Documente Academic
Documente Profesional
Documente Cultură
January 2012
CONTENTS
1. INTRODUCTION
1.1.1. ABOUT DERBA MIDROC CEMENTS
1.1.2. CONTROLLING MODULE AT DMC
1.1.3. PRODUCT COSTING AT DMC
2. PROCESS ARCHITECTURE
2.1.1. Organization Structure in Controlling
2.1.2. OPERATING CONCERN
2.1.3. CONTROLLING AREA
2.1.4. COST CENTRE STANDARD HIERARCHY
2.1.5. PROFIT CENTER MAPPING TO COST CENTER:
2.1.6. COST ELEMENTS
2.1.7. COST/REVENUE ELEMENT GROUPS
2.1.8. COST CENTRES
2.1.9. COST CENTRE GROUPS
2.1.10. STATISTICAL KEY FIGURES
2.1.11. INTERNAL ORDERS
2.1.12. PROFIT CENTRE
2.1.13. PROFIT CENTRE GROUPS
2.1.14. ACTIVITY TYPES
2.1.15. INTEGRATION WITH FI
3. COST CENTRE ACCOUNTING
3.1.1. PROCESS FLOW
3.1.2. COST CENTRE PLANNING
3.1.3. ACTIVITY TYPE PLANNING
3.1.4. PLANNED ACTIVITY PRICE
3.1.5. POSTINGS IN COST CENTRE
3.1.6. REPOSTING OF COSTS MANUALLY
3.1.7. PERIOD END CLOSING- COST CENTRE ACCOUNTING
DRAFT BUSINESS BLUEPRINT
1. INTRODUCTION
The purpose of the Business Blueprint is to serve as conceptual master plan for controlling module for
DERBA MIDROC Cement. This Blueprint has been developed by documenting all input gathered from
the core team. This document shows the business requirements in detail, and serves as the basis for
organization, configuration and development activities.
During the course of this phase of the assignment detailed discussions with core team members have
been carried out to study the following expectations
Business Process
Expectations / Improvements
Reporting / Information requirements
Based on the discussions the business scenarios have been documented which need to be
addressed by the system. The purpose of this report is to confirm the understanding of these
business scenarios, which would form the basis for system specifications and to also list requirements
which cannot be addressed by the system. This document forms the basis for all subsequent activities
to be conducted during the term of project.
The report initially gives an overview of the Controlling Module purview. This would essentially help in
defining the boundaries of the module and also in identifying the activities to be performed within
Controlling Module in SAP. Subsequently, the report discusses in detail, the proposed coverage of
SAP at DMC, in terms of organizational entities and business processes. Each business process has
been described with all the variations. The authorization requirements would be identified and
configured during the configuration phase.
Organization Overview
The requirements of organisation design for Financial Accounting are to ensure ease of use and
operation of the system, scalability to ensure future changes to the organisation structure and timely
generation and monitoring of Management Information System for decision making.
The organizational needs of Financial Accounting are to report for external purposes, that is, they fulfil
requirements that the business is subject to external entities and legal consideration of the country.
The organizational units of Controlling are used to satisfy internal reporting requirements. They
enable reporting performance within the organization and can be used to generate multi-dimensional
analysis in wiz Profit Centre, Cost Centre, Internal Order, Product Costing and Profitability Analysis.
2. PROCESS ARCHITECTURE
Controlling Overview
Controlling (CO) contains all accounting functions necessary for effective controlling. If an
organization divides accounting into internal and external viewpoints, CO represents the internal
accounting perspective, because it provides information for managers’ -those who are inside an
organization and are charged with directing and controlling its operations.
Controlling primarily divides the entire process into three basic areas:
Overhead Cost Controlling - provides tools to answer the question- “How do we control our
overhead costs?”
Product Cost Controlling - provides tools to answer the question. - “What is the manufacturing
cost of a product?”
Profitability Analysis – provides tools to answer the question – “How Profitable is individual
Market Segments?”
Controlling Objects: For postings in External Accounting that use a Cost Element, a Controlling
Object needs to be assigned to which data flows from FI (Financial) to CO (Controlling). In DMC the
following CO Objects shall be used to capture Revenues & Costs-
The organization structure of DMC needs to be mapped to the organization entities in SAP.
By setting off the costs against the revenues, you can calculate contribution margins for the individual
market segments.
