AC040 Cost Management and Controlling

Enterprise ControllingEnterprise Controlling

Overview of CO Components

Profit center accountingProfit center accounting

COCO

CONTROLLINGProfitability analysis

Sales analysis of products and servicesContribution marginProfitability analysis by organizational units

Enterprise Enterprise ControllingControlling

MCMC

COCO

CONTROLLINGOverhead and process costs

Cost/Revenue elements

Cost centers Internal orders

and projects

Cost allocation by sources

Master Data in Profitability and Sales Accounting

Overhead Cost ControllingOverhead Cost Controlling

Product costControllingProduct costControlling Cost

object

Profitabilitysegment

ProfitabilityAnalysisProfitabilityAnalysis

ProfitCenterAccounting

ProfitCenterAccounting

Profit Center

Process

Cost Center

InternalOrders

Basic Concepts of CO-PA

CUST.

GRP.

Sales region NorthProduct Prod1Product group Electronics customer Cust1Cust. grp Wholesale tradeLand GermanySales rep. Miller

CharacteristicsCharacteristics

Revenues 800Sales, discountsand returns 100COGS 650

Value fields RevenuesRevenues

Sales, discountsSales, discountsand returnsand returns

COGSCOGS

Profitabilitysegment

ValuesValues

RE

GIO

N

S

N

W

PRODUCT GRP

Food Bicy. Electr.

Types of Profitability Analysis in Operating concern M001

Account-Based

Value FieldsRevenues 1,000,000Sales Deductions 100,000

--------------Net Revenue 900,000Net Revenue 900,000Material Costs 400,000Production Costs 190,000Production Variances 10,000

--------------Contribution Margin 1 300,000Contribution Margin 1 300,000Material Overhead 50,000Production Overhead 50,000

--------------Contribution Margin 2 200,000Contribution Margin 2 200,000R & D 10,000Marketing Costs 50,000Admin. Costs 40,000

--------------Contribution Margin 3 100,000Contribution Margin 3 100,000

Costing-Based

Cost/Revenue Elements800000 Revenue 1,000,000808000 Sales deductions 100,000

--------------Net Revenue Net Revenue 900,000 900,000893000 Cost of Sales 690,000231000 Price Variances 10,000

651000 R & D Costs 10,000671000 Marketing Costs 50,000655000 Admin. Costs 40,000

--------------Operating ProfitOperating Profit 100,000 100,000

Operating concern M001

ALTKN Prev.acct no.BISMT Old mat. numberKDGRP Customer groupKONDA Price groupKONDM Mat.pricing grpKTGRM Acct asgnmt grpLAND1 CountryMTART Material typePLTYP Price list typePRODH Prod.hierarchySTAWN Comm./imp. codeWW001 Group of countriesWW003 Sales groupWW004 Sales officeWW005 Customer groupWW006 Customer areaWW007 RegionWW008 Raguired term of delWW009 Key of valid conditiWW010 Incoterms 1WW011 Incoterms 2WW012 Net valueWW013 Material taxWW015 Batch numberWW016 Statist.mater.numberWW017 Land

CharacteristicsCharacteristics

Value fields

ValuesValues

Operating concern M001

Value fields

ABSMG Sales quantityERLOS RevenueSTDPR Standard priceVVDIFVVFI1 FIVVKG1 Net value kgVVP08 Total payableVVP09 Paid advance paymentVVP10 Guarant.flat ratePONVVP11 Other costs PONVVP12 Market-flat ratePONVVP13 Freight PONVVP14 Insurance-freightPONVVP15 Insurance-credit PONVVP16 FCOVVP17 Sum PONVVP26 Commision PONVVP27 Claim compensation %VVP28 Cost overrun %VVP29 Cost overrun -amountVVP30 Price-Internal setl%VVP31 Price-Internal settlVVP32 Output VATVVP33 Price-cost overrun%VVP34 Price-Cost overrunAm

Operating concern M001

Value fields

VVP39 MTPVVP40 Rebate perc./val.VVP41 Rebate perc./qty.VVP42 Rebate val./qty.VVP43 Gross / price listVVP44 Manual gross priceVVP45 Net priceVVP46 Net price manualVVP47 Basic discountVVP48 Additional discountVVP49 Additional discount2VVP50 Discount excl. (man)VVP51 Discounts add. (man)VVP52 Discount val (man)VVP53 Surcharge manualVVP54 Surcharge manual %VVP55 DA discountVVP56 Manual gross priceVVP58 Cash discountVVP59 Comm. Accr. perc/valVVP60 Comm. Accr. val/qty

Profit Center

ValidityPeriod

BasicData

Profit CenterProfit Center

Company Code Assignment

Address DataCommunication

Data

Profit Center – division in Mitas

OrganizationalProfit centers

Profit CenterProfit Center

Product type Profit centers

Profit Centers in Mitas

Profit CenterProfit Centers s IndustryIndustry

Profit CenterProfit Centers s AgroAgro

31153115

3 – BU Industry3 – BU Industry1 – Plant1 – Plant15 – Product/Goods group15 – Product/Goods group

Plant 3 – off take productsPlant 3 – off take products

61106110

6 – BU Agro6 – BU Agro1 – Plant1 – Plant10 – Product/Goods group10 – Product/Goods group

Profit Center Assignments

Cost center,Cost center,businessbusinessprocessprocess

Cost objectCost object

Internal orderInternal order

Sales order

ProfitabilityProfitabilitysegmentssegments

Asset

Product order

Profit centersProfit centers

Material

ProfitProfitcentercenter

Planning and Planning Integration: Overview

Introduction to Planning

Planning in Cost Center Accounting using different Controlling methods

Integrated Planning Cycle

Planning With ABC

Copy Plan and Actual Data

Plan data

Copy:Cost CentersProfitability Segments . .

