TFIN20_1

Unit 1 - Overview of Management Accounting

General Tasks of Management Accounting
Financial Accounting vs. Management Accounting
SAP
Financial
Supply
Chain
Management
concentrates on functions such as cash management,
treasury management (for instance, funds, foreign
exchange, derivatives, and securities), loans, and market
risk management.
Financial Accounting mainly involves the general
ledger, processing receivables and payables, and asset
accounting.
Investment Management supports planning, investment, and finance processes for capital
investment measures.
Management Accounting offers many tools that can be used to prepare operating data for
business analysis and management decisions.
- Standardized accounting intended for external users is sometimes referred to as
financial accounting. Management accounting generally refers to the non-standardized
accounting approach that supports management decision making.
Management Accounting Architecture
Overhead Cost Controlling (CO-OM) - take costs that
cannot be assigned directly to the goods and services of a
company and allocate them as far as is possible according
to their cause.
Product Cost Controlling takes the costs for producing
goods and services (and, in certain cases, also their sales
revenues) and settles them to financial accounting or to
profitability and sales accounting.
Profitability and sales accounting is used for
enterprise planning. Its main focus, however, is the
determination of the actual business profit and loss. Two
views are always used for this purpose: the external view in the market for analysing
profitability segments (Profitability Analysis) and the internal view of individual parts of the
company responsible for profit (Profit Center Accounting).
Integration Within Management Accounting and with Other SAP Applications

Unit 2 Organizational Units

Components of Management Accounting

The operating concern is the highest reporting level for profitability and sales and
marketing controlling, and the central organizational unit in Profitability Analysis (CO-PA) used
to segment and structure the market.
Controlling areas structure the internal accounting operations of an organization within
Management Accounting. They represent closed units that are used to calculate costs. All
internal allocations relate solely to objects that belong to the same controlling area
Company codes are independent accounting units within Financial Accounting. They
represent the smallest organizational units for which an account group can be set up for the
purposes of external reporting
Customizing Controlling Area
The controlling area is the organizational unit within a company for which complete, closed
cost controlling can be carried out. You cannot allocate costs outside of controlling areas.
- The controlling area 0001 is created in the SAP standard version. You can use these
as copy templates.
- A controlling area may contain more than one company code and these company
codes can include more than one currency. However, the company codes assigned
to a controlling area must all use the same operational chart of accounts.
- The control indicator can be used to activate or deactivate certain controlling
components and functions for a fiscal year same number of (normal) posting
periods.
Assignment of Organizational Units
Operating concern (0, 1) <- Controlling area (1, n) <- Company code (1, n) <- Plant
(0, 1, n)
Business area
You can use the following currencies in Management
Accounting to perform evaluations in the information
system:
Controlling area currency: If you are using a 1:1
assignment, the controlling area currency must be the same
as the company code currency. In cross-company-code cost
accounting, the controlling area and company codes may
possess different currencies.
Object Currency: When using a 1:1 assignment, an object
currency that is different to the controlling area or company code currency can be defined for
the account assignment object.
Company code currency: In cross-company code cost accounting, you are only free to
choose an object currency if all the assigned company codes have the same currency and this
is the same currency as the controlling area currency. If this is not the case, the object
currency in the account assignment object will automatically be the company code currency.
Transaction currency: The currency in which a document is posted to Management
Accounting is the transaction currency.
! The fiscal year variants of a controlling area and company code can have different
numbers of special periods. The number of posting periods must be the same.
! You have to use the same operational chart of accounts in Management Accounting and
in the assigned company code.
Changes to the assignment should not be a problem provided you have not created any
master data or transaction data. In a productive system, combining company codes that were
previously separate in a controlling area, or splitting a controlling area (1:n) into several new
controlling areas necessitates conversion of data.

Unit 3 Master Data

Cost Centres
The Organizational Structure of the Standard Hierarchy
- You must first define a standard hierarchy. Specify the name of the standard
hierarchy when you create the controlling area. SAP recommends that you define the
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structure so that it reflects the internal areas of responsibility and the controlling and
decision-making structures within your organization.
Each level or node of the standard hierarchy is a cost centre group. Cost centres that
are created or changed from within the standard hierarchy have the status Inactive
You can change the assignments of the organizational units, if:
o The currency of the new company code is the same as the currency of the old
company code.
o You have only posted planning data in the fiscal year.
o The cost centre is not assigned to a fixed asset, work centre, or HR master
record.
The cost centre category is an indicator in the cost centre master data, which
specifies the category for the cost centre. Cost centre categories enable you to assign
the same characteristics to similar cost centres.

Cost elements
- Expense and revenue accounts in Financial Accounting
correspond to primary cost and revenue elements in
Management Accounting; In addition, secondary cost
elements are used to record internal value flows like activity
allocations, assessments and settlements.
- To be able to post to a primary cost element, you require an object in Management
Accounting (such as a cost centre) to identify the origin of the
costs.
- ! Revenue elements are primary cost elements. (11, 12
and 22)
- Cost element category:
Activity Types
- The activity type classifies the activities that are to be
performed within a company by one or several cost
centres. Activity types serve as tracing factors for this cost
allocation.
- The activity type category is used to determine whether
and how an activity type is recorded and allocated.
Statistical key figures
- Statistical key figures provide information on non-monetary data for profit centres, such
as the number of employees, number of machines, capacity usage, market information,
and so on. You can group statistical key figures together into statistical key figure
groups.
- ! You can post both planned and actual statistical key figures.
- Statistical key figures are defined either as a fixed value or a totals value.
Global Functions for Master Data
Time-Based Master Data
- You can store master data fields for cost centres, cost elements, and activity types as
time-based. You specify whether individual fields are time-based in Customizing.
- ! The Cost centre assignment to the standard hierarchy area is a non-timedependent field.

Unit 4 Event-Based Postings

Entering Primary Postings
Difference between reposting and allocation (assessment and distribution)
- Reposting: debit is reduced on the sender (no credit line)
- Allocation: line item with credit on sender, debit on receiver
Direct activity allocation = activity type * quantity * price
- Sender Cost Centre (secondary C Elem) -> receiver cost object
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Document number assignment in Controlling

- Number ranges are defined for Business Transactions (not document type).
- You group Business Transactions in nr. interval groups and decide whether the numbers are
internal or external
- Number ranges are fiscal year independent
- There should be different assignments for at least actual and plan transactions
Event-Based Postings through Integration
- Business transactions generate documents that reflect the view of the external accounting
system.
- The Management Accounting posting is a one-sided entry, since only the profit and loss
statement respective postings is passed to Management Accounting.
- SAP system summarizes all line items to form totals records, which in turn are stored in a
Management Accounting totals record file.
Account Assignment Logic
- Real/statistical postings only ONE real posting -> as many statistical as necessary. Only
real postings can be settled and allocated
- The account assignment object determines whether the posting is real or statistic
(real/statistical order)
- ! The cost centre is the exception to this rule. You can make real and statistical postings for
a cost centre (assignment to a cost centre, and an additional, real account assignment
object. In this case, the system always updates the cost centre statistically.)
- ! You always make statistical postings to the profit centre.
Account Assignment Logic - Revenue Postings
- Revenues can only be posted as real postings
- ! Revenue postings to the profit centre are statistical, the same as for cost postings.
Reports in Cost Centre Accounting
- You can enter the following default values: Basic data (controlling area, cost centre or
cost centre group, cost element, and so on) Settings for extract management Planning
timeframe Reporting timeframe Report currency Other specifications, such as the
version
- Variation function enables you to select a separate report for each element of a group
that was generated during a selection run (for a multiple C Centre report you can switch
between C Centres)
Account Assignment Tools
Automatic or default account assignments are required for primary cost elements used in
automatically-generated postings such as price differences, exchange rate differences and
discounts. Automatic assignment occurs during postings in external accounting (within the FI,
MM, or SD components) if you did not enter a CO account assignment object (cost centre,
order, or project) for a cost accounting relevant posting. This is always the case if the system
automatically created the line item in question.
Validation and Substitution triggered by events (call-up points): header manual
postings in CO, line item (row) FI and CO, CO Internal Posting: Sender/Receiver CO internal
postings such as allocations
-

Validation: prerequisites=> if condition = false => message (W, E, I)

Substitution: prerequisites=> substitute
An additional event - the Order Event (0010) is defined for substitutions. This is used only
for collective processing of order master data.
! Validation has priority, or is stronger than substitution.

Adjustment postings
Manual Postings of Costs and Revenues - primary costs are reposted (under the original
cost element) to a receiving order.
- No reference to the original FI document
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No sender check is made, in other words the system does not check whether the costs
you repost actually exist on the sending cost centre (negative postings may occur).
Reposting line items - is the equivalent of a reversal on the sender object to one or more
receiver object.
- Document must contain a reference to the original FI document.
- The original FI document does not change its account assignment
Direct Activity Allocation
- Activity type represents the tracing factors (AcTy Cat 01 manual entry, manual allocation)
- ! Only one cost centre can be the sender of an internal activity allocation -> receiver any
CO object
- Direct activity allocation uses a secondary C Element category 43 (derived from the
MD of the AcTy)
- Adjustments of activity - You can make adjustments in periods, but not in the same period
from which the document to be adjusted originates. However, the fiscal year must remain
the same.

Unit 5 Period-End Closing

Accrual Calculation
- In CO can either be done by using the percentage method or the target=actual method.
The plan=actual method is only used in FI
- Accrued costs do not have a corresponding expense in Financial Accounting. They are
only accrued for cost-accounting purposes. There are two different types of accrual costs:
Valuation differences, which have corresponding expenses of a difference (for
example, cost-accounting depreciation, imputed interest and so on)
Additional costs, which do not have a corresponding expense (for example,
management salary, imputed rents and so on)
- Accrual calculation can be done automatically with the Accrual Engine
Percentage Method - based on a percentage overhead, which is related to a cost element
or a cost element group.
- You create a primary accrual cost element (cost element category = 3) to process the
accrual calculation.
- The amounts are determined through a Costing Sheet: Basis Components - On the
basis of which cost elements do you want overhead surcharges to be levied? Overhead
- How high should the overhead percentage be? Credit - Under which cost element do
you want the overhead to be posted? Which cost centre or internal order (accrual object)
do you want to credit? Dependencies to the overhead key, you can specify conditions
under which the overhead is calculated for a cost centre.
Target = Actual Method - calculate accrual costs that are activity-dependent and activityindependent, but for which the percentage method cannot be used.
Planning of the dependent and independent primary costs is made with an accrual cost element
category 4 to plan under a primary cost element (= accrued cost element/ target =
actual).
- For activity-dependent accrual costs, the system includes the operating rate of the cost
centre when the planning values are transferred to the actual data
- For accrued costs that are independent of activity, the operating rate of the cost centre
is not included or is set at 100%.
Entering Statistical Key Figures
- You can enter statistical key figures as a tracing factor for periodic allocations, or for
creating key figures in reporting. Statistical Key Figures can be: Fixed values
(category 01) Totals values (category 02)
Periodic Reposting
- Primary postings, such as telephone costs, are collected on an allocation object to
restrict the number of Financial Accounting postings as much as possible.
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! You can only repost primary costs. During this process, the original cost element
remains the same.
Line items are posted for the sender as well as for the receiver, enabling the allocation to
be recorded in detail.

Cycles and Segments

determines the allocation relationship between sender(s) and receivers
- A segment takes sender cost centres, in which allocation values are determined based on
identical rules, and combines them with receiver objects, in which tracing factors are
determined based on identical rules.
- Several segments are grouped together in one cycle. You can define a cycle for the entire
controlling area.
Sender and Receiver Rules
- Sender values can be posted values, fixed amounts, as well as fixed prices.
- On the receiver side, you can store fixed amounts, fixed percentages, fixed portions, and
variable portions as rules
- The tracing factor of the variable portion identifies a posted value on the cost centre as
an allocation base.
Cycles and Iterations
- Iteration = the segments are processed until all senders are credited according to their
sender value.
- Cycles cannot be iterated with each other
Cycle Header and Cycle Overview
- The formal check function enables you to test an individual cycle prior to an update run.
- System uses the object search to display the cycle using the field values you selected
- Segment overview - function used to display all the segments used in a cycle.
Cost Allocations
Distribution
- Cost centres function as senders in indirect activity allocation. The receivers of an
indirect activity allocation can be cost centres, WBS elements, internal orders, cost objects
or business processes.
- Depending on the activity type category, you can use one of two allocation methods:
When you can determine the total activity for the sender, use indirect activity
allocation (AcTy Cat 2 Indirect determination/ indirect allocation)
For activities that are to be planned on a sender object, use activity type category
three (manual entry, indirect allocation).
- Distribution was designed to transfer primary costs from cost centres or business
processes
Assessment
- Transfer primary and secondary costs from cost centres or business processes
- During assessment, the original cost elements are grouped together into assessment
cost elements (secondary cost element category = 42).
Comparison: Periodic Reposting, Distribution, Assessment
Allocation
Sender totals records Receiver totals records
Periodic reposting
100
500*100
Distribution
500*100
500*100
Assessment
500
500
Assessment: Allocation Structure
- If the assessment for each segment is not made with a pre-defined assessment cost
element, you can assign the source cost elements to the desired assessment cost element
in an allocation structure. During cycle definition, enter the allocation structure instead of
an assessment cost element in the segment.
Cumulative Allocation
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Cumulative processing is possible only for distributions, assessments, and periodic

repostings.
- You process an allocation cycle cumulatively to clear any fluctuations of the tracing factors
or sender amounts to be allocated.
- The allocation is usually performed by period, meaning that posted values are allocated for
a sender in a period according to tracing factors entered in this period. If the tracing
factors or the sender amounts to be allocated fluctuate to a great extent, an assignment of
the allocated costs based on source is not possible during processing by period.
Segment Reverse and Rebook
- Segment reversal and rebooking involves taking segments from a previous period and
posting a new allocation in the current period (using corrected reference data from the
previous period).
- Allocations belonging to the previous period must have used the cycle and the segments,
and the current period must not be closed.
- Iterative relationships between cycles are not included.
Manual Cost Allocation

Manual cost allocation also lets you correct incorrect secondary postings and import data
from external systems.
! You can use manual cost allocation for all cost element categories. An exception to this is
category 43 (allocation of activities/processes) which may only be used for activity
allocation.

