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Page 1: Controlling Module2

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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

Page 2: Controlling Module2

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

Page 3: Controlling Module2

1. Double-click Accounting – ControllingThe 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. Cost Center Accounting

B. Internal Orders

C. Product Costing

D. Profitability Analysis

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.

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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,

Page 5: Controlling Module2

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.

Page 6: Controlling Module2

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 code4. 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.

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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.

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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.

Page 2 of 4: Cost Center Accounting

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.

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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

Page 3 of 4: Cost Center Accounting

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

Page 4 of 4: Cost Center Accounting

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.

Page 2 of 3: Product Costing

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

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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.

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

Page 3 of 3: Product Costing

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 public-address 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.

Page 2 of 3: Profit Center Accounting

Here is the organizational structure input for the Profit Center Accounting transaction:

Graphic

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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.

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 costs incurred by Brocadero at the new plant located in the US

Page 3 of 3: Profit Center Accounting

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

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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.

company code: C001– to specify the company for which you want to perform the transaction, for 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.

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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 |

Page 14: Controlling Module2

| 1.Controlling transactions |

| 2.Organizational structure data |

| 3.Master data |

| 4.Data flow in Controlling |

| Summary |

Copyright © 2010 SkillSoft. All rights reserved.SkillSoft and the SkillSoft logo are trademarks or registered trademarks of SkillSoft in the United States and certain other countries.

All other logos or trademarks are the property of their respective owners.

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Reports in the Controlling Module

Learning Objectives

After completing this topic, you should be able to

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

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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 actual/planned/variance details.

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.

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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

Page 17: Controlling Module2

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: 32004. 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 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

Page 18: Controlling Module2

To period indicates the end period, within the financial year, for which you want to find the actual/planned/variance details.

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 actual/planned/variance details.

Profit center group

The profit center group indicates the group for which you want to find the actual/planned/variance details.

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

Page 19: Controlling Module2

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 year2. 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.

Page 20: Controlling Module2

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

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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

Page 22: Controlling Module2

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

Selecting the link title opens the resource in a new browser window.

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. Profitability Analysis

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):

Page 23: Controlling Module2

1. Profitability Analysis

With SAP ERP 6.0 now available, there have been many functional enhancements that make CO transactions easier for businesses.

Supplement

Selecting the link title opens the resource in a new browser window.

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 |

Page 24: Controlling Module2

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Controlling Transactions and Reports

Learning Objectives

After completing this topic, you should be able to

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

Selecting the link title opens the resource in a new browser window.

Page 25: Controlling Module2

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

Page 26: Controlling Module2

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.

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.

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.

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

Page 27: Controlling Module2

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

Page 28: Controlling Module2

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. Cost Center Accounting

2. Product Costing

3. Profit Center Accounting

4. Profitability Analysis

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.

Page 29: Controlling Module2

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.

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.

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 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

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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.

Page 31: Controlling Module2

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 |

Copyright © 2010 SkillSoft. All rights reserved.SkillSoft and the SkillSoft logo are trademarks or registered trademarks of SkillSoft in the United States and certain other countries.

All other logos or trademarks are the property of their respective owners.