CO Controlling Module

CARITOR
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Contents
About Controlling Cost Element Accounting

Cost Center Accounting

Internal Order Product Cost Controlling

Profit Center Accounting

Profitability Analysis Information System Integration

About Controlling

Purpose - Internal Reporting

CO Components

CO Components - Purpose

Organizational Units
STERLITE

Access Bus (0110)

STLL (0610)

OF,OFC (2010)

STL (0620)

Cost Element Accounting

CEA - Cost Element Accounting

Cost and Revenue Element Accounting provides an overview of the costs and revenues that occur in an organization.
It is a detailed recording of data that forms the basis for cost accounting It is used to Analyze Costs & Revenues that occur within the Organization and to Reconcile costs and revenues with Financial Accounting

Relationship between Cost Element and GL Account

CO
Primary Cost and Revenue Element

FI
GL Account

Secondary Cost Element

No Relation

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Cost Center Accounting

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CCA - Cost Center Accounting

CCA is Used to track costs at the point of occurrence in the Organization
Cost Center Accounting lets you analyze the overhead costs according to where they were incurred within the organization. Enables planning, collection, monitoring and settling costs of specific operations and tasks performed within an organization.

You can use the methods of activity allocation, assessment or distribution to further allocate costs, for example, to internal orders, projects, cost objects or market segments (CO-PA).
Enables classification based on different purposes Maintenance, Capital, Imputed costs. Real-time evaluation and reporting on order life-cycle to keep track of planned, committed and actual costs.
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Posting from FI to a Cost Center

FI FI

Expense account 70110000 Salaried Compensation

~~

Bank/Cash account
~~

Cost origin: Cost center 84112101 Purchasing

CO CO

Cost Center Purchasing 84112101

Debit under a cost element

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Issues to Cost Center

MM MM
FI

Issue Slips for Operating Supplies

OFC Production CC Lubrication Oil for maintenance

CO

Cost Center 84111101

Debit under a cost Element 72020000 Operating Supplies - Lub Oil

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Internal Orders

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IO - Internal Order
Internal orders are used to plan, collect, monitor, and settle the costs of specific operations and tasks performed within a company. Can be grouped into four general categories :
Overhead Orders : To monitor overhead costs incurred for a particular purpose Investment Orders : To monitor incurred in the creation of fixed asset Accrual Orders : To offset postings of accrued costs to cost centers

Orders with Revenue : To monitor cost & revenue arising from activities not belonging to the core business of the organisation

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Internal Order - Data Flow

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Product Costing

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Product Costing
Product Costing is concerned with the aspects of planning the cost of

manufacturing products as well as tracking and analyzing the actual

costs that are incurred in the production process.

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Product Costing
Product costing is the tool used in SAP for planning costs and establishing material prices.
Used to calculate the costs of goods manufactured and the costs of goods sold for each product unit. Utilizes manufacturings quantity structures such as BOMs and Routings Belongs to both the Production Planning (PP) Module and the Controlling (CO) Module. Bridges the gap between Accounting and other functional areas

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Product Cost Planning and Cost Object Controlling

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Product Costing Product Costing

Quantity Structure
BOM Routing

Value Structure
Prices for materials Prices for activities Overhead from costing sheet

Costing
Pricing Pricing

Costing Results
Item s M Material M Material E Activity E Activity G Overhd $ $ $ $ $ Cost Elements 400 000 610 000 612 000 660 000 $ $ $ $ Cost Components

Valuation Valuation

Usage Usage

Profitability Profitability analysis analysis Controlling Controlling

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Period-End in Product Costing

Function
Revaluation at Actual Activity Prices Overhead Work in Process Variances

Result
Actual Quantity Flows are revaluated Over surcharges are calculated WIP values are calculated Variances are calculated : Quantity Price Resource Usage Lot Size Output Price Scrap Values are settled : WIP Posted to FI Price Difference to FI WIP Posted to PCA Variances to PA
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Settlement

Profit Center Accounting

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PCA - Profit Center Accounting

The goal of Profit Center Accounting is to determine the profitability in areas of responsibility within the Organization.

