Cost Center Concept & Config

8/9/2019 Cost Center Concept & Config

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verhead Cost Controlling


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Objectives

To gain understanding of key business processes of SAP Overhead

Cost Management (OCM)


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SAP verview

SAP Overhead Cost Management


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SAP Modules - Overview

Sales !istribution

SD

MM

PP

QM

PM

HR

FI

CO

AM

PS

OC

IS

MaterialsMgmt"

Product

Planning

#ualityMgmt"

Plant Maint"

$uman%esources

&inancialAccounting

Controlling

&i'ed Asset

Mgmt"

ProectSystem

Office Comm"

ndustrySolutions

SAP R/3

OverheadCost

Management


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Correlations in Accounting

SAP SEM / SAP BW

Docment Data!ase

Conso"#dat#on

$endor

Cstomer

Hman

Resorces

F#%ed

Assets

Mater#a"

S!s#d#ar&'edger General

Ledger

Cash Management Cash management

(os#t#on '#)#d#t& *orecast

S(ec#a" Pr(ose

'edger S(ec#a" eva"at#ons Para""e" re(ort#ng +o#nt $entre

Accont#ng

Contro""#ng Cost center

Interna" order Pro,ect s&stem Pro*#ta!#"#t& ana"&s#s Pro*#t Center

Accont#ng


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C Components

Pro*#ta!#"#t& Ana"&s#s

Pro*#ta!#"#t& Ana"&s#s

Pro*#tCenterAc

cont#n

g

Hman

Resorces

F#nanc#a"

Accont#ng

FI

S-D

Sa"es andMater#a"s

Management

Mater#a"s

Management

COCO

PAPA

COCO

OMOM

ECEC-

PCAPCA

D#str#!t#on

Cost E"ement Accont#ng

COCO

CE'CE'

HR MM SD

F#nanc#a"

Accont#ng

Cost E"ement Accont#ng

Cost centers Interna"orders

Pro*#ta!#"#t&

segment

Asset RevenesE%(ense

Act#v#t&

t&(es

Interna" Orders

Com(an& Code .011 A 'td2 11 A0 'td4

O(erat#ng concern .011 5 A gro(4

Overhead Cost Contro""#ng Prodct Cost

Contro""#ng

Standard

Cost Est#mate

CO Prodct#on

Order

Contro""#ng area .011 5 A gro(4


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verhead Cost Management

The Overhead Cost Controlling component (CO*OM) helps you to

plan+ allocate+ control+ and monitor overhead in your organi,ation -y planning in overhead areas+ you can develop standards+ that allo.

you to control costs and valuate internal activities"

Cost Centre Accounting

Cost Center Accounting analy,es .here overhead occurs .ithin the

organi,ationCosts are assigned to the sub*areas of the organi,ation .here they originated"

SAP offers a .ide variety of methods for allocating posted amounts and

/uantities"

nternal Order Accounting

nternal Orders collect and analy,e costs based on individual internal obs"

SAP can monitor and automatically check budgets assigned to each ob"


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verhead Cost Management

Cost E"ement Accont#ng Cost Center Accont#ng

nternal Orders

Cost E"ements

Reconc#"at#on 6#th FI

H#erarch#es

Cost Centers

Stat7 8e& F#gres

Act#v#t& 9&(es

Interna" Orders

Orders

Resorce P"ann#ng

M"t#("e Crrenc&

M"t#("e $a"at#on

Ana"&:e o* P"an/

9arget/Acta" Costs


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CM Processes



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CM Process verview

Process decompositions are the starting

point for process documentation" They summarise .hat is involved in the

OCM process at a high level

PlanningMaster

Data

Cost CentreAccounting

Actual

Posting

Period End

Closing

Reporting

Controlling


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PlanningMaster

Data

Actual

Posting

Period End

Closing

Reporting

CM Processes

Planningpreparation

Cost CentrePlanning

nternal OrderPlanning

Plan costdistribution

Plan costassessment

Plan directactivity allocation

Plan indirect

activity allocation Plan settlement

of overhead costorders

Other planningactivities

%eposting Actual Cost

distribution Actual Cost

Assessment Cost Splitting Calculate Actual

Activity Prices Settlement of

Overhead Orders Manual Cost

Allocation &CO

%econciliation

Cost 0lement Cost Centre Activity Type %esource

Statistical 1ey&igures nternal order 2roups

Manual entries S1& entry !irect activity

allocation

ndirect activityallocation Order budget


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Master Data



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rganiational !nits " Master Data

A0 'td

11

A 'td

011

HQ

0111

Cost Centers Prchas#ng03;


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Cost #lement

!escriptionA cost element classifies the organi,ation3s valuated

consumption of production factors .ithin a controlling area

Pr#mar& E"ement* costs that originate outside the

company4 relate directly to the income statement in & and

must be included in the & Chart of Accounts

Secondar& E"ement* costs that result from internal

allocation activities4 5O relation to 267 accounts in &"