Period Lock
- After ending the period-end closing, the period for postings should be locked so that the
period-end closing can no longer be influenced.
- Use the period lock to lock plan and actual business transactions for a combination of
controlling area, fiscal year, and version.

Unit 6 Internal Orders: Overview

Real and Statistical Orders
-

You can use overhead cost orders to conduct detailed controlling for a particular object or
activity. All costs concerning this object or activity are assigned to the relevant order. When
you create an overhead order master record, you choose whether to create it as a real
order or a statistical order
Real Orders: You use the real order to collect costs and allocate them later to different
recipients. In the primary cost posting, the costs are updated to the real order. In the
periodic process of order settlement, you allocate the actual costs to controlling
objects. You can settle portions of the order costs to many objects. When you create a real
order, you must assign the order to a company code. If you have selected business
area balance sheets in Financial Accounting, you must also assign the order to a business
area.
Statistical Orders: You use the statistical order to evaluate costs which cannot be
itemized in detail in cost element or cost centre accounting. ! You can neither settle
statistical orders nor apply overhead to them. You can change the indicator in the order, as
long as the order was not posted to and you have not yet created a settlement rule for the
order.

The Different Scenarios for Internal Orders

- Internal orders may be used for a variety of purposes:
To monitor internal actions settled to cost centres (overhead cost orders)
To monitor internal actions settled to fixed assets (investment orders)
To offset postings of accrued costs calculated in Management Accounting (accrual
orders)
To display cost accounting sections of sales orders in Sales Order Management and
include revenues that are not part of the company's core business (orders with
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revenues). Revenues can be settled primarily to the following objects: Profitability

segments; Other orders with revenues; G/L Accounts; Not to cost centres!
Order Category: 01-Internal, 02-Accrual, 03-Model, 04-Production, 05-Prod. Cost Collector

Unit 7 Master Data of Internal Orders

Master Data Maintenance
Order Type
- The order type controls: Whether commitment management is active/ Whether revenue
postings are allowed/ Order status management/ Characteristics (required, optional, and so
on) of master record fields/ Whether the order number is internally or externally assigned,
and the number range/ General parameters for settlement, planning, and budgeting/ The
presentation of the master data/ The CO Partner Update
- The order type is client-dependent (available in all CO areas)
Model Orders
- Model orders contain default values for the orders in an order type. The Model order is
assigned as the reference order in the order type. When you create a new order, all the
fields active in the relevant order type are copied from the model order to the new order
Master Data Maintenance
- Overhead cost orders, like cost centres, are assigned to a company code and a controlling
area (also Business Area if required). Actual (and planned if required) postings on orders
are transferred to a PC, if there is one defined in the order MD
Status Management for Overhead Cost Orders
- Each phase in the order life cycle controls which business transactions are valid for an
order at any given time.
- The standard SAP System includes four system status settings: Created, Released,
Technically Complete, and Closed. You can also create user-defined status indicators
for further subdivisions.
User Status
- You define user statuses and associated rules in a status profile and assign the profile to
your order type. The status profile allows you to: Define the user statuses Assign a
follow-up to your statuses Define an initial status, which is automatically set when an
order is created Determine that a user status is automatically set during the execution of
a business transaction Permit or forbid specific transactions
Grouping and Collective Processing
- Order groups help in planning and settling costs, calculating overhead and creating reports
for any given combination of orders as defined by you. ! The groups can form a hierarchy,
but it is not a standard hierarchy.
- ! Order groups are client-dependent: you cannot use the same group name to create
different group structures in different controlling areas.
- You use selection variants to gather orders in a single listing for collective processing
- Automatic collective processing offers convenient options for changing multiple orders
in one step. You can update the status of the orders or substitute values on the order
master record using this function.

Unit 8 Transaction-Based Postings

Event-Based Postings Within and Outside Management Accounting
- Same as for Cost Centre Accounting
Commitment Management
- A commitment identifies costs which will be incurred in the future for materials and
services requested or ordered. By recording commitments as well as actual costs, you can
compare the funds you have allocated to your planned or budgeted costs to determine
funds availability.
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! You must activate commitment management both in the controlling area and in the order

type to create commitment information on an order.

Commitments can be generated automatically (from other modules) or manually in CO as
funds commitment
You can carry forward open commitment values into the first period of the next fiscal
year as part of the year-end closing process.

Unit 9 Period-End Closing of the Internal Orders

Periodic Debit Postings
Overhead Costs
- You allocate overhead costs to the appropriate objects by applying a percentage or
quantity-based fixed amount to a specified cost base (Costing Sheet).
- You can apply overhead to both planned and actual costs or on the basis of commitment
data.
- Overhead costing sheet combines three central elements which determine how overhead
is calculated
Calculation base specifies the cost element base to which overhead is applied,
such as the materials cost elements. You can further restrict the base by identifying
the origin of the cost elements. The origin field subdivides the cost element by
material.
Overhead amount allows you to define the amount of overhead to be applied as
follows:
Percentage overhead approach, you identify base cost elements. A
percentage is applied to the costs posted to these cost elements. The
calculated cost is added as overhead.
Quantity-based overhead approach, you specify the amount of
overhead cost to be applied per quantity unit posted to the calculation base
cost elements. In this case, units of measure must be recorded in
Management Accounting.
Dependency allows you to differentiate overhead rates or amounts by
plant, company code, profit centre, responsible cost centre, order type, or
other criteria.
Overhead type determines whether the overhead calculation is for actual,
plan, or commitment data
Credit key defines which object (cost centre or internal order) is credited to offset
the debit to your overhead order. You also specify which cost element should be
used to post the overheads.
Other Periodic Posting

Revaluation allows you to revaluate activity allocations based on an automatically

generated calculation of actual price.
Activity Based Costing (CO-OM-ABC), you can allocate costs from business processes to
overhead orders. The allocation is defined by a process template developed in Activity
Based Costing.

Periodic Credit Postings

Settlement: Overview
-

Settlement to an asset or General Ledger account is an external settlement, because

Financial Accounting is updated by the settlement. An external settlement cost element
(cost element type 22) is used when you settle to an asset or a General Ledger account.
Settlement to one of the remaining objects is an internal settlement within Management
Accounting.
You can settle statistically to a cost centre, statistical order, or statistical WBS element in
addition to the actual receivers. An internal settlement cost element (cost element type
21) is used when you settle to a Management Accounting
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Order settlement is not mandatory.

Defining Order Settlement

- Basic settlement allows you to settle 100% of the costs to one cost centre or to one G/L
account under one cost element. You enter the data in Period End Closing on the order
master record.
- Extended settlement allows you to create your own settlement rules in the order master
record. These settlement rules can be used to Settle costs to one or more receivers and
allow a wide range of receivers, specifying how the costs are to be split.
Settlement rule: (Percentage, Equivalence number, Fixed amounts)
Recipient (allowed recipient)
Distribution type:
PER settles only the costs for the period you specify.
FUL settles all costs on a sender object that have been incurred right
up until the settlement period.
Settlement profile: The settlement profile is entered in the order type, ensuring
that the order master record contains the correct default values. The settlement
profile performs the following: Determines whether settlement is required
Specifies valid settlement receivers and proposes these in the order master record
Sets settlement indicators, including the valid methods for apportioning costs
Defines document management parameters Identifies the default values for the
other settlement parameters on the order master record: the settlement structure,
Profitability Analysis transfer structure, and the source structure
Allocation structure: In the settlement structure you combine the primary
and secondary cost elements into groups, in which debits are then posted
to the sender objects. For each group, you specify whether (for settlement
to a given receiver type) settlement is performed by the original cost
element or using a settlement cost element. In Customizing, you link the
cost element group to the settlement structure with a settlement
assignment. For each settlement assignment, you stipulate by receiver
type whether the settlement will use the original posted cost elements or a
designated settlement cost element.
Account assignment default (Source structure). In the source structure,
you can combine the primary and secondary cost elements used for debit
postings to your order into source assignments. You can then use the
source assignments to allocate different types of costs to different
receivers.
PA transfer structure: The PA transfer structure is only required when you
settle objects to Profitability Analysis (CO-PA). You can use it to assign the
fixed and variable costs incurred under one cost element or cost element
group to different value fields in the operating concern.
Hierarchy number: On the basis of your entries in the settlement rules, the
system automatically determines the processing sequence for the
settlement objects so that you can settle all objects completely. Each object
is given a hierarchy number between 0 and 999. The object with the
highest number is settled first and the object with the lowest number is
settled last.

Unit 10 Planning, Budgeting and Availability Control

Budgeting and Availability Control
Budget Management: The system recognizes the following budget types:
- The original budget is the budget that was originally allocated.
- Budget updates for orders include supplements and returns and are used when
unforeseen events and additional requirements force a correction to the original budget.
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When you create or update your budget, the system documents the transaction in a line
item.
- The current budget includes the original budget and all budget updates. You can freeze
the original budget using status management.
In order to create a budget for an order, you must define a budget profile and assign it to
the order type. You must define the following control parameters in the budget profile:
- Time horizon: Budgeting start year, based on the current fiscal year; Number of years
into the past, from the start year, for which budgeting is allowed; Number of years into the
future, from the start year, for which budgeting is allowed
- Budgeting of overall and/or annual values: You can only budget overall values if you
are using a fund.
- Value display parameters: Use the View parameter to determine which values are
displayed, in addition to the budget, when you enter budgeting (such as the distributed
value or the accumulated value). You also define the scaling and number of decimal places
for your budget value display.
- Availability control: Against annual/overall budgets and releases: 0 cannot be
activated; 1 automatic activation during budget assignment; 2 background activation
- Budgeting currency and currency translation: controlling area currency/object
currency/free definable currency; exchange rate type (M, B, C) and value date
Availability Control (Commitments)
Certain business transactions result in actual costs and commitments being posted to the
order. Commitments represent obligations that will lead to actual costs through subsequent
business events. Actual costs and commitments are funds allotted to an order and they can
be checked against the budget using the availability control.
- You use the tolerances to define how the system should respond to a given degree of
budget overrun. (Info, info + mail to the responsible person, warning messages). The
tolerance levels for budgets are defined in the budget profile according to business
transaction groups. Different tolerance levels can be set for different business transaction
types.
Budget Carry forward
- You can transfer unused funds to the next fiscal year using the budget carry forward
function. The SAP system will carry forward the difference between the budget and the
actual amounts for the year specified.
- ! You cannot carry forward budgets for orders that have system status Complete or that
are flagged for deletion, nor can you carry forward negative budget amounts.
- You can execute the carry forward run more than once for a fiscal year.
- Commitments are not considered in the calculation of the unused funds.
Introduction to Planning
Planning goals:
- Planning of future business activities, taking changing business circumstances into
account.
- Forecasting for setting up binding standards for a fiscal year, for the following: valuation of
internal business activities; monitoring efficiency using plan/actual and target/actual
variance analyses.
- Plan the structure of the company's future operations for particular periods.
- Create benchmarks for monitoring the business transactions within a fiscal year.
Planning Views and Functions
- A version is a unique view of planned costs and revenues, given a particular set of
assumptions. In the planning process, many different versions can be created and different
planned values can be created for each version. Each version is independent of all others.
When defining a version you need to make settings in the Operating Concern, for the Profit
Centre Accounting, in the Controlling area
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Version 0 automatically created version. The actual values created when entering
primary costs and allocating costs internally are posted in this version. This version must
be used for plan/actual cost comparisons. Version 0 is the version used for analysing actual
data.
- You can use the copy planning function. This function can also be used to copy actual
data from cost center accounting and use this data as a basis for future planning data.
- Revaluation allows you to increase or decrease the planning results on a percentage
basis. By combining copy planning and revaluation, you can create multiple planning
versions. This can be useful after copying the plan data from the previous year or for
running through best-case and worst-case scenarios.
Planning Layouts and Planner Profiles
- Planning layouts are used to define the planning screen. Standard planning layouts are
available for almost every type of planning area.
- You use entry displays or planning layouts to enter planning data. You can customize
these displays as required.
Organization of the Planning Views
- You can control the planning process using planner profiles. In a planner profile, you can
assign as many planning layouts as required to each planning area. A planning area can,
therefore, contain more than one planning layout. (ex. SAPALL, SAPEASY)
Cost Accounting Methods
Cost Allocations
- Used to plan cost values only; Enable plan/actual comparison
Internal Activity Allocation
- A cost centres activity must be defined; Activity type quantities are planned , scheduled
and reconciled; System can calculate price or you can enter the price manually
Fixed and Variable Costs
- Based on activity-dependent and activity-independent cost planning; Allow fixed and
variable components in the activity price; Enable target/actual comparisons to be made;
Allow marginal costing
Planning Options in Overhead Management Accounting
Planning statistical key figures enables you to:
- Calculate the ratios in Cost Center Accounting (such as costs per employee)
- Create receiver bases (allocation factors) for allocations such as assessment or distribution
- Statistical key figures can be fixed value or totals value
- You can also transfer statistical key figures from the Logistics Information System (LIS).
Primary Cost Planning
- You plan activity-independent primary costs structured by cost element on the cost centers
where you later assign actual data.
Cost Allocation Methods for Planning
- In distributions and assessments, costs that were planned on a cost center with userdefined keys (such as percentages, amounts or statistical key figures) are allocated
Activity Type and Other Planning Methods
- With activity type planning, you manage the performance of a cost center by measuring
and controlling its output.
- You can enter the price for each cost center and activity type manually or calculate the
price using automatic price calculation.
You can set manual activity prices for your cost center/activity type combination
if the activity price is fixed within your company and unaffected by any internal
exchange of activities.
In the automatic calculation of prices, all primary and secondary costs are
contained in the price. These costs are planned as either activity-dependent costs
or activity-independent costs for each cost center.
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If several activity types are planned for a cost center, the activity-independent plan
costs are assigned to these activity types for activity price calculation. You can
accomplish this by entering equivalence numbers with each planned activity type,
or with plan cost splitting.
The unit price for an activity type is calculated by dividing planned costs for an
activity by the planned quantity of activity type units. Alternatively, the capacity of
a cost center to produce a given activity type can be used when calculating the
fixed portion of the activity price.

