Understanding Transactions in The Controlling Module

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Understanding Transactions in the Controlling Module

Learning Objective
After completing this topic, you should be able to
determine the transaction and data required to extract the desired Controlling information, in a
given scenario
1. Controlling transactions
The Controlling (CO) module of SAP R/3 enables you to define the cost structure of a
company. It helps management make decisions related to controlling the costs of a
business.
The CO module provides transactions that enable you to perform control-related tasks.
By performing controlling transactions, you can
compare the actual costs with the planned costs
calculate the product cost
evaluate how each business unit within the company is performing
analyze the profit of the company

The most commonly used transactions in the CO module include
Cost Center Accounting
Internal Orders
Product Costing
Profit Center Accounting
Profitability Analysis
Cost Center Accounting enables you to define the cost structure of the company, assign
costs to the appropriate cost centers, and plan the costs for each business unit and
compare the planned costs with the actual costs.
A cost center is a business unit marketing, production, or customer service within a
company, which incurs expenses, such as salaries, telephone, and electricity.
Internal Orders enables you to plan, track, and calculate the cost of performing a specific
task displaying the product in a trade fair or advertising the product, for example. The
cost incurred to perform these tasks is settled through internal orders.
Product Costing enables you to
calculate the cost incurred while manufacturing a product
decide the minimum price at which you can market your products
plan the product cost without referring to set prices, and
analyze the planned and actual costs of the product

Profit Center Accounting evaluates how each business unit within your organization is
performing and contributing to the profit of the company. The business unit may be
incurring expenses but also generating revenues.
For example, the salary paid to the personnel of Sales Department is considered costs,
whereas the profit earned by the Sales Department is considered revenues.
Profitability Analysis enables you to analyze the profit of an organization based on
product, price, customer, or sales organization.
A sales organization is a unit within a company that is responsible for the sales and
distribution of goods and services.
The CO module of SAP R/3 works in combination with the Financial Accounting (FI)
module of SAP R/3. The CO module receives data from the FI module.
Try It
You can access the CO module from the SAP Easy Access screen.
To complete the task
1.
Double-click Accounting Controlling

The SAP menu includes the following options: Office, Cross-Application Components, Logistics, Accounting,
Human Resources, Information Systems, and Tools.
A list of transactions Cost Center Accounting, Internal Orders, Product Costing,

Profit Center Accounting, and Profitability Analysis is displayed.
Question
Match each CO transaction with its corresponding business function.
Options:
A.
B.
Internal Orders
C.
Product Costing
D.
Targets:
1.
Enables you to analyze the profit of an organization at different business levels
2.
Enables you to calculate the cost incurred while manufacturing a product
3.
Enables you to compare the actual costs with the planned costs
4.
Enables you to plan, track, and calculate the cost of performing a specific job
Answer
A business aims to earn profits. It is very important for an organization to analyze
the profit at different business levels, such as sales organization, product, and
consumer. You can analyze the profit of an organization using Profitability
Analysis.
A product goes through different manufacturing levels before it is delivered to the
customers. It is essential for an organization to calculate the cost of a product at
each manufacturing level to ensure that the cost of the product is not more than
what is planned.
Every organization wants to have visibility about the costs incurred in the
organization. Using Cost Center Accounting, you can compare the actual costs
with the planned costs, and have visibility about the costs.
To promote a product in the market, an organization needs to display the product
in trade fairs or advertise the product. The cost incurred for these promotional
activities is considered as expenses for the organization. To settle this cost, the
organization needs to use Internal Orders.
Correct answer(s):
Target 1 = Option D
Target 2 = Option C
Target 3 = Option A
Target 4 = Option B
2. Organizational structure data

