Profit Center Accounting

Profit Center Accounting

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Document Reference: Business Blueprint Strategy Author: Date: 18/03/2003 Checked By: Date: Approved By: Date: Change Record Issue 10 Date 18 03 2003 Author Comments

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Profit Center Accounting

Business Blueprint Format Business Scenario Code / Name Business Process Code / Name Process O ners Process !eam "em#ers Application Consultants "odules Influenced

R$%&IR$"$N! / $'P$C!A!ION
Profita#ilit( Planning

1 2

Creation o* )lan Data on all )ro*it Centers )osting o* Actual +,penses and -evenues on )ro*it Centers

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Profit Center Accounting

Business "odel A) Profit Center Planning:
)ro*it Center )lanning ena.les the individual pro*it centers to plan *or revenues and costs PROC$SS PR$*R$%&ISI!$S Creation o* the *ollo/ing #asters: 1 2 All 0' Accounts o* !inancial Accounting1 relevant to )ro*it Centre Accounting1 should have .een created as Account 0roups /ithin )ro*it Center Accounting Profit Center +ierarch( and the Cost Center 2ierarchy #ust .e co#pletely de*ined 3he 2ierarchies contain the relationship .et/een the individual )ro*it and Cost centers /ith their respective 0roups Sales )lanning should .e co#pleted in S4D under Sales 4 5peration )lanning #odule 3he )lanned revenues /ill .e trans*erred to C5 in 6uantities and values at a su##ary level *or a )ro*it Center

Other Pre*re,uisites: 1 2 3 & 3he Controlling Area settings #ust have .een set and )CA should .e active in the Controlling Area *or a *iscal year Du##y )ro*it Center is re7uired to .e de*ined in the Controlling Area All Cost Centers should have )ro*it Center assign#ent )lanning versions should .e de*ined *or )CA in the Controlling Area Settings

PROC$SS -OR.F/O-:
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Profit Center Accounting

Act "o 1 2 3 & Activity <denti*y the )lan )ro*ile )lan *or Costs/-evenues/Balance Sheet Accounts1 Statistical ;ey !igures on )ro*it Centers / 0roups )lanning Aids > Copy )lanning Aids > 3rans*er o* Statistical ;ey *igures *ro# other Cost 5.?ects SA) 83 C5D+9 %;+) %;+11 %;+31 %;+= %;+( 1;++ -+:A-; S

& PROC$SS F/O- DIA0RA":

S$! !+$ P/AN PROFI/$

!ransfer of Statistical .e( Figures from Other Cost O#8ects

$'$C&!$ !+$ !RANSAC!ION COD$S 2.$13 2.$43 2.$5

Cop( Actual/Plan Data to another Plan 6ersion/Fiscal 7ear

Step 1: Identif( Plan Profile

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Profit Center Accounting

Set )lanning )ro*ile : 3ransaction code : %;+) AC!I6I!7 D$SCRIP!ION )lanner )ro*ile: A )lan )ro*ile descri.es the areas in /hich the )lan is intended *or So#e o* the areas /hich -/3 Syste# has provided are listed .elo/: 1 Costs and -evenues 2 Statistical ;ey !igures 3 Balance Sheet <te#s "e/ )lanning areas can also .e de*ined apart *ro# the a.ove @ithin each Area a plan layout /ill .e de*ined /hich can also .e custo#iAed 3here*ore .y setting a )lan pro*ile1 the plan area and the related layouts are selected *or planning horiAon

Step 9: Plan for Costs / Re:enues

)lan *or Cost and -evenues B 3ransaction Code > %;+1 AC3<(<3C D+SC-<)3<5": A*ter the )ro*ile is set1 -evenue and Cost o* goods sold on the )ro*it Centers can .e planned 5verhead Cost )lanning /ill .e #ade *ro# the Cost Center Accounting and .y virtue o* Cost Center assign#ent to the )ro*it Center1 the plan data o* 5verhead Costs are linked to )ro*it Center Accounting -evenue and Costs o* 6uantity 0oods sold /ill .e captured *or each pro*it center /ith #onthB/ise .reakBups

