MSIS 5123

Enterprise Resource Planning

SAP Project

Project Option #1
SAP Software
(Structured)

Student: Rajesh Shelmeda

SAP ID: User - 78

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 Table of Contents
Topic Group #6 Pricing and Accounting
A. Pricing using the Condition Technique ………………………3
1. Determine Pricing Procedure: Document Pricing Procedure
3. Define Pricing Procedure Determination
4. Test the Basic Pricing Procedure
5. Pricing with Discounts
6. Too many Discounts and Minimum Pricing
7. SAP glossary definitions

B. Financial Accounting ……………………………..…………………6

1. General Ledger Accounts

2. General Ledger Master Records
3. CO-Controlling
4. Transactions
a. G/L Document Entry
b. Vendor Invoice Payment
c. Posting and Reposting
d. Allocating via Statistical Key Figures
e. Allocation via Assessments

5. SAP glossary definitions

Topic Group #5 Human Resources

Creating Organizational Structures……………………………..14

B. Displaying and Printing the Organizational Structure…………15

C. SAP Glossary definitions

Project Experiences …………………………………………………16

Screen shots………………………. …………………………………17

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 Topic Group #6 Pricing & Accounting

Pricing using the Condition Technique

In this exercise we are going to see a unique Pricing procedure used by SAP for each
combination of sales document type and customer. The document type helps determine
the pricing procedure suitable for it.

1) Determining Pricing Procedure: Document Pricing Procedure

For a unique combination of sales document type and customer, SAP allows a pricing
procedure to be defined. To see how it works, we need to look at the configuration
data in the Tools drop down menu. Here we find the configuration data that defines
the settings for various sales orders. This can be accessed by navigating to the SAP
Reference IMG where the menu system is shown. The menu system contains paths
which run transactions that configure SAP system and determine how it runs. To see
the system settings which are made already, we need to navigate to Sales Document
Types. Here we can start a transaction to see them. A page which contains the option
of entering a Document pricing procedure is shown. When an option is chosen and a
search is made, the procedures corresponding to the option entered are listed.

2) Determine Pricing Procedure: Customer Pricing Procedure

In this step, for a given customer, a pricing procedure can be set up. The customer
here is 78Houghton Health Club. In this process a code is set up for the given
customer which determines the pricing procedure to be used. We navigate to the
Master Data and further down to the business partner change. Upon reaching the
Customer Change screen, a search is enabled where the customer is searched for
using a search criterion (78, here). On finding the customer, the Company code,
Distribution Channel, Division details are entered to obtain General Data about the
customer. From this screen, navigate to Sales Area Data and change the Pricing
procedure from 1 to Z. This change is then saved to adopt the procedure chosen.

3) Defining Pricing Procedure Determination

When a standard order is created for 78Houghton Health Club, pricing procedure A
and customer procedure Z are created. To make the configuration settings
corresponding to this, we need to navigate to Edit Project in the Tools drop down.
Then we jump to a path which allows defining and assigning pricing procedures. The
screen allows making entries corresponding to pricing procedure determined for the
given customer (procedures A, Z). After the entries are made, the pricing procedure is
saved. For the given customer, procedure ZFSPRC is chosen.

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4) Test the Basic Pricing Procedure

The pricing procedure created above can be tested by creating a sales order for
78Houghton Health Club. To create a sales order, navigate to Logistics and jump to
create order through the code provided. Enter the information corresponding to the
order (78FS for the organization, DI for division etc). Search for the sold-to party
with the criterion 78 and select it. The standard order overview now shows the
customer number for the given customer. Assign a purchase order number, PO
(HHC178, here). In the material field, make a drop down view to see a pop up
window which lists the material groups. From this, select Sales and enter 78 for the
material description, then execute it. Choose 78NRG-B to see that the material
number has been entered. Enter order quantity (10, here) and execute the screen. This
will cause information from the database to be called up and the pricing procedure is
also run (ZFSPRC, here). A new SAP session can be created to check where the
standard price is set. The sales order screen in the other session contains pricing
condition records for the current order and can be viewed by selecting the pricing
condition. To check how the price was calculated, we need to navigate to Analysis. A
screen is displayed which shows all the pricing conditions for the procedure chosen. It
lists various pricing conditions, discount conditions etc. The prices listed for a
particular pricing procedure, if incorrect, can be changed. This can be done by
browsing back to the pricing screen and manually entering the pricing condition and
the amount. This, when executed makes sure that the earlier improper price is
overridden by the manual entry.