When you transfer data to Profitability Analysis, the system derives the appropriate operating concern
from the controlling area, and derives the controlling area, in turn, from the company code. Therefore,
in configuration assign each operating concern at least one controlling area. Below is the structure for
the Company Code i.e. Derba Midroc Cement.
A controlling area is an organizational unit within CO module. It is used for cost accounting. It is within
the controlling area that Cost Centre hierarchies are defined and cost centers are assigned to these.
A controlling area may be assigned to one company code or to many company codes. If you assign a
controlling area to many company codes then you can do cross-company code cost accounting.
However, each company code must use the same chart of accounts and also same fiscal year. In
case a Company Code has a separate Fiscal Year a new Controlling Area shall be created and the
Company Code shall be assigned to this Controlling Area.
A cost centre hierarchy comprises all cost centers for a given period and therefore represents the
whole enterprise. This hierarchy is known as the Standard Hierarchy. Since DMC has not yet started
actual production any addition of Cost Centers at latter stages for additional classification of cost is
also possible.
In addition to the profit centers defined above, one dummy profit center will be created for DMC,
herein named as “DUMMY”. Dummy Profit Center is a system requirement to activate the Profit
Center functionality. This dummy profit center will contain all profit-related postings, which cannot be
assigned directly to a profit center. Subsequently, these postings can be allocated to appropriate profit
centers.
Water supply/treatment
Quality control and lab
Portland cement cement grinding
Packing
Parts and supplies management
plant maintenance and workshop
Electric power and control
Water supply/treatment
Mobile equipment maintenance/ garage
Sewage and disposal
Quality control and lab
Alternative fuel preparation and handling
Gypsum and additives preparation and handling
Portland-slag cement cement grinding
Packing
Parts and supplies management
plant maintenance
Electric power and control
Water supply/treatment
Mobile equipment maintenance/ garage
Sewage and disposal
Quality control and lab
Alternative fuel preparation and handling
Gypsum and additives preparation and handling
Portland-pozzolana cement cement grinding
Packing
Parts and supplies management
plant maintenance
Electric power and control
Water supply/treatment
Mobile equipment maintenance/ garage
Sewage and disposal
Quality control and lab
Alternative fuel preparation and handling
Gypsum and additives preparation and handling
Service cost centers
DRAFT BUSINESS BLUEPRINT
To meet the above requirements the following scope has been identified in Controlling Module-
Overhead Calculation
WIP Calculation
Variance Calculation
Settlement
Product Costing in Made to Order Scenario (Cement Packing)
Sales Order Settlement
Profit Centre Accounting
Profitability Analysis
Master Data
Master Data in Controlling consists of the following-
Cost Elements
Cost Element Groups
Cost Centers
Cost Centre Groups
Activity Types
Statistical Key Figures
Internal Orders
Profit Centers
Profit Centre Groups
Material Master
Internal Activity Allocation: Direct allocations from Cost Centers to Production Orders
Overhead: Indirect allocations from Cost Centers to Production Orders
Cost Center Group is a hierarchical group of cost centers defined and organized according to
selected criteria. Cost Center Groups can serve various purposes. For instance, they can be applied
to call up reports, create reports, or be used in an allocation process. . This enables to use cost
centers to depict the structure of the organization in the SAP System.
The individual cost centers form the lowest hierarchical level. There must be at least one group that
contains all cost centers and represents the entire business organization. This cost centre group is
described as the standard hierarchy.
Any number of alternative groups can be created, for example, according to organizational and/or
functional viewpoints. Cost centre groups enable to perform evaluations for each decision-making,
responsibility, or control area. They also support the processes during planning and internal
allocations.
Internal orders are normally used to plan, collect, and settle the costs of internal jobs and tasks. The
SAP system enables to monitor internal orders throughout their entire life-cycle; from initial creation,
through the planning and posting of all the actual costs, to the final settlement. Internal orders can
also be used for statistical posting. This provides further break-up of expenses per event. For e.g.,
Travelling expense of 10000 Birr incurred by Marketing cost centre which consists of travel for 5
different events. If 5 statistical internal orders one each for one event is created and while in FI
posting internal order is also referred to the system shall give both the view of the same expenses
(a) travelling expenses cost centre wise and (b) travelling expenses Event wise.
