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BUSINESS BLUEPRINT
module CO
February 2011
Business blueprint CO
Project SAP R/3, Schneider Electric, KSA
Phoenix
Team Sajid Basha Version: 01 Created: 22.07.10 Printed: 11.03.15 Designed:
CONTENTS
1 INTRODUCTION....................................................................................................3
2 TEAM STRUCTURE..............................................................................................3
6 INTERFACE REQUIREMENTS..............................................................................3
1 Introduction
Company Trade name : Schneider Electric
Address : Industrial City 2– Riyadh
Team BPE : Sajid Basha
BPO : Anil Kumar
BPO :
Project : Rollout Implementation of the SAP R/3 system, CO module (Controlling)
This blueprint summarises the strategies and requirements in the area of management and assurance of
quality. It expresses options of their implementation within SAP R/3 module of CO.
The content of this blueprint was prepared on the basis of workshops within the frame of the project team
or as applicable the working circle of integration meetings and meetings of the project key team with
responsible persons of the key areas.
On this occasion, we would like to thank all employees of the company for the co-operation.
The blueprint target consists in defining the functional and process parts of the CO module and a method
of their application in the processes essential to the company with the standard SAP R/3 functions.
2 Team Structure
Team Members Sajid Basha
Business Partners Younes Souini,Anil Kumar
SAP Advisor
A controlling area may include single or multiple company codes that may use different currencies.
These company codes must use the same operative chart of accounts.
All internal allocations refer exclusively to objects in the same controlling area.
In KSA:
Controlling Area Code : ME01
Controlling Area currency : EUR
By setting off the costs against the revenues, we can calculate an operating profit for the individual
market segments, which are defined by a combination of classifying characteristics (such as product
group, customer group, country, or distribution channel). The market segments are called profitability
segments.
We can assign multiple controlling areas to one operating concern.
In KSA:
Operating Concern Code : ME01
Operating Area Currency : EUR
All PA reports will be updated in monthly periods. (There will be no daily or weekly data
transfer to PA module.)
Any creation of cost centers must be assigned to the cost center hierarchy.
Schneider Electric cost centers are defined according to the organizational units in KSA.
Schneider Electric cost center groups are defined according to the reporting needs on the budget
process.
NRG BU SOL
Oil & Gas Marketing
services Q&A
EEM Quality
Industry F&A
There are two types of cost elements: primary cost elements and secondary cost elements.
Cost elements whose costs originate outside of CO and accrual costs that are only used for controlling
purposes.
Primary cost elements will be same with the expense and revenue accounts in GL.
The primary cost elements and revenue elements are directly from the expense and revenue accounts of
the P&L statement.
Primary cost elements correspond to the expense and revenue GL accounts in FI.
Secondary cost elements do not correspond to any G/L account in Financial Accounting. They are only
used in Controlling and consequently cannot be defined in FI as an account.
Expense budget planning process will be managed on cost element groups. “L Codes” will be defined as
cost element groups.
L1 – Personnel Expenses
L101 – Salaries & Wages
L102 – Overtime
L103 – Bonus & Premium
L104 – Social Charges & Taxes
L105 – Meals & Transportation
L106 – Provisions & Expenses For Bonus, Holiday and Retirement
L107 – External Personnel
L108 – House Rental
L109 – Other Personnel Expenses
L7 – Provisions
L701 Provisions for Stock
L702 Provisions for Customer Account
L703 Other Provisions
Activity types describe the activity produced or supplied by a cost center and are measured in units of
time or quantity. These are used to charge out costs from cost centers to production orders, projects, and
service orders. Each activity will have a price/rate. Activities will be charged to these cost objects during
confirmation.
In KSA, statistical key figure groups will be used for reporting for non-productive times. The followings
will be used:
Actual/Real internal orders are used to collect costs and this can be settled to the other cost objects.
The following actual/real internal order types will be used in KSA:
Parameters and number ranges of the internal orders will be defined in Realization Phase.
PCA lets us analyze internal profit and loss for profit centers. This makes it possible for us to evaluate
different areas or units within our company.
Cost centers, internal orders, projects, production orders, cost objects and materials have a profit center
assignment field in their master records.
