The system generates a document number for each business transaction. Business transactions are classified according to CO transactions. This means that you must assign each transaction to a number range interval.
It is also possible to define multiple business transactions in one number range interval. The Controlling component provides a large number of transactions for each controlling area. Now pres on button which appears at top of the screen. So your all number range objects will assign to your number range as follow: 13 It will display following screen: 14 It will display another window click on. A profit center represents an organizational subunit that operates independently on the market and bears responsibility for its own costs and revenues.
You organize your organization into profit centers by assigning the master data of each profit-relevant objects materials, cost centers, orders, projects, sales orders, assets, cost objects, and profitability segments to a profit center.
All the business transactions in the SAP system which are relevant for costs and profits are updated in the profit centers at the same time they are processed in the original module, and organized according to cost and revenue elements. This transforms all the flows of goods and services within the company into exchanges of goods and services between profit centers. This profit center structure applies for both actual postings and profit center plan data.
A profit center is an organizational unit in accounting that reflects a management-oriented structure of the organization for the purpose of internal control. You can analyze operating results for profit centers using either the cost-of-sales or the period accounting approach.
Profit center Accounting at the profit center level is based on costs and revenues. These are assigned statistically by multiple parallel updating to all logistical activities and other allocations of relevance for a profit center. Every profit center is assigned to the organizational unit controlling area. Click on IM Activity , 19 Create Dummy Profit Center The dummy profit center is the default profit center to which data is posted when the corresponding object has not been assigned to a profit center.
You can find out which objects are not assigned to profit centers by analyzing the postings assigned to the profit center. You can also assess or distribute data from the dummy profit center to the desired profit centers. It may happen that some objects in your system are inadvertently left without an assignment to a profit center.
In this case, postings to accounts which are defined as revenue or cost elements are assigned to the dummy profit center of the controlling area to which the object posted to belongs. This ensures that your internal and financial accounting data are reconciled. You should not assign data intentionally to your dummy profit center for the purpose of allocating it later. If desired, define a separate "allocation profit center" for this purpose.
Type number as Dummy Profit center and click on Basic Data or pres enter key. Maintain above parameters. Define Profit Center The essential difference between a profit center and a business area is that profit centers are used for internal control, while business areas are more geared toward an external viewpoint. The profit center differs from a cost center in that cost centers merely represent the units in which capacity costs arise, whereas the person in charge of the profit center is responsible for its balance of costs and revenues.
In Profit center field any number and click on Master Data button, it will take to following screen: 22 So it will save automatically. Note: like above process you can create any number of profit centers as per client or project requirement. Scenario in General Ledger Accounting The scenario combines Customizing settings from different business views. In these Customizing settings, you specify which posting data is transferred from different application components in General Ledger accounting, such as cost center update or profit center update.
For each scenario, the system transfers the posting data relevant for General Ledger Accounting from the actual and plan documents. The Functional Area field is not filled automatically by the assignment of the scenario to your ledger. It is thus not an accounting system as such, but rather a detailed recording of data that forms the basis for cost accounting.
In an integrated accounting system such as the SAP system, you do not need to enter cost data separately. This is because each business transaction that involves costs updates the CO component with detailed information on the cost element and on the account assignment object itself.
A cost element corresponds to a cost-relevant item in the chart of accounts. We distinguish between primary cost and revenue elements and secondary cost elements. They portray internal value flows, such as those found in internal activity allocation, overhead calculations and settlement transactions. When you create a secondary cost element, the SAP System checks whether a corresponding account already exists in Financial Accounting.
If one exists, you can not create the secondary cost element in cost accounting. This is because the SAP System is structured as an Integrated Accounting System: Cost elements document which costs differentiated by category are incurred within a settlement period, and in which amount.
They provide information concerning the value flow and the value consumption within the organization. Each posting to an account that is also a cost element, is assigned either to a cost center or order. The following section describes how you can subdivide and characterize cost elements in the SAP System. In the next screen click on.
Change this as follow: 31 Change this as follow: 32 Change this as follow: 33 Change this as follow: 34 Change this as follow: Pres enter it will display following window: Now click on save button so it save the activity and com back to previous screen. Change this as follow: Pres enter it will display following window: 42 Change this as follow: Pres enter it will display following window: 43 Change this as follow: 44 Change this as follow: 45 Change this as follow: 46 Change this as follow: 47 Click on back button to go back to SPRO screen.
Creation of Cost Element Group You can collect cost elements with similar characteristics in cost element groups. The following graphic shows an example of a cost element group.
We can use cost element groups in the information system, for example. You can use the cost element group structure to define the row structure of your reports. Totals are calculated in the report for each node. For example, in cost center planning, distribution or assessment.
Enter into the screen the following screen will display: In the above screen enter Cost Element Group and press enter or click on Hierarchy button , It will take you to following screen: 51 In that small window click on continue button so it will display another window as follow: 53 1. Click on this arrow so it will display a small window.
In this small window click on this continue button Do the same activity for right side box also Click on down arrow button. The costs incurred by your organization should be transparent. This enables you to check the profitability of individual functional areas and provide decision-making data for management. This requires that all costs be assigned according to their source. However, source-related assignment is especially difficult for overhead costs.
Cost Center Accounting lets you analyze the overhead costs according to where they were incurred within the organization. Depending on the level of decision-making powers assigned to the manager of an organizational unit, you can distinguish between various types of responsibility areas within an organization: Cost center Recording costs with reference to plan values Profit centers Calculating operating results Investment centers Calculating Return On Investment In the SAP system you can create an investment center in the Profit Center Accounting component EC-PCA.
You do this by assigning balance sheet items to a profit center. Dividing an organization into cost centers allows you to follow several goals, depending on the cost accounting method.
From these cost centers you can then use different methods to assign the activities and costs to the relevant products, services, and market segments.
Some settings, however, such as chart of accounts, company code, must be made in Financial Accounting. For overhead costs this can be cost centers, internal orders, business processes, or overhead projects. Recording and assigning overhead costs allows you to control costs and prepare information for the subsequent areas of Cost Accounting.
Additional costs and outlay costs are recorded using the accrual method. Allocating actual costs: You can use various methods to further allocate the actual costs you have recorded, according to their source.
The system distinguishes between transaction-based allocations, which occur within one period, and period-based allocations, which occur at period end. Planning activities and costs: You can use planning to define organizational targets and carry out regular cost- effectiveness checks.
Variances can be calculated by comparing the actual costs and activities with the plan values. These variances serve as a control signal, which helps you to correct business processes, when required.
You can plan costs and activities to determine allocation activity prices. Allocating plan costs: All actual allocations that occur for cost centers can also be planned for example, distribution, assessment, indirect activity allocation. Entering plan and actual statistical key figures: Statistical key figures are used as the basis for the indirect allocation methods, as well as for evaluations in the information system for example, employees, telephones.
Activity Accounting: Activity Accounting uses the activity produced by a cost center as the tracing factor for the costs. You can use activities to measure the operating rate or the rate of capacity utilization for a cost center. The target costs of the cost center refer to the activity output. Depending on the source of the costs, the activities of a cost center are divided into various activity types for example, for the Work center cost center: Repair hours or Assembly hours.
You can carry out standard recurring evaluations; and create special reports for unique tasks or situations. Define Cost Center Categories To classify and specify the types of cost center and to control the data flow to the cost centers by cost center category you can maintain the following types of data to cost centers: 1.
Planed Primary cost 2. Planed Secondary Cost 3. Planed Revenues 4. Actual Primary Cost 5. Actual Secondary Cost 6. Actual revenue 7. Commitment Items 8. Functional Area in Formation 9. Now save and back to SPRO screen. Creation of Cost Center Group You can collect cost centers according to various criteria into groups. This enables you to use cost centers to depict the structure of the organization in the SAP System.
You can use the groups to build cost center hierarchies, which summarize the decision-making, responsibility, and control areas according to the particular requirements of the organization. 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 center group is described as the standard hierarchy.
You can assign more cost center groups to the standard hierarchy. You can also create any number of alternative groups. Cost center groups enable you to perform evaluations for each decision- making, responsibility, or control area.
They also support the processes during planning and internal allocations. In the above screen enter other Cost Center Groups and pres save button to save the activity and click on back button to go back to access screen. Type the description and place the curser on the same line 2. Click on this button 3. So it will take you to following screen 61 Immediately after you click on save button it will save and take you to previous screen.
So you can change the Cost Center number and create another one. You assess the costs for the cafeteria to the individual cost centers, based on the number of employees in each cost center.
To do this, you need to enter the number of employees in each cost center as a statistical key figure. In period 1 of the fiscal year, you post 10 Employees on cost center The system then automatically posts 10 employees in periods 2 through In period 6, the number of employees is increased to This means that in period 6, you post 15 Employees on the cost center. The system automatically posts 15 employees in periods 6 through Key figures defined as Totals values are valid only in the posting period in which they are entered.
Example: You define the statistical key figure Telephone units as a totals value. In period 1 of the fiscal year, you post Telephone units on cost center The system posts telephone units in period 01 only. Key Figure number and pres enter or click on Buton. It will take you to following screen: 65 In the same way create moor Statistical key Figure as follow: Stat.
Key Figure Name Stat. Key fig. Value No. These activities are recorded in the form of activity, quantity, which is measured in activity units. Activity types classify the activities produced in the cost centers within a controlling area. To plan and allocate the activities, the system records quantities that are measured in activity units. Activity quantities are valuated using a price allocation price. In Overhead Cost Controlling, costs based on the activity quantity of an activity type are posted separately in fixed and variable portions.
