AC412 Cost Center Accounting: Advanced Functions AC412 PDF

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AC412 Cost Center Accounting: Advanced Functions AC412 Release 470 04/11/2006 AC412 Cost Center Accounting: Advanced Functions AC412 Cost Center Accounting: Advanced Functions © SAP AG 2001 © SAP AG „ R/3 System „ Release 4.6 C „ January 2001 „ Material number 5004 4284 Copyright Copyright 2004 SAP ...

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AC412 Cost Center Accounting: Advanced Functions AC412

Release 470 04/11/2006

AC412 Cost Center Accounting: Advanced Functions

AC412 Cost Center Accounting: Advanced Functions © SAP AG 2001 © SAP AG

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R/3 System Release 4.6 C January 2001 Material number 5004 4284

Copyright

Copyright 2004 SAP AG. All rights reserved. No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG. The information contained herein may be changed without prior notice.

© SAP AG 2003

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Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors. Microsoft, Windows, Outlook, and PowerPoint are registered trademarks of Microsoft Corporation. IBM, DB2, DB2 Universal Database, OS/2, Parallel Sysplex, MVS/ESA, AIX, S/390, AS/400, OS/390, OS/400, iSeries, pSeries, xSeries, zSeries, z/OS, AFP, Intelligent Miner, WebSphere, Netfinity, Tivoli, and Informix are trademarks or registered trademarks of IBM Corporation in the United States and/or other countries. Oracle is a registered trademark of Oracle Corporation. UNIX, X/Open, OSF/1, and Motif are registered trademarks of the Open Group. Citrix, ICA, Program Neighborhood, MetaFrame, WinFrame, VideoFrame, and MultiWin are trademarks or registered trademarks of Citrix Systems, Inc. HTML, XML, XHTML and W3C are trademarks or registered trademarks of W3C®, World Wide Web Consortium, Massachusetts Institute of Technology. Java is a registered trademark of Sun Microsystems, Inc. JavaScript is a registered trademark of Sun Microsystems, Inc., used under license for technology invented and implemented by Netscape. MaxDB is a trademark of MySQL AB, Sweden. SAP, R/3, mySAP, mySAP.com, xApps, xApp, and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and in several other countries all over the world. All other product and service names mentioned are the trademarks of their respective companies. Data contained in this document serves informational purposes only. National product specifications may vary. These materials are subject to change without notice. These materials are provided by SAP AG and its affiliated companies ("SAP Group") for informational purposes only, without representation or warranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP

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Course Prerequisites

z AC410 - Cost Center Accounting

z AC415 - Overhead Orders (recommended)

z Theoretical knowledge and practical experience in Cost Center Accounting.

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Target group

z Audience „

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Project team members who are responsible for implementing Overhead Cost Controlling extended functions. Financial accounting employees responsible for efficient activity allocation, extended planning functions and differentiated analysis of target costs, variances, marginal costs, or actual price revaluation.

z Duration: 2 days

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Course Overview

Contents: z Course Goals

z Course Objectives z Course Content

z Course Overview Diagram z Main Business Scenario

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Course Goals

At the conclusion of this course, you will be able to: z Distinguish various controlling concepts for responsibility areas z Configure and use the advanced functions

for planning and activity allocation

z Analyze information and effects of various

cost accounting systems in overhead cost controlling

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Course Objectives At the conclusion of this course, you will be able to: z Describe and maintain the advanced planning

functions for quantity-based planning

z Use plan reconciliation, plan cost splitting, and

plan activity price calculation

z Use the various tools for activity allocation of

actuals

z Investigate and analyze variances between plan

or target costs and actual costs in detail

z Distinguish various cost accounting systems and

their effect in overhead cost controlling

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Course Content

Preface Unit 1

Course Overview

Unit 2

Activity allocation: Concept and Master Data

Unit 3

Enhanced planning techniques

Unit 4

Actual cost allocation

Unit 5

Period-End Closing Allocations and Analysis

Unit 6

Summary

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Course Overview Diagram

Activity Allocation: Concept and Master Data

Advanced Planning Techniques

Actual Cost Allocation

Period-End Closing: Allocations and Analysis © SAP AG 2001

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Main Business Scenario z A fictitious firm is portrayed, which produces

computers.

z A detailed analysis of actual data and variances is

required for each area of responsibility.

z The value flows and cost incurring factors in the

enterprise are to be explained as clearly as possible for internal activity allocation. This is to be done without causing any large amounts of data entry work.

z The options provided by different cost accounting

systems (such as variable costing or revaluation at actual prices) are to be examined for medium-term cost accounting purposes.

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Business Scenario: Enterprise Structure

Service

Production

Quality Assurance

Production of Computers

Energy Production of Chips Repairs

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Activity Allocation: Concept and Master Data

Contents: z Activity Allocation: Concept z Master Data: Activity Type

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Activity Allocation: Unit Objectives

At the conclusion of this unit, you will be able to: z Distinguish between the concepts of cost assignment and activity allocation z Interpret the goals of each concept

z Enter the most important basic settings for master data Activity type.

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Activity Allocation

Activity Allocation: Concept and Master Data

Advanced Planning Techniques

Actual Cost Allocation

Period-End Closing: Allocations and Analysis © SAP AG 2001

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Activity Allocation: Business Scenario

z To establish the cost accounting concept for your

enterprise, you:

z Work out the major benefits and disadvantages

of activity allocation for the enterprise

z Create activity types for the cost centers whose

costs have to be analyzed by reference to operating levels

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Value Flows in Controlling CO PA

Overhead Cost Controlling Internal orders

Cost centers

Activity types

CO CEL

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Make-tostock

Product Cost Controlling

Material Material valuation valuation

Processes

Cost Element Accounting

FI

Financial Financial Accounting Accounting

HR

Human Resources

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CO PC

Sales orders, Projects

ECECPCA

Profit Center Accounting

CO OM

Profitability segment

Profitability Analysis

Asset

Sales Revenues

Expense

MM

Material Material Mgmt. Mgmt.

PP

Production Production

SD

Sales Sales and and Distribution Distribution

Controlling provides you with information for management decision-making. It facilitates coordination, monitoring and optimization of all processes in an organization. This involves recording both the consumption of production factors and the activity provided by an organization. Therefore, all cost-relevant data flows automatically to Controlling from Financial Accounting. As part of this process, the system assigns the costs and revenues to different CO account assignment objects such as cost centers, business processes, projects or orders. The relevant accounts in Financial Accounting are recorded in Controlling as cost elements or revenue elements. You use Cost Center Accounting for controlling purposes within your organization. It is the appropriate tool for monitoring all of the overhead costs incurred and allocating them appropriately to the place where they were incurred. Product Cost Controlling calculates the costs arising from the manufacture of a product or the provision of a service. It enables you to calculate the minimum price at which a product can be profitably marketed. Profitability Analysis analyzes the profit or loss of an organization according to individual market segments. The system allocates the corresponding costs to the revenues for each market segment. Profitability Analysis provides a basis for decision-making, price determination, customer selection, conditioning, and for choosing the distribution channel.

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Responsibility Area Controlling CO PA

ECECPCA

Internal orders

CO CEL

CO PC

Overhead Cost Controlling

Cost Element Accounting

Processes

Product cost Controlling

- Quantity-based planning and reconciliation - Price calculation - Target cost calculations - Variance analysis - Cost accounting system

Profit Center Accounting

CO OM

Profitability Analysis

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Overhead costs are costs that cannot be directly assigned to the manufacture of a product, or the provision of a particular service. You assign all overhead costs to the locations at which they were incurred, or to the activities from which they arose. The cost center represents a separate location of cost occurrence within a controlling area. You can create cost centers according to a number of criteria, including functional considerations, allocation criteria, activities provided, or according to their physical location and/or management area. Activity types define the type of activity that can be provided by a cost center. Activity provided by one cost center to other cost centers, orders, or processes, represent the utilization of resources of the sender cost center. You valuate activities using a price calculated on the basis of certain business or management information. Business processes combine sequences of activities within an organization over and above individual cost centers. They can be used to control organizational processes in line with particular functions. Internal orders are used to plan, collect, and analyze the costs arising from internal activities. There are different methods for allocating values and quantities, depending on the type of CO object in question. You can use advanced analysis tools at period-end on quantity allocations: The system uses

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the operating rate (target costs) to compare the planned costs with the corresponding actual costs. You can then analyze the variances identified, and their causes.