These accounts are e'clusively for cost accounting and are

only maintained in CO


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F#nanc#a"

Accont#ng


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Cost Centre

!escription Organi,ational unit .ithin a controlling area that represents

a defined location of cost incurrence" The definition can bebased on8

&unctional re/uirements

Allocation criteriaPhysical location

%esponsibility for costs !efines the smallest area of responsibility .ithin the

company that causes and influences costs4 the lo.est levelto .hich you can meaningfully assign direct and indirectcosts


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Cost Centre Standard $ierarch%

%%10 Prodct#on

%%1 Ma#ntenance

%%13 t#"#t#es

%%1= 5 Eng#neer#ng - Pro,ects

%%1? 5 Qa"#t& Assrance

%%1@ 5 Prodct#on P"ann#ng

%%1 5 Prodct#on Hand"#ng

%%1 5Warehos#ng - Storage

%%1 5E%ect#ve O**#ce

%%01 F#nance

%%00 5 Hman Resorces

%%0 5 In*ormat#on 9echno"og&%%03 Prchas#ng

%%0= 5 et#ng

%%0 5 Research - 9echno"og&

%%0 5 Com(an&


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Activit% &%pe

!escription 9nit in a controlling area that classifies the activities performed in a cost

centre+ e"g" maintenance hours for a maintenance cost centre

9sed in activity allocation process


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Statistical 'e% (igure

!escription 9sed to track /uantities and values for various operating activities

!esigned to be used in reporting and analysis

9sed to assist in the allocation of costs throughout the OCM

environment


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)nternal rder

!escription 9sed to plan+ collect and settle the costs of internal obs and tasks"

nternal orders are categori,ed as either8

Orders used purely to monitor obects .ithin Cost Accounting (such as

advertising+ training+ or trade fair orders) and

Productive orders that are value*added+ that is+ orders that can be

capitali,ed (such as in*house construction of an assembly line)"


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Groups

!escriptionOCM master data can be grouped together+ for e'ample

Cost Centre 2roups

Cost 0lement 2roups

Activity Type 2roups

Statistical 1ey &igure groups

nternal Order 2roups

Master data groups are used in reporting+ planning+allocation+ etc"

:ou can divide comple' groups into manageable sections

by separating them into sub*groups :ou can create and maintain sub*groups separately and

then combine them in larger groups


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Actual Posting



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Manual #ntries

!escription Actual cost entry enables you to monitor and trace costs incurred by

your company as they arise" This allo.s you to identify variances

/uickly and take appropriate action to deal .ith them"

Actual cost entry involves transferring the (r#mar& costsrecorded in

&inancial Accounting (&) to the Controlling (CO) application

component" n the CO component+ this transfer occurs real*time from

the components &+ MM+ and AM+ .hereby a cost accounting obect is

recorded during account assignment

Process

ncorporated into other processes+ e"g" & ;ournal 0ntry+ 2oods ssue+etc


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Manual #ntries

Primary postings include the follo.ing transactions

Payroll Material 9sage

Travel

Purchase %e/uisition 6 Purchase Order 6 2oods %eceipt 6 nvoice

nter 6 ntra Accounting ;ournals

!epreciation


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Manual #ntries

SAP SEM / SAP BW

Docment Data!ase

Conso"#dat#on

$endor

Cstomer

Hman

Resorces

F#%ed

Assets

Mater#a"

S!s#d#ar&'edger General

Ledger

Cash Management Cash management

(os#t#on '#)#d#t& *orecast

S(ec#a" Pr(ose

'edger S(ec#a" eva"at#ons Para""e" re(ort#ng +o#nt $entre

Accont#ng

Contro""#ng Cost center Interna" order Pro,ect s&stem Pro*#ta!#"#t& ana"&s#s Pro*#t Center

Accont#ng


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Statistical 'e% (igure #ntr%

S1&


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Direct Activit% Allocation

!escription !irect activity allocation involves the measuring+ recording+ and

allocating of business services performed Activity types are used as the cost drivers Activity allocation occurs+ for e'ample+ .hen business transactions are

confirmed or .hen posting activity /uantities to accounts+ eg Plant

Maintenance $our+ Production $ours+ 9tilities+ etc The system multiplies the activity produced by the price of the activity

type" Activity types are planned using prices set manually or using SAP


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)ndirect Activit% Allocation

!escription AA is a method of allocating actual and plan costs using activity

/uantities as the basis" AA is e'tremely beneficial .hen calculating the

activity /uantities on the sender involves too much time or e'pense"