To align your CO tasks with SAP R/3, you need to define the components of your
business units in the organizational structure components provided by SAP R/3.
When you perform any control-related tasks in SAP R/3, you need to refer to the
components defined in the organizational structure of the CO module.
The organizational structure components available in SAP R/3 that you can use to map to
your existing business units involved in controlling are
Client
In SAP R/3, a client is at the highest level in the organizational structure. A client is a
collection of administrative, organizational, and business units that work as a group
towards a common purpose. For example, in SAP R/3, you can define a corporate group
as a client.
Company code
A company code is an independent legal entity within a client and is at the second level in
the organizational structure. Each company code consists of its profit and loss account and
its own balance sheet. For example, in SAP R/3, you can define a company within a
corporate group as a company code.
Controlling area
You use controlling area to record the costs and revenues of the business when
performing the Cost Center Accounting transaction. The controlling area consists of cost
centers and profit centers. A cost center only monitors the costs of the business. For
example, a production unit of a business is a cost-incurring unit. A profit center monitors
both costs and revenues of the business. For example, a sales unit of a business is a
revenue-generating unit.
You can assign one or several company codes to a controlling area.
Operating concern
An operating concern is a sales structure defined by the company to calculate the
revenues of the company. The sales structure consists of the sales organization, product,
customer, and price. When you perform a profitability analysis, you must specify the
operating concern. Using the sales structure, you can decide at what level you want to
analyze the profitability of the company.
You can assign one or several controlling areas to an operating concern.
Suppose you want to analyze the profit of the company at the customer level. For this,
you need to perform Profitability Analysis.
When you perform Profitability Analysis, you need to refer to the sales structure
operating concern defined in the organizational structure component.
In addition, you need to specify the company code for which you want to analyze the
profit.
If on the other hand, you wanted to compare the actual costs with the planned costs, you
would need to perform Cost Center Accounting.
When you perform Cost Center Accounting, you need to refer to the organizational
structure component, controlling area.
Question
Suppose you work for Award Sportswear. The company specializes in casual and
formal sportswear. The company's headquarters are in Los Angeles, with local
offices in Maryland and Georgia. The company analyzes the profits on a quarterly
basis.
Award Sportswear wants to analyze the profit at the sales organization level. To do
this, you need to perform Profitability Analysis.
Which organizational structure components should you specify in Profitability
Analysis?
Options:
1.
Client
2.
Company code
3.
Controlling area
4.
Operating concern
Answer
Option 1: Incorrect. The client would be the corporate group. You do not have to
specify the corporate group while performing Profitability Analysis.
Option 2: Correct. To analyze the profit of the company at the sales organization
level, you need to specify the company code to which the sales organization
belongs.
Option 3: Incorrect. Controlling area is used to record the costs and revenues of
the business. It is not used to analyze the profitability of the company.
Option 4: Correct. Operating concern enables you to decide at what level you
want to analyze the profitability of a company. Award Sportswear wants to analyze
its profit at the Sales organization level.
Correct answer(s):
2. Company code
4. Operating concern
3. Master data
To perform CO transactions, in addition to organizational structure components, you need
to define the CO Master data components.
The essential master data components that you need to begin working with the CO
module are
cost element
Cost element describes the origin of costs within your company. For example, expenses
incurred on salaries, telephone, and electricity are considered as the starting point of costs
in your company. Each transaction related to these expenses will be recorded under the
cost element for that expense.
cost center, and
A cost center is a business unit such as a production unit that incurs costs within a
company. A cost center code is assigned to each business unit. The costs incurred by a
business unit are recorded under its cost center code.
profit center
A profit center is a business unit such as a sales unit that earns revenues within a
company. A profit center code is assigned to each business unit. The profit earned by a
business unit is recorded under its profit center code.
Suppose you want to record the cost incurred for electricity expenses. For this, you need
to perform Cost Center Accounting. When you perform this transaction, you need to refer
to the cost element of electricity expenses, which is a master data component of the CO
module. The cost incurred for electricity is recorded in the electricity cost element.
However, when you want to find the total costs of all elements salary, telephone,
electricity, stationery incurred by a business unit such as production, you would refer to
the cost center component, using the code for that cost center.
Question
Sonical Electronics has two Production Departments that look after the production
of washing machines and refrigerators. The company wants to have visibility of all
the costs that have been incurred by the Production Department that
manufactures refrigerators. To do this, you need to perform Profit Center
Accounting.
Which master data component would you have to specify to perform a Profit
Center Accounting transaction?
Options:
1.
Cost element
2.
Cost center
3.
Profit center
Answer
Option 1: Incorrect. You specify the profit center master data component to record
the profit gained in the profit element of that expense.
Option 2: Incorrect. When you perform the Profit Center Accounting transaction,
you do not have to specify the cost center code. This is because a cost center is
only concerned with the costs that are incurred in the company, and is not
concerned with the profit.
Option 3: Correct. You specify the profit center master data component to find out
the total profit gained by the production unit at Sonical Electronics.
Correct answer(s):
3. Profit center
4. Data flow in Controlling

Each transaction in SAP R/3 involves a data flow; it prompts you for input data, processes
the data, and produces output data.
The input data for the transactions comes from the organizational structure and master
data components, along with some transaction-specific data.
The output of the transaction is in the form of a report or updates to the SAP R/3
database.
Here is a business scenario that explains the important input and output of some CO
transactions.
Brocadero is a company that manufactures hi-fi and public-address equipment. It is
based primarily in the US but has recently begun manufacturing in the United Kingdom
and Australia. The company wants to
compare the actual cost of production with the planned cost
calculate the costs incurred while manufacturing a product
find out the contribution of each business unit to the profit of the company, and
analyze the profit at different business levels
Drill Down Home Page

The four main transactions involved in this scenario are
Page 1 of 4: Cost Center Accounting

At the start of the fiscal year, Brocadero has planned the expenses that will be incurred
on salaries.
At the end of the first quarter of the fiscal year, Brocadero wants to compare the actual
cost incurred on the salary expense with the planned cost in order to ensure that the cost
element is under control. For this, you need to perform the Cost Center Accounting
transaction.