A given cycle can contain a number of segments. A segment consists of the following elements:
Sender objects whose values to be allocated are computed using the same rules
Receiver objects whose allocation bases are computed using the same rules
Cycles are only valid in the environment in which they were defined (such as planned distribution, actual
distribution, etc.)
Sender and receiver cost centers and related cost elements will be defined.
4.3.2.1 Plan Cycle (from indirect cost centres to direct cost centres)
Plan
Cycle
Creation
Manual
entry
Statistical
Expense
key Run the Check the
budget
Figure cycle results
Planning
values
Transfer
from LIS
Planned costs on the indirect cost centers will be posted to the direct cost centers before standard
costing run. Sender cost centers are indirect cost centers, and receiver cost centers are direct and
indirect cost centers in various situations. At the end of the distribution, indirect cost centers will have no
planned costs.
4.3.2.2 Actual Cycle (from indirect cost centers to direct cost centers)
Cycle
creation
Payroll
(data flow
from HR)
Invoice entry
from
FI
Distribution
of
common
expenses
Manual entry
Statistical
Collection of Run the Check the
key
actual costs cycle results
figure values
Transfer
from LIS
The aim and the process will be same with the planned costs distribution. Same distribution strategies
and statistical key figures will be used in the cycle. Actual cycle will be created in the system for actual
cost distribution.
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Business blueprint CO
Project SAP R/3, Schneider Electric, KSA
Phoenix
Team Sajid Basha Version: 01 Created: 22.07.10 Printed: 11.03.15 Designed:
Cycle
creation
4.3.2.3 Actual cycle (from dummy cost centers to indirect cost centers)
Check the
Manual results
entry
Invoice
Statistical
entry to
key Run the
the dummy
Figure cycle
cost
values Transfer
center
from LIS
Common expenses will be posted to the dummy cost centers at the invoice entry transaction. This
process will make easy the invoice entry transaction. Because accountants will enter only one cost
center for the common expenses.
Values of the statistical key figures will be entered to the system or transferred from other applications.
(From LIS, etc.) The following statistical key figures will be used in this process:
Energy consumption (KWh)
The floor area (M2)
Number of personnel
Etc.
Statistical key figures will be finalized in Realization Phase.
Cycle will be run. (First run: test run, afterwards actual run)
The results of the cycles will be checked. There will be no amount on the dummy cost centers after
cycle run. All the costs/common expenses will be posted to the related cost centers.
Period-based price:
The system divides the costs arising in each period by the activity. This can result in different prices in
each period.
Period-based price calculation method will be used with “standard costing” and “RECO” processes, in
KSA.
Average prices:
The average price is based on the total costs from all periods divided by the total activity quantity of an
activity type from those periods. This ensures that the activity inputs of all receivers are valuated with the
same price, regardless of the period in which the activity input occurs.
Average price calculation method will be used with budget costing process.
Manual
entry
(Planned
working
Hours)
Plan activity
Expense Distribution unit
budget Splitting
(Plan cycle) price
Planning
calculation
Transfer
from LIS
(Planned
working
hours)
Plan price calculation determines prices for the plan activity types of each cost center and activity type.
File name: 263122317.doc1 19 / 71
Business blueprint CO
Project SAP R/3, Schneider Electric, KSA
Phoenix
Team Sajid Basha Version: 01 Created: 22.07.10 Printed: 11.03.15 Designed:
In the plan, the SAP System considers all the planned activity relationships between cost centers. It
calculates the prices iteratively by dividing the plan costs by the plan activity quantity.
Expense budget planning will be done “activity-dependent” on “L codes” in direct cost centers.
Costs of indirect cost centers will be distributed to the direct cost centers.
Planned working hours will be planned:
Manual planning: planned working hours will be entered to the system manually.
Automatic planning: after MRP run, planned working hours will be calculated on related work
centers – cost centers. These planned working hours can be transferred from PP to CO and used
on plan activity unit price calculation.
In KSA, planned working hours will be entered to the system manually. (Number of personnel, total
production times, % efficiency, non-productive times, etc.)
Planned costs will be divided by planned working hours. And the planned activity unit price will be
calculated.