Planning Activity-Dependent Primary Costs

- You plan primary costs that depend on certain activity types provided by the cost center.
- After activity type planning is complete, you can plan the costs, taking into account these
activities (divided into fixed and variable costs if required). Variable costs occur relative to
the planned activity quantity and can be planned in addition to costs that are activity-inde
pendent.
Planned activity-independent costs for the cost center
Fixed portion of activity-dependent costs planned for the activity type
Planning Secondary Costs
- Activity input from other cost centers. You can plan this kind of activity input as either
activity-independent or activity-dependent:
You plan activity input as activity-independent if you use services such as plant
maintenance hours, regardless of the activity of the receiver cost center. In this
case, the consumption of planned activity input is regarded as fixed.
Activity input is planned as activity-dependent if the consumption of this activity
depends on the output of an activity on the receiver cost center. The consumption
can be fixed or variable for the activity output quantity.
Typical Planning Steps
- Plan statistical key figures
- Assign activity types to cost centers
- Plan activity inputs (activity-dependent and activity-independent): how much activity a C
Centre wants to use.
- Reconciliation (scheduled activity quantity/ plan activity quantity): plan the activity
quantities C Centre wants to provide.
- Plan primary costs (activity-dependent and activity-independent): You can subdivide the
activity-dependent costs into fixed and variable costs.
- Plan additional secondary costs: Secondary cost planning can include assessment and
indirect activity allocation.
- Automatic price calculation
Easy Cost Planning
Easy Cost Planning and Execution Services work in the following sequence:
- Costing models are defined as predefined quantity structures that depend on allocation
bases (cost drivers).
- Easy Cost Planning uses these costing models.
- Actual costs are recorded using Execution Services on the basis of the planned data.
This planning method corresponds to planning using unit costing.
Templates for Easy Cost Planning
- You can predefine quantity structures for Easy Cost Planning using costing models
(planning forms that are known as templates). you can control quantities, prices, and the
activation of the entry with formulas or conditions
Advanced Planning Techniques for Internal Orders
Planning versus Budgeting
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Planning

Budgeting

Cost-oriented (cost-elements, activity types,

period values, planning versions)

Funds-oriented
returns)

Easily changed; line items created as required

Binding values; line items for each change

Funds required

(original,

supplements,

Availability check
Funds approved

Planning Aids
Copy Plan Data or Actual Data to Plan
You can copy:
- Within fiscal years, versions, and cost centers
- Between different fiscal years, periods, and versions
Revaluation
- Using the plan revaluation function, you can increase or decrease planning data on a
percentage basis.
- You can revaluate costs and consumption.
- ! You cannot revaluate assessment cost elements, imputed cost elements, and cost
elements used in indirect activity allocation.
Transferring Plan Values
- Integrated planning enables you to transfer data from one of the pre-stored systems in
Cost Center Accounting to cost center planning.
Plan Lock
- If the planning process in cost center accounting has been completed, the planning should
be locked to protect it from changes.

TFIN20_2
Unit 1 Introduction to Product Cost Planning
Overview of Product Cost Planning
Goals of Product Cost Planning
- Costing results:
- Cost of goods manufactured
(COGM)
- Cost of goods sold (COGS)
- Pricing
- Productivity
- Comparison of alternatives
- Continuous improvement
- Cost origin
- Influence of primary costs
- Valuation of inventory
Fig. Product Life Cycle
Costing Methods
-

Unit costing

14

Multilevel unit costing: Multilevel unit costing uses a highly flexible screen layout for the
editing of material cost estimates without quantity structure and base planning objects.
Structure:
Costing Structure This screen area can be used to display or edit a material cost
estimate or base planning object.
Work lists: This screen area is used to manage and sort information that you require
on a regular basis to edit a material cost estimate or base planning object on a
multilevel basis.
Detail List: This screen area displays detailed information, such as the itemization,
the cost component split or the message log
List Screen or Costing Information: display the costing data for a material cost
estimate both with and without quantity structure
Cost estimate with quantity structure: Costing with a quantity structure is a tool for
planning costs and setting prices for materials without reference to orders. It is used to
calculate the cost of goods manufactured and cost of goods sold for each product unit. You
can use the results of material cost estimates with a quantity structure to valuate
materials at standard prices. (Qty. struct. = BOM + routing)
Costing run: You can use the costing run to process mass data. It enables you to cost,
mark, and release more than one material at the same time.

Unit 2 Material Cost Estimate without Quantity Structure

Material Master
Organizational Structures for Material Cost Estimates
- Operating concern -> Controlling area -> Company Code -> Plant -> Valuation area ->
Material
- Material cost estimates are saved with reference to a plant.
- Valuation area determines the organizational level at which the material is valuated.
- ! To use material costing, it is mandatory that you establish each plant as a valuation
area
Views in the Material Master
- Relevant to PCP are:
MRP (Material Requirements Planning): Material status in PP, Scrap factors,
Indicators: Co-product/Bulk material, Production version
Accounting: Relevant to material valuation, material price control, and account
determination
Planned prices 1, 2, 3 - These can be used for raw materials and purchased
parts, and to valuate the materials in the cost estimate.
Tax-based prices and Commercial price: entered for purchased parts in
inventory costing to determine values such as the lowest value. An
inventory cost estimate can use these prices for valuation and then update
the costing results for finished and semi-finished products in these fields.
Price control (S/V): Indicator for price control according to which the
inventory of a material is valuated. These prices are used to valuate goods
movements within the SAP ERP and to valuate inventories.
Costing: control parameters for material costing, characteristics required for Cost
Object Controlling, Costing view should be maintained to be able to cost a material.
General data
Lot size: The lot size entered here is used as the default value for the
material cost estimate. The lot size can be overwritten in individual
processing. It cannot be overwritten in mass processing.
Base unit of measure
Text
Account (Determination/Overhead)
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Valuation class: The valuation class controls account determination.

The consumption account is determined, which also appears as the
primary cost element in the itemization.
Origin group: If an origin group is entered for a material, the
combination of origin group and cost element is updated in the CO
system.
Overhead group: Key that groups materials manufactured for the same
type of overhead application, based on the product.
Costing or no costing
No costing
Material status

Unit Cost Estimates

Single-level Unit Costing
- You can use material costing without quantity structure: When costing and updating prices
for new materials; When you want to perform costing using non-SAP production
planning data
- Material costing without quantity structure is designed to cost materials without accessing
BOMs and/or routings. If BOMs or routings do not exist, you can manually enter the items
that represent the quantity structure and value them with the cost estimate.
- Steps in creating a Single level Unit Costing:
1. Selecting a costing variant:
When you select the costing variant, you establish the valuation strategy for
costing items
The costing variant proposes validity dates for the costing variant and valuation
dates for material and activity prices
If you do not enter a lot size, the system uses the lot size from the material master.
2. Costing items are created
a. A cost estimate header is created automatically.
Change the lot size
Enter various text
b. List screen
c. Detail screen
3. Save
After saving the costing items, the material cost estimate is updated to the
database.
Multi-level Unit Costing
Multi-level unit costing can be used in the following scenarios:
- Scenario 1: New product You are creating new material masters or cost estimates for new
materials. As a rule, you create the structure from top to bottom by making further
refinements.
- Scenario 2: Similar product You want to cost a new product that is similar to an existing
one. You can copy the subordinate structure to the new product and make changes to the
new (copied) structure.
- Scenario 3: Product changes You want to make changes to an existing product. Copy the
existing cost estimate and make changes to the copy.
Costing Results
Itemization
- Report that lists the calculated costs and contains detailed information on cost origins and
elements that make up costs. An itemization is generated automatically with a cost
estimate
- You can use itemization to analyse a costed material, base planning object or sales
document item in more detail.
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You can modify this structure to suit your own requirements by creating your own layouts.
Only limited selection of layouts is available for base planning objects.

Cost Component Split

- This report shows the costs calculated in a material cost estimate or sales order cost
estimate across all production levels, broken down into cost components. You can analyze
the costs of the cost component split for the cost of goods manufactured and the costs of
the primary cost component split.
-

The cost component split enables you to do the following:

Analyse the cost origin across multiple production levels.

View the costs by original production factors (primary cost component split).
Structure the costs according to the requirements of other areas (such as material
valuation or profitability analysis).
The system automatically updates a cost component split for each costed material in the
BOM if you have already defined a cost component structure in Customizing (deciding
which cost components the calculated costs should be assigned to and which cost elements are
grouped into which cost component)

Costed Multilevel
- The costed multilevel BOM displays the values for all items of a costed material as a
hierarchy, according to its costed quantity structure.
- The costed multilevel BOM is based on the itemization and explodes the total costs for the product
-

according to the materials used

The costed multilevel BOM enables you to display the costs for each assembly (halffinished and finished products) and each material component (raw material, trading goods,
purchased parts, and so on) in the BOM of the material costed, as well as all other items
(for example, internal activities, overhead).

Unit 3 Preparing for Product Cost Planning

Costing Variant
You use costing variants to stipulate which pricing strategy
the system should use for the costing and how overhead is
to be determined.
Costing Type
- Update prices: You specify the prices that are updated
in the material master with the results of the cost estimate (ex. Standard price update).
Except when updating in multiple valuation, you always use legal valuation.
- Date of update: Specifies the date on which the cost estimate is saved to the database.
- Other:
Cost portion for overhead. You specify the cost component view that should be
the subject of overhead application (usually the cost of goods manufactured).
Partner cost component split: Business unit that is part of the value-added
chain. You can define a partner on a multi-dimensional basis from the following
organizational units: plant, company code, profit center, and business area

17

Valuation Variant
- A strategy that is used to determine the prices that are used
to value component materials, activity types, processes,
subcontracting, and external activities.
- The valuation variant searches the various price sources
listed for each strategy. The price sources are searched in
the sequence in which they are entered in the strategy.
Date Control
- Date control can be used to create the quantity and value structures based on various
dates. It specifies the following:
For material costing with quantity structure: The
period of validity of the cost estimate/ The date on
which the quantity structure is determined (quantity
structure date)/ The date on which the quantity
structure is valued (valuation date)
For material costing without quantity structure:
The period of validity of the cost estimate/ The date
on which costing items are valued (valuation date)
Further Settings
- Quantity structure: You specify if the lot size should be passed on.
- Additive costs: Material costs that you can manually enter in a unit cost estimate and
then add to an (automatic) cost estimate with quantity structure (ex. freight).
- Update: Specifies if saving is permitted for the costing variant.
- Assignments: You can maintain the following settings and assignments of the costing
variant: Cost component structure/ Costing version/ If the cost component split is activated
in the controlling area currency/ If you require cross-company costing
Purpose of the Costing Variant
Depending on the purpose of the cost estimate, you can create various results for the same
material by making multiple costing variants with various settings for costing type, valuation
variant, dates, and quantity structure determination.
- Standard cost estimate: Valuation of the planned quantity structure with planned prices.
Calculation of standard prices for the valuation of S-price materials
- Modified standard cost estimate: Valuation of current quantity structure with planned
prices. Costing of material during the fiscal year to analyse cost developments.
- Current cost estimate: Valuation of current quantity structure with current prices.
Costing of materials during the fiscal year to analyse cost developments.
- Inventory cost estimate: Valuation of actual quantity structure with tax-based and
commercial prices. Establishment of valuation approaches for inventory valuation.
Cost Component Split
In multilevel costing structures, the cost component split provides information about the costs
of the original material components, such as the costs for materials in the pump. Each line of
itemization is therefore assigned to a cost component as defined in the cost component
structure.
-

Cost rollup The purpose of cost rollup is to include the cost of goods manufactured of all
the materials in a multilevel production structure within the costs of the material located at
the top of the structure. For costing, you assign the costs in a cost estimate to cost
components in Customizing for Product Cost Planning. The cost components break down
the costs of a material. In the cost rollup process, the data for these cost components is passed
18

on to the costing results of the next-highest material. The data structure is called a cost
component split.

