Units and Structures

At the conclusion of this TOPIC,

you will be able to:

 Identify the basic organizational structures which

are relevant to CO.
 Define the relationships between those
organizational structures.

 SAP AG 1999

(C) SAP AG AC040 4-5

0.6
Organizational Units

CO-
CO-
Operating Concern
PA

CO-
CO- CO-
CO- EC-
EC-
Controlling Area OM PC PCA

Focus on External
Company Code
Accounting

Sales Organization Focus on Sales

A
A A

Plant Focus on Manufacturing

 SAP AG 1999

 The Controlling Area is the fundamental organizational unit in Controlling. A controlling area
represents a closed system for cost accounting purposes. Cost allocations can only be performed
within a controlling area. They cannot involve objects in different controlling areas. Several
company codes may be assigned to one controlling area, which gives the ability to perform cross-
company-code controlling.
 Note: The controlling area and its assigned company codes must always use the same operating
chart of accounts and must have the same fiscal year (only the number of special periods can be
different).
 Profitability Analysis (CO-PA) is performed within the Operating Concern. It is an organizational
unit representing the structure of external market segments for the enterprise. You can assign several
controlling areas to an operating concern to analyze them together.
 The company code is an independent accounting unit. Balance sheets and profit and loss statements
are prepared at the company code level to satisfy legal reporting requirements.
 The plant represents a production facility. It is an important organizational unit in the SAP R/3
Materials Management and Production Planning application components. Plants are assigned to
company codes when organizational structures are defined.

(C) SAP AG AC040 4-6

0.7
Multiple Assignment

CO Profitability
Profitability EC-
PA Analysis
Analysis Operating Concern  Currency: EURO PCA

CO

Profit Center Accounting

CO PC
OM

Controlling Area 1000

 Currency: EURO
 Chart of Accounts
- Operating: INT

FI Company Code 1000 Company Code 2000

 Currency: EURO  Currency: $
 Chart of Accounts  Chart of Accounts
- Operating: INT - Operating: INT
- Local: CAUS

 SAP AG 1999

 By assigning multiple company codes to a controlling area, you can perform cross-company-code
cost accounting. You can make allocations in CO that refer to more than one company code.
 In cross-company-code accounting, you assign a currency, a chart of accounts, and a fiscal year
variant to the controlling area.
 In cross-company-code cost accounting, the controlling area and company codes may have different
currencies. You can define the controlling area currency to be the same as one of the company code
currencies, or it can be different from the currency of any company code assigned to it.
 You may utilize three currencies in CO:
 Controlling area currency
 Company code currency OR object currency
In cross-company-code cost accounting, the object currency defaults from the company code
currency, and can not be modified. If there is only one company code assigned to the
controlling area, then the object currency is freely assignable for each controlling object (such
as cost center).
 Transaction Currency
The transaction currency is the currency in which a document is posted to CO.
 Multiple company codes from different countries can still be linked to a single controlling area, even
when some of the companies are required to produce country-specific external reports. All
companies within the controlling area have to use the same operating accounts, but these accounts
may be linked to country-specific accounts via the alternative account number field on the account
master record.
 The fiscal year variants assigned to the controlling area and assigned company codes can differ only
in the number of special periods.

(C) SAP AG AC040 4-7

0.8
Basic Data and Structures

At the conclusion of this TOPIC,

you will be able to:

 Name the types of the Master Data are used

within each of the components of CO.
 Define the purpose of each of these types
of Master Data.
 List at least three ways in which Groups of
Master Data can be used.

 SAP AG 1999

(C) SAP AG AC040 4-8

0.9
Accounts and Cost Elements

Example: International Chart of Accounts

Financial Accounting Financial Accounting
0 1 2 3 4 7 8 9
Current Non- Material Expense Finished Revenue/ Closing
financial opera- inventory and inventory
assets ting accounts semi-
and costs, finished changes/
short- revenue products current
term internal
capital activity

1 2 3 5 6
Current Non- Material Primary Secon- Secon- Revenue
financial opera- inventory cost dary dary
ting elements
assets ele- cost cost
costs, ments ele- ele-
and revenue ments ments
short-
term
capital Controlling

Profit Center Accounting

 SAP AG 1999

 The integration of the R/3 System requires you to create expense accounts in Financial Accounting
(FI) with corresponding primary cost elements in Controlling. This ensures that expenses in FI and
primary costs in CO can be reconciled. You must create the primary cost elements in FI as G/L
accounts before you can create them in CO.
 Postings with primary cost elements are made to cost-carrying controlling objects, such as cost
centers or internal orders. Examples of primary cost elements are material costs, salary & wage
costs, and utilities costs.
 Secondary cost elements are used exclusively in CO to identify internal cost flows, such as
assessments or settlements. They do not have corresponding general ledger accounts in FI and are
defined only in CO.
 If you analyze revenues in Controlling, the R/3 System records them as revenue elements, which are
simply a different category of primary cost element. Revenue postings are normally made to
Profitability Analysis and Profit Center Accounting. Revenues in Cost Center Accounting can be
treated as statistical only, which means they cannot be allocated elsewhere in CO.
 When you create a cost element master record, you must assign a cost element category. The
category determines the transactions for which you can use the cost element. For example, category
01 (general primary cost element) is used for the standard primary postings to CO from Financial
Accounting, Materials Management, or other R/3 modules.

(C) SAP AG AC040 4-9

0.10
Master Data in Overhead Cost Controlling

Overhead Cost Controlling Profit Center

Internal Accounting
Order
Cost Center

Process

Product Cost
Controlling Cost
Object
CO
Profit
Center
Profitability
Analysis
An

Profitability
Segment
 SAP AG 1999

(C) SAP AG AC040 4-10

0.11
Cost Center

Validity
Period

Communication Basic
Data Data

Cost Center

Address Indicators
Data

 SAP AG 1999

 The cost center master record contains several different categories of information. The header of the
master record includes the cost center ID, the controlling area to which the cost center is assigned,
and the validity date range for the cost center.
 Under the “Basic data” section, there are fields for the name and description of the cost center, the
person responsible for the cost center, and the department to which the cost center is assigned. The
next field is the “Cost center category”, which identifies the general business purpose of the cost
center, such as production, service, sales, admin, etc.
 The “Hierarchy area” field specifies the node of the standard hierarchy to which the cost center has
been assigned; it is a required field. The standard hierarchy is a control feature of Cost Center
Accounting; each controlling area must have a unique standard hierarchy which includes every cost
center created in that controlling area.
 The company code and business area fields reflect the close ties between CO and FI. If a controlling
area has multiple company codes, then each cost center must specify with which company code it is
linked. If business areas are used for that company code (as defined in FI), then a business area must
also be specified in the cost center master record.

(C) SAP AG AC040 4-11

0.12
Activity Type

Validity Basic
Period Data

Activity
Type

Output Indicator

 SAP AG 1999

 The activity type represents some form of productive output by a cost center. Common examples of
activity type would include labor hours or minutes of machine time. Activity types are used to
allocate costs from a sender cost center to another CO object (e.g. cost center, internal order,
production order, etc.) based on the number of units of the activity performed. A unit price is used to
value the activity quantity.
 The header information for the activity type master record is very similar to that of the cost center. It
includes the activity type ID, the controlling area to which the activity type is assigned, and the
validity period.
 The Basic data includes fields for the name and description. There is an “Activity unit” field that
specifies how the activity type will be measured (e.g. hours, days, seconds, etc.), and a “CCtr
categories” field that identifies which cost center categories may utilize the activity type for
allocations.
 The “Allocation default values” section of the master record defines various aspects of the activity
type relating to how it can be used in performing activity allocation. Two key fields included here
are the activity type category and the price indicator. The former specifies how the activity type may
be allocated (e.g. during or at the end of each accounting period), and the latter indicates how the
activity price is calculated.

(C) SAP AG AC040 4-12

0.13
Statistical Key Figure

 A measurable quantity that can be assigned to Cost Centers,

Activity Types, Overhead Orders, Business Processes and
Profit Centers
 Used as an allocation base (“Tracing Factor”) in overhead
cost allocations
 Two categories: Type 1 = Fixed, Type 2 = Totals
 Can be linked to Logistics Information System (LIS)

Periods 1 2 3 . . . 12
Type 01 Employees 20 20 20 20
Type 02 Electricity Use 1300 1355 1275 1325

 SAP AG 1999

 Statistical key figures define some measurable value applicable to cost centers, profit centers,
internal orders, or processes. Examples could include total number of employees in a cost center,
minutes of long-distance phone calls, number of employees in the Transportation cost center who
perform vehicle repairs, etc.
 You can post both plan and actual values for statistical key figures.
 You can use statistical key figures as an allocation base (“tracing factor” in CO terminology) for
periodic allocation transactions, such as distributions or assessments, as well as for analysis purposes
(e.g. to calculate the rent cost per employee).
 You define a statistical key figure as a fixed value or a totals value:
 The fixed value is carried over from the period in which it is posted to all subsequent periods of
the same fiscal year. This is useful for statistical key figures that tend to remain constant over
time (such as the number of employees). You enter a new posting only when the value changes.
 The totals value is not transferred to the following period but must be entered for each individual
period. This is preferable for statistical key figures whose values tend to change each period (such
as kilowatt hours of electricity consumption).
 You can also transfer statistical key figure values from the Logistics Information System (LIS). This
is accomplished by linking a key figure from LIS to a statistical key figure in Cost Center
Accounting.

(C) SAP AG AC040 4-13

0.14
Internal Order

Order
Type

General
Assignments
Data
Internal
Order

Period-End
Control Data
Closing details
 SAP AG 1999

 Internal orders are used to plan, collect, monitor, and settle the costs of specific operations and tasks
performed within a company. The SAP R/3-System allows you to control your internal orders
throughout their entire life-cycle from initial creation through the planning and posting of actual
costs right up to final settlement.
 Internal orders can be used for different purposes. This functional classification is reflected in the
different order types, which define the way orders are processed in the system. The general
categories of internal orders include overhead orders, investment orders, accrual orders, and orders
with revenue.
 Perhaps the single most important field in the order master record is the order type. Orders are
subdivided into different order types depending on their purpose. The order type determines default
values for the various master record data fields, and defines certain order characteristics, such as
settings for settlement, planning, and budgeting.
 The master record of an internal order has several different sections, consisting of tab pages with
predefined groups of fields in each. You can change the titles of the tab pages in Customizing as
well as assign fields individually to the tab pages.

(C) SAP AG AC040 4-14

0.15
Business Process

Basic Organizational
Data Units

Business
Process

Allocation Attributes

 SAP AG 1999

 A business process describes a procedure or series of actions within an organization that consumes
resources and may cross internal organizational boundaries.
 A process in ABC is not "tied" to any specific cost center. It is a cross-functional CO object which
can receive costs from multiple cost centers with different functional responsibilities.
 A process can also carry different types of attributes, such as “value added/non-value added”, which
provide an additional dimension to managing the processes within an Activity Based management
framework. When looking for ways to improve operating efficiency, a process identified as adding
low value would be an attractive candidate for cost reduction.
 The process master record header information includes the business process ID number and
description, the controlling area to which it is assigned, and the validity period.
 There are four major areas in the master record: Basic data, Organizational units, Attributes, and
Allocation.
 The Basic data area contains the text descriptions, name of the responsible person, the location
(node) of the process on the Standard Hierarchy, the company code and business area assignments,
currency for the process (object currency), and the profit center assignment. The business process
category is also included, which is used for default allocation purposes. And finally, the business
process template is identified, which provides detailed calculation instructions for process
allocations.
 The Organizational units area has fields for assigning the business process to a plant, sales area
(combination of sales organization, distribution channel, and division), cost center, and cost center
group.

(C) SAP AG AC040 4-15

0.16
Master Data Groups

Cost Cost Activity Statistical Internal Business

Elements Centers Types Key Figures Orders Processes

Production
Personnel Motor Pool Hours Employees Trade Fair Sales

Order Cust.
Wages Salaries F1 F2 F3 PHR1 PHR2 Tenured Temps Domestic Foreign
Entry Care

 SAP AG 1999

 With master data groups, you can summarize or group together various types of master data in CO-
OM for use in analysis (reporting), planning, and allocations. These groups can be useful for
processing multiple master data records in a single transaction. For example, in a single cost
planning transaction you could enter plan data for all the cost elements used by your cost center by
creating an appropriate cost element group, and specifying it in the planning selection screen.
Similarly, you could produce a report summarizing the results for all the cost centers that you
manage by creating the cost center group, and then specifying it in your report definition.
 Master data groups can be “flat” (meaning all values are at the same level), or can incorporate a
hierarchical structure. When using these groups in reporting, each hierarchical level can produce
automatic totals of the levels beneath it. The master data itself is assigned to the lowest level nodes
in the structure. The R/3 System checks that a value (cost center, cost element, activity type, etc.) is
represented only once in the group. You can create as many different groups as are required to
support your business. A given value can appear in multiple different groups.
 The cost center standard hierarchy is a special type of cost center group. Each controlling area must
have a unique standard hierarchy. All cost centers in that controlling area must be assigned to a node
on the standard hierarchy.
 A master data group name may be used only once in a client. If, for example, you create a cost
center group named “Utilities”, you cannot use this name for any other group, whether it is a cost
center group, cost element group, etc.

(C) SAP AG AC040 4-16

0.17
Master Data in Product Cost Controlling

Overhead Cost Controlling

Profit Center
Internal Accounting
Order
Cost Center

Process

Product Cost
Controlling Cost
Object
CO
Profit
Center
Profitability
Analysis
An

Profitability
Segment
 SAP AG 1999

(C) SAP AG AC040 4-17

0.18
Master Data Structures in CO-PC

BOM The Bill of Material is a complete,

formally structured list of the components
that make up a product or assembly.

A work center is a physical location

at which an operation is carried out.
Each work center is assigned to a cost center.

Routing
A routing describes a sequence
of processing steps and determines the
activity quantities used from cost center accounting.

 SAP AG 1999

 A Bill Of Material (BOM) is a complete, formally structured list of the components that make up a
product or assembly. The list contains the material number of each component, together with the
quantity and unit of measure. The components are known as BOM items. A BOM can include
materials that have their own BOMs.
 The work center is the physical location at which an operation is carried out. When the master
record for a work center is created in PP, it is linked to a cost center, and also the various activity
types produced by the cost center. This link allows access to the activity type unit prices, which are
used in valuing labor (or machine time) supplied by the cost centers in a production process.
 The Routing lists the specific steps required to manufacture a product. These “steps” are called
operations. The routing specifies the following for each operation:
 the work center which carries out the operation
 the default values used for calculating dates, capacities and production costs
 whether the costs of an operation are taken into account for costing
 the material components needed to carry out an operation

(C) SAP AG AC040 4-18

0.19
Product Cost Controlling by Order

When to Use?
 Very flexible production
environment
Lot
Lot  High set-up costs
 Full cost tracing needed
Work center 2
Lot  Controlling by individual
Work center 1 production lots needed

Production Order  Example:

M Order related production
Work center 3

 SAP AG 1999

 Order-related production is lot-based production to stock. Cost Object Controlling in order-related

production provides information about a production order whose costs are settled to stock. Cost
Object Controlling in order-related production can be used with or without the Production Planning
module.
 For each production order, you can
 Calculate planned and actual costs
 Pass on actual costs to other objects in the R/3 System
 Analyze planned and actual costs
 The functions for order-related production allow you to do the following:
 Find out which costs were incurred for production orders that have not yet been settled, and pass
on the work in process for each order to Financial Accounting and Profit Center Accounting at the
end of each period.
 Find out which production variances occurred for each order and pass these values on to FI,
Profitability Analysis, and Profit Center Accounting as costs for the period.
 Find out which costs were incurred for scrap and pass these values on to FI, Profitability Analysis,
and Profit Center Accounting as costs for the period.
 Total the costs for all production orders with specific selection criteria and display the results in a
summarized form.

(C) SAP AG AC040 4-19

0.20
Product Cost Controlling by Period

Line am-
am-line1 When to Use ?
 High volume production
am-
am-100 am-
am-200
 Stable and continuous production
am-
am-110 am-
am-120 am-
am-210 am-
am-220
 No individual lot oriented
controlling needed
 Collecting costs on
product cost collectors
 Example: Repetitive production

Cost Collector
M

 SAP AG 1999

 Repetitive manufacturing refers to production planning and control using run schedule headers that
deliver the semifinished and finished products to stock.
 The planned requirements for repetitive manufacturing are normally generated automatically by
material requirements planning (MRP), although they can also be created manually. Production
planning and control uses the planned orders for capacity planning and scheduling.
 In contrast to order-related production, the planned orders are not converted into run schedule
headers using the lot size. Instead, the planned requirements are defined on run schedule headers.
Run schedule headers are not based on lots, but exist over a period of time defined by the user.
Under some circumstances this period can be the entire life cycle of the product.

(C) SAP AG AC040 4-20

0.21
Product Cost by Sales Order

 When to Use ?
 Collecting costs and revenues
Sales Order M
collected by Sales Order
irrespective of manufacturing
scenario
 Collecting special sales costs on
sales orders
 Tracking funds committed
 Calculating Work in Process and
Reserves with Results Analysis
 Example: Controlling complex
Make-to-Order Production

 SAP AG 1999

 The Product Cost by Sales Order component is recommended for make-to-order environments.
 You can use the Product Cost by Sales Order component in the following situations:
 When you are manufacturing in-house with reference to a sales order.
 When you are purchasing products with reference to a sales order and reselling them to your
customers.
 When you are providing services whose costs are assigned to a sales order.
 This component allows you to do the following:
 Calculate and analyze planned costs and actual costs by sales order item
 Calculate and analyze planned revenues and actual revenues by sales order item
 Calculate the value of your inventories of finished and unfinished products
 Create reserves automatically
 Transfer data to Financial Accounting (FI)
 Transfer data to Profitability Analysis (CO-PA)
 Transfer data to Profit Center Accounting (EC-PCA)

(C) SAP AG AC040 4-21

0.22
Master Data in Profitability Management

Overhead Cost Controlling

Profit Center
Internal Accounting
Order
Cost Center

Process

Product Cost
Controlling Cost
Object
CO
Profit
Center
Profitability
Analysis
An

Profitability
Segment
 SAP AG 1999

(C) SAP AG AC040 4-22

0.23
Types of Profitability Analysis

Costing-Based Account-Based

Value Fields Cost and Revenue Elements

Revenues 1,000,000 800000 Revenues 1,000,000
Sales deductions 100,000 808000 Sales deductions 100,000
-------------- --------------
Net revenues 900,000 Net revenues 900,000
Var. material costs 400,000 893000 Cost of sales 690,000
Var. production costs 190,000 231000 Price differences
Prod. variances 10,000 10,000
--------------
Contribution margin 1 300,000
Material overhead 50,000
Production overhead 50,000
--------------
Contribution margin 2 200,000
Research & develop. 10,000 651000 Research & develop. 10,000
Marketing 50,000 671000 Marketing 50,000
Sales and administration 40,000 655000 Sales and Administration 40,000
-------------- --------------
Contribution margin 3 100,000 Result 100,000

 SAP AG 1999

 Costing-based Profitability Analysis:

 Reports display values by ‘value fields' (flexibly defined performance figures).
 Can be posted with estimated values, for example 'anticipated sales commissions'.
 Indirectly reconciles with Financial Accounting.
 Uses transaction data tables specific to CO-PA.
 Revenues and cost of sales are recognized simultaneously, when the billing document is created.
 Account-based Profitability Analysis:
 Reports display values by cost elements (CO revenue and cost accounts).
 Cannot be posted with estimated values.
 Reconciles directly with Financial Accounting at the account level.
 Shares data tables with other CO applications such as Cost Center Accounting.
 Revenues are posted to PA and FI simultaneously, when the billing document is created, whereas
cost of sales is updated at the time of goods issue.

(C) SAP AG AC040 4-23

0.24
Basic Concepts of CO-PA

Characteristics Values

W
Sales Region North

REGION
Product Prod1
Product Group Electronics

N
.
Customer Cust1 RP
Customer Grp Wholesale T .G

S
State Illinois C US
Sales Rep Miller Food Bicy. Elec.
PROD. GROUP

Value Fields
Revenue
Revenues 800
Discounts
Discounts 100
COGS
COGS 650
Profitability
segment
 SAP AG 1999

 Characteristics
 Answers the question: "What do I want to report on?”
 Examples: Divisions, Regions, Products, Customers
 Characteristic Values
 Answers the question: "What values can I have for these characteristics?”
 Examples: Southern Region; Northern Region, Western Region
 Profitability Segments
 Answers the question: "What is the specific segment of my sales market I wish to examine?”
 Example: Sales of product Prod1 to customer Cust1 in the Northern Region by sales rep Miller
 Value Fields
 Answers the question: "What performance measures do I want to track and analyze?”
 Examples: Gross Sales, Surcharges, Discounts, Cost-of-Sales, Gross Margin

(C) SAP AG AC040 4-24

0.25
Profit Center

Validity Company Code

Period Assignment

Profit Center

Address/ Basic
Communications Data
Data

 SAP AG 1999

 A profit center is assigned to a controlling area. When creating a profit center, you enter the name of
the profit center and the period of validity. Profit center master data is time-based; therefore, you
can create different data for different periods of time. You can copy the master data information from
an existing profit center.
 In the Basic data tab page (screen) you maintain the profit center name and description, the person
responsible, the department, and the Profit center group. The Profit center group defines the
location of the profit center in the standard hierarchy.
 By selecting the lock indicator in the Indicators tab page, you can lock the profit center against any
postings.
 By default, a profit center is assigned to all company codes assigned to the controlling area. You can
deselect certain company codes for a profit center by choosing Company codes. This setting is used
by functions in Consolidation (EC-CS). If the profit center is not assigned to a company code, the
system displays an error message whenever a posting is made to that profit center.
 You can enter more information about the profit center in the Address and Communication tab
pages.

(C) SAP AG AC040 4-25

0.26
Profit Center Assignments

Profitability
Segment

Cost center, Sales order

Business
process
Profit
Cost object Center Asset

Internal order,
Project Production order

Material

Profit Center

 SAP AG 1999

 When you implement Profit Center Accounting, you assign each object which incurs costs or
revenues in your system to a specific profit center. These assignments also make it possible to
display selected balance sheet items.
 The system automatically posts the data to Profit Center Accounting when it is posted to the original
object. Both actual and plan data from the assigned objects in Profit Center Accounting are updated
in this way.
 Cost centers, business processes, internal orders, projects, production orders, and cost objects have a
profit center assignment field in their master records.
 A project, such as the construction of a crane, usually involves several profit centers (design of the
motor, construction of the frame, and so on). Consequently, the various operational structures --
WBS element, network header and network -- are assigned separately to profit centers.
 Generally, revenue postings are transferred to Profit Center Accounting by determining the profit
center assignment from the master record of the material in the sales order item in SD. The
subsequent cost of goods sold posting is made to the same profit center when the delivery note is
created.
 Profitability segments do not have master records. A profitability segment is a combination of
characteristics, such as a customer, product, plant, distribution channel, and so on. One of these
characteristics is always the profit center. The profit center can be derived automatically from the
material/plant or other characteristics, or you can enter it manually.
 Assets are assigned to profit centers indirectly via the cost center stored in the asset master record.

(C) SAP AG AC040 4-26

0.27
Reflecting Your Business in CO : Unit Summary

Having completed this UNIT,

you should now be able to:

 Identify the basic organizational structures which

are relevant to CO, and the relationships between
them.
 Name examples of master data which are relevant
to CO, and their purpose.
 List at least three ways in which groups of
master data can be used.

 SAP AG 1999

(C) SAP AG AC040 4-27

0.28Exercise: Reflecting your business in CO

Unit: Reflecting Your Business in CO

Topic: Organizational Units and Structures

• Identify the basic organizational structures used in CO and understand

the relationship between them.

Each company has a given organizational structure, which must be

reflected in the system. Using the organizational units available in R/3,
you want to define a possible configuration for your company.

1-1 Think about how your company might best be reflected in the system by using
the organizational units explained in this unit. Draw the structure.

(C) SAP AG AC040 4-28

 Unit: Reflecting Your Business in CO
Topic: Basic Data and Structures

• Create CO master data.

• Use master data groups.

Depending on your requirements, you use different application

components to provide certain data. In these components you use master
data with which you can post, allocate, and plan revenues and costs. You
will create several Overhead Cost Controlling master records for
management of overhead costs.
To show the responsibility for costs, you split your company into different
cost responsibility areas, which are represented by cost centers. If you
also use profit centers, which are profit responsibility areas, you should
assign the cost center to the appropriate profit center.
Activity types represent a quantifiable output of a cost center. Only cost
centers can produce an activity type. Once an activity type master record
is created, it must be linked with a cost center in the cost center planning
process. The activity type can then be used in actual postings.
To support analysis, you can use statistical key figures, which are
measurable quantities that can be planned or posted as actual data on cost
centers and internal orders.
In addition to managing costs by organizational units (cost centers), you
may also want to manage costs for specific jobs or tasks that are
undertaken internally within your company. You will set up overhead
orders to collect these costs. Like cost centers, you should assign your
order to the appropriate profit center if you use profit centers. The order
costs will be transferred (settled) at the end of the accounting period to the
cost center responsible for the costs.

The first time that you access a Controlling function after logging on
the system, the Set Controlling Area screen is displayed. If this
appears, enter 1000 in the Controlling area field.

(C) SAP AG AC040 4-29

 2-1 Create a new cost element.

2-1-1 Create a secondary cost element 6200## in the CO Europe controlling

area (1000). Make sure that the cost element is valid for the entire fiscal
year. Name the cost element DAA Check Assets and assign the cost
element to category 43. Save the new cost element.

2-1-2 How can you use this cost element in the system?
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________

2-2 Create two cost centers in the CO Europe controlling area (1000) and the
German subsidiary company code (1000): an internal service cost center and a
production cost center. Make sure that the cost centers are valid for the entire
fiscal year and are assigned to the HAC040 node on the standard hierarchy.

2-2-1 Cost center SERV-##, Group ## Services, is a service cost center (cost
center category H), which will be assigned to business area 9900
(Corporate Other) and profit center 1400 (Internal Services). Save your
cost center master data.

2-2-2 Cost center PROD-##, Group ## Production, is a production cost

center (category F), which will be assigned to the Mechanical
engineering business area (1000) and the High Speed Pumps profit
center (1010). Save your cost center master data.

2-3 Create a cost center group containing your two new cost centers, so you
will be able to work with them collectively. Name your cost center
group CENTERS-##, with the description Group ## Cost Centers, and
assign your production and service cost centers (PROD-## and SERV-
##).

(C) SAP AG AC040 4-30

 2-4 Create two activity types to describe the productive output of your new service
cost center.

2-4-1 Display activity type 1421 in the system and review the master data
information.

2-4-2 Create activity type REP-##. You may copy from activity type 1421.
Make sure that your new activity type is valid for the entire year. This
activity type is for repair work on your group’s fixed assets, so its
name and description is Repair Group ##. The activity type category is
manual entry, manual allocation (category 1) and the allocation cost
element is DAA Repair Hours (615000).

2-4-3 Create activity type CHK-##. You may copy from activity type 1421.
Make sure that the activity type is valid for the entire year. This activity
type is for checking your group’s assets, so its name and description is
Check Assets Gr ##. The activity type category is manual entry,
manual allocation (category 1) and the allocation cost element is your
new cost element DAA Check Assets (6200##).

2-5 Create a fixed value statistical key figure EMPL##, Number of Employees to
record the number of employees in your cost centers. Use the unit of measure
for “Each” (EA).

2-6 Create an overhead order for detailed controlling of all costs related to a trade
fair in which the service cost center participates. The order costs will be settled
at the end of each accounting period to the service cost center.

2-6-1 Enter the master data information for the trade fair order. Use Order
type 0400 (Int. Order – Marketing). Name your order Trade Fair
Group ## and assign it to business area 9900 (Corporate Other) and
profit center 1400 (Internal Services). Identify your services cost center
(SERV-##) as the responsible cost center. Do NOT save your order yet.

(C) SAP AG AC040 4-31

 2-6-2 Create a periodic settlement rule to settle 100% of the actual costs
posted to the trade fair order to your services cost center (SERV-##).
Save the order. Record the order number and copy it to your Data
sheet.
______________________________________________________________

(C) SAP AG AC040 4-32

0.29Solution: Reflecting your business in CO

Unit: Reflecting Your Business in CO

Topic: Organizational Units and Structures

• Identify the basic organizational structures used in CO and understand

the relationship between them.

Each company has a given organizational structure, which must be

reflected in the system. Using the organizational units available in R/3,
you want to define a possible configuration for your company.

1-1 Think about how your company might best be reflected in the system by using
the organizational units explained in this unit. Draw the structure.
Responses will vary.

(C) SAP AG AC040 4-33

 Unit: Reflecting Your Business in CO
Topic: Basic Data and Structures

• Create CO master data.

• Use master data groups.

Depending on your requirements, you use different application

components to provide certain data. In these components you use master
data with which you can post, allocate, and plan revenues and costs. You
will create several Overhead Cost Controlling master records for
management of overhead costs.
To show the responsibility for costs, you split your company into different
cost responsibility areas, which are represented by cost centers. If you
also use profit centers, which are profit responsibility areas, you should
assign the cost center to the appropriate profit center.
Activity types represent a quantifiable output of a cost center. Only cost
centers can produce an activity type. Once an activity type master record
is created, it must be linked with a cost center in the cost center planning
process. The activity type can then be used in actual postings.
To support analysis, you can use statistical key figures, which are
measurable quantities that can be planned or posted as actual data on cost
centers and internal orders.
In addition to managing costs by organizational units (cost centers), you
may also want to manage costs for specific jobs or tasks that are
undertaken internally within your company. You will set up overhead
orders to collect these costs. Like cost centers, you should assign your
order to the appropriate profit center if you use profit centers. The order
costs will be transferred (settled) at the end of the accounting period to the
cost center responsible for the costs.

The first time that you access a Controlling function after logging on
the system, the Set Controlling Area screen is displayed. If this
appears, enter 1000 in the Controlling area field.

(C) SAP AG AC040 4-34

 2-1 Create a new cost element.

2-1-1 Create a secondary cost element 6200## in the CO Europe controlling

area (1000). Make sure that the cost element is valid for the entire fiscal
year. Name the cost element DAA Check Assets and assign the cost
element to category 43. Save the new cost element.
Menu path:
Accounting→Controlling→Cost Center Accounting→Master data→Cost
element→Individual processing→Create secondary
Enter 6200## in the Cost element field.
Enter the first day of the current fiscal year in the Valid from field.
Enter the last day of the current fiscal year in the To field.
Select Master Data..
Enter DAA Check Assets in the Name and Description fields.
Enter 43 in the CElem category field.
Select Save.

2-1-2 How can you use this cost element in the system?
By defining the cost element as a category 43 cost element, you determined
that it will be used for internal activity allocations. Internal activity
allocations result in the flow of costs from a cost center to other controlling
objects (cost centers, overhead orders, production orders, and so on) based on
the number of units of activity provided by the sender cost center to the
receiver. The allocated costs are posted using a category 43 cost element.

2-2 Create two cost centers in the CO Europe controlling area (1000) and the
German subsidiary company code (1000): an internal service cost center and a
production cost center. Make sure that the cost centers are valid for the entire
fiscal year and are assigned to the HAC040 node on the standard hierarchy.

2-2-1 Cost center SERV-##, Group ## Services, is a service cost center (cost
center category H), which will be assigned to business area 9900
(Corporate Other) and profit center 1400 (Internal Services). Save your
cost center master data.
Menu path:
Accounting→Controlling→ Cost Center Accounting →Master data→Cost
center→Individual processing→Create

Enter SERV-## in the Cost center field.

Enter the first day of the current fiscal year in the Valid from field.

Enter the last day of the current fiscal year in the To field.
(C) SAP AG AC040 4-35
 Select Master data.

Enter Group ## Services in the Name and Description fields.

Enter any name in the Person responsible field.

Enter H in the Cost center category field.

Enter HAC040 in the Hierarchy area field.

Enter 1000 in the Company code field.

Enter 9900 in the Business area field.

Enter 1400 in the Profit center field.

Select Save.

Remain in the Create Cost Center: Initial screen for the next exercise.

2-2-2 Cost center PROD-##, Group ## Production, is a production cost

center (category F), which will be assigned to the Mechanical
engineering business area (1000) and the High Speed Pumps profit
center (1010). Save your cost center master data.

Enter PROD-## in the Cost center field.

Select Master data. (Validity periods should remain from the first cost center.)

Enter Group ## Production in the Name and Description fields.

Enter any name in the Person responsible field.

Enter F in the Cost center category field.

Enter HAC040 in the Hierarchy area field.

Enter 1000 in the Company code field.

Enter 1000 in the Business area field.

Enter 1010 in the Profit center field.

Select Save.

(C) SAP AG AC040 4-36

 2-3 Create a cost center group containing your two new cost centers, so you will be
able to work with them collectively. Name your cost center group CENTERS-
##, with the description Group ## Cost Centers, and assign your production
and service cost centers (PROD-## and SERV-##).
Menu path:
Accounting→Controlling→ Cost Center Accounting →Master data→Cost center
group→Create

Enter CENTERS-## in the Cost center group field.

Select Hierarchy.

Enter Group ## Cost Centers in the description field.

Select Insert Cost Center.

Enter both PROD-## and SERV-## in the left column.

Select Save.

2-4 Create two activity types to describe the productive output of your new service
cost center.

2-4-1 Display activity type 1421 in the system and review the master data
information.
Menu path:
Accounting→Controlling→ Cost Center Accounting→Master data→Activity
type→Individual processing→Display

Enter 1421 in the Activity type field.

Select Master Data.

Review the master data information.

2-4-2 Create activity type REP-##. You may copy from activity type 1421.
Make sure that your new activity type is valid for the entire year. This
activity type is for repair work on your group’s fixed assets, so its
name and description is Repair Group ##. The activity type category is
manual entry, manual allocation (category 1) and the allocation cost
element is DAA Repair Hours (615000).
Menu path:
Accounting→Controlling→Cost Center Accounting→Master data→Activity
type→Individual processing→Create

Enter REP-## in the Activity type field.

Enter the first day of the current fiscal year in the Valid from field.

(C) SAP AG AC040 4-37

 Enter the last day of the current fiscal year in the To field.

Enter 1421 in the Copy from Activity type field.

Select Master Data.

Enter Repair Group ## in the Name and Description fields.

Verify that the ATyp category is 1.

Enter 615000 in the Allocation cost elem field.

Select Save.

Remain in the Create Activity Type: Initial screen for the next exercise.

2-4-3 Create activity type CHK-##. You may copy from activity type 1421.
Make sure that the activity type is valid for the entire year. This activity
type is for checking your group’s assets, so its name and description is
Check Assets Gr ##. The activity type category is manual entry,
manual allocation (category 1) and the allocation cost element is your
new cost element DAA Check Assets (6200##).

Enter CHK-## in the Activity type field.

Enter the first day of the current fiscal year in the Valid from field.

Enter the last day of the current fiscal year in the To field.

Enter 1421 in the Copy from Activity type field.

Select Master Data.

Enter Check Assets Gr ## in the Name and Description fields.

Verify that the ATyp category is 1.

Enter 6200## in the Allocation cost elem field.

Select Save.

2-5 Create a fixed value statistical key figure EMPL##, Number of Employees to
record the number of employees in your cost centers. Use the unit of measure
for “Each” (EA).
Menu path:
Accounting→Controlling→ Cost Center Accounting →Master data→Statistical key
figures→Individual processing→Create

Enter EMPL## in the Stat. key figure field.

Select Master data.

(C) SAP AG AC040 4-38

 Enter Number of Employees in the Name field.

Enter EA in the Stat. key fig. UnM. field.

(The setting should default to fixed value.)

Select Save.

2-6 Create an overhead order for detailed controlling of all costs related to a trade
fair in which the service cost center participates. The order costs will be settled
at the end of each accounting period to the service cost center.

2-6-1 Enter the master data information for the trade fair order. Use Order
type 0400 (Int. Order – Marketing). Name your order Trade Fair
Group ## and assign it to business area 9900 (Corporate Other) and
profit center 1400 (Internal Services). Identify your services cost center
(SERV-##) as the responsible cost center. Do NOT save your order yet.
Menu path:
Accounting→Controlling→Internal orders→Master data→Order→Create
Enter 0400 in the Order type field.
Select Master data.
Enter Trade Fair Group ## in the Short text field.
Enter 9900 in the Business area field.
Enter 1400 in the Profit center field.
Enter SERV-## in the Resp. cost cntr field.
Do NOT Save the order master record.

2-6-2 Create a periodic settlement rule to settle 100% of the actual costs
posted to the trade fair order to your services cost center (SERV-##).
Save the order. Record the order number and copy it to your Data
sheet.
Select Settlement rule.
Enter CTR in the Cat. field.
Enter SERV-## in the Settlement receivers field.
Enter 100 in the Percent field.
Enter PER in the Settle (Settlement type) field.
Select Save.
Record the order number.

(C) SAP AG AC040 4-39

0
Reporting Tools: Unit Contents

 Reporting Overview
 Report Writer Reporting
 Drilldown Reporting
 Reporting based on ABAP List Viewer (ALV)
 Defining Reports using Report Painter

 SAP AG 1999

(C) SAP AG AC040 5-1

0.2
Reporting Tools: Unit Objectives

At the conclusion of this UNIT,

you will be able to:
 Name the different reporting tools available
in Controlling.
 Explain the purpose and capability of each
reporting tool.

 SAP AG 1999

(C) SAP AG AC040 5-2

0.3
You Are Here!

FI
MM CO
HR
$$ CO
+ABC SD AA 1 12
$
Planning and Postings to CO 
t Plan Integration From Other Modules $
Event-Based
Reporting Tools Postings in CO

AC040 1 12
OM PC Profit
OM PC Profit FI CO
Reflecting Your Period-End
Business in CO Postings in CO

INT EXT
OM PC Profit “Which
FI MM HR AA SD
Button?”
Overview of CO AcceleratedSAP

Getting Started Course Review

 SAP AG 1999

(C) SAP AG AC040 5-3

0.4
Reporting Tools: Business Scenario

 The next stage of your system review involves the area

of reporting. You are very aware that reporting
requirements can vary substantially throughout an
organization.
 You talk with a number of different managers with
different information needs to assess the adequacy of
their current reports. You find that, in many cases, the
standard reports that were delivered with R/3 are
sufficient.
 But you also find that in some instances, custom
developed reports are required to meet specialized
needs. Depending on the type of report required, you
learn that there are several different reporting tools
available to create custom reports.

 SAP AG 1999

(C) SAP AG AC040 5-4

0.5
Which Reporting Tools are used in CO?

 Different Report Tools used

 Report Painter/Writer Reporting

 Drilldown Reporting

 Reporting based on
ABAP List Viewer (ALV)

 SAP AG 1999

 Several different reporting tools are used in the Controlling Information System. Every report tool
has its own features and range of applications.
 Report Painter allows you to create reports using data from CO and other R/3 application
components, which you can adapt to meet your individual requirements. Many of your reporting
requirements can already be met by using the standard reports provided by the various CO
application components. If these standard reports do not meet your reporting needs, Report Painter
enables you to define your specific reports quickly and easily.
 Report Painter fulfills a function similar to Report Writer, but is easier to use. Most of the functions
found in Report Writer have been built into Report Painter; however, you do not have to be familiar
with all Report Writer concepts (such as Sets) in order to use Report Painter.
 Drilldown reporting is used in Profitability Analysis (CO-PA) and in Product Cost Controlling
(CO-PC). This reporting tool uses characteristics to classify transaction data. Controlling area,
company code, customer, product group, order, and product are examples of characteristics. The
time reference (fiscal year, period) is also a characteristic. Key figures represent specific values of
the classified data. Examples of key figures include direct costs, sales, sales deductions, number of
employees, and sales quantity. You can perform calculations with key figures to derive values such
as sales per employee and contribution margin.
 The ABAP List Viewer standardizes and simplifies the operation of lists in the R/3 System. It is
used for line item reporting throughout CO. A uniform interface and list format is available for all
lists. It contains convenient features for the dynamic creation of display variants. Using display
variants, you can change the format of your list. You can choose fields to be added to the display,
change the order of the fields, and adjust the column width to suit your requirements

(C) SAP AG AC040 5-5

0.6
Report Selection

Information System
- Plan / actual comparisons
CCtr: Actual/Plan/Variance
Area: Cost Centers
Area: Cost Elements
CCtr: Current Period/Cumulated
+ Additional characteristics
+ Additional key figures
+ Actual / Actual Comparisons
+ Target / Actual Comparisons

 SAP AG 1999

 Data is evaluated in Controlling by means of reports that are provided in the standard system or that
you define yourself.
 You select reports in the information system using the report tree. The report tree contains all
reports in an application organized in a hierarchical tree structure.
 There is a separate standard report tree in each application area in Controlling. The standard reports
for each application area are assigned to the nodes of the relevant report tree.
 In addition to the report tree in the standard system, you can also define your own report tree to
which you can assign both standard reports and your own reports.

(C) SAP AG AC040 5-6

0.7
Report Painter/Report Writer

- Cost Element/Cost Center Actual/Target: Results Report

***** Cost Element/Cost Center Actual/Target *****
Reporting period . . . . 1 to 03 2000 Date 07.04.00
Cost Elements / Cost Centers Actual Costs Target Costs
Variance (abs)
** Other Administrative Costs 6,477,800.00 3,238,900.00 3,238,900.00 -
2210 Electricity 112,000.00 56,000.00 56,000.00 -
* 481000 Depreciation 112,000.00 56,000.00 56,000.00
** Imputed Costs 112,000.00 56,000.00 56,000.00
2110 Goods Receipt 566,000.00 283,000.00 283,000.00
2120 Warehouse, Receiving 849,000.00 424,500.00 424,500.00
2130 Warehouse, Shipping 1,414,999.84 707,499.92 707,499.92 -
2310 Admin Building 590,000.00 295,000.00 - 295,000.00
2320 Warehouse Building 900,000.00 450,000.00 - 450,000.00
2330 Production Building 1,340,000.00 670,000.00 - 670,000.00
* 511111 Assessment
2110 Goods Receipt 1,277,159.92 638,579.96 638,579.96 -

 SAP AG 1999

 In addition to standard reports, you can also use Report Painter and Report Writer to define your own
reports. You can then add these custom reports to your reporting tree.
 In the interactive information system, you can evaluate posted data immediately after its entry into
the SAP R/3 System, and follow its origins down to the document level. Both Report Painter and
Report Writer reports offer a variety of options to display, sort, filter, and summarize the data.
 Report Painter has similar capabilities to Report Writer, but is easier to use. Most of the functions of
Report Writer have been incorporated into Report Painter, but in general have been designed to be
more intuitive and end-user oriented.
 Report Painter reports can be edited by using Report Writer, but can then no longer be maintained
by Report Painter. Report Writer reports cannot be modified by Report Painter.
 When you use Report Painter to create your own reports, you define the report column and row
structure and general data selection. Report Painter can access the data out of an extract, directly out
of the data base, or out of an archive.
 The variation feature makes it possible to create an individual report for each element of a group that
you defined in the general data selection. For example, you can create an individual report for the
total summary node and each group node in a cost center hierarchy.
 All reports available online can be executed in the background at predefined times. This can be
particularly useful during a process such as period-end reporting, where multiple reports are
executed for various users throughout the organization. This feature allows you to process large
quantities of data during periods of lower system use.