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Cost distribution z Method z Transaction-Based „ Reposting costs „ Reposting line iems „ Manual cost allocation z Periodic „ Accrual calculation „ Periodic reposting „ Distribution „ Assessment

Cost Center

Cost Center

Profitability segment Processes

z Advantages

z Primary and secondary cost

Orders Projects

distribution z Analysis: plan/actual or actual/actual comparison

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z Sender controlled allocation z Simple or no planning

Assigning costs to cost centers enables you to determine where costs are incurred within the organization. If you plan costs at cost center level, you can check cost efficiency at the point where costs are incurred. Actual cost entry: Primary costs are transferred to Cost Accounting from other components, for example, Materials Management (MM), General Ledger Accounting (FI-GL), Asset Accounting (FIAA) and Payroll Accounting (PY). Additional costs or valuation differences are periodically entered using the accrual method, or the overhead or plan=actual processes. Actual Cost Allocation: You can use various methods to allocate the actual costs you have recorded. The system distinguishes between transaction-based allocations, which occur within one period, and period-based allocations, which occur at period end. Characteristics of the cost allocation methods: y Either no planning or only simplified planning is necessary

y The sender specifies the allocation amount.

y Both primary and secondary costs can be transferred

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y Various reports are available for the cost center analysis, which are based on plan-actual or actualactual comparisons.

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Activity Allocation z Method

z Transaction-Based

Cost Center

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Direct activity allocation (confirmation from orders) z Periodic „ Indirect activity allocation „ Target=actual activity allocation „ Template allocation

Activity Type

Cost Center Activity Type

Profitability segment Processes

z

Orders Projects

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Advantages

z Fixed and variable costs z Receiver-controlled receiver input

(demand) z Plan reconciliation z Price calculation with cost component split z Analysis: Target/actual comparisons and advanced variance analysis

Production Orders

More advanced methods of overhead cost allocation are also available. You can use these methods throughout the organization, or in separate particular problem areas. They can help determine what internal activities are needed to supply services or products, and to market them. This enables you to allocate overhead costs according to resource consumption and activity utilization. The SAP R/3 System can automatically determine the quantities used in many cases, considerably reducing the expense of activity allocation. This removes an argument often given in organizations favoring simple assessment and overhead calculation methods. Along with time-saving automatic allocations, the integration of Overhead Cost Controlling in the R/3 System environment minimizes entry of actual data and reduces the work involved in planning. Activity (Type) Allocation: Activity allocation uses the activity produced by a cost center as the allocation base for the costs. You can use activities to measure the operating rate or the rate of capacity utilization for a cost center. The target costs of the cost center refer to the activity output. When you allocate internal activity, you enter the quantity of the activity to be allocated. If not, then the system derives this quantity automatically. The system needs an activity price to allocate costs and to allocate activity. You can either set this price manually, or you can calculate it, using planned or actual costs.

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Goals of Each Concept Cost Distribution

Plan Costs

Actual Costs Plan/actual comparison? Actual/actual comparison? Balance? Time

Activity Allocation

Allocated actual costs Target costs

Costs

Actual costs Plan costs

K (Plan)

Target/actual comparison? Marginal costs? Variances?

Kfix (Plan)

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h (Plan)

h (Actual)

Activity (hrs)

Overhead costs from planning, management, quality control, and coordination in such areas as research and development, procurement, and work preparation grow ever more important in comparison to actual product manufacture. Although direct activity output provides a great deal of cost transparency to which an organization can apply proven cost controlling methods to reduce costs, most managers have already exhausted most of these options. The interconnections in overhead costs, however, often remain unclear and the optimization potential unrealized. At the end of the period, you can use the methods of activity allocation to compare the planned costs (target costs) and their corresponding actual costs, based on the operating rate. You can make a source-based analysis of the resulting target/actual variances, and use the analyses for further managerial accounting measures within Controlling. Unlike the analysis tools used in the cost assignment procedure, more detailed Controlling instruments are also available: „

Statistics on the costs dependent on the current operating level

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Advanced variance analyses

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Comparison and, if required, revaluation at actual prices

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Activity Allocation: Master Data - Activity Type

At the conclusion of this topic, you will be able to: z Identify the most important indicators for activity

types

z Describe the importance of the activity type

categories

z Describe the importance of the various price

indicators

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Activity Type: General Settings

Activity Type Edit Goto Extras Environment System Help

Activity Type Activity Type Controlling area Valid from

1414 1000

Basic data

Indicator

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01.01.1997

to

31.12.9999

Output

History

Name

CPU Minutes

Description

CPU Minutes, indirect calculation

Activity unit

MIN

Cost center categories

*