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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 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 also assess or distribute data from the dummy profit center to the desired profit centers. Create a std hierarchy for the profit centers
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.
Cost Element Accounting is the area of cost accounting where you track and structure the costs incurred during a settlement period.
Cost elements classify an organizations valuated consumption of production factors within a controlling area. A cost element corresponds to a cost-relevant item in the chart of accounts.
Secondary cost elements can only be created and administrated in cost accounting (CO). They portray internal value flows, such as those found in internal activity allocation, overhead calculations and settlement transactions.
Examples of secondary cost elements include: Assessment cost elements Cost elements for Internal Activity Allocation Cost elements for Order Settlement
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. Cost element category 11 revenues and cost ele cat 12 sales deductions can be only transferred from SD condition type to copa Cost element category 43 Internal activity allocation where you allocate costs to other cost objects like cost centers using assessments and distribution Cost ele Cat 42 Assessment cost element used for assessment cycle Cost element - 21 - Internal settlement cost Cost element - 41 Overheads cost ex : production OH, Material OH, Labour OH Cost element -31 order /project related analysis Example : WIP direct cost/ WIP OH cost / WIP target or actual cost
COST elementt GROUP We can also use cost element groups whenever you want to process several cost elements in one transaction. For example, in cost center planning, distribution or assessment.
Create cost element group structure The similar cost elements belonging for ex Production cost group: under it COGS , stock transfer, inverntory, material scrapping, raw mat consumption etc are grouped
ASSESSMENT Assessment is a method of allocating/transferring primary and secondary costs in Cost Center Accounting and Activity-Based Costing, Assessment is a method of transferring internal cost by which you allocate (transfer) the costs of a sender cost center to receiver CO objects (orders, other cost centers, and so on) under an assessment cost element. The method works according to the keys defined by the user Ex: You can assess the costs from the cost center "Cafeteria" to receiver cost centers in proportion to the statistical key figure "employees" for each cost center.
DISTRIBUTION Distribution is used to allocate the primary costs of a cost center. The following information is passed on to the receivers: The original cost element (that is, the primary cost element) is retained. Sender and receiver information (for example, the identities of the sender and receiver cost center/business process) is documented using line items in the CO document
. Cost Center Accounting lets you analyze the overhead costs according to where they were incurred within the organization If you want to assign overhead costs accurately to individual products, services, or market segments, you need to further allocate the costs to those cost centers directly involved in the creation of the products or services. From these cost centers you can then use different methods to assign the activities and costs to the relevant products, services, and market segments. You can use the methods of activity allocation, assessment or distribution to further allocate costs, for example, to internal orders (CO-OM-OPA), projects (PS), cost objects (CO-PC) or market segments (CO-PA).
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. 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. 2. 3. 4. 5. 6.
Planned Primary cost Planned Secondary Cost Planned Revenues Actual Primary Cost Actual Secondary Cost Actual revenue
7. Commitment Items
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.
, SKF Statistical key figures are used as an allocation base and to determine the operation rate of a cost center
You can use them as the basis for internal allocations, such as Distribution and Assessment.
You can define statistical key figures as either: Fixed values Totals values
Example: The statistical key figure Employees is defined as a fixed value. In period 1 of the fiscal year, you post 10 Employees on cost center 4100. The system then automatically posts 10 employees in periods 2 through 12. 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 1000 Telephone units on cost center 4100. The system posts 1000 telephone units in period 01 only.
Activity type describes and classifies the activities performed or produced by cost center. These activities are recorded in the form of activity, quantity, which is 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 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
Activity Category Activity type category 1: (Manual entry, manual allocation) you plan activity quantities manually for activity types in this category
Activity type category 2: (Indirect calculation, indirect allocation you plan activity types on the sender cost center
Activity type category 3: (Manual entry, indirect allocation) choose Actual postings activities. You cannot enter receiver objects here. Activity type category 5: (Calculation and allocation through target=actual activity allocation)
The Price indicator determines how the price of a business process or an activity type is calculated for a cost center.
COST CENTER PLANNING Cost center planning involves entering plan figures for costs, activities, prices or statistical key figures for a particular cost center and a particular planning period Cost center planning is divided into the following planning areas: Cost elements/activity input o Primary costs o Secondary costs
SKF -=Planning T-code - KP46 Use planning layout 1 - 301 for activity-independent planning, and Planning layout 1 - 302 for activity-dependent planning
ACTIVITY OUTPUT OR PRICES PLANNING Transaction Code: KP26 Same like SKF activity price planning is done at Cost center level with plan activity, capacity, fixed price and variable price
Activity-Independent and Activity-Dependent Cost Planning Activity-independent cost planning covers both primary and secondary costs, but does not refer to a specific activity type. The opposite of this is activity-dependent planning Activity-dependent planning of primary and secondary costs enables you to plan both fixed and variable costs. You may require this functionality if your costing system uses flexible standard costing based on marginal costs. ACTIVITY DEPENDENT ACTIVITY INPUT PLANNING Transaction Code: KP06
layout to 1-102
Note in KP46 you plan each SKF on each cost center that is for each SKF for example number of employee in cost center 1200 you will maintain 100 In KP26 you plan activity output or price planning i.e. for each activity defined in activity master data KL01 , you will plan the activity quantity and capacity qty then you will enter a fixed price and variable price per quantity
In KP06 you will determine the activity dependent activity input planning You will give values for receiving cost center, receiving activity type, and in particular sender cost center & sender activity type
You will have the below screen with receiving activity type the sender cost center with plan fixed consumption an d plan var consumption
ACTIVITY INPUT ACTIVITY INDEPENDENT PLANNING T-code KP06 Layout 1- 102 Here in activity independent planning we will not give the receiving activity type as above and we will give only the receiving cost center then sending cost center and sending activity type but not the receiving activity type
EXECUTE PLAN RECONCILICATION OF ACTIVITES KPSI Initially we have planned about 30 activities but during activity dependent and activity independent planning we included more activity planning to correct this we use reconciliation
Distribution Method of Allocation of the Primary Cost Transaction Code: KSV9 Create cycle and attach segments
Same like this attach segments for rent, telephone, canteen etc
The calculates the planned prices with respect to cost center and activity type
Define Cycle for Indirect Activity Allocation Path: AccountingControllingCost Center AccountingPlanning S_ALR_87005471 - Define Indirect Activity Allocation Current Settings
SPLITTING
In every cost center we may have activity dependent cost or activity independent cost. If the cost center has multiple activities, the activity independent cost should be distributed among the activities by specifying same distribution rule if no distribution rule is specified in the system, then split the activity independent cost equally among the activity.