(C) SAP AG AC040 5-7

0.8
Options Within Report Writer Reporting

Graphics Internet

Summation level
Export
** Debit
** Credit
** Overabsorption

Threshold value
Print

Number format
100.00 Callup Report
100
Sort Report Rows Hide/Show
Hide/Show Row

 SAP AG 1999

 After the Report Painter report has been executed, you have a variety of options to aid in the analysis
of the output. These assist in navigating through the data and in changing the report layout. You can
modify the report online to meet your specific requirements.

 Some of the most important of these additional functions can be found in function buttons in the
report output screen. Others are available through menu choices. Some examples of these functions
include:
 Downloading the report to your PC (for example, formatted transfer to MS Excel)
 Setting threshold values, to highlight or ignore certain rows of the executed report.
 Mailing reports using the Send function. The prerequisite is that you have saved the report in an
extract.
 Other functions include: sorting report rows, hiding or showing report rows, changing the number
format, entering a summation level to see only the totals, and producing graphical renditions of the
report data.

(C) SAP AG AC040 5-8

0.9
Drilldown Reporting Example

Sales Report: Divisions

Period 1 - 7, 1999
Characteristics Divisions Revenue Cost of Sales CM1
Customer Group 01 Cars 1,000,000 800,000 20%
Sales Organization 02 Cycles 250,000 150,000 16%
Material Group 03 Parts 100,000 70,000 30%
Division

Revenue - Divisions
Revenue 1,000,000
1000000
Cost of Sales 800,000
CM1 200,000 500000

CM1 % 20% 250000

Sales & Admin 50,000 0

Cars Cycles Parts

 SAP AG 1999

 In drilldown reporting you can summarize data according to the characteristics, and then drill down
interactively. At each level of the report, you can display the drilldown list (overview) or detailed
information (margin analysis).
 In the example above, the drilldown was executed with the characteristic “Region”, followed by
“Customer group”. From the first drilldown list, the region “North” was chosen for further analysis,
and both a detail and drilldown list produced. This second drilldown list shows overview profitability
information for each value of the next lower level characteristic (customer group). The detail list
shows detailed profitability information for all of “North”, without further breakdown to customer
group:

(C) SAP AG AC040 5-9

0.10
Options Within Drilldown Reporting

Other Reports
Currency Translation

Graphic

Print Customer Group

Microsoft Excel
01 Retail 1,000,000
02 Wholesale 2,500,000
03 Brokers 1,500,000
E-Mail 04 Mailorder 1,000,000 Microsoft Word

Attributes Hierarchies
Street Adress
Display
City, State
Master Data

 SAP AG 1999

 The functions of drilldown reporting are divided into three levels so that you can give each user only
those functions that he or she requires.
 Level 1 contains the basic functions of drilldown reporting, plus it lets you send reports by SAPmail.
This level is designed for users who do not require the full functionality of drilldown reporting.
 Level 2 contains the rest of the drilldown functions, plus it lets you display graphics and download
reports to Microsoft Excel.
 All functions offers you all the functions in drilldown reporting, including the print setup function
and the functions for saving report data and defining exceptions. This level is designed for users who
need to print and modify reports in addition to all the interactive drilldown functions.
 You can define the desired level for each user by entering the parameter RLV (0 = All functions, 1 =
Level 1, 2 = Level 2) in his or her user parameters.
 Remember: The individual function levels are are subjected to an authorization check.

(C) SAP AG AC040 5-10

0.11
Interactive Information System

Account Actual Cost Plan Cost Var.(abs.) Var. (%)

470000 Rent 100,000.- 100,000.-

CO-
CO-Documents
470000 Rent 60,000 Cost Center
470000 Rent 30,000 Cost Center
470000 Rent 10,000 Cost Center

FI-Document

Debit 470000 Rent 10,000

Credit 113100 Bank 10,000-

 SAP AG 1999

 Every individual transaction is automatically summarized in totals records. This summarization

takes place in the R/3 System according to object/account, and provides a quicker evaluation of the
data. You can analyze the totals record data using the information system. You can also analyze
line items using a line item report by using the drilldown feature from the totals report. You can also
branch from a line item to the original documents that created it.
 Original document display
To display the original document in the application area that originated the CO posting you are
analyzing, click on the line item to select it, and choose the Source document button, or the menu
path Environment > Source document. Or you can simply double-click on the desired document
line. For example, if a document line item originated in Financial Accounting (FI), with a primary
posting to a cost center in CO, the system displays the FI document.
 Display Accounting documents (actual line items only)
When you select a line item and choose the menu path Environment > Accounting documents, the
system displays a dialog box containing a list of the accounting documents that were created in
connection with the corresponding line item. In the example above (primary posting to a cost center
in FI), these would be the FI document, the CO document, the profit center document and possibly
other documents (such as Special purpose ledger and Consolidation document).

(C) SAP AG AC040 5-11

0.12
Line-Item Reports (ABAP List Viewer)

Unit CCtr CElem Total Quantity Entered Unit

4220 619000 819.083 h
Cost element 4220 619000 105.500 h
4220 620000 1001.000 h
Value 4220 620000 1476.111 h
4230 619000 105.500 h
Cost center 4230 619000 77.747 h
4230 619000 1102.800 h
Currency 4230 620000 35.001 h
4230 620000 3.125 h
Total quantity entered 4230 625000 10.000 h
4230 625000 5.500 h
4230 625000 82.030 h

 SAP AG 1999

 The R/3 System offers several standard line item display variants. The display variant controls how
the line item information is displayed on the screen. If you wish, you can change the line item fields
that are displayed, and the sequence in which they appear. You can save these settings to create your
own display variants.
 Depending on the width of a column, the R/3 System automatically displays the short text version or
the long text version of the field name, using your logon language, if available for the report.
 Once you have executed a line item report, you have the following display options:
 Horizontal scrolling by column
 Hide/show columns
 Change order of columns
 Sort list according to certain criteria
 Totals for value columns
 Subtotals for each object in a column
 Original document display
 Filter Function
 Source Document Display

(C) SAP AG AC040 5-12

0.13
Reporting Tools: Unit Summary

Having completed this UNIT,

you should now be able to:
 Name the different reporting tools available
in Controlling.
 Explain the purpose and capability of each
reporting tool.

 SAP AG 1999

(C) SAP AG AC040 5-13

0.14Exercise: Reporting Tools

Unit: Reporting Tools

Topic: Reporting Overview

• Using different reports, the participants will see similarities and

differences between FI and CO related to the level of detail of the data

In a company, FI and CO are used together for managerial accounting, but

provide different levels of detail concerning focus and drill down
possibilities. While FI focuses on revenues and expenses at high levels,
CO provides detailed data for costs and revenues by the objects (cost
centers, orders, profit centers, and so on) that are originally responsible for
them.
You will process reports for the German subsidiary in the CO Europe
controlling area (IDES Worldwide operating concern) in the General
Ledger (FI), Profitability Analysis (CO), and Cost Center Accounting
(CO) in order to examine the different focus provided in each application
area.

1-1 Generate a Balance Sheet/P+L report in the General Ledger for the IDES
German subsidiary.

1-1-1 Process the Balance Sheet/P+L report for company code 1000. Using
the SAP minimal variant and the INT financial statement version,
generate a report in English for the current fiscal year, comparing back
to the previous fiscal year.

1-1-2 Focus on the sales revenue account 800000 and purchased services
expense account 417000. At what level of detail is revenue and expense
information provided on this Balance Sheet/P+L report?
______________________________________________________________
______________________________________________________________
______________________________________________________________

(C) SAP AG AC040 5-14

 1-2 Produce a report in Profitability Analysis for the IDES Worldwide operating
concern (IDEA). Process the Contribution Margin report AC040 for the current
fiscal year to view the results for different market views.

1-2-1 Drill down to view the results for the Hamburg plant (1000). What is
the gross revenue for this view?
______________________________________________________________

1-2-2 Drill down from the plant 1000 report to view division Pumps, material
P-100, and customer 1321. What is the actual gross revenue for this
view?
______________________________________________________________

1-2-3 From the overall report, drill down to view the results for the Pumps
division (01). What is the actual gross revenue for this view?
______________________________________________________________

1-3 Run a report in Cost Center Accounting for the CO Europe controlling area
(1000). Process the Cost centers: actual/plan/variance report for periods 1
through 12 of the current fiscal year and plan version 0. Execute the report for
the service cost center, AC040-SERV. At what level of detail is cost
information provided on this report?
______________________________________________________________
______________________________________________________________

When you exit from most of the Cost Center Accounting initial report
screens, the system will ask you if you want to generate an extract of the
report. Select No.

(C) SAP AG AC040 5-15

 Unit: Reporting Tools
Topic: Integration

• Students should gain an understanding of the integration in the system

by tracing a cost posting in CO back to the original FI transaction that
created it.

Whenever you post expenses in a module outside CO, if those expense

accounts have also been defined as costs in CO, a copy of this data is
transferred to CO. The costs will be posted to the specific object, such as
a cost center, that was responsible for them.

2-1 Look up a cost element in the service cost center AC040-SERV and examine
the posting documents related to this cost element.

2-1-1 Run a report in Cost Center Accounting for the CO Europe controlling
area (1000). Process the Cost centers: actual/plan/variance report for
periods 1 through 12 of the current fiscal year and plan version 0.
Execute the report for the service cost center, AC040-SERV.

2-1-2 Drill down on the report line for purchased services (cost element
417000) to view the actual line items that make up this balance. Drill
down on a line item to examine the document that recorded the business
event (source document). Review the other accounting documents
associated with this transaction.

(C) SAP AG AC040 5-16

0.15Solution: Reporting Tools

Unit: Reporting Tools

Topic: Reporting Overview

• Using different reports, the participants will see similarities and

differences between FI and CO related to the level of detail of the data

In a company, FI and CO are used together for managerial accounting, but

provide different levels of detail concerning focus and drill down
possibilities. While FI focuses on revenues and expenses at high levels,
CO provides detailed data for costs and revenues by the objects (cost
centers, orders, profit centers, and so on) that are originally responsible for
them.
You will process reports for the German subsidiary in the CO Europe
controlling area (IDES Worldwide operating concern) in the General
Ledger (FI), Profitability Analysis (CO), and Cost Center Accounting
(CO) in order to examine the different focus provided in each application
area.

1-1 Generate a Balance Sheet/P+L report in the General Ledger for the IDES
German subsidiary.

1-1-1 Process the Balance Sheet/P+L report for company code 1000. Using
the SAP minimal variant and the INT financial statement version,
generate a report in English for the current fiscal year, comparing back
to the previous fiscal year.
Menu path:
Accounting→Financial accounting→General ledger→ Information
system→General Ledger Reports→ Balance Sheet/P+L Statement/Cash Flow
→General→Actual/Actual Comparisons →SAP minimal variant
Enter 1000 in the Company code field.
Enter INT in the Financial statement version.
Enter EN in the Language field.
Enter the current fiscal year in the Reporting year field.
Enter the previous fiscal year in the Comparison year field.
Select Execute.

(C) SAP AG AC040 5-17

 1-1-2 Focus on the sales revenue account 800000 and purchased services expense
account 417000. At what level of detail is revenue and expense information
provided on this Balance Sheet/P+L report?
Select Edit→Find.
Enter 800000 in the Find field.
Select Find.
Double-click on the first selected entry for this account. Review the report
rows for revenue account 800000.
After reviewing this account, select Edit→Find again.
Enter 417000 in the Find field.
Select Find.
Double-click on the first entry for this account.

In this report, the revenue and expense information is displayed at the

company code/business area/account level.

1-2 Produce a report in Profitability Analysis for the IDES Worldwide operating
concern (IDEA). Process the Contribution Margin report AC040 for the
current fiscal year to view the results for different market views.

1-2-1 Drill down to view the results for the Hamburg plant (1000). What is
the gross revenue for this view?
Menu path:
Accounting→Controlling→Profitability analysis→Information
system→Execute report
In the Set Operating Concern screen, enter IDEA in the Operating concern
field.
Select Continue.
Enter AC040 in the Report field.
Select Execute.
Enter period 001/current fiscal year in the Period/YR From field.
Enter period 012/current fiscal year in the Period/YR To field.
Select Execute.
Click on Plant in the Navigation area.
Select Continue if the Drill-down: Callup for documentation for hotspots
screen is displayed.
Verify that plant 1000, Hamburg is displayed. If necessary, you can scroll
with the arrows or click on the magnifying glass to see the available plants.

(C) SAP AG AC040 5-18

 1-2-2 Drill down from the plant 1000 report to view division Pumps, material
P-100, and customer 1321. What is the actual gross revenue for this
view?
Click on Division.
Verify that division 01, Pumps is displayed.
Click on Product.
Click on the magnifying class icon to the left of the displayed product.
Double-click on P-100.
Click on Customer.
Verify that customer 1321 is displayed.

1-2-3 From the overall report, drill down to view the results for the Pumps
division (01). What is the actual gross revenue for this view?
Select Back (green arrow) in the Navigation area until you return to the
initial report.
Click on Division.

1-3 Run a report in Cost Center Accounting for the CO Europe controlling area
(1000). Process the Cost centers: actual/plan/variance report for periods 1
through 12 of the current fiscal year and plan version 0. Execute the report for
the service cost center, AC040-SERV. At what level of detail is cost
information provided on this report?
Menu path:
Accounting→Controlling→Cost Center Accounting→Information
system→Reports for Cost Center Accounting→Plan/actual
comparisons→CCtr: Actual/Plan/Variance
Enter 1000 in the Controlling area field.
Enter the current fiscal year in the Fiscal year field.
Enter 1 in the Period field.
Enter 12 in the To field.
Enter 0 in the Plan version field.
Enter the cost center AC040-SERV in the first Or value(s) field.
Execute the report.

In this report, cost information is displayed at the cost center (object) and cost
element level.

When you exit from most of the Cost Center Accounting initial report
screens, the system will ask you if you want to generate an extract of the
report. Select No.

(C) SAP AG AC040 5-19

 Unit: Reporting Tools
Topic: Integration

• Students should gain an understanding of the integration in the system

by tracing a cost posting in CO back to the original FI transaction that
created it.

Whenever you post expenses in a module outside CO, if those expense

accounts have also been defined as costs in CO, a copy of this data is
transferred to CO. The costs will be posted to the specific object, such as
a cost center, that was responsible for them.

2-1 Look up a cost element in the service cost center AC040-SERV and examine
the posting documents related to this cost element.

2-1-1 Run a report in Cost Center Accounting for the CO Europe controlling
area (1000). Process the Cost centers: actual/plan/variance report for
periods 1 through 12 of the current fiscal year and plan version 0.
Execute the report for the service cost center, AC040-SERV.
Menu path:
Accounting→Controlling→Cost Center Accounting→Information
system→Reports for Cost Center Accounting→Plan/actual
comparisons→CCtr: Actual/Plan/Variance
Enter 1000 in the Controlling area field.
Enter the current fiscal year in the Fiscal year field.
Enter 1 in the Period field.
Enter 12 in the To field.
Enter 0 in the Plan version field.
Enter AC040-SERV in the first Or value(s) field.
Execute the report.

(C) SAP AG AC040 5-20

 2-1-2 Drill down on the report line for purchased services (cost element 417000) to
view the actual line items that make up this balance. Drill down on a line item
to examine the document that recorded the business event (source document).
Review the other accounting documents associated with this transaction.
Double-click on the report line for cost element 417000.
Double-click on the Cost Centers: Actual Line Items report.
Click on the line item that you want to display in order to select it.
Select the Source document button to review the original FI (Accounting)
document.
Go Back to the Display Actual Line Items for Cost Centers screen.
Select the line item that you want to display.
Select Environment→Accounting documents to review the other accounting
documents generated by this business event.
Double-click on the document that you want to display.

(C) SAP AG AC040 5-21

0
Planning and Plan Integration: Unit Contents

 Introduction to Planning
 Planning Based on Different Costing Options
 Planning in Cost Center Accounting
 Integrated Planning Cycle
 Planning With ABC

 SAP AG 1999

(C) SAP AG AC040 6-1

0.2
Planning and Plan Integration: Unit Objectives

At the conclusion of this UNIT, you will be able to:

 Identify the most important costing options used

and the differences between them.
 Identify the application components that are
involved in the Integrated Planning Cycle, and
explain their roles.
 Explain how the Integrated Planning Cycle is used
in different industries.
 Identify the additional features and functionality
available when using ABC.
 Perform some basic planning functions.

 SAP AG 1999

(C) SAP AG AC040 6-2

0.3
You Are Here!

FI
MM CO
HR
$$ CO
+ABC SD AA 1 12
$
Planning and Postings to CO 
t Plan Integration From Other Modules $
Event-Based
Reporting Tools
Postings in CO

AC040 1 12
OM PC Profit
OM PC Profit FI CO
Reflecting Your Period-End
Business in CO Postings in CO

INT EXT
OM PC Profit “Which
FI MM HR AA SD
Button?”
Overview of CO AcceleratedSAP

Getting Started Course Review

 SAP AG 1999

(C) SAP AG AC040 6-3

0.4
Planning and Plan Integration: Business Scenario

 You now focus on the planning function. As it looks

ahead to the next year, your company has developed
operational estimates for costs, revenues, and
profitability. You are responsible for reviewing these
planned values, and ensuring that the integrated
planning process produced consistent and realistic
estimates.
 This cycle began with forecasting sales levels for the
various products and services offered. Then the
planning focus turned to estimating the costs that must
be incurred to produce/acquire those quantities of
products.
 Finally, the profitability planning phase matched the
planned revenues and costs to see if the planned
operating results are acceptable. You will check to see if
any additional planning cycle iterations are necessary.

 SAP AG 1999

(C) SAP AG AC040 6-4

0.5
Introduction to Planning

At the conclusion of this TOPIC,

you will be able to:

 Describe the extent of the current planning

activities within your organization.
 Explain how different plan versions can be used.

 SAP AG 1999

 Virtually every business organization performs some level of planning for future business operations.
The extent of this effort, however, and the way the planning results are utilized, can vary
dramatically from one enterprise to another.
 The best reason for planning is that it provides a baseline measurement against which actual
operating results can be matched. This offers improved capabilities to analyze and control aspects of
the business operations to achieve desired results.
 Planning results can be incorporated into a formal operating budget, or used as more of a general
guideline, depending on company philosophy and policies.

(C) SAP AG AC040 6-5

0.6
Planning: Goals

Planning of future business

activities and consideration of
changing business
circumstances

Forecasting to set periodic

controlling standards for:
 Valuation of internal
activities
 Monitoring efficiency
using “plan / actual” &
“target / actual” variance
analyses

 SAP AG 1999

 Planning is used to set organizational goals. The comparison of actual operating results with the plan
can identify variances that serve as signals to take corrective measures in the business operations.
 There are several basic goals in planning:
 Plan the structure of the company's future operations for particular periods
 Create benchmarks for controlling the business transactions within an accounting period
 Monitor efficiency after completion of the accounting period by means of plan/actual and
target/actual comparisons
 Give a basis for valuation of organizational activities, through estimating the unit cost of
performing a given activity in a given period
 To achieve these goals, the R/3 System offers a wide variety of options from which to choose.

(C) SAP AG AC040 6-6

0.7
Versions

 General version definition

 Settings in the Operating Concern

 Settings for Profit Center Accounting
 Settings in the Controlling Area
 Settings for fiscal year
 Activity Based Costing: Delta Versions

 SAP AG 1999

 A “version” can be thought of as a unique view of planned operating results, given a particular set of
assumptions. In the planning process, many different versions can be created, with different planned
values developed for each version. Each version is independent of all others.
 The SAP R/3 System automatically creates version 000 when you create a controlling area. All
actual values created from entering primary costs and allocating costs internally are posted in this
version. Consequently, version 000 must be used for plan/actual cost comparisons.
 Planning always take place within a plan version. A version is cross-application by nature. This
helps ensure that the integrated use of a particular version produces consistent results across
applications (for example, planning integration between Cost Center Accounting and Profit Center
Accounting).
 In the General version definition, each version is marked as being available for plan or actual
postings, or both. A given version can also have certain settings that apply individually to each
controlling area, and to each fiscal year, such as whether copying the version is allowed, or if
planned data for the version is locked (cannot be changed). In addition, other version settings impact
aspects of planning for Cost Center Accounting, Internal Order and Project Cost Accounting,
Profitability Analysis, and Activity-Based Costing.
 Actual postings are possible only in version 000. The only exception to this is that other actual
versions can be defined as delta versions used for the parallel model of Activity-Based Costing.
Additional actual versions are also created for alternative valuations when using transfer prices.

(C) SAP AG AC040 6-7

0.8
Copy Plan data and Actual data

Plan data Actual data

Plan 2000
Version 1 Actual 1999
Copy
Cost Centers
Prof. Segments
...

Plan data

Plan 2001
Version 1

 SAP AG 1999

 You can use the tool Copy Planning if you want to reuse large parts of your manual cost center
planning from a previous year for your current planning, or to copy plan values within a fiscal year
to a different period, or to generate alternate plan versions.
 Similarly, the tool Copy Actual to Plan allows you to utilize previous actual cost center data as the
reference for creating new plan data.
 To use the Copy Planning function, select a reference version and a target version.
 You can copy plan data:
 Within fiscal years, periods, versions, and cost centers
 Between different cost centers, fiscal years, periods, and versions
 You may select any set of values. For example, you may limit the selection of data to a particular
cost center, or you can select all cost centers. You can also choose to copy all plan data, or select
only particular types of planning data.
 With the Revaluation planning tool you can increase or decrease planning results on a percentage
basis. Therefore you can combine the Copy Planning and Revaluation functions to create several
plan versions. This may be useful after copying the plan data from the previous year or for
producing best-case and worst-case scenarios within a year. Plan line items are recorded during
revaluation execution.
 You may undertake as many revaluations of cost center and cost element planned values as required.
The percentages within a revaluation can be changed as often as desired. Repeated executions with
changed percentages cancel the old plan line items and always use the original initial value.

(C) SAP AG AC040 6-8

0.9
Planning Layouts

Activity Type/Activity Price Planning

Year 2000
Periods 1 to 12
Cost Center 4100 Technical Services
Activ. Type Planned Allocation
Activity Unit Price PPI Cost Element
MAINT 10000 H 35.00 3 612000
REPAIR 5000 H 60.00 3 615000

 SAP AG 1999

 You use planning layouts to specify your cost planning structure. You define the headings, lead
columns, and value columns, based on your specific business requirements. You do this for each
planning area. The planning areas are:
 Cost elements/activity input
 Activity types/prices
 Statistical key figures
 The standard R/3 System includes planning layouts for all planning areas. You can use these
standard planning layouts, copy and adapt them to your requirements, or create completely new
planning layouts.
 For each planning area you can create different planning layouts, which may have different lead
columns. The lead columns contain the objects to be planned. You can define multiple lead
columns. For example, a layout could be created with cost center and activity type defined as two
lead columns. The value columns would then be available to plan values for all cost center/activity
type combinations.

(C) SAP AG AC040 6-9

0.10
Organization of the planning screen

Planning areas Planning layouts Planner profiles

1-101 cost elements

activity indep./dep.
Cost elements / SAPALL CO planning:
1-102 activity input
activity inputs All planning areas
activity indep./dep.

Z0011 own layout for

activity input planning
SAPEASY CO-OM:
Activity types/prices 1-201 activity types Simple layouts
A0014 own layout for
activity type planning

1-201 stat.key figures P0001 Own profile

Statistical key figures CO-OM
S0010 own layout for
statistical key figures

 SAP AG 1999

 Entering Controlling (CO) plan data is accomplished with entry screens which can be structured as
desired in customizing. These entry screens are called planning layouts.
 In Cost Center Accounting there are three planning areas:
 cost element/activity input planning
 activity types/activity prices
 statistical key figures
 A planning layout is created for each one of the planning areas. The layout defines the lead columns
(characteristics for which you are entering plan values, such as cost center, cost element, and so on);
and arranges the value columns in which planned data is to be entered. SAP provides many
predefined standard layouts. Layout 1-101, for activity-independent and activity-dependent cost
element planning, is one of several shown above.
 Planning profiles are used to control the planning process. In a planner profile you can assign as
many planning layouts for each planning area as you like. One planning area can contain multiple
planning layouts. You can group planning layouts efficiently by assigning them to planner profiles.
During planning you can switch between planning layouts belonging to a given planning area of a
given planner profile, such as between layouts 1-101 and 1-102 in profile SAPALL.
 The R/3 System includes standard planner profiles and planning layouts that cover many possible
planning situations. The planner profile SAPALL enables you to plan the three planning areas with
several assigned SAP standard layouts. For simple planning SAP provides the planner profile
SAPEASY. You may also define your own profiles.

(C) SAP AG AC040 6-10

0.11
Planning Based on Different Costing Options

At the conclusion of this TOPIC,

you will be able to:
 Identify the most important costing options
used within the R/3 system.
 Explain the difference between these
costing options.
 Perform some basic planning functions
using these costing options.

 SAP AG 1999

(C) SAP AG AC040 6-11

0.12
Focus of the Different Costing Options

 Cost Allocations
 Only cost values are planned
 Enables Actual / Plan comparisons
 Internal Activity Allocations
 The Activity Types of a Cost Center
must be defined
 Activity type quantities are planned
 Activity type quantities can be scheduled and reconciled
 Activity type price can be set manually or calculated by the system
 Identifying Fixed and Variable Costs
 Based on activity-dependent and activity-independent cost planning
 Enables fixed and variable components in the activity type price
 Enables Target / Actual comparisons
 Marginal Costing (cost per additional unit)
 SAP AG 1999

 There are three primary costing options available in overhead cost planning: Cost Allocations,
Internal Activity Allocations, and Identifying Fixed and Variable Costs.

 These three options offer progressively greater detail and analytical capabilities, but also require
progressively more effort to implement and maintain. The choice of option depends on the level of
detail required.

 The choice of costing option does not have to be enterprise-wide. If less planning detail and
controlling precision is required for certain parts of an organization, a more basic costing option can
be utilized. For other areas of the organization requiring more sophisticated controlling capabilities,
a more advanced option could be appropriate.

(C) SAP AG AC040 6-12

0.13
Cost Allocations

Cost center
 Easiest way of planning
 Analyse: Planned/actual
comparison or actual/actual
comparison

Cost Center
Profitability segment

Process

Order,
Project

 SAP AG 1999

 When using the Cost Allocations costing option, planning is not required. But if planning is done,
only costs are planned. If costs are planned, then it will be possible to do analysis on actual costs
compared with planned costs.
 Plan costs can be entered manually or transferred from feeder systems such as Human Resources
(HR), Asset Management (AM), and the Logistics Information System (LIS).
 Several cost allocation tools can be utilized when planning costs. Distributions, assessments, and
surcharges can be defined and calculated for plan costs. These essentially simulate the allocations of
actual data that are anticipated for each period of the fiscal year being planned.

(C) SAP AG AC040 6-13

0.14
Activity Type Allocations

 Allocation of quantities
(Activity types)
Cost
center h  Valuation with prices
(plan price/actual price)
 Fixed and Variable costs /
activity unit
 Target/actual comparison &
extended variance analysis
Cost Profitability segment
center h
Process

Order,
project

Production
order

 SAP AG 1999

 When using the Activity Type Allocations costing option, planning is essential. Costs are planned,
as before, but activity type quantities are also planned. This refers to the number of units of each
activity type that is expected to be performed by a cost center.
 Since both costs and quantities of activity types are planned, it is possible to calculate a unit cost for
each activity type. This is referred to as the activity price. The system can calculate these activity
prices automatically once the planning has been completed. It is also possible to set activity prices
manually.
 Activity type allocations can now be planned. This is called activity input planning. It involves
planning the specific number of units of an activity type produced by a given cost center that will be
consumed by receiver cost centers (or internal orders). Activity input planning results in quantities
of activities “scheduled” to be consumed. This permits the manager of a cost center that produces
activity units to see what activity quantity will be required. Activity quantities planned to be
consumed by other cost centers, by planning integrated internal orders, and by production (via Sales
and Operations Planning) are visible through reporting. This visibility facilitates plan reconciliation
between activity quantities scheduled to be consumed and those planned to be produced by a cost
center.

(C) SAP AG AC040 6-14

0.15
Planning in Cost Center Accounting

At the end of this unit, you will be able to:

 Explain the purposes and methods of planning
statistical key figures
 Describe the goals of activity type planning

 Describe the cost allocation methods in planning

 List the typical sequence of steps in cost center

planning
 Describe simple and advanced planning options

 SAP AG 1999

(C) SAP AG AC040 6-15

0.16
Planning Statistical Key Figures

Cost Center
Administration

36 Employees

1200 Telephone Units

 SAP AG 1999

 You can plan statistical key figures in order to:

 Calculate ratios in cost centers, such as cost per employee
 Create receiver tracing factors (allocation factors) for periodic allocations (e.g. assessment,
distribution)
 There are two different types of statistical key figures:
 Fixed value
 Totals value
 If you plan a fixed value statistical key figure, such as Employees, you enter the quantity of
employees assigned to a cost center. The system displays the average value for all planned periods in
the overview screen. In the periodic screen you see the planned quantity for each period.
 If you plan a totals value statistical key figure, such as the number of long-distance calls, the entered
quantity is distributed to the periods according to the assigned distribution key.
 Statistical key figures can be planned directly on a cost center, or dependent on activity types. SAP
provides Standard-Layout 1-301 for activity-independent and Standard-Layout 1-302 for activity-
dependent statistical key figure planning. You can access both with the Standard-Profile SAPALL.
 You can also transfer statistical key figures from the Logistics Information System (LIS). (See the
slide “Transferring plan values to Cost Centers” in the Integrated Planning Cycle topic).

(C) SAP AG AC040 6-16

0.17
Primary Cost Planning

Cost Center: Production

Primary cost element Fixed costs

420000 Direct Labor Costs 300,000.00
421000 Indirect Labor Costs 100,000.00
430000 Salaries-Base Wages 130,000.00
452000 Machinery & Equipment 400,000.00
471000 Machinery Rental 50,000.00
481000 Estimated Depreciation 100,000.00
490000 . . . ...

 SAP AG 1999

 Activity-independent primary costs, classified by cost elements, are planned on cost centers by plan
version.
 If you plan activity-independent primary costs, you can only plan fixed costs. For cost centers using
activity types, these planned fixed costs are assigned to the activity types of the cost center based on
the equivalence numbers in the plan, or based on the plan splitting structure. In activity price
calculation these fixed costs are taken into account to calculate the fixed portion of the activity price.
 You can use the Standard-Layout 1-101 included in the Profile SAPALL to plan activity-
independent primary costs.

(C) SAP AG AC040 6-17

0.18
Cost Allocation Methods in Planning

Costs Cost Center

Periodic Reposting
Plan Distribution
Plan Assessment

Cost Center 1 Cost Center 2 Cost Center 3

 SAP AG 1999

 Periodic repostings are used purely as a posting aid.

 Primary postings (such as telephone costs) are collected on an allocation controlling object to
minimize the number of postings to FI. These costs are then allocated to the appropriate controlling
objects at period-end closing according to a user-defined key (fixed amounts or tracing factors). The
sender controlling object can be a cost center, internal order, or other object. You can specify the
allowed sender and receiver objects for periodic reposting in customizing.
 Only primary costs can be reposted. The original cost elements are retained on the postings to the
receivers.

 Distribution is intended for the transfer of primary costs from a sender cost center to receiver
controlling objects. Only cost centers may serve as senders in a distribution.
 Primary postings (such as energy costs) are collected on a service cost center and allocated according
to user-defined keys.
 Only primary costs can be distributed. The original cost elements are retained on the postings to the
receivers.

 Assessment is designed for the allocation of primary and secondary costs from a sender cost center
to receiver controlling objects. Only cost centers may serve as senders in an assessment.
 Primary and secondary postings are allocated according to user-defined keys.
 In the assessment framework, the original cost elements are grouped together into assessment cost
elements (secondary cost element category = 42). The relationship between original and assessment
cost elements is defined in an allocation structure.

(C) SAP AG AC040 6-18

0.19
Activity Type Planning

Cost Center: Production

Activity Type ”Machine Hours "

Planned quantity: 10,000 hrs
Capacity: 12,000 hrs
Activity price: Fixed _____ Variable _____
Cost element: 620 000

Activity Type ”Employee Hours "

Planned quantity: 800 hrs
Capacity: 1,000 hrs
Activity price: Fixed _____ Variable _____
Cost element: 625 000

...
 SAP AG 1999

 Activity types serve as a measurement of cost center performance. They describe the quantity output
of a cost center and can be used to determine an operating rate and target costs.
 Activity types are allocated under a secondary cost element, which is stored as a default value in the
activity type master record.
 The activity price is determined per cost center/activity type either manually or in automatic activity
price calculation:
 You can set manual activity prices for your cost center/activity type combination if the activity
price is fixed within your company and unaffected by any internal exchange of activities.
 In automatic activity price calculation, all primary and secondary costs planned as activity-
dependent or activity-independent for the appropriate cost centers are included in the activity
price.
 If several activity types are planned on a cost center, the activity-independent plan costs are
broken down (split) onto these activity types for activity price calculation. You can accomplish
this by entering equivalence numbers along with each planned activity type, or with plan cost
splitting.
 The unit price for an activity type is calculated by dividing planned costs for an activity by the
planned quantity of activity type units. Alternatively, the capacity of a cost center to produce a
given activity type can be used in calculating the fixed portion of the activity price.
 For activity type planning, SAP provides the Standard-Layout 1-201, assigned to the standard
planner profile SAPALL.

(C) SAP AG AC040 6-19

0.20
Activity-Dependent Primary Cost Planning

Cost Center: Production

Activity Type “Machine Hours” 1200 hrs

Primary cost elements Fixed costs Variable costs

420000 Direct Labor Costs 600,000.00 400,000.00
421000 Indirect Labor Costs 200,000.00 130,000.00
453000 Maintenance Costs 100,000.00 100,000.00
481000 Estim. Depreciation 300,000.00 270,000.00

Activity Type “Employee Hours” 800 hrs

420000 ...

 SAP AG 1999

 Activity-dependent primary cost planning enables you to plan primary costs on a cost center that are
dependent on the work performed by the cost center, in terms of activity type quantities.

 After completing activity type planning, you can plan the costs dependent on these activities in fixed
and variable portions. Variable costs are the costs incurred in proportion to the quantity of activity
produced. If the cost center produces several activities, you may plan fixed costs on the basis of the
individual activity types, along with the activity-independent costs already planned on the cost center
itself. This means that the activity type price can include two fixed cost portions:
 Activity-independent plan costs for the cost center
 Activity-dependent fixed plan costs for the activity type

 SAP provides the Standard-Layout 1-101 included in the SAP-profile SAPALL to plan activity-
dependent primary costs.

(C) SAP AG AC040 6-20

0.21
Secondary Cost Planning

Receiver Cost Center: Production

Sender CCtr. Sender activity type Input quantity Plan costs

4100 Repair hours 100 hrs 8000.--

Sender Cost Center: Technical Service - Maintenance 4100

Activity type Planned Quantity Scheduled Quantity Fixed price Variable price
Repair hours 100 hrs 100 hrs 30.-- 50.--

80.-- x 100 hrs = 8000.--

 SAP AG 1999

 In addition to primary costs, secondary costs are often incurred by a cost center, because a cost
center must use services (activity inputs) from other cost centers. You can plan the activity input as
activity-independent and activity-dependent.
 You plan activity input as activity-independent if you need services, such as maintenance hours,
which are not dependent on the performance of an activity by the receiving cost center. The
consumption of the planned activity input is considered to be fixed in this situation. The activity
input is planned as activity-dependent if the consumption of that activity will vary based on the
quantity of some other activity that the receiving cost center performs. For example, you may have
to maintain equipment that you use in the performance of a production activity type. You plan to
consume a quantity of maintenance hours activity type from a maintenance cost center, but only in
some proportion to the number of hours you will use the equipment.
 You must plan secondary costs for your cost centers in order to obtain meaningful periodic
comparisons of plan and actual data. In actual postings, you would be the receiver of internal
activity allocations as you obtain the services from other cost centers.
 A cost center that plans to receive secondary costs from activity allocations must always identify a
sender cost center and the quantity of the activity to be received.
 To calculate planned secondary costs, the R/3 system multiplies the total unit price of the activity
type supplied by the sender cost center by the activity quantity consumed by the receiving cost
center. Activity-independent secondary costs planned for a receiver cost center are always fixed
costs.
 The Standard-Layout 1-102 assigned to the profile SAPALL can be used here.

(C) SAP AG AC040 6-21

0.22
Typical Planning Steps for Cost Centers

➼ Planning Statistical Key Figures

➼ Activity Type Planning
➼ Primary Cost Planning
(Activity-Dependent /
Activity-Independent)
➼ Secondary Cost Planning
(Activity-Dependent / Activity-Independent)
➼ Indirect Activity Allocation
➼ Reconciliation
➼ Automatic Price Calculation

 SAP AG 1999

 There is no required fixed sequence for cost center planning. However, SAP offers some general
guidelines that may help in developing a logical procedural flow that fits your requirements. Some
of the following steps may not be relevant in your situation, or you may find that the sequence of
certain steps should be modified.
 The first suggested step is to plan statistical key figures. Statistical key figures are frequently used as
tracing factors in plan distributions and assessments. (Note: actual distributions, assessments, and
indirect cost allocations can also use plan statistical key figures as tracing factors).
 Activity type planning is generally the next step in cost center planning, because the planned activity
quantities will determine the costs a cost center must incur to produce those activity quantities.
 Primary cost planning is the next logical step. Primary costs can be planned manually as either
activity-independent or activity-dependent. You can split the activity-dependent primary costs into
fixed and variable costs. Automatic Primary Cost Planning steps include accruals and distributions.
 Secondary cost planning includes activity input planning, assessments, and indirect activity
allocations.
 Plan reconciliation is then used to check and reconcile the planned exchange of internal activities.
The activity quantity planned for a cost center is adjusted to the quantity of the activity scheduled by
the receiver cost centers.
 Activity price calculation is the final stage of the planning process. The SAP System calculates the
activity prices for all activity type / cost center combinations iteratively, then uses the activity prices
to value the planned exchange of activities.
 Cost center budgeting can be performed at any time independently from the other planning steps.

(C) SAP AG AC040 6-22

0.23
Typical Planning Activities (1)

Simple planning options  only cost planning

in Overhead Cost  allocation of costs by distribution and
assessment
Controlling
  only actual/actual and plan/actual
costcomparisons will be possible

Additional planning  overhead

options in scenarios  activity types with manually entered prices
with integration to  activity input quantity planning
product cost controlling  plan reconciliation (of activity quantities)
  activity price calculation
  actual/ actual and plan/ actual reports of
costs, activity output quantities and
scheduled quantities

 SAP AG 1999

 In simple scenarios planning is optional and no activity types are necessary. Only costs are planned.
Plan cost allocations can be accomplished with distributions and assessments.
 If you want to integrate with cost object controlling, you must be able to pass overhead costs to
production orders and other cost objects. Overhead and activity type allocations can be used to
accomplish this cost transfer from overhead cost controlling, as well as distributions and
assessments.
 The advantage of the activity type allocation is that it combines both quantity and value flows.
Required activity quantities are specified in routings, which provides detailed cost controlling
information in product cost planning and on cost objects.
 Activity types can also be consumed by cost centers and internal orders. When activity input
planning is performed, the quantity of activities other controlling objects have planned to consume
shows up on the sender cost center as the scheduled quantity. With the plan reconciliation function,
planned activity quantities can be changed to match the scheduled quantities.
 After cost and activity planning is complete, the system can calculate activity prices by dividing the
plan costs by the planned activity output quantities. If more than one activity is produced by a cost
center, you have to split the costs to the different activity types first, using equivalence numbers or
the splitting tool.
 These planning methods are sufficient to meet the requirements of static standard costing.

(C) SAP AG AC040 6-23

0.24
Typical Planning Activities (2)

Advanced planning  activity dependent cost planning (fixed/variable)

options  activity dependent input quantity planning
(fixed/variable)
  activity price calculation with fixed and
variable portions of activity prices
  determination of operating rate of cost
centers
  target/actual comparisons

 SAP AG 1999

 Advanced planning methods can be used to provide more detailed information about costs, activity
outputs and operating levels.
 In order to address the operation level of a cost center in the analysis of actual costs, the planning
process should classify planned costs and activity input as either activity-independent or activity-
dependent. This will give the system the information necessary to calculate target costs. A change
in the operating level for an activity type will result in a changed value for target costs. Target Cost
= [Planned Fixed Costs + (Planned Variable Costs * Operating Rate)], where the operating rate is the
actual number of units of an activity type produced in a period divided by the planned number of
units.
 The target cost reflects the costs that would be expected for a given operating rate. It is a base for
comparisons with actual costs, in addition to the plan versus actual cost analysis approach. But plan
cost values are static, and do not take into account changes in operating requirements. A target cost,
by contrast, is a dynamic value that fluctuates according to the actual number of activity units
performed. Consequently, it could be viewed as a more realistic measure of operating performance
by a cost center.
 The variable portion of activity dependent planned costs and activity inputs will result in a variable
portion of the activity price.
 These planning methods are sufficient to meet the requirements of flexible standard costing.

(C) SAP AG AC040 6-24

0.25
Integrated Planning Cycle

At the conclusion of this TOPIC,

you will be able to:

 Identify the application components that are

involved in the Integrated Planning Cycle.
 Explain the impact of each of the application
components involved.
 Explain how the Integrated Planning Cycle is
used in the Manufacturing and Service
industries.