5) Pricing with Discounts

This step describes handling discounts. To see how discounts are handled, we need to
navigate to the Master Data in Logistics and jump to create a condition. A screen is
displayed which allows entry of a particular discount type (K004, here for material
discount). Execute the screen to find a fast entry screen. Upon access to this screen,
enter the fields for material (78F110, here) and select Sales to find another screen
where two more entries are made. These two entries are the scale, quantity which
determines the amount of discount for a quantity which is greater than equal to the
quantity entered in the screen. Now save this pricing condition. Go back to the sales
order session and update the screen and delete the manual pricing condition (PB00).
A screen shows up where pricing type B is chosen to recalculate the pricing for
78NRG-B bars according to the new pricing condition. To add more to the existing
conditions, add a percentage discount for the given customer. Choose a discount
type, say K007 and enter it in the screen which is obtained by jumping from Master
Data to selection of a condition under Logistics. Execute the screen after entering the
discount type. Upon execution, search for the customer number for 78Houghton
Health Club. Call up the data on the customer and click on Scales icon. On the screen
which is now shown, enter a value for Scale and Amount (1000 and 10, here) i.e., if
the customer orders 1000 or more number of products, discount by 10%. Save this

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 action now so as to apply this discount condition to the sales order transaction. To
check if the new condition is applied or not, cancel the current sales order and create
a new one. The new sales order can be now reviewed and it can be seen that all
conditions, including the latest percentage discount have been applied.

6) Too many Discounts and Minimum Pricing

This step involves creating condition records for certain pricing conditions. To create
a record we need to navigate to Create conditions under Logistics. Here, we are
creating a record for a sales deal, KA00 which gives a discount for a particular
combination of customer and material (10% discount for 78NRG-B bars over $1000).
To see the impact of this order cancel the prior sales order and create a new one for
10 cases of 78NRG-B bars for 78Houghton Health Club. A final screen displaying all
the pricing conditions should be popping up if everything goes right.

SAP Glossary Definitions for Pricing data items

Pricing code: An alphanumeric identifier that is used to assign an item to a group of

items for pricing. Pricing codes are normally used to calculate discount
rates.

Pricing component: An element of a pricing arrangement. A pricing component is

always assigned a pricing component type that defines whether the
pricing component can be used for value-based or quantity-based
calculation of the total value of a line item.

Pricing model: Method of calculating NPV key figures. For example, discounting
cash flows and the standard model for options. External price
calculators can be used in addition to the pricing models delivered by
SAP.

Pricing worklist: Group of special pricing documents that are created in the pricing
worklist function when the pricing work list is created.

Pricing table: Table (list) containing the calculations carried out in the sales price
calculation.

Pricing type: An indicator that controls whether pricing must be performed again
when copying a document or whether the process must be transferred
unchanged.

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 Financial Accounting
This exercise deals with the areas of a SAP ERP system where financial impact is seen.

1) General Ledger Accounts

Any transaction in a SAP ERP system where financial impact is seen has itself stored in a
General Ledger (G/L) account or sub-ledger accounts that are posted to G/L via
reconciliation accounts. The task of these accounts is to provide a picture for external
accounting and accounts. The G/L has features like automatic posting of sub-ledger items
in G/L accounts, updating of G/L accounts, evaluation and reporting on current account
data etc. For the Fitter Snacker Company, the G/L accounts are in three groups:

a) Balance sheet (BS) [ 100000-399999 ]

b) Profit and loss(PL) [ 400000-999999 ]
c) Reconciliation(RA)[ 110000-310000 ]

2) General Ledger Master Records

G/L accounts are maintained as Master Data which is the data used in business like
accounts, materials, customers, vendors, etc and does not change over an extended period
of time. A typical example is the address of a customer. It differs from transactional data
in that the latter is regularly removed and archived whereas Master Data is always kept in
place. To view the G/L accounts for the present customer, i.e., Fitter Snacker Company,
we have to jump to the G/L account list in the Master Data which comes under the
Financial Accounting section of the SAP menu. On navigating, we can see a screen
which where the company code (78FS) needs to be entered. This leads to a screen which
shows the details.

