Controlling Module Overview

SAP R/3 CO sub-modules

CCA - Cost Center Accounting

PC- Product Costing

OPA - Order Project Accounting

ECEIS

PA - Profitability Analysis

ABC- Activity Based Costing

EC-PCA - Enterprise Controlling Profit center Accounting

CO
COCO-

COOPA

EC-EIS - Enterprise Controlling Executive Information system

CCA
ECPCA COPA

ABC
COPC

Organizational Units in the SAP System

FI CO

Financial accounting
Client Company code Legal unit Legal unit for which for which we need we need to publish to publish annual annual accounts accounts Business area Line of Line of Business: Business: e.g. Petro e.g. Petro & Polymer & Polymer Can take BS Can take BS & P&L & P&L Not used Not used

Controlling
Controlling area Operating concern Top level Top level logical unit logical unit in SAP. in SAP. It is It is superset superset of all CC of all CC ,, BA, CA etc. BA, CA etc. Cost center Smallest Unit Smallest Unit in CO to in CO to Capture the Capture the Cost Cost

ApplicationApplicationindependent independent unit: Top unit: Top level level Physical Physical structure structure

This is This is orgn. orgn. controlling controlling unit. unit.

Assignment of Company Code and Controlling area

CO System Objectives
Effective Overhead Cost Management
through
Detailed Planning of Overhead Costs Tracing actual costs to their origin - tight integration Comprehensive analysis of performance (Plan vs Actual) Support for budgetory control

Support for Strategic Cost Management

through
Accurate product cost information Instant Profitability analysis of business segments (CO-PA) Performance monitoring by setting product cost standards and measurement of actuals Cost Estimation for new products and orders

CO Account Assignment Objects (i.e. Cost Objects)

Account Assignment Objects

CCA
Cost Center

(Cost Objects)

PA
Profitability Segment

OPA
Internal Order

Production Order/Sales Order

PC

ABC
Business Process

Cost Center Accounting - What does it do?

Expense Variance Analysis / Activity Prices FI / TR MM Actual Cost Booking SD Planned Activity Price PP Cost Allocation

CO-PC

Cost Center Planning

Profit Center Accounting

Cost Cost Center Sales Order Production Cost Center GL Account

Profitability ROCE

Profit Center

e m c nI o

Other Income

Ratios Accessibility Control

Equity Share Capital

Bank

Unrealized Forex Gain / Loss

Loans

Assets

Balance Sheet items

Product Cost flow

Co. Area

Business Support at Mfg. Location

Mfg. Services

Mfg. Operations

Mktg, Sales & Distn

Business Support at HO

Profitability segments

Cost Allocation Cost Allocation Production / Process Order Material Issues

Assessment

Products

WIP
Settlement

FG Stock

Sales Order

Re co venu sts e of s & sa le

Input Material Stock

Market segments

Re gio ns

Profitability Analysis - An External View

The goal of CO-PA is to determine the profitability of market segments:

Company Market

Key Sales Figures: Revenues, Cost of Sales...

COPA

SD
Market Segments: Customer, Product, Product Group, Distribution Channel

Billing Document SD

Profitability Analysis CO-PA

10

Integration with other Modules

Overhead Cost Controlling Cost & Revenue Element Accounting
FI AA Overhead Order Accounting

Profit Center Acc.

Activity Based Costing

HR MM SD FI HR MM SD PP PP

Cost Center Acc.

PrCtr 1 PrCtr 4 PrCtr 2

Product Cost Controlling

Cost Object CO

PrCtr 3 PrCtr 5 PrCtr PrCtr

Profit Center

FI

SD

PP

Profitability Analysis
Profitability segments
11

What is Master Data in CCA

Cost element: Similar to a/c head in FI. Bank charges is

a cost element. Cost Centers: POY-CP is a cost center. Standard Hierarchy :Tree structure containing all the cost centers in a controlling area from the Controlling (CO) standpoint. Statistical Key Figures: Its a basis of allocation. E.g. NO of employees is the basis of allocation for Personnel cost.

The Standard Hierarchy

13

What is Master Data in CCA

Activity type: This is a unit of measuring the activity level

in Production or utility cost center, e.g. Spinning hours is an activity type. This is measured in terms of how many hours the resources related to Spinning activity type run to produce any product.

Activity Types
Allocation Cost Center Activity Type Cost Object

Activity types define functions or services performed by a cost center, and are used to allocate that cost centers costs to other cost objects. Not all cost centers have activities (outputs). Activity types are frequently used in the allocation of overhead to production.

15

Planning Goals
Planning structures for the companys future Controlling business transactions Monitor efficiency Base for valuation of companys activities

16

Integrated Planning Cycle

Sales Forecast
(Sales volumes or amounts)

(SD)

Planned Capacity (PP)

Are we physically able to produce?

MRP Production Planning (PP)

Materials Requirement Planning

(MM/PP) Planned Activities

(Routing)

PP/PCA Overhead/Cost Center Planning (CO-CCA))

Planned Product Cost (PC) Profit Plan (EC or PA)

17

CCA PLANNING
Step 1:
Cost

element planning (cost center budget)

Step 2:
Activity

planning (similar planning the cost center wise machine hours) planning (planning the basis of allocation on every cost center)

Step 3:
SKF

PLAN ACTIVITY PRICE CALCULATION

ACTIVITY PRICE:

Definition: Activity Price is the per hour rate of the

activity being produced at the production / utility cost center. For example the power unit rate

How do we arrive at this:

Take the input:
Cost

center budget Allocate the Business support & manufacturing support cost
Take the plan

activity output.