 SAP AG 1999

(C) SAP AG AC040 6-25

0.26
Plan Integration - Manufacturing

Strategic Target Requirements

Procedure

Sales Planning Profit Planning

Sales Volume Cost of goods

Template manufactured
/ sold
Routing Bill of
SOP material Product
LTP Costing

Activity Input Quantity

Cost Center/
Center/ Activity Price
Process Input Quantity
Activity Type Process Price

Business Process
 SAP AG 1999

 In the Sales Information System (SIS) component of the Logistics Information System (LIS), the
company can plan sales quantities for the following year. Similarly, sales quantity planning can be
accomplished in profitability analysis (CO-PA). Both SIS and CO-PA can produce forecasts of sales
quantities at the product or product group level. The two sales plans can be reconciled to produce a
single consistent “master” sales quantity plan.
 The sales quantity plan is transferred to Sales and Operations Planning (SOP) in Production
Planning. There, a capacity-based comparison of plan quantities with production resources takes
place. If the plan cannot be met, additional resources must be obtained or the sales plan changed.
 The activity requirements are calculated in Production Planning and transferred as scheduled
activities to cost center planning.
 In cost center planning, the plan activity quantities are created on the basis of scheduled quantities.
Cost planning is performed for cost centers and internal orders, as well as additional activity
planning for overhead cost controlling. Planned costs from the HR and Asset Accounting
components can be transferred to cost center planning. Plan activity prices are then calculated.
 The calculated plan activity prices go to Product Cost Planning, which estimates the production costs
of the planned products with the use of bills of material and routings (quantity structures). Cost
center planning data can be transferred to profit center planning.
 Planned production costs are then transferred to profitability planning (CO-PA). These estimated
costs are used in conjunction with the sales plan projected revenue to create a profitability plan.
Based on the results of this profitability plan, adjustments may be made to the original sales plan,
which would flow through the entire integrated planning process as another iteration. This cycle
could be repeated until all aspects of the integrated plan are satisfactory.

(C) SAP AG AC040 6-26

0.27
Planning Integration - Sales Planning

Logistics Sales Planning/

Information Fore-
Fore-
System casts

Sales
quantities Sales quantities

 SAP AG 1999

 In the Sales Information System (SIS) component of the Logistics Information System (LIS), the
company can plan sales quantities for the following year. Similarly, sales quantity planning can be
accomplished in profitability analysis (CO-PA). Both SIS and CO-PA can produce forecasts of sales
quantities at the product or product group level. The two sales plans can be reconciled to produce a
single consistent “master” sales quantity plan.

(C) SAP AG AC040 6-27

0.28
CO-PA: Planning

Sales Organization
Period From … To
Record Type
Version

Industry Product Quantity Revenue CoGS

Media 1000 3000 2000
Hitech 5000 4000 3000
Paper 3000 1000 800

 SAP AG 1999

 Planning layouts are customized screens for entering plan data. The definition of a planning layout
controls not only the appearance of the planning screen, but also some of the functionality. This
allows for complete flexibility in controlling the planning entry process.
 A planning layout definition consists of three parts: the general data selection, the lead columns, and
the value columns. The general data selection is where characteristic values are specified that are
valid for the entire layout. The lead columns are where additional characteristics that are to be
planned may be specified. And the value columns contain characteristic/value field combinations.
 Valid values for the special characteristics version, record type (for costing-based CO-PA), and plan/
actual indicator, are required for each row/column intersection in a planning layout definition. By
employing these intelligently in the layout design, layouts can be created in which values can be
planned for more than one version at a time and in which actual history data may be displayed for
reference.
 Variables may be used when defining planning layouts to give them maximum flexibility. Variables
can be used for any characteristic, and they can be installed anywhere they are necessary: rows,
columns, or the general data selection. Users will be prompted to enter values for these variables
when planning.
 Separate planning layouts are necessary for costing-based CO-PA and account-based CO-PA, as
planning figures on the two sides of CO-PA are not related or linked in any way. When defining
layouts in costing-based CO-PA, the characteristic record type is necessary. When defining layouts
in account-based CO-PA, the characteristic cost element is mandatory.

(C) SAP AG AC040 6-28

0.29
CO-PA: Top-Down Distribution Concept

Plan Values
Value to be
Prod. Group Revenues distributed
Pumps 3000

Reference Data
Product Prod. Group Quantity in '99
P1 Pumps 100
P2 Pumps 200

Result: Distributed Values

Product Prod. Group Revenues
P1 Pumps 1000 + 1/3*3000
P2 Pumps Result
2000 + 2/3*3000

 SAP AG 1999

 Top-down distribution is a process for distributing data which has been planned at one level in CO-
PA to additional lower levels, based on some reference data (which can be plan or actual CO-PA
data).
 One example of this might be planning values at the product group level, and then distributing these
values to the individual products in a group. Another example might be planning values at the
individual product level, and then distributing those values to the plants from which the products are
sold.
 Plan values can be distributed strictly according to the reference data by period, or based on the
reference data aggregated across the periods. The latter has the effect of equalizing the distribution
percentages across periods for the receivers.
 When performing a top-down distribution, it is necessary to specify the field(s) in the reference data
whose values should be used as the distribution basis.
 In this slide, revenue for product group is distributed down to the individual products in that group.
The reference data would be the values of a single value field 'sales qty’. The distribution basis is
the value100 for product P1, and the value 200 for product P2.

(C) SAP AG AC040 6-29

0.30
Planning Integration - Planning in PP

Logistics Sales Planning/

Information Fore-
Fore-
System casts

Sales
quantities Sales quantities

Production
Production
SOP - PP
SOP, LTP

 SAP AG 1999

 In the Sales Information System (SIS) component of the Logistics Information System (LIS), the
company can plan sales quantities for the following year. Similarly, sales quantity planning can be
accomplished in profitability analysis (CO-PA). Both SIS and CO-PA can produce forecasts of sales
quantities at the product or product group level. The two sales plans can be reconciled to produce a
single consistent “master” sales quantity plan.
 The sales quantity plan is transferred to Sales and Operation Planning (SOP) in Production Planning.
There, a capacity-based comparison of plan quantities with production resources takes place. If the
plan cannot be met, additional resources must be obtained or the sales plan changed.

(C) SAP AG AC040 6-30

0.31
Planning Integration - Cost Center Planning

Logistics Sales Planning/

Information Fore-
Fore-
System casts

Sales
quantities Sales quantities

Production - PP
SOP, LTP

Activity requirements

Cost Centers

 SAP AG 1999

 In the Sales Information System (SIS) component of the Logistics Information System (LIS), the
company can plan sales quantities for the following year. Similarly, sales quantity planning can be
accomplished in profitability analysis (CO-PA). Both SIS and CO-PA can produce forecasts of sales
quantities at the product or product group level. The two sales plans can be reconciled to produce a
single consistent “master” sales quantity plan.
 The sales quantity plan is transferred to Sales and Operation Planning (SOP) in Production Planning.
There, a capacity-based comparison of plan quantities with production resources takes place. If the
plan cannot be met, additional resources must be obtained or the sales plan changed.
 The activity requirements are calculated in Production Planning and transferred as scheduled
activities to cost center planning.

(C) SAP AG AC040 6-31

0.32
Transferring Plan Values to Cost Centers

HR
Personnel costs
Human Resources Cost Center

NG
NI
AA

AN
Depreciation / interest

PL
Asset Accounting

R
NTE
CE
Statistical key figures

ST
Logistics Information System
(LIS)

CO
PP
Activity requirements

Production Planning

SAP AG 1999

 Integrated planning supports transfers of data from Cost Center Accounting feeder systems to cost
center planning.
 If you planned this data in the feeder systems and want to transfer it unchanged to cost center
planning, you do not have to plan the corresponding data in Cost Center Accounting.
 To use integrated planning, you must meet various preconditions in Cost Center Accounting and in
the feeder systems. For example, if you wish to transfer statistical key figure planned values, you
must first have created the necessary statistical key figure master records, and linked them to the
Logistics Information System (LIS).
 The personnel costs that you planned in Human Resources (HR) can be transferred to relevant cost
centers. During integrated planning between Cost Center Accounting (CO-OM-CCA) and Personnel
Planning (PD), you can plan personnel costs for target wages, payroll results, or basic pay, and
transfer these costs to Cost Center Accounting. A precondition is that the cost centers to which the
affected personnel master data is assigned must be valid.
 If Personnel Cost Planning and Cost Center Accounting are implemented in systems at Release 4.6A
or later, the system automatically transfers the personnel costs to Cost Center Accounting. In prior
Releases, the user initiates the data transfer.

 During integrated planning between the Cost Center Accounting (CO-OM-CCA) and Asset
Management (FI-AA) components, you can transfer periodic depreciation and interest of an asset to
primary cost planning in Cost Center Accounting.

 After you calculate the values for services required in SOP, Long-Term Planning (LTP), or MRP,
you can transfer these figures as scheduled activity type quantities to Cost Center Accounting.

(C) SAP AG AC040 6-32

(C) SAP AG AC040 6-33
0.33
Planning Scope on Internal Orders

Internal Orders

Overall Primary and Secondary Costs Unit Stat.

Planning and Revenues Costing Key figures

Manual Automatic
Cost elements Overhead

Activity inputs Distribution

Revenues Periodic reposting

Assessment
Indirect activity
allocation

Process costs

Settlement

 SAP AG 1999

 Cost planning is performed mostly on orders with long durations. Orders which only exist for a very
short period, such as orders for unexpected small repairs, are usually not planned.
 Internal order planning provides three different levels of cost planning:
Overall Planning is the simplest way of planning costs for orders. You can estimate overall and
annual values for an order independent from cost elements.
When more detailed information is available for an internal order, you can use primary and
secondary cost and revenue planning. This covers the planning of primary costs, activity inputs
and revenues in manual planning. In automatic planning, you can charge the order with
overheads, distribution costs, periodic reposting costs, assessment costs, indirect activity allocation
costs, process costs, and settlement costs. If the order is a plan-integrated order, you perform a
plan credit using periodic reposting or settlement to a cost center.
If you have access to more information on sources of supply, quantities and prices, you can
perform unit costing. With unit costing you can plan on a level below the cost element level.
 You can plan statistical key figures as a basis for allocations and as a means to calculate the
management key figures for your orders.
 In integrated planning for internal orders, you can integrate cost element and activity input planning
for an internal order with cost center or business process planning. This integrated planning
capability is activated in the plan version. When planning activity inputs to integrated internal
orders, the scheduled activities post to the sender cost center/process. In addition, plan settlement
and periodic repostings of integrated orders to cost centers/processes is allowed. And plan
allocations of indirect activities, assessments, and distributions from cost centers/processes to plan
integrated orders are also allowed.

(C) SAP AG AC040 6-34

0.34
Planning Integration - Product Cost Planning

Logistics Sales Planning/

Information Fore-
Fore-
System casts

Sales
quantities Sales quantities

Production - PP Product Material

SOP, LTP Costing Master

Production
costs
Activity requirements
Cost Centers

Personnel Cost
Planning
Asset Cost Plan-
Plan-Integrated
Planning Orders
 SAP AG 1999

 In the Sales Information System (SIS) component of the Logistics Information System (LIS), the
company can plan sales quantities for the following year. Similarly, sales quantity planning can be
accomplished in profitability analysis (CO-PA). Both SIS and CO-PA can produce forecasts of sales
quantities at the product or product group level. The two sales plans can be reconciled to produce a
single consistent “master” sales quantity plan.
 The sales quantity plan is transferred to Sales and Operation Planning (SOP) in Production Planning.
There, a capacity-based comparison of plan quantities with production resources takes place. If the
plan cannot be met, additional resources must be obtained or the sales plan changed.
 The activity requirements are calculated in Production Planning and transferred as scheduled
activities to cost center planning.
 In cost center planning, the plan activity quantities are created on the basis of scheduled quantities.
Cost planning is performed for cost centers and internal orders, as well as additional activity
planning for overhead cost controlling. Planned costs from the HR and AA components can be
transferred to cost center planning. Plan activity prices are then calculated.
 The calculated plan activity prices go to Product Cost Planning, which estimates the production costs
of the planned products with the use of bills of material and routings (quantity structures). Cost
center planning data can be transferred to profit center planning.

(C) SAP AG AC040 6-35

0.35
Product Cost Planning: Overview

Quantity Structure Costing Results

BOM Routing
Cost Components

Mat. Labor OH Process

Costing Pricing

Cost Elements Valuation

Usage
400000 $
610000 $ Profitability
660000 $ Analysis
650000 $
Value Structure
Cost Object
Prices for materials Controlling
Itemization
Prices for activities
M Material $
Process costs M Material $
E Activity $
Overhead rates X Process $
G Overhead $

 SAP AG 1999

 When you create a cost estimate with a quantity structure, you enter the costing variant, the material,
the plant, and the lot size. The dates are proposed from the costing variant and determine the
following:
 the period of validity of the cost estimate (costing date from/to)
 the selection date for the bill of material and routing (quantity structure date)
 the pricing date for the material components and activities (valuation date)
 With the Transfer control indicator you specify that you either want to use an existing cost estimate
for component materials, or create a new cost estimate.
 The system selects and values the quantity structure automatically.
 The costing results can be saved and displayed as an itemization, a cost element itemization, or a cost
component split. The itemization shows detailed information on the origin of the costs, such as the
quantities and prices of the materials and internal activities used.
 The cost element itemization groups the individual costing items into cost elements. The cost
elements group the costs according to how they were incurred. For materials, cost elements are
determined through account determination; for activities, through the activity type master or through
activity type planning; for processes, through the process master record.
 The cost component split groups the cost elements into cost components. When a multilevel
structure is costed, the cost component split is rolled up so that the original identity of the costs is
retained for analysis.
 You can analyze the results of the cost estimate directly or in the information system.

(C) SAP AG AC040 6-36

0.36
Product Cycle

Degree of cost determination

100%

Product idea / Specification / Prototype All products Continuous

simulation product design of new product ready for market improvement

Comparability of Results

Detail of requirements through

engineering and work scheduling

Estimates BOM
Rough specifications BOM + routing
Existing structures Production versions

Flexibility / Manual maintenance

& changes / Use of references
 SAP AG 1999

 At the start of the product cycle, only rough estimates and basic design goals are available. Product
cost planning must be able to provide preliminary but accurate cost estimates:
 quickly
 flexibly
 using existing similar products or structures without time-consuming maintenance of master data.
 In the product design and specification stage, the requirements increase and the initial requirements
and assumptions are refined.
 In the prototype stage, initial engineering specifications are drawn up in the form of bills of material.
This stage is characterized by increasing requirements regarding integration and direct access to this
data in logistics. Missing components are added by the product cost planner.
 Once the products are ready for market, the focus switches to master data integration for material
products. The entire product spectrum is now regularly costed, and changes in costs are investigated.
 For important products, product cost planning must assess improvements in production and provide
supporting cost analyses.

(C) SAP AG AC040 6-37

0.37
Overhead

Direct material costs

+ = Material costs
Material overhead
+
Direct production costs
+ = Production costs
Production overhead
=
Cost of goods manufactured

+
Administration overhead

+
Sales overhead

Costing =
sheet Cost of goods sold

 SAP AG 1999

 Overhead costs are costs which can only indirectly be attributed to the product, such as electricity or
general storage costs.
 Costing sheets allow you to define overhead calculations to meet your specific requirements. In the
conventional method, overhead is applied to the reference object as a percentage rate or a quantity-
based rate.
 The costing sheet determines how the overhead costs are calculated for the cost of goods
manufactured and the cost of goods sold.
 The costing sheet is assigned to a valuation variant, which in turn is assigned to a costing variant.
When a product cost estimate is created that uses that costing variant, the assigned costing sheet is
used for overhead calculation.
 When calculating overhead, the system inserts a costing category of type G. The applied overhead is
updated under the cost elements that you specified in the costing sheet.
 The standard system provides predefined costing sheets, and additional costing sheets can be created
by the user to meet specific requirements.

(C) SAP AG AC040 6-38

0.38
Cost Rollup in Product Cost Planning

Quantity Unit Value Material Labor OH Process

Pump T-F100 1 PC 215 $ 100 80 15 20

Casing T-B100 1 PC 20 $ 20

- Shaft T-B300 1 PC 150 $ 80 50 10 10

Slag T-T400 1 PC 80 $ 80

 SAP AG 1999

 The purpose of cost rollup is to ensure that the cost of goods manufactured (material and production
costs) of all materials in a multilevel BOM are included in the cost estimate of the higher-level
material. This is achieved by assigning the costs in a cost estimate to cost components.
 When a cost estimate for a multilevel BOM is created, the costs are rolled up. That is, the cost
components of the cost component split are passed upwards in the hierarchy to the cost estimate of
the higher-level material.
 For each material in a multilevel BOM, the cost component split provides information on:
 the value added for the material
 the costs of the subordinate material in the BOM (lower level components)

(C) SAP AG AC040 6-39

0.39
Update of the Standard Cost Estimate

Analysis of costing results Material Master

Standard price
Future Current Previous

10

Allow marking Future Current Previous

for Mark standard
CO area/co. code 15 10
Period, fiscal year cost estimate
Cstg var./version

Future Current Previous

Release standard
cost estimate 15 10

Stock
Stock
revaluation
revaluation
 SAP AG 1999

 Marking and releasing the standard cost estimate updates the material's standard price in the material
master. This activates the results of the standard cost estimate for stock valuation (relevant for
Financial Accounting).
 The following requirements must be met before a standard cost estimate can be marked or released:
 The standard cost estimate must be free of errors (status KA).
 Marking and releasing must be allowed. The authorization for marking specifies the company
code and period in which you can mark a standard cost estimate with a given valuation variant.
You cannot mark cost estimates with different valuation variants in this period. This allowance
should be made once in each period by an authorized person in your company. When you mark a
standard cost estimate, the results are written to the material master as the future standard price.
 When you release a standard cost estimate, the future standard price becomes the current standard
price.
 You can cost a material more than once and mark the standard cost estimate each time. However,
you can only release the standard cost estimate once in a given period, unless you choose to delete
the previously-released cost estimate from the database. (A special program exists for this purpose.)
Therefore, you should always verify the accuracy of the cost estimate before releasing a new product
standard cost. Reports are available for this purpose in the information system.

(C) SAP AG AC040 6-40

0.40
Planning Integration - Update Sales Plan/CO-PA

Logistics Sales Planning/ Profitability Planning

Information Fore-
Fore-
System casts

Sales Cost
quantities Sales quantities components

Production - PP Product Material

SOP, LTP Costing Master

Production
costs
Activity requirements
Cost Centers

Personnel Cost
Planning
Asset Cost Plan-
Plan-Integrated
Planning Orders
 SAP AG 1999

 In the Sales Information System (SIS) component of the Logistics Information System (LIS), the
company can plan sales quantities for the following year. Similarly, sales quantity planning can be
accomplished in profitability analysis (CO-PA). Both SIS and CO-PA can produce forecasts of sales
quantities at the product or product group level. The two sales plans can be reconciled to produce a
single consistent “master” sales quantity plan.
 The sales quantity plan is transferred to Sales and Operation Planning (SOP) in Production Planning.
There, a capacity-based comparison of plan quantities with production resources takes place. If the
plan cannot be met, additional resources must be obtained or the sales plan changed.
 The activity requirements are calculated in Production Planning and transferred as scheduled
activities to cost center planning.
 In cost center planning, the plan activity quantities are created on the basis of scheduled quantities.
Cost planning is performed for cost centers and internal orders, as well as additional activity
planning for overhead cost controlling. Planned costs from the HR and AA components can be
transferred to cost center planning. Plan activity prices are then calculated.
 The calculated plan activity prices go to Product Cost Planning, which estimates the production costs
of the planned products with the use of bills of material and routings (quantity structures). Cost
center planning data can be transferred to profit center planning.
 Planned production costs are then transferred to profitability planning (CO-PA). These estimated
costs are used in conjunction with the sales plan projected revenue to create a profitability plan.
Based on the results of this profitability plan, adjustments may be made to the original sales plan,
which would flow through the entire integrated planning process as another iteration. This cycle
could be repeated until all aspects of the integrated plan are satisfactory.

(C) SAP AG AC040 6-41

0.41
Transfer of the Product Costing Results to CO-PA

Quantity Unit Value Material Labor OH Process

Pump T-F100 1 PC 215 $ 100 80 15 20

Casing T-B100 1 PC 20 $ 20

- Shaft T-B300 1 PC 150 $ 80 50 10 10

Slag T-T400 1 PC 80 $ 80

CO
PA

 SAP AG 1999

 The cost components from a product cost estimate can be used in Profitability Analysis for profit
planning, and to value the plan/actual data of billing documents. This enables you to receive detailed
information on the origin of your product costs in Profitability Analysis, and analyze your
contribution margins.
 To transfer the product cost estimate, you assign the cost components containing the cost of goods
manufactured, and sales and administration costs, to the corresponding value fields of an operating
concern, and link these values with the quantity field ‘sales quantity'.
 The calculated cost of goods sold is then compared with the forecast revenues, and planned profit
margins can be calculated. If the result is unsatisfactory, the entire planning cycle can be repeated
with different starting values.
 You make the necessary settings to transfer data from the cost estimate into Profitability Analysis in
Customizing for Profitability Analysis.

(C) SAP AG AC040 6-42

0.42
Plan Integration - Services

Strategic Target Requirements

Procedure

Sales Planning Profit Planning

Sales Volume Cost to Serve

Process-
Process- / Monetary
Template valuation of the
Resource-
Resource-
Planning with planned quantity
Templates structure

Process Consumption /
Cost Center/ Resource Rates
Resource Consumption
Activity Type Process Rates

Process
 SAP AG 1999

 For service activities that are not driven by a production plan, the integrated corporate planning cycle
becomes possible through the template for market segments in CO-PA. This functionality enables
service companies to apply Activity-Based Budgeting.
 The template is used to calculate process and/or resource quantities consumed by sales volumes
planned for the different market segments.
 Once the primary cost planning is done, the price calculation determines the rates for resources and
processes that are used to evaluate the planned quantity structure, thus transferring the process costs
to CO-PA.

(C) SAP AG AC040 6-43

0.43
Plan Integration in Profit Center Accounting

Profitability Analysis

Projects
Networks Profit Center Plan
St

Sales 100,000 MRP SOP

Discounts 5,000 t

Cost of Sales 50,000

Marketing Expenses 10,000
Admin. Expenses 15,000
Number of Sales Orders 1,000
….
….
Internal
Cost
Order
Center
Business
Process
 SAP AG 1999

 To make it possible to control and evaluate internal areas of responsibility effectively, you should
limit profit center planning to those values which are measurable and can be influenced directly. The
people in charge of the profit centers will only be able to use the planned data and targets if they can
influence the costs, revenues and inventories in their area. Since the organizational structure and
scope of your company's responsibility areas depends largely on individual factors, it is necessary to
create as flexible and multi-dimensional a plan as possible.
 Profit center planning is an integral part of your overall company planning. Profit centers make the
integrated character of company planning especially evident, since the plan data here is created
principally in other applications, and can be supplemented or changed here. Profit center planning is
a part of short-term corporate planning, and encompasses a span of one fiscal year. Short-term
corporate planning generally consists of the following partial plans:
 sales plan
 master production schedule
 cost plan
 sales revenue plan
 The planning process combines these individual planning areas into an integrated planning network.
You can use different plan versions to reflect changes during the planning process, or different
planning scenarios for the same time frame.
 The planning of profit centers is performed in two stages. First, plan data can be transferred online
from the following applications: Cost Center Accounting, Internal Orders, Profitability Analysis, and
Product Cost Planning. Second, planning can be carried out directly on profit centers.

(C) SAP AG AC040 6-44

0.44
Planning with ABC

At the conclusion of this TOPIC,

you will be able to:

 Identify the additional features and functionality

available when using ABC in the integrated
planning cycle.
 Perform some basic planning functions involving
Business Processes.

 SAP AG 1999

(C) SAP AG AC040 6-45

0.45
Push versus Pull Approach (I)

Push Approach Pull Approach

Financials Financials
Cost
Assignment

Cost Center Cost Center

Resource Quantity Pull

(Resources) (Resources)

Costs = Quantity * Rate

Resource Cost Resource
Driver Assignment Driver

Activity Cost Activity

Driver Assignment Driver

Products, Products,
Customers Customers
Channels, etc. Channels, etc.

 SAP AG 1999

 Two different ABC approaches are supported by the R/3-System: the Push-Approach and the Pull-
Approach.
 The Push Approach is the traditional ABC approach, and is used when costs must be distributed
appropriately based on tracing factors representing the resource and cost drivers. Activity quantity
flows are of no importance in this approach.

 The primary difference between quantity consumption (Pull) methods and pure cost distribution
(Push) is that the Pull Approach is based on allocation of activity and business process quantities,
which are then evaluated with prices in a second step. Allocation takes place using a cost element
specific to an activity type or a business process. The ability to create multiple quantity and cost
flows opens up a wide range of possibilities for using Activity-Based Costing (ABC) techniques in
the overall framework of Activity-Based Management (ABM).
 The Pull Approach also allows you to answer questions like “What is the cost of idle capacity?”,
which can only be answered when the utilized capacity is known and compared with the total
available capacity.
 As companies mature in their use of ABC, they will be likely to move toward the Pull Approach,
because it provides a more powerful tool to manage resources and capacities.

(C) SAP AG AC040 6-46

0.46
Push versus Pull Approach (II)

Push Approach Pull Approach

(Traditional ABC) (Advanced ABC)

Implementation Easy, straightforward + Requires more details -

and knowledge of
standards / cost behavior

Process No Quantity Structure - Quantity Structure +

Optimization/ • No backflushing capability. • Backflushing capability
Flexible • No capacity view. (Requires • Identify idle capacities.
Budgeting dummy processes for idle • Leverage resources in an
capacity.) early stage (planning).
• No leveraging of resources.

Fair Costing Costs not assigned according Prices calculated based +

to actual usage of resources on practical capacity
• Costs of idle capacity - • Costs of idle capacity are
burden products and only assigned to products
customers and customers when it
makes sense.
 SAP AG 1999

 Although the Push Approach is easy and straightforward to implement, it has significant drawbacks
compared to the Pull Approach when it comes to the information provided by the ABC system in an
Activity-Based Management context.
 Due to the lack of a quantity flow model a backflushing of sales quantities (CO-PA) down to the
resource level on cost centers is not possible when using the Composite Approach. However, this
functionality is essential to identify idle capacities of the resources during your flexible budgeting
phase, as well as to look for other usage of these resources. To optimize your processes, the idle
capacity can either be used for growth, or it can be eliminated in the long term.
 Fair Costing is not guaranteed when using the Push Approach, because the costs of idle capacity are
spread over products and customers that are not necessarily responsible for it. The only workaround
is to define dummy processes for carrying the costs of idle capacity. To do so, however, you have to
know what these costs are, because without a quantity structure the system can’t determine them. In
the Pull Approach, costs of idle capacity remain on the cost centers and can then be allocated to the
plant or company level, where it makes sense.

(C) SAP AG AC040 6-47

0.47
Integrated ABC

BOM CO-
CO-PC
Cost Cost Cost
CO-
CO-CCA Center 1 Center 2 Center 3
AT X Routing

AT 1 AT 2
Overhead Production
Structure Order
CO-
CO-ABC Process 1 Process 2
Template
Allocation, Allocation
Direct Charging of Variances

Product costing
with process Warehouse
costs
CO-
CO-PA
Data
LIS
Warehs.
(LIS)
 SAP AG 1999

 In Integrated ABC, processes become full controlling objects. They are integrated into the
operational value flow of the R/3 system and can become relevant for inventory valuation.
 A structure called the process template is the central tool for assigning (or tracing) process quantities
to cost objects. By selectively using Integrated ABC, you can allocate indirect costs to a single cost
object using overheads (calculated with costing sheets), standard values, or processes for various
types of overhead.
 In Profitability Analysis, you can also analyze process costs for a product on an aggregate level as
these costs are transferred to CO-PA, through the cost component view of product costing.

(C) SAP AG AC040 6-48

0.48
Product Costing with Process Templates

Cost Object
(Order, Project etc.) Materials

LIS
Order Header
Material Lot-size
Functions
Routing BOM
Template
Statistical
Key Figures

CO - Values
ss
Proce es
iti
Material Quant
Operations
Processes
Overhead
Processes Other
External Sources SAP Sources

 SAP AG 1999

 You can use the "functions" within the process template to define how the resource driver quantity
should be calculated for a process. You can also define where the template should look for driver-
relevant information in the system.
 Once the resource driver quantity is calculated, the template interfaces with the Product Cost
Controlling application. This application multiplies the resource driver quantity by the process price.
It then applies the resulting cost of the overhead resources consumed to a specific cost object.
Finally, the application credits the process with a corresponding debit to the cost object.
 By using the driver concept instead of a simple overhead percentage “mark-up”, you can eliminate
the inaccuracy caused by spreading overhead costs equally among all cost objects.
 The process quantities in Plan and Actual can be calculated by using different functions. You can use
this functionality for higher-level models for the drivers in Plan, whereas operational driver
quantities recorded in the Logistic Information System can be used in Actual.

(C) SAP AG AC040 6-49

0.49
Planning and Plan Integration: Unit Summary

Having completed this UNIT,

you should now be able to:

 Identify the most important costing options used

and the differences between them.
 Identify the application components that are
involved in the Integrated Planning Cycle, and
explain their roles.
 Explain how the Integrated Planning Cycle is used
in different industries.
 Identify the additional features and functionality
available when using ABC.
 Perform some basic planning functions.

 SAP AG 1999

(C) SAP AG AC040 6-50

0.50Exercise: Planning and Plan Integration

Unit: Planning and Plan Integration

Topic: Introduction to Planning

• Describe how planning is used to forecast costs and revenues and

make decisions.

Cost center managers would like to have a very clear idea about the
expected results of their cost centers in future periods. They would like to
have the information early, to be able to react and correct variances from
plan, instead of waiting until the periods have ended.

1.1 Describe how you might use the CO planning and budgeting functions in your
company.

1-1-1 Name some of the goals of planning.

______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________

1-1-2 Will you use both planning and budgeting?

______________________________________________________________
______________________________________________________________

1-1-3 How many versions of plan might you have? What might those plan
versions represent ( for example, best case, worst case, and so on)?
Would you use the copy plan function to create some of these plan
versions?
______________________________________________________________
______________________________________________________________
______________________________________________________________

(C) SAP AG AC040 6-51

 Unit: Planning and Plan Integration
Topic: Planning Based on Different Costing Options

• Use the planning tools and see how certain information is planned on
master data records.

Since the company would like to have the ability to forecast costs and
revenues, the planning tools will be used to enter planning data into the R/
3 System. This planning data shall be used for later plan/actual
comparisons, to see how responsibility areas performed. The comparison
will also be used for control purposes, to monitor processes and make
adjustments or corrections if variances from the plan occur.
You will examine several planning functions in Cost Center Accounting
to view some of the options for planning cost center inputs and outputs.

2-1 Cost Element Planning: A cost center will have to consume services and
materials in order to produce its service for other objects. This consumption
will lead to debit postings on the cost center. You can plan these costs by
entering plan data using those cost elements under which the service or material
consumption will be posted in actual.

2-1-1 Plan the purchased services cost element (417000) on your cost center
SERV-##. Enter the plan for the periods 1 to 12 for the current fiscal
year and plan version 0. The fixed plan costs for the year are 36000.
This amount shall be distributed in equal amounts to the individual
accounting periods. Save the plan data.

2-1-2 Plan the direct labor costs cost element (420000) on your cost center
PROD-##. Enter the plan for the periods 1 to 12 for the current fiscal
year and plan version 0. The fixed plan costs for the year are 19200.
This amount shall be distributed in equal amounts to the individual
accounting periods. Save the plan data.

2-2 Activity Type Planning: In order to manage the performance of a cost center,
you may be interested in measuring and controlling the cost center’s output.
You can enter a plan for your cost center and its activity types, which define a
measurable output. You will manually plan the activity price as well as the plan
quantity.

(C) SAP AG AC040 6-52

 2-2-1 Plan the repair hours to be provided by your service cost center SERV-
##, using the activity type REP-##. The planned activity quantity is
1000 hours and the fixed activity price is 60 per unit. Change the
equivalence number to 2.

2-2-2 The service cost center also has the task to inspect assets on a regular
basis. Therefore the cost center SERV-## will use the activity type
CHK-##. The planned activity quantity is 500 hours and the fixed
activity price is 40 per unit. Verify that the equivalence number is 1.

2-2-3 Your production cost center produces the activity 1421. Plan the
activity type 1421 as the output of your cost center PROD-##. The
planned activity quantity is 120 hours and the fixed activity price is 180
per unit.

2-3 Activity-Dependent Cost Planning: In order to reflect that some costs will
only be incurred by a cost center if certain activity types are produced by that
cost center, you plan those costs as activity-dependent. In addition, you can
decide whether the cost amount depends on the output quantity of this activity
type. If the cost depends on the activity type quantity, it should be planned as a
variable cost. If it does not, it should be planned as a fixed cost.
Operating supplies costs for the service cost center (SERV-##) are dependent
on the REP-## activity type. Plan the operating supplies costs (cost element
403000) as activity-dependent, with 6000 fixed plan costs and 18000 variable
plan costs.

2-4 Activity Input Planning: Your production cost center PROD-## plans to
consume 100 hours of the activity type REP-## from your service cost center
SERV-##. Use the activity input planning layout (1-102) to enter the plan
information.

Note that the service activity consumed by the production cost center
is not dependent on the amount of activity performed by the
production cost center (activity-independent). Therefore, you should
make sure that the activity type field is blank.

2-5 Process the Cost centers: Planning overview report for periods 1 to 12 of the current
fiscal year and plan version 0. Execute the report to view in detail the effect of the
planning steps on the service cost center (SERV-##). Review the activity prices.

(C) SAP AG AC040 6-53

 Page down in the report to see the activities planned for the
selected cost center.

2-6 Automatically Calculate Plan Activity Price: When a cost center plans to
produce an activity type, it must also plan the costs it expects to incur in order
to produce the planned number of units of the activity. As a result, it is possible
to calculate the unit cost of producing the activity. You may use the automatic
plan price calculation to get this price. If a cost center produces more than one
activity type, then in order to calculate the price, the activity-independent
planned costs must be split among the cost center’s activity types. In our
example, equivalence numbers, which were entered in the activity type planning
exercise, will be the basis for the cost splitting.

2-6-1 Run the automatic plan price calculation for your service and production
cost centers. Execute the calculation for your cost center group
CENTERS-## for periods 1 through 12 of the current fiscal year.
Select No business processes, Test run, and a Detailed list of the
results. Compare your results to the manually planned prices (Exercise
2-2) and the expected results for the automatic planned price calculation.
Record both the manual and automatic plan prices. If your
automatically planned prices are acceptable, post the new prices.

Activity Type/Cost Center Manual Price Automatic Price

CHK-##/SERV-##
REP-##/SERV-##
1421/PROD-##

2-6-2 Process the Cost centers: Planning overview report for periods 1 to 12
of the current fiscal year and plan version 0. Execute the report to view
in detail the effect of the plan activity type price calculation on the
service cost center (SERV-##). Is the plan balance zero (allowing for
small rounding differences)? Review the activity prices.
______________________________________________________________

(C) SAP AG AC040 6-54

 Unit: Planning and Plan Integration
Topic: Integrated planning Cycle

• Create, mark and release a standard cost estimate cycle.

• Understand the flow of planning results through the integrated
planning cycle.
Since the company plans to produce products and to provide services
based on market demand, it was decided to start the planning cycle in CO-
PA. The resulting sales plan (business plan) has been transferred to SOP,
and required material quantities and production resources have been
determined. At the completion of the SOP planning process, cost center
planning was performed, and the planned activity prices have been
calculated. Based on these results, it is now possible to create standard
cost estimates for materials for the next period.

3-1 Before a standard cost estimate is created, we have to review the activity price
that has been calculated for one of the production activities identified in the
routing of pump assembly T-F1##. The first production operation for the pump
assembly T-F1## will occur at work center T-M##. This work center is
assigned to cost center 4230, and the planned labor for this operation is 10
minutes per piece. The activity type for this labor is 1421. Review the planned
activity price for activity type 1421 and cost center 4230. Record the fixed and
variable planned activity prices.
Activity fixed plan price: __________________________________________
Activity variable plan price: ________________________________________

3-2 As the result of the cost center planning, it is necessary to recalculate the cost of
goods manufactured for our product. To accomplish this, we will create a
standard cost estimate. By creating this new standard cost estimate, we will be
able to incorporate the planned activity prices that were calculated during cost
center planning.

3.2.1 Create a standard cost estimate for the material T-F1## with costing
variant PPC1 and a lot size of 500 pieces. Change the default for the
‘Costing from date’ to today’s date. Accept the other default dates for
QSID and valuation.

(C) SAP AG AC040 6-55

 3.2.2 From the Material Costing Data screen, review the results of the cost
estimate. Begin by selecting the Costed BOM report. Expand the BOM
to display all of the component materials, and then change the settings to
include all items.

3.2.3 The costed BOM report displays the costs in a hierarchical manner. The
first operation listed identifies the components that are to be consumed
at that operation. For each of these components, the itemized detail is
listed, including the production activities, components, processes and
overhead surcharges. Use the Next Screen icon to move through
different views of this report. The focus or title of each different view is
displayed in the Title bar at the top of the screen.

3.2.4 The Lot sizes/prices view displays the pricing unit, unit price, quantities
required and total value for each item. Locate activity type 1421, cost
center 4230, and verify that the price listed matches the price that you
reviewed in 3-1 of this exercise.

3.2.5 Save the cost estimate.

3.3 In order to use this cost estimate as a future standard, it is necessary to mark
this cost estimate. Once you have completed the mark transaction, go to the
costing 2 view of the material master record for T-F1## and review the future
price that is entered in the material master record.

3-4 Release the cost estimate for material T-F1## so that it becomes the current
standard price. After the new standard price is released, display the Costing 2
view of the material master record and review the Current standard price.

(C) SAP AG AC040 6-56

 Unit: Planning and Plan Integration
Topic: Costing with ABC

• Review the concept of ABC process costs and how the costs for
allocated process quantities are included in the standard cost estimate.

One important step in the plan integration cycle is the calculation of the
costs of goods manufactured based on the business plan. Since one of the
company objectives is to minimize overhead costs, it has been decided to
use ABC functionality in order to have a more dynamic method to allocate
costs from the overhead management area to the production controlling
area. The process template has already been maintained to appropriately
allocate planned process quantities to the standard cost estimate.

4-1 Review the ABC processes in a standard cost estimate.

4-1-1 Create a standard cost estimate for the material T-F1## with costing
variant PPC1 and a lot size of 500 pieces. Use the first day of the next
period as the costing date. Accept the other default dates for QSID and
valuation.

4-1-2 From the initial display screen for the cost estimate, which process
template has been applied to the cost estimate?
______________________________________________________________

4-1-3 From the itemization report for the cost of goods manufactured, what is
the value of the process costs that have been calculated during the
creation of the cost estimate? What is the quantity of processes that
have been applied to the cost estimate?

This information is identified with an item category of X.

______________________________________________________________
______________________________________________________________

(C) SAP AG AC040 6-57

 4-1-4 Review the itemization report for the cost of goods sold. Have any
additional process costs and quantities been applied to this view of the
cost estimate? What is the quantity and value of this additional process?

This information is identified with an item category of X.

______________________________________________________________
______________________________________________________________
______________________________________________________________

(C) SAP AG AC040 6-58

0.51Solution: Planning and Plan Integration

Unit: Planning and Plan Integration

Topic: Introduction to Planning

• Describe how planning is used to forecast costs and revenues and

make decisions.

Cost center managers would like to have a very clear idea about the
expected results of their cost centers in future periods. They would like to
have the information early, to be able to react and correct variances from
plan, instead of waiting until the periods have ended.

1.2 Describe how you might use the CO planning and budgeting functions in your
company.

1-1-1 Name some of the goals of planning.

1-1-2 Will you use both planning and budgeting?

1-1-3 How many versions of plan might you have? What might those plan
versions represent ( for example, best case, worst case, and so on)?
Would you use the copy plan function to create some of these plan
versions?

Answers will vary.

(C) SAP AG AC040 6-59

 Unit: Planning and Plan Integration
Topic: Planning Based on Different Costing Options

• Use the planning tools and see how certain information is planned on
master data records.

Since the company would like to have the ability to forecast costs and
revenues, the planning tools will be used to enter planning data into the R/
3 System. This planning data shall be used for later plan/actual
comparisons, to see how responsibility areas performed. The comparison
will also be used for control purposes, to monitor processes and make
adjustments or corrections if variances from the plan occur.
You will examine several planning functions in Cost Center Accounting
to view some of the options for planning cost center inputs and outputs.

2-1 Cost Element Planning: A cost center will have to consume services and
materials in order to produce its service for other objects. This consumption
will lead to debit postings on the cost center. You can plan these costs by
entering plan data using those cost elements under which the service or material
consumption will be posted in actual.

2-1-1 Plan the purchased services cost element (417000) on your cost center
SERV-##. Enter the plan for the periods 1 to 12 for the current fiscal
year and plan version 0. The fixed plan costs for the year are 36000.
This amount shall be distributed in equal amounts to the individual
accounting periods. Save the plan data.
Menu path:
Accounting→Controlling→Cost center Accounting→Planning→Cost and
activity inputs→Change
Enter Version 0.
Enter From period 1.
Enter To period 12.
Enter the current fiscal year in the Fiscal year field.
Enter SERV-## in the Cost center field.
Enter Cost element 417000.
Select Form-based Entry.
Select the Overview screen.
Enter 36000 in the Fixed plan costs column.

(C) SAP AG AC040 6-60

 Enter 1 in the DK column immediately following the Fixed plan costs
column.
Select Post.
Remain on the Cost Element/Activity Input Planning: Initial Screen for the
next exercise.

2-1-2 Plan the direct labor costs cost element (420000) on your cost center
PROD-##. Enter the plan for the periods 1 to 12 for the current fiscal
year and plan version 0. The fixed plan costs for the year are 19200.
This amount shall be distributed in equal amounts to the individual
accounting periods. Save the plan data.
Enter PROD-## in the Cost center field.
Enter Cost element 420000.
Select the Overview screen.
Enter 19200 in the Fixed plan costs column.
Enter 1 in the DK column immediately following the Fixed plan costs
column.
Select Post.

2-2 Activity Type Planning: In order to manage the performance of a cost center,
you may be interested in measuring and controlling the cost center’s output.
You can enter a plan for your cost center and its activity types, which define a
measurable output. You will manually plan the activity price as well as the plan
quantity.

2-2-1 Plan the repair hours to be provided by your service cost center SERV-
##, using the activity type REP-##. The planned activity quantity is
1000 hours and the fixed activity price is 60 per unit. Change the
equivalence number to 2.

