Integration Case Study CO

SAP ERP ECC 5.0

SAP UCC, Stefan Weidner

May 2008

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Table of Contents
TERMS OF REFERENCE AND SCENARIO .............................................................................................................. 3 PREPARING THE MASTER DATA ............................................................................................................................. 4 CREATING COST CENTERS ............................................................................................................................................. 4 Creating Cost Center for Canteen........................................................................................................................... 4 Creating Cost Center for Maintenance ................................................................................................................... 4 Creating Cost Center for Assembly ......................................................................................................................... 5 CREATING STATISTICAL KEY FIGURE NUMBER OF EMPLOYEES................................................................................. 5 CREATING SECONDARY COST ELEMENTS ...................................................................................................................... 6 Creating Secondary Cost Element for Canteen Assessment.................................................................................... 6 Creating Secondary Cost Element for Activity Allocation of Maintenance Hours.................................................. 6 Creating Secondary Cost Element for Activity Allocation of Assembly Hours........................................................ 6 CREATING ACTIVITY TYPES........................................................................................................................................... 7 Creating Activity Type for Maintenance Hours....................................................................................................... 7 Creating Activity Type for Assembly Hours ............................................................................................................ 7 CREATING COST CENTER GROUP FOR THE CANTEEN ASSESSMENT ............................................................................... 8 COST CENTER PLANNING .......................................................................................................................................... 9 PLANNING THE NUMBER OF EMPLOYEES ....................................................................................................................... 9 PLANNING ACTIVITY OUTPUT........................................................................................................................................ 9 PLANNING PRIMARY COST INPUTS .............................................................................................................................. 10 PLANNING INTERNAL ACTIVITY INPUTS ...................................................................................................................... 10 CREATING ASSESSMENT FOR CANTEEN COSTS ............................................................................................................ 11 PERFORMING ASSESSMENT FOR CANTEEN COSTS ........................................................................................................ 12 AUTOMATIC PRICE CALCULATION OF TWO ACTIVITY TYPES ...................................................................................... 13 INTEGRATION WITH THE PP MODULE .................................................................................................................. 14 CREATING NEW WORK CENTER FOR COST CENTER .................................................................................................... 14 INTEGRATING NEW WORK CENTER IN ROUTING ......................................................................................................... 15 PERFORMING NEW PRODUCT COST ESTIMATE............................................................................................................. 15

SAP UCC, Stefan Weidner

May 2008

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Terms of Reference and Scenario

This case study emphasizes the major master data and planning methods in Cost Center Accounting. During the exercises, you will create three cost center master records and model the internal activity links between them. In doing so, you will use the principles direct activity allocation and assessment. In conclusion, you will run an automatic price calculation for the activity types offered by the cost centers. The importance of these prices was already discussed in the framework of the case study involving PP master data: their amount assuming the activity types of a production cost center (for example) are involved has a direct impact on product costing. In conclusion, you will demonstrate the integration with the PP module, by creating a new work center with reference to one of the new cost centers. You will integrate this work center in the routing for manufacturing a motorcycle that you created in the PP case study, and analyze its effects by starting a new product costing. Because each participant is supposed to use his or her own master data and transaction data, each participants data has to have different names. Accordingly, all master data objects end with ##. You replace the ## with your PC or group number. Please follow these naming conventions, as it will otherwise be impossible to differentiate between the different participants master data. Before you start the case study, you can display the transaction codes in the SAP Easy Access menu: Select menu item Extras Settings, and press ENTER or click to confirm. Change your SAP GUI settings as follows: Choose , and then Options. Go to the Expert tab. Select the Show Keys in All Dropdown Lists indicator, and choose ENTER to confirm.

SAP UCC, Stefan Weidner

May 2008

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Preparing the Master Data

Creating Cost Centers

A cost center represents an organizational unit within a controlling area and specifies a uniquely definable instance where costs are incurred. This definition can be based on functions, settlement specific, geography, or by cost responsibility.
Creating Cost Center for Canteen

In the SAP Easy Access menu, choose Accounting Controlling Cost Center Accounting Master Data Cost Center Individual Processing Create (transaction code: KS01). If the system prompts you to enter the relevant controlling area, enter [1000]. Press ENTER to confirm. Enter CC-CA-## as the key for the cost center (substitute your group/computer number for ##). The cost center should be valid from 01/01 of the current fiscal year. Press ENTER or click to confirm. Enter Canteen ## as the cost center name and enter a name for the person responsible. Select cost center category Service cost center [2] and assign the cost center to hierarchy area Internal services [H1120]. In addition, choose company code IDES AG [1000], business area Corporate Other [9900], and profit center Motorcycles [1000]. Click to save your cost center

Creating Cost Center for Maintenance

Repeat the above process with the following data: Cost center: Valid from: CC-MA-## 01/01 of the current fiscal year

Press ENTER to confirm.

