Terp10 Unit 4 Management Accounting (CO)

Controlling area is a self-controlled unit for costs and revenues Red lines - Incoming costs from FI Green lines - how do we move it around? (inside controlling) Take things from a cost center and move them out to a production order Profit center will be a reflection of all of the cost objects that are assigned to it Cost object - Debits Increase, Credits Decrease cost in the objects

Arrow coming back down- P.O. (Temp cost object, where we capture cost associated with production) When we are done with the P.O. we send the value of it back to finished goods inventory (FI)

Start with Client (Highest org. unit in an enterpriseCost element acctg- the identity of what those costs areTwo pieces of structure that are specific to controlling: operating concern & controlling areaCLIENTOPERATING CONCERN (CO-PA) need to do profit. Analysis --no assignment, can have >1 if want,

CONT. AREA CONT. AREA (a Cont. area is assigned to 1 and only 1 operating concern; can have many CCs) CO. OM , CO. PC, CO. PCA (profit ctr. Acting)C.CODE C.CODE C.CODE C.CODE --------S. ORG,Division, D.CBusiness Area Business Area Business Area Business AreaPlantPlant SLOCPUR ORG Sales Area:PROD GROUP

Cannot exist in controlling if it does not exists in FI1. Example of a non-operating revenuea. Stocks, Interest revenueb. Interest revenue non operating revenue Know what cost is but need to know where it was actually incurred

2. 2 things TRUE to assign 2 company codes to the same controlling area:a. Same chart of accountsb. Same fiscal year variant**What things take place in:Operating ConcernControlling Area

Managerial accounting - think of as a bucket of costs that you are responsible for

Buckets of Responsibility

FI

Primary are from financial accounting Secondary CElem used only by CONTROLLING Move costs from one bucket to another bucket inside controlling Primary vs. secondary CElem: (Drawing T Accounts)

Can have 1 and only 1 standard hierarchy All cost centers must exist within the standard hierarchy

As long as they are in the stand. Hierarchy you can create an alternate group

The standard is the largest standard hierarchy group we are going to have

Contains all the copy centers across the campuses you have Controlling area can have 1 and only 1 standard hierarchy After creating hierarchy we must create a cost center

Cost center is an org. unit in controlling representing a clearly delimited location where costs occur (get incurred) really is a piece of master data where costs are incurred controlling area can have 1 and only 1 standard hierarchy

You can also CREATE A cost center Use graphical tool Or by going into master data Create a cost center: Initial screen ENG-20 dont use just do ENGR-20 the first time ENGR-20 Cost ctr. Is only valid if it exists from the beginning of the period (entire period) Click Give name (Eng Services 20) Engineering Services Group 20 ** Required fields for cost centers (5)Hierarchy area, company code, cost center category, person responsible

Profit centers are where we mask costs and revenues Havent assigned cost center to profit center? (1400 internal services) Dont have to but should be Click MASTER DATA Cant create primary Cost element unless it exists in the GL first! Create a cost center

Activity Types--1410 is Labor Type

You can create different activity types associated with the productive activities that are being carried out Can associate a relationship value of the activity you are billing for Ex. (ENG21) in cost center (ENGR-21) value of $150.00 Relationship between the activity type and the cost center that creates value Not the activity type itself Can copy an activity type from one that already exists! Rather than re typing it all Determine it manuallyAsterisk to select all cost centers Create a relationship between the cost center and EVERY activity type uses a secondary cost element Relationship between the cost center and activity type that cause value

**2 different kinds of statistical key figures Pete is in charge of acctg. Services it is the end of the period (need to assess) Purchasing doesnt bill for their time, at the end of per. They dont bear their own costs How do you make the division? How should he decide to pass out the costs incurred? Based on # of P.O.s created? No Based on values of purchase orders? No. No right answer; Have to figure out: what is best methodology that accurately represents how those costs should be incurred? *Statistical key figure Ex. Best method for rent allocation sq. footage Phones number of phones Why do we do cost center planning? What is the value and what should the planned prices, OH costs, rates going to be Capture planned personnel costs then pass HR costs to the appropriate cost centers Are you going to do based on actual quantity / capacities? Where we gather all the costs and generate what planned activity costs are going to be

Relevant for controlling means: Has operating cost or operating revenue (p.163) IF GL account has been linked to primary element you must tell it the cost object Between FI to CO one sided entries Move around in CO 2 sided entries (DR = CR) Back over to FI one sided entries