Here is the organizational structure input for the Cost Center Accounting transaction:
Graphic
Description of the data flow in the Cost Center Accounting transaction.
When you perform the Cost Center Accounting transaction, the data comes from
the organizational structure and master data components of the CO module. The
organizational structure input is company code (C001) and controlling area code
(0001).
Description ends.
company code: C001 to specify the company for which you want to perform the transaction, for
example Brocadero
controlling area code: 0001 to record the total costs incurred by Brocadero

Here is the master data input for the Cost Center Accounting transaction:
Graphic
Description of the data flow in the Cost Center Accounting transaction:
The master data input is cost element code (210000) and cost center code
(996701).
The output is a report that compares the actual cost incurred on the salary
expense with the planned cost.
Description ends.
cost element code: 210000 to record the salary expense

cost center code: 996701 to specify for which business unit (production, marketing, or sales)
the salary expense was incurred

The output is a report that compares the actual cost incurred on the salary expense with
the planned cost.
Page 1 of 3: Product Costing

Brocadero wants to calculate the costs incurred while manufacturing a product. For this,
you need to perform the Product Costing transaction.

Here is the organizational structure input for the Product Costing transaction:
Graphic
Description of the data flow in the Product Costing transaction:

When you perform the Product Costing transaction, the data comes from the
organizational structure and master data components of the CO module. The
organizational structure component is company code (C001) and controlling area
code (0001).
Description ends.
example Brocadero
controlling area code: 0001 to record the total costs incurred by Brocadero

The master data input for the Product Costing transaction is cost center code: 996701
to record the costs (salary, electricity, stationery, and telephone) incurred to manufacture
the product.
Graphic
Description of the data flow in the Product Costing transaction:
The master data input is cost center code (996701).
The output is a report that lists the costs incurred while manufacturing hi-fi and
public-address equipment.
Description ends.
The output is a report that lists the costs incurred while manufacturing hi-fi and publicaddress equipment.
Page 1 of 3: Profit Center Accounting

Brocadero already has three manufacturing plants. Brocadero has invested $10 million to
set up a new manufacturing plant in the US.
After a year, the company wants to find out the contribution of the new plant to the profit
of the company. For this, you need to perform the Profit Center Accounting transaction.

Here is the organizational structure input for the Profit Center Accounting transaction:
Graphic
Description of the data flow in the Profit Center Accounting transaction:
When you perform the Profit Center Accounting transaction, the data comes from
the organizational structure and master data components of the CO module. The
organizational structure input is company code (C001) and controlling area code
(0001).
Description ends.
example Brocadero
controlling area code: 0001 to record the costs incurred by Brocadero at the new plant located in
the US

The master data input for the Profit Center Accounting transaction is profit center code:
996801 to record the income earned by the manufacturing plant located in the US.
Graphic
Description of the data flow in the Profit Center Accounting transaction:
The master data input is profit center code (996801).
The output is a report that shows the contribution of the new plant to the profit of
the company.
Description ends.
The output is a report that shows the contribution of the new plant to the profit of the
company.
Page 1 of 2: Profitability Analysis

Brocadero wants to analyze the profit of the company at the product level. For this, you
need to perform the Profitability Analysis transaction. When you perform this transaction,
the data comes only from the organizational structure components of the CO module.
Page 2 of 2: Profitability Analysis

Here is the organizational structure input for the Profitability Analysis transaction:
Graphic
Description of the data flow in the Profitability Analysis transaction:
When you perform the Profitability Analysis transaction, the data comes from the
organizational structure components, company code (C001) and operating
concern code (PC01), of the CO module.
The output is a report that shows the profit of the company at the product level.
Description ends.
example Brocadero
operating concern code: PC01 to decide at which level (product, customer, price, and sales
organization) you want to analyze the profit of Brocadero
Question
Your company wants to calculate the costs that are incurred while manufacturing a
product. For this, you need to perform the Product Costing transaction.
Here is the information that comprises the organizational structure and master
data inputs and output of the Product Costing transaction.
Match each piece of information with the appropriate category.
Options:
A.
Master data input
B.
Organizational structure input
C.
Output
Targets:
1.
A report that shows the costs incurred while manufacturing a product
2.
Company code: C001
3.
Controlling area code: 0001
4.
Cost element code: 11212
Answer
A report of costs contains the result of manufacture and is thus an output.
The company code is an input of the Product Costing transaction.

