Using Variance calculation, you can analyze the actual balance and to find variance of actual cost from target cost with different activity types.
To perform variance calculation, navigate to Accounting → Controlling → Product Cost Controlling → Cost Object Controlling → Product Cost by Period or Product Cost by Order → Period-End Closing → Single
Functions: Product Cost Collector → Single Functions: Cost Object Hierarchy → Variances → Individual Processing or Collective Processing
Period end closing is work carried out at period end as part of cost controlling. To perform period end closing, it is required to transfer the data from other SAP components. You should perform all the posting in Finance Accounting.
As part of period closing, following activities are performed:
In SAP system, you generally have two types of data:
1 Transaction data
Transaction data keeps on changing in system and is stored in line item tables.
2 Master data
You can use the following functions to create, change master data:
Key figures can be defined manually or you can also transfer it automatically from the information system of SAP system application.
To create a cost center in system, you need to define a cost center hierarchical structure. The structure of Cost center and its characteristic depend on the accounting objective and on the system you want to use to maintain accounting.
If you have already posted into the new fiscal year, you do not need to carry-forward the balances manually. But you can use the various ‘carry-forward’ programs supplied by SAP for this task.
You can divide cost center in cost center groups. In system, it should have at least one group that contains all cost centers and represents the entire business organization. This cost center group is described as the standard hierarchy. You can assign more cost center groups to the standard hierarchy.
Cost Center : A Cost center is defined as a component in an organization that adds to the cost and indirectly adds to profit if the organization. Examples include Marketing and Customer Service.
A company can classify business unit as profit center, cost center or an investment center. The simple and straight forward division in an organization can be classified as cost center as cost is easy to measure.
To create a cost center in system, you need to define a cost center hierarchical structure. The structure of Cost center and its characteristic depend on the accounting objective and on the system you want to use to maintain accounting.
Profit Center : SAP CO-Profit center is used for managing internal controlling. When you dividing your company into profit centers, it allows you to delegate responsibility to decentralized units and allows you to treat as separate companies in a company. It also allows you to calculate key figures in cost accounting like- ROI, Cash flow, etc.Profit Center is part of Enterprise Controlling module and is integrated with new General Ledger Accounting.
Internal Order :
Price reports in Cost Center accounting are available for activity types and for activity based costing. Under Activity-Based Costing, price report are used to provide an overview of the process prices for each business process.
To execute price report online, navigate to Information Systems → Accounting → Controlling → Reports for Cost Center Accounting → Prices
You allocate operating expenses differently in cost accounting as compared to Finance accounting. You can distribute irregular occurring expenses as per cost origin, on the months in which they are incurred. And hence you can avoid all irregularities within cost accounting. Cost allocated in this way is known as Accrual cost.
SAP CO-Profit center is used for managing internal controlling. When you dividing your company into profit centers, it allows you to delegate responsibility to decentralized units and allows you to treat as separate companies in a company. It also allows you to calculate key figures in cost accounting like- ROI, Cash flow, etc.
It is used to group the costs and revenues as per the value fields. It is used to ensure that you access at all times to a complete, short-term profitability report.
Cost element category is used to define if you can post to cost element directly or not. When you post a fixed amount to a cost elements by mentioning account number, it is called direct posting. In direct posting, you can post directly to all primary cost elements by specifying the account number. When you can’t enter account number with posting transaction and system determines account at the time of posting automatically, this is known as indirect posting.
SAP CO-PA is used to analyze the market segments classified as products, customers, sales area, business area, etc.
SAP CO Profitability Analysis (CO-PA) is used for the evaluation of Market segments, which is classified according to products, customers, and orders or any combination of these or Strategic business units such as sales organizations or business areas, with reference to company's profit or contribution margin.
You can create an internal order to monitor the costs of a time-restricted job or the costs for the production of activities. Internal orders can also be used for the long-term monitoring of costs.
No, in standard hierarchy, you can only assign each cost center to one group.
The structure of resource master data contains the following fields:
Cost element is known as cost relevant item in Chart of Accounts.
When actual cost on cost center is different from target cost or planning was over/under, you can see a variance in controlling component.
SAP CO: Standard Reports : There are various standard reports that exists in system for Cost Center Accounting.
Activity type is defined as activity performed in cost center within controlling area. For each cost center, you perform the following activities:
The main aim of creating a Profit Center in Controlling is to analyze the cost of a product line or a business unit.
You can also generate profit and loss accounts according to Profit Center and also generate balance sheets however Profit center should only be used for internal reporting purposes.
The key components of a profit center includes- name of the profit center, the controlling area under which it is assigned, time period, person responsible for the profit center, standard hierarchy, etc.
Number Range is defined as a number interval defined in the system so that when documents are posted, the system assigns a number from this range.
A Posting Key in SAP is a 2-digit alphanumeric key that controls the entry of line items. SAP comes with many posting keys for meeting the different business transaction requirements.
It is used to provide you with a profitability report that is permanently reconciled with financial accounting.
It is mainly used for getting information related to sales, marketing, product management and corporate planning departments to support internal accounting and decision-making.
Primary Cost Elements : A Primary cost element is defined as elements for which General Ledger Account G/L exists in Finance Accounting FI.
Common primary cost element includes:
Secondary Cost Elements : These elements are maintained in Cost Accounting. To create a secondary cost element, system checks account already exists in Financial Accounting and if an account exists, secondary cost element can’t be created.
Common examples of secondary cost elements:
SAP offers a variety of tools to maintain exchange rates on an on-going basis.
The tools include:
A Cost center is defined as a component in an organization that adds to the cost and indirectly adds to profit if the organization. Examples include Marketing and Customer Service.
A company can classify business unit as profit center, cost center or an investment center. The simple and straight forward division in an organization can be classified as cost center as cost is easy to measure.
SAP CO-Profit center is used for managing internal controlling. When you dividing your company into profit centers, it allows you to delegate responsibility to decentralized units and allows you to treat as separate companies in a company.
Resources are used to perform quantity based cost planning for cost centers, orders and WBS element. In SAP system as per the available data.
you can select from the following resource type:
This report is used to perform a comparison of the figures in internal and external accounting, display the costs incurred for each object class, and see the cost flows between company codes.
Navigate to Information Systems → Accounting → Controlling → Reports for Cost and Element Accounting
Using 3 character Currency Code
You can use following line item reports:
In cost center hierarchy, at the top you have organization which is further divided as per the functional areas. Each Functional area are further divided into sub areas and can be further divided as per activities performed.
In year-end closing, you can transfer carry forward to first period of next fiscal year and this is performed for each Controlling under SAP system.
SAP CO-Product Costing module is used to find the value of internal cost of products. It is also used for profitability and management accounting for production.
While configuring Product Costing, it involves two areas for setting:
The basics of Product Costing is Cost Center Planning. The goal of cost center planning is to plan total dollars and quantities in each Cost Center in a Plant.
Following are the key uses to create cost centers and performing cost center accounting in an organization:
A Cost center is defined as a component in an organization that adds to the cost and indirectly adds to profit if the organization. Examples include Marketing and Customer Service.
A company can classify business unit as profit center, cost center or an investment center. The simple and straight forward division in an organization can be classified as cost center as cost is easy to measure.
You perform Cost Center planning to achieve following functions:
A Financial Statement Version helps to define the Financial Statements both the Balance Sheet and Profit & Loss statements.
Accrual calculation can be performed in following way:
To change some of the accounting information relating to an already posted document, you can only achieve this by Reversing option the original document and posting a new one with the correct information.
Line Items contain information relating to account number, amount, debit/ credit, tax code, amount, etc. SAP allows a maximum of 999 line items in a single document.
Value fields are number or value related fields in profitability analysis such as quantity, sales revenue, discount value etc.
To create Cost center, you can use T-code: KS01
Under GL accounting, you can have a maximum of 16 posting periods (12 regular plus 4 Special Periods).