Internal Order can be real or statistical. A real Internal Order is Actual Cost Object, the Costs of which
can be Settled to a Cost Centre or another Cost Object. For e.g. Vehicle Costs can be captured
through Vehicle Orders. Here Vehicle Orders are Real Orders. During period end, the Vehicle Orders
cost can be settled to the Cost Centre to which the Vehicle pertains. Statistical Internal Order on the
DRAFT BUSINESS BLUEPRINT
other hand is not the Actual Cost Object & postings to a Statistical Internal Order are for information
purpose only. For example, Marketing Office may have many Sales Employees, who incur Travel
Expenses. While booking the Travel Expenses the real Cost Object is the Marketing Office Cost
Centre while Sales Employees can be created as separate Statistical Internal Orders to capture Sales
Employee wise Travelling Expenses.
Profit Centers are created under a controlling area. Cost centers are linked to Profit Centers. The Cost
Centers are attached to the Company Code. Thus for entries in a profit centre, the company code is
derived through the link to cost centre. An entry posted to a Cost Centre will automatically get
duplicated in profit centre if profit centre is attached to a Cost Centre.
Integration
2.1.16. INTEGRATION WITH FI
Primary Cost and Revenue Elements shall be created for the corresponding Expense and Revenue
GL’s created in FI.
DRAFT BUSINESS BLUEPRINT
e.g., overheads per liter will be entered at the beginning of the period the year, later on this rate will
be changed based on the actual overheads for that cost centre.
Certain individual costs are collected at default cost centre for ease of entry. Thereafter at the end of
the period, it is allocated to the actual cost centre using the secondary/primary cost element through
Assessment/Distribution cycle. The allocation cycles must be executed in the correct sequence to
ensure that costs are allocated correctly.
The overheads are allocated from Service Cost Centers to Production Cost Centers. For example:
Power Costs in Utilities Cost Centre or Cafeteria Costs in Cafeteria Cost Centre. Allocations can be
done through Assessment Cycles or Distribution Cycles. These cycles are used in both plan and
actual for allocation and apportionment of Costs.
The original cost elements are assigned cumulatively, or in groups, to assessment (secondary) cost
elements, i.e. Assessment records the costs in a separate head in the sender and receiver objects
without reflecting original Cost Elements.
Assessment is done in the form of cycles to settle primary and secondary Cost Elements.
Assessments are also defined in Segments, each Segment representing a rule for allocation of costs.
The original cost elements are not recorded on the receivers. Sender and receiver
information (sender cost centre, receiver cost centre) appears in the Controlling (CO)
document.
The total expenses of service cost centers are allocated on a reasonable basis. For
example, all expenses of Cafeteria cost centre can be allocated to other cost centers on the
number of employees.
The allocation cycles must be executed in the correct sequence to ensure that costs are not
allocated to a cost centre after its costs are fully allocated.
DRAFT BUSINESS BLUEPRINT
4. INTERNAL ORDERS
Internal orders are normally used to plan, collect, and settle the costs of internal jobs and tasks. The
SAP system enables to monitor internal orders throughout their entire life-cycle; from initial creation,
through the planning and posting of all the actual costs, to the final settlement. Different types of
internal orders that are available in SAP for the tracking of cost and revenue which are:
Overhead cost orders are used for the time-restricted monitoring of overhead costs (that are
incurred when you execute a job) or for the long-term monitoring of parts of the overhead
costs. This will be used in DMC.
Investment orders let monitor investment costs that can be capitalized and settled to fixed
assets. This will be used for tracking of cost through Investment Management.DMC is not
going to use it as of now.
Orders with revenues let monitor costs and revenues that are incurred for activities for
external partners, or for internal activities that do not form part of the core business for your
organization.
DRAFT BUSINESS BLUEPRINT
Order Number
Type Short text Cat Range Number From Number To
412 PR Activity/Event Management 1 01 000000100000 000000199999
Internal Order - Capital
600 Spending 1 02 000000200000 000000299999
900 Internal Order - Special Jobs 1 03 000000300000 000000399999
930 Internal Order - Revenue 1 04 000000400000 000000499999
1100 Internal Order - Statistical 1 05 000000500000 000000599999
An internal order is not a static object, but has its own life cycle that begins when it is created and
ends after it is closed. During this time, the internal order is changed by various business transactions.
For example, costs are planned, posted and settled for it.
Each internal order passes through four system status, one of which is always active.
Created
In this status, for example, actual postings are not possible.