(C) SAP AG AC040 6-61

 Menu path:
Accounting→Controlling→Cost center Accounting→Planning→ Activity
output/prices→Change
Enter Version 0.
Enter From period 1.
Enter To period 12.
Enter the current fiscal year in the Fiscal year field.
Enter SERV-## in the Cost center field.
Enter REP-## in the Activity type field.
Select the Overview screen.
Enter 1000 in the Planned activity column.
Enter 1 in the DK column immediately following the Planned activity
column.
Enter 60 in the Fixed activity price field.
Enter 2 in the EquiNo field.
Select Post.
Remain on the Activity Type/Price Planning: Initial Screen for the next
exercise.

2-2-2 The service cost center also has the task to inspect assets on a regular
basis. Therefore the cost center SERV-## will use the activity type
CHK-##. The planned activity quantity is 500 hours and the fixed
activity price is 40 per unit. Verify that the equivalence number is 1.
Enter CHK-## in the Activity type field.
Select the Overview screen.
Enter 500 in the Planned activity column.
Enter 1 in the DK column immediately following the Planned activity
column.
Enter 40 in the Fixed activity price field.
Verify that the EquiNo field is set to 1.
Select Post.
Remain on the Activity Type/Price Planning: Initial Screen for the next
exercise.

2-2-3 Your production cost center produces the activity 1421. Plan the
activity type 1421 as the output of your cost center PROD-##. The
planned activity quantity is 120 hours and the fixed activity price is 180
per unit.
Enter PROD-## in the Cost center field.
Enter 1421 in the Activity type field.
(C) SAP AG AC040 6-62
 Select the Overview screen.
Enter 120 in the Planned activity column.
Enter 1 in the DK column immediately following the Planned activity
column.
Enter 180 in the Fixed activity price field.
Select Post.

2-3 Activity-Dependent Cost Planning: In order to reflect that some costs will
only be incurred by a cost center if certain activity types are produced by that
cost center, you plan those costs as activity-dependent. In addition, you can
decide whether the cost amount depends on the output quantity of this activity
type. If the cost depends on the activity type quantity, it should be planned as a
variable cost. If it does not, it should be planned as a fixed cost.
Operating supplies costs for the service cost center (SERV-##) are dependent
on the REP-## activity type. Plan the operating supplies costs (cost element
403000) as activity-dependent, with 6000 fixed plan costs and 18000 variable
plan costs.
Menu path:
Accounting→Controlling→Cost center Accounting→Planning→Cost and activity
inputs→Change
Enter Version 0.
Enter From period 1.
Enter To period 12.
Enter the current fiscal year in the Fiscal year field.
Enter SERV-## in the Cost center field.
Enter REP-## in the Activity type field.
Enter Cost element 403000.
Select Form-based Entry.
Select the Overview screen.
Enter 6000 in the Fixed plan costs column.
Enter 1 in the DK column immediately following the Fixed plan costs column.
Enter 18000 in the Vbl. planned costs column.
Enter 1 in the DK column immediately following the Vbl. planned costs column.
Select Post.
Remain on the Change Cost Element/Activity Input Planning: Initial Screen for the
next exercise.

2-4 Activity Input Planning: Your production cost center PROD-## plans to
consume 100 hours of the activity type REP-## from your service cost center

(C) SAP AG AC040 6-63

 SERV-##. Use the activity input planning layout (1-102) to enter the plan
information.

Note that the service activity consumed by the production cost center
is not dependent on the amount of activity performed by the
production cost center (activity-independent). Therefore, you should
make sure that the activity type field is blank.

Select Next layout to change the layout to 1-102.

Enter PROD-## in the Cost center field.
Make sure the Activity type field is blank.
Enter SERV-## in the Sender cost center field.
Enter REP-## in the Sender activity type field.
Select the Overview screen.
Enter 100 in the Plan fixed consumpt. column.
Enter 1 in the DK column immediately following the Plan fixed consumpt. column.
Select Post.

(C) SAP AG AC040 6-64

2-5 Process the Cost centers: Planning overview report for periods 1 to 12 of the current
fiscal year and plan version 0. Execute the report to view in detail the effect of the
planning steps on the service cost center (SERV-##). Review the activity prices.
Menu path:
Accounting→Controlling→Cost Center Accounting→Information system→Reports
for Cost Center Accounting→Planning Reports→Cost centers: Planning overview
Enter SERV-## in the Cost center field.
Enter the current fiscal year in the Fiscal year field.
Enter 1 in the Period field.
Enter 12 in the To field.
Enter 0 in the Version field.
Execute the report.

Page down in the report to see the activities planned for the
selected cost center.

Click on the activity type line.

Choose Goto→Display activity price.

2-6 Automatically Calculate Plan Activity Price: When a cost center plans to
produce an activity type, it must also plan the costs it expects to incur in order
to produce the planned number of units of the activity. As a result, it is possible
to calculate the unit cost of producing the activity. You may use the automatic
plan price calculation to get this price. If a cost center produces more than one
activity type, then in order to calculate the price, the activity-independent
planned costs must be split among the cost center’s activity types. In our
example, equivalence numbers, which were entered in the activity type planning
exercise, will be the basis for the cost splitting.

2-6-1 Run the automatic plan price calculation for your service and production
cost centers. Execute the calculation for your cost center group
CENTERS-## for periods 1 through 12 of the current fiscal year.
Select No business processes, Test run, and a Detailed list of the
results. Compare your results to the manually planned prices (Exercise
2-2) and the expected results for the automatic planned price calculation.
Record both the manual and automatic plan prices. If your
automatically planned prices are acceptable, post the new prices.
Menu path:
Accounting→Controlling→Cost center
Accounting→Planning→Allocations→Price Calculation
Select Cost center group.

(C) SAP AG AC040 6-65

 Enter CENTERS-## in the Cost center group field.
Select No business processes.
Enter 0 in the Version field.
Enter 1 in the Period field.
Enter 12 in the To field.
Enter the current fiscal year in the Fiscal year field.
Select Test run and Detailed lists.
Select Execute.
If your activity type prices have been calculated correctly, select Post.
Select Continue to clear the information message.
2-6-2 Process the Cost centers: Planning overview report for periods 1 to 12
of the current fiscal year and plan version 0. Execute the report to view
in detail the effect of the plan activity type price calculation on the
service cost center (SERV-##). Is the plan balance zero (allowing for
small rounding differences)? Review the activity prices.
Menu path:
Accounting→Controlling→Cost Center Accounting→Information
system→Reports for Cost Center Accounting→Planning Reports→Cost
centers: Planning overview
Enter SERV-## in the Cost center field.
Enter the current fiscal year in the Fiscal year field.
Enter 1 in the Period field.
Enter 12 in the To field.
Enter 0 in the Version field.
Execute the report.
Click on the activity type line.
Choose Goto→Display activity price.

(C) SAP AG AC040 6-66

 Unit: Planning and Plan Integration
Topic: Integrated planning Cycle

• Create, mark and release a standard cost estimate cycle.

• Understand the flow of planning results through the integrated
planning cycle.
Since the company plans to produce products and to provide services
based on market demand, it was decided to start the planning cycle in CO-
PA. The resulting sales plan (business plan) has been transferred to SOP,
and required material quantities and production resources have been
determined. At the completion of the SOP planning process, cost center
planning was performed, and the planned activity prices have been
calculated. Based on these results, it is now possible to create standard
cost estimates for materials for the next period.

3-1 Before a standard cost estimate is created, we have to review the activity price
that has been calculated for one of the production activities identified in the
routing of pump assembly T-F1##. The first production operation for the pump
assembly T-F1## will occur at work center T-M##. This work center is
assigned to cost center 4230, and the planned labor for this operation is 10
minutes per piece. The activity type for this labor is 1421. Review the planned
activity price for activity type 1421 and cost center 4230. Record the fixed and
variable planned activity prices.
Menu path:
Accounting→Controlling→Cost center Accounting→Planning→Activity
Output/Prices→Change
Enter Version 0.
Enter 1 in the From Period field.
Enter 12 in the To Period field.
Enter the current fiscal year in the Fiscal year field.
Enter 4230 in the Cost center field.
Enter 1421 in the Activity type field.
Select the Period screen icon.

(C) SAP AG AC040 6-67

 3-2 As the result of the cost center planning, it is necessary to recalculate the cost of
goods manufactured for our product. To accomplish this, we will create a
standard cost estimate. By creating this new standard cost estimate, we will be
able to incorporate the planned activity prices that were calculated during cost
center planning.

3.3.1 Create a standard cost estimate for the material T-F1## with costing
variant PPC1 and a lot size of 500 pieces. Change the default for the
‘Costing from date’ to today’s date. Accept the other default dates for
QSID and valuation.
Menu path:
Accounting→Controlling→Product Cost Controlling→Product Cost
Planning→Material Costing→Cost Estimate with Quantity Structure→Create
Enter Costing Variant PPC1.
Enter material T-F1##.
Enter 1000 in the Plant field.
Enter 500 in the Costing lot size field.
Select Enter.
Change the Costing date from to today’s date, leave all other date fields
unchanged.
Press Enter.

3.3.2 From the Material Costing Data screen, review the results of the cost
estimate. Begin by selecting the Costed BOM report. Expand the BOM
to display all of the component materials, and then change the settings to
include all items.
Show the costed multilevel BOM from the icon structure.
From the initial display, position your curson on T-F1##, then select the Expand
All icon from the tool bar.
To include all of the items, follow the menu path Settings → All items.
The list will then expand to display all components, production activities, process
and overhead surcharges.

(C) SAP AG AC040 6-68

 3.3.3 The costed BOM report displays the costs in a
hierarchical manner. The first operation listed
identifies the components that are to be consumed at
that operation. For each of these components, the
itemized detail is listed, including the production
activities, components, processes and overhead
surcharges. Use the Next Screen icon to move
through different views of this report. The focus or
title of each different view is displayed in the Title
bar at the top of the screen.
Select the Next Screen and Previous Screen icons from the toolbar to navigate to
the different views of the report.

3.3.4 The Lot sizes/prices view displays the pricing unit, unit price, quantities
required and total value for each item. Locate activity type 1421, cost
center 4230, and verify that the price listed matches the price that you
reviewed in 3-1 of this exercise.
Use the Next Screen icon until the title bar indicates ‘Lot sizes/prices’.

3.3.5 Save the cost estimate.

Using the icon, save the cost estimate.

3.4 In order to use this cost estimate as a future standard, it is necessary to mark
this cost estimate. Once you have completed the mark transaction, go to the
costing 2 view of the material master record for T-F1## and review the future
price that is entered in the material master record.
Menu path:
Accounting→Controlling→Product Cost Controlling→Product Cost
Planning→Material Costing→Price Update
Enter Company code 1000.
Enter the current period/current year in the Posting period/fiscal year field.
Enter 1000 in the Plant field.
Enter T-F1## in the Material field.
Select ‘Marking’.
Select ‘Marking Allowance’.
Select legal valuation for the Valuation level,.Comp. Code 1000.
Enter cstg vrnt PPC1 and save.
Select Execute, and then select Enter to continue through the warning (deactivate
test run).
To review the effect on the material master, from the list displayed immediately after
executing the mark transaction, position your cursor on material T-F1##.

(C) SAP AG AC040 6-69

 You will immediately move to the Display Material Master transaction. Select the
Costing 2 view.
Enter 1000 in the Plant field.
Select Enter.
The value of the standard cost estimate will be displayed in the Future column.

3-4 Release the cost estimate for material T-F1## so that it becomes the current
standard price. After the new standard price is released, display the Costing 2
view of the material master record and review the Current standard price.

Menu path:
Accounting→Controlling→Product Cost Controlling→Product Cost
Planning→Material Costing→ Price Update
Enter the current period/current year in the Posting period/fiscal year field.
Enter Company code 1000.
Enter 1000 in the Plant field.
Enter T-F1## in the Material field.
Select ‘Release’.
Select Execute, and then select Enter to continue through the warning (deactivate
test run).
To review the effect on the material master, from the list displayed immediately after
executing the release transaction, position your cursor on material T-F1##.
You will immediately move to the Display Material Master transaction. Select the
Costing 2 view.
Enter 1000 in the Plant field.
Select Enter.
The value of the standard cost estimate will be displayed in the Current column.

(C) SAP AG AC040 6-70

 Unit: Planning and Plan Integration
Topic: Costing with ABC

• Review the concept of ABC process costs and how the costs for
allocated process quantities are included in the standard cost estimate.

One important step in the plan integration cycle is the calculation of the
costs of goods manufactured based on the business plan. Since one of the
company objectives is to minimize overhead costs, it has been decided to
use ABC functionality in order to have a more dynamic method to allocate
costs from the overhead management area to the production controlling
area. The process template has already been maintained to appropriately
allocate planned process quantities to the standard cost estimate.

4-1 Review the ABC processes in a standard cost estimate.

4-1-1 Create a standard cost estimate for the material T-F1## with costing
variant PPC1 and a lot size of 500 pieces. Use the first day of the next
period as the costing date. Accept the other default dates for QSID and
valuation.
Menu path:
Accounting→Controlling→Product Cost Controlling→Product Cost
Planning→Material Costing→Cost Estimate with Quantity
Structure→Create
Enter Costing Variant PPC1.
Enter material T-F1##.
Enter 1000 in the Plant field.
Enter 500 in the Costing lot size field.
Select Enter.
Verify the Costing date from is the first day of the next period. Leave all
other date fields unchanged.
Press Enter.

4-1-2 From the initial display screen for the cost estimate, which process
template has been applied to the cost estimate?
The process template can be found on the tab Valuation.

(C) SAP AG AC040 6-71

 4-1-3 From the itemization report for the cost of goods manufactured, what is
the value of the process costs that have been calculated during the
creation of the cost estimate? What is the quantity of processes that
have been applied to the cost estimate?

This information is identified with an item category of X.

Position the cursor on the cost of goods manufactured view, and select the
itemization report.
Menu: Costs→Itemization.
The process costs are identified with the item category X. The value and
quantities of the process are listed to the right of the process.

For the cost of goods manufactured view, the process 300900, order
handling, has been applied. This process has been identified to allocate the
overhead costs associated with managing production orders. The quantity of
one has been determined since one actual production order would require
one unit of the production order overhead process to create and manage one
production order.

4-1-4 Review the itemization report for the cost of goods sold. Have any
additional process costs and quantities been applied to this view of the
cost estimate? What is the quantity and value of this additional process?

This information is identified with an item category of X.

Position the cursor on the cost of goods sold view, and select the itemization
report.
The process costs are identified with the item category X. The value and
quantities of the process are listed to the right of the process.
For the cost of goods sold view, the additional process 400900, sales order
handling has been included. This process has been identified to allocate the
overhead costs associated with managing sales orders. This has been included in
the cost of goods sold view, since it would require one unit of the sales order
overhead process to create and manage one sales order.

(C) SAP AG AC040 6-72

0
Postings To CO From Other Modules: Unit Contents

 Postings From Other Modules

 Statistical and Real Postings

 SAP AG 1999

(C) SAP AG AC040 7-1

0.2
Postings To CO From Other Modules: Unit Objectives

At the conclusion of this UNIT, you will be able to:

 Name the typical feeder systems that

post data to CO.
 Explain the concept of Commitment
Management within CO.
 Name the Real and Statistical Controlling
Objects.
 Explain the difference between Real and
Statistical postings in CO.

 SAP AG 1999

(C) SAP AG AC040 7-2

0.3
You Are Here!

FI
MM CO
HR
$$ CO
+ABC SD AA 1 12
$
Planning and Postings 
t Plan Integration $
to CO From
Event-Based
Reporting Tools Other Modules Postings in CO

AC040 1 12
OM PC Profit
OM PC Profit FI CO
Reflecting Your Period-End
Business in CO Postings in CO

INT EXT
OM PC Profit “Which
FI MM HR AA SD
Button?”
Overview of CO AcceleratedSAP

Getting Started Course Review

 SAP AG 1999

(C) SAP AG AC040 7-3

0.4
Postings To CO From Other Modules:
Business Scenario

 Your review now takes you to an analysis of how the

transaction data finds its way into CO. This is done in
conjunction with the auditors from the CPA firm who are
attempting to document the data flow.
 As you learned at the beginning of your assignment, FI is a
primary source of data postings to CO. But as you dig
deeper, you find that other application components are
major contributors as well, such as MM, Asset Accounting,
and HR.
 You are also responsible for evaluating the use of real and
statistical controlling objects in the transaction postings,
based on information requirements. And you are required
to explain to the auditors the use of commitments as a cost
control tool.

 SAP AG 1999

 Actual cost and revenue entry enables you to monitor and trace costs and revenues incurred by your
company as they occur. This allows you to identify variances to plan costs and revenues quickly and
take appropriate action.
 The control of actual costs and revenues is supported by delivered and user-definable reports.
Reporting covers periodic actual cost/revenue statements, plan/actual comparisons, and comparison
reports based on periodic actual/actual comparisons (for example, you can compare the actual costs
of the previous period with the actual costs of the current period).
 Actual cost/revenue entry involves transferring the primary costs recorded in Financial Accounting
(FI) to the Controlling (CO) application component. In the CO component, this transfer occurs real-
time from the components FI, MM, SD, and AM, whereby a cost accounting object (such as a cost
center, a profitability segment or an internal order) is recorded during account assignment.

(C) SAP AG AC040 7-4

0.5
Postings From Other Modules

At the conclusion of this TOPIC,

you will be able to:

 Name the typical feeder systems that

post data to CO.
 Explain the concept of Commitment Management
within CO.

 SAP AG 1999

(C) SAP AG AC040 7-5

0.6
Posting Logic

FI Data Entry:
Line item 001 FI Document # 1200000089
- G/L Account 420000
(P&L) G/L Account (P&L) G/L Account (Bal. Sheet)
420000 113100
- Amount
- Controlling Object Amount Amount
Line item 002
- G/L Account 113100
(Bal. Sheet)
- Amount
CO Document # 1000000009

Controlling Object
Cost Element Amount
(420000)

 SAP AG 1999

 When an FI document is created that posts to an expense (or revenue) account having a
corresponding cost element, and a valid controlling object (such as a cost center) is identified for the
expense line item, a controlling document is also created.
 This CO document has its own unique number and contains the following details:
 controlling object posted to
 the cost element used
 the amount
 In the above example, the FI document debited a P&L account and credited a Balance Sheet account.
The CO document debited the controlling object (using the corresponding primary cost element of
the same number). Note that there is no corresponding credit entry in the CO document.
 When a primary cost is initially posted into CO, it is treated as a one-sided journal entry, unlike a
traditional balanced financial accounting journal entry. (Note that as any subsequent cost
movements occur within CO, the transactions creating these cost flows are balanced entries. When a
cost is moved from one controlling object to another, such as from one cost center to another, the
sending object is credited, and the receiving object is debited for the same amount.)

(C) SAP AG AC040 7-6

0.7
Real versus statistical Objects in CO

Cost origin

FI AA MM SD

Real Objects Statistical Objects

Cost Internal Statistical

Center Order Order
CO
Cost Statistical
Object Project
Project

Network Profitability Profit Center . . . . .

Segment .....

 SAP AG 1999

 Postings of costs and revenues to CO can result in real and statistical postings:
 Real postings can be allocated or settled to other controlling objects.
 Statistical postings are for informational purposes only.
 Generally, the account assignment object determines whether the posting is real or statistical. That
is, the account assignment object is itself either a real or a statistical object. For example, an
overhead order is defined as real or statistical when it is created. A real order takes only real
postings, and a statistical order only statistical postings. The exception to this rule is the cost center.
A cost center, which is always a real object, may take both real and statistical postings.
 To accomplish a CO cost posting, you must identify the appropriate real CO account assignment
object in the source document (such an FI journal entry, etc.). Only one real object is permitted for
each line item in the source document. Additional statistical objects can be entered or derived by the
system.
 A profit center is always posted to statistically.
 Real objects may serve as senders or receivers during cost allocation. Real Controlling objects
include the following: Cost centers (for account assignment of costs), Internal orders (real), Projects
(real), Networks, Make to order production orders, Cost objects, Profitability segments
 Statistical objects cannot allocate costs to other objects. You can make statistical account
assignments to any number of Controlling objects. Statistical Controlling objects include the
following: Statistical orders, Statistical projects, Profit centers

(C) SAP AG AC040 7-7

0.8
Posting from FI to a Cost Center

Income statement account Balance sheet account

FI 403000 113100

1000-- Cost origin: Cost center XY

1000--

CO

Cost Center
Debit under a cost
element

 SAP AG 1999

 When a journal entry is created in FI that includes an expense line item, that expense can be posted
to CO as a cost if:
 a primary cost element has been created in CO that corresponds to the expense account used in the
FI journal entry, and
 a valid cost center is referenced in the FI line item.
 As a result, two separate documents are created: both an FI document as well as a CO document.
Each document has a unique document number, and it is possible to drill down in either document to
link to the other.

(C) SAP AG AC040 7-8

0.9
Posting from AA to a Cost Center

AA Depreciation on a machine
Cost origin: cost center xy

FI Depreciation Valuation adjustment

~~ Cost origin: Cost center XY ~~

CO

Cost Center XY
Debit under a
cost element

 SAP AG 1999

 If Asset Accounting initiates a transaction in FI that affects a P&L account for which a primary cost
element has been created, a CO posting will also be created.
 An asset master record has a cost center field that can be used to assign the asset to a cost center.
 Depreciation and interest expense postings are examples of AA-initiated transactions that could
generate cost postings to CO.

(C) SAP AG AC040 7-9

0.10
Posting from HR to a Cost Center

HR Payroll accounting
Cost origin: Cost center XY

FI Salaries & other costs Salaries clearing account

~~ Cost origin: Cost center XY ~~

CO

Cost Center XY
Debit under a cost
element

 SAP AG 1999

 Payroll accounting in Human Resources calculates the amounts for the different salaries and related
costs, and records them in a session.
 When you process the session, the system generates FI postings and also posts the costs to the cost
centers to which the employees are assigned.
 If you prefer, you can charge all the costs to a clearing or collecting cost center and then use CO
tools to distribute or transfer them to the actual cost centers.
 Employee master data in HR can be assigned to infotypes. The infotype determines the company
code, personnel area, and personnel subarea to which the employee is assigned. For example,
Infotype 0001 Organizational Assignment enables you to determine the cost center to which
personnel costs are debited, and to assign your employee to a business area.

(C) SAP AG AC040 7-10

0.11
Posting from MM to a Cost Center

MM Material issued from stock

Cost origin: Cost center XY

Material consumption Material stock

FI
~~ Cost origin: Cost center XY ~~

CO

Cost Center XY
Debit under a cost
element

 SAP AG 1999

 Goods issue transactions posted in the Material Management component can be assigned to a cost
center. An example could be parts issued to an R & D cost center for constructing a product
prototype.
 From the aspect of the cost center, this type of transaction is called material consumption. When you
enter a goods issue in the system, you must enter a movement type to differentiate between the
various categories of goods movements. A movement type is an identification key which has
important control functions in Inventory Management, such as updating stock and consumption
accounts.
 A goods issue to a cost center creates an FI transaction that debits a material consumption expense
account and credits a material stock (inventory) account. The cost center is debited with the value of
the goods issued using a primary cost element.

(C) SAP AG AC040 7-11

0.12
MM Purchase Order Posted to a Cost Center

MM Material purchase order to vendor

Purchaser: Cost Center XY

FI

CO

Cost Center XY
Debit under a cost
element
- Commitment

 SAP AG 1999

 A purchase order is a formal request from a purchasing organization to a vendor or a plant to supply
or provide a certain quantity of goods or services at or by a certain point in time. A purchase order
does not create an entry in FI. Each item in a purchase order can be assigned to a separate cost
center (or other controlling object).
 Once posted, the purchase order record creates a “commitment” line item for the cost center entered
on the purchase order item. The Information System can report on outstanding commitments for a
given cost center.
 Subsequently, when the actual costs are incurred (such as when the ordered goods are delivered), the
R/3 System clears the commitment and posts the actual costs.

(C) SAP AG AC040 7-12

0.13
Commitments

MM CO
Purchase
requisition
(with account
assignment Cost Center 3105: Sales, Automotive
object)
CElem Committed Actual Assigned
Purchase 400000 500.- 0 500.-
500.-
1 order ∑ 500.-
500.- 0 500.-
500.-
2

Cost Center 3105: Sales, Automotive

Goods
receipt CElem Committed Actual Assigned
400000 0 500.-
500.- 500.-
500.-
∑ 0 500.-
500.- 500.-
500.-

 SAP AG 1999

 Commitments for costs to be incurred in the future are initiated in the Purchasing function of the
Materials Management component as follows:
 A purchase requisition is an internal communication of a procurement requirement (from the
requestor to the buyer). A purchase requisition represents a provisional commitment, which can
be changed at any time. You are not required to assign a CO object on a purchase requisition line;
but if you do not, no commitment will be reflected in CO.
 A purchase order is a contractual agreement to purchase goods or services from a vendor
according to agreed conditions. A purchase order represents a firm commitment since it is based
on a contractual obligation. For a purchase order item charged to a cost element, you are required
to specify a controlling object; therefore, a commitment will be reflected in CO.
 When you create a purchase order with reference to a purchase requisition, the commitment will be
reclassified in CO.
 Processing goods receipts against the purchase order reduces the commitment, and actual costs are
posted to the controlling object. This process continues until the purchase order is closed and the
commitment is reduced to zero.
 You must activate Commitment Management in CO by controlling area.

(C) SAP AG AC040 7-13

0.14
Statistical and Real Postings

At the conclusion of this TOPIC,

you will be able to:

 Name the Real and Statistical Controlling Objects.

 Explain the difference between Real and
Statistical postings in CO.

 SAP AG 1999

 Postings of costs and revenues to CO can result in real and statistical postings:
 Real postings can be allocated or settled to other controlling objects.
 Statistical postings are for informational purposes only.
 Generally, the account assignment object determines whether the posting is real or statistical. That
is, the account assignment object is itself either a real or a statistical object. For example, an
overhead order is defined as real or statistical when it is created. A real order takes only real
postings, and a statistical order only statistical postings. The exception to this rule is the cost center.
A cost center, which is always a real object, may take both real and statistical postings.
 To accomplish a CO cost posting, you must identify the appropriate real CO account assignment
object in the source document (such an FI journal entry, etc.). Only one real object is permitted for
each line item in the source document. Additional statistical objects can be entered or derived by the
system.
 A profit center is always posted to statistically.
 Real objects may serve as senders or receivers during cost allocation. Real Controlling objects
include the following: Cost centers (for account assignment of costs), Internal orders (real), Projects
(real), Networks, Make to order production orders, Cost objects, Profitability segments
 Statistical objects cannot allocate costs to other objects. You can make statistical account
assignments to any number of Controlling objects. Statistical Controlling objects include the
following: Statistical orders, Statistical projects, Profit centers

(C) SAP AG AC040 7-14

0.15
Posting to a Statistical Order

Income statement account Balance sheet account

FI ~~ ~~
Cost origin: Cost center XY
Cost collector: Statistical Order 12
Debit affecting costs

CO Further Cost Objects

Cost Center XY Debit under a cost

element, statistical:
Debit under a cost additional - Statistical order 12
element - Profit center (optional)
- Real costs

 SAP AG 1999

 Statistical orders are typically used to evaluate costs which cannot be itemized in detail in cost center
accounting.
 In this example, the FI document assigns the cost posting to both a cost center and a statistical
internal order. The costs will then appear under the original cost element both on the cost center
(real costs) and on the order (statistical, for information purposes only).
 Example: Statistical orders could be created for individual trucks monitored in a motor pool cost
center. Cost postings could be assigned to both the relevant order and the cost center. The real cost
postings are accumulated on the cost center for the entire motor pool, whereas the individual orders
retain the detail cost information for each vehicle.
 Unlike real internal orders, you can neither settle statistical orders, nor apply overhead to them.

(C) SAP AG AC040 7-15

0.16
Posting to a Real Order

FI Income statement account Balance sheet account

~~ ~~
Cost origin: Order 123456

CO
Order 123456 Optional:
Further Cost Objects
Debit under a cost
element Debit under a cost
- Real costs element, statistical:
optional
- Real Cost Center
additional - Statistical project
- Profit center
-...

 SAP AG 1999

 In this example, the internal order is entered in the FI document as the account assignment object.
The internal order is apparently a real object, which means that the cost posting is a real posting.
 If the FI document were to also specify a cost center as an account assignment object, the cost center
would be updated statistically. When a real internal order and a cost center are both specified in the
source document line item, the real posting is directed to the order, and statistical postings are
recorded for the cost center and profit center.

(C) SAP AG AC040 7-16

0.17
Posting to a Profitability Segment

Income statement account Balance sheet account

FI
809000 113100
1500-- 1500--
Cost origin: Profitability Segment X

Cost element: 809000

CO
Profitability Segment X Optional:
•Customer: Miller Further Cost Objects
•sales organization: NW
•division: 03 Credit under a revenue
optional element, statistical:
Credit under a revenue - Real Cost Center
element additional - Profit center
- Real revenue

 SAP AG 1999

 In this example, there is a revenue posting to FI. If there is a primary cost element of type 11
(revenues) that corresponds to the revenue account, then the revenue will post to the appropriate
profitability segment in CO-PA.
 Real revenues can be posted only to a profitability segment, customer order, customer project, or
revenue order. As with cost postings, revenue postings to profit centers are statistical.
 Additionally, revenues can be entered statistically on cost centers

(C) SAP AG AC040 7-17

0.18
Postings To CO From Other Modules: Unit Summary

Having completed this UNIT,

you should now be able to:

 Name the typical feeder systems

that post data to CO.
 Explain the concept of Commitment
Management within CO.
 Name the Real and Statistical Controlling
Objects.
 Explain the difference between Real and
Statistical postings in CO.

 SAP AG 1999

(C) SAP AG AC040 7-18

0.19Exercise: Postings to CO from other modules

Unit: Postings to CO from other modules

Topic: Postings from other modules

• Review account assignment logic and the posting concept in the R/3
System.

Whenever business events are recorded in an application component like

FI or MM, the company would like to rely on getting the associated cost
data in CO at the same time, without additional transfer and reconciliation
effort.
You will enter business events in FI and MM to see how the system
utilizes the appropriate account assignment to automatically transfer the
information to CO. You will also create a purchase order in MM to test
commitment management in CO. You will process CO reports to view
these transactions and drill down to access the source documents.

1-1 Post an expense in the General Ledger (FI) to a cost center and review the costs
that are transferred into CO.

1-1-1 Create a G/L account posting with today’s date for the purchase of raw
materials for the German company code (1000) in currency UNI. Enter
a debit of 5000 to G/L account 403000. Specify that the offsetting credit
is to G/L account 113100. What error message is displayed?

In the G/L account master records, some of the expense accounts are
configured to indicate that taxes may be associated with these
accounts, but are not mandatory. A tax warning message will appear
prior to the mentioned error message. This is to ensure that you do
not forget to enter a tax code when appropriate. For these exercises,
we are treating all expenses as non-taxable. Therefore, you can
ignore the warning message.

____________________________________________________________
____________________________________________________________
____________________________________________________________

(C) SAP AG AC040 7-19

 1-1-2 Enter SERV-## in the cost center field to charge the raw materials costs
to your service cost center. Post the document.

1-1-3 Process the Cost centers: actual/plan/variance report for the current
period and plan version 0. Execute the report for the service cost center
(SERV-##).

1-1-4 Drill down to the original document

____________________________________________________________
____________________________________________________________

1-2 In Inventory Management (MM) record the consumption of a material by a cost

center. Review the costs that are transferred into CO.

1-2-1 Enter a goods issue for your service cost center (SERV-##). Use
movement type 201 and get 20 pieces of material T-T200 from storage
location 0001 in the Hamburg plant (1000).

1-2-2 Process the Cost centers: actual/plan/variance report for the current
period and plan version 0. Execute the report for the service cost center
(SERV-##).

1-2-3 Drill down to the original document.

____________________________________________________________
____________________________________________________________

1-3 Generate a purchase order for a cost center and review the resulting
commitment in CO.

1-3-1 Create a purchase order for vendor 1000, purchasing organization 1000,
purchasing group 000, and plant 1000. Specify that the purchase order
is to be charged to a cost center (account assignment category K). Order
10 pieces of material T-T200, at a price of 50, for your service cost
center, SERV-##. Specify today’s date as the delivery date and ignore
any delivery date warning messages.

1-3-2 Process the Cost centers: actual/plan/commitment report for the current
period and plan version 0. Execute the report for the service cost center
(SERV-##).

(C) SAP AG AC040 7-20

 1-3-3 Drill down to the original document.
____________________________________________________________
____________________________________________________________

(C) SAP AG AC040 7-21

 Unit: Postings to CO from other modules
Topic: Statistical and real postings

• Compare a statistical posting to a real posting

The company wants to use an overhead order to reflect the costs of a truck
belonging to a cost center, without having to perform settlement to view
the costs at the cost center level as well. You will create a statistical order
in order to achieve this. Since the costs on the order are only statistical,
they can be analyzed at the detailed order level, but need not (and cannot)
be settled to cost center.

2-1 Create a statistical order for a truck used by the service cost center, SERV-##.
Create the overhead order with order type 1000. Name the order TRUCK-##
and add Truck ## to the defaulted description. Assign the order to business area
9900 and profit center 1400. Set statistical order to „on“ and save your order.

2-2 Post an expense to your statistical order to determine the information required
to complete this transaction. View the results in CO.

2-2-1 Create a G/L account posting for today’s date, for vehicle costs for your
truck in the German company code (1000) and currency UNI. Enter a
debit of 4000 to G/L account 475000 for your truck order TRUCK-##.
Specify that the offsetting credit is to G/L account 113100. What error
message is displayed?
____________________________________________________________
____________________________________________________________

2-2-2 Enter SERV-## in the cost center field to charge the „real“ vehicle costs
to your service cost center. Post the document.

2-2-3 Process the Cost centers: actual/plan/variance report for the current
period and plan version 0. Execute the report for the service cost center
(SERV-##).

(C) SAP AG AC040 7-22

 2-2-4 Process the Order: actual/plan/variance report for the current period
and plan version 0. Execute the report for the your truck order
(TRUCK-##).

(C) SAP AG AC040 7-23

0.20Solution: Postings to CO from other modules

Unit: Postings to CO from other modules

Topic: Postings from other modules

• Review account assignment logic and the posting concept in the R/3
System.

Whenever business events are recorded in an application component like

FI or MM, the company would like to rely on getting the associated cost
data in CO at the same time, without additional transfer and reconciliation
effort.
You will enter business events in FI and MM to see how the system
utilizes the appropriate account assignment to automatically transfer the
information to CO. You will also create a purchase order in MM to test
commitment management in CO. You will process CO reports to view
these transactions and drill down to access the source documents.

1-1 Post an expense in the General Ledger (FI) to a cost center and review the costs
that are transferred into CO.

1-1-1 Create a G/L account posting with today’s date for the purchase of raw
materials for the German company code (1000) in currency UNI. Enter
a debit of 5000 to G/L account 403000. Specify that the offsetting credit
is to G/L account 113100. What error message is displayed?

In the G/L account master records, some of the expense accounts are
configured to indicate that taxes may be associated with these
accounts, but are not mandatory. A tax warning message will appear
prior to the mentioned error message. This is to ensure that you do
not forget to enter a tax code when appropriate. For these exercises,
we are treating all expenses as non-taxable. Therefore, you can
ignore the warning message.

Menu path:
Accounting→Financial accounting→General ledger→Document entry→ G/
L account posting
Enter the current date in the Document date field.
Enter 1000 in the Company code field.

(C) SAP AG AC040 7-24

 Enter UNI in the Currency field.
Enter 403000 in the G/L Account field.
Enter debit in the D/C field.
Enter 5000 in the Doc. Currency Amount field.
Enter 113100 in the G/L Account field.
Enter credit in the D/C field
Enter 5000 in the Doc. Currency Amount field.
Select enter.
Select enter to clear tax warning message.

The system displays the error message „Account 403000 requires an

assignment to a CO object.“

1-1-2 Enter SERV-## in the cost center field to charge the raw materials costs
to your service cost center. Post the document.
Enter SERV-## in the Cost center field.
Select Enter.
Select Save.

1-1-3 Process the Cost centers: actual/plan/variance report for the current
period and plan version 0. Execute the report for the service cost center
(SERV-##).
Menu path:
Accounting→Controlling→Cost center Accounting →Information
system→Reports for Cost Center Accounting→Plan/actual
comparisons→CCtr: Actual/Plan/Variance
Enter 1000 in the Controlling area field.
Enter the current fiscal year in the Fiscal year field.
Enter the current period in the From Period field.
Enter the current period in the To Period field.
Enter 0 in the Plan version field.
Enter SERV-## in the first Or value(s) field.
Select Execute.

(C) SAP AG AC040 7-25

 1-1-4 Drill down to the original document.
Double-click on the report line for cost element 403000.
Double-click on the Cost Centers: Actual Line Items report
Double-click on the line item with a value of 5000.

A Financial Accounting document is displayed (the G/L account posting).

1-2 Record the consumption of a material by a cost center in Inventory

Management (MM). Review the costs that are transferred into CO.

1-2-1 Enter a goods issue for your service cost center (SERV-##). Use
movement type 201 and get 20 pieces of material T-T200 from storage
location 0001 in the Hamburg plant (1000).
Menu path:
Logistics→Materials management→Inventory management→Goods
movement→ Goods issue
Enter 201 in the Movement type field.
Enter 1000 in the Plant field.
Enter 0001 in the Storage location field.
Select Enter.
Enter SERV-## in the Cost center field.
Enter T-T200 in the Material field.
Enter 20 in the Quantity field.
Select Post.

1-2-2 Process the Cost center: actual/plan/variance report for the current
period and plan version 0. Execute the report for the service cost center
(SERV-##).
Menu path:
Accounting→Controlling→Cost Center Accounting→Information
system→Reports for Cost Center Accounting→Plan/actual
comparisons→CCtr: Actual/Plan/Variance
Enter 1000 in the Controlling area field.
Enter the current fiscal year in the Fiscal year field.
Enter the current period in the From Period field.
Enter the current period in the To Period field.
Enter 0 in the Plan version field.

(C) SAP AG AC040 7-26

 Enter SERV-## in the first Or value(s) field.
Select Execute.

1-2-3 Drill down to the original document.

Double-click on the report line for cost element 400000.
Double-click on the Cost Centers: Actual Line Items report
Double-click on the line item with a quantity of 20 pieces.

A Material document is displayed (the goods issue document).

1-3 Generate a purchase order for a cost center and review the resulting
commitment in CO.

1-3-1 Create a purchase order for vendor 1000, purchasing organization 1000,
purchasing group 000, and plant 1000. Specify that the purchase order is
to be charged to a cost center (account assignment category K). Order
10 pieces of material T-T200, at a price of 50, for your service cost
center, SERV-##. Specify today’s date as the delivery date and ignore
any delivery date warning messages.

Menu path:
Logistics→Materials management→Purchasing→Purchase order→
Create→Vender/supplying plant known
Enter 1000 in the Vendor field.
Select Index Card Org. Data.
Enter 1000 in the Purch. organization field.
Enter 000 in the Purchasing group field.
Item Overview.
Enter K in the Acct. assignment cat. field.
Enter T-T200 in the Material field.
Enter 10 in the PO quantity field.
Enter the current date in the Deliv. date field.
Enter 1000 in the Plant field.
Enter 50 in the Net price field.

(C) SAP AG AC040 7-27

 Select Enter.
Enter to clear warning message about delivery date.
Enter SERV-## in the Cost center field.
Select Save.

1-3-2 Process the Cost centers: actual/plan/commitment report for the current
period and plan version 0. Execute the report for the service cost center
(SERV-##).
Menu path:
Accounting→Controlling→Cost center Accounting→Information
system→Reports for Cost enter Accounting→Plan/actual
comparisons→Additional ratios→CCtr: Actual/Plan/Commitment
Enter 1000 in the Controlling area field.
Enter the current fiscal year in the Fiscal year field.
Enter the current period in the Form Period field.
Enter the current period in the To Period field.
Enter 0 in the Plan version field.
Enter SERV-## in the first Or value(s) field.
Select execute.

1-3-3 Drill down to the original document

Double-click on the report line for cost element 400000.
Double-click on the Cost Centers: Commitment Line Items report
Double-click on the line item.

A Purchase order document is displayed.

(C) SAP AG AC040 7-28

 Unit: Postings to CO from other modules
Topic: Statistical and real postings

• Compare a statistical posting to a real posting

The company wants to use an overhead order to reflect the costs of a truck
belonging to a cost center, without having to perform settlement to view
the costs at the cost center level as well. You will create a statistical order
in order to achieve this. Since the costs on the order are only statistical,
they can be analyzed at the detailed order level, but need not (and cannot)
be settled to cost center.

2-1 Create a statistical order for a truck used by the service cost center, SERV-##.
Create the overhead order with order type 1000. Name the order TRUCK-##
and add Truck ## to the defaulted description. Assign the order to business area
9900 and profit center 1400. Set statistical order to „on“ and save your order.
Menu path:
Accounting→Controlling→Internal Orders→Master data→Order→Create
Enter 1000 in the Order type field.
Select Master data.
Enter TRUCK-## in the Order field.
Enter Truck ## at the end of the text in the Short text field.
Enter 9900 in the Business area field.
Enter 1400 in the Profit center field.
Select the Control data tab.
Click on the Statistical order box.
Select Save.

2-2 Post an expense to your statistical order to determine the information required
to complete this transaction. View the results in CO.

(C) SAP AG AC040 7-29

 2-2-1 Create a G/L account posting for today’s date, for vehicle costs for your
truck in the German company code (1000) and currency UNI. Enter a
debit (posting key 40) of 4000 to G/L account 475000 for your truck
order TRUCK-##. Specify that the offsetting credit (posting key 50) is
to G/L account 113100. What error message is displayed?
Menu path:
Accounting→Financial accounting→General ledger→Document entry→ G/
L account posting
Enter the current date in the Document date field.
Enter 1000 in the Company code field.
Enter UNI in the Currency field.
Enter 475000 in the G/L Account field.
Enter debit in the D/C field.
Enter 4000 in the Doc. Currency Amount field.
Enter TRUCK-## in the Order field.
Enter 113100 in the G/L Account field.
Enter credit in the D/C field.
Enter 4000 in the Doc. Currency Amount field.
Select Enter.
Select enter to clear tax warning message.

The system displays the error message „Account 475000 requires an

assignment to a CO object.“

2-2-2 Enter SERV-## in the cost center field to charge the „real“ vehicle costs
to your service cost center. Post the document.
Enter SERV-## in the Cost center field.
Select Enter.
Select Save.

2-2-3 Process the Cost centers: actual/plan/variance report for the current
period and plan version 0. Execute the report for the service cost center
(SERV-##).
Menu path:
Accounting→Controlling→Cost center Accounting→Information
system→Reports for Cost Center Accounting→Plan/actual
comparisons→CCtr: Actual/Plan/Variance
Enter 1000 in the Controlling area field.
Enter the current fiscal year in the Fiscal year field.