3) CO-Controlling

Expenses in Financial Accounting which are relevant to cost accounting need to have a
valid controlling object before they are posted. The controlling objects can be cost center,
order, etc. These expenses are divided into different types such as

a. primary cost elements: there exist G/L accounts for such expenses
b. cost elements: there exist no G/L accounts for such expenses

The Cost centers are used to track where costs occur in the organization. As the costs are
incurred, they are assigned or posted to the appropriate cost center. The cost centers are
organized hierarchically. To display the hierarchy, drop down to Accounting and jump to
the Standard hierarchy under the Master Data. It produces a screen where the field

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“Controlling area” is to be entered. Here, for the Fitter Snacker Company, enter 78FS and
then execute the screen. This displays the various cost centers that make up the group.
To display the primary, secondary cost elements drop down to Cost Element in the
Accounting Master Data. Then jump to Collective Processing and select display. Now, on
the screen produced, select the option “All cost elements” and execute the screen. This
produces the cost elements for the current organization.

4) Transactions

To see how FI and CO modules operate, various transactions can be entered in SAP ERP.
To make the transactions easy, standard default values can be set up for data entry fields.
This is done by Parameter IDs (PID), which are given default values.

To set up parameter ID values, navigate to own data under User profile. On the screen
produced, select the parameters tab and give default values to parameter IDs (78FS,
78PR, USD, CHFS etc). Then save the settings.

Transaction No.1: G/L Document Entry

a) For the Fitter Snacker Company, the cash purchase of office by supplies by marketing
department is used to make a G/L Document entry. To do this jump to the Accounting
General Ledger drop down and navigate to G/L Account Document. In the Document
date, Currency, method of payment, Amount is entered for two G/L accounts (74000 and
100000). This information informs SAP about the appropriate account to record the
transactions to. The CO module needs to be informed using a cost center. Scroll to the
cost center column in the screen and enter A040 and simulate it. Now save the screen,
upon which we can exit the screen.

b) In order to verify the G/L document entered above, jump to The Accounting General
Ledger and navigate to Display balances. On the next screen, enter 100000 for the G/L
account and execute the screen. This produces another screen displaying the amount
entered and other information. Double click on this to get a report where the document
can be displayed. On this screen, click on the header icon to get the information regarding
the current G/L account being verified.

c) A default tolerance group is inbuilt in SAP system to avoid the transaction limits
crossing $10,000. In order to verify if this tolerance is in effect, we try to violate this limit
and try to record other G/L Document with an amount that exceeds the transaction limit.
To do this, life before, we jump to Accounting G/L and navigate to Enter G/L document.
Then we enter data which exceeds tolerance limits ($15000 for both G/L accounts). Now
simulate this to see that SAP does not allow us to do this and displays an error message
saying the obvious “you may post documents up to USD 10,000.00”.

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Transaction No.2: Vendor Invoice Payment

For Rent expense account, we post an invoice from Lansing Leasing to the P/L (profit
and Loss) account. In order to do this, we need to enter data for Lansing Leasing as a
master record in SAP ERP system.

Creating new vendor Master record

Navigate to Master Records under Accounts payable and select Create. We get a screen
which prompts the entry of Account group. Enter KRED and execute the screen. We get
a screen in which the following data is entered:

Title: Company
Name: 78Lansing Leasing
Search term ½: 78
Street/House number: 536 Abbott Rd.
Postal Code: 48824
City: E. Lansing
Country: US
Region: MI
Language: English

Now enter MI0000000 for jurisdiction code and execute the screen. Now move three
pages forward to get to the vendor creation page. Enter 300000 in the Reconciliation
account field and execute the screen. Now move one page forward to get to the Payment
Transaction Accounting screen. Here, enter 0001 in the Payt Terms field (immediate due
net payment) and save the vendor master record.