The area code is an input of the Product Costing transaction.
The cost element code is the master data input of the Product Costing transaction.
Correct answer(s):
Target 1 = Option C
Target 2 = Option B
Target 3 = Option B
Target 4 = Option A
You can compare and contrast Controlling transactions and data with Financial
Accounting transactions and data.
Supplement
Selecting the link title opens the resource in a new browser window.
Job Aid
Access the job aid Controlling Action Inputs to review the inputs necessary to
perform controlling actions.
Summary
SAP R/3 provides transactions to carry out everyday tasks related to controlling costs.
The transactions are Cost Center Accounting, Internal Orders, Product Costing, Profit
Center Accounting, and Profitability Analysis.
The organizational structure components of the CO module are client, company code,
controlling area, and operating concern.
The master data components of the CO module are cost element, cost center, and profit
center.
The organizational structure and master data components are referenced when you
perform CO transactions.
Table of Contents
| Top of page |
| Learning Objective |
| 1.Controlling transactions |
| 2.Organizational structure data |
| 3.Master data |
| 4.Data flow in Controlling |
| Summary |
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Reports in the Controlling Module

Learning Objectives
recognize the inputs required for a Controlling module report in a given scenario
select the Controlling module report that will provide the information required in a given
scenario
1. Cost centers
Controlling (CO) reports help you extract and view data related to day-to-day controlling
activities, such as comparing the actual costs incurred for the telephone expenses with
the planned costs.
Using CO reports, you can efficiently analyze and manage the controlling activities in your
business.
Here are some frequently used CO reports:

Cost Centers: Actual/Planned/Variance
The Cost Centers: Actual/Planned/Variance report provides a summary of all the costs
incurred by the company across all cost centers. This report displays actual costs, planned
costs, and the difference between the actual costs and planned costs.
Profit Center: Actual/Planned/Variance, and
The Profit Center: Actual/Planned/Variance report provides a summary of all the revenues
earned by the company across all profit centers. This report displays planned revenues,
actual revenues, and the difference between the actual revenues and the planned
revenues.
Profitability Report: Sales Analysis
The Profitability Report: Sales Analysis report is a user-defined report that compares the
actual revenues with the planned revenues based on the sales structure defined by the
company. A sales structure consists of sales organizations, products, customers, and
price. This report shows the impact of revenues and costs on the profitability of the
company by selling a product.
You generate the Cost Centers: Actual/Planned/Variance report to find the actual costs
and the planned costs for cost elements such as salaries, electricity, or telephone bills
across cost centers.
The report also provides information about the difference in the actual costs and planned
costs of each cost element by comparing the actual costs with the planned costs.
The input parameters for the Cost Centers: Actual/Planned/Variance report include
Controlling
Controlling indicates the controlling area of the company to record the total cost incurred
by the company.
Fiscal year
Fiscal year indicates the financial year for which you want to find the
actual/planned/variance details.
From period
From period indicates the start period, within the financial year, for which you want to find
the actual/planned/variance details.
To period
To period indicates the end period, within the financial year, for which you want to find the
Plan version
Plan version indicates the planning version where you have entered the planning figures of
each cost element. A planning version is a version assigned to the planning document that
helps in tracking the changes made to the planning figure.
Cost center group/cost center code
Cost center group code, or cost center code, indicates the code of the cost center or the
cost center group for which you want to find the actual/planned/variance details.
Cost element group/cost element code
Cost element group code, or cost element code, indicates the code of the cost element or
cost element group for which you want to find the actual/planned/variance details.
Based on the input parameters, the Cost Centers: Actual/Planned/Variance report is
displayed.
The four columns of the Cost Centers: Actual/Planned/Variance report are
Cost elements
The Cost elements column lists the cost elements for which the actual and planned costs
are posted in the cost center.
Act costs
The Act costs column lists the actual costs that are posted for each cost element in the
cost center.
Plan costs
The Plan costs column lists the planned costs that are posted for each cost element in the
cost center.
Abs var
The Abs var column lists the difference between the actual costs and the planned costs
posted for each cost element in the cost center.
Question
You work for the Atlanta branch (cost center group code: 422100) of Sonical
Electronics. The Atlanta office has two departments, Finance (cost center code:
3200) and Production (cost center code: 3201). The Finance department incurs
various costs, such as salaries (cost element code: 215421) and telephone
expenses (cost element code: 215422). You want to find the total cost incurred for
making payments for salaries in the Finance department.
Which input parameters should you specify in the Cost Centers:
Actual/Planned/Variance report?
Options:
1.
Cost center code: 3200
2.
Cost center group code: 422100
3.
Cost center code: 3201
4.
Cost element code: 215421
Answer
Option 1: Correct. You specify the cost center code (3200) to record all the
expenses incurred by the finance department.
Option 2: Incorrect. If you specify 422100, the report will display the cost incurred
for the finance department and the production department.
Option 3: Incorrect. If you specify the cost center code (3201), the report will
display the cost incurred by the production department.
Option 4: Correct. You specify the cost element code (215421) to record only the
expenses incurred for making payments for salaries.
Correct answer(s):
1. Cost center code: 3200
4. Cost element code: 215421
2. Profit center
You generate the Profit Center: Actual/Planned/Variance report to find all the revenues
earned by the company across all profit centers. For example, you may want to examine
the revenue on sales or return on investment. The report also displays the difference
between the actual revenues and planned revenues.
The input parameters for the Profit Center: Actual/Planned/Variance report are very
similar to the inputs for the Cost Center. They include
Controlling
Controlling indicates the controlling area of the company that records the total cost
incurred by the company.
Fiscal year
Fiscal year indicates the financial year for which you want to find the
From period
From period indicates the start period, within the financial year, for which you want to find
the actual/planned/variance details.
To period
To period indicates the end period, within the financial year, for which you want to find the
Plan version
Plan version indicates the planning version where you have entered the planning figures of
each revenue element.
Profit center code
The profit center code indicates the code for which you want to find the
Profit center group
The profit center group indicates the group for which you want to find the
Based on the input parameters, the Profit Center: Actual/Planned/Variance report is
displayed.
Many of the inputs for Cost Centers: Actual/Planned/Variance report inputs are identical
to the inputs for Profit Center: Actual/Planned/Variance. The exceptions are Cost center
group/cost center code and Cost element group/cost element code, instead of Profit
center code and Profit center group.
The three columns of the Profit Center: Actual/Planned/Variance report are
Plan
The Plan column lists the planned revenues that are posted for each revenue element in
the profit center.
Actual
The Actual column lists the actual revenues that are posted for each revenue element in
the profit center.
Variance
The Variance column lists the difference between the actual revenues and the planned
revenues posted for each revenue element in the profit center.
The Profit Center: Actual/Planned/Variance report allows you to view the revenues earned
by the company at different levels. The levels are profit center, account number, and
period.
For example, you can view the consolidated list of planned revenues, actual revenues,
and the difference between the planned revenues and actual revenues month-wise by
selecting the period level from the report.
Question
Sonical Electronics has two branch offices in the United States. The offices are
situated in Florida (profit center group code: 542145) and in Atlanta (profit center
group code: 542122).
The branch office in Florida consists of two offices that are situated in Bristol (profit
center code: 5403) and Miami (profit center code: 5404). You want to find the total
revenue earned by the office situated in Miami for the current year.
Which input parameters should you specify in the Profit Center:
Actual/Planned/Variance report?
Options:
1.
Fiscal year
2.
Profit center code: 5404
3.
Profit center code: 5403
4.
Profit center group code: 542145
Answer
Option 1: Correct. Fiscal year indicates the financial year for which you want to
find the actual/planned/variance details.
Option 2: Correct. When you specify 5404, the report will show only the revenues
earned by Sonical in Miami, Florida.
Option 3: Incorrect. When you specify 5403, the report will show only the
revenues earned by Sonical in Bristol, Florida.
Option 4: Incorrect. When you specify 542145, the report shows the revenues
earned in both cities in Florida.
Correct answer(s):
1. Fiscal year
2. Profit center code: 5404
3. Profitability report
You generate the Profitability Report: Sales Analysis report to find the impact of revenues
and costs on the profitability of a company.
The profitability of the company is based on products, customers, price, locations, and
sales organizations.
The input parameters for the Profitability Report: Sales Analysis report can be customized
depending on the requirements of the company.
Suppose Sonical Electronics wants to analyze its sales to determine the profit margins. It
wants profit margins based on different parameters, such as customers, locations, and
products. The company wants to view the actual revenues earned for each parameter.
In this scenario, the input parameters required to analyze Sonical's sales are
Operating concern
Operating concern indicates the sales structure to be used to calculate the revenues
earned by the company. The sales structure consists of different levels such as sales
organizations, products, customers, and price. You can decide at which level you want to
calculate the revenues of the company.
From period
From period indicates the start period, within the financial year, for which you want to
analyze the profitability of the company.
To period
To period indicates the end period, within the financial year, for which you want to analyze
the profitability of the company.
Plan/act. ind
Plan/act. ind indicates whether you want to view the planned revenues or the actual
revenues of the company.
Based on the input parameters provided by Sonical, the Profitability Report: Sales
Analysis report is displayed.
The Profitability Report: Sales Analysis report based on the input parameters defined by
Sonical displays three columns. They are
Revenue
The Revenue column lists the revenues earned by the company from the customers. Other
levels at which the company can calculate the revenues earned by the company are
product and location.
Sales OH.
The Sales OH. column list the sales overhead costs incurred by the company by selling
the product to the customers.
Examples of sales overhead expenses are insurance charges, discounts, and