(C) SAP AG AC040 7-30

 Enter the current period in the From Period field.
Enter the current period in the To Period field.
Enter 0 in the Plan version field.
Enter SERV-## in the first Or value(s) field.
Select execute.

2-2-4 Process the Order: actual/plan/variance report for the current period
and plan version 0. Execute the report for the your truck order
(TRUCK-##).
Menu path:
Internal Orders→Information system→Reports for Internal
Orders→Plan/actual comparisons→ Order: actual/plan/variance
Enter 1000 in the Controlling area field.
Enter the current fiscal year in the Fiscal year field.
Enter the current period in the From period field.
Enter the current period in the To period field.
Enter 0 in the Plan version field.
Enter TRUCK-## in the first Or value(s) field.
Select Execute.

(C) SAP AG AC040 7-31

0
Event-Based Postings In CO: Unit Contents

 Transactions related to Overhead Cost Controlling

 Transactions related to Cost Object Controlling
 Transactions related to Profitability Management
 Example for Transfer Price Concept

 SAP AG 1999

(C) SAP AG AC040 8-1

0.2
Event-Based Postings In CO: Unit Objectives

At the conclusion of this UNIT,

you will be able to:
 Post CO Reposting documents.
 Post a direct Activity Allocation.
 Establish a budget on an overhead order and post
a transaction to the order.
 Create different types of orders and post various
transactions involving them.
 Explain the Transfer Price concept.

 SAP AG 1999

(C) SAP AG AC040 8-2

0.3
You Are Here!

FI
MM CO
HR
$$ CO
+ABC SD AA 1 12
$
Planning and Postings to CO 
t Plan Integration From Other Modules $
Reporting Tools
Event-
Event-Based
Postings in CO

AC040 1 12
OM PC Profit
OM PC Profit FI CO
Reflecting Your Period-End
Business in CO Postings in CO

INT EXT
OM PC Profit “Which
FI MM HR AA SD
Button?”
Overview of CO AcceleratedSAP

Getting Started Course Review

 SAP AG 1999

(C) SAP AG AC040 8-3

0.4
Event-Based Postings In CO: Business Scenario

 As your review continues, you move into the area of

actual transactions. The first major category involves
postings that are made in conjunction with a particular
business event.
 You find that there are several CO transactions in this
category. They range from correcting postings that
assigned the wrong CO object, to the allocation of
activities (and associated costs) performed by
cost centers.
 Other event-based transactions you analyze include time
entry by employees, as well as several functions related to
the production process.
 As you anticipated, the auditors are particularly interested
in the availability control functionality that serves to
control spending for overhead orders.

 SAP AG 1999

(C) SAP AG AC040 8-4

0.5
Transactions related to Overhead Cost Controlling

At the conclusion of this TOPIC,

you will be able to:
 Post CO Reposting documents.
 Explain the purpose of a direct Activity Allocation.
 Post a Direct Activity Allocation.
 Explain the purpose of entering time sheets.
 Describe the steps in time sheet processing.

 SAP AG 1999

(C) SAP AG AC040 8-5

0.6
Reposting Line Items

FI Kunde C
CO
Kunde B

Kunde A

Document Number: 30012 CCtr 2100

CCtr 2100 473000 10000.-
10000.- 473000 10000.-
10000.-
CCtr 2200
113100 -10000.-
10000.- -10000.- 473000 10000.-
10000.-

Doc. No.: 30012

 SAP AG 1999

 You can repost primary costs from one controlling object to another using transaction-based
transfers; the original cost element is always retained. This function is designed to correct posting
errors. Posting errors should preferably be corrected in the application component where they
occurred, so that external and internal accounting (FI and CO) are always reconciled. Posting errors
involving assignment to a controlling object (cost center or internal order) can, however, be
corrected using a transaction-based reposting in CO.
 There are two types of reposting transactions: reposting costs (or revenues), and reposting line items.
 The reposting costs transaction is a simple transfer of cost from one controlling object to another.
This reposting does not preserve a direct link between the amount transferred and the transaction that
originally posted the costs to CO.
 Alternatively, you can repost line items from CO documents. To do this, the CO reposting document
must reference the original FI document that posted the costs to CO. This enables you to track the
movement of cost within CO, and still preserve the link with the originating FI document.
 You can enter multiple receiver objects for a line item reposting. The full amount of the original line
item must be reposted.

(C) SAP AG AC040 8-6

0.7
Direct Activity Allocation

Cost Center
10 h Production

3h
Cost Center Cost Center
Development Customer-
Customer-
service
Activity 5h

Orders,
Projects,
...

 SAP AG 1999

 Direct activity allocation deals with the measurement and allocation of a quantity of activity type
units produced by a cost center.
 To enter a direct activity allocation, you record the cost center providing the service (sender cost
center), the object receiving the service (receiver), the type of service performed (activity type), and
the quantity of service provided (number of units of the activity type consumed). Note that only a
cost center can be the sender in an activity allocation. The receiver can be any real controlling
object, such as a cost center, order, project, and so on.
 Direct activity allocation credits the sender cost center and debits the receiver object. Debits and
credits use a secondary cost element (category = 43). This cost element is maintained in the activity
type master record. The allocation is valued by multiplying the quantity of activity produced by the
planned activity price.
 A direct activity allocation is documented by creating line items from the perspectives of both sender
and receiver.

(C) SAP AG AC040 8-7

0.8
Time Sheet

Time Sheet

Personnel number 000001 Max Miller

Date 01/01/2000 - 12/31/2000 Week 12.2000

Receiver Sum Monday Tuesday Wednes. Thursday Friday

3200 40.50 8.50 8.50 7.00 8.50 8.00

 Single entry point into R/3  Approval process

 Easy-to-use multiple entry screen  Flexible via user exits
 Use of templates and defaults  Audit trail
 SAP AG 1999

 The R/3 Time Sheet component facilitates standardized, cross-application time recording. The time
sheet combines the existing functionality for time recording from a variety of applications into a
single transaction. Using the time sheet, you can supply the following components with information
on working times:
 Attendance and absences in Human Resources (HR)
 Internal activity allocation in Controlling (CO)
 Confirmations in Plant Maintenance (PM), Project System (PS), and Service Management (SM)
 Entry of services performed in External Services Management (MM-SRV)
 Both internal employees and external service providers can use the time sheet to enter their personal
working times into the system. There is also a screen for central data entry for several persons. The
time recording interface is designed for ease of use.
 Working times are entered as a number of hours or as actual clock times, and are always linked to a
specific person. Each internal employee or external service provider is assigned a personnel number
in the R/3 System. You can create the required mini-master record even if you do not use HR.
 Users access the time sheet with special data entry profiles. When you define these profiles in
Customizing, you can tailor the entry process according to the user's level of knowledge and area of
activity. There is a field selection function for the data entry profiles. You can use the function to
limit the fields that appear on the entry screen.

(C) SAP AG AC040 8-8

0.9
Budget Management

Order: 400010
Original Current
Budget Budget
Overall 40,000 50,000
1998 20,000 25,000 Budget Line Items
1999 15,000 18,000 Order 400010 Chicago Trade Fair
2000 2,000 3,000
2001 3,000 4,000 Document Year Activity Amount ...
030000001 1998 Original 20,000
030000200 1998 Supplement 7,000
030000306 1998 Return 2,000-

Total 1998 25,000

 SAP AG 1999

 The system recognizes the following budget types for internal orders:
 The original budget is the budget originally approved.
 Budget updates for orders include supplements and returns and are used when unforeseen events
and additional requirements force a correction to the original budget.
 The current budget includes the original budget and all budget updates.
 In addition to the budget update functions, you can make changes to the original budget. You can
freeze the original budget using status management. You accomplish this by creating a user status
that prohibits the Budgeting business transaction, but allows supplements and returns.
 When you create or update your budget, the system documents the transaction in a line item. You
can display the budget line items from the budget screen. You can enter text for budget line items to
provide support for the budget transaction.
 In Customizing, you must define a number range for your budget documents. Number range 04 is
provided for order budgeting.
 When you save the budget, the system checks that the sum of the annual values matches the overall
value for the order.

(C) SAP AG AC040 8-9

0.10
Availability Control

Order
Budget Budget profile 00001
Total 100
1998 20
1999 30
2000 30 Tolerances
2001 20
Profile Activity Action %
000001 ALL Warning with mail 100
000001 ALL Error message 110

Responsible parties

 SAP AG 1999

 In addition to other budgeting parameters, the budget profile also controls availability checking.
 In the profile, you can specify the circumstances under which the availability check can be activated.
You also specify whether checks on funds availability use either the annual or overall budgeted
value.
 Tolerances define how the system should respond to a given degree of budget overrun. In the
example above, when the budget is consumed (100%), a warning is issued with an automatic mail
message to the person responsible for the budget. With a budget overrun of ten percent (110%), the
R/3 System issues an error message, and the document that caused the overrun cannot be posted.
Tolerances are established for a budget profile by activity groups, allowing you to set up different
tolerances for different types of transactions.
 When you select the action Warning with Mail, you must specify a budget manager in Customizing.
If no budget manager is entered, the system generates an error message.
 You can exclude individual cost elements from availability control.

(C) SAP AG AC040 8-10

0.11
Transactions related to Cost Object Controlling

At the conclusion of this TOPIC,

you will be able to:
 Create a production order.
 Post the necessary documents to record the
Activity and Materials consumption.
 Post the necessary documents to record all
other production costs.

 SAP AG 1999

(C) SAP AG AC040 8-11

0.12
Product Cost Controlling

Product Cost Product Cost Product Cost

by Period by Order by Sales Order
Work
Center 2
Production Line

Production order
Lot size Production
Production line
order
Work Work
Center 1 Center 3

Warehouse Warehouse Warehouse

Product Production Sales Order

Cost Order
Collector SD

 SAP AG 1999

 In Product Cost by Order, Cost Object Controlling provides information on production orders whose
costs are settled to stock. The order quantity is of central importance for cost object controlling in
this scenario, since the planned costs of the order are calculated using this quantity, and the actual
costs cannot be settled until the final delivery of this quantity has been made. The actual costs for the
internal activities and materials are collected on each production order, and can be compared with
the planned costs for the order, as well as the results of the product cost estimate.
 In contrast to Product Cost by Order in which you analyze costs by lot, in Product Cost by Period
you analyze costs by period. You collect the costs on a product cost collector over an extended
period of time, and analyze the debits and credits in each period. Product cost collectors enable you
to collect costs at the product level independently of the production type. Regardless of whether the
production environment is order-related production, process manufacturing, or repetitive
manufacturing, you collect the production costs for the product on a product cost collector and
analyze the costs in each period.
 In the application component Product Cost by Sales Order, the sales order items function as the cost
objects for which you can calculate costs and revenues for both planned and actual data. You can use
the Product Cost by Sales Order component in the following situations:
 When you are manufacturing in-house with reference to a sales order in complex make-to-order
production
 When you are purchasing customer-specific trading goods with reference to a sales order and
reselling them to your customers
 When you are providing services whose costs are assigned to a sales order

(C) SAP AG AC040 8-12

0.13
Controlling by Production Order

Production Production Production Material

Order 1 Order 2 Order 3
PP
Goods issues Goods issues Goods issues
Confirmations Confirmations Confirmations
Goods receipt Goods receipt Goods receipt

CO-
CO-
PC
Debit: Debit: Debit:
Material 2,400 $ Material 3,600 $ Material 1,200 $
Internal Act. 700 $ Internal Act. 900 $ Internal Act. 500 $
Overhead 300 $ Overhead 400 $ Overhead 100 $
Credit: 3,200 $ Credit: 4,800 $ Credit: 1,700 $

 SAP AG 1999

 In Product Cost by Order, the production orders themselves are the cost objects. Costs charged to the
orders are usually analyzed and settled by lot. This means that variances can only be analyzed after
the entire planned production quantity has been delivered into inventory.
 The Product Cost by Order component allows you to do the following:
 Calculate and analyze planned costs, target costs, and actual costs of production orders and
process orders
 Calculate or update the Work in Process and the finished goods inventory
 Calculate and analyze variances
 Transfer data to Financial Accounting (FI), Profitability Analysis (CO-PA), Profit Center
Accounting (EC-PCA), and Actual Costing / Material Ledger (CO-PC-ACT)
 When a production order is created, a preliminary cost estimate will be carried out automatically to
calculate the planned costs for the order.
 Actual costs are incurred when raw materials from stock and activity types from cost centers are
consumed. Primary costs can also be posted directly from other system components to the
production order, and overhead can be charged to the order as well. Process costs can be posted by
allocating process quantities using the process template.
 Since these various actual costs are posted to the production order simultaneously with the
consumption of materials and activity, production order costs can be reviewed and analyzed at any
time.
 As deliveries of finished goods are made to stock, the inventory value is debited and the order is
credited.

(C) SAP AG AC040 8-13

0.14
Periodic Controlling on Product Cost Collectors

Production Production Production Material

Order Order Order
PP
Goods issues Goods issues Goods issues
Confirmations Confirmations Confirmations
Goods receipt Goods receipt Goods receipt

Product Cost Collector

CO-
CO-
PC Debit:
Material 1,200 $
Internal Act. 800 $
Overhead 200 $

Credit: 2,100 $

 SAP AG 1999

 A product cost collector is a cost object in the Product Cost by Period component that collects the
actual costs incurred in each period for the production of a material. When you use a product cost
collector, the product becomes the main cost object.
 Product cost collectors are independent of the production type. This means that the actual costs for a
product cost collector can be collected in any of the following environments: order-related
production, process manufacturing, or repetitive manufacturing.
 Actual costs can be collected on the product cost collector in the following ways:
 Through logistics transactions (such as goods issues or confirmations) for manufacturing orders
(production orders or process orders) and run schedule headers. For example, goods issues to a
production order or reporting point backflushes in repetitive manufacturing debit the product cost
collector with actual costs. Goods receipts from production credit the product cost collector.
 Directly, for example through G/L account postings in Financial Accounting (FI)
 You can view the actual costs for the product cost collector in the Information System at any time
 During the period-end closing process, you can:
 Charge the product cost collector with process costs by means of a process template
 Revaluate the activities at actual activity prices
 Calculate overhead for the product cost collector
 Calculate the value of your unfinished products (work in process) for the period
 Calculate the variances of the period
 Settle the work in process and variances to other application components

(C) SAP AG AC040 8-14

0.15
Process Chain: Order-Related Manufacturing

Order archived / deleted Order request

Settlement Order creation

HEADER

Variance calculation
Availability check
OPERATIONS
OPERATIONS

Goods receipt MATERIAL

MATERIAL COMPONENTS
COMPONENTS

Release of order
WIP calculation PRODUCTION
PRODUCTION RESOURCES
RESOURCES

COSTS
COSTS PLAN
PLAN
TARGET
TARGET
100 20 Shop paper printing
Surcharging ACTUAL
ACTUAL
50

Reval. with actual prices Material withdrawal

Allocating process quantities Confirmations

 SAP AG 1999

 The process chain shows each step of order related manufacturing.

 The order request may come from the SOP- planning that was described in the unit on plan
integration. You can transfer the SOP- data to the production plan. The MRP- run can generate a
plan order, which can be converted to a production order. The order request could also be based on a
business request from outside the system. During the MRP- run, the system will also check the
availability of the necessary raw materials and semi-finished goods required for the manufacturing
process. If there are not enough materials available, the system may create additional plan orders for
them, which can be converted to production orders, purchase requisitions, or purchase orders.
 When the order is created, a preliminary cost estimate is generally carried out (although not for
repetitive manufacturing) to calculate the planned costs for the order. The planned costs are updated
whenever the order is changed.
 When the order is released, actual costs can be assigned to the order. Actual costs are incurred when
materials are withdrawn from stock for the order and when confirmations are created, which
documents the consumption of activity types. Primary costs can also be posted directly from other
system components to the production order. Shop papers are printed for the shop floor.
 After finishing the production process, the goods are delivered to stock. It is possible to perform
partial deliveries at any time during the production process.

(C) SAP AG AC040 8-15

0.16
Delivery to Stock

Resource
Allocation
Cost Object
Name Cost Items Plan Actual

glass 1,500 1,800

Plug 2,000 2,200
GOODS ISSUE Cable 500 600

Material 4,000 4,600

Labor 2,500 2,800

Overhead 1,500 1,600

CONFIRMATION
Process 1,000 1,500
GOODS
Total Costs 9,000 10,500 RECEIPT
EXTERNAL Delivery Value 9,000
PROCUREMENT Order Balance 1,500
EXTERNAL
ACTIVITIES

 SAP AG 1999

 After final delivery, any costs remaining on the order are settled to stock or to a price difference
account. The order is then fully credited.
 If the price control indicator in the material master record is S, a price difference account is debited
with the difference between the actual costs incurred and the credit postings for the goods receipts.
The moving average price is recalculated and updated for statistical purposes.
 If the price control indicator in the material master record is V, the material stock account is debited
with the difference between the actual costs incurred and the credit postings for the goods receipts.
The total value of the stock and the moving average price are recalculated.
 If the warehouse stock at the time of settlement is less than the order quantity because goods were
issued in the meantime, the following happens:
 The costs that are based on the quantity that is still in stock are posted to the material stock
account of the material.
 The remaining costs are automatically posted to a price difference account.
 If the material ledger is active, the delivery is posted to the material ledger and can be used to
calculate an actual material price at period-end.

(C) SAP AG AC040 8-16

0.17
Transactions related to Profitability Management

At the conclusion of this TOPIC,

you will be able to:
 Create a sales order.
 Post the necessary documents to record the costs
of goods issues.
 Generate revenue postings using the billing
functionality in the SD module.

 SAP AG 1999

(C) SAP AG AC040 8-17

0.18
Customer Order Management

Customer

Process Partners

FI
4

Payment
1
SD 1 2 3

Sales Delivery Billing

Quantity Flow Order 1 1 1
Logistic Documents

t
 SAP AG 1999

 Effective sales order processing ties all activity to customer demand in a series of tightly integrated
processes. R/3 Sales and Distribution gives you precisely this kind of sales order processing using a
series of linked documents to generate a workflow for sales and distribution. Sales and Distribution
begins with pre-sales processing and ends with customer payment for goods received and services
rendered. Sales Distribution represents each of these processes with electronic documents, each
linked both to preceding and subsequent electronic documents.
 As part of Sales Order Processing, you create a sales document.
 During Inventory Sourcing, R/3 determines the supplier of the inventory, based on data that you
create and control. Is the supplier one of your plants? If so, which one? Is the supplier a third-party
vendor? If so, which one?
 As a part of Delivery, you create a delivery document.
 During Billing, you create a billing document.
 In the Customer Payment process, you receive payment and post the payment receipt in Financial
Accounting (FI).
 In R/3, the documents defined in Sales and Distribution help you manage the Customer Order
Management cycle for you and your customer.

(C) SAP AG AC040 8-18

0.19
Transferring Incoming Orders

CO-
CO-
Sold qty +
PA
Revenue +
(costing-based) Rebates +
COGS +

EC-
EC-
CO-
CO-PA
PCA Acc.b.
Acc.b.
FI

SD 1

Sales
Quantity Flow Order 1

t
 SAP AG 1999

 You can valuate incoming sales orders (as expected revenues) and transfer them from SD to costing-
based CO-PA in order to obtain an early analysis of anticipated profits. Consequently, you can create
reports that not only reflect the course of actual profits and contribution margins on the basis of
billing documents, but also allow you to analyze these developments on the basis of incoming orders.

(C) SAP AG AC040 8-19

0.20
Delivery and Billing

Sold qty +
CO-
CO- Revenue +
PA Rebates +
COGS +
(costing-based)

Revenue
COGS
EC-
EC- X
CO-
CO-PA X
PCA Rebates
Acc.b.
Inventory X
FI X Customer
X

SD 1 2 3

Sales Delivery Billing

Quantity Flow Order

t
 SAP AG 1999

 Data is transferred to account-based CO-PA at the same time as it is posted in Financial Accounting
(FI). This means that the system creates line items in CO-PA when it creates the accounting
documents upon goods issue and billing. Note that a line item is created in CO-PA for each item and
each cost or revenue element. The amounts these line items receive are also the same ones posted in
FI. No line items are created here for incoming sales orders, since those do not lead to postings in FI.
 The values in account-based CO-PA are assigned to profitability segments and are stored in the cost
or revenue element determined in MM (for goods issues) or SD (for billing documents) and posted in
FI. Note that the data is only transferred to account-based CO-PA if the general ledger account
posted in FI is defined as a cost or revenue element in CO. (See also the general posting logic in
Controlling.)
 A business transaction is usually concluded in SD with the billing document. The billing data is
automatically transferred to FI, where the revenue and receivable postings are made at the same time.
 When a billing document is created, SD calculates all sales revenues, sales deductions, and other
values (such as the standard cost) using pricing procedures, and stores these values in condition
types. By assigning these condition types to the value fields in costing-based Profitability Analysis,
you can have the system automatically transfer their values to CO-PA.

(C) SAP AG AC040 8-20

0.21
Selling Goods and Services - Example

 A customer orders 99 pumps,

Sales order which we will deliver from
99 unrestricted stock

Item 10

99 pumps

 The customer wants us

Item 20 to install the pumps in his plant

onsite
installation

 SAP AG 1999

 This example combines the sale of a product from finished goods inventory together with the sale of
a service.
 If a customer orders both products and services, each item is depicted as a separate sales order item.

(C) SAP AG AC040 8-21

0.22
Selling Goods and Services without
Sales Order Controlling

Sales order Profitability

Analysis

Item 10
Billing Document CO-
CO-
PA

99 pumps
Product
Costing
Cost of Goods Sold
CO-
CO-
PC

 SAP AG 1999

 First sales order item (Item 10):

 The first item is related to products, which we produce in a make to stock environment. The
production process is controlled by a production order, which delivers the finished goods to
warehouse unrestricted stock, for sale at a later time.
 In this case, the sales order item is not a cost object.
 The products are shipped to the customer without postings to CO. When the billing document is
created in SD, revenues and cost of goods sold postings are made to Financial Accounting and to
CO-PA.
 Since the sales order item is not a cost object in this scenario, the revenues will be transferred
directly to profitability analysis (CO-PA) during the billing process. The cost of goods sold
posting to CO-PA is based on a cost estimate created previously in Product Cost Planning.
Production variances are transferred to PA during settlement of the production order.

(C) SAP AG AC040 8-22

0.23
Selling Goods and Services with
Sales Order Controlling

Billing
Sales order SD
Acty. Profitability
Allocation Cost Center Analysis

CO-
CO-
PA
Goods
MM Issues

CO Object

Item 20
Order Settlement
onsite
installation
Invoice External
activities

 SAP AG 1999

 Second sales order item (Item 20):

 The second item is related to a service, which we provide at the customer's location. It entails
installing the pumps that were sold in sales order item 10.
 In this case, the sales order item is a cost object.
 A sales order-specific cost estimate exists for the cost of the service in the second sales order item.
 The costs incurred by providing the service will be controlled on the sales order item. In this
example, cost center 4712 allocates 15 minutes of activity FEP to the sales order item. There are
also material costs charged to the sales order item for parts used in the installation.
 Since the sales order item is a cost object in this scenario, the revenues will be posted to the order
item when the billing is done.
 When this sales order item is settled to CO-PA, both cost and revenue information will be
transferred to a profitability segment.

(C) SAP AG AC040 8-23

0.24
Transfer Prices

At the conclusion of this TOPIC,

you will be able to:

 Explain the significance of parallel valuation

approaches for EC-PCA
 See how parallel valuation approaches are
represented in EC-PCA.
 Understand the transfer pricing concept in
EC-PCA.

 SAP AG 1999

(C) SAP AG AC040 8-24

0.25
Transfer Prices in Profit Center Accounting

Transferpreis
150 price
Transfer
Profit Center 1 150 Profit Center 2

Profit
Center
Accounting

Production
Material order
120

FI/CO Parallel value flows

Logistics Quantity flow

 SAP AG 1999

 If you choose to use profit center valuation in PCA, you can define transfer prices for goods
movements between profit centers.
 The diagram above indicates that Profit Center 1 transfers a quantity of raw material to
Profit Center 2, which will consume the raw material in carrying out a production process.

(C) SAP AG AC040 8-25

0.26
Example for Transfer Prices

Profit Center 1 Profit Center 2

Profit Internal revenue: - 150
Center Material
Accounting consumption 150
Cost of sales + 120
Stock - 120

Production
Material order
120

FI/CO Parallel value flows

Logistics Quantity flow

 SAP AG 1999

 Based on a transfer price set at 150.00, the sender profit center records an internal revenue in this
amount. This is set off against the "cost of sales", which is calculated based on the internal change in
stock. The receiver profit center records an expense of the same amount.

(C) SAP AG AC040 8-26

0.27
Event-Based Postings In CO: Unit Summary

Having completed this UNIT,

you should now be able to:

 Post CO Reposting documents.

 Post a direct Activity Allocation.
 Explain the purpose, and process, of entering
time sheets.
 Establish a budget on an overhead order and
post a transaction to the order.
 Create different types of orders and post
various transactions involving them.
 Explain the Transfer Price concept.

 SAP AG 1999

(C) SAP AG AC040 8-27

0.28Exercise: Event-Based Postings in CO

Unit: Event-Based Postings in CO

Topic: Repostings

• Use the reposting function to correct postings to the wrong CO object

by other components such as FI

The bookkeeper assigned in his FI posting the wrong posting object. You
would like to correct this without reversing the FI posting.

1-1 Enter the initial FI posting.

1-1-1 Create a G/L account posting for the purchase today of raw materials for
the German company code (1000) in currency UNI. Enter a debit of
1000 to G/L account 403000 and the service cost center SERV-##.
Specify that the offsetting credit is to G/L account 113100. Post the
document.

1-1-2 Process the Cost centers: actual/plan/variance report for the current
period and plan version 0. Execute the report for the service cost center
(SERV-##).

1-2 Repost (without reference to the FI document) costs from the service cost center
to the production cost center.

1-2-1 Use screen variant Cost Center. Repost 500 of the raw materials costs
from the service cost center (SERV-##) to your production cost center
(PROD-##). The cost element is 403000. Post your document.

1-2-2 Process the Cost centers: actual/plan/variance report for the current
period and plan version 0. Execute the report for the service cost center
(SERV-##) and for the production cost center (PROD-##).

(C) SAP AG AC040 8-28

 Unit: Event-Based Postings in CO
Topic: Direct Allocations

• View the combined quantity and value flow of a direct activity

allocation

The service cost center has performed a quantity of activity for the
production cost center. Through the direct activity allocation in CO, you
will record the flow of the activity quantity and associated costs between
the cost centers.

2-1 Your service cost center spent 50 hours inspecting the assets of your production
cost center. The detected damages of some assets were repaired with 90 hours
repair activity. An activity report (paper document) is now passed to the internal
accounting department. You will process the activity allocation based on this
information and review the results on your service cost center.

2-1-1 Create a direct activity allocation to post 50 hours of activity type CHK-
## and 90 hours of activity type REP-## from cost center SERV-## to
cost center PROD-##. Post your document. The screen variant that you
should use is: To cost center.

2-1-2 Process the Cost centers: actual/plan/variance report for the current
period and plan version 0. Execute the report for the service cost center
(SERV-##). Review the quantity and cost flows out of the service cost
center.

(C) SAP AG AC040 8-29

 Unit: Event-Based Postings in CO
Topic: Cross Application Time Sheet

• Use the cross application time sheet

Rather than continue having employees record activities on a paper

document for entry into the system by internal accounting, the company
wants the employees to fill out the information online. The information
can them be transferred to CO to update cost accounting.

3-1 Create an entry using the cross application time sheet and transfer the
information to CO. Review the results in the service cost center.

3-1-1 You will use the cross application time sheet with data entry profile CO
to record the repair activity REP-## that your employee with the
personnel number 10## performed for the production cost center
PROD-##. The sending cost center is SERV-##, and the employee
performed 8 hours of repair. Use the column for the actual date to enter
the hours. After that enter the release view, mark the line and press the
Release- button. Save the time sheet. (Notice: in some countries it may
be necessary to use the personnel number 70##)

3-1-2 Transfer the time sheet information you entered only to CO. Select by
using the personnel number of your employee.

3-1-3 Process the Cost centers: actual/plan/variance report for the current
period and plan version 0. Execute the report for the service cost center
(SERV-##). Access the Cost Centers: Actual line items report for the
DAA Repair Hours cost element (615000) and drill down to the original
document.

(C) SAP AG AC040 8-30

 Unit: Event-Based Postings in CO
Topic: Availability Control on Internal Orders

• Examine budgeting and availability control for overhead orders

In order to assure that the overhead orders are not over-spent, the
company has decided to approve a budget for an order and establish
controls to warn the user if an order is near exhaustion or exceeded.

4-1 Enter an original budget for the current fiscal year for your trade fair order
(from Data Sheet). Establish a budget of 20000.

4-2 Create a G/L account posting for the purchase today of raw materials for the
German company code (1000) in currency UNI. Enter a debit of 19500 to G/L
account 400000 and your trade fair order. Specify that the offsetting credit is to
G/L account 113100. Post the document. Record the budget warning message.
______________________________________________________________
______________________________________________________________

4-3 Create another G/L account posting for the purchase today of raw materials for
the German company code (1000) in currency UNI. Enter a debit of 3000 to G/
L account 400000 and your trade fair order. Specify that the offsetting credit is
to G/L account 113100. Post the document. Record the budget warning
message.
______________________________________________________________
______________________________________________________________

4-4 The instructor will display the mail messages that were automatically initiated
by the availability control settings.

(C) SAP AG AC040 8-31

 Unit: Event-Based Postings in CO
Topic: Transactions relating to Cost Objects

• Create a production order and view the costing for it

• Perform typical postings to a production order

The company produces a certain material. They have depicted the

logistics process as make-to-stock manufacturing using BOMs, Routings
and PP-production orders. They have decided to control the order process
by identify specific lot sizes to be produced, rather than maintaining the
orders by period. This is supported within R/3 controlling by the Product
Cost by Order environment.

Prerequisite:

In this scenario you need to consume several materials from stock in order to produce
your product. Normally you would produce or purchase them. To save time in
this course, we perform a special goods receipt to stock with movement type
561.
So do the following: From the logistics menu for material management, inventory
management, create a goods receipt posting (other). Enter movement type 561,
plant 1000 and storage location 0001.
In the list screen enter the material numbers T-B1##, T-B2##, T-B3## and T-B4##
with a quantity of 300 each.
Post the goods receipt.

5-1 Create a production order and review the information generated.

5-1-1 From the logistics menu for production control, create a PP production
order for material T-F1##. The production order type is PP01. The
production lot size is 100 pieces, and the finish date will be the last
working day of this month.

5-1-2 From the component overview, review the components that were copied
from the BOM into the production order. Also, review the operations in
the operation overview that were copied from the routing.

(C) SAP AG AC040 8-32

 5-1-3 From the production order header, review the master data information.
What are the relevant fields for costing?
______________________________________________________________
______________________________________________________________
______________________________________________________________

5-1-4 Locate the settlement rule. What has been defined as the receiver?
______________________________________________________________

5-1-5 Release the production order and then save it. Record the order number
and copy it to your Data sheet.
To release the order, select the release icon. To save the order, select the
save folder.
______________________________________________________________

5-2 From the CO report tree for product cost by order, display the plan/actual
comparison report for your production order from Exercise 5-1-5.

5-3 From inventory management, post the goods issue for the material components
reserved for the order. Use the movement type 261, issue the components from
plant 1000, storage location 0001, and reference the production order number
from Exercise 5-1-5. While processing the goods issue, change the quantity of
the second item from 100 pieces to 101 pieces and post the goods issue.

5-4 Review the actual costs posted to the production order from the goods issue
transaction. From the CO report tree for product cost by order, display the plan/
actual comparison report for your production order from Exercise 5-1-5.

5-5 After each operation, the production floor may carry out a completion
confirmation to record the output quantities and the actual activity quantities
consumed by the operation. These activity confirmations can be entered from
the production control menu.

During a confirmation entry, it is possible for the system to execute automatic

goods movement transactions. The routing for material T-F1## has been
maintained so that when the last operation is confirmed, the system will
automatically process the goods receipt for the finished product. This material
movement transactions will create a credit posting on the production order.

(C) SAP AG AC040 8-33

 Execute a partial completion confirmation for the last operation (60) of the
production order. Since this is considered a milestone operation, the preceding
operations will be automatically confirmed using the planned executions times
adjusted for the actual confirmed quantity. Confirm to have finished only 80
pieces, without any scrap, but increase the proposed activity quantities
(execution times) by approximately 10%. (The activity quantities are being
intentionally changed to create a variance).

5-6 Review the actual costs posted to the production order from the completion
confirmation. Additional debit entries should have been made for the
production activities, and a credit should have been applied to the order for
delivered quantity of 80 pieces. From the CO report tree for product cost by
order, display the plan/ actual comparison report for your production order.

5-7 Additional costs have been incurred for the production order beyond the normal
production activities and goods issue transactions. Using financial accounting,
post primary costs directly to the order. This additional cost is for an unplanned
external service, which was necessary to complete the production process.
Create a G/L account posting for the purchase today of OEM product
consumption for the German company code (1000) in currency UNI. Enter a
debit of 1000 to G/L account 410000 and your production order from Exercise
5-1-5. Specify that the offsetting credit is to G/L account 113100. Post the
document.

5-8 Review the actual costs posted to the production order from the FI posting.
From the CO report tree for product cost by order, display the plan/ actual
comparison report for your production order.

(C) SAP AG AC040 8-34

 Unit: Event-Based Postings in CO
Topic: Selling Goods

• Understand selling a product from stock made to sales order.

The company receives an order from a customer, requesting pumps.

6-1 Create a sales order for the customer.

6-1-1 Create the sales order and the first item, the requested pumps. Create a
standard order for the Frankfurt sales organization (1000), sales
distribution channel (10), and division 00. The Sold to party and Ship to
party are both Becker Berlin (1000), and the customer purchase order
number is 1000##. The customer has requested 100 pieces of your
material T-F1##, the pumps.

6-1-2 Review the pricing conditions for the pumps.

6-1-3 Review the account assignment for the pumps to view the Profitability
Analysis settlement. Save the sales order and record the document
number.

Select display doc. header details.

______________________________________________________________

(C) SAP AG AC040 8-35

 6-2 Process a delivery to ship the pumps to the customer. Ship the goods from the
Hamburg shipping point (1000), with a selection date that is two weeks from
today’s date. Be sure to Pick all 100 pumps from storage location 0002 and post
a goods issue to record the transaction in accounting. Record the delivery
document number.
______________________________________________________________

6-3 Bill the customer for the pumps and review the CO-PA posting.

3.2.1 After shipping all the materials create the billing for the sales order item.
The pump invoicing information is generated from the delivery
document. Record your billing document numbers and the billing date.
______________________________________________________________
______________________________________________________________
______________________________________________________________

3.2.2 View the accounting document type created for the billing document.
Review the data (value fields) which was posted to CO-PA for this
product.
______________________________________________________________

(C) SAP AG AC040 8-36

0.29Solution: Event-Based Postings in CO

Unit: Event-Based Postings in CO

Topic: Repostings

• Use the reposting function to correct postings to the wrong CO object

by other components such as FI

The bookkeeper assigned in his FI posting the wrong posting object. You
would like to correct this without reversing the FI posting.

1-1 Enter the initial FI posting.

1-1-1 Create a G/L account posting for the purchase today of raw materials for
the German company code (1000) in currency UNI. Enter a debit of
1000 to G/L account 403000 and the service cost center SERV-##.
Specify that the offsetting credit is to G/L account 113100. Post the
document.

Menu path:
Accounting→Financial accounting→General ledger→Document entry→ G/
L account posting
Enter the current date in the Document date field.
Enter 1000 in the Company code field.
Enter UNI in the Currency field.
Enter 403000 in the G/L Account field.
Enter.debit in the D/C field.
Enter 1000 in the Doc. Currency Amount field.
Enter SERV-## in the Cost center field.
Enter 113100 in the G/L Account field.
Enter credit in the D/C field.
Enter 1000 in the Doc. Currency Amount field.
Select Enter.
Select enter to clear tax warning message.
Select Save.

(C) SAP AG AC040 8-37

 1-1-2 Process the Cost centers: actual/plan/variance report for the current
period and plan version 0. Execute the report for the service cost center
(SERV-##).
Menu path:
Accounting→Controlling→Cost center Accounting→Information
system→Reports for Cost Center Accounting→Plan/actual
comparisons→CCtr: Actual/Plan/Variance
Enter 1000 in the Controlling area field.
Enter the current fiscal year in the Fiscal year field.
Enter the current period in the From Period field.
Enter the current period in the To Period field.
Enter 0 in the Plan version field.
Enter SERV-## in the first Or value(s) field.
Select execute.

1-2 Repost (without reference to the FI document) costs from the service cost center
to the production cost center.

1-2-1 Use screen variant Cost enter. Repost 500 of the raw materials costs
from the service cost center (SERV-##) to your production cost center
(PROD-##). The cost element is 403000. Post your document.
Menu path:
Accounting→Controlling→Cost center Accounting→Actual
postings→Manual Reposting of Costs→Enter
Enter Cost Center in the Screen variant field.
Select List entry.
Enter SERV-## in the Send. CCtr field.
Enter 403000 in the Cost elem. Field.
Enter 500 in the Amount field.
Enter UNI in the Currency field.
Enter PROD-## in the Rec. CCtr field.
Select Post.

1-2-2 Process the Cost centers: actual/plan/variance report for the current
period and plan version 0. Execute the report for the service cost center
(SERV-##) and for the production cost center (PROD-##).

(C) SAP AG AC040 8-38

 Menu path:
Accounting→Controlling→Cost center Accounting→Information
system→Reports for Cost Center Accounting→Plan/actual
comparisons→CCtr: Actual/Plan/Variance
Enter 1000 in the Controlling area field.
Enter the current fiscal year in the Fiscal year field.
Enter the current period in the From Period field.
Enter the current period in the To Period field.
Enter 0 in the Plan version field.
Enter SERV-## in the first Or value(s) field.
Select Execute.

(C) SAP AG AC040 8-39

 Unit: Event-Based Postings in CO
Topic: Direct Allocations

• View the combined quantity and value flow of a direct activity

allocation

The service cost center has performed a quantity of activity for the
production cost center. Through the direct activity allocation in CO, you
will record the flow of the activity quantity and associated costs between
the cost centers.

2-1 Your service cost center spent 50 hours inspecting the assets of your production
cost center. The detected damages of some assets were repaired with 90 hours
repair activity. An activity report (paper document) is now passed to the internal
accounting department. You will process the activity allocation based on this
information and review the results on your service cost center.
2-1-1 Create a direct activity allocation to post 50 hours of activity type CHK-
## and 90 hours of activity type REP-## from cost center SERV-## to
cost center PROD-##. Post your document. The screen variant that you
should use is: To cost center.
Menu path:
Accounting→Controlling→Cost center Accounting→Actual
postings→Activity allocation→Enter
Enter the current date in the Document date field.
Enter 0 in the Version field.
Enter Cost Center in the Screen variant field.
Select List entry.
In the first row:
- Enter SERV-## in the Send. CCtr column.
- Enter CHK-## in the SATyp column.
- Enter PROD-## in the Rec. CCtr field.
- Enter 50 in the Total quantity column.
In the second row:
- Enter SERV-## in the Send. CCtr column.
- Enter REP-## in the ATyp column.
- Enter PROD-## in the Rec. CCtr field.
(C) SAP AG AC040 8-40
 - Enter 100 in the Total quantity column.
Select Post.

2-1-2 Process the Cost centers: actual/plan/variance report for the current
period and plan version 0. Execute the report for the service cost center
(SERV-##). Review the quantity and cost flows out of the service cost
center.
Menu path:
Accounting→Controlling→Cost center Accounting→Information
system→Reports for Cost Center Accounting→Plan/actual
comparisons→CCtr: Actual/Plan/Variance
Enter 1000 in the Controlling area field.
Enter the current fiscal year in the Fiscal year field.
Enter the current period in the From Period field.
Enter the current period in the To Period field.
Enter 0 in the Plan version field.
Enter SERV-## in the first Or value(s) field.
Select Execute.

(C) SAP AG AC040 8-41

 Unit: Event-Based Postings in CO
Topic: Cross Application Time Sheet

• Use the cross application time sheet

Rather than continue having employees record activities on a paper

document for entry into the system by internal accounting, the company
wants the employees to fill out the information online. The information
can them be transferred to CO to update cost accounting.

3-1 Create an entry using the cross application time sheet and transfer the
information to CO. Review the results in the service cost center.
3-1-1 You will use the cross application time sheet with data entry profile CO
to record the repair activity REP-## that your employee with the
personnel number 10## performed for the production cost center
PROD-##. The sending cost center is SERV-##, and the employee
performed 8 hours of repair. Use the column for the actual date to enter
the hours. After that enter the release view, mark the line and press the
Release- button. Save the time sheet. (Notice: in some countries it may
be necessary to use the personnel number 70##)

Menu path:
Accounting→Controlling→Cost center Accounting→Actual postings→Time
sheet→Time data
Select Enter times.
Enter CO in the Data entry profile.
Enter 10## in Personnel number field.
Select Enter.
Enter your assigned date in the Key date field.
Select Enter times.
Enter SERV-## in the Send. CCtr column.
Enter REP-## in the ATyp column.
Enter PROD-## in the Rec. CCtr field.
Enter 8 in the column of the actual date.

(C) SAP AG AC040 8-42

 Select Release view.
Mark your entered item and select Release (You may use the icon in the icon
bar).
Select Save.
Go Back.

3-1-2 Transfer the time sheet information you entered only to CO. Select by
using the personnel number of your employee. Record the CO document
number.
Select Transfer→All Components.
Select Period today.
Enter 10## in Personnel no. field.
Enter 1000 in the Controlling Area field.
Select Target Components Controlling.
Select Execute.

3-1-3 Process the Cost centers: actual/plan/variance report for the current
period and plan version 0. Execute the report for the service cost center
(SERV-##). Access the Cost Centers: Actual line items report for the
DAA Repair Hours cost element (615000) and drill down to the original
document.
Menu path:
Accounting→Controlling→Cost center Accounting→Information
system→Reports for Cost Center Accounting→Plan/actual
comparisons→CCtr: Actual/Plan/Variance
Enter 1000 in the Controlling area field.
Enter the current fiscal year in the Fiscal year field.
Enter the current period in the From Period field.
Enter the current period in the To Period field.
Enter 0 in the Plan version field.
Enter SERV-## in the first Or value(s) field.
Select Execute.
Double-click on the report line for cost element 615000.
Double-click on the Cost Centers: Actual Line Items report
Double-click on the line item with the quantity 8- .