Error b/c you created the relationship between primary element and controlling Must assign IS account to a cost center (GL account 403000) ENGR-20 Post it Display See accounting doc you created See controlling doc Supplies account is an expense account Because it is consumed not put right into inventory*

*assign to cost center ENGR-20*cost center actual line items Highlight the line item and click magnifying glass to see doc. Double click shows the controlling doc used to create 2 separate docs created 1 for accounting and 1 for controlling

True & Statistical objects in Management Accounting True object- shows up in cost center as a REAL costStatistical posting- receives a statistical posting, but posts somewhere else in the system-can never be a real object

Statistical project, statistical order, and profit center Can ONLY be a Statistical objectOthers can be either*Posting from MM to a cost Center Good issue to cost center decreases material inventory which results in a controlling issue taking place In accounting we create set of rules in the background system knows it would go to RM expense movement type GBB a goods issue (consumption) One that receives it is whatever object you told it to consumeAnother place costs come from HCM- human capital management Org. unit is assigned to a COST center Based on specific person -- Value of those expenses go into a particular cost bucket

We created a relationship between our activity type Relationship was worth 50 euro/hr. Now move costs out of this cost center and into another (the one that asked me to do work) (?) Take 10HRS*50= from ENGR-20 Take secondary CElem to do it (CElem 622001) As we do work and bill for it we keep track of what objects we did the work for Purchasing and IT and Accounting all use each other Different periodic allocation techniques: ALLOCATION

This is a distribution above ^ Because the identity of costs remain the SAME in the receiver as it does in the sender Assessment Do not want the identity of costs to remain the same (Accounting services) Assess costs out to 3 other cost centers What is MY specific benefit in the sender? Use the assessment Every segment of assessment has a secondary cost elem. That is used You can see each specific assessment and know whose labor is whose Change identity so you can see where that cost came from How do we do an assessment?(bundling these things together and moving somewhere else)Creating an Assessmentonly need to create methodology once and can reuse every month Cycle: AAC-20 1/1/2013 Turn iterative OFF GO to -> cycle run group Group 20 Hit enter cycle run group created successfully Created an assess. Cycle and can attach many segments to that cycle AACS-20 Each segment must be assigned to a secondary cost element 631300 Sender ValuesLL 1 posted amounts Share % Fixed Senders/Receivers Cost Center: ENGR-20 CElem Group: OAS (total costs) all primary and secondary

Make sure you put in the right GROUP!

Checks for errors

Attach another segment (ex. IT segment)

Leave test run on for the first time-should have 1 sender and 2 receivers

Do again, take test run off Does update run Doc number generated Can now go into reports (information system->line items) Balance in the cost center is now 0.00 Should be able to go to cost center 4220 & 4230 and see End of next period Just add assessment cycle and it will run for the next period Can do many cycles w. many segments associated with it at once

Real-Time integration of Management Accounting & Financial Accounting

List examples of master data used in cost center accounting Standard hierarchy Cost center Place where costs are incurred Required fields*** know screenshot Activity types Productive output of a cost center Wage hrs., machine hrs., engineering svcs Create a relationship between activity type and give it value Profit center Master data Statistical objects Cost element 2 kinds Primary (1:1 relationship with GL) Secondary exists only in controlling to move costs around by changing ID of the cost Statistical key figures Can all be GROUPED together Tracing factor that we used to allocate the costs

Internal order- Temporary cost object where we want to capture the cost of some activity and settle it out to more than once receiver Associate COGS Investment order where we can build something Ex. Putting in an SAP system When done need to settle those costs out It can settle out to an ASSET Accrual order Accrue the expenses associated then profit out to a profitability segment at a later point Orders with revenue You can assign revenues to a particular order When done level it out to (ex. Another order with revenue)

Order manager how we can manage all of our orders at once (together)

Click control data tab You can create temp buckets but not all months open yet to receive costs End of the use of the bucket, can change status to complete then closed Once settled out, no one can put any more costs into it Status that allows us to RELEASE it No one can post costs into it until released Once released button changes to Tech. comple

Once technically complete it is now closed then you can archive to system Once saved it creates a piece of master data Once # is used cannot use it again until archived from the system Can set back to released if you want to go back Can specify how you want to settle the order out Create settlement hierarchy Then you can specify how you want it to be settled out Can do periodic settlement Full settlement Once settlement rule has been created, statistical order cannot be checked no settlement required if only one object statistical order can only have 1 RECEIVER

Will say no profit ctr assigned yet** need to assign one

Commitment Management levels

Purchase req. level (a request for something) Purchase order level (a legally binding unit between you and vendor)