Released
Nearly all business transactions are allowed in this status.
Technically completed
This status, for example, cannot make any planning changes.
DRAFT BUSINESS BLUEPRINT
Closed
In this status, for example, no cost-relevant business transactions are allowed.
DMC will maintain the system created status with permitted business transaction. The Order will
be released once it is created, there will not be automatic release on creation.
Actual postings will take place in internal order based on FI entries, MM entries and Assets
Accounting, similar to that of cost centre.
4.1.13 Settlement:
An internal order is usually used as an interim collector of costs and an aid to the planning,
monitoring, and controlling processes needed. When the job has been completed, it is possible to
settle the costs to one or more receivers such as cost centre, fixed asset, profitability segment, and so
on.
DMC will do the settlement at the end of every month. The settlement profile will be created which will
allow the settlement of costs to one or more receivers (cost center, fixed asset, profitability segment,
and so on).
Requirements/Expectations
The Company intends to transfer the plan costs from service cost centers to the production cost
centers based on certain basis of apportionment.
General explanations
Assessment is a method of allocating primary and secondary costs in Cost Center Accounting. The
following information is passed on to the receivers:
Distribution is used to allocate the primary costs of a cost center. The following information is passed
on to the receivers:
DRAFT BUSINESS BLUEPRINT
The original cost element (that is, the primary cost element) is retained.
Sender and receiver information (for example, the identities of the sender and receiver
cost center) is documented using line items in the CO document.
Cycle should have a valid sender and receiver cost center or cost objects like Internal
Order, WBS Elements etc. This is documented by line items in the Cost object.
Information system reports can be used to analyze the distribution results according to
sender and receiver relationships.
Requirements/Expectations
The Company intends to allocate the planned fixed & variable costs from the cost centers to the cost
of the product.
General explanations
The cost driver is to allocate the indirect costs to the cost objects i.e., Process Orders.
In SAP, the cost drivers are Activity type for allocating costs from production cost center to Process
Orders. The allocation of costs are based on the units produced for each period e.g., UOM Ton etc.
Each cost center provides a portion of the services in the activity process of the whole enterprise.
Requirements/Expectations
The Company intends to define the budgets approved by the Management as planned costs. The
planned costs from these cost centers would be loaded to the planned cost of the product.
General explanations
Each cost center provides a portion of the services in the activity process of the whole enterprise. We
plan activity-dependent primary costs as follows on a cost center(s)/cost center group:
This means that we can plan a fixed amount for the primary costs in producing a given activity,
proportional to the quantity of activity produced.
The Company intends to load the planned cost of the activity types like staff cost, depreciation,
maintenance cost etc., to all the products.
DRAFT BUSINESS BLUEPRINT
Each product is assigned to a cost center which is known as production cost center. This activity is
used for planning the cost of each activity for the said product. All the activities are planned for the
respective cost elements associated with. The said costs would be per unit of production for each
product.
This process is not required to be performed for the Activity type “Depreciation” as planned data
would directly flow from FI-AA (Asset Accounting) into the cost center planning based on plan
depreciation.
Requirements/Expectations
The Company intends to allocate the planned costs from the cost centers to the planned cost of the
product.
General explanations
DRAFT BUSINESS BLUEPRINT
At the end of the period the planned costs of the cost elements are accumulated in the production
cost centers / Activities.
The planned costs for all the cost elements are accumulated for the Activities for all the
respective cost centers.
The planned cost for the cost elements linked to each Activity is split to derive the
accurate actual activity price of each activity.
This ensures absorption costing of the fixed costs of the respective product debited the
respective cost center.
Requirements/Expectations
The Company intends to arrive at the actual costs of the entire product.
General explanations
During the period, there are some activities which are required to derive the accurate costs of the
products. Here are some of the functions which are explained as under:
During the period we need to make some rectifications, where we need transfer posting from one
product to another product (Orders), and one cost center to another etc.
6. PRODUCT COSTING
The Cement costing involved in the process consists of transferring the costs from service cost center
to the main production cost centers. At period-end closing the service cost centers (Auxiliary) are
balanced to zero, using secondary cost elements (assessment cycles), and costs are transferred to
the main production cost centers based on fixed percentages or statistical key figures.
DRAFT BUSINESS BLUEPRINT
The production cost centers costs are also balanced to zero and costs are transferred to the products
with secondary cost elements based on activity types. These activity types are evaluated in produced
quantities, worked hours (machine/product) and consumed kWh (machine/product).