Cost components are established by grouping together cost elements.

When a multi-level BOM is costed, the costs are rolled up.
For each material, the cost component split provides information about: The value added
of the material (upper level) and The costs of the subordinate materials (lower level)
! A maximum of 40 cost fields can be rolled up in a cost component split (fixed + variable)

Views of Material Cost Estimate Results

- View = a combination of cost components based on various characteristics. (report layout)
- Cost Estimate Results = Cost component split, Itemization, Costed Multilevel BOM
In the cost estimate header, you can display up to 5 views as the initial costing
result:
COGM > Material Activity Overhead Production
COGS > Material Activity Overhead Production Sales and
Administration
COS >Sales and Administration
Cost Component Structure
Specifies which costs are contained in the cost component split.
- Cost elements are assigned to cost components in the cost component structure.(see img.
below)
- For each cost component, you determine the following: If the costs are rolled up; If costs
are included in the standard price or inventory price of the material; The views of the cost
estimate or information system in which the costs appear; The cost component group to
which the cost component is assigned; If it is relevant to inventory and cost of goods
manufactured; If it should contain a total amount or if there should be a fixed or variable
split
- ! A cost component structure is assigned to each costing variant (/company code and
plant.).

Purpose of Primary Cost Component Split

The function of the primary cost component split is to show the primary costs of a product
when valuating cost centres/activity types and process costs (ex. What portion of the product
can be attributed to depreciation?)
- There are several requirements to create primary cost component splits, such as:
You assigned a cost component structure in the CO version in cost center and
process cost planning.
You determined the prices through planned price iteration.
You defined a cost component structure for the primary cost component split of
Product Cost Planning.
You defined a transfer structure for the transfer of cost components in cost centers
and Activity-Based Costing to the cost components of the primary cost component
split in Product Cost Planning.

19

Overhead Costing Sheet

Calculation base: You can combine cost elements in base rows. You can also split cost element
by origin such as raw materials only with origin XYZ. Also, you can divide the calculation
base as fixed and variable costs.
Overhead: You can calculate overhead on the lines of the calculation base. You can define the
overhead percentage so that it differentiates among planned costs, actual costs, and area
of validity based on specific fields. You can also allocate quantity-based overhead such as
USD 100 for every 30 pieces.
Credit: You assign a credit key to each overhead line in the costing sheet. The amount of the
overhead is credited to a cost center, business process, or order under a secondary cost
element. The cost element is important in Product Cost Planning because it controls
overhead costs. You can specify the percentage of the overhead that is fixed costs.
Allocating Process Costs to a Product (ABC)
Business Process
- A process or activity within a company that uses resources and activities from one or more
cost centres. A process has only one output measurement (ex. number of orders
processed) and it can be allocated as follows: quantity*price or price=costs/output
quantity.
Working with the Template
Templates are centrally maintained tabular frameworks that are highly flexible and, through
their use of formulas, dynamic.
What is to be allocated? The Object column can contain business processes, cost
centers/activity types, templates, or object formulas that determine the combination of
characteristics of an object.
How many should be allocated? The Quantity column is subdivided as plan and actual
quantities, because the planned and actual quantities to be allocated have different
sources. (For example, the planned quantity can be the lot size and the actual quantity
can be the true quantity.)
Under what conditions should the allocation take place? The Activation column is
subdivided as plan and actual quantities.

Unit 4 Material Cost Estimate with Quantity Structure

Basics of Material Costing with Quantity Structure
A material cost estimate with quantity structure has the same structure as the cost estimate
without a quantity structure: Cost component split, Itemization, Costed multilevel BOM. It is
only the method by which costing results are obtained that differs. Material costing with
quantity structure can determine the product structure and production plans as entered in
Logistics, and converts them to structures of the itemization and cost component split.
BOM
- The bill of material (BOM) is a directory for an object and its constituent parts, containing
information such as the name, reference number, quantity and unit of measure.
- BOMs are used in: Material Requirements Planning for procuring parts production for
staging parts costing for calculating material costs
- Costing levels are automatically determined by the system when you create a cost
estimate -> determines the correct sequence of costing (raw mat -> finished goods)

20

BOM: Header
BOM usage You can maintain separate BOMs for
different areas within your company, such as
design or production.
BOM status Active (it can be exploded)/inactive.
The BOM status must be active for costing to
enable the BOM to be read for a cost estimate.
Area of validity a certain lot size the BOM is used
for
Alternative BOM describe different product
structures that create a product with the same properties.
BOM: Item
Categories: L = stock item; N = non-stock item; R = variable-size item
Fixed quantity indicator: This indicates whether the quantity entered is dependent
on the lot size.
Planned scrap
! Relevancy to costing indicator: If this indicator is not selected, the system ignores
the BOM item in the material cost estimate.
Bulk material: is usually posted as consumption at production cost centers as soon
as it is procured. ! Therefore, it is not included in the cost estimate in the standard
system.
BOM: Nonstock Materials
Nonstock materials are materials that are not kept in inventory. They are always
procured externally and assigned directly to the order. For nonstock materials
without a material master, data that is relevant to costing (such as prices) is
entered directly in the BOM item (purchasing data). For nonstock materials with a
material master, no prices can be maintained and materials are valuated in
accordance with the strategy specified in the costing variant.

Routing and Work Center

Routing - A routing is a description of which operations (process steps) have to be carried
out and in which order to produce a material (product). As well as information about
the operations and the order in which they are carried out, a routing also contains
details about the work centers at which they are carried out as well as about the
required production resources and tools, material assignments, operation texts, and
standard values (how long, how much). Standard values for the execution of individual
operations are also saved in routings.
- Routing: Header
Material plan assignment: A routing can contain multiple materials involved in the
same production process.
Task list usage: assign routings to various work areas.
Routing status: You use this status to indicate the processing stage of a plan.
Work Center - Work centers are used in plans (routings, networks, inspection plans,
maintenance task lists, and rough-cut planning profiles). Machine group and capacity
planner group are synonyms for work center. ! Work centers are defined with reference
to a plant. ! Work centers are assigned to cost centers.
Use of Work Center and Routing - The standard value key enables you to define up to
six standard values for an operation. The system assigns a parameter key to the standard
values of the operation and the work in the network activity. The control key specifies the
business functions you want to execute with an operation: Scheduling/ Capacity
planning/Costing: This ensures that the operation is included in costing./ Confirmation: Here
21

you specify whether and how the operation is confirmed./ External processing: Here you
specify whether the operation is processed internally, externally, or both.
At the same time, the parameter key (in the standard value key) represents the names of
the formula parameters. You can use the formula parameters to represent the standard values
in a formula. Formula: You can use formula parameters to which you have assigned values.
The formulas are maintained in Customizing for the work center.
Production Version
- Combination of task list group, group counter and alternative BOM (BOM + Routing)
- Description of various production technologies
- Restriction of production version: lot-size range, validity period
How Does the System Find a BOM?
Quantity structure control a process by which the system searches for alternatives if
multiple BOMs and/or routings exist for a material. It is defined in the Costing Variant and
determines the priority of BOMs and routings (this process is called BOM application).
Criteria: Period of validity: The BOM must be valid on the quantity structure date. Lot-size
range: The costing lot size must fall within the lot size range. The status allows costing.
How Does the System Find a Routing?
If a production version is found or defined, the routing contained in it is used. The
selection ID for the routing determines which routing is selected first, the parameters
being the task list type, task list usage, and plan status. The criteria are the same as for
quantity structure control.
- ! The process industry uses a master recipe instead of a routing.
Material Cost Estimate
- Steps in the creation of material cost estimate: chose costing variant -> standard costing
values -> check material costing results -> save material cost estimate
Enhanced Efficiency - The costing result, itemization, cost component report and Costed
BOM are now visible from a single screen. You can decide which views should e fist displayed
in the header data and in the detailed reports and which lot size should be displayed (costing
lot size, price unit, free definable (quantity, unit of measure))
Explanation Facilities - Quickly access data and information in the costing environment,
while remain in the cost estimate or the analysis while accessing the costing data: costing
sheet template, material master, BOM/routing, product structure and configuration.
Prices in Material Master
You can update the following:
- The result of the standard cost estimate as the standard price.
- The results of the modified standard cost estimate or the current cost estimate as planned
prices 1, 2, and 3.
- The results of the inventory cost estimate as commercial prices 1, 2, and 3 or tax-based
prices 1, 2, and 3.
The standard price is updated in the material master in two steps: Marking and Releasing a
standard cost estimate
Integration and Procedure
Standard Price and Standard Cost Estimate (St. P in MM; ST. C Est. in CO)
- Price control plays a crucial role in material valuation. When the price control indicator is
set to S, the inventory is valuated at standard price.
- ! If the standard price was updated by a standard cost estimate, it can be used in Cost
Object Controlling.
22

The system can use the itemization of standard cost estimates to determine the target
costs for manufacturing orders.
- In Profitability Analysis, you can use standard cost estimates (or other material cost
estimates) to compare the revenues of the billed quantity with the cost component split of
the product.
- A standard price is also required in the Material Ledger to determine the actual price.
Procedure: Update of Standard Price
- Execute material cost estimate: Use a costing variant that is applicable to a standard
cost estimate (costing type).
- Accuracy of costing results: The system can notify the user of possible errors via the
technical status. Content errors, such as incorrect prices or quantities, cannot be detected
by the system.
- Recommendation: In the Product Cost Planning reporting, use object lists which can be
compared with material master prices and set the inspection severity in accordance with
your requirements
- Update allowed: You must grant an allowance once for the business period. This is
carried out for the company code, valuation variant and costing version. Ensure that the
valuation variant is also used in your costing variant.
- Marking: Once the above steps have been carried out, the material cost estimate can be
marked. The future planned price is updated in the material master and linked to the
standard cost estimate. You can mark the cost estimate in December for January.
- Release: You can only release cost estimates once. It can also only be carried out in a
period corresponding to the valid from date.
- Revaluation: If the material has inventory, the inventory can be revaluated at standard
price.
Changing the Standard Price
- Price change without affecting the released standard cost estimate
You change the S price with price change transaction MR21. The standard system
does not allow this type of price change if a released standard cost estimate exists.
The standard price is changed. However, the released standard price and its link to
the standard cost estimate remain.
- Price change with effect on released standard cost estimate
Delete the cost estimate. Use the menu option Delete Test Data for this. When you
delete the current standard cost estimate, the cost component split and itemization
are removed from the database. Similarly, the link to the material master is
deleted, and the current planned price is set to _. The standard price is unaffected.
Execute a new, corrected standard cost estimate and proceed with the price update
process described above.

Unit 5 Costing Run

Costing Run in Product Cost Planning
Functions of the costing run (Cockpit):
- Costing analysis and (if applicable) price update of multiple materials
- Sequence of material selection, BOM explosion, costing, analysis, price update
- Separate costing levels
- Repeated costing of materials in a costing level until costing is free of errors
- Online and background processing
The costing run organizes the processing steps and checks the material cost estimates
generated. ! After a costing run and its processing steps are successfully completed, it can be
deleted. ! The administrative data in the costing run is also deleted, but the material cost
estimates generated by a costing run remain and can be reorganized and/or archived, if
required.
Flexible Material Selection
1. Provide name and short text for Selection list
23

2. Enter selection parameters for materials: Mat. Number, plant/ BOM usage/ Additional
MMaster fields in the accounting and costing views/ Existing cost estimates/ Materials
included in an existing costing run
3. Execute material selection
4. Manually add or delete materials included in the selection list (transaction CKMATCON)
5. Use the selection list in the Costing run
There is a separate transaction to maintain the parameters to select materials and generate
the selection list (transaction CKMATSEL).
Working with Costing Run
! A costing run is identified by its name and the costing run date.
1. Creating a Costing Run As a rule, you should execute costing runs for the same
plants on a monthly, quarterly, or yearly basis. If you use this function, all the
necessary data and parameters (general data and process flow parameters) are copied.
The important entries are those of the costing variant, costing version, dates of validity,
explosion and valuation.
2. Executing a Costing Run Processing activities are categorized as Change
parameters and Execute. The functions of the Parameters column (Change parameters)
enable you to check or maintain the options of the
activity. By choosing Execute, the processing
activity is initiated or scheduled. Other columns
that are used to execute a function are
Authorization and Log.
3. Costing Results and Analysis Analysis options/ Choice of 3 reports: Costing levels,
Material list, Analysis/ Navigation to cost estimates and Master data
Costing levels: Provides an overview of the number of materials selected and
costing levels created. The lowest level contains the material components,
purchased parts and raw materials.
Material list: Contains the selected materials. You can also check the status of the
cost estimate for the material.
Analysis: This report is generated by the identical processing activity in the
Analysis area. It enables you to compare costing results with the results of other
costing runs or with the prices in the material master.
- Recommendation: SAP recommends the use of the Analysis option to compare new
standard cost estimates with the standard price.
Error handling in the Costing Run
Costing by costing level: When you cost mass data for the first time ad you anticipate
numerous errors or the quality of the master data is poor, it is recommended that you
execute costing by costing level.
Cost estimates with errors only: This procedure is recommended when few errors are
anticipated or for the above situations for one or more selected costing levels.

Unit 6 Overview of Cost Object Controlling

Overview of the Components of Cost Object Controlling
Product cost controlling:
- Valuates material movements
- Provides cost component splits for valuation in Profitability Analysis
- Allocates overhead costs from cost centers and business processes to cost objects (such as
production orders, sales orders, networks)
- Determines WIP
- Determines variances and their settlement in Profitability Analysis
Product Cost Controlling: Benefits
24

Management Requirements
Support of cost reduction concepts
Support of strategic decision-making:
- Which products
- Where or how to produce
Support of operative decision-making:
- Pricing
- Manufacturing efficiency

Legal Requirements
Valuation of:
- Raw materials
- Semi-finished goods
- Finished goods
Work in process
Reserves for imminent losses

In Cost Object Controlling, the costs

incurred during the creation of a product
or service, are collected on a cost object
(such as a production or sales order).
Which cost object is used depends on
your controlling requirements. Possible
cost objects are sales orders, production
orders, process orders, product cost
collectors, and projects, among others.
Cost
Object Controlling
allows for
simultaneous costing (mapping and
valuation of logistical quantity flows) and
final
costing
(period-based
accrual
calculation and variance calculation). The calculated values can be settled in Financial
Accounting and Profitability Analysis
Cost Object Controlling
- Work in process can either be determined on the basis of
actual costs (when using full settlement) or on the basis of
target costs (when using periodic settlement).
- Variance calculation determines the target costs of an
order, and on that basis, the target/actual comparison. !
The scrap is calculated on the basis of the target costs.
- ! For objects that cannot deliver to the warehouse, a
Results Analysis will be performed instead of a WIP and
variance calculation.
- Settlement is the last step of period-end closing in Cost
Object Controlling. The values determined are settled in
other components (such as FI and CO-PA)
Product Cost by Order
- When used: very flexible production environment; high setup costs; full cost traceability
needed (ex. Order-related production)
- Product Cost by Order is used when the controlling focus is on concrete quantities. For
this, you must use a cost object that can include an output quantity. Examples are CO and
PP production orders. Costs for goods issues, confirmations and goods receipts are posted
to the cost object (such as a production order).
- ! The settlement rule has the settlement type FUL.
- For period-end closing, either WIP or variances will be calculated depending on the
status of the cost object.
If the order has neither been delivered (DLV) nor technically completed (TECO),
work in process (WIP at ACTUAL) is calculated on the basis of actual costs. The
difference between all debits and credits of the order is the size of the WIP.

25

If the order has been delivered (DLV) or technically

completed (TECO), any existing work in process will be
cancelled and the system interprets the entire
remaining order balance as variances where various
variance causes are examined and represented by
appropriate variance categories. ! Product Cost by
Order does not realize variances until the last period
of production.

Product Cost by Period

- When used: high volume production; Stable and continuous production; No lot-based
controlling needed; cost collected on product cost collectors; ex. Repetitive manufacturing.
Product Cost Collector
- Costs for goods issues, confirmations and goods receipts are posted to the cost object
(such as product cost collectors). The settlement rule has the settlement type PER.
- For period-end closing, work in process is calculated in target costs and variances
simultaneously.
- For repetitive manufacturing you must enter reporting point back-flushes for operations.
For production and process orders controlled by period, you
must enter confirmations for the operations. The product
cost collector is the recommended cost object for repetitive
manufacturing.
- The system determines the target costs of the cost object
based on costing that you can specify with a valuation
variant in Customizing. Based on this, work in process and
scrap are calculated at target cost.
- Variances result from deducting work in progress and
scrap at target cost from the balance, where various variance causes are examined and
represented by appropriate variance categories. Variances are realized by period in
Product Cost by Period.

Sales-Order-Related Production is used when the activity output does not take place until
after a sales order has been received. With sales-order-related production, they are first sold,
and then manufactured. If the sales order alone does not provide all functions or options for
integration that you desire, you can combine the sales order with other cost objects, such as
projects or networks. This is especially recommended for complex make-to-order production
scenarios, such as: Make-to-order production to customer specifications/ Complex products
like structures, ships, etc./ Large-scale variant manufacturing
-

Controlling level - Order level Controlling

- Product-Level Controlling

26

Unit 7 Sales-Order-Related Production Scenarios

Sales-Order-Related Production Scenarios
The document flow of the Sales Order Management:
- Pre-Sales Activities: Mailing lists, Inquiries, Quotations
- Order Processing: Customers place orders; Standard orders normally contain: Customer
and material information, Pricing conditions for each item, Schedule lines and delivery
information, Billing information
- Procurement Alternatives: Availability check; From stock, By replenishment activities
(production order, purchase order), Make-to-order production, Shipped from an external
supplier, Shipped from another warehouse
- Delivery: Creating delivery documents, Creating transfer orders (picking), Packing (if
required), Goods issue
- Billing: Creating invoices for deliveries and services, Creating credit and debit memos on
the basis of orders, Cancelling business transactions, Transferring billing data to financial
accounting
- Payment: Final step of the Sales Order Management cycle; Customer Payment includes:
Posting payments against invoices and Reconciling differences, if necessary
Product Cost by Sales Order, the sales document items (items in inquires, quotations, or
sales orders) function as the cost objects for which you can determine costs and revenues in
both planned and actual data. You can use the Product Cost by Sales Order component in the following
situations:

When you are manufacturing in-house with reference to a sales order in complex make-toorder production
When you are purchasing customer-specific trading goods with reference to a sales order
and reselling them to your customers
When you are providing services whose costs are assigned to a sales order
When you want to collect the sum of the actual costs incurred for the sales order item on
the sales order item (standard cost of goods manufactured of sales plus variances).

Valuated or un-valuated sales order stock

You use a valuated sales order stock if you want the goods movements to have
corresponding postings in Financial Accounting (FI). A sales order stock is assigned exclusively
to a particular sales order and sales order item and cannot be used for other sales orders or
sales order items. Sales order stocks can be for independent requirements as well as for the
dependent individual requirements of the individual requirements material (finished product).
For this reason, the material components can only be used to manufacture the material
ordered by the customer and listed in a particular sales order item, and the material
manufactured can only be delivered to the customer in the context of the sales order item.
You use a non-valuated sales order stock if you do not want the goods movements to
have corresponding postings in Financial Accounting (FI). A sales order stock is assigned
exclusively to a specific sales order and cannot be used for other orders. Sales order stocks
can be for independent requirements as well as for the dependent individual requirements of
the individual requirements material (finished product). For this reason, the material
components can only be used to manufacture the material ordered by the customer, and the
material ordered by the customer can only be delivered to the customer in the context of the
order. With a non-valuated sales order stock, inventory changes are not reflected in Financial
Accounting. The sales order stock is settled to Financial Accounting only after results analysis
and settlement of the calculated values (results analysis data).

27

Unit 8 Product Cost by Period

Master Data and Preliminary Costing
A production order should be created in the master data while a product cost collector
should serve as a cost object for Controlling by period.
Periodicity of Product Cost Collectors
- Actual costs: Costs for products for which a goods receipt in the warehouse has been listed
in the current period (delivery to stock). Costs for work in process. These are target costs
for the production quantities that have been confirmed for the operations but not yet
delivered to stock. Production variances that are calculated using the following formula:
Variances = actual debit - goods receipt - work in process.
- Period-end Closing: Periodic costs (Template allocation, revaluation at actual prices,
overhead), WIP, Variance, Settlement
The product cost collector has two uses. For repetitive manufacturing, it is always used. It is
also always used as a cost object when controlling is not to take place for logistical objects
(decoupling scenario) ex. When the cost objects are created outside SAP ERP.
In order to ensure that the costs of a manufacturing order are collected on a product cost
collector, you must make the necessary settings for the order type of the manufacturing
order in Customizing for Product Cost by Order under Define Default Values for Order Types. !
You must manually create a product cost collector before you start production.
Process Chain
- Production Order: Order creation -> Schedule ->Availability check -> Release of order ->
Material withdrawal -> Goods Receipt -> Confirmation -> Archiving, Deleting
- Product Cost Collector : Create Product cost collector -> Preliminary costing ->
Simultaneous costing -> Period-end closing -> Process cost allocation -> Revaluation at
actual price -> Overhead allocation -> Work in progress -> Variance -> Settlement
Controlling Level
There is a separate controlling level for each plant material and process category. The
relevant process category in Cost Object Controlling is production. When you create the
product cost collector, you decide on which level the costs should be collected on the product
cost collector. You can choose from the following levels: Production version/ Any BOM/routing
combination/ Material per plant
-

If you are using the controlling level Production version, the product cost collector is created for the
characteristics material, production plant, planning plant, and production version. ! SAP recommends this
controlling level whenever you are using production versions. In repetitive manufacturing, you should always
use this controlling level.
If you are using the controlling level BOM/Routing, the product cost collector is created for the characteristics
material, production plant, planning plant, BOM, and routing. ! BOM/Routing should only be used if the material
does not have any production versions.
If you are using the controlling level Production Plant/Planning Plant, the product cost collector is created
for the characteristics material, production plant, and planning plant. These product cost collectors have a
number of features. For example, it is not possible to create a preliminary cost estimate for a product cost
collector. This affects subsequent functions. Problems may arise if you make changes to the reporting points of
the production versions.

A product cost collector is an order. The order type of the product cost collector must
belong to order category 05 (product cost collector). A results analysis key must be specified
in all product cost collectors for which you want to calculate work in process. When the
product cost collector is settled, the system apportions the balance among the different stock
in accordance with the delivery values for the period. The settlement process generates the
distribution rule automatically on the basis of the delivery values. The system creates
equivalence numbers based on the delivery values, and transfers these equivalence numbers
into the dynamic distribution rule. For preliminary costing and simultaneous costing, enter the
costing variant and valuation variant in the order type.
Preliminary Costing
- Based on: Costing lot-size of production process; BOM and Routing; Costing variant
28

Used to: Determine the activity quantity to be confirmed in repetitive manufacturing;

Valuate WIP: Determine the Production variance and valuate scrap; Revaluate reporting
point
Direct Materials Costs = Quantity req. (BOM)*Price (Valuation variant)
Direct Costs of Production =(planned setup times + machine times +labour times)
(Routing) *Price (Valuation variant)
- The standard values are specified in the operations in the routing and can be defined as
either fixed or variable (lot-size-dependent) values. (Machine hours / Setup costs)
Simultaneous Costing
The following business transactions can result in actual costs on cost objects: G/L account
postings in FI; goods movements in MM; reposting of primary costs; reposting of line items;
internal activity allocations; reposting of internal activity allocations; direct assignment of
personnel costs to cost objects using time sheets; process cost allocation; manual process
allocation; template allocation; calculation of overhead; revaluation of activities at actual
prices; confirmations in Logistics that result in activity allocations; subcontracting.
- The price control of the material is specified in the material master record: Price Control
Indicator V or S. For internally manufactured materials, SAP recommends valuation at the
standard price.
Period-End Closing
Sales controlling is only carried out in Profitability Analysis (CO-PA). To be able to better
compare the cost objects, all production processes should be accompanied by controlling by
period.
Template Allocation
- The template allocation technique allocates ABC processes and activity types of the cost
centers. In principle, all information in the system can be used as the cause value (cost
driver).
- The process template is determined dynamically based on the following parameters:
The costing sheet for the application of overhead is selected with the valuation
variant.
The overhead key is either entered directly in the cost object or derived from the
overhead group from the material master (costing view 1).
With the combination of overhead key and costing sheet, you can assign a template
in Customizing.
Revaluation at Actual Prices
- The actual prices are the actual costs divided by the activity and process quantities
consumed. You control whether revaluation at actual prices is possible in Customizing in
the parameters for the actual version that depend on the fiscal year, as well as in the
master data of the activity type.
- Revaluation at actual prices is performed in the period-end closing process for the product
cost collector. The cost object is charged with the difference between the actual price and
the price originally allocated to it.
Actual Overhead Calculation
- Overhead is allocated to cost objects using quantity-based or percentage allocation rates.
- Overhead costs are charged to the cost objects (product cost collectors, manufacturing
orders, or general cost objects). The Overhead Cost Object (cost center, order, process) is
credited (using the secondary C Elem. From the Credit column in the Costing Sheet).
Work in Process (at Target)
- Calculating the WIP means valuating the unfinished goods (work in process), provided that
the quantities are not scrap and no goods receipt has been entered.
29

In Customizing, you can use a valuation variant to define which cost estimate should be
used to calculate the target costs for the valuation of the work in process and the scrap. If
you are using a product cost collector, in many cases it is appropriate to calculate the
target costs using the preliminary costing for the product cost collector. You assign a
valuation variant for work in process and scrap to a combination of controlling area,
Results Analysis version and Results Analysis key.
Results analysis versions contain information on whether a version is relevant for
the balance sheet and the profit and loss statement or if it solely serves informational
purposes.
Results analysis keys contain control parameters for WIP calculation. The order
(product cost collector or manufacturing order) is only included in WIP calculation, if it
has a results analysis key.
Definition: results analysis = A periodic valuation of long-term orders and projects.
Results analysis valuates the relationship between the costs and a measure of the
order's progress toward completion, such as the revenue or the quantity produced.
Results Analysis cost elements of type 31
Definition: line ID = A concept used to structure the costs and revenue of a results
analysis object. You define a line ID to be able to group the results analysis data (such
as work in process) into source cost elements. For example, you could define a line ID
for all direct costs of production. Direct material costs K (costs)/ Accrued costs N
(not included).
When the work in process is settled, a posting document is generated in FI. When the
system capitalizes the work in process, it debits Unfinished Goods Inventory (WIP) (balance
sheet account) and credits Changes in Unfinished Goods Inventory (WIP) (income
statement account).
! The WIP GL account, although it is a P&L account it does not use a primary cost element,
but a Results Analysis cost elements of type 31

Variance Calculation
In variance calculation, target cost versions are used mainly to control the type of variance
(total variance, production variance, or planning variance). They can also be used to valuate
the scrap variances. The standard system uses the following target cost versions:
- Target cost version 0 (total variance). The total variance equals the order balance. For
this version, choose actual costs as the control costs and standard cost estimate as the
target costs.
- Target cost version 1 (production variance). For this version, choose actual costs as
the control costs and preliminary costs as the target costs.
- Target cost version 2 (planning variance). With target cost version 2, the costs in the
preliminary order cost estimate are interpreted as control costs. For this version, choose
planned costs as the control costs and current standard cost estimate as the target costs.
You cannot calculate planning variances for product cost collectors.
- Target cost version 3 (production variance of the period). You compare the planned
costs of the period calculated on the basis of an alternative material cost estimate (such as
a modified standard cost estimate) with the actual costs of the period on the basis of the
yield delivered to inventory in the period. The base quantity for variance calculation is the
yield. For this version, choose actual costs as the control costs and alternative material
cost estimate as the target costs.
Variance Categories

30

Settlement
Settlement transfers the variance values and WIP values to FI and CO-PA and Material Ledger
(if active).
Price

Price difference account

Inventory change account

Inventory account

Inventory change account

You can settle the variance categories to Costing-Based Profitability Analysis (CO-PA).
The only variances that are relevant for settlement to Profitability Analysis are those
calculated on the basis of target cost version 0. The value fields are assigned to the variances
for each category and cost element. If the price difference account has a corresponding cost
element, the price difference is settled to Account-Based Profitability Analysis in a similar
way as to Financial Accounting.
Settlement Profile
The settlement profile for a product cost collector must
allow settlement to a material. If you want to settle
variances to Profitability Analysis, the Variances
indicator must be selected and settlement to a
profitability segment must be allowed.
The settlement profile is defaulted through the order
type of the product cost collector.
The settlement profile also has fields for the allocation structure and the PA transfer
structure. These structures control settlement to costing-based Profitability Analysis. In the
PA transfer structure, you specify which variance category and cost element groups are
assigned to which value fields in Profitability Analysis.

Unit 9 Controlling by Sales Order without Production (Service)

Master Data and Preliminary Costing
Dynamic Item Processor
The dynamic item processor is a tool that the system uses to summarize data on dynamic
items during resource-related quotation creation and billing (for example, line items that arise
through the posting of goods movements, completion confirmations or surcharges). Further
entries are made according to use. You control the creation of dynamic items in Customizing
with the profile of the dynamic item processor (DIP profile). USE: resource related billing;
31

flat rate billing document with list of the actual effort; resource related creation of quotations;
flat-rate quotation with list of planned effort.
Preliminary Costing

TFIN22_1
Unit 1 Profitability Management
Overview of Profitability Management
Methods of Profitability Management
Cost-of-sales accounting With this method, the emphasis
is on matching the revenues for goods or services provided, or
both, such as the value that a company gains as a result of
sales against the related expenses for the items for which the
value is lost when products are transferred out of the company.
As a result, this accounting method displays the profit and loss
information in a way optimized for conducting margin
analyses, and as such it is optimal for the sales, marketing, and product management
areas.
Period accounting With this method, the emphasis is on summarizing the activity and
situational change over a period of time for a given organizational unit. As a result, this
accounting method presents the revenues and primary expenses that have been incurred
during a given period of time and the changes in stock value levels, work-in-process, and
capitalized activities. As such, it is optimal for the production and profit center areas.
Views of Profitability Management
Sales Reporting CO-PA allows you to analyse the profitability of specific market segments,
structured according to products, customers, and summarizations of these and other
characteristics as well as organizational units, such as company codes or business areas. The
aim is to provide your sales, marketing, product management and business planning
departments with the market-oriented controlling information to support the decision-making
process.
Responsibility Reporting You can use EC-PCA to analyse internal profit and loss for profit
centers. This allows you to evaluate the different areas or units within your company. You can
structure the profit centers of your company according to region, such as branch offices and
plants, or functions, such as production and sales, or products, such as product ranges and
divisions. Profit Center Accounting is a component of Enterprise Controlling
Profitability Analysis and Profit Center Accounting
Profitability Analysis by Market Segments
32

The business purpose of Profitability Analysis is to provide profitability-oriented performance

information on the market segments or sales channels of a company to support corporate
planning and decision-making, especially in the areas of sales and marketing.
- Market segments are normally some combination of information regarding customers,
products, and the selling organization. Performance figures are normally measurements of
quantities, revenues, discounts, surcharges, product costs, margins, and period costs.
Responsibility Reporting
- EC-PCA allows you to calculate the internal operating results for profit centers. 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 object, such as
materials, cost center, order, project, sales order, asset, cost object, and profitability
segment, to a profit center.
Reporting
- This sales-oriented approach in CO-PA means that no contribution to the success of the
organization is made until a sales transaction has been completed. As a result, the
products sold are transferred to CO-PA in accordance with the cost-of-sales accounting
method and provide the information about the sales revenue and sales deductions.
Management Accounting is made up of multiple application components optimized for
processing different approaches to managerial accounting. Management Accounting answers
the following typical questions by means of the appropriate component: What costs occur
within our organization? (CO-OM)/ What does producing a product or providing a service cost
our organization? (CO-PC)/ In which market segments are we successful? (CO-PA)/ How
profitable are our individual organizational areas (Profit Centers)? (EC-PCA)
Flows of Actual Values
Profit Center Accounting, EC-PCA, is a statistical accounting component. This means that it
takes the transaction data posted in other components and represents it from a profitcenter-oriented point of view. The postings in EC-PCA are statistical postings because the
profit center is not itself an account assignment object in Management Accounting.
In costing-based CO-PA, you can valuate the incoming sales orders or billing documents to
automatically determine the anticipated sales deductions or costs. You can also revaluate
your data periodically to adjust the initial, real-time valuation or add the actual costs of goods
manufactured.
The actual postings are the most important data source in account-based profit analysis.
Both sales orders and billing documents can be transferred from Sales and Distribution. In
addition, an interface program is available to enable you to transfer external data to the SAP
system.
Objects and Aspects in Profitability Management
Objects in Profitability Management
- Profitability segments are the market segments or strategic business units that are to
be analysed in the profitability analysis. They represent combinations of product, customer
and sales structure information and can contain information on company codes, business
units and profit centers. The primary purpose of CO-PA, its design has been optimized for
producing profit and loss statements under the cost-of-sales accounting format and
philosophy.
- Profit centers are the areas of responsibility within a corporation. These are responsible
for revenues and expenses, as well as certain assets and liabilities in some cases. All profit
centers are arranged into a standard hierarchy representing the entire organization. The
primary purpose of EC-PCA, its design has been optimized for producing profit and loss
33

statements under the period accounting format and philosophy. Notice that the cost-ofsales accounting in EC-PCA can also be undertaken with the aid of functional areas.
Organizational Units and Master Data
Operating concern the key organizational unit in the
Profitability Analysis, for which the sales market has a
uniform structure. One or more controlling areas are
assigned to an operating concern when organizational
structures are defined. In most cases, corporations have
only a single operating concern, which is recommended
for the sake of simplicity and convenience if all
controlling areas and company codes share the same
fiscal calendar.

Parallel
Currencies
Profitability Management

in

Unit 2 New General Ledger Accounting

New General Ledger Accounting Basic Information
New G/L advantages - Overview:
- The new G/L uses an extended data structure as
standard.
- Document splitting
- Real-time integration between CO and FI
- The ledger solution (within new G/L)
Overview of the totals tables in the conventional
components:
- Classic FI: Table GLT0
- COS ledger: Table GLFUNCT
- Reconciliation ledger: Table COFIT
- EC-PCA / classic Profit Center Accounting: Table GLPCT
The more sales-oriented cost-of-sales approach compares the costs to the corresponding
quantity structure of the revenues. Revenues are only compared to the costs incurred for the
quantity of goods or services sold. You can use period accounting and/or cost-of-sales
34

accounting in Profit Center Accounting. If you want to use cost-of-sales accounting, you have
to activate the COS accounting scenario and configure the corresponding settings.
Global Settings in New General Ledger Accounting for Profit Centers
Ledger Definition and Profit Centers

Real-Time CO-FI Integration and Profit

Centers
SAP has had real-time integration from financial
accounting (FI) to management accounting (=> CO)
for a long time. The other way around, from CO to FI
was previously not possible in real time. The
reconciliation ledger that was to be maintained in
the cost element invoice is always used to reconcile
CO with financial accounting.

Unit 3 Profit Center Master Data in

New General Ledger Accounting
Profit Center Master Data
Profit Center Structure
- Regional profit center structure (sales-oriented)
- Functional profit center structure
- Product-related profit center structure
- Business unit profit center planning
You can divide your enterprise according to the following aspects:
- Geographical structure of profit centers (locations, regions, and so on)
- Product-related structure of profit centers (divisions, product lines, and so on)
- Functional structure of profit centers (production, sales, research, and so on)
The Profit Center Standard Hierarchy
This structure is called the standard hierarchy. The standard hierarchy is a tree structure
that contains all the profit centers in a controlling area. When you create a profit center, you
have to assign it to a hierarchy area (hierarchy node) in the standard hierarchy. This ensures
that all profit centers in the controlling area end at the same node.
Profit Center Master Data
- A profit center is defined at controlling area level.
- When creating a profit center, you enter the name of the profit center and the period of
validity.
- Profit center master data is time-dependent
- By default, a profit center is assigned to all the company codes within the controlling area.
You can exclude certain company codes for a profit center by not selecting them.
35

The dummy profit center is the primary default value for postings to an account
assignment object in an accounting area if no other profit center is assigned. In the new
general ledger - in contrast to classic Profit Center Accounting - you do not have to
define or use a dummy profit center. Postings are simply made without profit centers and
then assessed or distributed to the desired profit centers.
Create Dummy Profit Center: You do not specify a validity period. The dummy profit
center is automatically valid for the maximum validity period./ You cannot copy the
dummy profit center from an existing profit center./ A flag identifying the profit
center as the dummy profit center is set automatically (in the indicator folder).
Default profit centers are profit centers that do not reflect an organizational area of
responsibility, but instead are used to collect costs, revenues, and postings to balance
sheet accounts within a posting period. You should only define default profit centers
for accounts for which document splitting is not active.

Profit Center Accounting is based on the chart of accounts that is assigned to Financial
Accounting. These accounts include: Stock accounts: The system uses these accounts to
display the liability and equity sides of the balance sheet. P&L accounts (primary cost
element): The system uses these accounts to generate the profit and loss statement.
Secondary cost elements: These costs are generated through allocations within controlling
Derivation of a Segment The segment characteristic is only derived together with the
profit center characteristic. If no segment is entered manually during posting (only possible in
Financial Accounting transactions), the segment is determined from the master record of the
profit center.
Profit center groups are alternative hierarchies to the standard
hierarchy. You can use them in reporting, distribution and assessment, or
various planning functions. In contrast to the standard hierarchy, these
profit center groups do not have to contain all the profit centers in the
controlling area.
Profit Center
Status
Profit Center Assignments
You assign profit centers to all account assignment objects to which costs and revenues
have been posted. As a result of the assignment logic, the profit center is normally not posted
to explicitly. Instead, data is derived from primary account assignment objects (cost centers,
internal orders).
Cost objects are used in Product Cost Accounting to collect and store costs that cannot be
assigned to objects at a lower level (orders, projects, or cost centers). However, in certain
circumstances, you may need to assign a cost object to a profit center.
Unlike other assignment objects, profitability segments do not have master records. A
profitability segment is a combination of characteristics, such as a customer, product, plant,
distribution channel, and so on. The profit center is always one of the characteristics.
Profit centers are assigned to the various data-bearing structures in the project rather than to
the project definition itself. These structures are: Work breakdown structure element
(WBS element)/ Network header/ Network operation

36

Materials are always assigned to a profit center at plant level.

Assignment Monitor
The assignment monitor provides you with an overview of all the
assignments you have made for various objects, and supports you
when you make or change assignments. For example, you can call
up a list of all cost centers that have not been assigned to a profit
center or profit center group, or a list of cost centers that are
assigned to a particular profit center or profit center group. From
here, you can jump directly to the transaction for changing the
object.

Unit 4 - Actual Postings in Profit Center Accounting

Data Flow
Caution: Profit center distribution and assessment in new General Ledger Accounting work
the same way as in Overhead Management, but affect FI postings only.
Hint: The (actual) allocations from the different components in the SAP system with active
new General Ledger Accounting are integrated with FI, as described:
- Actual allocations in Overhead Cost Controlling: Profit center changes are also updated in
new G/L if real-time CO FI integration is active.
- Actual allocations from classic Profit Center Accounting (EC-PCA): No update in FI a strict
EC-PCA document is generated.
- Actual allocations in new G/L: No integration with other components - a strict FI document
is generated
Hint: The distribution only creates an FI document.
Hint: The assessment account must not correspond to any secondary cost element in CO this means that you cannot simply use the assessment cost elements (cost element type 42)
from CO.

Unit 5 - Profit Center Planning

Planning Configuration and Manual Planning
Settings that are needed to activate planning in new General Ledger Accounting:
1. Activate summary table
2.
Import planning layouts
3.
Define
plan periods
4. Set planner profile 5.
Create planning document types
6.
Define
plan
version
7. Assign plan version to a fiscal year
8.
Activate plan line items
Planning Layouts for Planning in Financial Accounting
- (Direct) planning in FI is always saved together with an account. This means it is easy to
plan primary processes. However, it is not possible to plan secondary processes(such
as activities) directly from FI. This is only possible through integrated planning with
Overhead Cost Controlling (in standard with EHP3 or SAP Note 1009299)
- You can activate cumulative plan data entry for balance sheet accounts. Thus you
can perform balance carry forward for plan data. The system considers the balance carry
forward values when determining the balance sheet values for the individual periods but
does not display them separately (the planned balance sheet values are displayed for
balance sheet accounts (and only for balance sheet accounts) instead of the balance sheet
change values.)
Integrated Planning
- Activate the integrated planning indicator both in FI and CO plan versions. ! By default, the
system transfers only the data that contain primary costs. For secondary costs: these costs
must be assigned to reconciliation accounts
37

Transfer of Plan Data Classic and New General Ledger

You can transfer plan data from the following Controlling (CO) components for planning in the
new general ledger:
Overhead Cost Controlling (CO-OM): Primary and secondary cost elements
Profitability Analysis (CO-PA): Primary cost elements

Unit 6 Structures
Overview of Operating Concern
- Operating concern -> Controlling area ->Company Code ->Plant
Basic Concepts: Characteristics and Value Fields
Characteristics What do I want to report on? Divisions, Regions, Products, Customers.
Characteristic Values What values can I have for these characteristics? Region South;
Region North.
Profitability Segments What is the technical definition of my sales channel? Combination
of Region North, Product Prod1, Sales Rep Miller. The combination of the values for the
characteristics is a Profitability Segment.
Value Fields What performance measures do I want to track and analyse? Gross Sales,
Surcharges, Discounts, Cost-of-Sales.
Characteristics
- ! Characteristics are valid in all clients and are available for all operating concerns
- Definition: Characteristics are the analytic dimensions of the Profitability Analysis. They
define what items or objects the user can evaluate.
Fixed characteristics: A number of fundamental characteristics are automatically
predefined in every operating concern. These include the product number,
company code, billing type, business area, sales order, customer, and the
Sampl
controlling area, to name but a few. In addition to the fixed characteristics, up to 50
e
Chara
non-fixed characteristics can be added to an operating concern.
cterist
Predefined characteristics: In addition to the fixed characteristics, a number of
other predefined characteristics are available in the field catalogue. Such
characteristics include customer group, customer district, and country, and they
can be added to your operating concern if desired.
Characteristics from SAP tables: You can define your operating concerns by
using characteristics that already exist in other applications. For example, you can
select fields from the tables for customer master records, material master records,
Create
and sales documents. You can also select the partner roles defined in the structure
d by
PAPARTNER in the Sales and Distribution (SD) application and use them as
Custo
characteristics in Profitability Analysis.
mer
Custom Characteristics: If the characteristic categories are insufficient for your
needs, you can define completely new characteristics from scratch for exclusive use
in Profitability Analysis. To derive values for these newly defined characteristics, you
need to create your own derivation rules.
These non-fixed characteristics must be added to the field catalog before they can be used
to define a new operating concern. The field catalog originally contains some suggested
characteristics which might be used in a new operating concern definition. There are two ways
to add other characteristics to the field catalog:
- Choose an existing field from certain SAP tables, which must be five characters long or
less.
- Create a characteristic independently, which should begin with WW and be four to five
characters total.
Value Fields
Value fields are only required in costing-based Profitability Analysis. These are the fields that
contain the currency amounts and quantities that you want to analyse in CO-PA. They
represent the structure of your costs and revenues. Value fields can either be highly
38

summarized, such as representing a summary of cost element balances, or highly detailed,

such as representing just one part of a single cost element balance.
-

! Unlike characteristics, there are no fixed value fields for a new operating concern.
All value fields must exist in the field catalog before they can be used to define a new
operating concern. The field catalog originally contains some suggested value fields, which
might be used in a new operating concern.
Value fields can also be defined independently. These should begin with VV..., and should
be four to five characters in total.

Fixed Basic Key Figures (Account-Based CO-PA only)

- In account-based Profitability Analysis, all values are updated to accounts. Each amount is
stored in up to three different currencies under fixed basic key figures, which are accessed
in reporting.
Value Fields With New Time Aggregation Rules
- You can use value fields with the aggregation rules, SUM (summation) AVG (average) and
LAS (last value) in CO-PA drill-down reports.
- Aggregation is the combination or compression of various data, measured values, or
indicators to superordinate key figures using certain rules (aggregation rules). It is used for
a spatially, temporally, or factually compressed display. In this way, you can aggregate the
measured values of a measurement network by calculating their arithmetic average.
Defining an Operating Concern and its Attributes
You define the structure of your operating concern when you set up your system. This is done
by selecting the characteristics you want to use in the data structures of the operating
concern. In costing-based Profitability Analysis, you also need to select the value fields you
want to use. ! The structure of an operating concern is valid in all clients.
Currency types Operating concern currency
Company code currency
Profit center valuation
Fiscal year variant The fiscal year variant determines the number of posting periods for
each fiscal year. Because each controlling area assigned to the operating concern, and each
company code assigned to each of the controlling areas, can have its own fiscal year variant,
the variant you choose for the operating concern must agree with that for the other areas.
Data Structures
Defining Data Structures To define data structures, copy the required characteristics and
value fields to the operating concern and save them.
Activating the Environment (up to 4.6B Generation) - generate the operating
environment. This process generates all the tables, programs, and technical objects required
to support the operating concern you have defined.
Changing the Data Structures - You must reactivate the environment after you change the
data structures of an operating concern. For example, reactivate the environment after you
add a new characteristic or a value field.
Transaction Data Structures
Costing-based CO-PA stores its transaction data in its own
data tables, which are created when activating and
generating the operating concern. This means that its data
will never affect the execution speed of a report in another
CO application.
Account-based CO-PA stores its transaction data in the
transaction data tables for Overhead Cost Management. This
means that its data will affect the execution speed of reports for other CO applications that
share the same transaction data tables.
39

CE1xxxx for actual line items (where xxxx = operating concern), which contains all the
data at the most detailed level
- CE2xxxx for Planned line items
- CE3xxxx for values posted to the profitability segments that are additionally
available broken down into the posting period.
- CE4xxxx for profitability segments, created based on the business considerations that
are defined when an operating concern is created.
Typical record lengths: CE4xxxx = 250 bytes, CE3xxxx = 2000
bytes
Segment Level and Non-Segment Level Characteristics
- For reasons of performance, we recommend that the number of profitability segments be
kept as low as possible so that the quantity of the totals records required in the profitability
segment also remains low. You can achieve this by restricting the selection of
characteristics for the profitability segment.
Operating Concern Templates
- S_AL: Template for Route Profitability.
- S_GO: Cross Industry Template.
- S_CP: Consumer Goods Industry Template.
Operating concern templates offer the following advantages:
- They enable you to gain an insight into Profitability Analysis as a demonstration, without
your having to perform extensive Customizing.
- The operating concern templates simplify the Customizing in the profitability analysis.

Unit 7 Master Data

Introduction to Characteristic Derivation and Valuation
Characteristic Derivation: Central Points
- Derivation supplements or overwrites certain automatically mapped characteristic values.
- A derivation strategy is a sequence of steps, where each step uses one derivation
technique to calculate one or more values for one or more characteristics, respectively.
- Control attributes can be assigned to each step, such as conditions for execution, reactions
when unsuccessful, and overwrite authority.
- Some derivation steps are created by the system at generation time, of which some are
modifiable. Others are created by the configurator from the beginning.
Valuation: Central Points
- Valuation supplements the data being passed directly from transactions into Controlling
Profitability Analysis with calculated, retrieved, or otherwise accessed values.
- A valuation strategy can contain CO-PA costing sheets, Sales Order Management pricing
procedures (in planning), product costing calls, and user exit calls, in a sequence that can
be customized.
- Valuation strategies must be assigned to record types, points of valuation, and plan
versions when applicable to be activated.
- Using valuation is optional. It is merely a tool that can be used in an attempt to get the
most complete and useful information out of CO-PA.
Characteristic Derivation
Characteristic Derivation Concept - For each CO-PA-relevant transaction, if the derivation
strategy is complete, the system tries to derive a characteristic value for each characteristic
in the operating concern.
- The total combination of (segment-level) characteristic values for a given transaction
consists of the definition of the relevant profitability segment.
Derivation Strategy and Techniques - consists of a number of different steps, which derive
the different characteristic values. Each derivation step defines the logical interrelationship
between known source characteristics and the characteristics to be derived.
- The system automatically creates a standard derivation strategy for each operating
concern. This strategy contains the derivation steps for all the dependencies that are
already known between characteristics. You can then change this strategy to meet the
requirements of your organization.
40

The derivation steps are performed in a customizable sequence to maximize the

possibilities to locate or determine valid characteristic values. The following items can be
configured for each step: Conditions under which the step should be executed/ Whether or
not initial values are allowed for source fields in a step/ Whether or not the step should
overwrite an existing characteristic value/ Whether or not an error message should
generate if the step is unsuccessful
o Derivation of fixed characteristics
Legend:
Derivation from derivation rules
Derivation from table lookups
o SAP
o Derivation from customer hierarchy
Both SAP and Customer
o Derivation from product hierarchy
Customer
o Derivation of region
Derivation with move and clear
Derivation with SAP enhancements
Derivation of units of measure
You can use other derivation steps to overwrite the values determined through the fixed
derivation steps. This can be normally achieved with all characteristics, except for !
controlling area, company code, product, and customer. These have fixed non-modifiable
derivation.
- With derivation rules, characteristic values, known as target values, are determined
directly based on the values of other characteristic values, known as source values.
- In contrast to other derivation steps, derivation rule entries can be configured to be either
related to a specific interval or time, which is being time-dependent or applicable for all
times (time-independent).
Customizing Monitor Derivation Analysis
The Customizing Monitor provides an overview of all derivation steps. Additional functions are
available when you use the SAP list viewer to display derivation analysis. You can search for
specific value fields and determine their use in derivation.

Valuation
Valuation Concept
In costing-based Profitability Analysis, you can configure a function
known as valuation to supplement the performance information
provided directly by a transaction. The additional information may
be estimated, calculated, or retrieved from a different source.
- Valuation can be used with either actual or planning data.
- Valuation can be configured to function either in real-time,
which means at the time data is first posted to CO-PA, or
periodically, which means at some later point when manually
triggered.
- Valuation can be used, for example, to calculate:
o Sales deductions that do not appear in the invoice (such
as cash deductions, rebates, and commission)
o Costs of sales (sold products * standard costs of goods manufactured)
o Calculated direct costs, referred to as the special direct costs for sales (such as
transportation costs, packaging or insurance)
Valuation Strategy and Techniques
Profitability Analysis offers you the following methods of valuation:
- Material cost estimate Valuation using material cost estimates lets you determine the
cost of sales when you post a sales transaction to Profitability Analysis. For this, the
quantities of products sold are multiplied by the standard costs of goods manufactured,
thereby including in the contribution margin analysis detailed fixed and variable cost
components for the cost of goods manufactured in the individual contribution margins.
(Customizing: assign Cost component values -> Value Field using costing keys 41

determines which product cost estimate is used to valuate value fields in Profitability
Analysis (CO-PA).
Costing sheet You can use the condition technique to calculate values in CO-PA that,
although relevant for analysis purposes, such as calculating a contribution margin at each
level, are not yet established when the document posting occurs. This means in particular
that you can determine anticipated sales commissions, discounts, or shipping costs that
are not yet known at the time of billing, and use this information to analyze your sales
transactions. (Customizing: )
User Exit Customer-defined valuation routines are available for cases where anticipated
valuation approaches cannot be determined using either of the two preceding methods.
This means that you can implement your own valuation logic.

Unit 8 Actual Data

Integration with Sales Order Management
The main purpose of costing-based CO-PA is to
provide sales management with a tool for analysing the
expected results generated by sales transactions. Its
main feature is the use of value fields and the
automatic calculation of anticipated or accrual data
(valuation). The advantage of this method is that the
data is up-to-the-minute.
Account-based CO-PA enables you to reconcile cost
and Financial Accounting at any time at the account
level. In contrast to costing-based CO-PA, the system
stores values in cost and revenue elements, which form the common account structure for all
the Financials applications. All the costs and revenues are posted to account-based CO-PA
simultaneously and using the same valuation approach as Financial Accounting. The main
difference here is that the cost of sales is transferred at the point of goods issue and not
together with the revenues.
Update in CO-PA
Sales Order
Delivery
Billing

Costing based

Account based
X

Condition Types Pricing Procedure

A condition type is a representation in the system of some aspect of your daily pricing
activities. For example, you can define a different condition type for each type of price,
discount, or surcharge that occurs in your business transactions.
A condition table defines the combination of fields that identifies an individual condition
record. A condition record is how the system stores the specific condition data that you enter
in the system as condition records. For example, when you enter the price for a product or a
special discount for a good customer, you create individual condition records.
An access sequence is a search strategy that the system uses to find valid data for a
particular condition type. It determines the sequence in which the system searches for data.
The access sequence consists of one or more accesses. The sequence of the accesses
establishes which condition records have priority over others. The accesses instructs the
system where to look first, second, and continue in this way until it finds a valid condition
record. You specify an access sequence for each condition type for which you create condition
records.
Transfer of Overhead
- In theory, you could create one cycle for transferring all the overhead costs to Profitability
Analysis. Notice that for performance reasons as well as for technical ones, it is a good
idea to create several cycles and process them sequentially in the order entered.
42

You should divide your assessment into separate cycles if you want to allocate the different
areas of your organization to CO-PA at different times. This also has the advantage that
when errors or changes occur, you only need to repeat the affected cycles.
! A cycle can contain the sender cost centers or sender processes from one controlling
area and can use the values from either costing-based or account-based Profitability
Analysis as tracing factors.
The sender cost centers or processes are credited in the assessment cost element
specified in the segment of the cycle. The receiver is defined by a combination of
characteristic values, which means a profitability segment. The values are debited to the
profitability segment using the assessment cost element, such as account-based CO-PA
and value fields, such as costing-based CO-PA, which you specified for each segment of
the cycle.