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Profitability Analysis

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COPA - Profitability Analysis

The goal of Profitability Analysis is to determine the profitability of Market

Segments

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Information System

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General Reports
Cost Center
Plan vs. Actual by Cost Element Plan vs. Target by Cost Element Cost centre Splitting Manual Reposting of costs- KB11N Activity Type Price Report- KSBT Under Over Absorption by Cost Element

Internal Order . Order Group

Plan vs. Actual by Cost Element ( Production Order/ Maintenance Order/ Internal

order) Statistical Key Figure-Actual KB31N Budget vs Commitment vs Actual Report Internal Order Variance Report KOC4

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General Reports
Product Costing Standard Cost Estimate - Multi Level BOM Standard Cost Estimate Control Report-S_P99_41000111 Cost Estimate Comparison- Plant wise- CK79_99 WIP Calculation- KKAO/KKAQ Product level Plan/ Actual Comparison- KKBC_HOE Profit Center Accounting Analysis using Accounting Groups Profitability Analysis Contribution Margins ( Matrix of Characteristics )- KE30

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COST CENTRE ALLOCATION

Residual amount in Cost Centre after Settlement

Sr No

Cost Centre

1 Production Cost Centres

Plan Actual Variance Analysis Month End Settlement Through Through Business Actuals at month End settled KP06 at Transactions Through Cost Centre to Production Order based on month occurring in MM, beginning PP, FI & PM Reports in Controlling Activaty Rate updation

Nil

2 IT & HR Cost Centres

Through Through Business KP06 at Transactions Year occurring in MM & Through Cost Centre Beginning FI Reports in Controlling

Actuals at Month end settled to Residual amount Other cost Centres on some in IT & HR after logical base such as No of reallocation Employees or No of treated as period Computers cost Residual amount in mainatenance cost centres treated as period costs

3 Maintenance Cost Centre

Through Through Business KP06 at Transactions Through Cost Centre month occurring in MM, beginning PP, FI & PM Reports in Controlling Through Through Business KP06 at Transactions Year occurring in MM & Through Cost Centre Beginning FI Reports in Controlling Through Through Business KP06 at Transactions Year occurring in MM & Through Cost Centre Beginning FI Reports in Controlling Through Through Business KP06 at Transactions Year occurring in MM , Through Cost Centre Beginning FI & PP Reports in Controlling Through Through Business KP06 at Transactions Year occurring in MM & Through Cost Centre Beginning FI Reports in Controlling Through Through Business KP06 at Transactions Year occurring in MM & Through Cost Centre Beginning FI Reports in Controlling

Actuals at month end settled on Production Cost Centres based on statististical Key Figure No of machines

4 Marketing Cost Centres

Actuals at month end settled on Sales Order based on Sales Value

Nil

5 Finance Cost centres

Actuals at month end settled on Sales Order based on Sales Value

Nil Amount in these Cost Centres treated as period costs Amount in these Cost Centres treated as period costs

6 R & D Cost Centres

No Settlement

7 Production Planning Cost Centres

No Settlement

8 Packing Cost Centres

9 Quality & Procurement Cost Centres Note

Amount in these Cost Centres treated as period No Settlement costs Residual Through Through Business Actuals at month end settled Amount in these KP06 at Transactions on Production Order based on Cost Centres Year occurring in MM & Through Cost Centre percentages specified in treated as period Beginning FI Reports in Controlling Costing Sheet costs

All Costs accounted under Business Area 1695 ( Pune office) under various cost centres are curretly treated as period costs

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Terms A Input Variances

Meaning

The difference between target cost and actual cost caused by a different input component 1 Resource Usage Variance (such as a raw material) being used than was planned. Variance on the input side which cannot be assigned to any of the following categories , Input Price Variance, Input Quantity Variance, Resource Usage Variance , Scrap 2 Remaining Input Variance The difference between target cost and actual cost caused by a different input component (such as a raw material) being used than was planned.Typically, input price variances are calculated by multiplying the difference between the planned value and the actual value by the quantity consumed. 3 Input Price Variance Typically, input price variances are calculated by multiplying the difference between the planned value and the actual value by the quantity consumed. For Example, the quantity of raw materials withdrawn from inventory for a production order was higher than planned, or the activity quantity used at a cost center was less than planned 4 Input Quantity Variance The value of the unplanned scrap quantities. The scrap variance is calculated by valuating the unplanned scrap quantities with the target costs less the planned scrap costs. The unplanned scrap quantity is the difference between an operation's actual scrap quantity and its target scrap quantity. 5 Scrap Variances B Output Variances The difference between the planned fixed costs and the allocated actual fixed costs.Fixed cost variances arise when a part of the planned fixed costs are not covered by the amount for which the cost center is credited. Fixed Cost Variance Can be calculated only in overhead Cost Controlling. Interest , rent & depreciation remain the same for a factory regardless of whether it produces anything Variance category on the output side that shows the variance between the standard price calculated in a mixed cost estimate of multiple procurement alternatives (procurement versions) and the cost estimate of a single procurement alternative. The difference between actual credit and target credit.An output price variance arises under the following conditions: In Overhead Cost Controlling (CO-OM), an output price variance arises when the activity price used is not the same as the monthly iterative price on the basis of the planned activity (for example, a manually entered activity price).In Cost Object Controlling (CO-PC-OBJ), an output price variance arises when the material manufactured is transferred to inventory at a price other than the standard The variance between the actual credit and the target credit caused by differences between the allocated actual quantities and the manually posted actual quantities. The difference between planned fixed costs and allocated actual fixed costs. Lot size variances arise when part of the total cost of an order or cost object hierarchy remains the same as the quantity manufactured changes. For Example the fixed costs of an operation (such as setup costs) remain the same regardless of how often the operation is repeated 5 Lot Size Variance The difference between the target costs and the costs that cannot be attributed to single variance categories. The latter can occur if no variance category was specified in the variance variant. 6 Remaining Variances

1 Fixed Cost Variance

2 Mixed Price Variance

3 Output Price Variance 4 Output Quantity Variance

Target Costs

Target costs can be calculated on the basis of various costs such as standard costs or planned costs. Control costs can be the actual costs, for variance analysis purpose the target cost version chosen is " 0 ".

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Accounting at the Time of Production / Delivery

DEBIT Raw Material Labour Activity Type *** QTY Actual Actual

COST OF GOODS PRODUCED RATE Rs Actual xxx Finished Goods Std xxx Variance FG WIP

QTY Actual

RATE Std

CREDIT Rs xxx

xxx xxx

Machine Activity Type ***

Actual

Std

xxx

Production Overheads Quality ( %age can be updated to match actuals) Procurement ( %age can be updated to match actuals)

%age of Direct Costs %age of Direct Material

xxx xxx

xxx

xxx

***

Revaluated at actuals during closing of controlling

DEBIT Finished Goods QTY Actual

COST OF GOODS SOLD RATE Rs Std xxx Finished Goods Inventory

QTY Actual

RATE Std

CREDIT Rs xxx

xxx

xxx

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Integration

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Integration Within CO - Value Flows

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PP - CO Integration CO Integration with Logistics

Logistics
Material masters BOMs Routings Work centres Product Cost Planning

Usage
Pricing Valuation Profitability analysis Controlling

Controlling
Activity types Cost elements Cost centres Overhead costing sheets Base planning objects

Cost Object Controlling

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Product Costing - Revisit Product Costing

Quantity Structure
BOM Routing

Value Structure
Prices for materials Prices for activities Overhead from costing sheet

Costing
Pricing Pricing

Costing Results
Items M Materi al M Materi al E Activi ty E Activi ty G Overhd $ $ $ $ $
Co st Eleme nts Co st Co mp on ents

Valuation Valuation

Usage Usage

Profitability Profitability analysis analysis Controlling Controlling

400 000 610 000 612 000 660 000

$ $ $ $

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Product Costing - Flow

Finished Product
Routing
Production Costs

Bill of Material

Assembly Process Work Center Work Center

Cost Center 1
Activity: Setup Hrs Activity: Machine Hrs Activity: Labor Hrs

Manual Entries

Cost Center 2

Material Costs

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Calculating the BOM + Costs Material Costs - MaterialPrices for Material

Mater ial Cost $17 $6 $34 Mater ial Item 10 Item 20 Raw material 1 Semifin. 1 Cost Estimate Assembly Cost Estim ate $4 $3 $17 ... ... $8 $2 Eac h Item 10 Item 20 Op 10 Op 20 ... ... Raw Material Cost Estimate $3 Mov. avg price $4 Standard price $3 ...... Strategy from valuation v ariant Eac h $16 $4 Qty 3 pc 2 pc

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Activity Costs - Routings + Prices for Activity

Work Center
Formula key Perform. eff. rate for activity type

Routing
General operation data Standard values

Cost Center
Activity type

Formula

Activity price

Effective time / qty

Activity Costs
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Product Cost Computation - Summary

Direct material costs Material Overhead

Material Cost

+
Direct production costs

+ Production overhead

Production costs

=
Cost of goods manufactured

+
Administration Overhead

+
Sales overhead

Costing

=
R

sheet
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Cost of goods sold

Product Costing Responsibility

Quantity structure Quantity structure

Responsibility

Bill of Material

Routing Production

Valuation Material prices / Activity prices Overhead

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Cost Accounting