At year-end closing, the deviations between the standard costs and the actual costs are settled to the
products. If deviations are very high, they can also be corrected during the year.
DCBL will be using both the scenarios of Made to Order and Made to Stock.
DRAFT BUSINESS BLUEPRINT
In Made to Stock scenario Production Process is initiated on receipt of planned order resulting from
the MRP run based on Annual Sales forecast. Stocks are manufactured and kept for storage.
Costing with a quantity structure is a tool for planning costs and setting prices for materials without
reference to orders. It is used to calculate the cost of goods manufactured for each product. You can
use the results of material cost estimates with a quantity structure to valuate materials at standard
prices.
A control of how the results of activity price calculation or material costing are stored.
The cost component structure groups cost elements into cost components to show the following
information:
In Product Cost Controlling (CO-PC), the cost component structure determines the attributes for
passing on the following costs:
Material costs passed on to material valuation as the standard price or inventory price
DRAFT BUSINESS BLUEPRINT
Costing Variant
A tool that contains all control parameters for costing, including parameters that control how cost
estimates are executed and the material prices or activity prices that are used to valuate the costing
items.
Costing Type
Specify whether the costing is for legal, profit center or group valuation
Define which prices are to be updated Standard price, Planned prices, Commercial prices
etc.,
Display the cost in cost component Split
Valuation Variant
Specifies which prices are used to evaluate the materials, activity types, processes,
subcontracting, and external activities.
Transfer Control
In this step we define parameters for partial costing. The purpose of partial costing is to prevent the
system from creating a new cost estimate for a material when costing data already exists. Instead, the
existing costing data is simply transferred into the new cost estimate.
Date Control
Controls the validity period of the cost estimate, the quantity structure date, and the valuation date
Others
Before a cost estimate with a quantity structure can be created, a bill of materials and routing (PP)
must exist for the material being costed.
DRAFT BUSINESS BLUEPRINT
The material costs for a material are calculated using the BOM and the master records of the
materials in the BOM. The production costs are calculated using the routing, the work centers where
the respective operations are carried out, the cost centers, and the activity types.
In Production Planning (PP), the work center is the organizational entity in which an operation is
carried out. Each work center is linked to a cost center. The cost center is the organizational entity in
Controlling (CO) where costs are incurred.
A routing contains the default values for the production of a product. The work center contains
parameters such as:
On the basis of the formula in the work center and the default values in the operation, the system
calculates the anticipated activity input. This activity is valuated using the prices in Cost Center
Accounting to calculate the planned costs for the operation.
All the materials can be costed together. It also costs the semi-finished products which are contained
in the BOM and costs up to the last level. This procedure is called as Costing Multilevel BOM.
It updates the planned price and Standard price for all the materials for the said period mentioned in
the cost run.
o Structure Explosion - that it explodes all the Bills of Materials up to the last level of
production
o Costing of Materials – It costs all the materials up to the last level of production.
o Marking – It releases the cost as planned cost estimate and updates the Material
Masters.
o Release – It releases the cost as Current Standard Cost estimate and updates the
Material Masters. It also revalues the Inventory based on the current standard cost.
DMC would be able to cost all the products independently with detailed break-up of variable
and fixed costs. The costs are further consumed at the higher level of production to derive
the costs of higher levels of products.
DMC can get accurate cost of each material they are producing.
You can now have a distinction between Cost of Goods Manufactured (COGM) and Cost of
Goods Sold (COGS).
DMC can identify the Costs of Production and Selling & Administration separately.
Requirements/Expectations
DMC intends to load the cost of staff costs, maintenance, depreciation, overheads etc., at actual cost
periodically to the interim and finished products.
General explanations
If a cost accounting object uses an activity from a cost center, we usually start with a plan price to
allocate the activity. This is because the actual price is calculated during period-end closing. In the
actual activity price calculation, the SAP system performs calculation of the prices for the activity
types.
To do this, it uses the actual costs that were debited to the cost center, and the activities actually
incurred. The system accounts for all activity relationships with the cost centers as per the cost
elements / activity in the splitting structure.
After actual price calculation, we can revaluate the objects at actual prices if they have used the
activities from cost centers. The system always determines the variances between the costs posted
up to this point and the costs that occur under the new prices. The corresponding sender cost center
is credited by the actual price revaluation and the receiver Process Order is debited accordingly.