Plan 2005Version 1

Actual data

Actual 2004

Plan data

Plan 2004Version 1

Revaluation

Integrated Corporate Planning

SOPSOPLTPLTP

Sales

Activity input quantityProcess Input quantity Activity price

Process price

Material CostMaterial CostEstimateEstimate

Profit PlanningProfit PlanningSales PlanningSales Planning

StrategicProcedure

planned requirements

Cost of goods manufactured / sold

Cost center/Cost center/Activity typeActivity type

Template

Bill of material

Routing

LISLIS

Planning Integration - Update Sales Plan/CO-PA

Salesquantity

Profit PlanningProfit Planning

Activity requirements

Cost of goods sold

Sales Planning/Sales Planning/Fore-Fore-castscasts

Plan-IntegratedPlan-IntegratedOrdersOrders

MaterialMaterialmastermaster

Costcomponents

Logistics Logistics InformationInformationSystemSystem

Salesquantity

ProductProductcostingcosting

Production - PPProduction - PPSOP, LTPSOP, LTP

Cost CentersCost Centers

CO- PA: Planning

Sales OrganizationTime frame from … to ...Version

ProductProduct QuantityQuantity RevenueRevenue COGSCOGSIndustryIndustry

MediaSoftwarePharma

100050003000

300040001000

20003000 800

Integrated Planning in Profit Center Accounting

Sales 100,000Discounts 5,000Cost of sales 50,000Marketing costs 10,000Administration costs 15,000….

Profit Center Plan

Profitability Analysis

LISPC

t

Internal Order Cost

CenterCost

Center

Transaction-Based Postings In CO: Contents

Postings in Overhead Cost Controlling

Postings in Cost Object Controlling

Postings in Profitability and Sales Accounting

Example Posting for Transfer Prices

Transferring Sales Order Receipts to CO-PA

Quantity +Revenue +Bonus +COS +

Quantity flow

CO-CO-PAPA

(accrued)

SD

11

11

CustomerOrder

t

Acct.Acct.CO-PACO-PA

FIFI

EC-EC-PCAPCA

Delivery and Billing

X

X

XRevenue

Customer

RebateX

COS

XInventory

Quantity +Revenue +Bonus +COS +

11

Salesorder

22

Delivery33

Billing Quantity flow

CO-CO-PAPA

(costing-based)

SD

FIFI

EC-EC-PCAPCA

t

Acct.Acct.CO-PACO-PA

Selling Goods and Services - with Sales Order Controlling

Goods receipts

Externalactivities

Invoice

Billing Document

Order Settlement

Sales order

Item 20

Installationonsite

CO-PACO-PA

ProfitabilityAnalysis

CO Object

CCtrCCtrCCtrCCtr

ActyActy

Allocation

SDSD

MMMM

Period-End Postings in CO: Unit Contents

Overhead Cost Controlling

Cost Object Controlling

Actual Costing/Material Ledger

Profitability Analysis

Schedule Manager

Reconciliation Ledger

Overview of the Data Flow in Profitability Analysis

Cost and Revenue Element Accounting

Overhead CostControlling

Product costControlling

Profitability AnalysisProfitability Analysis

Profitability Segments

COCO

Cost of goods estimation

RevenuesDiscounts

Costobject

CO-CO-PAPA

Cost Centers• Internal Orders

SDSD

FIFI

Assigning Overhead Costs: Overview

Process

Cost Center

Assessment

Assessment

Value Fields

Administrativecosts

Administrativecosts

Direct/indirect activity allocation

Order/project settlement

Template Allocation

CO-CO-OMOM

CO-CO-PAPA

Field servicehours

Field servicehours

MarketingcampaignMarketingcampaign

Customersupport

Customersupport

SpecialdeliveriesSpecial

deliveries

Assessment of Cost Center and Process Costs

Assessment

400000 20,000

430000 30,000

50,000

630000 - 50,000

Cycle:

Administration: + 50,000Administration: + 50,000

CO-CO-PAPACost center

administration

Order Settlement to ProfitabilityAnalysis

Invoice+ x%+ x%

CostsCosts InvoicesInvoices OverheadsOverheads

Order

CO-CO-PAPA

Overview of the Data Flow to Profit Center Accounting

Cost and Revenue Element Accounting

Overhead Cost Controlling

Product costControlling

Profitability Analysis

COCO

revenues

Discounts

Costobject

EC-EC-PCAPCAProfit Center Accounting

• Processes• Cost Centers• Internal Orders

FIFI

SDSD

Balance Sheet Items in EC-PCA

EC-PCA Online

Assets

Work in Process

Inventory Values

Down Payments

Financial Accounting

Assets

Work in Process

Down Payments

Inventory Values

Receivables

Payables

Distribution/ Assessment

VVaalluuee

FFllooww

Profit CentersSalesAdministration Profit Center

Sports cars

Period-End Closing:Distribution

Profit CenterMotor cycles

EC-EC-PCAPCA

Distribution and Assessmentsimilar to

Cost Center Accounting

Distribution/ Assessment in Mitas

VVaalluuee

FFllooww

Organizational Profit Centers Sales Administration

Profit CenterTyre 2

Period-End Closing:Distribution/Assessment

Profit CenterTyre 1

EC-EC-PCAPCA

Overhead Distribution/Assessment to

Product Profit Centers

Profit/Loss Statement: Revenues Change of Inventory

Overhead

Profit/Loss Statement:

Overhead