When you divide the activities of a cost center into activity types, you should consider whether the costs can be allocated effectively to the activity types. Prices can be calculated either using plan costs or actual costs.
You can plan, allocate, and control costs either at the activity type level of a cost center, or at the cost center level. You can enter actual costs at the cost center level. Costs entered at the cost center level are assigned using splitting. You can also assign the activity type of a cost center directly. This use was designed for certain application areas such as personnel costs and depreciation postings. When the activities produced by a cost center are used by other cost centers, orders, processes, and so on, this means that the resources of the sending cost center are being used by the other objects.
You can assign one activity type, multiple activity types, or no activity types to a cost center. Examples: Activity types for cost centers are machine hours, administrator hours, CPU minutes or units produced. These activity types are categorized based on the information availability for the purpose of allocation. Indirect Determination, Indirect Allocation 3. So it will take to next screen as follow: Enter the required parameters and save it.
Price indicator Activity Category Activity type category 1: Manual entry, manual allocation you plan activity quantities manually for activity types in this category. You enter actual activity quantities in internal activity allocation, based on business transactions.
Plan activities are allocated using activity input planning on the receivers. It may be necessary to reconcile the plan sender quantities and the plan scheduled activities. Activity type category 2: Indirect calculation, indirect allocation For activity types of this category, you plan activity types on the sender cost center. Activity type category 3: Manual entry, indirect allocation you plan activity quantities manually for activity types in this category.
You cannot enter receiver objects here. The system calculates the activity quantity to be allocated to each receiver, based on the relationship of the tracing factors to all receivers. Manually planned or posted activity quantities are further allocated in full to the receivers. This means that the activity types in the plan are always reconciled following the activity allocation. Activity type category 4: Manual entry, no allocation you plan activity quantities manually for activity types in this category.
You cannot allocate to other objects. Actual allocation requires activity type category 5. Planning requires activity type categories 1, 2, or 3. Category 1 is most commonly used. In activity type maintenance, you have the option of entering separate plan and actual activity type categories.
An actual activity type category is required only if actual allocation varies from plan allocation. Otherwise, the SAP System automatically adopts the plan activity type category in the actual.
Price Indicators The Price indicator determines how the price of a business process or an activity type is calculated for a cost center.
There are two fields: The Price indicator determines the way the system calculates prices for actual values. For actual allocations, you can enter a price indicator different from that in the plan. The fixed portion, however, is based on capacity. This method usually results in an under absorption for the cost center. This is because the cost center is not credited in full for the costs of providing the capacity.
If you activate Purely iterative price in the version, the SAP System calculates a purely iterative price, in addition to the price resulting from planning. Actual Price Calculation: The method used to calculate the prices of planned activities iteratively for combinations of cost center and activity type or for business processes, taking all activities performed for other cost centers or business processes into account. Click here to sign up.
Download Free PDF. C Cab. A short summary of this paper. It can be used for a rest rict ed period w hen execut ing a job, or for long-t erm monit oring of port ions of overhead cost s. Int ernal Orders are company code dependent. Int ernal order groups can be creat ed for cross-company report ing.
Overhead cost orders w ill be used t o collect act ual cost s incurred. This allow s cost s to be monit ored cont inuously. The overhead cost s assigned t o t he overhead cost orders are set tled in full as cost s t o ot her cost collect ors.
This is generally on t he periodic basis, at mont h-end. Int ernal orders plan and monit or t he cost s of a specific job. Internal orders are 4 types 1. Over head orders 2. Profit abilit y orders 3.
Invest ment orders 4. Product ion orders How ever, int ernal order means overhead orders. It deals w it h management of overheads of a job or t ask. This component enables t he organizat ion t o capt ure t he overheads in a Syst emat ic manner relat ing t o a part icular job. There by w e can know t he overall cost of t he job and even profit abilit y of t he part icular job.
This part icular configuration is t he same node w here w e maintain t he cont rolling area. An order t ype is used for st oring various cont rol paramet ers and various default s w hile creat ing an Int ernal Order. The order t ype is client -specific, w hich means t hat every order t ype can be used in all cont rolling areas. A number range is assigned t o t he internal order t ype.
Int ernal order is a cost object t hat t racks t he cost of a specific event. IO has a short life compared t o a cost cent er.
Through real IO, you can t rack t he cost of a part icular event , and at t he end you can set t le t he IO cost to t he respect ive cost cent er. Thus w hile creat ing internal order only t hose fields are displayed and available for input. You can assign a layout t o each order t ype. The syst em displays t he order mast er dat a as a t ab w it h a series of t ab pages.
On t he t ab pages t here are group boxes w it h a series of fields for t he order master dat a. The group boxes are defined by t he syst em.
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