In DMC the Process Order is the receiver and sender is the cost center after revaluation. The values
of activities are revalued based on the actual costs of the cost center pertaining to the activity.
DRAFT BUSINESS BLUEPRINT
This would ensure that all the total costs accumulated in the cost center of the materials produced are
loaded. Hence it ensures absorption costing. This would result in absorption costing of all costs in the
cost center for the said period.
The revaluation at actual prices would be performed for all production cost centers.
Requirements/Expectations
General explanations
Variance calculation provides us with detailed cost information on products or manufacturing orders.
The system compares the control costs (Actual costs) against the target costs (Plan costs for actual
production) and assigns the resulting variances to variance categories. The variances are assigned to
variance categories in the following sequence:
Input price variance - Input price variances are caused by differences between the
planned and actual prices of the input materials and activities used.
Resource-usage variance - Resource-usage variances are caused by the use of
different materials and activities than were planned.
o The target costs of a cost element, origin group, or origin are not zero while the
actual costs of the same cost element, origin group, or origin are zero.
o The target costs of a cost element, origin group, or origin are zero but the actual
costs of the same cost element, origin group, or origin are not zero.
Input quantity variance - Input quantity variances are caused by differences between
the planned and actual consumption quantities of materials and activities. Turn on the
Material origin indicator in the costing view of the master record of all materials that have
a large influence on the costs.
Remaining input variance - The system calculates variances for each cost element on
the input side. If the system cannot assign a variance on the input side to any of the
above categories, it assigns the variance to the remaining input variance category. This
can happen when costs are entered without a quantity, or when the overhead rates are
changed.
Output price variance - Output price variances are reported in the following situations:
o If the standard price has changed between the time point of delivery to stock and
the time point when the variances are calculated
o If the material’s price control indicator is set to V and the material was not
delivered to stock at the standard price
o If the price used to valuate the inventory is not a mixed price
Output price variances are caused by a difference between the target credit (such as Confirmed
Quantity x Standard Price) determined by variance calculation, and the actual credit posted when the
goods were received (such as Confirmed Quantity x Moving Price).
Remaining variance - Differences between the target costs and the allocated actual costs that
cannot be assigned to any other variance category. For example, rounding differences are
reported as remaining variances.
Overhead applied to costs that do not vary with the lot size are also reported as remaining
variances.
DRAFT BUSINESS BLUEPRINT
When the system cannot calculate target costs, such as when no cost estimate for the material exists
or because no goods receipt for the order has taken place in the Product Cost by Period component.
If we do not select a variance category, the variances of that category are assigned to the category
remaining variances. The scrap variances are an exception to this. Scrap variances that are not
shown as such can flow into any other variance category on the input side.
The variance calculation would be done for all the product cost collectors.
Requirements/Expectations
The Company intends to settle Process Orders to Products once in every month.
General explanations
During production, Process Orders are debited with actual costs. The actual costs posted to an order
can be more or less than the value with which an order was credited when the goods receipt was
posted. When we settle, this difference between the debit and credit of the order is transferred to
Financial Accounting (FI).
The order balance can be reduced to zero by transferring to Financial Accounting (FI) the difference
between the preliminary inventory valuation (goods receipt) and the actual costs incurred. The price
difference can also be transferred to Profit Center Accounting (EC-PCA).
The total variance can be transferred to profitability segments in Profitability Analysis (CO-PA). This
enables us to see an actual contribution margin in CO-PA. We can transfer the individual variance
categories of the total variance to value fields in CO-PA in combination with certain cost elements or
cost element groups.
The variance calculation would be done for all the product cost collectors.
In the application component Product Cost by Sales Order, the sales document items (items in
inquires, quotations, or sales orders) function as the cost objects for which you can determine costs
and revenues in both planned and actual data.
In sales-order-related production, you use the functions of Product Cost by Sales Order to collect and
analyze the costs in complex on the sales order item.
Calculate and analyze planned costs and actual costs by sales document item
Calculate and analyze planned revenues and actual revenues by sales document item
Revaluate the activities and business processes allocated to the cost objects with actual
activity prices
Allocate the overhead costs to the cost object using overhead calculation or dynamic process
allocation
Calculate the value of goods that have been delivered to the customer but not invoiced
Create reserves automatically
Transfer data to Financial Accounting (FI)
Transfer data to Profitability Analysis (CO-PA)
7.1.2.2 Valuation
In Valuated sales order stock goods movements takes place corresponding postings in Financial
Accounting (FI).