SAP UCC, Stefan Weidner

May 2008

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Name: Person responsible: Cost center type: Hierarchy area: Company code: Business area: Profit center: Click to save.

Maintenance ## Any [2] Service cost center [H1430] Plant Maintenance [1000] IDES AG [9900] Corporate Other [1000] Motorcycles

Creating Cost Center for Assembly

Perform the transaction once again, with the following values: Cost center: Valid from: CC-AS-## 01/01 of the current fiscal year Assembly ## Any [1] Production [H1420] Production [1000] IDES AG [1000] Mechanical engineering [1000] Motorcycles

Press ENTER to confirm. Name: Person responsible: Cost center type: Hierarchy area: Company code: Business area: Profit center: Save your cost center.
Creating Statistical Key Figure Number of Employees

Because the costs of the canteen are assessed for three cost centers (including itself), the number of employees in the cost centers is the allocation base for cost apportionment. You have to create a statistical key figure for this purpose. In the SAP Easy Access menu, starting from the Cost Center Accounting node, choose Master Data Statistical Key Figures Individual Processing Create (transaction code: KK01). Enter EM-## as the key for the key figure and press ENTER. Enter the name Number of employees and choose Persons [PER] as the unit. The key figure has the category Fxd val. Click Save.

SAP UCC, Stefan Weidner

May 2008

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Creating Secondary Cost Elements

Internal cost flows and activity flows are always allocated in R/3 using secondary cost elements. A cost element classifies the purposerelated, valuated consumption of factors of production within a controlling area. In contrast to primary cost elements, secondary cost elements do not have any corresponding, cost-relevant chart of accounts item (P&L account with the same number).
Creating Secondary Cost Element for Canteen Assessment

In the SAP Easy Access menu, starting from the Cost Center Accounting node, choose Master Data Cost Element Individual Processing Create Secondary (transaction code: KA06). Enter PLA-## as the key for the cost element. The cost element should be valid from 01/01 of the current fiscal year. Press ENTER. Enter the description Plan Ass. CC-CA-## and assign it cost element category Assessment [42]. Click Save.
Creating Secondary Cost Element for Activity Allocation of Maintenance Hours

Repeat the process for the allocation cost element for maintenance: Cost element: Valid from: Name: Cost elem. cat.: Save.
Creating Secondary Cost Element for Activity Allocation of Assembly Hours

MAI-## 01/01 of the current fiscal year Allocation CC-MA-## [43] Internal activity allocation

Repeat the process for the allocation cost element for assembly: Cost element: Valid from: Name: Cost elem. cat.: Save. SAP UCC, Stefan Weidner May 2008 Page 6 of 16 ASS-## 01/01 of the current fiscal year Allocation CC-AS-## [43] Internal activity allocation

Creating Activity Types

Activity types are organizational units within the controlling area that classify the activities performed by a cost center. As units of measure, they are used to allocate internal activities according to cause.
Creating Activity Type for Maintenance Hours

The first activity type is rendered by the maintenance cost center. To create it, starting from the Cost Center Accounting node of the SAP Easy Access menu, choose Master Data Activity Type Individual Processing Create (transaction code: KL01). Enter M-## as the key for the activity type. It should be valid from 01/01 of the current fiscal year. Press ENTER. Enter Maintenance hours ## as the description. The activity unit is Hour [H], the activity type should be valid for all cost center categories [*]. Choose activity type category Manual entry, manual allocation [1] and assign it the cost element you just created [MAI-##] as the allocation cost element. Save your activity type.
Creating Activity Type for Assembly Hours

Similarly, create the activity type for the assembly cost center: Activity type: Valid from: Press ENTER. Name: Assembly hours ## Activity unit: [H] Hour Cost center cat.: [*] All Cost Center Cate Activity type cat.: [1] manual entry, manual allocation Alloc. cost element: [ASS-##] Allocation CC-AS-## Click to save your activity type. A-## 01/01 of the current fiscal year