(C) SAP AG AC040 8-43

 Unit: Event-Based Postings in CO
Topic: Availability Control on Internal Orders

• Examine budgeting and availability control for overhead orders

In order to assure that the overhead orders are not over-spent, the
company has decided to approve a budget for an order and establish
controls to warn the user if an order is near exhaustion or exceeded.

4-1 Enter an original budget for the current fiscal year for your trade fair order
(from Data Sheet). Establish a budget of 20000.
Menu path:
Accounting→Controlling→Internal Orders→Budgeting→Original budget→Change
Enter your trade fair order number in the Order field.
Select Enter.
Enter 20000 for your order budget for the current fiscal year.
Select Save.

(C) SAP AG AC040 8-44

 4-2 Create a G/L account posting for the purchase today of raw materials for the
German company code (1000) in currency UNI. Enter a debit of 19500 to G/L
account 400000 and your trade fair order. Specify that the offsetting credit is to
G/L account 113100. Post the document. Record the budget warning message.
Accounting→Financial accounting→General ledger→Document entry→ G/L
account posting
Enter the current date in the Document date field.
Enter 1000 in the Company code field.
Enter UNI in the Currency field.
Enter 400000 in the G/L Account field.
Enter debit in the D/C field.
Enter 19500 in the Doc. Currency Amount field.
Enter your trade fair order number in the Order field.
Enter 113100 in the G/L Account field.
Enter credit in the D/C field.
Enter 19500 in the Doc. Currency Amount field.
Select Enter.
Select enter to clear tax warning message.
Select Save.
Note the budget warning message.
Hit enter to clear the budget warning message.
Remain in the Enter G/L Account Posting: Header data screen for the next exercise.

The warning message indicates that your order budget is almost exhausted.

(C) SAP AG AC040 8-45

 4-3 Create another G/L account posting for the purchase today of raw materials for
the German company code (1000) in currency UNI. Enter a debit of 3000 to G/
L account 400000 and your trade fair order. Specify that the offsetting credit is
to G/L account 113100. Post the document. Record the budget warning
message.
Enter the current date in the Document date field.
Enter 400000 in the G/L Account field.
Enter debit in the D/C field.
Enter 3000 in the Doc. Currency Amount field.
Enter your trade fair order number in the Order field.
Enter 113100 in the G/L Account field.
Enter Credit in the D/C field.
Enter 3000 in the Doc. Currency Amount field.
Select Enter.
Enter to clear tax warning message.
Select Save.
Note the budget warning message.
Hit enter to clear the budget warning message.

The warning message indicates that your order budget has been exceeded for the
current fiscal year.

4-4 The instructor will display the mail messages that were automatically initiated
by the availability control settings.
Menu path:
Office→Workplace →Inbox
Select Office unviewed.
Double-click on the mail message about your order.

(C) SAP AG AC040 8-46

 Unit: Event-Based Postings in CO
Topic: Transactions relating to Cost Objects

• Create a production order and view the costing for it

• Perform typical postings to a production order

The company produces a certain material. They have depicted the

logistics process as make-to-stock manufacturing using BOMs, Routings
and PP-production orders. They have decided to control the order process
by identify specific lot sizes to be produced, rather than maintaining the
orders by period. This is supported within R/3 controlling by the Product
Cost by Order environment.

Prerequisite:

In this scenario you need to consume several materials from stock in order to produce
your product. Normally you would produce or purchase them. To save time in this
course, we perform a special goods receipt to stock with movement type 561.

So do the following: From the logistics menu for material management, inventory
management, create a goods receipt posting (other). Enter movement type 561, plant
1000 and storage location 0001.

In the list screen enter the material numbers T-B1##, T-B2##, T-B3## and T-B4##
with a quantity of 300 each.

Post the goods receipt.

(C) SAP AG AC040 8-47

 5-1 Create a production order and review the information generated.

5-1-1 From the logistics menu for production control, create a PP production
order for material T-F1##. The production order type is PP01. The
production lot size is 100 pieces, and the finish date will be the last
working day of this month.
Menu path:
Logistics→Production→Production Control→Order→Create→With material
Enter material T-F1##.
Enter Production plant 1000.
Enter Order type PP01.
Select Enter.
Enter 100 pieces.
Enter the last working day of this month as the finish date.

5-1-2 From the component overview, review the components that were copied
from the BOM into the production order. Also, review the operations in
the operation overview that were copied from the routing.
Select the Component overview icon.
Select the Operation overview icon.

5-1-3 From the production order header, review the master data information.
What are the relevant fields for costing?
Choose the header (hat) icon. From the header screen, choose the control
data tab.
The fields that are relevant for costing are contained in the subscreen titled
Costing. These fields are costing variant plan and actual, costing sheet,
overhead key, RA key, and variance key.

5-1-4 Locate the settlement rule. What has been defined as the receiver?
Menu path:
From the menu bar, choose Header → Settlement rule.
The material T-F1xx has been defined as the receiver.

5-1-5 Release the production order and then save it. Record the order number
and copy it to your Data sheet.
To release the order, select the release icon. To save the order, select the
save folder.
5-2 From the CO report tree for product cost by order, display the plan/actual
comparison report for your production order from Exercise 5-1-5.

(C) SAP AG AC040 8-48

 Menu path:
Logistics →Production→Production Control→Information System→Controlling
Reports→Product Cost by Order
Expand Detailed Reports, expand for orders, then expand Variance Analysis, then
choose Plan/Actual Comparison.
Enter the order number from 5-1-5, choose Cumulated time frame, and then select
Execute.

5-3 From inventory management, post the goods issue for the material components
reserved for the order. Use the movement type 261, issue the components from
plant 1000, storage location 0001, and reference the production order number
from Exercise 5-1-5. While processing the goods issue, change the quantity of
the second item from 100 pieces to 101 pieces and post the goods issue.
Menu path:
Logistics →Materials management→Inventory management→Goods
movement→Goods issue
Enter movement type 261.
Enter Plant 1000.
Enter Storage location 0001.
Select To order, and enter the production order number.
Select Continue.
Select all of the items, and change the quantity for the second item from 100 to 101.
Select copy.
Select Enter to bypass the warning message regarding the reserved quantity.
Save the goods issue.

5-4 Review the actual costs posted to the production order from the goods issue transaction.
From the CO report tree for product cost by order, display the plan/actual
comparison report for your production order from Exercise 5-1-5.
Menu path:
Logistics→Production→Production Control→Information System→Controlling
Reports→Product Cost by Order
Expand Detailed Reports, expand for orders, then expand Variance Analysis,
then choose Plan/Actual Comparison.
Enter the order number from 5-1-5, choose Cumulated time frame, and then
select Execute.
Actual values should be listed for the cost elements for the components. To view
quantities and values by material, expand the actual cost element number.

(C) SAP AG AC040 8-49

 5-5 After each operation, the production floor may carry out a completion
confirmation to record the output quantities and the actual activity quantities
consumed by the operation. These activity confirmations can be entered from
the production control menu.

During a confirmation entry, it is possible for the system to execute automatic

goods movement transactions. The routing for material T-F1## has been
maintained so that when the last operation is confirmed, the system will
automatically process the goods receipt for the finished product. This material
movement transactions will create a credit posting on the production order.

Execute a partial completion confirmation for the last operation (60) of the
production order. Since this is considered a milestone operation, the preceding
operations will be automatically confirmed using the planned executions times
adjusted for the actual confirmed quantity. Confirm to have finished only 80
pieces, without any scrap, but increase the proposed activity quantities
(execution times) by approximately 10%. (The activity quantities are being
intentionally changed to create a variance).
Menu path:
Logistics→Production→Production Control→Confirmation→Enter→For
operation→Time ticket
Enter the order number, Select Oper/activity 60
Select Partial Confirmation and press Enter.
Enter a yield to confirm of 80, and change the default labor time to be
approximately 10% higher than the time proposed by the system.
Save the confirmation.

5-6 Review the actual costs posted to the production order from the completion
confirmation. Additional debit entries should have been made for the
production activities, and a credit should have been applied to the order for
delivered quantity of 80 pieces. From the CO report tree for product cost by
order, display the plan/ actual comparison report for your production order.
Menu path:
Logistics→Production→Production Control→Information System→Controlling
reports→Product Cost by Order
Expand Detailed Reports, expand for orders, then expand Variance Analysis, then
choose Plan/Actual Comparison.
Enter the order number from 5-1-5, choose Cumulated time frame, and then select
Execute.
Actual values should be listed for the cost elements for the components and activity
types. To view quantities and values by material and activity type, expand the actual
cost element number.

(C) SAP AG AC040 8-50

 5-7 Additional costs have been incurred for the production order beyond the normal
production activities and goods issue transactions. Using financial accounting,
post primary costs directly to the order. This additional cost is for an unplanned
external service, which was necessary to complete the production process.
Create a G/L account posting for the purchase today of OEM product
consumption for the German company code (1000) in currency UNI. Enter a
debit of 1000 to G/L account 410000 and your production order from Exercise
5-1-5. Specify that the offsetting credit is to G/L account 113100. Post the
document.
Menu path:
Accounting→Financial accounting→General ledger→Document entry→ G/L
account posting
Enter the current date in the Document date field.
Enter 1000 in the Company code field.
Enter UNI in the Currency field.
Enter 410000 in the G/L Account field.
Enter debit in the D/C field.
Enter 1000 in the Doc. Currency Amount field.
Enter your production order number in the Order field.
Enter 113100 in the G/L Account field.
Enter credit in the D/C field.
Enter 1000 in the Doc. Urrency Amount field.
Select Enter.
Select enter to clear tax warning message.
Select Save.

(C) SAP AG AC040 8-51

 5-8 Review the actual costs posted to the production order from the FI posting.
From the CO report tree for product cost by order, display the plan/ actual
comparison report for your production order.

Menu path:
Logistics→Production→Production Control→Information System→Controlling
reports→Product Cost by Order
Expand Detailed Reports, then expand Variance Analysis, then choose Plan/Actual
Comparison.
Enter the order number from 5-1-5, choose Cumulated time frame, and then select
Execute.
Actual values should be listed for the cost elements for the components, finshed
good, activity types and consulting services. To view quantities and values by
material and activity type, expand the actual cost element number.

(C) SAP AG AC040 8-52

 Unit: Event-Based Postings in CO
Topic: Selling Goods

• Understand selling a product from stock made to sales order.

The company receives an order from a customer, requesting pumps.

6-1 Create a sales order for the customer.

6-1-1 Create the sales order and the first item, the requested pumps. Create a
standard order for the Frankfurt sales organization (1000), distribution
channel (10), and division 00. The Sold to party and Ship to party are
both Becker Berlin (1000), and the customer purchase order number is
1000##. The customer has requested 100 pieces of your material T-
F1##, the pumps.
Menu path:
Logistics→Sales and distribution→Sales→Order→Create
Enter Standard Order in the Order type field.
Enter 1000 in the Sales organization field.
Enter 10 in the Distribution channel field.
Enter 00 in the Division field.
Select Item overview.
Enter 1000 in the Sold-to party field.
Enter 1000 in the Ship-to party field.
Enter 1000## in the PO number field.
Enter T-F1## in the Material field.
Enter 100 in the Order quantity field.

(C) SAP AG AC040 8-53

 6-1-2 Review the pricing conditions for the pumps.
Select the item. (Click on the box to the left of the item number.)
Select Display doc. Header details
Select the tab conditions to review pricing conditions.

6.1.3 Review the account assignment for the pumps to view the Profitability
Analysis settlement. Save the sales order and record the document
number.
Select display doc. Header details.

Select the Account assignment tab.

Select Save.
Go Back to the Create Sales Order: Initial Screen for the next exercise.

6-2 Process a delivery to ship the pumps to the customer. Ship the goods from the
Hamburg shipping point (1000), with a selection date that is two weeks from
today’s date. Be sure to Pick all 100 pumps from storage location 0002 and post
a goods issue to record the transaction in accounting. Record the delivery
document number.

Go Back to the standard menu.

Select Order→Subsequent functions→Delivery.
Enter 1000 in the Shipping point field.
Enter the current date + 2 weeks in the Selection date field.
Verify that your sales order number is in the Order field.
Select enter.
Select Subsequent functions via menu.
Create transfer order.
Answer yes, if delivery is to save.
Record the delivery number.
Enter 001 to Warehouse field.
Enter 1000 to plant field.
Verify that the delivery number is in the delivery field.
Enter 2 in the Adopt pick quant. field.
Enter 2 in the Adopt putaway qty field.
Select Enter.

(C) SAP AG AC040 8-54

 Select post.
Record the transfer order number

6-3 Bill the customer for the pumps and review the CO-PA posting.

6-3-1 After shipping all the materials, create the billing for the sales order
item. The pump invoicing information is generated from the delivery document.
Record your billing document number and the billing date.

Menu path:
Logistics→Sales and distribution→Sales→Order→ Subsequent
functions→Billing document
Verify that your delivery document number appears in the first field in the
Document column.
Select Save.

6-3-2 View the accounting document type created for the billing document.
Review the data (value fields) which was posted to CO-PA for this
product.
Select Billing document→Display.
Enter the billing document number.
Select Accounting.
If the Profitab. Analysis document type is displayed in the list:
- Double-click on it.
- Select Item data to view the product.
- Select Value fields and use the Next screen and Previous screen functions
to view the data transferred to Profitability Analysis for this product.
Go Back to the Sales screen.

(C) SAP AG AC040 8-55

0
Period–End Postings In CO: Unit Contents

 Overhead Cost Controlling

 Cost Object Controlling
 Actual Costing / Material Ledger
 Profitability Management
 Period–End Closing Process / Schedule Manager
 Reconciliation Ledger

 SAP AG 1999

(C) SAP AG AC040 9-1

0.2
Period–End Postings In CO: Unit Objectives

At the conclusion of this UNIT,

you will be able to:
 Post Statistical Key Figures, perform an Assessment
of costs, and settle an Overhead Order.
 Allocate overhead, and assign Process costs to an
order. Deliver material to stock, calculate WIP and
Variances. Settle the balance of an order.
 Execute Profitability Management Reports.
 Explain the purpose of the Reconciliation Ledger and
execute appropriate reports.
 Explain the Period–End process.

 SAP AG 1999

(C) SAP AG AC040 9-2

0.3
You Are Here!

FI
MM CO
HR
$$ CO
+ABC SD AA 1 12
$
Planning and Postings to CO 
t Plan Integration From Other Modules $
Event-Based
Reporting Tools
Postings in CO

1 12
AC040 OM PC Profit
OM PC Profit FI CO
Reflecting Your Period-
Period-End
Business in CO Postings in CO
INT EXT
OM PC Profit “Which
FI MM HR AA SD
Button?”
Overview of CO AcceleratedSAP

Getting Started Course Review

 SAP AG 1999

(C) SAP AG AC040 9-3

0.4
Period–End Postings In CO: Business Scenario

 As you continue your review, you find that the second major
category of transactions involves postings performed at the
end of each accounting period. Here again, there are a
number of transactions of this type, some having broad
applicability throughout CO, while others are more specific.
 Your review reveals that many of these period-end postings
involve allocations. The purpose is to assign the costs to
the appropriate controlling objects. As you explain to the
auditors, these period-end closing activities follow a
particular sequence, and are intended to provide accurate
periodic operating results to management.
 You find that the auditors have many questions in the
production area. You must explain the process flow in CO
that accumulates production costs during the period, and
then calculates the balance
sheet WIP values.

 SAP AG 1999

(C) SAP AG AC040 9-4

0.5
Period end postings in Overhead Cost Controlling

At the conclusion of this TOPIC,

you will be able to:
 Post Statistical Key Figures to a Controlling Object.
 Perform an Assessment of costs from one Cost
Center to several others.
 Perform a Settlement of an Overhead Order’s costs
to a Cost Center.

 SAP AG 1999

(C) SAP AG AC040 9-5

0.6
Postings of Statistical Key Figures

Periods 1 2 3 . . . 12
Type 01 Employees 20 20 20 20
Type 02 Counter no. 1300 1355 1275 1325

Posting
Period

 SAP AG 1999

 You can enter statistical key figures for your cost center in order to provide a basis for periodic
allocations, and also to create ratios in the information system. For example, the statistical key figure
“Employees” might be used to report on personnel costs per employee, or used to apportion costs
incurred by the Cafeteria cost center to all the cost centers which it supports.
 The critical factor for statistical key figures is how they were created as master data. Fixed values
(category 1) are valid as of the period posted for all following periods in the fiscal year. You need
not create a new statistical key figure posting until the value changes. Totals values (category 2) are
valid exclusively for an individual period and, therefore, must be posted in each accounting period.
 You can also post statistical key figures to a cost center/activity type. This can be useful in cost
splitting.

(C) SAP AG AC040 9-6

0.7
Transferring Statistical Key Figures from the LIS

Stat. key figure:

Number of
purchase orders

Ship.No.: 1 - 1000
Material No.: * 4000 Purchase Orders
Procur. Org.: *
...

Cost Center
LIS Production 1
Ship.No. No. of Orders
0005 1500

0100 2500

 SAP AG 1999

 You can transfer key figure values maintained in the Logistics Information System (LIS) to
Controlling as statistical key figures. These values can then be used in period-end cost allocations.
 The preconditions are:
 You have activated the LIS
 You have created statistical key figures in CO, and linked each statistical key figure master record
to the related LIS key figure.
 You have maintained the cost center/statistical key figures assignment or the the cost
center/activity type/statistical key figures assignment in Customizing.
 Statistical key figures can be transferred as activity-independent or activity-dependent to Cost Center
Accounting.
 The transfer of LIS key figure values to statistical key figures in CO would normally be performed as
a standard step in period-end closing procedures.

(C) SAP AG AC040 9-7

0.8
Periodic Activities in Overhead Cost Controlling

Cost Centers
Processes

Senders Orders

Cost based Quantity based

- Accrual calculations (Activity Type & Process)
- Periodic Reposting - Indirect (with defined
- Distribution sender quantity)
- Assessment - Indirect (with undefined
- Overhead sender quantity - Inverse)
- Order settlement - Target = Actual
- Quantities through Template

Cost Centers
Processes

Receivers Orders

 SAP AG 1999

 There are several methods available to carry out periodic allocations in Overhead Cost Controlling.
 Pure cost allocations are used to move costs from sender objects to receiver objects. This movement
of costs is termed a value flow. It is possible to also include a quantity flow in the cost allocation.
This is optional and dependent on whether you activated the “Record quantities” indicator in the
master record of the cost element(s) used in the cost allocation. The type of cost element used in
executing cost allocations (primary and/or secondary) depends on which form of allocation is being
used. Note that “accrual calculations” and “periodic repostings” are not, strictly speaking, considered
to be cost allocations.
 Activity allocations can also be performed in a periodic allocation, depending on the cost accounting
method used. In activity allocation, a quantity flow always takes place. This refers to the quantity of
activity type units being performed. An additional value flow takes place either immediately, or can
be calculated at the end of the period. Activity allocation is always executed using an allocation cost
element.
 If the Activity-Based Costing application component is active, periodic process allocations can be
performed using process templates. These are also quantity based, with an associated value flow.

(C) SAP AG AC040 9-8

0.9
Accrual Calculations

FI FI

Expenses
=
Costs
CO-
CO- CO-
CO- Accrued Costs :
CEL CEL - Accrued
vacation
bonus
- Depreciation

Methods:
CO-
CO- CO-
CO-  Percentage Method
OM OM
 Target=Actual Method

 SAP AG 1999

 Operating expenses are often allocated differently in Financial Accounting (FI) than in Controlling
(CO). For example, an expense entered into FI in one accounting period may cover a whole year.
 In order to avoid cost fluctuations in Cost Center Accounting (CO-OM-CCA), irregularly-occurring
expenses can be allocated to the relevant time periods and cost centers. Costs allocated in this
manner are termed accrued costs. You can post accrued costs in two ways:
 Process a recurring entry transaction in FI and pass the costs to CO using a special accrual
allocation cost element
 Calculate the accrual in CO based on the costs posted there
 If you calculate the accrual in CO, you may use either of two methods:
 Percentage method
 Target=actual method
 If you use the CO accrual calculation procedure, you must ensure that the costs are updated in FI if
you want to display the accrual postings there as well.

(C) SAP AG AC040 9-9

0.10
Accrual Calculation: Percentage Method

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Wage Costs 20,000 20,000 20,000 .... .... .... .... .... .... .... .... 20,000
2,000 2,000 2,000 .... .... .... .... .... .... .... .... 2,000

Rules for Periodic Accrual Calculation

Accrued Accrual Cost Object

vacation (Cost Center or Order)
bonus Accrual costs and
(10% of Period
effective actual costs
wage costs) 01 - 2,000
02 - 2,000
03 - 2,000
04 - 2,000
Vacation 05 - 2,000
bonus paid: 06 - 2,000 + 24,000.-
24,000 ...
12 - 2,000

 SAP AG 1999

 The percentage method is used to determine accrued costs on the basis of a percentage rate applied to
a reference cost element or group of cost elements.
 The advantage of this method, when compared with accrual calculation using a recurring entry in FI,
is that accrued costs are determined on the basis of actual costs. The percentage method is useful, for
example, in accrual calculation of non-wage labor costs such as vacation bonuses.
 In accrual calculation, the amounts of the accrued costs are debited to the cost centers.
Simultaneously, an accrual object defined by you (a cost center or internal order) is credited. The
actual costs are also posted on the accrual object in order to calculate, analyze, and allocate any
balances between expenses from FI and accrued costs from CO.
 You create an accrual cost element (cost element category 3) to process the accrual calculation. In
addition, you must create an overhead structure that defines the various components of the accrual
calculation, and identifies the accrual object that will be credited as each periodic posting is made.

(C) SAP AG AC040 9-10

0.11
Periodic Reposting

“Clearing” Cost Center

Telephone
473120 +15,000.-
January
473120 - 15,000.-

Allocation Rule:
Statistical key figure
(long-distance calls)

Long-Distance Long-Distance Long-Distance

2000 2000 1000
2100 - Finance & 2200 - Human 2300 -
Administration Resources Purchasing
473120 +6,000.- 473120 +6,000.- 473120 +3,000.-

 SAP AG 1999

 A Periodic Reposting is used purely as a posting aid.

 Transactions relevant to Controlling (CO) such as telephone costs, postal charges, insurance, and so
on are entered in Financial Accounting (FI) and posted to an allocation cost center, which is used
exclusively for cost collection. This minimizes the number of different cost center assignments you
have to make when entering data in FI. At the end of the period, the costs in the allocation cost
center are reposted to the cost centers which actually incurred the costs according to rules defined in
the allocation cycle.
 Original (primary) cost elements are retained.
 Periodic repostings should only be used when the identity of the allocation (sender) cost center is not
important to the receiver cost centers. In periodic allocation transactions, line items are recorded for
both the sender and receiver sides in order to document the allocation in full detail. However, in a
periodic reposting, the identity of the sender allocation cost center is not stored in the totals records.
You can only analyze where the costs come from using the line items, not the totals records. The
SAP R/3 System therefore stores data records in a way that uses less memory.
 The receivers on a periodic reposting can be other cost centers, WBS elements, internal orders, cost
objects, or business processes. You can restrict the allowed receiver types in Customizing.
 Periodic reposting can be reversed and repeated as often as desired.

(C) SAP AG AC040 9-11

0.12
Distribution

Electricity Electricity
Electricity Cost
Cost Center
Center
January 416100
416100 +23,000.-
+23,000.-
416100
416100 -- 23,000.-
23,000.-

Allocation Rule:
Fixed percentages

30% 20% 50%

4220 - Production,
Production, 4240 - Production,
Production, 4260 - Production,
Production,
Pumps Paints/
Paints Solvents
/ Bulbs

416100 +6,900.- 416100 +4,600.- 416100 +11,500.-

 SAP AG 1999

 A distribution is intended for the transfer of primary costs from a sender cost center to receiver
controlling objects. Only cost centers or business processes may serve as senders in a distribution
allocation.
 The receivers on a distribution can be other cost centers, WBS elements, internal orders, cost objects
or business processes. You can restrict the allowed receiver types in Customizing.
 Primary postings (such as energy costs) are collected on a service cost center and allocated at period-
end closing according to rules defined in the distribution cycle. In the example above, the allocation
rule chosen was “fixed percentages”. Other rules are also available, depending on your
requirements.
 Only primary costs can be distributed. The original cost elements are retained on the receivers.
 Line items are recorded for both the sender and receiver sides in order to document the allocations in
detail. In comparison to a periodic reposting, a distribution updates the partner (sender) in the totals
record so that it may be identified on the totals record level in the information system.
 Distributions can be reversed and repeated as often as desired.

(C) SAP AG AC040 9-12

0.13
Assessment

Cafeteria
420000 Direct Labor
January 420000 6,000.-
416100 1,000.-
416100 Electricity 612000 2,000.-
∑ 9,000.-
612000 Maintenance 631000 -9,000.-
Assessment (Cafeteria)
Allocation Rule:
Statistical key figure
(Employees)

Employees Employees Employees

30 10 50
1000 - Corporate 1220 - Motor Pool 3200 - Marketing
Services
631000 +3,000.- 631000 +1,000.- 631000 +5,000.-

 SAP AG 1999

 An Assessment is designed for the allocation of primary and secondary costs from a sender cost
center to receiver controlling objects. Only cost centers or business processes may serve as senders
in an assessment allocation.
 The receivers on an assessment can be other cost centers, WBS elements, internal orders, cost
objects, or business processes. You can restrict the allowed receiver types in Customizing.
 Primary and secondary costs are allocated at period-end closing according to rules defined in the
assessment cycle. In the example above, the allocation rule uses statistical key figures to determine
the allocation amount for each receiver. Other rules are also available, depending on your
requirements.
 Each segment of an assessment cycle is assigned an assessment cost element (secondary cost
element category 42). All costs allocated in an assessment are classified on the receiver(s) with these
assessment cost elements. Alternatively, you can use an allocation structure to define which cost
elements are to be allocated under which assessment cost elements. You can assign individual cost
elements, cost element groups or intervals to an assessment cost element. The allocation structure
can be stored during segment maintenance.
 Line items are recorded for the sender and receiver sides in order to document the allocations in
detail. The original cost elements are not displayed on the receivers; therefore, an assessment
allocation is useful when the breakdown of costs is unimportant to the receiver.
 Similarly to a distribution, an assessment updates the partner in the totals record.
 An assessment can be reversed and repeated as often as desired.

(C) SAP AG AC040 9-13

0.14
Overhead

Warehouse Warehouse Cost Center

Credit from overhead

Cost Object calculation:
calculation: –200
Costing sheet COGM

Oil 1,000
1 barrel Storage
overhead 200

Overhead
Percent

20%

 SAP AG 1999

 Overhead calculation is another form of periodic cost allocation. In Overhead Cost Controlling the
receiver can be a cost center, internal order, or business process. The sender (credit object) can also
be a cost center, internal order, or business process.
 Overhead can be calculated on the basis of a percentage of base costs, or as a fixed amount per some
reference quantity. For example, assume that a surcharge must be calculated for material handling
costs when lengths of plastic pipe are withdrawn from inventory and issued to an order. The
surcharge amount could be calculated as a percentage rate of the cost of the pipe, or as a fixed
overhead amount per meter of pipe length.
 The costing sheet is the mechanism used to define the calculation base, overhead rate, and the credit
cost element and object. The credit cost element is a secondary cost element (category 41). The
costing sheet is assigned in the master records of the objects that will receive overhead postings.

(C) SAP AG AC040 9-14

0.15
Order Settlement

Orders Possible
Settlement
Receivers
Cost Center
Settlement Order
Debits
Options:
- Credits Project
- Cost element specific via
Order Balance settlement cost element
Profit. Segment
- Settlement rule to
all cost elements or G/L Account
differentiated based on
origin layout
Asset
- Distribution: % / amount /
equivalence number Customer Order
With Cost Collector
...

 SAP AG 1999

 Internal orders are normally used as an interim collector of costs and an aid to the planning,
monitoring, and reporting processes. When the task is complete, the costs have to be passed on to
their final destination (cost center, fixed asset, profitability segment, ... etc.). This process is called
"settlement". It is another form of periodic cost allocation.
 Settlement may occur at the end of each period, or at the end of the order's life, depending on the
type of order and its business purpose.
 An order settlement can be made to numerous different types of receivers, as long as the receivers
are defined as valid in customizing and no system restrictions (such as locks) prevent settlement.
Examples of possible settlement receivers include cost centers, other orders, projects, profitability
segments, fixed assets, and G/L accounts.
 A settlement rule must be defined for each order. This rule is defined in the order master record. It
may specify that all of the costs on the order are settled to a single receiver, or may be split to
multiple receivers.
 Settlement can be structured quite flexibly with the use of the many available settlement options.

(C) SAP AG AC040 9-15

0.16
Indirect Activity Allocation

Activity quantities can be Activity quantities cannot be

determined for the sender object determined for the sender object
Cost Center Cost Center
"Quality Control" "Quality Control"
Tester hours  Tester hours ?

Inspection: Inspection: Inspection: Inspection:

Goods receipt Finished goods Goods receipt Finished goods
Tester Tester Tester Tester
hours? hours? hours? hours?

 SAP AG 1999

 Indirect activity allocation automatically assigns activity quantities in actual and plan. In contrast to
direct activity allocation, you define keys (tracing factors) to allocate activities to the receivers.
 Indirect activity allocation, like the other periodic allocation methods, uses segments and cycles in
order to define sender and receiver relationships. You set the processing method for each segment
individually, which means a cycle can include multiple methods.
 In the indirect activity allocation framework, costs are allocated under an internal activity allocation
cost element (secondary cost element category 43). The cost element assignment defaults from the
activity type master record to the cost center/activity type plan, where it may be overwritten.
 Cost centers serve as senders in an indirect activity allocation. The receivers on an indirect activity
allocation can be other cost centers, WBS elements, internal orders, cost objects or business
processes.
 Depending on the category of the activity type to be allocated, you can choose between two different
allocation approaches:
 You manually enter the sender activity quantity.
 The R/3 System inversely determines the sender activity quantity based on rules that you define.

(C) SAP AG AC040 9-16

0.17
Actual Activity will be entered for the Sender

Cost Center 4280

Quality Inspection
Tester hours 1000 h

Allocation Rule:
Fixed percentages
(number of testing items)

8000 Items 6000 Items 6000 Items

4200 - Production,
Production, 4215 - Production,
Production, 4290 - Production,
Production,
Motorcycles Automotive Elevators
400 tester hours 300 tester hours 300 tester hours

 SAP AG 1999

 For most activity types, you can determine the total activity quantity provided by the sending cost
center. You use an indirect activity allocation to distribute these posted activity quantities from the
senders to the receivers as defined in the segments of the indirect activity allocation cycle.
 For activities which can be measured and posted on a sender object, you create a manual entry,
indirect allocation (activity type category 3) activity type. You enter the activity to the sender cost
center with an event-based posting.
 You generate the posting to the receivers by executing the indirect activity allocation. The allocation
segment must use the sender rule “posted quantities”. Any receiver rule other than fixed quantities
may be used.
 For example, although you measure the time your inspectors spend on the “tester“ activity, you do
not measure the time spent testing items for each production cost center. You therefore know the
sender total activity quantity, but not the individual receiver values. However, you can relate this
activity to the number of tested items for each production cost center, information which is available
as a statistical key figure from the Logistics Information System (LIS). Using the indirect activity
allocation, you allocate the total tester activity (in hours) to the receiving cost centers based on each
cost center‘s proportion of the total number of tested items.

(C) SAP AG AC040 9-17

0.18
Actual Activity will not be entered for the Sender

Cost Center 4280

Weighting Quality Inspection Weighting
factor: 0.25 Tester hours 2500 h factor: 0.25
4000 X 0.25 = 6000 X 0.25 =
1000 hr Allocation Rule: 1500 hr
Fixed percentages
(number of test items)

4000 Items 6000 Items

4260 - Production,
Production, 4270 - Production,
Production,
Bulbs,
Bulbs, Line 1000 Bulbs,
Bulbs, Line 2000
1000 tester hours 1500 tester hours

 SAP AG 1999

 For activity types where produced quantities cannot be determined, or determined only after a great
deal of effort, executing the indirect activity allocation determines both the sender and receiver
activity quantities with the following approaches:
 With receiver tracing factors
 With explicit entries in the segment definition (as a sender or receiver fixed quantity)
 For this form of indirect activity allocation, you create a category 2 activity type (inverse
determination, automatic allocation). The corresponding segment must use either the sender rule
“quantities calculated inversely” in combination with any receiver rule, or the identical sender and
receiver rules “fixed quantities”. If you use sender rule “quantities calculated inversely”, you can
enter sender-specific weighting factors (default value = 1) to define the relationship between the
tracing factor unit of measure and the activity type unit of measure.
 For example, it may be difficult for you to measure the time your testers spend performing a specific
test because of the variety of activities in which they are involved. Again, you can relate this activity
to the statistical key figure describing the number of items tested for each production cost center. By
performing sample measurements, you determine that it takes on average 15 minutes (0.25 h) to test
an item, and you establish this as your sender weighting factor. With this data, the system calculates
the allocation of tester hours to each production cost center and the total tester hours performed.
 You can also establish receiver-specific weighting factors where the activity type/tracing factor
relationship is not consistent for all receivers. In our example, you would use this approach if the
time to test items for “Production 4260” is not the same as the time to test items for “Production
4270”.

(C) SAP AG AC040 9-18

0.19
Revaluation at Actual Activity Price

Revaluation through Revaluation through

actual activity price revaluation Internal
calculation transaction Production Order
Actual Order
Cost center Activity Maintenance
Price Order

Cost Projects
Activity
center Type Cost
Object WBS Elements

Process
Process

Production Network
Cost
Collector

Profitability
Segment
 SAP AG 1999

 Since the actual activity price calculation is performed at period-end closing, no actual prices exist
when the actual activity is posted during the period. For this reason, the actual activity is first valued
with plan prices. If no plan price has been entered or calculated, the activity can be posted without a
valuation.
 After calculating the actual activity prices, you can choose to revalue the actual activities with the
actual prices. You can differentiate between the following:
 To revalue activity allocations to cost centers, business processes, and profitability segments, you
have to set the revaluation indicator in the fiscal year settings of the version. The revaluation is
performed within the actual activity price calculation. You have the following options for this
revaluation:
The difference between the allocation valued at the plan and actual prices is posted under a
separate data record.
The new valuation is updated in the original data record. You can use this approach if there are
no plan prices, meaning the original allocation was not valued.
 To revalue internal orders, production orders, maintenance orders, WBS elements, networks, and
so on, you have to perform the revaluation transaction. The transaction can be found in the menus
for the individual CO components. The revaluation data are always stored in a separate record on
the R/3 data base. This makes it possible to carry out actual cost accounting and standard cost
accounting in parallel.
 By performing the actual price calculation with revaluation and the revaluation transactions you can
fully credit the sender cost center. Alternatively you can assess the variances between the target costs
and the actual costs to Profitability Analysis.

(C) SAP AG AC040 9-19

0.20
Variance Calculation on Cost Centers

Area
Target Actual Total Variance
16,000.- 20,000.-
-16,000.- -15,000.-
0.- 5,000.- Input Side Output Side

Where does the Input Price Output Price

over/under-absorption
come from? Input Quantity Output Quantity

Resource Usage Fixed Costs

 SAP AG 1999

 Variances in the Controlling component (CO) at period-end closing can be due to several causes:
 Planning was overshot/undershot
 The actual costs on the cost center or business process vary from the target costs
 Over-/under-absorption occurs on the cost center or the business process
 Variance calculation allows you to analyze the causes for these and other situations.
 To calculate the variances the system performs these three steps:
 calculates the target costs
 allocates actual costs to the activity types
 calculates variances for each cost center/activity type combination
 The calculated variances are not charged further within Cost Center Accounting. To relieve the cost
centers completely, you need to perform the actual activity price calculation and/or assessment to the
profitability segments.
 Variance calculation explains the differences between target and actual costs. A variety of variance
categories are used, distinguishing between input side variances and output side variances. The input
side deals with all cost center debits and credits, the output side with cost center activity allocations.
 Variance calculation is cumulative - the total of all variances equals the total variance.

(C) SAP AG AC040 9-20

0.21
Period-end postings in Cost Object Controlling

At the conclusion of this TOPIC,

you will be able to:
 Allocate overhead to an order
 Allocate Process costs to an order
 Deliver material to stock
 Calculate WIP
 Calculate Variances
 Settle the order balance

 SAP AG 1999

(C) SAP AG AC040 9-21

0.22
Process Chain: Order-Related Manufacturing

Order archived / deleted Order request

Settlement Order creation

HEADER

Variance calculation
Availability check
OPERATIONS
OPERATIONS

Goods receipt MATERIAL

MATERIAL COMPONENTS
COMPONENTS

Release of order
WIP calculation PRODUCTION
PRODUCTION RESOURCES
RESOURCES

COSTS
COSTS PLAN
PLAN
TARGET
TARGET
100 20 Shop paper printing
Overhead ACTUAL
ACTUAL
50

Reval. with actual prices Material withdrawal

Allocating process quantities Confirmations

 SAP AG 1999

 At the end of the period, it is necessary to calculate the overhead for all of the costs that have been
debited to the production order. These debits may include both material and activity costs.
 If the production order has not been completed at the end of the period, it may be necessary to
calculate and capitalize your Work In Process value. Within R/3, as component materials are issued
to the production orders, their value is credited to the inventory accounts, and debited to a
consumption expense account on the production order. The value does not move directly from raw
material inventory to work in process inventory accounts. It is also necessary to calculate the
additional value that has been added to the order through activity allocations, overhead, and process
allocations. Although this value is reflected on the production order cost object, it is not visible in FI
and Profit Center Accounting (PCA) without the use of the WIP calculation and the settlement
transaction. The WIP calculation will consider the debits and credits (for any partially delivered
quantities) for the production order and calculate a remaining WIP value. This value can then be
passed to FI and PCA by means of the settlement transaction. Transferring this value to FI will
result in a debit to the Work In Process inventory accounts, and a credit to a P&L account. If your
order is “final delivered”, no WIP is calculated for that order, and any existing previous WIP balance
is cancelled.
 Delivering the produced materials to stock credits the production order. The order balance after the
final delivery is the value of scrap and variances. You can use the tool “variance calculation” to
analyze the reasons for the variances in detail. These variance categories and scrap values can be
passed to CO-PA. However, only the remaining order balance, or price variance, as one total value
can be passed to FI.
 The last step of the period-end closing is to settle the order balance, the WIP and the variances to FI,
Profitability Analysis, and Profit Center Accounting.

(C) SAP AG AC040 9-22

0.23
How does it work - Period-End Closing?

Periodic Process Costs

Costs
Revaluation

Overhead

Analyzing Work in Process

Costs
Scrap,
Variances,
Target Costs

FI/CO -Posting Settlement

 SAP AG 1999

 During period-end closing, process quantities are assigned to cost objects by using the process
template. Activity quantity allocations can be revalued by the actual activity prices, if previously
calculated in cost center accounting.
 Overhead is calculated on the actual costs incurred to date using the costing sheet specified in the
order.
 WIP is calculated either on the actual costs incurred or on the basis of the operations or reporting
points confirmed to date. This is controlled by the results analysis key specified in the order.
 Variances and scrap are calculated either cumulatively (full settlement) or by period (periodic
settlement). This is controlled by the variance key specified in the order.
 The settlement process results in the following postings:
 Using the posting rules, postings for WIP are generated in Financial Accounting and Profit Center
Accounting.
 The variances and scrap are settled to Profitability Analysis according to the assignments in the
PA settlement structure (if allowed by the settlement profile).
 The variances and scrap are settled to Financial Accounting as price differences.
 If you use cost object hierarchies, you can use the distribution to allocate the cost on hierarchical cost
objects down to the periodic cost objects, for example run schedule headers. This applies only to
“controlling by period”- scenarios.

(C) SAP AG AC040 9-23

0.24
Allocation Process Quantities

Statistical
Material key figures/LIS

Cost Center

Cost
driver

Activity:
KWh Process Quantity
fix/variable
Production
Order
Process Template
Re-
source Order 2
driver handling

 SAP AG 1999

 Process costs must be allocated to the cost objects at the beginning of the period end closing process.
 Using cost drivers, the process template calculates the process quantities which are to be allocated to
the material/ cost object. This means that process quantities are “pulled” into the cost objects by the
production process using the process template.
 Processes can use activities of cost centers to provide their process quantities. By allocating the
activities with the inverse activity allocation method, you can use data from a number of sources as
resource drivers, such as statistical key figures, data from the material master record, and data from
external sources. In this manner, activities are “pulled” by the process; the process determines the
activity quantity to be allocated by its resource drivers.
 By dividing the costs of the consumed activities by the process quantities, the price per unit of a
process can be calculated. The process costs to be debited on a material/ cost object are determined
by multiplying the process quantity by the unit price. Consequently, process quantities are always
valued by the unit price of the process. A process quantity allocation will always have a combined
quantity and value flow.
 For actual production, the functions within the process template can utilize the actual transactions
that were executed for the order to determine the cost drivers for the process allocation. Once the
process quantity can be calculated for the cost driver, this quantity can be multiplied with the process
price, and the result debited to the order. A document is created, and the process is credited for the
same amount.

(C) SAP AG AC040 9-24

0.25
WIP Calculation based on Actual Costs

Cost Object
Name Cost Items Plan Actual

Glass 1,500 900

Plug 2,000 1,100
Cable 500 300

Material 4,000 2,300

Labor 2,500 1,400

Overhead 1,500 855

Process 1,000 745

Total Costs 9,000 5,300

Delivery Value 4,000

Order Balance 1,300

WIP at Actual Costs

.

1,300
 SAP AG 1999

 The value basis for the calculation of work in process (WIP) can be either the actual costs incurred
on the order, or the planned costs for the completed operations.
 When using the actual costs approach, the WIP value per order is the difference between debited
actual costs and the total credits for any partial deliveries.
 When using the planned costs approach, the WIP value is determined by multiplying the quantity
remaining at each operation with the planned costs for that operation. The planned costs are
determined by using either the current standard cost estimate or a version specific cost estimate. The
version specific cost estimate is most common in repetitive manufacturing.
 In both cases, you can use customizing to determine which portion of the costs should be capitalized
(such as 100% of the material costs, 80% of the material overhead costs, and 0% of the production
overhead costs). It is possible to capitalize the entire WIP value.
 Customizing will also define if the calculation basis should be the actual or planned costs. This can
be defined by the different types of manufacturing order types and the manufacturing plant.