A sales order stock is assigned exclusively to a particular sales order and sales order item and cannot
be used for other sales orders or sales order items. Sales order stocks can be for independent
requirements as well as for the dependent individual requirements of the individual requirements
material (finished product). For this reason, the material components can only be used to manufacture
the material ordered by the customer and listed in a particular sales order item, and the material
manufactured can only be delivered to the customer in the context of the sales order item.
The inventory values are updated when the goods receipts of the internally manufactured or
externally procured materials are entered.
The valuation indicator M is selected in the requirements class in Customizing for Product Cost by
Sales Order, posting the goods receipt in the sales order stock automatically updates the following
data:
DRAFT BUSINESS BLUEPRINT
The following sections describe results analysis at the level of the sales order item.
You can perform results analysis for each sales order item to valuate the result of the sales order
item.
Calculate the value of the costs that can be capitalized for each sales order item
You can capitalize costs with an option to capitalize by means of settlement to Financial
Accounting (FI).
Determine whether reserves should be created
Results analysis creates reserves that you can transfer to FI, Profit Center Accounting (EC-
PCA), and (depending on the type of reserve) Profitability Analysis (CO-PA) when you settle.
Reconcile the data posted in FI and in CO-PA to each other
Because the revenues affecting net income and the costs affecting net income are usually
different from the actual revenues and actual costs posted in FI, the result shown in CO-PA is
different from the profit/loss in FI. The difference between the value in CO-PA and the value in
FI can be offset by means of postings of reserves and inventories. If you are not using CO-
PA, correction postings can still be made in FI. The correction postings are made through the
settlement of results analysis data.
7.1.2.4 Settlement
Inventory values (depending on the results analysis method, capitalized costs or revenue in
excess of billings)
Reserves for unrealized costs
Reserves for imminent loss
Reserves for complaints and commissions
Balancing in Financial Accounting with the cost-of-sales accounting method
COPA
Process Flow Manual Planning
Segments
Customer
Product
Region
Sales &
Actual
Distribution
Revenue
Billing
Actual
Cost of Production
of Goods Sold
Data
Actual
Sales Related
Deductions
Plan / Actual
Cost Center Corporate & Assessment /
Corporate Marketing Distribution Tool
Expenses
Requirements/Expectations
DRAFT BUSINESS BLUEPRINT
The Company intends to analyze Market Segments like Customer, Product, Region, Country,
Consignee etc.
General explanations
Characteristic derivation is the attempt to determine the characteristic values for all CO-PA
characteristics in a given profitability-relevant business transaction. The characteristic values that are
transferred automatically are used to determine other logically dependent characteristics.
The combination of the values for the characteristics in an operating concern is called a Profitability
Segment. Characteristics include-
Sales Organization
Division
Distribution Channel - Example: Institutional Sales, Trade Sales,
Sales Office
Sales Order
Product
Customer etc.
Characteristic derivation consists of a series of derivation steps (the derivation strategy), each of
which can be used in turn to derive characteristic values from other characteristics.
For each operating concern we define, the system generates standard derivation steps that
automatically contain all the known dependencies between characteristics. The standard derivation
strategy contains:
Each derivation step describes how a group of target fields can be populated with values derived from
a group of source fields. One or more values are derived from the combination of values in the source
fields and then entered into the target fields. To find out which fields are valid as source fields and
target fields, refer to the section Source and Target Fields.
All the required characteristics are automatically derived in COPA. There are no new characteristic
which needs to be derived for meeting the business requirement of DMC.
Requirements/Expectations
The Company intends to load the Plan Corporate Overheads to the cost of goods manufactured.
General explanations
To reflect all the Plan costs from Overhead Cost Controlling to Profitability Analysis, We need to
transfer the cost center costs which are not directly attributable to the production process. We can
transfer these costs to any profitability segments we wish and thus assign them to any level of the
contribution margin hierarchies.
This function makes it possible for We to transfer to Profitability Analysis overhead costs, such as the
variances for production cost centers (as a single whole, not according to variance categories) and
the costs for sales and administrative cost centers.