SAP UCC, Stefan Weidner

May 2008

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Creating Cost Center Group for the Canteen Assessment

Cost centers can be grouped together to form cost center groups by various perspectives, to model the companys structure as cost centers in the SAP System. You can use these groups to form cost center hierarchies that summarize the areas for decision-making, responsibility, and control according to the companys specific needs. To assess the canteen costs, you want to create a group with the cost centers CC-CA-##, CC-MA-## and CC-AS-## (as receiver of the canteen costs). From the Cost Center Accounting node of the SAP Easy Access menu, choose Master Data Cost Center Group Create (transaction code: KSH1). Name the group GROUP-## and press ENTER. Name the displayed nodes Canteen cost receivers. Then click ). (not In the left-hand column, enter the cost centers CC-CA-##, CC-MA-## and CC-AS-## in that sequence and press ENTER to confirm. The names of the cost centers should then be displayed (see graphic). If you see instead, it means you have misspelled one and then . of the cost centers. Select the involved cost center, click Enter the correct cost center and press ENTER.

SAP

Click

Save. Then return to the SAP Easy Access menu.

You have now created all the master data you need for this case study. We will continue with cost center planning and the integration with the PP module.

SAP UCC, Stefan Weidner

May 2008

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Cost Center Planning

Planning the Number of Employees

According to company records, 15 people work in assembly, 5 work in maintenance, and 5 work in the canteen. Choose Accounting Controlling Cost Center Accounting Planning Statistical Key Figures Change (transaction code: KP46). The planning layout Statistical key figures: standard (1-301) appears. Choose the Plan/actual version [0] and periods 1 to 12 in the current fiscal year. Enter cost center CC-AS-## and key figure EM-##. Make sure you leave all the other fields blank. Click Form-Based at the bottom of the screen. Then click Overview Screen or press F5. Enter 15 as the current plan value and save. Repeat the process for cost center CC-MA-## and enter 5 as the current plan value. Save this plan as well. Repeat the process again for cost center CC-CA-##. Enter 5 as the current plan value. Save and choose .
Planning Activity Output

In the following steps, you will plan the total activities of maintenance (1,800 hours) and assembly (6,000 hours). Choose menu item Accounting Controlling Cost Center Accounting Planning Activity Output/Prices Change (transaction code: KP26). The layout Activity types with prices: standard (1-201) appears. Fill the fields Version, Periods and Fiscal Year as in the previous exercise, if they dont already contain the correct default values. Enter CC-MA-## as the cost center and M-## as the activity type. Leave all the other fields blank. Then click Overview Screen or click F5. Enter 1,800 hours as the plan activity and save. Repeat the process for cost center CC-AS-## and activity type A-##. Enter a plan activity of 6,000 hours here. Save.

SAP UCC, Stefan Weidner

May 2008

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Planning Primary Cost Inputs

Primary costs are incurred in all three cost centers each fiscal year. These costs are 60,000 for salaries and 90,000 for purchased services in the canteen, maintenance salaries in the amount of 60,000, and assembly wages in the amount of 150,000. Choose Accounting Controlling Cost Center Accounting Planning Costs/Activity Inputs Change (transaction code: KP06). The Cost elements acty-indep./acty.-dependent (1-101) layout appears. Fill the fields Version, Periods and Fiscal Year as in the previous exercise, if they dont already contain the correct default values. Enter CC-CA-## as the cost center and Salaries [430000] as the cost element. Leave all the other fields blank. Click Overview Screen or F5. Enter the plan fixed costs as 60,000. Save. Repeat the process for cost center CC-CA-## and cost element Purchased services [417000]. Again, leave all the other fields blank. Click Overview Screen or F5. Enter the plan fixed costs as 90,000 and save. Now enter CC-MA-## as the cost center and Salaries [430000] as the cost element. Leave all the other fields blank. Click Overview Screen or F5. Enter the plan fixed costs as 60,000 and save. Now enter cost center CC-AS-##, activity type A-## and cost element Direct labor costs [420000]. Now that you have added the activity type, the primary cost input can now be planned activity specifically that is, with a fixed and variable price. Then click Overview Screen . The Plan variable costs field should now be ready for input. Enter 150,000 here and save.
Planning Internal Activity Inputs

During the current fiscal year, the assembly department plans to have their equipment checked regularly by the companys internal maintenance team. They estimate an effort of 600 maintenance hours. To plan this, from the Cost Center Accounting menu, choose Planning Costs/Activity Inputs Change (transaction code: KP06). The Cost elements acty-indep./acty.-dependent (1-101) layout appears. Because this screen is only suitable for cost elements, not activity types, click to go to the next layout, Activity input acty-indep./acty-dep. (1-102).

