Controlling - CO - Training for Recruiters

7/29/2019 Controlling - CO - Training for Recruiters

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Controlling - CO

Training for Recruiters


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Sub-modules of Controlling

Module Skill Cost Element Accounting Generic Cost Center Accounting Generic Internal Orders Generic

Activity Based Costing Hot (Very Specialized) Product Costing Hot

Product Cost by Period For repetitive manufacturing industries Product Cost by Order For make to stock and process industries Product Cost by Sales Order Make to order industries

Actual Costing/Material Ledger Hot (Very Specialized)

Profitability analysis Hot Profit center accounting Generic


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Controlling (CO)

Controlling provides information for management decision-making.

It facilitates coordination, monitoring and optimization of all processes in anorganization. This involves recording both the consumption of productionfactors and the services provided by an organization.

As well as documenting actual events, the main task of controlling isplanning.

Variances can be determined by comparing actual data with plan data.Variance calculations enable to control business flows.


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Cost Element Accounting (CO CEL)

Cost element accounting is the part of accounting where you enter andorganize costs incurred during a period for cost accounting.

Each business transaction relevant to cost accounting provides the (CO)component with detailed information for the cost element, and for theaccount assignment object itself.

Each consumption transaction in Material Management (MM), each billing inSales and Distribution (SD) (= revenue), and each external transaction forinvoice verification flows directly through the G/L Account (= cost element)to the corresponding account assignment object.


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Cost Center Accounting (CO-CCA)

Cost Center Accounting lets you analyze the overhead costs according towhere they were incurred within the organization

If you plan costs at cost center level, you can check cost efficiency at thepoint where costs are incurred.

The "activities" of cost centers represent "internal resources" for businessprocesses in Activity-Based Costing.


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Internal Orders

Internal orders are normally used to plan, collect, and settle the costs of

internal jobs and tasks.

The SAP system enables you to monitor your internal orders throughout

their entire life-cycle; from initial creation, through the planning and posting

of all the actual costs, to the final settlement and archiving

When the job has been completed, you settle the costs to one or more

receivers (cost center, fixed asset, profitability segment, and so on).


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Activity-Based Costing (CO-ABC)

Activity-Based Costing provides a process-oriented, cross-functional view ofoverhead, in contrast to the traditional location-oriented view provided byCost Center Accounting.

Activity-Based Costing thus complements and enhances Cost CenterAccounting.

Activity-Based Costing also complements and enhances product costing byassigning costs to the business processes where they originated.

Cost center resources can allocate to business processes based on theirtrue utilization of activities


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Product Cost (CO-PC)

The following graphic illustrates

the aims of Product Cost

Planning, which are:

Calculation of the cost of goods

manufactured (COGM) and the

cost of goods sold (COGS) of aproduct

Analysis of the costing results

using the various reports available

Provision of information for other

SAP applications


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Profitability Analysis (CO-PA)

Profitability Analysis (CO-PA) enables you to evaluate market segments,

which can be classified according to products, customers, orders or any

combination of these, or strategic business units, such as sales

organizations or business areas, with respect to your company's profit or

contribution margin.


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Profit Center Accounting (EC-PCA)

A profit centeris a management-oriented organizational unit used for

internal controlling purposes.

The main aim of Profit Center Accounting is to determine profit for internal

areas of responsibility. It lets you determine profits and losses using either

period accounting or the cost-of-sales approach

EC-PCA lets you set up your profit centers according to product (product

lines, divisions), geographical factors (regions, offices or production sites) or

function (production, sales).

The profit center differs from a cost centerin that cost centers merely

represent the units in which capacity costs arise, whereas the person in

charge of the profit center is responsible for its balance of costs and

revenues.


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Basic Terminology and Questions


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Controlling - CO

Controlling Area: Organizational unit in an organization that represents a

closed system used for cost accounting purposes.

Fiscal year Variant: The fiscal year variant contains the number of posting

periods in the fiscal year and the number of special periods. You can define

a maximum of 16 posting periods for each fiscal year

Chart of Account: This is a list of all G/L accounts used by one or several

company codes. You have to assign a chart of accounts to each company

code.

Standard Hierarchy: A special type of cost center/ profit center group. The

standard hierarchy is a tree structure which contains all cost centers/profit

centers in a controlling area and reflects the organizational l structure used

in Cost Center / Profit Center Accounting.


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Controlling

Cost Elements: A cost element corresponds to a cost-relevant item in the

chart of account

Cost Centers:

Organizational unit within a controlling area that represents a clearly

delimited location where costs occur.

You can make organizational divisions on the basis of functional,

settlement-related, activity-related, and/or responsibility-related

standpoints.

Activity Types: Activity types classify the activities produced in the costcenters within a controlling area.


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Controlling area - CO

Can we assign multiple company codes to a single controlling area?

YES

Points to consider:

The operative fiscal year variants in company codes must match thefiscal year variants in the controlling area.

The company codes within a controlling area must all use the sameoperational chart of accounts

How is controlling areas derived for a Plant ?