(C) SAP AG AC040 9-25

0.26
Posting of Work in Process based on Actual Costs

FINANCIAL ACCOUNTING

WIP Stock change

Reserve Expense

WIP
WIPbased
based via Settlement
on
on Actual
Actual Costs
Costs
PROFIT CENTER ACCOUNTING

Production

Vehicles

Motorcycles

 SAP AG 1999

 In the Product Cost by Order component, postings for work in process are generated in the balance
sheet when you settle the production order. In Customizing for Product Cost Controlling, you use
posting rules to define the accounts to which work in process is updated.
 If Profit Center Accounting is active, an additional posting is generated in Profit Center Accounting.
 The number of the order for which work in process is passed on to Financial Accounting is displayed
in the Assignment field of the accounting document. This ensures that the postings to the Financial
Accounting component can be explained.

(C) SAP AG AC040 9-26

0.27
Variance Calculation

Variance Categories

Input Variance Output Variance

Input Price Variance Lot size Variance

Input Quantity Variance Output Price Variance

Resource-Usage Variance Mixed Price Variance

Remaining Input Variance Remaining Variance

 SAP AG 1999

 The system assigns every variance to a variance category. The variance category indicates the cause
of the variance (such as price change or lot-size variance). Variances are updated to the information
system and passed on to Profitability Analysis according to variance category.
 You differentiate between variance categories on the input side and on the output side:
 Variances that occur because of goods issues, internal activity allocations, overhead and G/L
account postings are displayed on the input side. These include price variances, quantity variances,
resource-usage variances and input variances.
 Variances that occur because too little or too much of the planned order quantity was delivered, or
because the delivered quantity was valuated differently, are displayed on the output side.
Variances on the output side occur when you deliver using a price that differs from that found by
dividing the target costs by the delivered quantity.
If you deliver using the standard price, a variance can occur when the order lot size differs from
the costing lot size. This is displayed as a lot-size variance.

(C) SAP AG AC040 9-27

0.28
Settlement of Variances

Profit Center Accounting

Material Ledger

Cost Object FINANCIAL

Name Cost Items Plan Actual
ACCOUNTING
Stock Stock change
Glass 1,500 1,800
Plug 2,000 2,200
Cable 500 600 Price Difference

Material 4,000 4,600

Variances via
Labor 2,500 2,800 Settlement
Overhead 1,500 1.600 PROFITABILITY
ANALYSIS
Process 1,000 1,500

Total Costs 9,000 10,500 Product

Delivery Value 9,000

Plant

Order Balance 1,500

Company Code

 SAP AG 1999

 Variances are calculated and settled in the following way in order-related production:
 When you create a production order, the system automatically creates a settlement rule that
assigns the order costs to the material (stock account). In this case, the settlement receiver is the
finished material, the settlement share is 100% and the settlement type is full settlement.
 When you deliver the finished goods to stock, the system updates the material stock account of the
finished material and credits the order accordingly.
 When you calculate variances at the end of the period, the system sets the status for the order to
Variances calculated (VCAL).
 When you settle the order costs, the system creates an additional settlement rule that is assigned to
the profitability segment of the finished material for every order with the status Variances
calculated (VCAL) whose settlement rule points to a material. The settlement receiver is the
profitability segment of the finished material, the settlement share is 100% and the settlement type
is full settlement.
 When you settle the order, the order is relieved of costs (the order is credited for the amount of the
order balance), and the system makes the following offsetting entries:
If the material master record has selected price control indicator S, the actual costs (variances)
are written to a price difference account.
If the material master record has selected price control indicator V, the actual costs (variances)
are posted to the material stock account for the material.
At this point, variances are passed on to Profitability Analysis according to the PA settlement
structure.

(C) SAP AG AC040 9-28

0.29
Comparison of Methods

Product Cost Product Cost

Functions
by Order by Period
Settlement Type FULL PER

WIP calculated based WIP calculated based

Work in Process
on Actual Costs on Target Costs
Variances = Actual Costs - Variances = Actual Costs -
Variances
Delivery Value Delivery Value - WIP
Should be done Has to be done
Settlement per period per period
Cost Object
Not possible Possible
Hierarchy

 SAP AG 1999

 In Product Cost by Period the work in process is calculated based on target costs. For run schedule
headers, you must enter reporting point backflushes for the operation, and for manufacturing orders
you must enter confirmations for the operation. Confirmed quantities that are not scrap are valuated
in WIP calculation based on target costs, in accordance with the valuation variant for work in process
and scrap defined in Customizing for Product Cost by Period.
 In the Product Cost by Period component, variances are calculated by period. Variance calculation
compares the confirmed actual values with the target values. The work in process is deducted from
the difference between the actual values and the target values.

(C) SAP AG AC040 9-29

0.30
Period-end postings in Actual Costing/ML

At the conclusion of this TOPIC,

you will be able to:
 Understand the concept of Actual Costing
 Perform a Preliminary valuation
 Calculate the Periodic Unit Price
 Create Period end postings, including the
revaluation of stock with actual prices

 SAP AG 1999

(C) SAP AG AC040 9-30

0.31
Concept of Multi-Level Actual Costing

Level 3

Finished Single-Level
Good

Level 2
Semi-
Single-Level Multi-Level
Finished
Good

Level 1

Raw Single-Level
Material

= Variances
 SAP AG 1999

 In Material Ledger/Actual costing, the terms “single-level” and “multi-level” are introduced and
frequently used.
 The Material Ledger focuses on materials and their procurement process. The procurement process
of a material is not restricted to external procurement, but also refers to internal procurement
(production, company transfer,…).
 The term single-level always refers to one material and its procurement process; that means that all
values and quantities that arise during a procurement for the material are stored “single-level”.
 In the above example, three single levels are displayed: one for external procurement (with the
truck), and two for internal production.
 All single levels that belong to a production process are grouped and sorted into a Multi-Level
structure.
 At period end, the single-level settlement function gives you the option of distributing recorded
variances. Cumulated price differences of a period are split according to the stock quantity at period
end and the material usage of the period.
 As a result, the material can be valuated with the actual price of that period, the periodic unit price.
 When you settle an order, the system settles price differences that occur during the production
process to the relevant materials.
 As of Release 4.5, the system can determine multi-level price differences and can use them to
revaluate materials.
 At the end of a period, the relevant material transactions are collected by the system and used to
build an actual bill of materials (the system “knows” what materials were actually used for the
production of which goods). The produced goods can be then be revaluated accordingly.
 As a result, price differences can be rolled up through the various levels (for example, price
differences for raw materials can be rolled up to semi-finished goods and, in a next step, to the
finished goods).

(C) SAP AG AC040 9-31

0.32
Actual Costing: Preliminary Valuation

Average actual
price of
category (line)

Category Quantity PrelimVal PriceDif Price

Beginning inventory 20 2,000 100

Receipts 100 10,000 1,000 110
Other inward/outward mov 50 5,000 2,400 148

Cumulative inventory 170 17,000 3,400 120

Consumption 30 3,000 100
Ending inventory 140 14,000 100
Real time valuation Differences between
with Standard Price Standard Price and actual
price

 SAP AG 1999

 During a period, the Material Ledger collects data for all materials related activities. All the resulting
postings are valuated with a preliminary valuation price. This preliminary valuation price must
remain constant throughout a period. This price cannot be changed once the Material Ledger has
recorded data in that period.
 Also, the differences between the preliminary valuation price and the actual price are recorded for
each posted activity. This data is stored in the Material Ledger for each material in each period. At
period end, you can see the differences that were recorded within the period.
 The Material Ledger allows you to display data for a material by period. For each transaction, the
Material Ledger creates a new document. You can display the following information:
 Quantity
 Preliminary valuation (quantity valuated with the preliminary valuation price)
 Price differences (variances between preliminary valuation price and actual price of that
transaction)
 Exchange rate differences (with invoice verification / order related goods receipts)
 Price (actual unit price of that transaction)
 You can also display the cumulated inventory (beginning inventory plus all goods receipts), material
consumption during that period, and ending inventory.

(C) SAP AG AC040 9-32

0.33
Determination of the Periodic Unit Price

(Cumulated Inventory at Prel. Valuation Price) + (Cumulated Price Differences)

XN
Cumulated Inventory 3 ,4 00 M
MX N) +
ces * 1 00
0 pie ieces
(1 7 17 0 p
ie c e
Periodic Unit Price 0 M XN/p
= 12

Category Quantity PrelimVal PriceDif Price

Beginning inventory 20 2,000 100
Receipts 100 10,000 1,000 110
Other inward/outward mov 50 5,000 2,400 148
Cumulative inventory 170 17,000 3,400 120
Consumption 30 3,000 600 120
Ending inventory 140 14,000 2,800 120

 SAP AG 1999

 The periodic unit price is determined at the end of each period. It reflects the actual costs for a
material for the closed period.
 To determine the periodic unit price, the system uses the cumulated quantities (all goods receipts
plus the beginning inventory) and the cumulated differences (differences between the planned price
and the recorded price for all goods receipts and the beginning inventory).
 The operation that carries out the calculation of the Periodic Unit Price is called Price Determination.
 The Price Determination must be allowed for each period (Organizational Measures in the Material
Ledger menu).

(C) SAP AG AC040 9-33

0.34
Revaluation: Allocation of Price Differences

Period 1 Period 2
l
Preliminary Valuation Materia Actual Costing
Ledger for Period 1
-End
Stock Price Dif Period Stock Price Dif
Closing +

 SAP AG 1999

 Materials are always valuated with the standard price when using single-level/multi-level material
settlement (settlement control 3). The periodic unit price is determined for the closed period and
this price is used to update the V-price field in the Material Master for the closed period.

(C) SAP AG AC040 9-34

0.35
Single-Level Calculations

Procurement Material Single-Level

Calculations
Level 3
Financial Accounting
Finished
Stock Price Dif.
Good

Level 2
Semi- Financial Accounting
Finished Stock Price Dif.
Good

Level 1
Financial Accounting
Raw
Stock Price Dif.
Material

 SAP AG 1999 = Variances

 At period end, the single-level settlement function gives you the option of distributing recorded
variances. Cumulated price differences of a period are split according to the stock quantity at period
end and the material usage of the period.
 As a result, the material can be valuated with the actual price of that period, the periodic unit price.
 When you settle an order, the system settles price differences that occur during the production
process to the relevant materials.

(C) SAP AG AC040 9-35

0.36
Multi-Level Calculations

Procurement Material Multi-Level

Calculations
Internal
Financial Accounting
Finished
Stock Price Dif.
Good

Internal
Semi- Financial Accounting
Finished Stock Price Dif.
Good

External
Financial Accounting
Raw
Stock Price Dif.
Material

 SAP AG 1999 = Variances

 As of Release 4.5, the system can determine multi-level price differences and can use them to
revaluate materials.
 At the end of a period, the relevant material transactions are collected by the system and used to
build an actual bill of materials (the system “knows” what materials were actually used for the
production of which goods). The produced goods can be then be revaluated accordingly.
 As a result, price differences can be rolled up through the various levels (for example, price
differences for raw materials can be rolled up to semi-finished goods and, in a next step, to the
finished goods).

(C) SAP AG AC040 9-36

0.37
Accounts after Closing Entries with Revaluation

Material: Chocolate

Standard Price: 100$ Periodic Unit Price: 120 $ Period End Stock: 140 pc
Beginning inventory (BI): 20pc /100$ Invoice Receipt (IR): 100pc /110$
Initial stock entry (IS): 50pc /148$ Consumption (GI): 30pc /100$
Goods Receipt (GR): 100pc /120$ Closing Entries (CE): $ 2800

Material Stock GR / IR Clearing Accounts Payable

BI 2.000 3.000 GI IR 12.000 12.000 GR 12.000 IR
IS 5.000
GR 10.000
CE 2.800

Stock (Contra Account) Price Difference Material Consumption

7.400 IS IS 2.400 2.800 CE CO 3.000
GR 2.000

 SAP AG 1999

 During the process of revaluation, the system makes the following postings:
 the material stock account is debited
 the price difference account is credited with the same amount
 Note that only a part of the price differences are posted to the material stock.

(C) SAP AG AC040 9-37

0.38
Actual Costing: Price Control

g
Period 1 Closin Period 2
s
Entrie

Price Control
During Period: Preliminary Valuation Price (S)
After Closing Entries: Periodic Unit Price (V)

For Period 1: For Period 2:

Price Control S Price Control S

For Period 1:
Price Control V

 SAP AG 1999

 At the time of Period End Closing Entries, you can use the periodic unit price to revaluate the
inventory in the previous period, if desired. If you do, the system changes the price control for the
material for the closed period from S to V (from preliminary valuation price to periodic unit price).

 The Period End Closing Entries must be allowed for each period (Organizational Measures in the
Material Ledger menu).

 During the period, materials are always valuated with the standard price when using single-
level/multi-level material settlement (settlement control 3). The periodic unit price is determined for
the closed period (here Period 1) and this price is used to update the V-price field in the Material
Master.

 At the time of period end closing entries, you can use the periodic unit price to revaluate the
inventory of the last period (Period 1). If you do, the system changes the price control for the
material for the closed period from S to V (from preliminary valuation price to periodic unit price).
The price control of the current, the open period (Period 2) remains S.

(C) SAP AG AC040 9-38

0.39
Period-end postings in Profitability Management

At the conclusion of this TOPIC,

you will be able to:
 Understand the sources of information
for Profitability Management
 Understand data flow in CO-PA
 Understand data flow in EC-PCA

 SAP AG 1999

(C) SAP AG AC040 9-39

0.40
Overall Value Flow in Profitability Analysis

CO CO-
CO-
PA
Profit. segments
Profitability Analysis

Overhead Cost Product Cost

Controlling Controlling
• Processes Cost
• Cost Centers object
• Internal Orders
Standard
Cost Estimate
Cost and Revenue Element Accounting
FI Revenues
Discounts
SD

 SAP AG 1999

 Data from Sales and Distribution (SD) is one of the most important sources of information for
Profitability Analysis.
 In costing-based CO-PA, information can be taken from SD at two points in the sales order cycle:
when an order is created or changed [optional], and when an invoice for an order is generated.
 In account-based CO-PA, data from SD is received at two points in the sales cycle: when a goods
issue is performed, and when an invoice for an order is generated.
 Costs from other areas of CO can be transferred into CO-PA periodically, through activity and
process allocations, settlements, and assessments.
 It also possible to create a direct posting to CO-PA from FI through a manual journal entry.

(C) SAP AG AC040 9-40

0.41
Transfer of Overhead Costs: Overview

CO-
CO-
OM
Admin.
Assessment
costs
Cost center
Value
Field service fields
Direct /indirect activity allocation
hours

Marketing CO-
CO-
Order/Project Settlement PA
Campaign

Customer
Assessment, process allocation
Care
Process

Special
Dynamic process allocation
deliveries

 SAP AG 1999

 To show in Profitability Analysis all the costs incurred in Overhead Cost Controlling, you can
transfer to CO-PA those particular overhead costs for cost centers and business processes that are not
allocated to the materials inventory. This can be done using periodic assessment.
 You can also perform direct or indirect allocation of internal activities for cost center and business
processes to CO-PA. Along with the sender (cost center or process) and the receiver (profitability
segment), you enter the quantity of the activity performed. It is valued with the planned unit price of
the activity type. The calculated value is credited to the sender and debited to the profitability
segment receiving the activity quantity. This means, for example, that a transport activity can be
directly posted to particular customers without first having to be posted to a cost center or an order.

(C) SAP AG AC040 9-41

0.42
Assessing Cost Center and Process Costs

Process
Cycle

CO-
Cost Center Assessment PA
Administration

400000 20,000.00
430000 30,000.00
50,000.00 Administration: + 50,000.00

630000 - 50,000.00

 SAP AG 1999

 The Activity-Based Costing (CO-OM-ABC) application component provides an alternative form of

overhead control that is particularly useful when indirect activities generate a large share of the value
added to products. It uses so-called “cost drivers” to allocate internal activities to so-called
“overhead processes”, which can then be assessed to profitability segments. Reference values for the
transfer can be quantities and values posted in CO-PA or additional cost driver information, such as
the number of sales orders processed (see also the LIS interface in the unit “Planning and Plan
Integration”).
 This function makes it possible for you to transfer the variances in production cost centers as well as
the costs in sales and administrative cost centers to Profitability Analysis.
 The sender cost centers and processes are credited the amount allocated. As a result, all costs can
only be allocated once. You assess cost center and process costs the same way you do within
Overhead Cost Controlling - by defining cycles and executing these on a periodic basis. These cycles
contain the control information for the assessment and can be maintained in Customizing.

(C) SAP AG AC040 9-42

0.43
Order settlement to Profitability Analysis

Invoice
++
xx%
%

Costs Invoices Surcharges

Order

CO-
PA

 SAP AG 1999

 In a settlement profile, you define which receivers are allowed for order settlement. Moreover, you
define a default settlement structure and a default PA transfer structure. When you create an order,
you need to specify an order type. The system uses this order type to determine which settlement
profile − and thus which settlement structure and PA transfer structure − to use.
 In account-based CO-PA, the costs are settled to the settlement cost element specified in the
settlement structure.
 In costing-based CO-PA, the costs are settled from the original cost elements to the value fields to
which they are assigned in the PA transfer structure.
 The PA transfer structure contains the assignment of costs and revenues to the value fields in
costing-based CO-PA. PA transfer structures are used in order settlement, direct postings from FI,
and internal activity allocations in CO.
 A PA transfer structure consists of any number of so-called “assignment lines”. Each assignment line
contains the assignment of one interval or group of cost or revenue elements to the desired value
field.
 A PA transfer structure must meet the following criteria:
 It must be complete: All cost and revenue elements that can receive costs or revenues must be
assigned to a value field in the PA transfer structure.
 The assignments must be unique: Each cost or revenue element can only occur once within a PA
transfer structure.
 Remember: The cost and revenue element assignments are valid for one controlling area, while the
value field assignments are valid for an entire operating concern.

(C) SAP AG AC040 9-43

0.44
Overall Value Flow in Profit Center Accounting

EC-
EC-
Profit-
Profit-Center Accounting PCA

CO

Profitability Analysis

Overhead Cost Product Cost

Controlling Controlling
• Processes Cost
• Cost Centers object
• Internal Orders

Cost and Revenue Element Accounting

FI Revenues
Discounts
SD
 SAP AG 1999

 Before you can analyze your profits by profit center, the system has to summarize all the profit-
related postings in profit centers.
 Which data is transferred to Profit Center Accounting?
 All postings affecting revenue and cost elements
 Postings directly coded to a profit center
 P&L accounts maintained with automatic account assignment in PCA customizing
 Balance Sheet accounts maintained with automatic account assignment in PCA customizing
 P & L accounts related to transactions in Logistics
 Profit centers cannot receive direct postings in the R/3 System. Instead, the data is posted to other
objects and passed on from there to a profit center in Profit Center Accounting. This makes it
possible to display your company’s results by profit center based on the original postings and with
no additional work.

(C) SAP AG AC040 9-44

0.45
Balance Sheet Items in PCA

On-line Transfer Online Periodic Transfer Periodic Transfer

Asset Values Asset Values

Work in Process Work in Process

Inventory Values Inventory Values

Other Balance Sheet Items Accounts Receivable/Payable

Down payments

Balance Carry Forward

 SAP AG 1999

 If you assign balance sheet items to profit centers, the person in charge is responsible not only for the
profit center's operating results, but also for its fixed capital. The profit center can then be viewed
also as an investment center. You can also calculate key figures which indicate the success of the
profit center in managing its fixed capital (return on investment).
 You can transfer the following balance sheet items to profit centers at the end of the period:
 Fixed assets (acquisition costs and accumulated depreciation)
 Material stocks (raw materials, semi-finished and finished products)
 Work in process
 Payables and receivables
 In addition to the automatically determined balance sheet items, you can also transfer other balance
sheet items directly to Profit Center Accounting.
 Note: PCA reporting is intended to calculate financial key figures such as ROI, but PCA is not
intended to produce a full balance sheet

(C) SAP AG AC040 9-45

0.46
Distribution/Assessment

Distribution
Distributionand
and
V assessment
assessmentfunction
function
A the
thesame
samewaywayas
asinin
L Cost Center Accounting
Cost Center Accounting
U Profit Center
E Motorcycles

F
L
Profit Center
O Sales Admin
W Profit Center
Sportscars

Business EC-
EC-
process Period End Closing: PCA
Distribution

 SAP AG 1999

 Allocation (assessment and distribution) of overhead costs is usually performed at period closing.
This is normally done directly in CO and reflected in the data in Profit Center Accounting.
 If you have a service profit center or allocation center in your profit center hierarchy, you may need
to assess or distribute costs again within Profit Center Accounting.
 Under certain circumstances it may also be necessary to allocate revenues and sales deductions. You
can do this as well within Profit Center Accounting.
 One important use for this function is to distribute balance sheet items (raw materials, land, and so
on) that you initially post to one profit center and wish to spread across several receiving profit
centers.
 Assessing or distributing data in Profit Center Accounting only makes sense after you have
completed all the period-end closing activities in the applications which supply EC-PCA with data
(FI, CO, SD, MM, etc.). You should also post any additional profit center data manually, such as
PCA Statistical Key Figures, before allocating.
 Distribution and assessment work the same way as in Overhead Cost Controlling, but affect PCA
data only.

(C) SAP AG AC040 9-46

0.47
Period end postings: Schedule Manager

At the conclusion of this TOPIC,

you will be able to:
 Explain the purpose and basic functions
of the Schedule Manager
 Describe the typical sequence used in
Period–End–Processing within
Controlling

 SAP AG 1999

(C) SAP AG AC040 9-47

0.48
Schedule Manager: Benefits

Benefits provided by the Schedule Manager

 the closing process is more transparent

and easier to handle

 event driven processing means that the R/3 System

automatically performs the necessary steps

 monitoring the complete process is convenient

 worklist driven error analysis and integrated error handling

procedures reduce the time needed for error correction

 total processing time is minimized by

optimized worklist processing
 SAP AG 1999

 The Schedule Manager makes period-end closing easier. It provides a cross-application single point
of entry for all transactions related to the closing process. It includes all steps, from defining the
structure of your closing process to scheduling the jobs and monitoring the results.
 It provides you with all the data relevant for period-end closing. All authorized employees can find
information on pending tasks, look at the objects to be processed, and schedule more tasks. They can
see clearly when, for example, monthly closing must be completed, and the previous period is to be
closed. You can use the Schedule Manager at any time to check when, and which activities are to be
executed, and with which result.

 The Schedule Manager not only facilitates period-end closing, it is also useful in other components
of the SAP R/3 System. It assists with the definition, scheduling, execution and control of individual,
periodic tasks, and complex processes that have to be executed regularly. The Schedule Manager
provides you with a continuous overview.

(C) SAP AG AC040 9-48

0.49
Schedule Manager: Scheduling

Task list 2000

October
Send mail:
Closing process started
Set period lock
Periodic reposting
of personnel costs
Internal Orders:
Overhead and settlement Daily overview:
overview: October 31, 1999
Cost Centers: Allocations
Time Description Status User
8:00 Mail sent Miller
Convenient management 8:15 Actual period lock Miller
of period-end closing with 8:30 Periodic reposting Smith
the Schedule 9:45 Internal Orders: Closing Jones
Manager 11:30 Cost Centers: Allocations Jones

 SAP AG 1999

 As you heard about the new Schedule Manager provided within the R/3 System you start the
transaction. On the first screen you find the documentation which will help you through your first
steps. (If you do not need it anymore you switch these ‘User notes off’.)
 The Schedule Manager enables you to do the following:
 Create a structured display of tasks in task lists. The tasks can be executed periodically, and by
more than one user. A task list provides you with the following task types:
 Flows that can be executed in the background, which are defined once, and executed periodically
(compare with flow definition)
 Individual jobs that can be executed in the background
 Programs or transactions that you wish to execute individually online
 Notes as placeholders to describe tasks that you do not process in the R/3 System.
 You can store detailed documentation on each task.
 In the daily overview, you can get an overview of all the executed or scheduled tasks for a day. The
system logs the task execution, and provides you with information on the planned and actual start
time, as well as the current status of each task. You can go from the daily overview to the monitor, to
get detailed information on jobs or flows.

(C) SAP AG AC040 9-49

0.50
Schedule Manager: Task List - Flow Definition

Task list Flow Definition: Internal Orders

Send mail: Workflow started

Closing process started
Set period lock Select worklist
Periodic reposting
of personnel costs Calculate overhead rates
Internal Orders:
Overhead and settlement
Settlement
Cost Centers: Allocations
Check the worklist for
internal orders

Define sequences
Restart worklist processing
of background jobs for
automatic processing Workflow completed

 SAP AG 1999

 In the flow definition you can group tasks that are to be executed in the background in a particular
order.
 You use the workflow to control these flow definitions.
 You can structure subflows and include them in a flow definition.
 Insert user decisions for checking purposes.
 Use worklists to reduce the total runtime.
 Use the task list to group individual tasks. If you need to run sequences of jobs create a flow
definition including all dependent work items.

(C) SAP AG AC040 9-50

0.51
Schedule Manager: Monitor

Task list Status Details Parameters Add. Info

Start date Spool list

Actual period lock End date

Job log
User name
Periodic reposting
Job status Detail list
Internal Orders: Closing
Business transaction
Actual Overhead Activity Basic list
Actual Settlement
User decision Messages
Mssg Text
202 ORD 100070 Trade fair Lisbon
205 Maintain the settlement rule of the sender
The monitor 202 ORD 100071 Trade fair Atlanta
205 Cost Center 12345 does not exist on 10/31/99
provides you with all
202 ORD 100358 Special Events
necessary information 217 Cost element 600199 does not exist on 10/31/99
202 ORD 101065 Marketing
 SAP AG 1999

 In the monitor, you can call up detailed information on the active or completed jobs and flows that
were scheduled in the scheduler.
 The status field shows you immediately where errors occurred.
 All messages that the system created during job execution are displayed in a clear list.
 You can go from here to the spool list, job log, detail, and basic list.
 Once you check the results, you can change the system status and give a reason for the change. The
system logs your manual changes.

(C) SAP AG AC040 9-51

0.52
Reconciliation Ledger

At the conclusion of this TOPIC,

you will be able to:
 Explain the purpose of the Reconciliation Ledger.
 Execute some reports to enable the reconciliation
between FI and CO.

 SAP AG 1999

(C) SAP AG AC040 9-52

0.53
Reconciliation Ledger

Primary Postings

Allocations External Accounting

Reconciliation

Managerial
Reconciliation Ledger Accounting

Controlling
Objects

FI Organizational Units
Company code, Business area, Functional area
 SAP AG 1999

 CO data is summarized and evaluated in the reconciliation ledger. The reconciliation ledger provides
you with a view of the data from all CO applications for a cost element, as well as totals by company
code, business area, object type, object class, and so on.
 Data from internal and external accounting should be reconcilable. One of the uses of the
reconciliation ledger is to generate reconciling postings:
 External postings to FI relevant to cost accounting are transferred automatically (online, realtime)
to the appropriate CO application component. The CO totals in the reconciliation ledger are
updated for these postings.
 If amounts are allocated within CO across company codes, functional areas, or business areas, the
information must be passed back to FI. The R/3 System does not send this data to the FI
component automatically. However, the CO totals in the reconciliation ledger are updated.
 You can use the reconciliation ledger to generate a posting which brings FI into agreement with
the CO postings.
 You can choose to have the R/3 System update the reconciliation ledger with each CO transaction
posting or to process a periodic follow-up posting prior to the reconciliation posting.
 Along with FI-CO reconciliation, you may also use the ledger for:
 Overall CO cost analysis with short processing times
 Navigational aid and access to CO from the profit and loss statement

(C) SAP AG AC040 9-53

0.54
Reconciliation Reports

FI General CO Reconciliation
Ledger Ledger

Difference
(such as from
reposting) Reconciliation Report
for Company Code 3000

OK Account FI CO Balance
400000 200000 150000 50000
415000 500000 500000 0

 SAP AG 1999

 Special cost element reports are supplied in the SAP R/3 System for evaluating the reconciliation
ledger. With these reports you can compare the values in internal and external accounting, display
the costs incurred for each object class, and see the cost flows between company codes.
 You use the cost flows overview report to document the cost flows in Controlling, as well as the
reconciliation postings. This report displays all the cross-company-code, cross-business-area or
cross-functional-area cost flows in Controlling.

(C) SAP AG AC040 9-54

0.55
Period–End Postings In CO: Unit Summary

Having completed this UNIT,

you should now be able to:
 Post Statistical Key Figures, perform an Assessment
of costs and settle an Overhead Order.
 Allocate overhead, and assign Process costs, to an
order. Deliver material to stock, calculate WIP and
Variances. Settle the balance of an order.
 Know the sources of information for
Profitability Management
 Explain the purpose of the Reconciliation Ledger
 Understand the function of Schedule Manager

 SAP AG 1999

(C) SAP AG AC040 9-55

0.56Exercise: Period-End Postings in CO

Unit: Period-End Postings in CO

Topic: Overhead Management

• Process periodic cost allocations (from cost centers and overhead

orders)

The company wants to do a period-end closing. Therefore the real

overhead orders shall be settled, and the service cost centers shall be
brought to a balance of zero, using a period-end allocation. The service
cost center costs will be allocated to the production cost centers that they
supported.

1.1 You have completed your actual postings to your trade fair order and can now settle
it to the service cost center, which has responsibility for the costs.

1-1-1 Perform an actual settlement of your trade fair order (from Data Sheet)
in production. Use the current period for the settlement and posting
periods.

1-1-2 Process the Order: actual/plan/variance report for the current period
and plan version 0. Execute the report for the your trade fair order. What
is the balance on your order?

1-1-3 Process the Cost centers: actual/plan/variance report for the current
period and plan version 0 to view the effect of the settlement on your
cost center. Execute the report for the service cost center (SERV-##).

1-2 Create an assessment cycle and segment to allocate your service cost center
costs to the production cost centers that it supported.

1-2-1 Create an actual assessment cycle AAC-##, which starts on the first day
of the current fiscal year. Call the cycle Group ## Assessment. Use
the menu path „goto“ to create an assessment run group with the name
GR##

(C) SAP AG AC040 9-56

 1-2-2 Attach a segment ASSESS##, with the description Service ##
Assessment and corporate services assessment cost element (631300).
Allocate 100% of the actual posted amounts from your sender cost
center. The basis (tracing factor) rule is to allocate fixed percentages.

1-2-3 The sender of the allocation is your service cost center (SERV-##).
Specify the allocation of cost element group OAS. The receiver of this
allocation is cost center group HAC040.

1-2-4 Go to the tracing factors screen to establish an allocation of 5% of the

costs to cost center PROD00 and 95% to cost center PROD-##.
Perform a formal check of your cycle and segment. Save.

1-3 Process the actual assessment for your service cost center.

1-3-1 Execute the assessment in test for your cycle (AAC-##) and the current
period. Select processing with Detailed lists.

1-3-2 Execute the assessment in production to post your allocation. (De-select

processing with a Test run.)

1-3-3 Process the Cost centers: actual/plan/variance report for the current
period and plan version 0 to view the effect of the assessment on your
service cost center (SERV-##). What is the balance on your cost center?
______________________________________________________________

(C) SAP AG AC040 9-57

 Unit: Period-End Postings in CO
Topic: Cost Object Controlling

• Execute the period-end closing process in cost object controlling, to

include process cost allocation, overhead surcharge calculation, WIP
calculation, variance analysis, and order settlement.

At the end of the period, it is necessary to apply all overhead surcharges

and process cost to cost objects of cost object controlling. This should be
completed before WIP calculation, variance analysis and order settlement.
In addition, the calculation of the WIP value is necessary in the R/3
System, since the outstanding value of the open production orders is not
included on the balance sheet and P&L statement. As components are
issued to the production orders, their inventory value is expensed into
production consumption, and not transferred to another balance sheet
account for WIP. In addition, the completed production activities,
recognized through completion confirmations, have not been reflected in
FI. For this reason, it is necessary to establish the current WIP value at
period end, and settle this value to the balance sheet, P&L statement, PA
and PCA.
At the completion of the production order, any remaining overhead
surcharges and process cost will be calculated. After all costs have been
debited to the order, and delivery of the finished product is complete, you
have to perform once more the WIP calculation to cancel the WIP created
in prior periods. An additional option is to calculate the variances. As the
last step of the period end closing in cost object controlling you settle the
order. The balance will be settled to FI, the cancellation of the WIP to FI
and PCA and the variances to CO-PA.
Within this exercise, WIP will be calculated twice within the same period,
to demonstrate the calculation and cancellation of WIP for an individual
order.

2-1 The first step of the period-end closing activities is the allocation of process
quantities. Using the individual processing transaction, execute the process cost
allocation for your production order (from Data Sheet) for the current period
and version 0.

2-2 The next step in the period-end closing activities for cost object controlling is
the calculation of Overhead Surcharges. Use the individual processing for
overhead to calculate the overhead surcharges for your production order.

(C) SAP AG AC040 9-58

 2-3 Review the actual costs posted to the production order for the process cost
allocation and the overhead surcharge. From the CO report tree for product cost
by order, display the plan/actual comparison report for your production order.

2-4 In order to demonstrate the WIP calculation, let us assume that the period ends
before you can deliver all of your pump assemblies to stock. Without the WIP
calculation and settlement, the WIP value will not be reflected in FI and PCA.

Calculate the work in process in the current period for your production order.
Use results analysis version 0, select log information messages, and process the
calculation in production.

2-5 Using the WIP report, display the WIP value that has been calculated for your
production order. This report is provided in cost object controlling for product
cost by order.

2-6 Settle the work in process for your production order to FI and PCA. Process the
WIP settlement in the current period for your production order. Use processing
type Automatic and process the settlement in production.
After the settlement has been executed, a detailed list screen will be presented.
Review the sender and receiver information. Branch down to the financial
accounting and profit center document line items.

2.7 The production process has been completed. Process the final confirmation for
operation 60 for the remaining 20 pieces from the production control menu.
Remember that since this is considered a milestone operation, the preceding
operations will be automatically confirmed using the planned executions times
adjusted for the actual confirmed quantity, and the goods receipt will be
processed automatically for the 20 finished pieces.

2-8 Review the actual costs posted to the production order from the completion
confirmation. Additional debit entries should have been made for the
production activities, and a credit should have been applied to the order for
delivered quantity of 20 pieces. From the CO report tree for product cost by
order, display the plan/ actual comparison report for your production order.

2-9 When final delivery is processed for a production order, the order is considered
complete, and the WIP value should be cancelled. To cancel any existing WIP
from FI and PCA, the WIP calculation must be executed to establish a WIP
value of 0. During the settlement transaction, this change to WIP will be
credited to FI and PCA.

Calculate the remaining work in process in the current period for your
production order. Use results analysis version 0, select log information
messages, and process the calculation in production.
(C) SAP AG AC040 9-59
 2-10 At the completion of the order, it is now possible to calculate the variances.
The variance calculation will explain any differences between the actual cost of
the production order, and a target cost, such as the standard cost estimate.

Calculate the variances in the current period for your production order. Process
the calculation in production for all target versions and select detailed lists.
Review the cost element report and the variance analysis report from the
variance calculation list.

2-11 Since the order is completed, the WIP value has been calculated, and the
variance categories have been determined, the last step in the period-end closing
process for cost objects is the order settlement. This will cancel the existing
WIP balance in FI and PCA, transfer the variance categories to CO-PA, and
settle the remaining order balance to a price difference account, since this
material uses standard price control.

Execute order settlement for your production order. Process the WIP settlement
in the current period for your production order. Use processing type Automatic
and process the settlement in production.

After the settlement has been executed, a detailed list screen will be presented.
Review the sender and receiver information. Branch down to the financial
accounting, profitability analysis and profit center document line items.

(C) SAP AG AC040 9-60

 Unit: Period-End Postings in CO
Topic: Selling Goods and Services

• Understand the difference between selling a product from stock and a

product (service) made to sales order.

The company receives an order from a customer, requesting pumps. In

addition, we are requested to install the pumps at the customer onsite.

3-1 Since the customer asks you to install the pumps in his plant, you decide to
create a second sales order.

3.1.1 Create a sales order like you did in chapter Event-based Postings in CO.
To install the pumps, 100 hours of T-SERVICE, the pump installation,
are necessary.

3-1-2 Go to the account assignment view for the pump installation. Note the
new field in the account assignment view, Results Analysis Keys, and
the value in the costing sheet field. Delete the results analysis key! View
the Profitability Analysis settlement.

3-1-3 Check the pricing condition PR00 (price) for the pump installation
service.

3-1-4 Determine the costs for your service. You may use a base planning
object, T-SERVICE, which contains a template of the planned costs for
the pump installation service. Copy this template into the cost estimate
of the sales order item.

3-1-5 Review the schedule lines for the pump installation to view the
confirmed quantity. Save the sales order. (If you get the message, that
the order data is still incomplete, select to complete the data, select all
items in the list and press complete data. Enter in each date field the
current date and save the order.)
_____________________________________________________________

(C) SAP AG AC040 9-61

 3-2 The pump installation service is performed by the Assembly Pumps cost center
(4230). The installation consumes 100 hours of activity 1421 and 20 hours of
activity 1421. Create a direct activity allocation to post 100 hours of activity
type 1421 and 20 hours of activity type 1420 from cost center 4230 to your
sales order which provides the service. The screen variant that you should use is
SAP: sales order/cost object. Post your document.

3-3 Bill the customer for the pump installation and review the posting.

3-3-1 After providing all the services, create the billing for the sales order
item. The pump installation invoicing information is generated from the
sales order document. Record your billing document numbers and the
billing date.
______________________________________________________________
______________________________________________________________
______________________________________________________________

3-3-2 View the accounting document type created for the billing document
______________________________________________________________

3-4 Allocate overhead to your sales order. Process the overhead allocation in the
current period. Execute the calculation in production and select detailed lists.

3-5 Process the Plan/Actual Comparison report for your sales order to review the
effects of your planning and actual postings for the service item.

3-6 Settle your sales order document to CO-PA.

3-6-1 Process the settlement in test for the period in which the billing
document was posted. Your sales order was created for the Hamburg
sales organization (1000). Request a detailed list. If no errors exist in the
test run, process the settlement in production.

3-6-2 Review the CO-PA document generated by the settlement.

(C) SAP AG AC040 9-62

 Unit: Period-End Postings in CO
Topic: Profitability Accounting

• Look up the results in various segments of the market

• Use the drill- down reporting to analyze the data for different
profitability segments
After recording production and sales business events, the company would
like to know the results for different segments of the market. You want to
know where profit increased and where profit suffered by certain factors,
which you want to analyze. The company needs this information after
each sale, not only after the end of the period.

4-1 The billing and settlement of the sales orders created in Exercise 3 resulted in
postings to CO-PA, for which the system has created line items. Access the line
item display through the Actual Postings menu path. Select line items for your
User ID and sales order numbers. Restrict the processing to include postings
from yesterday and today.

4-2 Produce a report in Profitability Analysis for the IDES Worldwide operating
concern (IDEA). Process the Contribution Margin report AC040 for the current
fiscal year to view the results of the sales order postings.

4-2-1 Execute the report.

4-2-2 Select the overview and drill down to view the results for the Hamburg
plant 1000, the Pumps division 01, product T-F1##, and customer 1000
(Becker Berlin).

4-2-3 View the same information for the pump installation service, which is
product T-SERVICE in division 08.

4.2.4 Drill down on the actual line items for the Dresden plant 1200, division
08, product T-SERVICE, and customer 1000 to view your postings to
CO-PA.

4.2.5 Look up the contribution margin 1 of each product, which we have

realized with customer 1000.

(C) SAP AG AC040 9-63

 Unit: Period-End Postings in CO
Topic: Reconciliation ledger

• Analyze the cost flow between different business areas to show data
that was allocated in CO and is not yet reflected in the same way in FI

The company uses different business areas inside the controlling area.
Some allocations within CO that are required by the company will cross
business areas; however, this information is not immediately updated to
FI. Since the business area is one of the levels at which data is reported in
FI, this information must be reconciled between CO and FI.

5-1 Use the information system in Cost Element Accounting to run the appropriate
report to analyze cost flows between business areas. View the cost flow
between the business areas to which our production and service cost centers are
assigned (1000 and 9900, respectively).

5-1-1 Process the CElm: Allocation between Business Area report for the
current period for all business areas in controlling area 1000. Execute
the report.

The default value in the Business areas (business area set) field contains
all business areas. You can stay with this or you may enter instead the
range from 1000 to 9900.

5-1-2 Select variation. Set the business area to Mechanical Engineering and
the trading partner business area to Corporate other to view the
appropriate report. Explain the data shown.
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________

(C) SAP AG AC040 9-64

0.57Solution: Period-End Postings in CO

Unit: Period-End Postings in CO

Topic: Overhead Management

• Process periodic cost allocations (from cost centers and overhead

orders)

The company wants to do a period-end closing. Therefore the real

overhead orders shall be settled, and the service cost centers shall be
brought to a balance of zero, using a period-end allocation. The service
cost center costs will be allocated to the production cost centers that they
supported.

1.2 You have completed your actual postings to your trade fair order and can now settle
it to the service cost center, which has responsibility for the costs.

1-1-1 Perform an actual settlement of your trade fair order (from Data Sheet)
in production. Use the current period for the settlement and posting
periods.
Menu path:
Accounting→Controlling→Internal Orders →Period-end closing→Single
Functions→Settlement→Individual processing
Enter your trade fair order number in the Order field.
Enter the current period in the Settlement period field.
Enter the current period in the Posting period field.
Enter the current fiscal year in the Fiscal year field.
Make sure Test run is de-selected.
Select Execute.

(C) SAP AG AC040 9-65

 1-1-2 Process the Order: actual/plan/variance report for the current period
and plan version 0. Execute the report for the your trade fair order. What
is the balance on your order?
Menu path:
Internal Orders→Information system→Reports for internal
orders→Plan/actual comparisons→ Order: actual/plan/variance
Enter 1000 in the Controlling area field.
Enter the current fiscal year in the Fiscal year field.
Enter the current period in the From period field.
Enter the current period in the To period field.
Enter 0 in the Plan version field.
Enter your trade fair order number in the first Or value(s) field.
Select Execute.

The balance should be zero.

1-1-3 Process the Cost centers: actual/plan/variance report for the current
period and plan version 0 to view the effect of the settlement on your
cost center. Execute the report for the service cost center (SERV-##).
Menu path:
Accounting→Controlling→Cost center Accounting→Information
system→Reports for Cost Center Accounting→Plan/actual
comparisons→CCtr: Actual/Plan/Variance
Enter 1000 in the Controlling area field.
Enter the current fiscal year in the Fiscal year field.
Enter the current period in the Period field.
Enter the current period in the To field.
Enter 0 in the Plan version field.
Enter SERV-## in the first Or value(s) field.
Select execute.