SAP UCC, Stefan Weidner

May 2008

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Fill the fields Version, Periods and Fiscal Year as in the previous exercise, if they dont already contain the correct default values. Enter CC-AS-## as the cost center, CC-MA-## as the sender cost center, and M-## as the sender activity type. Leave the other fields blank. Go to the overview screen and enter 600 hours as plan fixed consumption. Save. To check your planning so far, from the Cost Center Accounting menu, choose Information System Reports for Cost Center Accounting Planning Reports Cost Centers: Planning Overview (transaction code: KSBL). Then run this report for each of your three cost centers (click Execute or press F8). You can see that your cost centers have been charged with primary costs. In addition, you can also see the total inputs and internal allocation quantities in maintenance and assembly.
Creating Assessment for Canteen Costs

In the Cost Center Accounting menu, choose Planning Allocations Assessment (transaction code: KSUB). Then choose Extras Cycle Create. Chose your valid cycle, C-##, which is valid from 01/01 of the current fiscal year and press ENTER to confirm. Enter Cycle CC-CA-## as text, . uncheck the Iterative field, and click Enter SEG-## as the segment name. Enter PLA-## as the assessment cost center in the Segment Header tab page. Enter CC-CA-## as the Sender Cost Center (from) and cost center group GROUP-## as the receiver in the Senders/Receivers tab page.

SAP

SAP UCC, Stefan Weidner

May 2008

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Choose the value Plan Stat. Key Figures [6] in the Var.portion type field in the Receiver Tracing Factor tab page. The message Maintain fields Stat. Key fig. indicates that new fields are displayed for maintenance. Choose the Plan/actual version [0] and statistical key figure EM-## as the selection criteria. Click Save, click to go back three times, and confirm the subsequent confirmation prompt with YES.
Performing Assessment for Canteen Costs

Enter C-## in the Cycle field of the Execute Plan Assessment: Initial Screen and press ENTER. Uncheck the Test Run field and choose Execute (click or press F8). The system should notify you that processing was completed without errors. The number of senders should be 1 and the number of receivers 3. Go back to the SAP Easy Access menu.

SAP

Examine the results of the assessment in your three cost centers, using the familiar report Cost Centers: Planning Overview (transaction code: KSBL). The maintenance and assembly cost centers should have been charged with a canteen assessment of 30,000 and 90,000, respectively, and the canteen cost center credited with 120,000. 30,000 remain with CC-CA-##. You may have noticed that the activity inputs and activity allocations of cost centers CC-AS-## and CC-MA-## are still valuated with zero, even though all the quantity information has been entered. This is because no prices have been planned yet for the involved activity types. We will do this next.

SAP UCC, Stefan Weidner

May 2008

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Automatic Price Calculation of Two Activity Types

In the Cost Center Accounting menu, choose Planning Allocations Price Calculation (transaction code: KSPI). Choose the first radio button (Cost center group) in the Cost centers field group and enter your cost center group, GROUP-##. Also choose No Business Processes, the Plan/actual version [0] and periods 1 to 12 in the current fiscal year. Uncheck the Test Run field again and press Execute. If everything worked correctly, the SAP System reports that the calculated prices have been posted correctly (Results of iterative activity price calculation have been posted). Press ENTER to display the prices. Write down the prices the system calculated for your activity types: Total price for CC-AS-## and activity type A-##: _______________

Total price for CC-MA-## and activity type M-##: _______________ Examine the results of the price calculation in your three cost centers in report Cost Centers: Planning Overview (transaction code: KSBL). Your assembly cost center report could look like the example below:

SAP

As you can see, the canteen costs and assessment of the maintenance cost center amount to 120,000. Production wages in the amount of 150,000 are also incurred. If the total input is 6,000 hours, this results in a price of 45.00 for an assembly hour.