Post Vendor Invoice

To post the invoice which was sent by Lansing Leasing above, go to the drop down path
in the Accounts Payable section under Financial Accounting and jump to Invoice,
producing a screen. Here, enter the vendor name i.e., Lansing Leasing. Use the search
method to find the Vendor number for the current vendor by using the search criterion 78.
When the search is made, all the vendors who posted are listed in a screen. Find Lansing
Leasing and double click on it to see that the vendor number is now entered in the
Invoice screen, as we wanted. The rest of the fields in the screen are filled up using the
data:

G/L account: 780000

Amount: 4875
Cost Center: A060
Invoice date: Today’s date

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Vendor: obtained from search

After the data is entered, click on the Simulate button and check if the postings were
correct. On getting correct postings, save the screen to post the invoice.

Post outgoing payment

Now that the invoice has been posted from Lansing Leasing, a payment can be made and
posted. To do this, navigate to Accounts payable under financial accounting and jump to
post under Outgoing payments. In the screen that pops up, enter the following
information:

Document date: Today’s date

Bank data Account: 100000
Amount: 4875
Text: Lease
Account: search for 78Lansing Leasing

Now execute the screen. On the resulting screen, verify a proper payment assignment and
save the screen to post the payment. Exit to the main menu and check the invoices from
the Accounts display/change under Accounts payable. When we get there, we need to
enter 78Lansing Leasing in the Vendor account field (if it is not pre entered) and then the
screen be executed. In the screen, now check on the cleared items field and re-execute.
This produces a screen showing the status of various invoices including the one we just
posted for 78Lansing Leasing.

Transaction3: Posting and Reposting

The functionality of CO module is understood in this transaction. Another invoice for

rent expense is first posted to an incorrect cost center and reposted to the correct cost
center.

To enter the rent invoice, jump to Accounts payable under financial accounting and
navigate to Invoice under Document Entry. In the screen produced, enter the following
information:

Vendor: 78Lansing Leasing

Invoice date: Today’s date
Amount: 10000
G/L Account: 788888
D/C: Debit
Amount in doc. curr: 10000
Cost center: A010 (incorrect! only to be reposted and proved wrong).

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Save the screen and exit.
To review the Invoice posting, navigate in the following path:

AccountingControllingCost Center AccountingInformation SystemReports for

Cost Center AccountingLine ItemsCost Centers: Actual Line Items

This produces a screen in which the fields Cost center and cost element are entered as
A010 and 780000 and the screen executed. This leads to a screen from which more
details can be obtained regarding the Rent which is posted under Finance cost center.
Now exit.

Reposting the Cost to the Correct Cost center

To repost to a correct cost center, navigate through the path shown below:

AccountingControllingCost center AccountingActual PostingsRepost Line

ItemsEnter

This produces a screen in which incorrect information is shown. Execute this erroneous
screen and these results in a warning message, whose explanation gives more clarity to
the issue. Click on cancel to get a screen where the Acct Assgt1 column is changed to
A060 (administration cost center) from A010 (the incorrect Finance cost center). Now
save the changes, since the correction has been made. Exit to SAP easy access screen. To
verify this repost we just implemented follow the following path:

AccountingControllingCost Center Accounting Information System Reports for

Cost Center Accounting Line Items Cost Centers: Actual Line Items

This leads to a new screen. Enter A010 to A060 for the cost center field and 780000 for
cost element field. Now execute the screen and see that the rent cost has been removed
from A010 and has been rightly applied to A060. Exit the screen.

Transaction4: Allocation via Statistical Key Figures

To allocate rent expense to the appropriate cost centers, we need to define the square
footage for each cost center. To do this, follow the path:

AccountingControllingCost Center AccountingActual PostingsStatistical key

figuresEnter

This produces a screen. In that screen the following data is entered:

A010 through A020 under Rec. CCtr column

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480,520,200,590,310,400 respectively under Total Quantity column
SQFT under StatKF column.
Save this entry. This makes sure that the rent expense is distributed from cost center to
each administrative cost center according to its proportion of the office space. Exit to the
SAP main screen.