Planning Aids ; Cop( Data to Plan

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Profit Center Accounting

1) Cop( Actual / Plan data to other Plan 6ersions / Fiscal 7ear of the Profit Center Accounting 3ransaction Code > %;+( AC3<(<3C D+SC-<)3<5" )ro*it Center )lanning *or Costs / -evenues / <nventories / Statistical ;ey !igures can also .e planned .y copying the plan / actual data o* the previous year to the plan version o* the current year Si#ultaneously1 the plan data o* the current year can also .e copied *ro# one version to another version Data can also .e revalued /hile copying *ro# actual to plan or *ro# plan to plan 2 !ransfer of Statistical .e( Figures from other Cost O#8ects 3ransaction ;ey > 1;++ AC3<(<3C D+SC-<)3<5" 3he )lanned Statistical ;ey !igures can also .e integrated into )ro*it Center Accounting .y copying the# *ro# other Cost 5.?ects like Cost Center Accounting1 <nternal 5rders 3he '<S data /hich got trans*erred to the Cost Centers or <nternal 5rders is also #ade availa.le to the )ro*it Centers Profit Center Allocations ; Distri#ution and Assessment a9 Actual -evenues and Cost o* goods sold 8:oving Average )rice9 are posted *ro# Sales and :: :odules to a Co##on )ro*it Center .9 +ach #aterial has to .e assigned to a )ro*it Center in Costing vie/ o* the :aterial :aster @hen the #aterial is sold1 the revenue and cost o* goods sold gets posted to the sa#e assigned )ro*it Center

c9 All 5verhead costs are posted to Cost Centers /hich in turn are linked to respective )ro*it Centers d9 Distri.ution Cycle / Assess#ent Cycle is created /ith seg#ents identi*ying the sender and receiver )ro*it Centers e9 @ithin each seg#ent1 the #ethod o* allocation o* -evenues and costs *ro# sender to receiver are saved along /ith receiver tracing *actors *9 -eBallocations /ill take place a*ter the #onthBend closing

9) PROC$SS PR$*R$%&ISI!$S

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Profit Center Accounting

1 2 3 (alidity period o* Distri.ution Cycle / Assess#ent Cycle should .e /ithin the (alidity period o* the )ro*it Center and Cost ele#ent :aster -ecords !inancial Accounting )eriod should .e closed .e*ore the Distri.ution / Assess#ent Cycle is run to ensure that no *urther postings occur Any -evenue / Costs accu#ulated in Du##y )ro*it Center should .e reposted to the respective pro*it center

B) Actual Postings on Profit Center:

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Profit Center Accounting

1) PROC$SS F/O- DIA0RA":
All Re:enues and Cost of 0oods Sold posted to a Common Profit Center are eligi#le for Allocation

Define Distri#ution C(cle / Assessment C(cle for Profit Center Accounting

Define Segments in the Distri#ution C(cle / Assessment C(cle ith sender and recei:er rules

$<ecute the Distri#ution transaction =.$5

$<ecute the Assessment transaction 4.$5

Process Flo : 1 2 3 & = Actual -evenues and Cost o* 0oods Sold are posted to a Co##on )ro*it Center : )ostings *ro# SD1 ::1 !</C5 :odules 3rans*er Statistical ;ey !igures *ro# Cost Center Accounting : ;(A= De*ine Distri.ution Cycle / Assess#ent Cycle : &;+11 3;+1 De*ine Seg#ents /ithin the Distri.ution Cycle / Assess#ent cycle : &;+21 3;+2 +,ecute Distri.ution / Assess#ent : &;+= / 3;+=

@hile posting the accounts receiva.le / paya.le to pro*it center accounting1 syste# takes the pro*it center *ro# the o**setting line ite# o* #aterial account !or e,a#ple1 in case o* a SD credit invoice posted *or a custo#er1 the pro*it center in the accounts
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Profit Center Accounting

receiva.le posting /ill .e taken *ro# the #aterial *or /hich the sales entry is .eing posted <n case there is #ore than one #aterial in the sales invoice /ith di**erent pro*it centers1 the total a#ount o* accounts receiva.le /ill .e split according to the sales value o* individual #aterials /ith pro*it centers Common costs are collected in a Common Profit Center : All -evenue and Cost o* goods sold postings to the Co##on )ro*it center originate *ro# SD1 :: and !< postings AC!I6I!7 D$SCRIP!ION: @hen a sale invoice is generated *or a :aterial1 /here )ro*it Center is <denti*ied1 it is .ooked to a co##on pro*it center Si#ilarly1 the costs *lo/ initially to the Cost Centers & Docu#ent +ntry: -hen the re:enues are posted Custo#er A/c Sales A/c DC2= 2= 8)ro*it Center Assign#ent9

3he pro*it center assign#ent is derived *ro# the sales general vie/ o* the #aterial #aster record -hen the "aterial Deli:er( is made to the Customer <n SA) the delivery process ends /ith the post goods issue co#pletion generates an accounting docu#ent *or the post goods issue activity Cost o* 0oods Sold Account <nventory Stock Account DC1= 1= Syste#

3he )ro*it Center assign#ent *or the cost o* goods sold is also derived *ro# the #aterial #aster sales vie/ 3he in*or#ation syste# in )ro*it Center Accounting can .e e,plored *or vie/ing the docu#ents posted to the respective pro*it centers *ro# a re*erence docu#ent

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Profit Center Accounting

Process Flo : 1 Define Distri#ution C(cles / Assessment C(cles <"<3<A3<"0 AC3<(<3C: Actual Co##on Costs posted to a Co##on )ro*it Center 3rans*er Statistical ;ey !igures *ro# '<S Distri#ution: Distri.ution is used to allocate the revenues earned and all the costs incurred > transaction /ise *ro# the Co##on 8Sender9 pro*it center to the -eceiving )ro*it Centers 3he *ollo/ing in*or#ation is passed on: 3he original -evenue Account is retained on the sender pro*it center

3he original cost ele#ent 8that is1 the pri#ary cost ele#ent9 is retained Sender and receiver in*or#ation 8*or e,a#ple1 the identities o* the sender and receiver pro*it center9 is docu#ented using line ite#s in the )CA docu#ent

Assessment: Assess#ent is a #ethod o* allocating -evenues and Costs in )ro*it Center Accounting 3he *ollo/ing in*or#ation is passed on to:

3he original 0' accounts *or revenues and costs are assigned cu#ulatively1 or in groups1 to assess#ent 8secondary9 cost ele#ents 3he original 0' Accounts are not recorded on the receivers Sender and receiver in*or#ation 8sender )ro*it Center1 -eceiver )ro*it Center9 appears in the )ro*it Center docu#ent

Allocation through assess#ent is use*ul /hen the co#position o* the revenues and costs are uni#portant *or the receiver !or e,a#ple1 the assess#ent o* ca*eteria costs to a cost center need not .e .roken do/n *urther 3he in*or#ation syste# can .e used to analyAe the assess#ent results .y assess#ent cost ele#ent according to sender and receiver relationships 3o e,ecute the a.ove process1 a Distri.ution Cycle / Assess#ent Cycle is de*ined /hich has a certain valid period 3he )ro*it Centers *or#ing part o* the cycle1 either as Senders or -eceivers1 should have their #aster record valid period /ithin the Cycle )eriod <n the Cycle de*inition1 it has to .e decided /hether the distri.ution should /ork on iterative .asis or nonBiterative .asis and on cu#ulative .asis or nonBcu#ulative .asis

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Profit Center Accounting

By <teration1 the syste# distri.utes everyti#e the values o* a sender )ro*it Center to all other )ro*it centers including other sender )ro*it Centers de*ined in the seg#ent level o* the cycle 3he process goes on till the value .eco#es negligi.le *or *urther distri.ution <* the cycle is de*ined /ith the cu#ulation indicator set to active1 then the sender )ro*it Center a#ounts posted up to the current period are allocated .ased on tracing *actors1 /hich are cu#ulated *ro# period 1 on/ards <n the current period1 the allocation a#ounts deter#ined are posted less the a#ounts allocated in the previous periods Cu#ulative allocation has the *ollo/ing re7uire#ents: 3he sender/receiver relationships should .e sta.le /ithin the *iscal year <n particular1 no sender or receiver #ay .e deleted /ithin the *iscal year 3he allocation should .e #ade using the sender rule E)osted a#ountsE and the receiver rule E(aria.le portionsE

