Controlling Overview

Presented by: Usman Ali Khan

Copyright 2008 AbacusConsulting. All rights reserved.

CO Organization Structure
Operating Concern is the highest reporting level for profitability, sales, marketing and controlling (internal accounting). Controlling Area is an organizational unit that represents a closed system for cost accounting purposes. Profit Center is a management-oriented organizational unit used for internal controlling purposes. Company code is a basic legal entity for which Balance Sheet and P&L Statements are prepared Cost Center is an organizational unit within a controlling area that represents a separate location of where cost is incurred.

Controlling Structure
In this presentation we will have an overview of the following sub-processes under controlling modules and its functions:
Cost Element Accounting Cost Center Accounting Internal Order Accounting Profit Center Accounting Product Cost Controlling Profitability Analysis

The Components of CO
Overhead Cost Controlling Cost and Rev. Element Accounting Cost Center Accounting Internal Order

Product Costing Product Cost Planning Cost Object Controlling

Profitability Management Profitability Analysis Profit Center Accounting

Controlling: Cost Element Accounting

The Cost Element
CO

Primary cost elements Primary cost element P&L accounts Secondary cost elements Internal activity allocation Assessment Internal order settlement

G/L accounts Balance sheet accounts Accounts posted to directly, such as bank accounts Accounts posted to indirectly, such as reconciliation accounts

FI

Expense accounts

Revenue elements Revenue element Sales deduction

Revenue account

Cost Center Hierarchy

Cost Center
Automatically assign simple and complex costs to cost centers and structures
Easily handle complex allocations with secondary cost distributions Allocate costs from payroll, fixed asset accounting and more Structure the organization using cost center hierarchies for reporting purposes

Ensure transparency and clear audit trails Trace all costs from the source event to the final product, segment, or channel assignment

Internal Order Accounting

Improve the accuracy of internal job costing Accurately plan, collect, and settle the cost of internal jobs Monitor internal orders through their entire lifecycle Create initial internal order to cover any internal job Track associated costs through posting Compute final settlement and assign costs to final profitability segment

Profit Center Accounting

Improve insight on the efficiency and profitability of internal areas of responsibility Determine profit and losses for internal areas of responsibility

A profit center is a management - oriented organizational unit for internal controlling purposes.

used

Dividing the company up into profit centers allows you to analyze areas of responsibility and to delegate responsibility to decentralized units as companies within the company. Analyze the profitability of even the smallest unit of responsibility

Improve transparency through drill down into documents from operations

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Product Costing Organizational Structure

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Controlling - Product Costing

Product Cost Controlling: Components (II)
Product Cost Planning Quantity Structure: PP Master Data
BOM Routing

Cost Object Controlling

Preliminary Costing, Simultaneous Costing Planned costs, actual costs
Order Material Labor OH Process Total $ $ $ $ ...

Value Structure Material prices Activity prices Process prices Overhead

Final Costing Period-End Closing Work in process Scrap variances Variances Settlement

Costing: Standard Cost

SAP AG 1999

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Product Cost - Product Cost Estimate

Calculation of the standard cost of semi-finished and finished products

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Product Costing
Planning and monitoring costs on cost objects (such as process orders)

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Product Costing Variance Calculation

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Product Costing
Settlement of production variances to Financial Accounting and

Profitability Analysis

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Structures of CO-PA
An operating concern is the highest reporting level within Organizational Units CO-PA.
Operating Concern ProfitabilitySegment ProfitabilitySegment

Controlling Area

Controlling Area

Company Codes

Company Codes

Company Codes Sales Organization

Plant Distribution Channel Customer Customer

SAP AG 1999

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Definitions
Characteristics
are the criteria in Profitability Analysis (CO-PA) according to which you can analyze your operating results and perform differentiated sales and profit planning.
Decision on what level of analyses should be performed, such as the sales organization, region, product, or customer level

Value fields
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 Decision on which values and key figures should be analyzed, such as revenues, sales deductions, costs, or quantities.
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Flow Of Actual Data - COPA

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Copyright 2008 AbacusConsulting. All rights reserved.