Create a pur. Req for an account assignment Consume it for internal order Material R-T521 Quan. 100 Plant 1000

-account 400000 -Under account assignment enter order # (100360) or look up stand. Order

-click savenow created a purchase requisition

Create purchase req. into a purchase order Delete line item in requisition, it is easy to start over Not easy for deleting pur. Order FI* no financial impact until you have spent the money or received the goods MIGO goods receipt-> goods receipt for a purchase order Dont put into a SLoc because it is going directly into the order Doing goods receipt in warehouse created 4 acctg. Documents Posting into operating ledger and other special ledgers as well parallel accounting is done by special ledgers What determines what orders can be settled out to? The ORDER TYPE

Also ability to create second settlement, secondary cost elements (assessment) Use settlement cost element Controlling allocation methodology Specifies what kind of costs use which cost elements

Settle an OrderError**make sure you set to right PERIOD We are in period [5] for May When moving from one object to another object The controlling doc. Takes out of order and puts into profit center Create a statistical posting to whatever cost center created Accounting document- there was a debit and credit showing in the GL account (Real Time Reconciliation) what it does Automatically created accounting posting to show the reconciliation Internal ord. didnt belong to functional area, but

Product Cost Accounting: Overview

Moving average value basis LIFO (Last in, first out) Ability to identify costs associated with that material How much should it have cost us to do this? First create the cost object in controlling Variations in actual costs associated with production Need to keep track of std. cost it should be Use in all material movements Then capture variances assoc. with it In order to do so, need to carry our product cost planning Cost object controlling = part of PRODUCTION When you get to PRODUCTION the temporary bucket is now called a production order After comparing the variances you then settle it: Settlement rule: settle out to material (a finished good) Takes value and puts back into fin. Accounting The balance left out there is called the variance Cost less or more to produce what we orig. planned for Say you planned to pay $120 each for something to product but only actually cost $110/ea. All goods movements in that period are inaccurate Can turn on actual costing in material ledger Tracks every goods movement that is done w/ respect to a good

When doing Goods receipt take out at the standard cost Debit order by the variance*when calc. the cost element it is based on cost component, cost pricing, itemizationGenerating costingOr can do cost est. without quantity structure Material- R-F121, Plant-1000, 5/8/2013 press enter and it goes through part numbers to cost the material (bottom of screen,left)

Is fixed cost standard cost?

Costing lot size is 100 fixed gets spread across all of them When create mater. Used fixed lot sizing, easy if done same Lot for lot need 30 make 30, etc.Dont want costing based on one and avoid driving up stand. Cost Need to change the lot size (create material cost estimate with quantity structure) Saves money that way because you spread setup cost across (100) items Save itemization in log? Can drill back into it from Material master

Batch processing deals with creating things in batches so they can be traced back Ex. Peto- tubes on the plane need to be traced back to the ore from which mine Ex. Mixing paint and getting same color Marking it makes it a future estimate Go to price update CC 1000, plant 1000, material R-F120 Can do for multiple plants or products; update groups at a time Can click on material, go to Costing 2 screen and see that it is updated and now there is a future estimate Accounting 1 should show total stock of 0 After marking want to RELEASE to become current estimate Click release instead of marking On costing screen curr. Est is now future one Future est. is now current one Also creates an accounting document Revaluation of inventory can show either a gain or a loss (No inv. Doesnt impact our balance sheet)

**TESTKnow about the quantity structure being a BOM & routing

**What happens--When creating an estimate, making an estimate and releasing and estimate?

Can create however we want to Master data ; areas of responsibility Can generate BS and IS at the profit center level Think of as little companies inside our big company

INTERNAL view Based on areas of responsibility Assign ASSETS to profit centers Can look at ROE, ROA, varietyetc. Assign sales orders to our profit centers*purely a statistical object

Can get profit center report list-select actual Line itemsSee all items posted in class to a particular profit center-drill down in to actual postings that created it

In order to do this you must have an OPERATING CONCERN (for prof. analysis) An external look at the market segments of our enterprise Anything we consider structures or master data assoc. with segments Create a sales order, it connects to a profitability segment Profitability analysis Can turn how you want to look at how we did (profit. Perspective) Based on profit segments Find out est product group, region**Run a REPORT, go to master data (characteristic values based on profitability segment) Operating concern in exercise: IDEA

Using period 5not much data from 2013.. Go back to ex. 2006 to actually see the data and look at the variance

-play around with the report and see what he means by characteristics and value fields

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