3he cycle can .e used *or all )ro*it Center Allocations at the Controlling Area level <t #eans a single cycle can .e used to process *or all Co#pany Codes that /ere attached to the Controlling Area 2o/ever1 that the actual allocations are #ade /ithin one co#pany code only +ssentially1 the pro*it centers *or#ing part o* the sa#e controlling area .ut di**erent in their assign#ents to co#pany codes have to .e processed in separate seg#ents o* the sa#e cycle 9) Define Segments in the Distri#ution C(cle / Assessment C(cles <"<3<A3<"0 AC3<(<3C: Actual -evenues and Costs posted to a Co##on )ro*it Center 3o the Distri.ution Cycle / Assess#ent Cycle1 Seg#ents are attached <n each seg#ent the *ollo/ing are re7uired to .e identi*ied: 1 At the Segment +eader /e:el: Assess#ent Cost +le#ent to .e attached *or the purpose o* allocation 8re7uired only in the case o* Assess#ent Cycle9 -ules *or the Sender Cost 5.?ect like )osted A#ounts or !i,ed A#ounts or !i,ed -ates )ercentage o* Costs o* Sender Cost 5.?ects that re7uires distri.ution -eceiver -ules > !i,ed A#ounts / !i,ed )ercentages / !i,ed )ortions / (aria.le )ortions
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Profit Center Accounting

!or a varia.le portion1 identi*y the type like Actual Costs / )lan costs / Actual Consu#ption / )lan Consu#ption / Actual S;! / )lan S;! / Actual Activity / )lan Activity In the Sender / Recei:er Bloc>: 3he Sender )ro*it Center / 0roup 3he -eceiver )ro*it Center / 0roup Account "u#.er / 0roup In the Sender 6alues Bloc>: <s the Distri.ution intended *or Actual or )lan values and in case o* plan1 version is re7uired to .e speci*ied Depending on the rules *or sender o.?ect1 the syste# /ill select the either total a#ounts posted or the *i,ed a#ounts or the *i,ed rates *ro# the sender )ro*it Centers In the Recei:er !racing Factor Bloc>: Depending on the -eceiver -ules de*ined at the header level o* the seg#ent1 the receiver tracing *actors *or the receiver o.?ect de#ands either the *i,ed a#ounts1 *i,ed portions or *i,ed percentages <* the receiver rule is .ased on varia.le portion1 the tracing *actor *or actual costs on a receiver cost ele#ent1 actual S;! on the receiver o.?ect needs to .e speci*ied @eighted !actor can also .e #entioned *or the (aria.le portion o* the -eceiver 5.?ect 3he syste# valuates the receiver value on the .asis o* /eights de*ined *or the tracing *actor and applies that /eighted *actor on the sender value

2 3

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4) $<ecute Distri#ution AC3<(<3C D+SC-<)3<5" <" D+3A<': Su.se7uent to the actual revenue and cost .ooking to the co##on )ro*it Center and the de*inition o* the distri.ution cycle / assess#ent cycle1 the actual distri.ution / assess#ent has to .e e,ecuted .y #entioning the Cycle "a#e *ro# the )ro*it Center Accounting 3he syste# generates a docu#ent .y #eans o* ?ournal entry on processing o* the cycle 3he entry /ill have no e**ect on the !inancial Accounting 3his is purely a Controlling Docu#ent <n the Distri.ution )rocess1 the syste# retains the original 0' Account1 /ith /hich the Sender )ro*it Center has got its de.it1 on the receiver )ro*it Center also

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Profit Center Accounting

@hereas in Assess#ent )rocess1 the syste# /ill not record the original 0' Account on the receiver pro*it center .ut receives the revenues and costs *ro# the sender pro*it center under a single cost ele#ent called Assess#ent +le#ent 5n e,ecution o* the Distri.ution / Assess#ent Cycle1 the syste# creates the *ollo/ing entry: -eceiving )ro*it Center Sender )ro*it Center D- 2= C- 2=

<* the in*or#ation syste# *or )ro*it Center Accounting is e,plored a*ter this entry1 the values registered on the sender pro*it centers /ill .e sho/n /ith a opposite sign and also the partner pro*it center to /hich the value has .een *lo/n /ill also .e displayed

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