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Very often for any business organization the following questions become very important to be addressed to:

How profitable are my individual market segments ? What is the contribution / margin on each of my products in different markets ? Which are my most profitable customers ? and so on and so forth

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By the end of this course, you should be able to:

Explain how to perform customer and product profitability analysis Describe how to report and analyze business performance Run reports

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 Lesson 1: CO-PA Overview Lesson 2: CO-PA Reports Lesson 3: CO-PA Components Lesson 4: Data Processing in CO-PA

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 Company Code Controlling Area Cost Element Profit Center Operating Concern Profitability Segment

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By the end of this lesson, you should be able to:

Define CO-PA Identify the various steps of CO-PA process Explain the purpose and benefits of CO-PA

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 Sub-component of SAP Controlling (CO) Related to the internal transactions of a company Enables selective extraction and data reporting capabilities on sales and costs Provides static or real-time information

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Sales Distribution

CO-PA
Production Materials Management

Controlling
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CO-PA lets you evaluate market segments -- classified according to products, customers, region or any combination of these -- or strategic business units such as company codes, business areas or profit centers with respect to your companys profit or contribution margin. CO-PA can be implemented in companies in any branch of industry (mechanical engineering, wholesale and retail, chemical, service industries and so on) and with any form of production (repetitive manufacturing, maketo-order manufacturing, process manufacturing). CO-PA calculates profits according to cost-of-sales method of accounting.

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CO-PA helps answer the following questions:

Contribution of individual market segments Gross margin goals of individual S&D units
Who are our largest and fastest growing customers?

Have the sales force achieved their gross margin goals?

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This process provides IGT with better information to support internal accounting and decision-making. Information that can be classified according to: Products, customers, orders or any combination of these Strategic business units, such as sales organizations Profit Centers, with respect to IGTs profit or gross margin

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 CO-PA allows you to analyze the profitability of specific market segments, structured according to products and customers. The data is summarized as per the above characteristics as well as organizational units such as company codes or profit centers. Provides sales, marketing, product management and business planning departments with information to support decision making process.

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CO-PA is a subcomponent of: - SAP CO - SAP PA - SAP MM

CO-PA is a part of the overall Accounting processes in SAP. (True/False)

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You have completed the CO-PA Overview lesson. You should now be able to: Define CO-PA Identify the various steps of CO-PA process Explain the purpose and benefits of CO-PA

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By the end of this lesson, you should be able to:

 

Know where to look for CO-PA Reports Execute CO-PA Reports

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To change between costing based and account based reports, select SAP transaction code KEBC to set the operating concern

Costingbased

Account based

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From KEBC, select Account-Based and go to Transaction code KE30. Here you will see reports that are available. Many have the ability to drill down by ship-to, and profit center.
Report CBCT01 Description IGT Business Area Summary of information available Sales and Gross Margin by AC, WB, PR, TS and other. Sales and Gross margin by sales office. Sales and Gross margin by product hierarchy. Sales and Gross Margin by customer. Customer information.

CBCT02 CBCT03

IGT Sales and GM IGT Product Hierarchy

CBCT04

IGT Customer

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Select Report CBCT01 and click on execute

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The report will provide Sales and Cost of Sales by Business Area. The other fields on the left of the screen provide other views, such as by Ship to or Profit Center

Other fields to view

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To see the line items of the report, at the top of the screen select Goto > Line items

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From KEBC, select Costing-Based and go to Transaction code KE30. Here you will see reports that are available Report
CBCTC1

Description
IGT Product Costs

Summary of information available

Sales and Gross Margin with product cost breakdown Sales and Gross margin by ship-to country Sales and Gross margin customer group. Sales and Gross Margin by sales district. Sales and Gross Margin by plant, product. .

