Controlling Notes General tasks of Management Accounting Accounting Architecture SAP FSCM Cash Management , Treasury Management , Loans

s , Market Risk Management FI- GL, AP, AR, Asset Accounting IM- Planning, Investment and finance processes for capital Investment MA(CO)- prepare operating data for business analysis and management decision making Management Accounting Internal Reporting purpose Financial Accounting- External Reporting purpose

Overhead Cost controlling(CO-OM) and Product Cost Controlling (CO-PC) flow into Profitability Analysis (CO-PA) together with revenue data used to

Calculate operating results OVERHEAD COST CONTROLLING It takes costs that cannot be assigned directly to goods and services of a company and allocate them according to their cause. Account assignment objects for such objects are cost centers and internal orders PRODUCT COST CONTROLLING Takes the costs for producing goods and services PROFITABILITY AND SALES ACCOUNTING Its main focus is the determination of the actual business profit and loss

Integration Within Management Accounting and with Other SAP Applications

Logistics 1. Goods Issued cogs a/c dr to inventory a/c Creates a cost posting in Management Accounting 2. Delivery of finished goods from production Management accounting can cause a posting to inventory

3. Product costs estimates created in mangement accounting Updates price fields in Material master record 4. Creation of purchase orders Generates commitment postings within mangement accounting Manufacturing area of logistics Bill of material and routings Product cost controlling Production orders are cost objects used to track and control production costs Sales order managemnt is primary source for revenue billing postings Make to order scenario COMPONENTS OF MANAGEMENT ACCOUNTING Components and value flows in management accounting 1. Cost center accounting It is ideal means for monitoring overhead costs 2. Product Cost Controlling Calculates the costs incurred when a service is provided or product is manufactured. Used to calculate minimum product price 3. Profitability Analysis Analyzes the profit or loss according to individual market segments 1. Overhead Costs Indirect costs 2. Cost centers

Area at which costs are incurred. CC can be created based on activities provided, functional considerations, physical location, allocation criteria or Management area. 3. Activity Type Type of activity that can be provided by a cost center 4. Business processes Combine activity flows within a organisation across individual cost centers 5. Internal orders Used to analyse , plan and collect the costs arising from internal activities CONTROLLING AREA A controlloing area may contain more than one company code and these company codes can include more than one currency. But the company codes assigned to a controlling area must all use same chart of accounts. The control indicator can be used to activate or deactivate certain controlling components and functions for a fiscal Year. ASSIGNMENT OF ORGANISATION UNITS You can assign more than one controlling area to a given operating concern. Changes to assignments are not a problem provided you have not created Any master data or transaction data. Assignment

When controlling area same as the company code (1:1) Controlling area currency Controlling area currency must be same as the company code currency Object Currency Different currency can be defined to account asssignment object ( cost center etc) otherthan controlling currency. Transaction Currency Currency in which Document is posted to management accounting is the transaction currency. Fiscal year variants of company code and controlling area can contain different numbers of special periods , they must have same number of posting periods 2. Multiple company codes to controlling area. (1:n) Cross company code Controlling area currency Controlling area currency may be different from the company code currency. Object Currency Different currency can be defined to account asssignment object ( cost center etc) otherthan controlling currency only if all assigned company codes have Same currency identical to controlling area currency. Other wise account assignment object will automatically be the company code currency. Transaction Currency Currency in which Document is posted to management accounting is the transaction currency.

Fiscal year variants of company code and controlling area can contain different numbers of special periods , they must have same number of posting periods

COST CENTERS Master data contains information that remains the same over a long period of time. Transaction data is short-lived and is assigned to master data. Cost elements describe the origin of costs. Cost elements are of two types primary and secondary. Primary cost elements are elements used in production that are procured from outside the company. Secondary Cost elements are elements used in production that are produced within the company. Cost centers define the areas of responsibility that incur and influence costs. Activity types are production activities and services provided to organisation by a cost center. They are used for allocating costs.

Statistical key figures , which are values that describe the cost center , are used as a basis for allocations (distribution and assessments) and for Performing key figure analysis. The standard hierarchy is a structure to which all cost centers within the Controlling area must be assigned. Cost center It the location where cost is incurred. For the purpose of overhead controlling , cost centers are grouped together in Decision , control and responsibility. To map this struture you create cost center standard hierarchy. Each level or node of the hierarchy is known as cost center group. Cost centers that are created or changed from within the standard hierarchy have the status Inactive. You can change the assignments of the organisational units during the course of fiscal year only if . 1. the currency of new company code is same as the currency of old company code. 2. only posted planning data. 3. The cost center is not assigned to a fixed asset , work center or HR master Record. Cost center category

It is indicator in cost center master data which specifies the category of the Cost center. Cost center categories enable you to assign the same characteristics to similar cost centers. Can also be used for cost calculations, wher it controls what percentage of the overheads apply to that cost center category. OKEON, KS01- Cost center creation, KE51- Profit center creation Before profit center is created setting has to be made in Contollin area *

COST ELEMENT

Primary costs and revenues flow from FI to Management Accounting. Secondary cost elements can be created only in Management Accounting. Exam of PCE material costs and salary costs SCE re used to identify internal costs flow ex. Assessments and settlements.

ACTIVITY TYPE The activity type classifies the activities that are to be performed within a company by one or several cost centers. Activity types serves as tracing factors for cost allocation. In Internal activity allocation , the quantity of the activity eg no of consulting hours are entered manually or automatically. The system calculates the cost based on activity price and generates Debit to receiver Credit to sender Internal activity allocation is carried out using secondary cost allocation. Restriction of use of activity type can be made by entering cost center category in activity type master data. Activity type category is used to determine whether and how an activity is allocated eg: directly, indirectly or not allocated. Create activity type KL01

STATISTICAL KEY FIGURE STKF are used for tracing factors for repostings and allocations. SKfs are figures relating to cost centers, profit centers and overhead cost orders. Eg: number of employees, the length of long distance calls. It may be value representing the services provided by one particular cost center. Eg, no of employees in transportationcost center who provide repair services. You can post both planned and actual statistical key figures It can be used for distribution and assessment and for key figure analysis. SKFs are either fixed values or a totals value Fixed value is carried over from the period in which it is entered to other fiscal years. Only when there is any change in value a new posting has to be

Done. The fiscal year total is average of periods total. Totals value is posted in the period in which it is entered. Long-distance Calls. The fiscal year total is the sum of all period values.