The value can be calculated inversely based on the activity /uantities

actually consumed or planned on the receivers


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)nternal rder *udgets

!escription The budget is the approved cost limit for an internal order

The budget is the limit set by management for internal order costs over

a certain period of time

-udgets have the follo.ing components

Original -udget

Supplements

%eturns

Transfers


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Period #nd Closing



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+eposting

:ou can repost primary costs manually using transaction*based

repostings+ .hereby the original cost element is al.ays retained" Thisfunction is designed mainly to adust posting errors"

:ou should al.ays adust posting errors in the application component

.here they occurred" This ensures that & and CO are al.ays

reconciled

:ou can only adust posting errors involving one cost accounting obect(a cost center or internal order for e'ample) using a transaction*based

reposting in Controlling (CO)"


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Prodct Cost#ng

Pro,ect

A group Allocation Model

Cost Centre Accont#ng

Com(an&


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Allocations - Description

T.o types of allocations8

!istribution

The follo.ing information is passed on to the receivers8

The original+ primary+ cost element is retained"

Sender and receiver information is documented .ith line items in

the CO documentAssessment

The follo.ing information is passed on to the receivers8

The original cost elements are grouped together into assessment

cost elements (secondary cost elements)" The original cost

elements are not displayed on the receivers"

Sender and receiver information is displayed in the CO document


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Distribution

Com(an&


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Assessment

Com(an&


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Cost Splitting

Actual cost splitting makes it possible to divide costs into fi'ed and

variable portions The actual costs are split in t.o stages8

n the first splitting step+ the system distributes actual costs by cost

element to the activity types based on the target costs or target

/uantities

n the second splitting step+ the actual costs are distributed on theactivity types according to splitting rules" f you have not defined

any splitting rules for a cost center+ the system splits actual costs

based on the e/uivalence numbers for the activity types"

t is only in this .ay that you can compare the actual costs .ith the

target costs of the activity types and display the variances by activitytype"


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Calculate Actual Activit% Prices

!uring actual price calculation+ the system calculates iterative prices for

activity types or business processes based on actual costs and actualactivities" The calculation takes into account all activity e'changesbet.een cost centres or business processes"

Price calculation+ .hich you can carry out during planning+ is based onplanned costs and activity" The resulting prices are used to valuateactual activity"

After running actual price calculation+ you can choose to revalue actualactivity at actual prices" This revaluates the activity using the differencebet.een plan and actual prices" -y revaluing the actual activity .ithactual prices+ you can fully balance sender cost centres and senderbusiness processes"


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Settlement o, verhead Cost rders

Some or all of the plan and actual costs incurred on an obect are

allocated to one or more receivers" System automatically generates offsetting entries to credit the sender

obect" The debit postings assigned to a sender obect remain in placeeven after settlement to a receiver

T.o types8 Periodic = 0very period

&ull = After completion

T.o methods8 ndividual

-y individual sender obect

Allo.s to analy,e in greater detail

CollectiveProcesses a large number of sender obects

9sed during period*end closing activities


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F#%ed Asset

Settlement o, verhead Cost rders

Overhead Cost Order

Mater#a"s 011

Sta** Sa"ar#es 11

Rent - Rates

$eh#c"es

Re(a#rs

9rave""#ng 1

Hote"s 31

Com(an&


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Manual Cost Allocation

Manual cost allocation involves posting secondary costs manually" The

system credits a sender obect (for e'ample+ a cost center) and debits areceiver obect (for e'ample+ an order)

:ou can use manual allocation to8

Avoid the need for complicated Customi,ing settings for simple

allocations

Manually transfer e'ternal data Make simple adustments to incorrect secondary postings"


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()C +econciliation

The reconciliation ledger is a tool used to portray transaction figures in

Controlling in a summari,ed form t provides reports .ith .hich you can monitor the CO6& reconciliation

for each account

t can determine and display value flo.s that .ere posted in CO across

company codes and functional areas

0ach company code in & represents an independent accounting unitfor .hich a balance sheet must be created" !ata flo.s bet.een

company codes must be posted separately so that no information is

lost" These boundaries are not relevant for Controlling (CO)"

:ou can use reconciliation postings to transfer cross*company code+ or

cross*functional area postings made in CO that are relevant to &+ andto automatically create reconciliation postings there


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Month.ear end Closing - Process Map/012

SAP 0nabled

Processes

0lectronic

ProcessesSAP +o! Ro"e

Adustnventory >

27 !oc" entry

9

%evie. correct

bil ling errors

3

%elease the

payroll

*?

0nsure payroll

Are posted

27 n/uiry

4

0nsure settlement depreciation

Are posted%un !epreciation

Close the period

for AP A%

Close PostingPeriod

0nter ournalvoucher >

27 !oc" entry

8 10 00Close the period

for MM

Close PostingPeriod

7

AP !isbursement

*@

Cash Out*

&i'ed AssetB-S Settlement

*

&i'ed Asset

%un !epreciation

*@D

Send the monthly

Schedule manager7ogistics

1

Ackno.ledgeSchedule manager

TreasuryactivitiesTreasury

@SimultaneousCosting >

7ogistics

?