Plan Labour activity unit price will be calculated manually and entered to the system. Holiday provisions
will be taken into consideration on labor cost planning. So the planned labor activity unit prices will be
same for each period. Calculation will be made 2 times in a year. (first 6 months and last 6 months)
Overhead activity unit price calculation will be same with labor activity unit price calculation. There will
be no differences between monthly figures.
Actual data
Period-end
flow
closing
From FI to
Transactions
CO
in FI
(Postings)
Actual
Actual
Plan-Actual working
Distribution activity unit
Comparison Splitting hours from
(actual cycle) price
(expenses) confirmation
calculation
s
During actual price calculation, the system calculates iterative prices for activity types based on actual
costs and actual activities. The calculation takes into account all activity exchanges between cost
centers.
Activity allocations / transfers between direct cost centers will be entered to the system before activity
unit price calculation.
All invoice entries in FI side, update the cost elements and cost centers in CO module.
When invoice entries finish in accounting department, budget-actual expense comparisons can be
reported.
The activity unit price calculation process is same with “plan” cycle.
Actual labor activity unit prices will be calculated with holiday provisions (personnel expense budget) and
planned working hours. Provisions and working time decisions will provide to see the same amounts on
plan and actual activity prices.
Actual production overhead activity unit prices will be calculated with actual costs.
When creating a material master record, we must assign the material to a material type.
Price Control:
Indicator determining the procedure used for material valuation.
Two procedures are available in the standard system:
Valuation at standard price (S)
Valuation at moving average price or (if the material ledger has been activated) periodic unit
price
(V and/or PUP)
We can use the Product Cost by Order application component in make-to-stock and sales-order-related
production environments.
In Product Cost by Order, the production orders themselves are the cost objects. Costs charged to
production orders are usually analyzed and settled by lot. This means that variances can only be
analyzed after the entire planned production quantity has been put into inventory.
We can manage our costs by period at the level of production cost collectors.
The application component Product Cost by Period enables periodic analysis of costs at the product
level.
In contrast to Product Cost by Order in which we analyze costs by lot, in Product Cost by Period we
analyze costs by period. This means that we collect the costs on a cost object over an extended period of
time, and analyze the debits and credits in each period.
Product cost collectors enable us to collect costs at the product level independently of the production
type. Regardless of whether the production environment is order-related production, process
manufacturing, or repetitive manufacturing, we collect the production costs for the product on a product
cost collector and analyze the costs in each period.
Cost objects can be independent entities (called cost object IDs), or they can represent other entities
such as orders or projects.
The functions of preliminary costing, simultaneous costing, and final costing can be performed on cost
objects.
4.3.5.4 Integration Points with Logistic (master data, some definitions, etc.)(CO-PC)
Bill of Material (BOM):
Bill of material is a multi-level material structure that defines the composition of the main material
reference.
Bills of materials contain essential master data for integrated materials management and production
control. A bill of material is a complete, formally structured list of the components that make up a
product or assembly. The list contains the material number of each component, together with the
quantity and unit of measure.
We work with order BOMs when we specially tailor the “make-to-order” production of our products to the
requirements of our customers. In order to meet the customer requirements, sales order specific
modifications to various assemblies are often required. Furthermore, assemblies are often specially
constructed for a particular sales order.
The order specific, modified or created BOMs are saved with reference to materials, sales orders, and
sales order items. BOMs of this category are linked to sales orders, so they are known as sales order
BOMs or order BOMs.
For Master pact, RM6, LC Component
Alternative BOM:
One product can be manufactured from alternative combinations of materials. The product is
represented by a number of alternative BOMs (alternatives). The differences between the alternative
BOMs are only small. Usually the only difference is in the quantity of individual components.
Work Center:
A work Center defines the organisational units where operations or work steps are carried out that
produce outputs of work. Each work center is assigned to a cost center for specific time periods that are
defined in the work center master records.
Work Center in Schneider will represent a group of people, a group of machines or a single production
line.
Routing:
Routing is a sequence of operations that describe the process and the resources used to manufacture a
product or a semi-finished product.
It defines:
operations (work steps) and their sequence
where the work must be done (work centers)
how much time is needed for the operation
the quality checks to be carried out
what materials have to be used (and when)
The activities to be produced in the operations as a basis for determining dates, capacity
requirements and costs.