Settlement of Orders
In the SAP system, you settle internal orders, sales orders, projects, as well as production
orders, and run schedules with production cost collectors to profitability segments. These
objects are used for the various purposes that are relevant to Profitability Analysis.
- Internal orders and projects can be used to control the costs of an internal activity, such as
the costs of an advertising campaign. At the end of the activity, they are settled to the
appropriate profitability segments, such as the product range and sales area.
- You can also use Management Accounting orders to calculate the anticipated values to be
able to evaluate the accuracy of your accrual method.
- A third possible use of internal orders or projects is in make-to-order manufacturing. If you
are handling sales orders, a customer project or a Management Accounting order to which
revenue postings are allowed, you can post costs, such as production costs and S costs, as
well as revenue and sales deductions to the order or project. When the product is
complete, the costs and revenues can be settled to Profitability Analysis. You can also
transfer the accrued values that are particularly important for progress billing.
Settling Orders Customizing
- In a settlement profile, you define which receivers are allowed for order settlement. You
define a default settlement structure and a default PA transfer structure. When you create
an order, you need to specify an order type. The system uses this order type to determine
which settlement profile and, as a result, which settlement structure and PA transfer
structure to use.
o In account-based CO-PA, costs are settled to the settlement cost element specified
in the settlement structure.
o In costing-based CO-PA, costs are settled from the original cost elements to the
value fields to which they are assigned in the PA transfer structure.
PA Transfer Structure
The PA transfer structure contains the assignment of costs and revenues to the value fields in
costing-based CO-PA.
- A PA transfer structure consists of any number of assignment lines. Each assignment line
contains the assignment of one interval or a group of cost or revenue elements to the
required value field.
- A PA transfer structure must meet the following criteria:
o It must be complete: All the cost and revenue elements that can receive costs or
revenues must be assigned to a value field in the PA transfer structure.
o The assignments must be unique: Each cost or revenue element can only occur
one time within a PA transfer structure.
An allocation structure consists of one or several settlement assignments. An assignment
defines which costs (Origin: Cost element groups from debit cost elements) are to be settled
to which receiver type (for example, cost center or order). You have two alternatives in
settlement assignment:
- You can assign the debit cost element groups to a settlement cost element.
43

You can settle by cost element, which means the debit cost element is the settlement cost
element.

Direct Postings
Direct Posting from Financial Accounting
Direct posting enables you to post direct costs, revenue, and sales deductions to profitability
segments. You assign the values to a profitability segment directly in the Financial Accounting
(FI) posting transaction. There, you can call up a special assignment dialog box for each
posting line by clicking the Prof. segment field.
- For direct postings in Financial Accounting, all the assignments of values and quantities to
the value fields in costing-based Controlling Profitability Analysis (CO-PA) are defined in the
PA transfer structure, FI, which you maintain in Customizing.
- In account-based CO-PA, the data is posted in the same cost or revenue element.
- If your system allows dual postings to both a profitability segment and a cost center, the
real posting always goes to the profitability segment. The cost center is posted only
for statistical purposes.
Value Flow from Cost Object CO
After finishing the production process or at the end of the period, the production order will be
settled to a price difference account. Additional period-end closing activities may be
performed: Calculation of overhead/ Calculation of work in process (WIP)/ Calculation of
variances
Settlement of Variances to PA
- You can settle or transfer the production variances calculated in Product Cost Controlling
for both final production orders as well as run schedule headers, settled periodically to
Controlling Profitability Analysis (CO-PA). The individual variance categories, such as
material price variance and material quantity variance, can be transferred separately.
- Notice the following when you define a PA transfer structure:
o Every debit cost element must be in the PA transfer structure. You can either group
all the cost elements into a cost element group or define a number of groups for
materials, internal activities, business processes, and other overhead costs. These
groups are entered in the cost elements area.
o Every variance category must be represented in the PA transfer structure. The
variance categories are specified by the system and are entered under the source
section.
o Each debit cost element or combination of cost element group and variance
category can only be assigned to one value field.
- You should make sure that:
o The current standard cost estimate is selected for valuation in Profitability Analysis.
o The cost components of the standard cost estimate are linked to value fields.
- Settlement to account based CO-PA is not standard (!) but an option.
Top Down Distribution
Top down distribution of actual data is a periodic function that enables you to distribute this
aggregated data to extensive levels, such as the division level or the customer level in CO-PA,
based on reference information, such as the data from the previous year. This function works
in the same way as top down distribution of plan data.
You can select the values posted to any profitability segments and value fields and then
distribute this data to a predefined distribution level. You can use the existing actual or plan
data as the basis for this distribution. You can also distribute period by period or aggregate
the period values to smooth out variances.

44

Schedule Manager
- The closing process is more transparent and easy
to handle.
- Event-driven processing means that the SAP
system automatically performs the necessary
steps.
- Monitoring the complete process is user-friendly.
- Worklist-driven error analysis and integrated error-handling procedures reduce the time
needed for error correction.
- Total processing time is minimized by optimized worklist processing.
Flow Definition: In a flow definition you can link the tasks to one another if they are related
or if they should be processed in a worklist.
Scheduler: In the scheduler, you can schedule tasks in a structure tree. You can use dragand-drop in a daily overview to enable the system to execute the tasks at a certain time.
Monitor: Provides an overview of the scheduled tasks during and after processing. You can
correct faulty objects in a worklist.
Worklist: Objects that are to be processed in a processing step sequence are managed in the
worklist. The worklist monitor presents information, such as the objects that were processed
without errors and the objects that could not be processed.

Unit 9 Tools
Realignment and Customizing Monitors
The realignment function alters the definitions of the profitability segments in the database.
- Its primary use is for restating historic data so that it makes sense in the context of the
current market situation.
- Notice that it can also be used to correct the mistakes in CO-PA and populate the
characteristics that have recently been added to an operating concern on historic
summary records.
- ! A realignment affects all the historic data in the CO-PA data structures.
Customizing Monitor
You can use the Customizing Monitor to carry out three key analysis functions:
- Overview of the organizational structures: The organizational structures for the
current operating concern are displayed here.
- Where-used list: In this list, you can display an overview of the objects in which a
characteristic or value field is used in CO-PA Customizing.
- The report overview specifies the reports in which particular characteristics are used. In
this way, you can set up certain useful summarization levels.

Unit 10 Planning
The Profit Planning Process
- Planning on Different Levels:
o Sales organization Marketing costs
o Customer group Sales costs
o Customer product group Sales volume, revenue
o Product COGS
Planning Layout
Planning layouts are customized screens for entering plan data. The definition of a planning
layout controls not only the appearance of the Planning screen but also some of the functions.
This allows for complete flexibility in controlling the planning entry process.
A planning layout definition consists of three parts:
- General data selection - characteristic values are specified that are valid for the entire
layout.
45

Lead columns - additional characteristics that are to be planned may be specified.

Value columns - characteristic/value field combinations.

46

Contents
TFIN20_1.................................................................................................................................... 1
Unit 1 - Overview of Management Accounting........................................................................1
General Tasks of Management Accounting..........................................................................1
Integration Within Management Accounting and with Other SAP Applications....................1
Unit 2 Organizational Units................................................................................................... 1
Unit 3 Master Data................................................................................................................ 2
Cost Centres........................................................................................................................ 2
Cost elements...................................................................................................................... 3
Activity Types....................................................................................................................... 3
Statistical key figures........................................................................................................... 3
Global Functions for Master Data......................................................................................... 3
Unit 4 Event-Based Postings................................................................................................. 3
Entering Primary Postings.................................................................................................... 3
Reports in Cost Centre Accounting....................................................................................... 4
Account Assignment Tools.................................................................................................... 4
Adjustment postings............................................................................................................ 4
Direct Activity Allocation...................................................................................................... 4
Unit 5 Period-End Closing..................................................................................................... 4
Accrual Calculation.............................................................................................................. 4
Entering Statistical Key Figures............................................................................................ 5
Periodic Reposting................................................................................................................ 5
Cost Allocations................................................................................................................... 5
Period Lock........................................................................................................................... 6
Unit 6 Internal Orders: Overview.......................................................................................... 6
The Different Scenarios for Internal Orders..........................................................................7
Unit 7 Master Data of Internal Orders...................................................................................7
Master Data Maintenance.................................................................................................... 7
Status Management for Overhead Cost Orders....................................................................7
Grouping and Collective Processing..................................................................................... 7
Unit 8 Transaction-Based Postings........................................................................................ 8
Event-Based Postings Within and Outside Management Accounting....................................8
Commitment Management.................................................................................................. 8
Unit 9 Period-End Closing of the Internal Orders..................................................................8
Periodic Debit Postings......................................................................................................... 8
Periodic Credit Postings........................................................................................................ 8
Unit 10 Planning, Budgeting and Availability Control............................................................9
47

Budgeting and Availability Control....................................................................................... 9

Introduction to Planning..................................................................................................... 10
Planning Options in Overhead Management Accounting...................................................11
Advanced Planning Techniques for Internal Orders............................................................12
Planning Aids..................................................................................................................... 12
TFIN20_2.................................................................................................................................. 13
Unit 1 Introduction to Product Cost Planning......................................................................13
Overview of Product Cost Planning.................................................................................... 13
Unit 2 Material Cost Estimate without Quantity Structure..................................................14
Material Master.................................................................................................................. 14
Unit Cost Estimates............................................................................................................ 14
Unit 3 Preparing for Product Cost Planning.........................................................................16
Costing Variant................................................................................................................... 16
Cost Component Split........................................................................................................ 17
Overhead Costing Sheet.................................................................................................... 18
Allocating Process Costs to a Product (ABC).......................................................................18
Unit 4 Material Cost Estimate with Quantity Structure.......................................................18
Basics of Material Costing with Quantity Structure............................................................18
Material Cost Estimate....................................................................................................... 20
Prices in Material Master.................................................................................................... 20
Unit 5 Costing Run.............................................................................................................. 21
Costing Run in Product Cost Planning................................................................................21
Unit 6 Overview of Cost Object Controlling.........................................................................22
Overview of the Components of Cost Object Controlling...................................................22
Unit 7 Sales-Order-Related Production Scenarios...............................................................24
Sales-Order-Related Production Scenarios.........................................................................24
Unit 8 Product Cost by Period............................................................................................. 25
Master Data and Preliminary Costing.................................................................................25
Simultaneous Costing........................................................................................................ 26
Period-End Closing............................................................................................................. 26
Unit 9 Controlling by Sales Order without Production (Service)..........................................29
Master Data and Preliminary Costing.................................................................................29
TFIN22_1.................................................................................................................................. 29
Unit 1 Profitability Management......................................................................................... 29
Overview of Profitability Management............................................................................... 29
Profitability Analysis and Profit Center Accounting.............................................................30
Objects and Aspects in Profitability Management..............................................................30
Unit 2 New General Ledger Accounting..............................................................................31
48

New General Ledger Accounting Basic Information.........................................................31

Global Settings in New General Ledger Accounting for Profit Centers...............................32
Unit 3 Profit Center Master Data in New General Ledger Accounting.................................32
Profit Center Master Data................................................................................................... 32
Profit Center Assignments.................................................................................................. 33
Unit 4 - Actual Postings in Profit Center Accounting..............................................................34
Data Flow........................................................................................................................... 34
Unit 5 - Profit Center Planning............................................................................................... 34
Planning Configuration and Manual Planning.....................................................................34
Integrated Planning............................................................................................................ 34
Unit 6 Structures................................................................................................................ 34
Overview of Operating Concern......................................................................................... 34
Data Structures.................................................................................................................. 36
Unit 7 Master Data.............................................................................................................. 36
Introduction to Characteristic Derivation and Valuation.....................................................36
Characteristic Derivation................................................................................................... 37
Valuation............................................................................................................................ 38
Unit 8 Actual Data.............................................................................................................. 38
Integration with Sales Order Management.........................................................................38
Transfer of Overhead.......................................................................................................... 39
Direct Postings................................................................................................................... 40
Value Flow from Cost Object CO......................................................................................... 40
Unit 9 Tools......................................................................................................................... 41
Realignment and Customizing Monitors............................................................................. 41
Unit 10 Planning................................................................................................................. 41
The Profit Planning Process................................................................................................ 41

49