commissions paid.
Prod.costs
The Prod.costs column lists the production costs incurred by the company while
manufacturing a product, which has been purchased by a customer.
Examples of production costs are material costs and labor costs.
Question
Suppose you are working for a fashion house, Zoflina. The company's
headquarter is in Berlin with local offices in Los Angeles and Hong Kong. The
company has outlets in different parts of the world Rio de Janeiro, Cairo,
Jerusalem, and Moscow.
Zoflina wants to analyze the profits on sales for each office location-wise.
Which input parameter should you specify in the Profitability Analysis: Sales
report?
Options:
1.
Controlling area code
2.
Operating concern code
3.
Profit center code
Answer
Option 1: Incorrect. You need not specify the controlling area code of the
company as an input because a controlling area of the company is already
assigned to the operating concern code. You can assign one or several controlling
areas to an operating concern.
Option 2: Correct. You have to specify the operating concern code of the
company because it is a sales structure defined by the company to calculate the
revenues and analyze the profit.
Option 3: Incorrect. You need not specify the profit center code because it is used
to find the actual revenues, planned revenues, and the difference between the
actual revenues and planned revenues.
Correct answer(s):
2. Operating concern code
4. Function of CO reports
The Cost Centers: Actual/Planned/Variance report is used to find the actual costs and the
planned costs for cost elements such as salaries, electricity, or telephone bills across cost
centers.
The Profit Center: Actual/Planned/Variance report is used to find all the revenues earned
by the company across all profit centers.
The Profitability Sales Analysis report is used to find the impact of revenues and costs on
the profitability of a company.
Supplement
Job aid
Access the job aid CO Reports Inputs and Outputs table to compare and
contrast the three reports.
Question
Say you are working at the Illinois office of Sonical Electronics. You are creating a
report to provide Sonical Electronics with information on their profit margins.
Which Controlling report enables you to find the impact of revenues and costs on
the profitability of the company?
Options:
1.
2.
Cost Centers: Actual/Planned/Variance
3.
Profit Center: Actual/Planned/Variance
Answer
Option 1: Correct. The Profitability Analysis report provides information on profit
margins.
Option 2: Incorrect. Cost Centers: Actual/Planned/Variance reports provide
information on the actual costs and the planned costs for cost elements.
Option 3: Incorrect. Profit Center: Actual/Planned/Variance reports provide
information on the revenues earned by the company across all profit centers.
Correct answer(s):
1. Profitability Analysis
With SAP ERP 6.0 now available, there have been many functional enhancements that
make CO transactions easier for businesses.
Supplement
Job Aid
Access the job aid Functional Enhancements in SAP ERP 6.0 Financial
Modules to read about the differences and improvements offered by SAP ERP 6.0.
Summary
The most commonly used CO reports in SAP R/3 include the Cost Centers:
Actual/Planned/Variance report, the Profit Center: Actual/Planned/Variance report, and
the Profitability Report: Sales Analysis report. The Cost Centers: Actual/Planned/Variance
report provides a summary of all the costs incurred by the company.
The Profit Center: Actual/Planned/Variance report provides a summary of all the revenues
earned by the company.
The Profitability Report: Sales Analysis report shows the impact of revenues and costs on
the profitability of the company.
SAP ERP 6.0 has provided many improvements so that SAP functions more efficiently
when compared with previous versions.
Table of Contents
| Top of page |
| Learning Objectives |
| 1.Cost centers |
| 2.Profit center |
| 3.Profitability report |
| 4.Function of CO reports |
| Summary |
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Controlling Transactions and Reports

Learning Objectives
align business processes with the Controlling module in a given scenario
select appropriate Controlling reports for a given scenario
Exercise overview
In this exercise, you're required to map business processes related to controlling with the
Controlling (CO) module of the mySAP ERP R/3 package.
This involves the following tasks:
aligning data with the CO module
using CO transactions
using CO reports
Sonical has already aligned the finance-related tasks of Sonical Appliances with the
Financial Accounting module offered by SAP R/3.
Next Sonical has decided to align the control-related tasks of Sonical Appliances with the
CO module offered by SAP R/3.
Use the attached table as a reference when answering the questions.
Supplement
Job Aid
Access the job aid Controlling Action Inputs as an aid in answering the
questions.
Task 1: Aligning data with the CO module