The routing is to be defined based on the production flow and the layout on the shop floor.
The routing will consist of work centres which can be differentiated through the various operational
functions.
The routing & rate routing will include the standard times: Labor, machine time, setup, other activities
etc.
Rate Routing:
Rate routings meet the needs of rate-based production schedules in the R/3 PP Module. It contains
specification for production rate, setup and teardown times and assigned production activities. This is
usually used for repetitive manufacturing.
Production Version:
A production version determines which alternative BOM is used together with which task list/master
recipe to produce a material.
For one material, we can have several production versions for various validity periods and lot-size
ranges.
Production versions are used in material requirements planning (MRP), production order creation, and
product costing to select the most suitable task list or recipe and the corresponding material list.
Production Order:
A production order defines which material is to be processed, at which location, at what time and how
much work is required. It also defines which resources are to be used and how the order costs are to be
settled.
Planned
Standard
activity
costing Mark Release
Unit price
run
Calculation
Standard costing will be calculated at the beginning of the month, after raw-material costing.
Necessary master data for standard costing are:
Material master data (all of the necessary views and fields)
BOM
Routing
Work Center – cost Center – activity type relations
BOM : material usage quantity x raw-material planned prices
Routing: standard production times x activity unit prices
Related activity types are defined in the routing master data.
Standard costing run will be calculated for the next period. Costing results will be analysed and
checked.
Costing results will be marked. The planned prices will update the “price of the next period” field in
material master data.
Costing results will be released at the first day of the month. All of the stock accounts will be
valuated with the new planned prices. Variance accounts will be updated. (variances : standard cost
for the last period and standard costs for the current period) And the standard costing results will
update the “current period’s price” fields.
A special costing variant will be used in standard costing run. (ZPPC)
In Product Cost Controlling (CO-PC), the cost component structure determines the attributes for passing
on the following costs:
Material costs passed on to material valuation as the standard price or inventory price
Cost of goods manufactured passed on to Profitability Analysis
There are no BOMs and routings for raw materials in the system. Raw materials (ROH), packaging
materials (VERP) and trading goods (HAWA) will be included in this process, the raw material price will
be contractual price agreement with the vendor or purchase order price.
In sales-order-related production, we can use the preliminary costing for the production order for the
following purposes:
To use the planned costs calculated in this way to determine the planned costs for the sales
order item
To use the planned costs calculated in this way as the basis for results analysis
Preliminary costing will be run with a special costing variant. Costing will be calculated by the system
automatically according to the system status of the production order. (REL: released) There won’t be a FI
transaction at this step, such as valuating of stock accounts, etc.
Material costs: (BOM in the production order) planned material usage quantities x material unit prices
(planned)
Labor + Overhead costs: (Routing in production order) planned operation times x planned activity unit
prices.
Material costs: Material consumption from stock to PP orders x material unit prices (planned)
Labor + Overhead costs: Confirmed times in PP orders x planned activity unit prices
Time confirmations and material consumptions are actual in this step. Material unit prices and activity
unit prices are planned values. Their actual values will be calculated after period-end closing
transactions in FI and CO modules.
Special Purchasing
Material procurement BOM master
Info
master & costing types data
on the master Record
data creation creation
data creation
Standard
costing Mark Release
run
Standard costing for the subcontracted materials will be calculated at the beginning of the month,
like standard products. Costing steps are same with the standard products. The difference in on the
valuation strategies. Necessary strategies will be defined in customizing, in costing variant.
There won’t be routing master data for subcontracted materials in the system. BOM master data will
be created in the system. Special procurement indicator for “subcontracting” will be entered in the
material master data, in accounting and MRP views.
Purchasing info record master data will be created in MM module. Purchasing info records will
include subcontracting labor prices and other conditions related with purchasing and procurement
processes. (Payment terms, delivery times, discounts, etc.)
Material costs : Material quantity (BOM) x planned material prices
Subcontracting labor costs: subcontracting unit price in Purchasing Info Record x quantity
FI accounts (stock accounts) will be updated with the planned prices for the next period, after
standard costing run, marked and released.