CBCTC2 CBCTC3

IGT Regional-specific IGT Customer-specific

CBCTC4 CBCTC5

IGT Sales-specific IGT Product-specific

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Select Report CBCTC5 and click on execute

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This report will provide Sales and Cost of Sales by Product, Plant and so on. Other fields on the left of the screen provide other views, such as by Product Hierarchy, Profit Center and Material Group

The report output shows on the next page

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Other fields to view

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To see the line items of the report, at the top of the screen select Goto > Line items

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` There is also a line

item report that can be run for both costing and account based CO-PA
` Go to SAP

Costingbased Account based

transaction code KE24 for this report

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By the end of this lesson, you should be able to:

Define the various forms of CO-PA Describe operating concerns and data structures

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The main element in CO-PA is called operating concern, a small group of selected data objects The data objects are extracted from specific SAP tables and that are part of what are called profitability segments Profitability segments can be considered as the link between Profitability Analysis and Profit Center Accounting, establishing the ability for common analysis, reporting, and display environment

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Operating Concern (OC)

It is the highest reporting level in CO-PA. It represents a part of an organization for which sales market is structured in a uniform manner. It is the valuation level for CO-PA. An OC is structured by selecting Characteristics and Value Fields (in case of costing based PA) and GL Accounts (in case of an account based PA). Since the OC reflects structures in the sales market, one OC should normally be sufficient for your entire business.

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When you transfer data to PA, the system derives the appropriate Operating Concern from the Controlling Area, and derives the Controlling Area, in turn, from the Company Code.

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Profitability segments, the account assignment objects for profitability analysis, are unique combinations of characteristic values, which the system creates and numbers automatically from the information in the originating transactions. The definition of a market is configured in the system through the selection of characteristics that are to be the subjects of analyses. Performance figures may either be profit and loss account balances or freely defined value fields. Object within Profitability Analysis to which costs and revenues are assigned.

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 Characteristics are the criteria in COPA according to which you can analyze your operating results and perform differentiated sales and profit planning.

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Value fields are only required in costing-based Profitability Analysis Value fields capture units, revenues, discounts, surcharges, and manufacturing costs in CO-PA

 

They represent the structure of your costs and revenues CO-PA receives value field data through: Automated postings from Sales Distribution (SD) and Material Management (MM) Manual postings in FI (general ledger transactions)

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Profitability Analysis

Costing Based Profitability Analysis

Account Based Profitability Analysis

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Two forms of Profitability Analysis are supported:

Costing Based


Account Based


 

This form of CO-PA groups costs and revenues according to value fields and costing-based valuation approaches. Here the values are stored in the value fields. It guarantees access at all times to a complete, short-term profitability report.

This form of CO-PA is organized in accounts and uses an accountbased valuation approach. Here the values are updated in accounts-the same accounts that are used in FI and the rest of CO.

 The distinguishing characteristic of this form is its use of cost and revenue elements.  It provides a profitability report that is permanently reconciled with financial accounting.

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Timing Updates in CO-PA Element Revenue Sales Discount Freight Cost of goods sold FI Expenses Internal/ Sales Orders MM Variances PP Variances Costing Based Billing Document Billing Document Billing Document Billing Document FI Posting Settlement FI Posting Settlement Account Based Billing Document Billing Document Billing Document Delivery (Goods Issue) FI Posting Settlement FI Posting Settlement

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By the end of this lesson, you should be able to:

` ` `

Describe high-level data-flow process in CO-PA Describe the integration of CO-PA with OTC Discuss direct postings

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Data flow from Sales Order Management to CO-PA

Costing-based
Short-term, up-to-date data Transferred to value fields Reconciliation value fields with accounts Imputed costs

Account-based
As in FI Transferred to cost and revenue elements Reconciled with FI

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Every billing document generated in SD (including credit memos, cancellations) immediately results in a corresponding line item in Profitability Analysis Revenues, Discounts, Accruals are typically transferred SD Condition Type Value Field mapping is maintained in customization Characteristics are deduced from various elements in Billing, as well as derived

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Revenue

Report Product Profitability Cost

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