These cost centers are first credited during production as the activities they perform (such as
machine hours and assembly hours) are required. The amount of the credit is based on the
quantities confirmed by production and on the activity prices (such as machine hour rates)
usually calculated in cost center planning. The balances that are thus achieved - or the over
absorption / under absorption remaining for the production cost centers due to the difference
between credits and actual costs - are transferred.
Assessment
From an accounting viewpoint, assessment cycles allocate the planned or actual costs for cost
centers to profitability segments in CO-PA on the basis of reference values, percentages, or fixed
amounts.
The planned cost of Corporate would be transferred to COPA periodically as mentioned above based
on the cost of goods manufactured.
Additionally the data can also be captured to the Sales Organization, Sales Division and Sales
Distribution Channel.
This helps in segregation of Selling & Administration expenses from the Cost of Goods
Manufactured.
DRAFT BUSINESS BLUEPRINT
Selling & Administration can be allocated to all the market segments like Customer
group, Product, area etc.
Requirements/Expectations
The Company intends to do planning of sales and related costs of the Market Segments like
Customer, Product, Region, Country, Ship to Party (Consignee) etc.
General explanations
Planning in Profitability Analysis allows us to plan sales, revenue and profitability data for any
selected profitability segments. We can display the entire planning process of the company in different
ways, depending on the business demands.
To support the individual steps of a planning process, the planning tool for Profitability Analysis offers
a wide range of planning methods and planning aids that we can use to create the planning data and
to modify it to suit the needs. These include automatic methods that allow us to produce data
automatically for an entire plan or to carry out changes on that data, and functions that allow us to
enter planning data manually. As alternatives to using the standard SAP interface, we can enter
planning data locally using Microsoft Excel before loading it centrally into the SAP system.
The elements that we can use to build the architecture for planning and to edit the planning data are
essentially as follows:
Planning level
We use the planning level to determine the level at which planning is to occur. We do
this by specifying the characteristics for planning.
DRAFT BUSINESS BLUEPRINT
Planning package
Planning method
Planning methods are functions with which planning data can be entered and
changed.
Parameter set
A parameter set contains all the settings necessary for executing a planning method.
Requirements/Expectations
The Company wants to analyze the actual costs of goods manufactured to the COPA segments like
products, customers, region etc.
General explanations
The actual costs are accumulated in the Process Order for all products. As per the standard SAP,
production variances i.e., difference between Actual costs less Standard cost in the product cost
collectors are transferred to the Price Difference Account in Finance.
In order to capture the actual costs in COPA segmental reporting, the production variance has to be
transferred also COPA.
At the time of Billing to the Customer, The Sales, Sales related expenses, Cost of Goods
Manufactured at Standard costs are transferred to COPA.
At the end of the month, once all the actual costs of all the products are captured, the productions
variances are transferred to the Price Difference Account are also transferred to COPA.
The various types of price differences can be assigned to difference value fields to meet the business
requirements of DMC.
Integration with SD
Identification of Characteristics (For example : Product, Customer, Product Hierarchy,
Division etc.) which will flow from Sales Order to COPA.
Identification of Value fields(For example : Sales Revenues, Discounts etc.) which will flow to
COPA through SD conditions.
Integration with MM
KA23 – List of Cost Element group / All Cost elements Master data information
KA03 – Display Cost Element Master Data
KSB5 - CO Documents: Actual Costs
KS13 – List of Cost Center group / All Cost Center Master data information
KS03 – Display Cost Center Master data
S_ALR_87013611 - Cost Centers: Actual/Plan/Variance
S_ALR_87013612 - Range: Cost Centers
S_ALR_87013624 - Cost Centers: Fiscal Year Comparison
KSB1 - Cost Centers: Actual Line Items
DRAFT BUSINESS BLUEPRINT
KL13 – To display the master data of the Activity Types created in the controlling area
KL03 – To display the individual Activity Types
KSPL – Planning Overview of Cost centers
KSBT – Activity Price Report
KSBP – Cost center plan line items per Activity / cost element
S_ALR_87013617 - Range: Activity Types Plan / Actual
S_ALR_87013611 - Cost Centers: Actual/Plan/Variance
KSS4 – Display planned cost splitting of cost elements for each Activity for each cost
center.
Cost Itemization
Variance Analysis
Settlement Reports
KKFB – Variances
KK87 - Individual Processing
CO88 - Collective Processing
CO-PA