Send materials
PO creation Goods receipt Invoice receipt
to the vendor
Period-end
closing
transactions
Purchase order will be created for the subcontracted materials. There won’t be a production order for
these materials in the system. The components that the vendor needs to manufacture the end
product are specified in the purchase order.
Materials will be sent to the vendor with the PO reference. Materials will be followed in special stock
statuts.
The vendor performs its service and delivers the ordered material (the end product). The
consumption of the components is posted.
Subcontracted materials will be receipt to our stocks. Stock accounts will be valuated with the
standard prices of the materials. Vendor invoice will be entered to the system in FI module.
Material costs : consumed material quantities x actual material prices
Subcontracting labor costs: goods receipt quantity x actual unit price (invoicing price) for
subcontracting services
New PP order
Confirmations
PP order Rework creation
(time &
creation decision (without
material)
material)
Settlement Settlement
From rework from rework
Confirmations order order
to the main PP to the main PP
order order
Routine production scenario will be completed. Confirmations and material consumptions will be
done in the production orders. Rework decision will be made at the final operation in routing: final
quality control.
New production order will be created. The order type will be different than normal production order:
“production order without material”. Rework process will be managed in the rework order.
Confirmations will be made and material movements will be done in the rework orders.
When rework process is finalized, Settlement rule will be defined in the order. Settlement rule will be
main PP order.
Settlement will be done in CO. The rework costs will be posted to the main production order, and the
main production order’s costs will be increased.
Variance
Variance Variance Asset
Distribution
calculation analysis settlement
If a cost accounting object uses an activity from a cost center, we usually start with a plan price to
allocate the activity. This is because the actual price is calculated during period-end closing. In the actual
price calculation, the SAP system performs an iterative calculation of the prices for the activity types. To
do this, it uses the actual costs that were debited to the cost center, and the activities actually incurred.
During this process, the system accounts for all activity relationships between cost centers.
After actual price calculation, we can revaluate the objects at actual prices if they have used the
activities from cost centers. We do this using Revaluation at actual prices (revaluation). The system
always determines the variances between the costs posted up to this point and the costs that occur under
the new prices. The corresponding sender cost center is credited by the actual price revaluation and the
receiver is debited accordingly.
WIP Calculation:
The WIP calculation function valuates the unfinished products. (Work in process) The WIP is valuated at
actual costs. Work in process is the difference between the debit and credit of an order that has not been
fully delivered. The system status of the manufacturing orders can be PREL (partially released) or REL
(released).
Variance Calculation:
Stage in the period-end closing process that determines variances for the following objects:
Product cost collectors
Production orders
Production variances are calculated based on the different between the actual cost against the standard
cost of semi-finished and finished goods produced. Production variances can be analyzed in terms of
price, quantity and other variances.
Settlement:
Full or partial allocation of calculated costs from one object to another.
The work breakdown structure (WBS) forms the basis for the organization and coordination of a project.
A WBS consists of various WBS elements. The WBS elements describe specific tasks or actions in the
project to be carried out within a defined time period.
Network:
Object containing instructions on how to carry out tasks in a specific way, in a specific order, and in a
specific time period.
Activity:
An activity is a task in a network which has a defined start and finish. An activity can be broken down into
activity elements.
There are four categories of activities in the Project System:
Internal activities
External activities
General costs activities
Service activities
Equipment Master
Data Creation Planning of
purchasing
(materials & services
BOM & Routing
Creation
Planning of
Standard Costing financial expenses
Run
Planning of customer
related expenses
Mark & Release
Planning of
labor activities
Costing run on
the project
Planning of
Project hrs activities
Reporting
Planning of
other project costs
The Project office standard cost will be calculated by the time planned and entered to PS (work in hours
on activity) by the Project Office Responsible, and the Standard Unit Price of the Labour Activity in Cost
Centre Project Office.
These two will give us the equipment cost which will be accumulated on related Equipment WBS. Since
every equipment on the Project will have different WBS, it will be easy to distinguish the cost of different
equipment on the project.
PP Order Purchasing of
Confirmation materials and services
with actual prices
Actual costing of
PP Orders Actual financial
expenses (insurance)
Actual costing of
CS Orders Actual
customer related
expenses
Expenses such as insurance, transportation, or plane will be related to the project during the entry of the
invoice. (Since we do not open a Purchase Order for these expenses, but directly post the invoices from
Accounting) These invoices had to be related to the Project during the invoice approval cycle.