BUDGETTING COST CENTERS Cost center budgeting provides a further method of planning in addition to primary cost and secondary cost planning. This tool enables you to carry out a comparison between actual postings and plan budgets Before you can plan your budget, you must create a budget profile during Create Budgeting Profile Transaction Code: OKF1
Enter values for all the cost centers for the fiscal yr
REPOST line item Transaction Code: KB61 Enter In the above screen 150000 is the amount posted to 1110 cost center. If we need to repost of that amount to other cost center that means out of 150000 you want to post 50000 to other cost center like 1200 so for that do as follow:
Sender activity : KB51N Enter (INDIRECT activity allocation) you only enter sending cost center sending activity type and total qty, the receiving cost center or activity types will be determined in the IAA cycle KSC5
Here you enter actual prove above you entered plan price Actual Price: you specify the fixed and variable price for each activity in each cost center Transaction Code: KBK6 Enter
Entering Actual Statistical Key Figures for all cost centers Transaction Code: KB31 Enter
Define Assessment Cycle for Assessment Method The main difference between Assessment cycle and Distribution cycle is - in case of Assessment we use secondary cost element. In Assessment all the postings will be made using Assessment Cost Element - which is secondary cost element You will require a secondary cost element, sometimes also called as assessment cost element to settle your Internal Order to Cost center. Under such circumstance, distribution will not be helpful
Sender receivers note in sender you will give the CC and CE but in receiver you will only give CC
In receiver tracing factor give the SKF relevant and ATTACH AS MANY SEGMENTS AS REQUIRED
Indirect Activity Allocation cycle for actual cost Path: AccountingControllingCost Center AccountingPeriod-End Closing Current Settings S_ALR_87005792 - Define Indirect Activity Allocation
Executive the above allocation Transaction Code: KSC5 - Indirect Activity Allocation
Actual splitting cost Transaction Code: KSS2 Splitting for cost center
Internal order Internal orders are used to plan, collect, analyze and monitor the cost of a specific job of cost. This can be used for collection of cost or revenue information for: Internal order may be settled either internally or externally. Internal orders are classified by internal order types. Internal order types are categorized by internal order categories. Orders used only for monitoring objects in Cost Accounting (such as, advertising or trade fair orders) Productive orders that are value-added, that is, orders that can be capitalized (such as in-house construction of an assembly line AUC Internal order planning enables you to roughly estimate the costs of a job before the order starts and to make an exact calculation at a later date. You can choose between various planning approaches to compare the effectiveness of different methods. You can assign and manage budgets for internal orders. Order settlement enables you to transfer the costs incurred by an order to the appropriate receivers. Defining Internal Order Types Order type 1 is internal order Transaction code: OKT2
Maintain no range
Maintain Settlement
Define Tolerance Limits for Availability Control Availability Control: The real time checking of the availability of funds, in order to identify possible budget under runs or overruns when funds are being committed. You configure availability control for each budget profile Transaction code: OKOC
In the above screen enter the text and other parameters as you required and go to tab Prd-end closing It will as below maintain settlement cost element and cost center
Now in control data tab change the system status In the below screen your System Status should be REL SFMT.
Internal order planning You can only use integrated planning for Internal Orders with Cost Center Accounting or Activity Based Costing, if the internal order already exists at the time of cost center or business process planning. You cannot lock the plan version.
If you activate integrated planning with Profit Center Accounting and the Extended General Ledger, the system transfers planning data for internal orders and Cost Center Accounting to Profit Center Accounting and the Extended General Ledger.
In the above give the version 0 plan/actual then period and fiscal yr, Also enter IO and Cost element For Io 90001 enter plan cost
Budgeting for orders The budget is the approved cost structure for an internal order or an order group. In contrast to planning, budget management is binding. In the planning phase you need to estimate costs, whereas during the approval phase, funds are prescribed by the budget Path: AccountingControllingInternal Orders Budgeting Original Budget KO22 ChangeTransaction Code: KO22
for
Internal
Post to G/L account for expenses using 900001 IO and also raise a SO using IO 900002 , now run the IO report to see the Order balance