Sonical, a corporate group, has two subsidiary companies, Sonical Appliances and
Sonical Electronics. Sonical Appliances manufactures household products, whereas
Sonical Electronics manufactures computers and laptops.
Sonical Appliances has defined a sales structure to analyze the profit of the company
based on locations, products, and customers. Sonical Appliances has also defined a cost
center and a profit center to record total costs and revenues of the business.
You are assisting the specialized team in aligning the control-related tasks of Sonical
Appliances with the CO module of SAP R/3. First you need to identify the existing
business units at Sonical Appliances and map them to the organizational structure
components of the CO module.
Question
Match the business units in Sonical Appliances with the appropriate CO
organizational structure components in SAP R/3.
Options:
A.
Client
B.
Company
C.
Controlling area
D.
Operating concern
Targets:
1.
Cost center and Profit center
2.
Sales structure
3.
Sonical Electronics
4.
Sonical
5.
Sonical Appliances
Answer
performing the Cost Center Accounting transaction. The controlling area consists
of cost centers and profit centers.
An operating concern is a sales structure defined by the company to calculate the
revenues of the company. The sales structure consists of the sales organization,
product, customer, and price.
A company code is an independent legal entity within a client and is at the second
level in the organizational structure. Each company code consists of its profit and
loss account and its own balance sheet. For example, in SAP R/3, you can define
a company within a corporate group as a company code.
In SAP R/3, a client is at the highest level in the organizational structure. A client is
a collection of administrative, organizational, and business units that work as a
group towards a common purpose. For example, in SAP R/3, you can define a
corporate group as a client.
Correct answer(s):
Target 1 = Option C
Target 2 = Option D
Target 3 = Option B
Target 4 = Option A
Target 5 = Option B
Next you need to identify the CO master data types where Sonical Appliances can store
its existing controlling-related data.
Sonical Appliances stores information about the total cost incurred by a business unit,
such as production. In addition, Sonical Appliances stores information about the total
revenues earned by a business unit, such as sales.
Apart from this, Sonical Appliances records all its expenses salaries, telephone, and
electricity under their respective expense accounts.
Question
Match the existing controlling data of Sonical Appliances with the CO module's
master data types in SAP R/3.
Options:
A.
Cost center
B.
Cost element
C.
Profit center
Targets:
1.
Each cost incurred at Sonical Appliances under its own expense account
2.
Total costs incurred by the production unit at Sonical Appliances
3.
Total income earned by the sales unit at Sonical Appliances
Answer
The costs incurred at both the units (sales and production) are salaries, telephone,
and electricity. The respective costs are recorded under the cost element of that
expense in the CO module. For example, the telephone expense incurred at
Sonical Appliances will be recorded under a cost element for telephone expense
in the CO module.
The production unit at Sonical Appliances is a cost incurring unit. All the costs
incurred salaries, telephone, and electricity to carry out the production
activities are recorded under a cost center for that expense in the CO module.
The sales unit at Sonical Appliances is a revenue generating unit. All the income
earned by the sales unit at Sonical Appliances is recorded under a profit center in
the CO module.
Correct answer(s):
Target 1 = Option B
Target 2 = Option A
Target 3 = Option C
Task 2: Using CO transactions

Next you need to align the daily controlling tasks of Sonical Appliances with SAP R/3.
The most common controlling-related tasks performed by Sonical Appliances are
finding the total costs incurred against the planned costs
calculating the product cost incurred during manufacturing
finding the contribution of each business unit toward the profit of the company, and
analyzing the impact of revenues and costs on the profitability of the company
Question
Which is the appropriate CO transaction that is used to find the costs incurred at
Sonical Appliances?
Options:
1.
2.
Product Costing
3.
Profit Center Accounting
4.
Answer
Option 1: Correct. The Cost Center Accounting transaction can be used to find
the amount of cost incurred. Using this transaction, you can compare the actual
cost with the planned cost at Sonical Appliances. In addition, you can define the
cost structure of Sonical Appliances using this transaction.
Option 2: Incorrect. The Product Costing transaction enables you to calculate the
cost incurred during manufacturing a product.
Option 3: Incorrect. The Profit Center Accounting transaction enables you to
evaluate how each business unit within the company is performing and its
contribution toward the profit of the company.
Option 4: Incorrect. The Profitability Analysis transaction enables you to analyze
the profit of the company based on the sales structure defined by Sonical
Appliances. The sales structure consists of product, price, customer, and sales
organization. In addition, the transaction enables you to analyze the impact of
revenues and costs on the profitability of the company.
Correct answer(s):
1. Cost Center Accounting
The Cost Center Accounting transaction of the CO module enables Sonical Appliances to
find the total costs incurred against the planned costs.
Question
Here is the information that comprises the organizational structure inputs, master
data inputs, and output of the Cost Center Accounting transaction.
Match each piece of information with the appropriate category.
Options:
A.
Master data input
B.
Organizational structure input
C.
Output
Targets:
1.
The difference between the actual cost incurred and the planned cost
2.
Company code
3.
Controlling area
4.
Cost center
5.
Cost element
Answer
The output is a report that compares the actual cost incurred on the salary
expense with the planned cost.
performing the Cost Center Accounting transaction. The controlling area consists
of cost centers and profit centers.
A cost center is a business unit such as a production unit that incurs costs
within a company. A cost center code is assigned to each business unit. The costs
incurred by a business unit are recorded under its cost center code.
Cost element describes the origin of costs within your company.
Correct answer(s):
Target 1 = Option C
Target 2 = Option B
Target 3 = Option B
Target 4 = Option A
Target 5 = Option A
Task 3: Using CO reports