(C) SAP AG AC040 9-66

 1-2 Create an assessment cycle and segment to allocate your service cost center
costs to the production cost centers that it supported.

1-2-1 Create an actual assessment cycle AAC-##, which starts on the first day
of the current fiscal year. Call the cycle Group ## Assessment. Use
the menu path „goto“ to create an assessment run group with the name
GR##
Menu path:
Accounting→Controlling→Cost center Accounting →Period-end
closing→Single Functions→Allocations→Assessment→Extras→
Cycle→Create
Enter AAC-## in the Cycle field.
Enter the first day of the current fiscal year in the Starting date field.
Execute to proceed to the next screen.
Enter Group ## Assessment in the Text field.

1-2-2 Attach a segment ASSESS##, with the description Service ##

Assessment and corporate services assessment cost element (631300).
Allocate 100% of the actual posted amounts from your sender cost
center. The basis (tracing factor) rule is to allocate fixed percentages.
Select Attach segment.
Enter ASSESS## in the Segment name field and Service ## Assessment in the
description field which follows.
Enter 631300 in the Assessment CEle field.
Verify that the Sender values are set correctly:
- enter in the Rule field: posted amounts
- 100 in the Share in % field
- Act. values selected
For the Receiver Tracing factor:
- Enter Fixed percentages in the Rule field

1-2-3 The sender of the allocation is your service cost center (SERV-##).
Specify the allocation of cost element group OAS. The receiver of this
allocation is cost center group HAC040.
Select Sender/Receiver tab.
Enter SERV-## in the Sender Cost center From field.
Enter OAS in the Sender Cost element Group field.
Enter HAC040 in the Receiver Cost center Group field.

(C) SAP AG AC040 9-67

 1-2-4 Go to the tracing factors screen to establish an allocation of 5% of the
costs to cost center PROD00 and 95% to cost center PROD-##.
Perform a formal check of your cycle and segment. Save.
Select Goto→Tracing factors.
Enter 5 in the Percent field for cost center PROD00.
Enter 95 in the Percent field for cost center PROD-##.
Go back to the segment screen.
Select Cycle→Formal check.
Save the cycle.

1-3 Process the actual assessment for your service cost center.

1-3-1 Execute the assessment in test for your cycle (AAC-##) and the current
period. Select processing with Detailed lists.
Menu path:
Accounting→Controlling→Cost center Accounting→Period-end
closing→Single Functions→Allocations→Assessment
Enter the current period in the Period field.
Enter the current period in the To field.
Enter the current fiscal year in the Fiscal year field.
Select to process a Test run with Detailed lists.
Enter AAC-## in the cycle field and select Enter. The Start date will be copied
from your cycle.
Select Execute.
Select Receiver to view the amounts to be assessed.

1-3-2 Execute the assessment in production to post your allocation. (De-select

processing with a Test run.)
Go Back to the assessment initial screen.
Click on Test run to de-select it.
Select Execute.

(C) SAP AG AC040 9-68

 1-3-3 Process the Cost centers: actual/plan/variance report for the current
period and plan version 0 to view the effect of the assessment on your
service cost center (SERV-##). What is the balance on your cost center?
Menu path:
Accounting→Controlling→Cost center Accounting→Information
system→Reports for Cost Center Accounting→Plan/Actual
Comparison→CCtr: Actual/Plan/Variance
Enter 1000 in the Controlling area field.
Enter the current fiscal year in the Fiscal year field.
Enter the current period in the From Period field.
Enter the current period in the To Period field.
Enter 0 in the Version field.
Enter SERV-## in the Cost center field.
Execute the report.

The balance should be zero.

(C) SAP AG AC040 9-69

 Unit: Period-End Postings in CO
Topic: Cost Object Controlling

• Execute the period-end closing process in cost object controlling, to

include process cost allocation, overhead surcharge calculation, WIP
calculation, variance analysis, and order settlement.

At the end of the period, it is necessary to apply all overhead surcharges

and process cost to cost objects of cost object controlling. This should be
completed before WIP calculation, variance analysis and order settlement.
In addition, the calculation of the WIP value is necessary in the R/3
System, since the outstanding value of the open production orders is not
included on the balance sheet and P&L statement. As components are
issued to the production orders, their inventory value is expensed into
production consumption, and not transferred to another balance sheet
account for WIP. In addition, the completed production activities,
recognized through completion confirmations, have not been reflected in
FI. For this reason, it is necessary to establish the current WIP value at
period end, and settle this value to the balance sheet, P&L statement, PA
and PCA.
At the completion of the production order, any remaining overhead
surcharges and process cost will be calculated. After all costs have been
debited to the order, and delivery of the finished product is complete, you
have to perform once more the WIP calculation to cancel the WIP created
in prior periods. An additional option is to calculate the variances. As the
last step of the period end closing in cost object controlling you settle the
order. The balance will be settled to FI, the cancellation of the WIP to FI
and PCA and the variances to CO-PA.
Within this exercise, WIP will be calculated twice within the same period,
to demonstrate the calculation and cancellation of WIP for an individual
order.

2-1 The first step of the period-end closing activities is the allocation of process
quantities. Using the individual processing transaction, execute the process cost
allocation for your production order (from Data Sheet) for the current period
and version 0.
Menu path:
Logistics→Production→Production Control→Period-end closing→Template
allocation→Individual processing
Or
Accounting→Controlling→Product Cost Controlling→Cost object
controlling→Product cost by order→ Period-End closing→Single
Functions→Template Allocation→Individual processing

(C) SAP AG AC040 9-70

 Enter the production order number.
Enter 0 in the Version field.
Enter the current period in the Period field.
Enter the current period in the To field.
Enter the current fiscal year in the Fiscal year field.
Remove the Test run indicator.
Select Detailed lists.
Select Execute.

2-2 The next step in the period-end closing activities for cost object controlling is
the calculation of Overhead Surcharges. Use the individual processing for
overhead to calculate the overhead surcharges for your production order.
Menu path:
Logistics→Production→Production Control→Period-End closing→Overhead→
Individual processing
Or
Accounting→Controlling→Product Cost Controlling→Cost object
controlling→Product cost by order→ Period-End closing→Single
Functions→Overhead→Individual processing

Enter the production order number.

Enter the current period in the Period field.
Enter the current fiscal year in the Fiscal year field.
Remove the Test run indicator.
Select Dialog display.
Select Execute.

2-3 Review the actual costs posted to the production order for the process cost
allocation and the overhead surcharge. From the CO report tree for product cost
by order, display the plan/actual comparison report for your production order.
Menu path:
Logistics→Production→Production Control→Information System→Controlling
Reports→Product Cost by Order→Detailed Reports→For orders→Variance
Analysis→Plan/Actual Comparison.
Enter the production order number, choose Cumulated time frame, and then select
Execute.

(C) SAP AG AC040 9-71

 The actual values should be listed for the cost elements for the process and overhead
surcharges. To view quantities and values by process or overhead surcharge, double-
click on the actual cost element number.

2-4 In order to demonstrate the WIP calculation, let us assume that the period ends
before you can deliver all of your pump assemblies to stock. Without the WIP
calculation and settlement, the WIP value will not be reflected in FI and PCA.

Calculate the work in process in the current period for your production order.
Use results analysis version 0, select log information messages, and process the
calculation in production.
Menu path:
Accounting→Controlling→Product Cost Controlling→Cost object
controlling→Product cost by order→ Period-End closing→Single Functions→Work
in Process→Individual processing→ Calculate
Enter the production order number.
Enter the current period in the WIP to period field.
Enter the current fiscal year in the Fiscal year field.
Select Results anal. Vers and enter version 0.
Remove the Test run indicator.
Select log information messages.
Select Execute.

2-5 Using the WIP report, display the WIP value that has been calculated for your
production order. This report is provided in cost object controlling for product
cost by order.
Menu path:
Logistics→Production→Production Control→Information System→ Controlling
Reports→Product Cost by Order→Detailed Reports→For orders→Work in Process.
Enter the production order number, choose Cumulated time frame, and then select
Execute.

(C) SAP AG AC040 9-72

 2-6 Settle the work in process for your production order to FI and PCA. Process the
WIP settlement in the current period for your production order. Use processing
type Automatic and process the settlement in production.

After the settlement has been executed, a detailed list screen will be presented.
Review the sender and receiver information. Branch down to the financial
accounting and profit center document line items.
Menu path:
Accounting→Controlling→Product Cost Controlling→Cost object
controlling→Product cost by order→ Period-End closing→Single
Function→Settlement→Individual processing
Enter the production order number.
Enter the current period in the Settlement period field.
Enter the current fiscal year in the Fiscal year field.
Enter Automatic in the Processing type field.
Remove the Test run indicator.
Select Execute.
To display the settlement, select the order number and then select Detailed Lists.
Select detailed lists for accrual data for FI.
To display the FI and PCA documents, from the receiver screen, select order No.,
select accounting documents, and click on the accounting document, then return to
the list of accounting documents, and click on the Profit center doc.

2-7 The production process has been completed. Process the final confirmation for
operation 60 for the remaining 20 pieces from the production control menu.
Remember that since this is considered a milestone operation, the preceding
operations will be automatically confirmed using the planned executions times
adjusted for the actual confirmed quantity, and the goods receipt will be
processed automatically for the 20 finished pieces.
Menu path:
Logistics→Production→Production Control→Confirmation→Enter→For
operation→Time ticket
Enter the order number.
Select oper/activity 60 and select Final conf.
Press Enter.
Verify the yield to confirm is 20 pieces.
Save the confirmation.

(C) SAP AG AC040 9-73

 2-8 Review the actual costs posted to the production order from the completion
confirmation. Additional debit entries should have been made for the
production activities, and a credit should have been applied to the order for
delivered quantity of 20 pieces. From the CO report tree for product cost by
order, display the plan/ actual comparison report for your production order.

Menu path:
Logistics→Production→Production Control→Information System→Controlling
Reports→Product Cost by Order→Detailed Reports→For orders→Variance
Analysis→Plan/Actual Comparison.
Enter the order number, choose Cumulated time frame, and then select Execute.
Actual values should be listed for the cost elements for the components and activity
types. To view quantities and values by material and activity type, double-click on the
actual cost element number.

2-9 When final delivery is processed for a production order, the order is considered
complete, and the WIP value should be cancelled. To cancel any existing WIP
from FI and PCA, the WIP calculation must be executed to establish a WIP
value of 0. During the settlement transaction, this change to WIP will be
credited to FI and PCA.

Calculate the remaining work in process in the current period for your
production order. Use results analysis version 0, select log information
messages, and process the calculation in production.
Menu path:
Accounting→Controlling→Product Cost Controlling→Cost object
controlling→Product cost by order→ Period-End closing→Single Functions→Work
in Process→Individual processing→ Calculate
Enter the production order number.
Enter the current period in the WIP to period field.
Enter the current fiscal year in the Fiscal year field.
Select Results anal. Vers and enter version 0.
Remove the Test run indicator.
Select log information messages.
Select Execute.

WIP value should be 0.

(C) SAP AG AC040 9-74

 2-10 At the completion of the order, it is now possible to calculate the variances.
The variance calculation will explain any differences between the actual cost of
the production order, and a target cost, such as the standard cost estimate.

Calculate the variances in the current period for your production order. Process
the calculation in production for all target versions and select detailed lists.
Review the cost element report and the variance analysis report from the
variance calculation list.
Menu path:
Accounting→Controlling→Product Cost Controlling→Cost object
controlling→Product cost by order→ Period-End closing→Single
Functions→Variances→Individual processing
Enter the production order number.
Enter the current period in the Period field.
Enter the current fiscal year in the Fiscal year field.
Select All target cost vsns.
Remove the Test run indicator.
Select Detail list.
Select Execute.

From the variance calculation list, position the cursor on the order number and
select the ‘Cost element breakdown’ icon to see the variances by cost element. To
review a variance by category, select a cost element, and choose the ‘variances
analysis’ icon from the toolbar.

(C) SAP AG AC040 9-75

 2-11 Since the order is completed, the WIP value has been calculated, and the
variance categories have been determined, the last step in the period-end closing
process for cost objects is the order settlement. This will cancel the existing
WIP balance in FI and PCA, transfer the variance categories to CO-PA, and
settle the remaining order balance to a price difference account, since this
material uses standard price control.

Execute order settlement for your production order. Process the WIP settlement
in the current period for your production order. Use processing type Automatic
and process the settlement in production.

After the settlement has been executed, a detailed list screen will be presented.
Review the sender and receiver information. Branch down to the financial
accounting, profitability analysis and profit center document line items.
Menu path:
Accounting→Controlling→Product Cost Controlling→Cost object
controlling→Product cost by order→ Period-End closing→Single
Functions→Settlement→Individual processing
Enter the production order number.
Enter the current period in the Settlement period field.
Enter the current fiscal year in the Fiscal year field.
Enter Automatic in the Processing type field.
Remove the Test run indicator.
Select Execute.
To display the settlement, select the order number and then select detailed lists.
Select detailed lists for accrual data for FI.
To display the FI and PCA documents, from the receiver screen, select order No.,
select accounting documents, and click on the accounting document, then return to
the list of accounting documents, and click on the Profit center doc.

(C) SAP AG AC040 9-76

 Unit: Period-End Postings in CO
Topic: Selling Goods and Services

• Understand the difference between selling a product from stock and a

product (service) made to sales order.

The company receives an order from a customer, requesting pumps. In

addition, we are requested to install the pumps at the customer onsite.

3-1 Since the customer asks you to install the pumps in his plant, you decide to
create a second sales order.

3-1-1 Create a sales order like you did in chapter Event-based Postings in CO.
To install the pumps, 100 hours of T-SERVICE, the pump installation,
are necessary.
Select Sales document→Change.
Select Item overview.
Enter T-SERVICE in the Material field.
Enter 100 in the Order quantity field.
Select the Procurement tab.
Enter SE in the RqTy field.

3-1-2 Go to the account assignment view for the pump installation. Note the
new field in the account assignment view, Results Analysis Keys, and
the value in the costing sheet field. Delete the results analysis key!
View the Profitability Analysis settlement.
Select the service item. (Click on the box to the left of the item number.)
Select GoTo→Item→Account assignment.
Review fields.
Click on Displayaccount assignment.
Select Continue to return to the Account assignment tab.

3-1-3 Check the pricing condition PR00 (price) for the pump installation
service.

(C) SAP AG AC040 9-77

 Select the Conditions tab.
Focus on PR00 in the CnTy column.
Remain in the Conditions tab for the next exercise.

3-1-4 Determine the cost for your service. You may use a base planning
object, T-SERVICE, which contains a template of the planned costs for
the pump installation service. Copy this template into the cost estimate
of the sales order item.
Select Extras
Select Unit Costing.
Enter PC04 in the Costing variant field and T-SERVICE in the Base plan obj
field on the Copy Cost Estimate screen. Select Continue.
Select Save.
If the Conditions view is not automatically displayed, select the service item
again and push the Pricing button

3-1-5 Review the schedule lines for the pump installation to view the
confirmed quantity. Save the sales order. (If you get the message that the
order data is still incomplete, you may decide to complete the data.
Select all items in the list and press complete data. Enter in each date
field the current date and save the order. The entry of these dates is not
mandatory.)
Select the Scheduled lines tab to review the confirmed quantity.
Select Save.

3-2 The pump installation service is performed by the Assembly Pumps cost center
(4230). The installation consumes 100 hours of activity 1421 and 20 hours of
activity 1420. Create a direct activity allocation to post 100 hours of activity
type 1421 and 20 hours of activity type 1420 from cost center 4230 to your
sales order which provides the service. The screen variant that you should use is
SAP: Sales order/cost object. Post your document.
Menu path:
Logistics→Sales and Distribution→Sales→Sales order - Controlling→Actual
postings→Activity allocation→Enter
Enter the current date in the Document date field.
Enter 0 in the Version field.
Enter Sales order/cost object in the Screen variant field.
Enter 4230 in the Send. CCtr column.
Enter 1421 in the SATyp column.
Enter your sales order number in the RecSaleOrd field.

(C) SAP AG AC040 9-78

 Enter item number 20 in the RecItm field.
Enter 100 in the Total quantity column.
Enter 4230 in the Send. CCtr column.
Enter 1420 in the SATyp column.
Enter your sales order number in the RecSaleOrd field.
Enter item number 20 in the RecItm field.
Enter 20 in the Total quantity column.

Select Post.

3-3 Bill the customer for the pump installation and review the posting.

3-3-1 After providing all the services, create the billing for the sales order
item. The pump installation invoicing information is generated from the
sales order document. Record your billing document number and the
billing date.
Menu path:
Logistics→Sales and distribution→Sales→Order→ Subsequent
functions→Billing document
Verify that your delivery document number appears in the first field in the
Document column.
Enter your sales order document number in the second field in the Document
column.

Select Save.

3-3-2 View the accounting document type created for both billing document.
Select Billing document→Display.
Enter the billing document number.
Select Accounting.

Go Back.

(C) SAP AG AC040 9-79

 3-4 Allocate overhead to your sales order . Process the overhead allocation in the
current period. Execute the calculation in production and select detailed lists.
Menu path:
Logistic→Sales and Distribution→Sales→Sales order - Controlling→Period-End
Closing→Single Functions→Overhead
Verify that your sales order document number appears in the Sales order field.
Enter your service item number in the Item field.
Enter the current period in the Period field.
Enter the current fiscal year in the fiscal year field.
De-select Test run.
Select Detailed lists.
Select Execute.
Go Back.

3-5 Process the Plan/Actual Comparison report for your sales order to review the
effects of your planning and actual postings for the service item.
Menu path:
Logistic→Sales and Distribution→Sales→Sales Order- Controlling→Information
System→Reports for Product cost by Sales Order→Detailed Reports→For Sales
Order→ Plan/Actual Comparison for Sales Order
Verify that your sales order document number appears in the Sales order field.
Enter your service item number in the Item field.
Select Execute.
Go Back.

3-6 Settle your sales order document to CO-PA.

3-6-1 Process the settlement in test for the period in which the billing
document was posted. Your sales order was created for the Hamburg
sales organization (1000). Request a detailed list. If no errors exist in the
test run, process the settlement in production.
Go Back to the Product Cost by Sales Order screen.
Select Period-End Closing→Settlement.
Enter 1000 in the Sales organization field.
Verify that your sales order number appears in the Sales document field.
Enter the period in which your billing document was posted in the Settlement
period field.
(C) SAP AG AC040 9-80
 Enter the current fiscal year in the fiscal year field.
Select Test run and Detail list.
Select Execute.
Review the results.
If no errors exist, go Back to the Actual Settlement: SD documents screen.
De-select Test run.
Select Execute.

3-6-2 Review the CO-PA document generated by the settlement.

Click on the item with the profitability segment (PSG) receiver and select
Debit receiver.
Select Accounting documents.

Double-click on the Profitab. Analysis document type to review the posting to

CO-PA.
Select Item data to view the product.
Select Value fields and use the Next screen and Previous screen functions to
view the data transferred to Profitability Analysis for this product.

(C) SAP AG AC040 9-81

 Unit: Period-End Postings in CO
Topic: Profitability Accounting

• Look up the results in various segments of the market

• Use the drill- down reporting to analyze the data for different
profitability segments
After recording production and sales business events, the company would
like to know the results for different segments of the market. You want to
know where profit increased and where profit suffered by certain factors,
which you want to analyze. The company needs this information after
each sale, not only after the end of the period.

4-1 The billing and settlement of the sales orders created in Exercise 3 resulted in
postings to CO-PA, for which the system has created line items. Access the line
item display through the Actual Postings menu path. Select line items for your
User ID and sales order numbers. Restrict the processing to include postings
from yesterday and today.
Menu path:
Accounting→Controlling→Profitability analysis→Actual postings→Display line
items
In the Set Operating Concern screen, enter IDEA in the Operating concern field.
Select Continue.
Enter yesterday’s date in the Date created field.
Enter today’s date in the Date created to field.
Enter your User ID in the Entered by field.
Enter your sales order document numbers in the Sales order fields.
Select Execute.
Select Yes to clear the selection criteria message.
Double-click on a line item to view detail.

(C) SAP AG AC040 9-82

 4-2 Produce a report in Profitability Analysis for the IDES Worldwide operating
concern (IDEA). Process the Contribution Margin report AC040 for the current
fiscal year to view the results of the sales order postings.

4-2-1 Execute the report.

Menu path:
Accounting→Controlling→Profitability analysis→Information
system→Execute report
In the Set Operating Concern screen, enter IDEA in the Operating concern
field.
Select Continue.
Enter AC040 in the Report field.
Select Execute.
Enter period 001/current fiscal year in the Period/YR From field.
Enter period 012/current fiscal year in the Period/YR To field.
Select Execute.

4-2-2 Select the overview and drill down to view the results for the Hamburg
plant 1000, the Pumps division 01, product T-F1##, and customer 1000
(Becker Berlin).
Click on Overview in the Navigation area.
Select Continue if the Drill-down: Callup for documentation for hotspots
screen is displayed.
Click on Plant in the Navigation area.
Click on the hotspot (diamond) to the left of 1000 Hamburg.
Click on Division in the Navigation area.
Click on the hotspot (diamond) to the left of 01 Pumps.
Click on Product in the Navigation area.
Click on the hotspot (diamond) to the left of T-F1##.
Click on Customer in the Navigation area.

4-2-3 View the same information for the pump installation service, which is
product T-SERVICE in division 08.
Click on Back in the Navigation area to return to the product level display.
Click on the magnifying glass to the left of 01 Pumps.
Double-click on division 08.
Click on the hotspot (diamond) to the left of T-SERVICE.
Click on Customer in the Navigation area.

(C) SAP AG AC040 9-83

 4-2-4 Drill down on the actual line items for the Dresden plant 1200, division
08, product T-SERVICE, and customer 1000 to view your postings to
CO-PA.
Click on the customer 1000 report row in the actual revenue column.
Select GoTo→Line items.
Double-click on one of the lines that your group entered to view detail..

4.2.6 Look up the contribution margin 1 of each product, which we have

realized with customer 1000.
Click on the green arrow, until you see all four characteristics in the
navigation box
Click on the characteristic customer in the navigation box and then select
customer 1000.
Select the overview icon and then the characteristic product.

(C) SAP AG AC040 9-84

 Unit: Period-End Postings in CO
Topic: Reconciliation ledger

• Analyze the cost flow between different business areas to show data
that was allocated in CO and is not yet reflected in the same way in FI

The company uses different business areas inside the controlling area.
Some allocations within CO that are required by the company will cross
business areas; however, this information is not immediately updated to
FI. Since the business area is one of the levels at which data is reported in
FI, this information must be reconciled between CO and FI.

5-1 Use the information system in Cost Element Accounting to run the appropriate
report to analyze cost flows between business areas. View the cost flow
between the business areas to which our production and service cost centers are
assigned (1000 and 9900, respectively).

5-1-1 Process the CElm: Business Area Allocation report for the current period
for all business areas in controlling area 1000. Execute the report.

The default value in the Business areas (business area set) field contains
all business areas. You can stay with this or you may enter instead the
range from 1000 to 9900.

Menu path:
Accounting→Controlling→Cost element Accounting→Information
system→Reports for cost and revenue Accounting→Cost flow→ CElm:
Allocation between Business Area
Enter 1000 in the Controlling area field.
Enter the current fiscal year in the Fiscal year field.
Enter the current period in the Period field.
Execute the report.

(C) SAP AG AC040 9-85

 5-1-2 Select variation. Set the business area to Mechanical Engineering and
the trading partner business area to Corporate other to view the
appropriate report. Explain the data shown.
Click on Business area under Variation Characteristics.
Click on Mechanical Engineering in the business area listing. The setting for
Business area should now be Mechanical Engineering.
Click on Tr. part. BA under Variation Characteristics.
Click on Corporate other in the business area listing. The setting for Tr. part.
BA should now be Corporate Other.

The report shows the flow of cost between business areas, summarized at the
cost element level and debit/credit indicator. These costs will be reconciled to
FI at the end of the accounting period prior to producing financial
statements.

(C) SAP AG AC040 9-86

0
ASAP Introduction: Unit Objectives

Upon completion of this unit, you will be able to:

 Explain the difference between TeamSAP, ASAP,
and the Implementation Assistant
 Describe the structure of the Implementation
Assistant
 Perform the first steps in the Implementation
Assistant
 State what deliverables are produced in an ASAP
project

 SAP AG 1999

(C) SAP AG AC040 10-1

0.2
Overview Diagram: ASAP Introduction

ASAP Overview

ASAP Introduction

Content / Tools of the

Legend: ASAP Phases

Unit
Unit
Topic
Topic

 SAP AG 1999

(C) SAP AG AC040 10-2

0.3
Topic: ASAP Introduction

 SAP AG 1999

(C) SAP AG AC040 10-3

0.4
Topic Objectives

Upon completion of this topic, you will be

able to:
 Describe the relationship between TeamSAP and
ASAP
 Describe the role of the BE tools in ASAP
 State the preconditions for rapid implementation
with ASAP

 SAP AG 1999

(C) SAP AG AC040 10-4

0.5
AcceleratedSAP …the process component of
TeamSAP

People: Processes:
Solutions Expertise AcceleratedSAP

Pr
 AcceleratedSAP Roadmaps

oc
le
 SAP
or Powered-By Methods
op

es
 Consulting Partners
 Quality Assurance
 Complementary
Pe

se
 R/3 Business Engineer
Software Partners

s
 Support, Consulting &
 Technology &
Hardware Partners Products Education Services

Products:
The Business Framework
 R/3 Product Family
 Complementary Software Products
 Technology Partner Products
 Industry Solutions
 SAP AG 1999

 The TeamSAP program is SAP's contribution to ensuring total lifecycle success in using the R/3
product with:
 Reinforced involvement of SAP employees in projects
 Coaching across the whole lifecycle: for example, feeding customer concerns into the SAP
network, supporting projects actively, and helping reduce costs
 Quality assurance (reviews) for all projects.
 TeamSAP works by providing a coordinated network of people, processes and products from SAP
and partners.
 ASAP is the TeamSAP solution for the implementation process, with a simple, consistent project
plan linked with the tools, services and support for implementing the R/3 System.

(C) SAP AG AC040 10-5

0.6
What is in ASAP?

ASAP
ASAP Accelerators
Accelerators
Individual
Individual accelerators
accelerators
 Roadmap also
also used in other
used in other projects
projects
 Step-by-step procedures and recommendations
 Tools
 ASAP Implementation Assistant:
 Navigation tool for the Roadmap, questionnaires,
templates, and check lists
 Q&A database for documenting requirements
 R/3 Business Engineer tools for creating Business
Blueprint (conceptual design) and for configuration
 R/3 Services and Training
 All the services are available for ASAP projects,
 including consulting, training, hotline,
SAP AG 1999

EarlyWatch, OSS, Info DB.

(C) SAP AG AC040 10-6

0.7
AcceleratedSAP - The Implementation Solution

ASAP Roadmap
Continuous
Change
Project
Preparation Final
Business Preparation Go Live &
Realization Support
Blueprint

Methodology
Implementation Assistant R/3 Business Engineer
- Q&A database - Implementation
- ASAP Roadmap Guide
- Knowledge R/3
R/3 - Reference Model
PC Tool
Corner Tool - Profile Generator
- BP Master List - Change Request
- Accelerators Management
Service
Training & Education, InfoDB,
OSS Support, Consulting
 SAP AG 1999

 AcceleratedSAP is the Implementation Solution provided by SAP. AcceleratedSAP integrates

several components that work in conjunction to support the rapid and efficient implementation of the
R/3 System. The three components that make up AcceleratedSAP are:
 Methodology - The AcceleratedSAP Roadmap defines the phases of the R/3 implementation
process and supports those with a comprehensive project plan. These MS Project templates
provide complete work breakdown structures and resource assignments.
 Tools - The AcceleratedSAP process is supported by a comprehensive set of both PC-based and R/
3-resident tools.
 Service
The PC-based tools and accelerators are integrated into the Implementation Assistant (IA). The
Implementation Assistant seamlessly links documents accessed through the AcceleratedSAP
Roadmap. The major PC tools include:
The Question & Answer Database (Q&A db) - A repository of all questions and corresponding
Company responses that are required to define business requirements and to develop the
business solutions in terms of the R/3 Reference Model and the R/3 System. This includes
business process, technical, organizational, and configuration questions and answers that are the
source for creating the Business Blueprint. After answering questions and filling out customer
input templates within the Q&A db, the Business Blueprint is generated and printed.
The Roadmap - A set of processes that identifies the steps needed to implement R/3. The five
phases of the AcceleratedSAP Roadmap (represented by a road graphic) are Project Preparation,
Business Blueprint, Realization, Final Preparation and Go Live and Support.

(C) SAP AG AC040 10-7

0.8
Preconditions for Rapid Implementation

 Clearly defined and stable

project scope
 Only reference based
reengineering
 Implementation uses standard
R/3 functions
 Whole company fully
committed
 Committed management (steering
committee) and fast decision-
making
 SAP AG 1999
 Committed project team,
competent, well-trained users and
decision-makers

(C) SAP AG AC040 10-8

0.9
Topic: Content / Tools of the ASAP Phases

 SAP AG 1999

(C) SAP AG AC040 10-9

0.10
Implementation Assistant: Objectives

Upon completion of this topic, you will be

able to:
 Describe the structure of the Implementation
Assistant
 Describe the structure of the ASAP Roadmap
 Outline the content of each of the Roadmap
phases, and tools used in them

 SAP AG 1999

(C) SAP AG AC040 10-10

0.11
AcceleratedSAP - Implementation Assistant

Hide Back Forward Refresh Print Options

Contents Search
Home Page Welcome to AcceleratedSAP
What`s New
Roadmap
Implementation Accelerators
Project Plan
Question and Answer Database

The Implementation Issues Database

Business Process Procedures

Assistant is the Knowledge Corner

Glossary
primary tool and Help Continuous
Change
framework for Project
Final
executing the ASAP Preparation
Business Preparation Go Live &
Realization
approach Blueprint Support

Version

 SAP AG 1999

 The Implementation Assistant is:

 A PC tool that can run completely independently of the R/3 System
 The one-stop collection of all tools and methods developed for the ASAP methodology
 Network-capable

(C) SAP AG AC040 10-11

0.12
Organization of the Implementation Assistant

Contents Search

Home Page  Roadmap

What`s New
Roadmap  Implementation Accelerators
Phase 1: Project Preparation
Phase 2: Business Blueprint  Project Plan
Phase 3: Realization
Phase 4: Final Preparation  Question and Answer Database
Phase 5: Go Live and Support
Implementation Accelerators
Project Plan
 Issues Database
Question and Answer Database
Issues Database
 Business Process Procedures
Business Process Procedures
Knowledge Corner
 Knowledge Corner
Glossary
Help
 Glossary
 Help

 SAP AG 1999

 Home Page: Branches back to the Roadmap graphic in the right pane.
 What's New: Delineates version and release changes.
 Roadmap: A set of processes that identifies the steps needed to implement R/3. The five phases of
the AcceleratedSAP Roadmap (represented by a road graphic) are Project Preparation, Business
Blueprint, Realization, Final Preparation and Go Live and Support.
 Implementation Accelerators: Alphabetical listing of accelerators found within the Roadmap.
 Project Plan: 6 or 9 month project plans.
 Question and Answer Database (Q&A db): A repository of all questions and corresponding
Company responses that are required to define business requirements and to develop the business
solutions in terms of the R/3 Reference Model and the R/3 System. This includes business process,
technical, organizational, and configuration questions and answers that are the source for creating the
Business Blueprint. After answering questions and filling out customer input templates within the
Q&A db, the Business Blueprint is generated and printed.
 Issues Database: Tool used to process and track project issues.
 Business Process Procedures: Lists default business processes from the R/3 System.
 Knowledge Corner: Task-oriented collection of efficient procedure documentation for use in the R/
3 implementation project (examples: authorization concept, data transfer).
 Help: Source for ASAP support and updates.

(C) SAP AG AC040 10-12

0.13
Organization within the ASAP Roadmap

Phase

Continuous
Change
Work Packages Project
Preparation
Final
Business Realization Preparation Go Live &
Support
Blueprint

Activities

Tasks  How To’s

 Accelerators
 Tools
 SAP AG 1999

 The Roadmap, regardless of the method of access, is divided into four types of organizational
folders:
 Phase - The major organizational steps of the ASAP Roadmap.
 Work package - A group of activities designed to accomplish a major portion of a Roadmap phase.
A work package is assigned to a project team for completion.
 Activity - A group of tasks. The results of an activity can produce certain deliverables and can be
accomplished by one or more project team members. Several activities comprise a workpackage.
 Task - A specific event to be performed by a project team member.
 Tasks contain the important How To instructions needed for task completion and provide access to
the accelerators:
How-To - Explanation of how to perform a process, activity, or task.
Accelerator – Documentation, templates, tips and tricks used to accelerate task completion.

(C) SAP AG AC040 10-13

0.14
Example of AcceleratedSAP Accelerators

 Knowledge Corner contains numerous

accelerators
Contents Search
Home Page
What`s New
Roadmap
Phase 1: Project Preparation
Phase 2: Business Blueprint
Phase 3: Realization
Phase 4: Final Preparation
Phase 5: Go Live and Support
Implementation Accelerators  SAP’s R/3 Services
Project Plan
Question and Answer Database  Data Transfer Made Easy
Issues Database
Business Process Procedures  System Administration Made Easy
Knowledge Corner
Glossary  Authorizations Made Easy
Help
 Automatic Account Assignment

 SAP AG 1999

 The Knowledge Corner contains many publications from SAP's Simplification Group.

(C) SAP AG AC040 10-14

0.15
Phase 1: Project Preparation Overview

Continuous
Change
Project
Preparation Final
Preparation Go Live &
Business Realization
Support
Blueprint

 Project organization and standards

 Measurement of business benefits
 High level project plan
 Technical requirements planning
 Executive kickoff

 SAP AG 1999

 Phase 1 focuses on:

 Getting the project started
 Identifying team members
 Developing a high-level plan
 In the kickoff meeting, the project team and process owners get a clear sense of what their
responsibilities will be throughout the project.

(C) SAP AG AC040 10-15

0.16
Phase 2: Business Blueprint Overview

Continuous
Change
Project
Preparation Final
Preparation Go Live &
Business Realization
Support
Blueprint

 Train project team

 Develop system environment
 Define organizational structure in organizational
workshop
 Define business processes requirements using
questionnaires and models
 Produce Business Blueprint
 SAP AG 1999

 Define Baseline Scope

 Phase 2 focuses on understanding the business goals of the company and determining the business
requirements needed to support those goals.
 During Phase 2, consultants will be using the AcceleratedSAP Implementation Assistant, The
Question & Answer Database, and VISIO's Business Modeler to gather requirements.

(C) SAP AG AC040 10-16

0.17
Using the Q&A db to Complete Phase 2

ASAP Roadmap Q&A

Activities Database

ns
Organizational
stio questions
Define business Que
organization structure Customer
Answers input templates

Busin Business
ess p process
Conduct business roces
ses questions
process workshops

 SAP AG 1999

 Specific tasks within the work packages provide direct access to the Q&A db for task completion.
Within the Q&Adb, questionnaires and templates provide the means for task completion as well as
data storage of results and report generation.

(C) SAP AG AC040 10-17

0.18
IMG (Implementation Guide)

Overview - Creating the R/3 IMG

SAP
Reference Create
Enterprise
IMG Enterprise Project
IMG Create Project
IMG IMG
Customizing IMGs Create
Project IMG
Views
Projects
Views

Customizing Project Project

Transactions Documentation Management

 SAP AG 1999

 The Implementation Assistant gives you both guidance and specific directions on the execution of
this process.
 The Enterprise IMG is the complete IMG for your company. It includes all components to be
implemented now and in the future. If a certain module, or function within a module, is still under
consideration, include it in the Enterprise IMG so that regeneration is not needed later. Although
regeneration is possible, it can be time consuming because it requires system resources. Be careful if
you regenerate the Enterprise IMG, because all Project IMGs will be affected.
 The purpose of the Project IMG is to provide a specific set of configuration activities for each
project phase, so that all SAP application components that go live at the same time are included in
one Project IMG for the customer, even when there are several locations, or multiple project teams.
The Project IMG substantially reduces the number of IMG activities.
 All available IMG activities are assigned to one or more components. For instance, if you select
Production Planning (PP), there is a branch Controlling, even when you do not use this component,
because PP needs cost centers for its work centers. Use Project IMGs to do your project planning and
control work.
 When you set up your Project IMGs or Release projects, be sure to keep to the standards you defined
in the Project procedures work package under the Define project documentation task for using status
indicators, for scheduling, and for documentation.

(C) SAP AG AC040 10-18

0.19
Phase 3: Realization Overview

Continuous
Change
Project
Preparation Final
Preparation Go Live &
Business Realization
Support
Blueprint

 Baseline Configuration
 Final Configuration/Integration Test
 Configuration management with IMG
 Design, develop and test interfaces, reports, and
conversions
 Develop integrated and documented solutions
through cycles
 SAP AG
1999Authorization and system administration

 The purpose of Phase 3 is to develop and evolve a future-state model into an integrated and
documented solution that fulfills the customer's business process requirements.
 Configuration is done in two work packages:
 Baseline configuration
 Final configuration
 Baseline configuration provides the basis for the configuration cycles. The system is refined in the
Final configuration work package.

(C) SAP AG AC040 10-19

0.20
IMG

IMG
Global settings
Set countries
Currencies
Maintain calendar

Customizing
Customizing
project
project

SAP documentation Activities Project management Project documentation

 Unified
 Unified structure
structure  Open
 Open  Status/activity
 Status/activity data  Efficiently
data  Efficiently organized
organized
Customizing
Customizing
 HTML display  MS Project  Use MS Word
transactions
transactions interface

Customizing
Customizing
project
project

 SAP AG 1999

 Activities are uniformly documented.

 In the IMG you can create complete (project) documentation for each activity.
 Note:
From Release 3.1G there is a translation option for language-dependent fields in Customizing
transactions. You can define or change any language. Fields can be translated into several languages
simultaneously.

(C) SAP AG AC040 10-20

0.21
Phase 4: Final Preparation Overview

Continuous
Change
Project
Preparation Final
Preparation Go Live &
Business Realization
Support
Blueprint

 Prepare Go Live plan

 User training
 Integration, volume and stress testing
 Establish internal help desk
 Cutover to production system

 SAP AG 1999

 Phase 4 focuses on completing final system testing, training users and cutting over both the data and
the system to a production environment.
 Final system testing consists of:
 Testing conversion procedures and programs, and interface programs
 Conducting volume and stress testing, and final user acceptance testing.
 In this phase, you also develop a Go Live plan, which specifically identifies the data conversion
strategy, initial audit procedures and a project team support structure.

(C) SAP AG AC040 10-21

0.22
Phase 5: Go Live and Support Overview

Continuous
Change
Project
Preparation Final
Preparation Go Live &
Business Realization
Support
Blueprint

 Production support
 Verify accuracy of production system
 Measurement of business benefits

 SAP AG 1999

 After Go Live, the customer team is focused on supporting the users. The consultants should be
secondary to this effort.
 Each day the business results and system performance should be measured and reviewed.

(C) SAP AG AC040 10-22

0.23
ASAP Overview: Summary

 TeamSAP is the coordinated network of people,

processes & products from SAP and partners that
delivers fast, integrated and assured solutions
over time.
 The AcceleratedSAP approach uses different tools
and accelerators within the context of a single
framework called the Implementation Assistant
 The Implementation Assistant is a PC-based
application made up of numerous tools and
seamlessly linked templates accessed through the
AcceleratedSAP
Roadmap. The Implementation Assistant provides
the framework or logical housing of tools and
accelerators
to conduct an ASAP project.
 Roadmap: This is the organizing principle of the
Implementation Assistant. The Roadmap contains
 SAP AG 1999 the step-by-step approach for ASAP to include

detailed explanations for completing each step

and providing access to the tools and accelerators
to be used for task completion.

(C) SAP AG AC040 10-23

 What Were The Course Goals?

This course will enable you to:

 Understand the components of the

R/3 Controlling (CO) module
 Understand the Integration between
CO and other R/3 modules
 Understand the various Costing Options
that are used in CO
 Decide which R/3 tools to use within your
business depending on the chosen
Costing Options
 Understand the SAP terminology and vocabulary
 Clarification of, and preparation for, additional
training needs
 SAP AG 1999

(C) SAP AG AC040 11-1

 What Were The Course Objectives?

At the conclusion of this course,

you should be able to:

 Execute core CO functionality

 Identify which components of CO are used to
address different business requirements
 Show and explain the integration within CO
 Show and explain the integration between
CO and other R/3 modules
 Explain SAP terminology and vocabulary
 Define various Costing Options and explain
the differences between them
 Decide which R/3 CO tools to use in given
business situations

 SAP AG 1999

(C) SAP AG AC040 11-2

 You Are Here!

FI
MM CO
HR
$$ CO
+ABC SD AA 1 12
$
Planning and Postings to CO 
t Plan Integration From Other Modules $
Event-Based
Reporting Tools
Postings in CO

AC040 1 12
OM PC Profit
OM PC Profit FI CO
Reflecting Your Period-End
Business in CO Postings in CO

INT EXT
OM PC Profit “Which
FI MM HR AA SD
Button?”
Overview of CO AcceleratedSAP

Getting Started Course Review

 SAP AG 1999

(C) SAP AG AC040 11-3

 Recommended Follow Up Courses (AC410)

 AC410 - Cost Center Accounting covers :

 Organizational Units
 Master Data
 Event-Based Postings
 Period-End Closing
 Planning
 Information System
 Special Functions

 SAP AG 1999

(C) SAP AG AC040 11-4

 Recommended Follow Up Courses (AC505)

 AC505 - Product Cost Planning covers:

 Introduction to and Preparation for Product Costing
 Material Costs
 Production Costs
 Overhead
 Process Costs
 Update in the Material Master
 Special Types of Processing
 Costing Run
 Costing Without a Quantity Structure

 SAP AG 1999

(C) SAP AG AC040 11-5

 Recommended Follow Up Courses (AC605)

 AC605 - Profitability Analysis covers:

 Introduction to and Preparation for Product Costing
 Overview of Profitability Accounting
 Basic Data Structures
 Characteristics Derivation and Valuation
 Flow of Actual Data
 Sales & Profit Planning
 Information System
 Technical Topics

 SAP AG 1999

(C) SAP AG AC040 11-6

 Recommended Follow Up Courses (AC610)

 AC610 - Profit Center Accounting covers:

 Overview of Profitability Accounting
 Basic Settings
 Actual Data
 Transfer Prices
 Profit Center Planning
 Information System

 SAP AG 1999

(C) SAP AG AC040 11-7

 Finish

 SAP AG 1999

(C) SAP AG AC040 11-8