Each plant is assigned uniquely to a company code and thecompany code is uniquely assigned to a Controlling Area. In turn,the relationship between plant and controlling area is determined


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Cost Element Accounting CO - CEL

What is a Primary Cost/Revenue Element?

A primary cost or revenue element is a cost or revenue-relevant item in

the chart of accounts, for which a corresponding general ledger (G/L)

account exists in Financial Accounting (FI).

Examples include: Material costs, Personnel costs, Energy costs

What are Secondary Cost Elements?

Secondary cost elements can only be created and administrated in cost

accounting (CO).

When you create a secondary cost element, the SAP System checks

whether a corresponding account already exists in FinancialAccounting. If one exists, you can not create the secondary cost

element in cost accounting.

Example:Assessment cost elements, Cost elements for internal activity

allocation, Cost elements for settlement


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Examples of Cost Element

Categories Primary cost element categories

01: Primary cost element

11: Revenue elements

12: Sales deduction

Secondary cost elements categories 41: Overhead rates

42: Assessment

43: Allocation of activities/processes


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Cost Center Accounting (CO-CCA)

Explain allocation methods in CCA1. Distribution

Is used to allocate the primary costs of a cost center.

The original cost element (that is, the primary cost element) is

retained.

2. Assessment

Is a method of allocating primary and secondary costs in Cost

Center Accounting and Activity-Based Costing.

The original cost elements are assigned cumulatively, or in

groups, to assessment (secondary) cost elements.

The original cost elements are not recorded on the receivers


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Period-end closing activities

Name few period end activities in cost center accounting?

Distribution of primary costs

Overhead Calculation

Settlement of overhead orders and projects

Assessment of primary and secondary costs

Balance-effective settlement of orders to fixed assets, material stock or thebalance sheet account

Calculation and analysis of the variances between target and actual costs

Locking the period for all cost accounting business transactions
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Internal Orders

Examples of Internal Orders:

Overhead cost orders are used for the time-restricted monitoring ofoverhead costs (that are incurred when you execute a job) or for thelong-term monitoring of parts of the overhead costs.

Investment orders let you monitor investment costs that can becapitalized and settled to fixed assets.

Accrual orders enable you to monitor period-related accrual calculationbetween expenses posted in Financial Accounting and the costing-based costs debited in Cost Accounting.

Orders with revenues let you monitor costs and revenues that areincurred for activities for external partners, or for internal activities thatdo not form part of the core business for your organization.
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Internal Order Settlement

What is order settlement?

Order settlement enables you to transfer the costs incurred by an

order to the appropriate receivers.

You can settle the costs collected on the internal order to a cost

center, or a G/L account under a settlement cost element. You canalso settle costs to a wide range of receivers (project, sales order,

profitability segment, and so on).

What are different types of internal orders?

Real and statistical

What are the differences between real and statistical orders?

Unlike realinternal orders, you can neither settle statistical orders,

nor apply overheads to them.
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Product Cost Controlling CO-PC

Standard Cost: A cost that is based on an activity unit and that remains

stable over a relatively long period of time. The standard cost of a material

can remain stable for a year. It is essentially a norm that should not be

exceeded

Standard Price: A constant price at which a material is valuated withouttaking goods movements and invoices into account


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Explain parameters in the costing variant :

Costing type: Specifies the valuation view, the price update

Valuation variant: Specifies which prices are used to valuate thematerials, activity types, processes, subcontracting, and externalactivities

Specifies the costing sheet (overhead, overhead key, template)

Price factors forinventory costingDate control: Controls the validity period of the cost estimate, thequantity structure date, and the valuation date

Quantity structure control (applies only to material cost estimates withquantity structure)

Specifies the master data in Logistics (BOM and routing or master

recipe)Transfer control : Controls how existing cost estimates are used in othercost estimates

Reference variant Controls how an existing quantity structure that hasalready been costed is used in the cost estimate
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Different types product cost controlling:

Product Cost by Period is used for recurring periodic cost control of

products that are manufactured in the same way over an extended

period of time.

Product Cost by Order is mainly used to control the costs of individual

production lots.

Product Cost by Sales Order is used to control costs in complex make-

to-order production or customer-specific services, for example.


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Profitability Analysis (CO-PA)

Different forms of profitability analysis:

Two forms of Profitability Analysis are supported:

Costing-based Profitability Analysis is the form of profitability analysisthat groups costs and revenues according to value fields and costing-

based valuation approaches, both of which you can define yourself.

Account-based Profitability Analysis is a form of profitability analysisorganized in accounts and using an account-based valuation approach..It provides you with a profitability report that is permanently reconciledwith financial accounting.


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Profit Center Accounting EC-PCA

Account groups: You can define any number of hierarchical structures of

accounts for use in the information system, allocations and planning. These

structures are called "account groups".

Can we copy account groups from CCA /FI?

Yes account groups of CCA can be copied to PCA. Also balance sheetaccount groups of FI can be copied to PCA


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Thank You!!

Documents

Controlling - CO - Training for Recruiters