Procedure Profitability Reporting in ByDesign

Exhibit 2: Link Price Components

Assigning price components to the contribution margin scheme is required if you want to
analyze order profit or invoice profit. If you want to analyze earned profit you need to assign
functional areas in the Settings for Earned Profit Analysis activity.

If you do not complete this step, the data on the Profit Overview by Key Figure report will be
blank if you try to report based upon order or invoice profit.

To find this activity, go to the Business Configuration work center and choose the
Implementation Projects view. Select your implementation project and click Open Activity List.
Select the Fine-Tune phase, then select the Settings for Earned Profit Analysis activity from the
activity list. Select Edit Financial Reporting structures under the Contribution Margin Scheme.

The contribution margin scheme specifies the structure of the Profit Detail by Contribution
Margin Scheme report. SAP delivers templates for contribution margin schemes (structure type
Income Statement by Function of Expense) as financial reporting structures for every template
chart of accounts.
 Procedure Profitability Reporting in ByDesign
Exhibit 2: Link Price Components
To edit a contribution margin scheme, click Edit financial reporting structures, select a structure
of the type Income Statement by Function of Expense, and click Edit Structure.

To correctly set up your contribution margin scheme:

Assign fixed structure items to the contribution margin scheme: This step is only necessary if
you have created a financial reporting structure from scratch (that is, without copying an SAP
template). Copies of SAP templates

The contribution margin scheme specifies the calculation of the key figures in the Profit
Overview by Key Figure report. You identify a structure item as a key figure by assigning one of
the following fixed structure items to the node:

o Operating Profit displayed as Income From Operations

o Gross Profit displayed as Gross Profit on Sales
o Net Revenue displayed as Net Sales Revenues.
o Gross Revenue displayed as Sales Revenues.
o Cost of Sales displayed as Cost of Goods Sold.

Additionally assign the following fixed structure items to nodes of the contribution margin
scheme:

o Income Statement add to the root node of the contribution margin scheme.
o Income Statement Result add to the node displaying the net income or net loss
of the income statement.
o Returns add to the node displaying the sales returns.
 Procedure Profitability Reporting in ByDesign
Exhibit 2: Link Price Components
Assign price components to the contribution margin scheme

By assigning price components to the structure items of the contribution margin scheme, you
specify where the values of the price components are displayed. To see examples, look at the
contribution margin schemes delivered with the system. When you access the assignment, the
structure will be opened in read-only mode.

To assign price components to a structure item:

Select a structure item and click Actions Assign Price Components.

Select the price components you want to assign, and click OK.

Standard Recommendations for Price Components

The following tables list all currently available price components. Table 1 contains price
components that can be assigned to financial structure items. Table 2 contains price components
that do not normally need to be assigned to any financial structure item because they are not
relevant to profit analysis.

Table 1: Recommended Assignments

It is recommended that you assign the following price components to the indicated
financial structure items. This is only a general guideline; specific business situations
may require alternative assignments. The list below may also flex based upon the pricing
questions that you answered during scoping.

Price Component Description Financial Structure Item

7GP1 Gross Price Gross Revenues
7PR1 List Price Gross Revenues
7PR2 Surcharge (%) Gross Revenues
7PR3 Surcharge Gross Revenues
7PR6 Discount Sales Discounts
7PR7 Working Condition (%) Gross Revenue
7PR8 Freight Gross Revenue
7PR9 Warranty (%) Gross Revenue
7PRA Quality Loss Fee Sales Discounts
7PRB Restocking Fee Gross Revenue
7PRC Goodwill (%) Gross Revenue
7PRE Migration Price Gross Revenue
0007 Overall Discount (%) Sales Discounts
0008 Cost Cost of Goods Sold
DIFF Rounding Difference Gross Revenue
 Procedure Profitability Reporting in ByDesign
Exhibit 2: Link Price Components

Table 2: Recommended Exclusions

It is recommended that you do not assign the following price components to any
financial structure item, since they either contain values that are not needed in profit
analysis or are used in items that are not relevant for profit analysis.

Price Component Description Reason for Exclusion

0TTE Tax Not relevant for profit analysis

1TTE Reverse Taxes Not relevant for profit analysis
7CEP Cust. Expected Used in A2A and B2B scenarios. For
Price statistical purposes only
7GDP Gross Down Used only for down payment requests.
Payment Not relevant for profit analysis
7NDP Total Net Amount Used only for down payment requests.
Not relevant for profit analysis
7TIP Tax Included Calculated tax line. Not relevant for profit
Price analysis

o You can use the Profit Detail By Contribution Margin Scheme report to determine
whether any price components have not been assigned to the financial reporting structure.
o You can use the same financial reporting structure for assigning functional areas or price
components.
 Procedure Profitability Reporting in ByDesign
Exhibit 3: Setup Key Figures

The Profit Overview by Key Figure is delivered out-of-the-box by SAP with some pre-defined Key Figure
settings. You are probably going to want to expand upon this by creating additional Key Figures. For
Example, the SAP KF for gross profit includes freight and other charges such as Handling Fees. You can
create a new Key Figure that calculates the product gross margin by summing the product revenue,
product discounts and the cost of the product.

In order to maximize your reporting capability, it is recommended that you create a Key Figure for each
price component listed on Table 1 of Exhibit 2. Examples and calculations are shown below.

You may want to create additional Key Figures to show additional calculations. For example, you could
consolidate freight and all of the other charges types price components into a Key Figure and show only
a consolidated amount in a single column. Additionally, if you want the invoice view to match invoice
totals, you would need to create and bring in a Key Figure for taxes.
 Procedure Profitability Reporting in ByDesign
Exhibit 4: Reporting Parameters
Specify Profit Analysis Attributes

The profit reports allow you to drill down by market segment in order to analyze profit based on
product, customer, organizational, regional attributes or project.

Product File Attributes:

Material ID
Product Category
Extension fields that you may define

Customer File Attributes

Customer ID
Customer Group (table is maintained in Bus Config // FT // Accounts
Country
Sales Unit
Distribution Channel
Employee Responsible (sales rep)
Industry (table is maintained in Bus Config // FT // General Business Partners)
ABC Code (table is maintained in Bus Config // FT // Accounts)
Nielsen ID (table is maintained in Bus Config // FT // Accounts)
Extension fields that you may define

Organizational / Region Attributes

Company
Segment
Sales Unit
Country
Extension fields on the customer file that further define geography (such as Territory or
Region)

Project Attributes (Projects // Project Plan // Accounting sub-screen)

Customer Group
Sales Unit
Country
Region
Product Category

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 Procedure Profitability Reporting in ByDesign
Exhibit 5: Reporting Samples

View: Order Profit by Product Category and Product

Profit Type 1 = Order Profit

This report will used estimated cost which is calculated as: Regarding the latest question
from you, the estimated cost is based on the Product Cost. If the Business Residence is
more than one, the estimated cost is the average of the number of Business residences.

7
 Procedure Profitability Reporting in ByDesign
Exhibit 5: Reporting Samples
View: Invoice Profit by Product Category and Product

Profit Type 2 = Invoice Profit

This report will used estimated cost which is calculated as: Regarding the latest question
from you, the estimated cost is based on the Product Cost. If the Business Residence is
more than one, the estimated cost is the average of the number of Business residences.

8
 Procedure Profitability Reporting in ByDesign
Exhibit 5: Reporting Samples
Use Option 3 = Earned Profit for actuals.

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 Procedure Profitability Reporting in ByDesign
Exhibit 5: Reporting Samples

Key Figures Selected:

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