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Month.ear end Closing - Process Map/112

SAP 0nabled

Processes

0lectronic

ProcessesSAP +o! Ro"e

0'ecute

Assessment

CycleAllocations

21

%un the

%econciliation7edger

%ec" CO .ith &

22

&inal Close

Of 27Close Posting

Period

23

2eneratedfinancial reports

27 %eporting

24

TemporallyClose 27

Close PostingPeriod

17

End

%un the foreign

Currency valuation >

27 PeriodicProcessing

Complete the

electronic bank

reconciliation >

Carryfor.ard

balances >

Periodic Pro"

0? 0@

?

2enerate a

Preliminary

financial report27 %eporting

18

9pdate materials

prices >Pricing

0=!etermine the7o.est value

Principle >Pricing

13

Product Costing >7ogistics

Material 7edger6Actual Costing >

7ogistics

19 20

Close thePeriod for &A

Close PostingPeriod

12


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+eporting



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CM +eporting

Comprehensive+ fle'ible information system to analy,e cost flo.s

Carry out standard recurring evaluations Construct special reports for uni/ue situations

Analyse all costs online and trace them right back to the original

document

0'ecute all reports available online in background runs as .ell (helpful

for large amounts of data)

&or hierarchically grouped obects+ such as cost centers+ you can

create separate reports for all hierarchy nodes and individual obects+ or

you can create all the relevant reports in a single selection run through

the database

The second option allo.s you to navigate .ithin a hierarchy" This

enables particularly fle'ible monitoring of cost center areas


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CM +eporting

ABAP '#stv#e6erRe(ort#ng

CO Smmar#:at#onRe(ort#ng

Formatted Re(ort#ng6#th Re(ortWr#ter

Dr#"" Do6n Re(ort#ng

9arget/Acta" Com(ar#sons2$ar#ances

S((ort o* the P"ann#ng Process

Assessment C&c"es2 9arget Costs

Reconc#"#at#on Re(orts to "oo>*or Post#ng Anoma"#es

Standard#:ed / F"e%#!"e CostAna"&s#s o* Cost O!,ects

Chec> o* Data Cons#stenc&

R/3Re(ort#ng*or OCM

9oo" O**ers Set o*


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CM +eporting Menu Path 3


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CM Sample +eport Selection Criteria 3


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+oles



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CM +oles

Master !ata Management

Master data role is assigned to an individual .ho is responsible for changesand maintenance of OCM master data" This role is to be centrali,ed" OCM

Master !ata are8

Cost Center and 2roups

Cost 0lements and 2roups

nternal Orders Maintenance

nternal order maintenance is assigned to an individual .ho is responsible

for creation+ changes and maintenance of internal order status


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CM +oles continued 3

Plan Settings

Plan setting maintenance is assigned to senior individual .ho isresponsible for redefinition of plan version+ maintain distribution keys etc

Primary Cost Planning

Primary cost planning is assigned to an individual .ho is responsible for

planning primary cost+ copy from plan and actual+ plan transfer from other

modules and plan revaluation Secondary Cost Planning

Secondary cost planning is assigned to an individual .ho is responsible for

planning cost allocation

nternal Order -udget Maintenance

Order budget maintain is assigned to an individual .ho is responsible forthe maintenance of ne. budget in*out+ supplement" Transfer from other

modules and plan revaluation


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CM +oles

Actual Postings

Actual posting is assigned to individual .ho is responsible for the actualS1& data entry+ posting manual entries+ direct6indirect activity allocation

and reservations

Allocation Settings Maintenance

$igh level of individual .ho decide to Create or change allocation cycles in

the system*Configuration process Period 6 :ear 0nd Closing

Period*end closing is assigned to individual .ho is responsible for carry on

necessary cost reposting+ distribution+ allocation+ settlement+ &6CO

reconciliation and period look

%eporting !isplay

%eporting is assigned to an individual .ho is trained to access+ use+ and

interpret OCM reports


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CM +ole to Process Mapping

Process

Ro"e

MasterData

P"ann#ng Acta"Post#ng

Per#od EndC"os#ng

Re(ort#ng

Master Data Ma#ntenance

Interna" Order Ma#ntenance

P"an Sett#ngs

Pr#mar& Cost P"ann#ng

Secondar& Cost P"ann#ng

Interna" Order BdgetMa#ntenance

Acta" Post#ngs

A""ocat#on Sett#ng Ma#ntenance

Per#od / ear End Re(ort#ng

Re(ort#ng D#s("a&

Cost Center Concept & Config

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Transcript of Cost Center Concept & Config