Sonical Appliances has been using the CO module for some time now. The company
wants to use reports to find various planned and actual revenues, as well as costs.
Question
Which two reports enable you to find the difference between the actual revenues
and the planned revenues posted for each revenue element in the Florida branch,
and the actual costs posted for the electricity at the Atlanta branch?
Options:
1.
Profit Center: Actual/Planned/Variance report and Cost Centers: Actual/Planned/Variance report
2.
Profitability Report: Sales Analysis report and Cost Centers: Actual/Planned/Variance report
3.
Profitability Report: Sales Analysis report and Profit Center: Actual/Planned/Variance report
Answer
Option 1: Correct. The Profit Center: Actual/Planned/Variance report can be used
to find all the revenues earned by the company across all profit centers, while the
Cost Centers: Actual/Planned/Variance report can be used to find the actual costs
and the planned costs for cost elements.
Option 2: Incorrect. Although the Cost Centers: Actual/Planned/Variance report
can be used to find the actual electricity costs for Atlanta, the Profitability Report:
Sales Analysis report to find the impact of revenues and costs on the profitability
of a company.
Option 3: Incorrect. Although the Profit Center: Actual/Planned/Variance report
can be used to find the actual and planned revenues for the Florida branch, the
Profitability Report: Sales Analysis report to find the impact of revenues and costs
on the profitability of a company.
Correct answer(s):
1. Profit Center: Actual/Planned/Variance report and Cost Centers:

Actual/Planned/Variance report
Table of Contents
| Top of page |
| Learning Objectives |
| 1.Exercise overview |
| 2.Task 1: Aligning data with the CO module |
| 3.Task 2: Using CO transactions |
| 4.Task 3: Using CO reports |

Understanding Transactions in The Controlling Module

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Understanding Transactions in the Controlling Module

After completing this topic, you should be able to

compare the actual costs with the planned costs

calculate the product cost

evaluate how each business unit within the company is performing

analyze the profit of the company

Cost Center Accounting

Profit Center Accounting

calculate the cost incurred while manufacturing a product

plan the product cost without referring to set prices, and

analyze the planned and actual costs of the product

Double-click Accounting Controlling

A list of transactions Cost Center Accounting, Internal Orders, Product Costing,

Cost Center Accounting

Enables you to analyze the profit of an organization at different business levels

Enables you to calculate the cost incurred while manufacturing a product

2. Organizational structure data

4. Data flow in Controlling

compare the actual cost of production with the planned cost

calculate the costs incurred while manufacturing a product

analyze the profit at different business levels

Drill Down Home Page

Page 1 of 4: Cost Center Accounting

Page 2 of 4: Cost Center Accounting

Page 3 of 4: Cost Center Accounting

cost element code: 210000 to record the salary expense

Page 4 of 4: Cost Center Accounting

Page 1 of 3: Product Costing

Page 2 of 3: Product Costing

Description of the data flow in the Product Costing transaction:

Page 3 of 3: Product Costing

Page 1 of 3: Profit Center Accounting

Page 2 of 3: Profit Center Accounting

Page 3 of 3: Profit Center Accounting

Page 1 of 2: Profitability Analysis

Page 2 of 2: Profitability Analysis

Master data input

Organizational structure input

A report that shows the costs incurred while manufacturing a product

Company code: C001

Controlling area code: 0001

Cost element code: 11212

The company code is an input of the Product Costing transaction.

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Reports in the Controlling Module

After completing this topic, you should be able to

Here are some frequently used CO reports:

Cost center code: 3200

Cost center group code: 422100

Cost center code: 3201

Cost element code: 215421

Profit center code: 5404

Profit center code: 5403

Profit center group code: 542145

Examples of sales overhead expenses are insurance charges, discounts, and

Controlling area code

Operating concern code

Profit center code

Cost Centers: Actual/Planned/Variance

Profit Center: Actual/Planned/Variance

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