Create distribution cycle

To tell SAP when to distribute the rent expense, we need to set up a cycle. To do this,
follow the menu path shown below:

AccountingControllingCost Center AccountingPeriod-End ClosingSingle

FunctionsAllocationsDistribution

In the period column, enter 1 to 12 and the current year as the Fiscal year. Then navigate
ExtrasCycleCreate to produce a screen. Here, enter 78DIST for cycle and
01/01/2008, then click enter. Enter Monthly Distributions for Text and uncheck the
Iterative option under Indicators to pull up a new screen. Now, enter the following
information:

Segment name: RENT Distribution of rent

Sender/Receiver tab:
Sender cost center: A060
Sender cost element: 780000
Receiver Cost center group: 78HQ

Now click on Recvr tracing factor tab to pull up another screen and select Actual stat.key
figures. Then enter SQFT in the Stat. key fig. column and save the screen. Exit to the
actual distribution screen and enter 78DIST for cycle and 01/01/2008 for StartDate.
Execute this to pull up a screen showing the Actual distribution basic list showing
senders and receivers and messages information. Check the warnings shown and close
down the window. Double click on Monthly distributions to show the final distribution of
rent expenses from A060 to all other administrative cost centers. Go back to the Initial
screen and uncheck the Testrun option. Now execute again to distribute the expense to
the administrative departments.

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Transaction5: Allocation via Assessments

This step shows another method to distribute costs via assessments. In this exercise, a
utility expense is distributed to the three production departments using fixed percentages.
To create the G/L Document entry for the rent expense, follow the menu path:

AccountingFinancial AccountingGeneral LedgerPostingEnter G/L Account

Document
Then the Account document screen is produced. Enter the following information:

Doc. date: Today’s date

First line of items:
G /L acct: 750000
D/C: Debit
Amount in doc. curr: 10000
Cost center: A060
Second line of items:
G/L acct: 100000
D/C: Credit
Amount in doc. curr: 10000

Now enter and simulate the screen to verify the postings. Save the settings and exit to the
main screen.

Create an assessment cycle

To distribute the $10,000 posted above using a fixed percentage to the production centers
we need to create an assessment cycle. To set up one, follow the menu path:

AccountingControllingCost Center AccountingPeriod-end closingSingle

FunctionsAllocationsAssessment

This results in the Initial screen to execute actual assessment. Enter the period and year
data; traverse ExtrasCycleCreate to pull up the screen to create an assessment cycle.
Here, enter 78ASSM for cycle and 1/1/2008 for staring date. Then execute the screen. In
the header data, enter Monthly Assessments in the Text field. Click on Attach segment
icon and pull up the Segment screen. Enter the data in segment header, senders/receivers,
receiver tracking factor tabs and save the settings. Exit to the assessment screen and enter
78DIST for cycle and 1/1/2008 for current year. Execute the screen to pull up the Actual
assessment basic list screen which shows the final result. Review the steps as before and
verify.

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SAP Glossary definitions in financial accounting

G/L Account Contract: A means of transferring amounts from a G/L account to another
G/L account

G/L Account Length: The number of digits in a general ledger account

Controlling level: Level on which the controlling process is based

a) Single-object controlling: only one level is possible. This is
determined directly by the controlling level.
b) Single-object controlling on PS projects: The controlling level
determines the level down to which the hierarchy levels of the PS
project can be used as possible levels.
c) Controlling on account assignment objects: The controlling level
determines the deepest level to which the account assignment object
can be assigned.

Controlling area: An organizational unit within a company, used to represent a closed

system for cost accounting purposes .A controlling area may include
single or multiple company codes that may use different currencies.
These company codes must use the same operative chart of accounts.
All internal allocations refer exclusively to objects in the same
controlling area.

Cost center budget: The budget is the approved cost structure for an action or project
in a particular period. Budgeting differs from cost planning in that it
is binding. While you must estimate costs as accurately as possible
during the planning phase, it is in the approval phase that you
prescribe your funds, in the form of a budget.

Cost collector: A CO object generated for a settlement unit per settlement period. It is
used to collect the costs incurred on a settlement unit per settlement
period or settlement variant.

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 Topic Group #5 Human Resources

1) Creating Organizational Structures

To create an organizational structure, the following menu path is to be followed:

Human ResourcesOrganizational ManagementOrganizational plan

Organization and StaffingCreate

On the window which pops up, set the validity period for the organizational
structure. Execute the screen and we end up at Organization and staffing creation page.
Enter 78FSHR and 78FitterSnacker Organization for the new organizational unit name
and description and then jump to the account assignment tab and customize the default
value of the controlling area. The customized values are 78Fitter Snacker for the
controlling area, 78FS for company code and 78FS for Personnel area. Save the setting
now.

To create the manufacturing group, click on 78Fitter Snacker organization in the top left
window and click on the create icon. On the next screen double click on the
Organizational unit line. This adds a new organizational unit under 78Fitter Snacker
organization. Add basic data to this new unit (78 MANU and 78Manufacturing Group for
Organizational unit). Switch to assignment tab now and save. Of the three personnel
areas i.e. Receiving, Warehouse and production, Production personnel is created first.
Then the organizational unit line is chosen and basic data about it is entered in the basic
data tab i.e. 78PROD and 78 PRODUCTION are entered in the Organizational unit
column. Now switch to Account assignment tab and go to the Master cost center search,
calling up a search window. Enter the search criterion in the restrictions area (78FS for
controlling area and company code) and press enter. This produces the Restrictions page
from which P010 (production cost center) is selected and saved.

To create the manager for this personnel area, click on 78Production and then click on
create icon. On the “choose relationship” window which pops up select position and enter
the basic data (78PRODMGR and 78 Production Manager for position) and as before,
switch to account assignment tab. Here, enter 78FS for company code and personnel area
and save. To designate this position as head of production area (aka chief), click back on
the basic data tab and select “display key date”. Here, check the mark beside the “Head of
organization unit” to designate this person as the head of production. Save the settings. In
a similar manner, production scheduler position can be created and saved.

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2) Displaying and printing the Organizational Structure

To enable display and printing an organizational structure, a printer connection needs

to be established. Follow the path SystemUser profileOwn data. Now click on
the defaults tab. In the field output device, enter LOCL and save this setting. To print
the organizational structure, click on 78Fitter Snacker Organization and click on the
“expand” node and then the print icon. The organization structure is now displayed
and is ready to be printed.

SAP Glossary definitions in Human Resources Data Items

HR Master Data: Data relating to employees that remains relatively constant

Examples:

• Personnel number
• Name
• Address
• Bank details
• Social insurance number
• Health insurance fund

Organization unit: An organization unit represents any type of organizational entity

found within a company, for example, subsidiaries, divisions, departments, or special
project teams. Organizational units are one of the objects that make up organizational
plans.

Organizational data profile: Standard roles are defined in the organizational data
profile for each standard role. You can create mandatory fields in these. The
organizational data profile must be assigned to a transaction type in Customizing.

Organizational management: This component allows you to:

• model the functional organizational structure (department hierarchy, for

example) as well as the reporting structure of your enterprise as an
organizational plan.

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 • Analyze this current organizational plan according to your desired evaluation
paths and, on this basis, to carry out workforce requirements and personnel cost
planning.

• Create further organizational plans as planning scenarios, in order to simulate

new structures in the framework of Business Process (Re-)Engineering.

• Create effective Workflow Management by accessing the reporting structure.

Organizational Management includes the sub-components "Organizational plan" and

"Structural graphics", with which you can create and edit organizational plans.

Organizational personnel structure: The assigning of employees to positions, jobs and

organizational units for the purpose of documenting and evaluating the organizational
status of the employee.

My Project Experience

I belong to an engineering background and ERP was quite new to me. I had fair amount
of knowledge in Finance and accounting thanks to my undergrad degree. ERP right away
was an interesting way of looking how what I know before, works in an organization.
The project made me walk through the careful and detailed procedures to be undertaken
to successfully get a job done. Navigating through SAP was troublesome sometimes
especially because occasionally I would miss a small check mark or an essential column
is left unattended to. I was at ease with the Human Resources exercise and Accounting
exercise. The pricing was something not very common to my knowledge. I treat my
experience using SAP as a very rich addition to my knowledge as I am going to the field
of financial applications with oracle and SAP. The very basic knowledge I need was
made familiar to me, at the right time through the course and particularly the project. I
could see and feel how it would be if I were in any one of the parts of the organization
say human resources, accounting etc. and I am given a task which needs to be
accomplished with the help of an ERP software in the organization.

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Screen Shots

Pricing

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Accounting: Transaction 1

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Transaction 2:

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Transaction: 3

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Transaction: 4

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Transaction: 5

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Human Resoures Organization Structure

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