COST ALLOCATION
Distribution: Cost distribution on the basis of pre-decided ratios. For

example we shall distribute the Process common costs to process cost centers. Assessment: Cost allocation on the basis of pre-decided ratios. For example we shall assess the accounts department cost to process common cost centers Activity Allocation: Allocating the activity quantities to various receivers. For example allocating the Power Units from Power cost centers to production cost centers. Surcharge: In case the cost is rather insignificant, and the activity definition and monitoring is not worth the effort, we may apply surcharge (i.e. fix percentage of production costs).

Allocations: Cycles and Segments

Sender Segment Segment Segment 3 2 1 Cost Center: Admin Buildings Allocation: 100% actual costs Cost Center: Energy Allocation: 30% actual costs Cost Center: Energy Allocation: 70% actual costs Receiver Administration Cost Centers Tracing factor: m
2

floor space

Administration Cost Centers Tracing factor: m

2

heated space

Production Cost Centers Tracing factor: Gas consumption per meter reading

Cycle
21

Allocations: Cycles and Segments

(continued)
Sender Segment Segment Segment 3 2 1 Cost Center: Admin Buildings Allocation: 100% actual costs Cost Center: Energy Allocation: 30% actual costs Cost Center: Energy Allocation: 70% actual costs Receiver Administration Cost Centers Tracing factor: m
2

floor space

Administration Cost Centers Tracing factor: m

2

heated space

Production Cost Centers Tracing factor: Gas consumption per meter reading

Cycle
22

ACTUALS / PERIOD END PROCESSING IN CO

ONLINE FLOW OF ENTRIES IN CO FROM VARIOUS

OTHER MODULES REPOSTING OF COST REPOSTING OF LINE ITEMS ACTIVITY ALLOCATION ACTUAL ALLOCATION CYCLES ACTUAL ACTIVITY PRICE CALCULATION

CCA REPORTS
PLAN V/S ACTUAL CC COMPARISON CC PLAN/ACTUAL LINE ITEMS
YEARLY PLAN / ACTUAL ACTIVITY RATES UTILITY FIXED / VARIABLE COST REPORTS MONTHLY UTILITY QTY REPORTS CC YEARLY / QUARTERLY COMPARISON REPORT TARGET /ACTUAL COMPARISON REPORT DISPLAY CC/CE/ACTIVITY TYPE

Information System: Overview

25

The Report Tree

Comparison Reports

Reports for Variance Analysis Planning Reports

Other Report Groups

User Settings
26

Standard Reports
Cost Centers: Actual / Plan / Variance Area: Cost Centers Area: Statistical Key Figures Cost Center: Variances Planning overview

Actual 30,000 70,000 100,000

Plan abs. 35,000 60,000 95,000

Plan var. 5,000 10,000 5,000

Cost elements / Cost centers 4110 4130 Service cost centers 4210 Shop floor area

...

27

Interactive Information System

Cost Elements 400000 Material consum. Line items Actual Cost 100,000.400000 40 50 100,000.Plan Cost Var.(abs.) 100,000.USD 100,000.100,000.Var.(%)

FI Document

400000 Material consum. 113100 Bank

28

Extract Management
Extract
Data source

Current

Archive

R/3 Database

Extract Administration

Report

29

Profit Center Accounting Overview

EC-Profit Center Accounting

Profit Center Accounting: Overview Master Data Profit Center Planning Actual Postings Information System

Profit Center Accounting

Introduction

Area of Responsibility within the company Combination of Product Group / Function-Location-Plant Investment Centers

Profit Center Accounting

Objectives

Enable Division wise Accounting requirements ROCE of each Reliance plant Profitability Analysis of functional areas Analysis of Key Accounting Ratios Profitability Reports & Performance Analysis

EC-PCA-Master Data
Creating, Changing and Displaying a Profit Center Standard Hierarchy Profit Center Groups

Profit Center Accounting

Codification Strategy of Profit Centers

5 digits code Intelligence built up in coding First 2 digits for Product Group Second 2 digits for Location Last digit for Plant

EC-PCA-Maintaining Accounts
Revenue and Cost Elements Account Groups

Materials

EC-PCA-Assignments to Profit Centers - 1

Cost Centers Internal Orders Production Orders

EC-PCA-Assignments to Profit Centers - 2

Maintenance Orders Projects / WBS Assets Sales Orders

Assignment Monitor (1KE4)

EC-PCA-Data Transfer Other Modules

From Financial Accounting From Sales and Distribution From Materials Management Goods Movements Between Profit Centers Transfer from Controlling Transfer from Investment Management /Asset

Management

EC-PCA-Data Transfer Within PCA

Subsequent Analysis and Posting of Actual Data

Prerequisites for Transferring Actual Data Creating Profit Center Documents Transferring/Creating Statistical Key Figures

EC-PCA-Periodic Activities
Balance Sheet Items in Profit Center Accounting Carrying Balances Forward Assessment and Distribution

Information System
Executing reports Overview Report Tree and Report List

Displaying line item reports

Actual Line Item Report Plan Line Item Report Summary records and the master data index Displaying Summary Records

Open for Discussion