SAP UCC, Stefan Weidner

May 2008

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Integration with the PP Module

The integration between Cost Center Accounting and Production Planning and Control is the result of assigning work centers to cost centers. You will implement this below based on the information you used in the PP case study.
Creating New Work Center for Cost Center

The work center organizational unit (for example: person, machinery, etc.) defines where and by whom an operation is performed. A work center has a specific available capacity. The work performed there is valuated using allocation rates that are determined by cost centers and activity types. In the SAP Easy Access menu, select Logistics Production Master Data Work Centers Work Center Create (transaction code: CR01). You want to create the work center in plant [1000], with the name CTR-##. As usual, you substitute ## with your group/computer number. Choose work center type Labor [0003] and use work center Assembly IV [1420] in plant [1000] as a template. Press ENTER. In the Copy from window, choose all the selection areas aside from Costing. Then click Copy or press ENTER. The Create Work Center: Cost Center Assignment view appears. Enter todays date as the start date. Enter the cost center you created, CC-AS-##, as the cost center. Then start the input help (F4) in field Activity Type for Setup. Only your activity type, A-##, should be displayed. Select it. Then define key Prod.: Setup time [SAP001] as the formula key. Proceed in a similar fashion for the Machine Time and Labor Time, using the following data: Activity type Machine time: Labor time: Then click to save. A-## A-## Formula key [SAP002] Prod: Machine time [SAP003] Prod: Labor time

SAP UCC, Stefan Weidner

May 2008

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Integrating New Work Center in Routing

In the SAP Easy Access menu, select Logistics Production Master Data Routings Routings Standard Routings Change (transaction code: CA02). Choose your routing for the material UCC-MOTORCYCLE-## in plant [1000], select todays date as the key date, and press ENTER. Then double-click on the description for operation 0020. In the next screen, first delete the default values and activity types in the Setup, Machine, and Labor lines. Then press ENTER.

Now overwrite the value in the Work Center field, 1420, with CTR-##, your new work center. Press ENTER to confirm. Enter a time of 6 Minutes in the line for the setup time and A-## as the activity type. Proceed accordingly with the second line (machine time): enter a time of 60 Minutes and A-## as the activity type. In the last line, enter a labor time of 120 Minutes and A-## as the activity type. Then press ENTER to confirm. Click to return to the operation overview and then click routing. to save changed

You have now added a new work center, valuated with your activity type, to the routing for assembling the motorcycle. As a result, the prices you just calculated will become effective during the next product costing. As you probably noticed, the new work center will be much more efficient.
Performing New Product Cost Estimate

In the SAP Easy Access Menu, choose path Accounting Controlling Product Cost Controlling Product Cost Planning Material Costing Cost Estimate with Quantity Structure Create (transaction code: CK11N). Choose your material UCC-MOTORCYCLE-##, the plant [1000] Hamburg, and in the Costing Data tab page costing variant [PPC1], costing version [1], and costing lot size [1]. Press ENTER to confirm.

SAP UCC, Stefan Weidner

May 2008

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In the next tab page, Dates, press ENTER to save the default dates. The system will now cost the material based on the bill of materials and the changed routing. The valuated BOM is displayed in the upper half of the screen. The manufacturing costs are estimated as 1,482.40. When you choose Costs Itemization (or press F6), the itemization is displayed in the lower half of the screen. in the lower screen area and choose Select Layout.... Choose Click the layout Operations (Grouped) [1SAP06]. Items 6, 7 and 8 in operation 0020 contain the costs of the second operation in the assembly routing, with your activity type A-##, rendered by work center CTR-##.

You can see the allocation rates that have been charged for 6 minutes, 1 hour, and 2 hours of assembly activity. To display the individual cost components, choose menu path Costs once again and choose Display Cost Components (or press F5). Click Select Layout.... This time, select the layout for Cost Component Groups [1SAP02]. Save your costing as an [Itemization] and a [Log] and press ENTER to confirm. Youre finished!

Several of the ideas in this case study are based on materials developed by Mr Martin Vo (University of Passau) and Mr Heino Schrader (SAP AG), whose work is acknowledged here. This publication or parts thereof may only be disclosed to or reproduced by faculty members of institutions connected to SAP University Competence Centers, for use in teaching. Material may not be disclosed in digital form. Any changes to the content of the case study, or any changes made to the case study texts minor or otherwise must not distort the origin of the intellectual property, as input in person by Stefan Weidner (SAP UCC Magdeburg). Should you have any queries, please contact the author. SAP, the SAP logo, the R/3 System, and any other SAP products and services mentioned in this text, including the relevant logos, are trademarks or registered trademarks of SAP AG in Germany and internationally. All other names of products and services are trademarks of the companies in question.

SAP UCC, Stefan Weidner

May 2008

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