4.3.6.3.4 Settlement to PA
These actual expenses will be accumulated at WBS header (Project WIP) until an invoice is made. As
the invoice is prepared from the SD, it is important to distinguish between partial invoicing and last
invoice. When the last invoice is prepared all the actual costs are to be Settled to Cost of Goods Sold,
and the turnover and all the costs are also to be settled to Profitability Analysis at the end of each period.
The product pyramid will be on Dummy material on SD order. Therefore the related activity/Family will
get this turnover and costs.
For partial invoices the situation is more complex. There may be unrealised cost on the Project but the
invoice may be related to some part of it. Therefore to put all the accumulated cost to COGS and PA
may result in wrong judgements. So the cost to be settled here has to be calculated by the forecasted
margin.
CS orders will be cost objects in CO. Actual costs will be collected on CS orders, and Settled to the
related objects. (SD orders, cost centers, GL accounts, CO-PA, etc…)
Services projects will be managed in PS module. The main costing process will be same with the other
projects in PS.
Planned Services activity unit price will be calculated at the beginning of the year, and will be used
during the year. Actual activity unit price will not be calculated. The differences will be followed on
“commercial based costs”.
Definition of
Planning of
CS order Task list & external
Component other
Creation & Activity services
assignment costs/manua
release planning (subcontract
l
ing)
Cost
Planning
Period-end Actual
closing activity
transactions unit price
in CO calculation
Material Purchasing
CS order consumptio of external Revaluation
Invoice entry
Confirmatio n services of
from FI
ns (MM (subcontract CS Orders
movement) ing)
Standard labor time will be entered to inspection plans, quality control operations.
QM work centers will be assigned to the related cost centers.
CO activity types will be assigned to the operations in inspection plan. QC labor activity will be used
in the IQC calculation.
QM orders will be created and assigned to the materials at the beginning of the month. Materials will
be grouped (work center basis) and assigned to the QM orders.
Test results will be recorded. Activity confirmations (with standard activity price) will be entered to the
system and multiplied by “planned activity unit prices”. Labor expenses will be accumulated on the
QM orders.
Materials consumed during the income quality control tests will be posted to the related cost center.
QM orders will be closed at the end of the month. (system status will be TECO : technically closed)
Settlement rule of the QM orders will be cost centers. Settlement will be done in CO module.
Final quality control operations will be defined in PP routings. The last operation will be final quality
control. A special control key will be used in the routings. (QM01)
Standard final quality control times will be entered to the routing master data.
Final quality control operations will be assigned to the related work centers. Direct labor activity will
determine in the routings.
Inspection lots are generated when PP orders are created.
Results will be recorded for the inspection lots. Final quality control times will be confirmed in PP
orders with standard times. Confirmed standard quality control times will be multiplied by the planned
labor activity unit prices.
Labor times will be accumulated in the PP orders, final quality control operations.
Final quality control costs will be added production costs.
Customer
IQC FQC
Returns
Non-conform materials will be posted directly to the related cost centers in IQC operations.
Non-conform semi-finished products and finished products will be confirmed on the PP orders as
scraps.
Customer returns will be entered to the system in SD module. Non-conform finished products will be
posted to Services cost center. Control and maintenance times will be accumulated in CS orders.
Confirmed times will be multiplied by services labor activity unit price.
Material costs + services labor costs = costs of customer returns.
In addition, CO-PCA lets us analyze certain balance sheet items by profit center. This also makes it
possible to control the necessary key figures for an area of responsibility.
Profit Center Accounting is account-based. That means, the values are updated in CO-PCA according to
account. Consequently, we can reconcile the data here with that in Financial Accounting.
CO-PCA provides us with a comprehensive and flexible information system for analyzing our data by
period. We can access the original postings from FI, CO, SD, MM, and so on directly to identify potential
weaknesses.
EC-PCA provides you with a comprehensive and flexible information system for analyzing your data by
period. You can access the original postings from FI, CO, SD, MM, and so on directly to identify potential
weaknesses. