Upendar Reddy, ICWA, Senior Controlling Consultant

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In the past, SAP advised companies to use costing-based CO-PA rather than,
account-based CO-PA. The main reason for this was:
Companies wanted a contribution-margin report with a breakdown of their
cost-of-sales down to the cost components level for each cost bucket
They wanted a production variance report by variance categories
They wanted a breakdown of the individual cost buckets beyond the total
value that was posted to the general ledger.
This functionality was not available in COPA account base before and
therefore did the most companies use Cost Base COPA.
The biggest issue with Cost based was the reconciliation effort, because cost base
COPA did not use a direct alignment to the general ledger accounts.
SAPs latest SAP Simple Finance product , uses SAP HANA as its primary
database, and opened up new options to build a COPA structures aligned with the
general ledger. Due to this SAP enhanced Account-based CO-PA in SAP Simple
Finance to provide:
Detailed information on the cost of goods, break down cost-of-sales to the
cost component of each cost bucket
Production variances by variance categories
Invoice quantities
Reconciliation between COPA and the GL at Account level
Due to this new functionality in Simple finance SAP is now advised companies to
use account-based CO-PA and not costing-based CO-PA.
Define Accounts for Splitting the Cost of Goods Sold
By default, the cost of goods sold is posted to a single COGS account as defined in
the account determination settings for material movements. In this Customizing
activity, you can refine the settings for COGS postings to split the COGS amount
and post it to different accounts according to the cost component elements
Steps:Create new G/L accounts on which you want to reflect the single cost
components of the COGS posting.
Specify a splitting scheme for your chart of accounts and assign a cost
component structure. The cost component structure groups the costs for each
material according to cost component (such as material costs, internal activities,
external activities, and overhead)
For each splitting scheme, specify the following information:
Account to which all cost of goods sold are posted according to the account
determination settings for material movements
Cost component structure

Upendar Reddy, ICWA, Senior Controlling Consultant

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New COGS target account for the specified cost component (profit account
or loss account
Assign the splitting scheme to the relevant companies.
Define Additional Quantity Fields
In financial accounting, reporting mainly focuses on amounts but sometimes you
also want to include quantities in your reporting. For example, in the consumer
goods industry it is common to store not just the quantity in the sales document
(for example, box or pallet) but also to convert that quantity into a quantity that is
common across all product lines (for example, pounds weight). This allows for the
aggregation of quantities across product lines. You can then use these common
quantities as drivers for management accounting (CO) allocation.
In Customizing, a standard unit of measure can be defined to ensure that the
quantities can be totaled and is required if you want to use totals as drivers in
allocation or top-down distribution. If you specify a standard unit of measure,
updates to the line item table of the record are done using this standard unit of
measure.
Activities:Assign a dimension to the additional quantity fields you are going to use.
If you want to allow the aggregation of quantities in order to use them as
drivers in allocation or top-down distribution, specify a standard unit of measure
Implement the logic to fill the additional quantity fields in the BAdI
FCO_COEP_QUANTITY for a specific controlling area.
Define Accounts for Splitting Price Differences
In this Customizing activity, you can refine the settings for splitting variance
categories into general ledger (GL) accounts. This allows you to do detailed
analysis on prices differences in your income statement. When the costs of
producing materials are valuated based on standard prices, production variances
can occur on production orders where there are differences between the actual
costs and the target costs. These production variances are calculated in Product
Cost Controlling (CO-PC) and are split into different variance categories.
Depending on the reason for the differences, the system calculates the production
variance, for example, price variances, quantity variances, lot-size variances, and
scrap.
With the settlement of the production orders, you can post the production variances
to Financial Accounting (FI) and Profitability Analysis (CO-PA). The amount
settled to CO-PA can be settled to different variance categories so that after
settlement you can display the single-variance categories in different value fields in
cost-based CO-PA. The amount settled to FI is normally shown as one total amount
on a G/L account for price differences. This account is defined in the account
determination settings for material movements. The variance categories and

Upendar Reddy, ICWA, Senior Controlling Consultant

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therefore the reasons for the variances can normally not be reflected in this FI
posting.
With this customizing activity, you can refine the FI posting to show the different
variance categories for each cost element on different G/L accounts allowing you
to show, for example, in your income statement, the reasons for the production
differences.
Requirements
The following prerequisites must be met:
You work with standard prices for producing materials.
You have executed the variance calculation in CO-PC.
You have defined a settlement profile that allows the settlement of variances
for your order type.
For settlement to cost based CO-PA, you have defined a profitability
accounting (PA) transfer structure.
Activities
For a refined posting of production variances on different G/L accounts in FI, you
have to make the following settings:
Create new G/L accounts on which you want to reflect the postings of the
different production variance
Choose the Customizing activity Define Accounts for Material Management.
In the view Configuration Accounting Display, choose transaction PRD Cost
(Price) Differences your chart of accounts.
Assign the G/L accounts where price differences are normally posted to for
the relevant valuation classes of your materials.
Specify a splitting scheme for your controlling area and your chart of
accounts.
Enter a cost element, cost element interval, or cost element group and/or a
variance category and assign one of the newly created G/L accounts where you
want to reflect these differences.
Multiple cost elements and/or variance categories can be reflected at the
same G/L account.
Select the Default checkbox for one of the entries. If no target account is
specified for a cost element/variance category, the system automatically posts these
amounts to the default G/L account.
Assign the splitting scheme to your company code and enter a valid from
date.

Upendar Reddy, ICWA, Senior Controlling Consultant

IMG> Financial Accounting (New)>General Ledger Accounting (New)>Periodic Processing> Integration>Materials Management>Define Accounts for Splitting the cost of goods
sold

Upendar Reddy, ICWA, Senior Controlling Consultant

Another major reason with SAP Customers preferring Costing based COPA over Account based COPA was the ability of costing based COPA to provide the break up of
Production Variances, which posted to a single GL Account. However, with Simple Finance comes the ability to assign a GL Account for each variance category and you can
have the same break up in Account based COPA on Simple Finance. The required configuration path for the same is:

IMG> Financial Accounting (New)>General Ledger Accounting (New)>Periodic Processing> Integration>Materials Management>Define Accounts for Splitting Price Difference

Upendar Reddy, ICWA, Senior Controlling Consultant

Here in similar to COSG split you have to define a Schema and assign a GL Account for each Variance category.

Most of SAP customers using costing base COPA choose not to report the quantity in logistics, but convert them into their own reporting units. This was typically done through
an enhancement to record this kind of conversion. COPA0005 was the enhancement which has been used in most customers. However, with Simple Finance, the COEP table
has additional quantity columns which can be used for these kind of reporting requirements. The IMG path for the same is:

Upendar Reddy, ICWA, Senior Controlling Consultant

Controlling>General Controlling>Additional Quantities> Define additional quantities

The usage of Account based COPA in Simple Finance ensures that there are no more time consuming painful reconciliation required to be done anymore. Additionally, the
customers get the same kind of reporting capabilities hitherto seen with costing based COPA making life simpler for Finance users

1. Create new G/L accounts on which you want to reflect the single cost components of the COGS
posting.
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Specify a splitting scheme for your chart of accounts and assign a cost component structure.

The cost component structure groups the costs for each material according to cost component
(such as material costs, internal activities, external activities, and overhead)
3. For each splitting scheme, specify the following information:

Account to which all cost of goods sold are posted according to the account determination
settings for material movements

Upendar Reddy, ICWA, Senior Controlling Consultant

Cost component structure

New COGS target account for the specified cost component (profit account or loss account
4. Assign the splitting scheme to the relevant companies.
To activate this split, follow IMG menu path Financial Accounting (New) > General Ledger Accounting (New) > Periodic Processing > Integration > Materials Management >
Define Accounts for Splitting the Cost of Goods Sold in the IMG

Define Additional Quantity Fields

In financial accounting, reporting mainly focuses on amounts but sometimes you also want to include quantities
in your reporting. For example, in the consumer goods industry it is common to store not just the quantity in the
sales document (for example, box or pallet) but also to convert that quantity into a quantity that is common

Upendar Reddy, ICWA, Senior Controlling Consultant

across all product lines (for example, pounds weight). This allows for the aggregation of quantities across
product lines. You can then use these common quantities as drivers for management accounting (CO)
allocation.
In Customizing, a standard unit of measure can be defined to ensure that the quantities can be totaled and is
required if you want to use totals as drivers in allocation or top-down distribution. If you specify a standard unit
of measure, updates to the line item table of the record are done using this standard unit of measure.
Activities
1. Assign a dimension to the additional quantity fields you are going to use.
2. If you want to allow the aggregation of quantities in order to use them as drivers in allocation or top-down distribution, specify a standard unit of measure
3. Implement the logic to fill the additional quantity fields in the BAdI FCO_COEP_QUANTITY for a specific controlling area.

Example
Assign dimension Mass to an additional quantity field. Implement coding to fill the additional quantity field in the BAdI FCO_COEP_QUANTITY. For example, calculate mass
according to the entered number of pieces.

Define Accounts for Splitting Price Differences

In this Customizing activity, you can refine the settings for splitting variance categories into general ledger (GL) accounts. This allows you to do detailed analysis on prices
differences in your income statement.
When the costs of producing materials are valuated based on standard prices, production variances can occur on production orders where there are differences between the actual
costs and the target costs. These production variances are calculated in Product Cost Controlling (CO-PC) and are split into different variance categories. Depending on the reason
for the differences, the system calculates the production variance, for example, price variances, quantity variances, lot-size variances, and scrap.
With the settlement of the production orders, you can post the production variances to Financial Accounting (FI) and Profitability Analysis (CO-PA). The amount settled to CO-PA
can be settled to different variance categories so that after settlement you can display the single-variance categories in different value fields in cost-based CO-PA.
The amount settled to FI is normally shown as one total amount on a G/L account for price differences. This account is defined in the account determination settings for material
movements. The variance categories and therefore the reasons for the variances can normally not be reflected in this FI posting.
With this customizing activity, you can refine the FI posting to show the different variance categories for each cost element on different G/L accounts allowing you to show, for
example, in your income statement, the reasons for the production differences.
Requirements

The following prerequisites must be met:

You work with standard prices for producing materials.

You have executed the variance calculation in CO-PC.

You have defined a settlement profile that allows the settlement of variances for your order type.

For settlement to cost based CO-PA, you have defined a profitability accounting (PA) transfer structure.
Activities
For a refined posting of production variances on different G/L accounts in FI, you have to make the following settings:

Upendar Reddy, ICWA, Senior Controlling Consultant

1. Create new G/L accounts on which you want to reflect the postings of the different production variance

2. Choose the Customizing activity Define Accounts for Material Management.

In the view Configuration Accounting Display, choose transaction PRD Cost (Price) Differences your chart of accounts.
Assign the G/L accounts where price differences are normally posted to for the relevant valuation classes of your materials.
3. Specify a splitting scheme for your controlling area and your chart of accounts.

4. Enter a cost element, cost element interval, or cost element group and/or a variance category and assign one of the newly created G/L accounts where you want to reflect these
differences.
Multiple cost elements and/or variance categories can be reflected at the same G/L account.
5. Select the Default checkbox for one of the entries. If no target account is specified for a cost element/variance category, the system automatically posts these amounts to the
default G/L account.
6. Assign the splitting scheme to your company code and enter a valid from date.