SKH & KML Working together to improve Business Performance Krishna Group 21-Oct-10 2 Agenda
1. Overview of Product Costing ( CO- PC)
2. Overview of Profitability Analysis (CO-PA)
3 Overview of Product Costing Product Costing in SAP 1. Maintenance of Quantitative Structure 2. Creation of Standard Cost Estimates 3. Execution of Period End closing activities 4. Derivation of Variances 5. Benefits of Product Costing 4 Maintenance of Quantitative Structure Quantitative Structure is based on Three base objects. 1. Materials Cost - Through the Bill of Materials (BOM) --Raw materials at moving average price --Semi finished / Finished at Standard Price 2. Operation Cost - Through Routing and Versions -- Activities based on Cycle time of operation 3. Overhead Cost - Through Cost sheet Percentage rates or quantitative basis -- Factory Overheads -- Administrative Overheads -- Selling Overheads 5 Cost Component Structure of SKH Material Costs Operatio n Costs Overhea d Costs COG M Costs 6 Cost Component Structure of SKH Material Costs Operatio n Costs Overhea d Costs COGS Costs 7 Creation of Standard Cost Estimates Standard Cost Estimate is Plan Cost for the Period 1. Maintaining Cost Component Structure Like splitting of Costs in Raw Materials, BOCs, Consumables, Paint Cost, Weld Cost etc. 2. Maintaining Plan Prices of Activities 3. Maintaining Plan Rates of Overheads 4. Execution of Cost Run Provides the Standard Cost Estimate of the Product and the Components. It is recommended to update the Standard Cost monthly this provides us cost of materials near actual. 8 Execution of Period End closing activities Major Activities of Period End Closing are : 1) Confirmation of Primary Costs in correct Cost centres. 2) Execution of Distribution and Assessment Cycles. 3) Execution of Splitting of Actual Costs at the Cost centre level. 4) Derivation of Actual Activity prices 5) Calculation of Actual Overhead Rates 6) Revaluation of Orders / PCC with the actual prices and overheads
Product Costing requires the Period End closing activities to be run for correct results 9 Derivation of Variances Differences in Plan Costs and Actual Cost are Variances 1) On completion of Period end activities the Variances are derived. 2) Variances are normally segregated in 1) Price Variance 2) Quantity Variance 3) Costs Variance 4) Scrap Variance 3) Analysis of Variances for corrective actions 10 Benefits of Product Costing Depending upon the organisation the following are main benefits of Product Costing in SAP 1) Correct Valuation of Inventory 2) Product-wise Cost Analysis and Variances 3) Analysis of Cost of Goods Manufactured (COGM) & Cost of Goods Sold (COGS). 4) Analysis of make or buy decisions 5) Periodic analysis of Cost in Repetitive manufacturing scenario. 6) Flow of Values to COPA provide Profitability Analysis of the product General Overview of CO-PA
The Controlling Profitability Analysis (CO-PA) component is a subcomponent of the SAP Controlling (CO) module.
Integrates information coming from different platforms such as Sales and Distribution (SD), Materials Management (MM), Financials (FI), CO, Production (PP), and others. Characteristics in CO-PA
The characteristics in Profitability Analysis represent those criteria according to which we analyze our operating results, sales and profit.
Characteristics can be described as Customer, Customer group, Billing type, Division, Plant, Product, Material group etc.
These characteristics can be used to limit the data extraction with the definition of profitability segments or market segments. Value fields in CO-PA
These are the fields that contain the currency amounts and quantities that you want to analyze in CO-PA.
They represent the structure of your costs and revenues.
Value field are such as Sales Quantity, Sales Value, Discount, Raw material costs, BOC costs, paint cost, freight cost, packing cost etc. Segment
Combination of characteristics is called Segment Data flow in COPA Flow of Actual in Profitability Analysis
Overview
Flow from the Sales and Distribution (SD) Module Flow from Billing Document
Flow from the FI/MM direct postings General Ledger Posting MM Postings
Flow from the Product Costing Settlement of Production Variances to PA Sales Data flow Plan and actual sales data can be maintained in COPA. Sales Plan can be uploaded to compare with the actual and analysis of variances. Actual values of Sales order ,delivery, billing and accounting simultaneously flows to COPA. Condition types in the billing documents are mapped to the value fields.
Sales Data flow Sales Data flow Finance Data flow Derivation of documents on actual posting Finance values simultaneously flow to COPA FI structure is maintained for flow of finance values direct to COPA. General Ledger Values are mapped with the value fields in COPA. Finance values at profit center level can be distributed to other characteristics of such profit center. Cost Data flow Cost Data flow Cost Data flow Standard cost estimates of the product flows to COPA with the billing documents. Values of Cost component structure are mapped with the value fields. Costs of Product as per cost component structure can be analyzed against the sales value.
Cost Data flow Production variances flow
Production variances values can flow to COPA.
Production orders or Product cost collectors order type profile should be assigned with settlement profile having variances settled to COPA.
PA structure is maintained with the variances assigned to value fields. Production variances flow Production variances flow Summary of Flow of Data to COPA Profitability Reports
Only customized reports are maintained in COPA.
No standard reports are available.
Report painter reports are maintained for profitability analysis.
Profitability Reports Reports can be two types Basic reports Maintained for line items drill-down No restriction can be maintained at line item level Plan line items cannot be derived Filters cannot be instituted
Form based reports Maintained with the structure of form Restrict the values in the form as per the requirement. Plan and actual values can be reflected Profitability Reports Basic report based on line items
Profitability Reports Form based reports Benefits of COPA Reports Profitability Analysis allows users to display Sales and Profitability reports based on different characteristics and key figures
Sales and Cost can be analyzed as per Products Characteristic At Plant Level At Material Group Level At Division Level At Product Level
Sales and Cost can be analyzed as per Customer Characteristics At Sales Organization Level At Sales Region Level At Distribution channel Level At Customer Group Level At Customer Level
Combination of Products and Customer characteristics Benefits of COPA Reports Benefits of COPA Reports
Working Together for a Better Business Performance Thank you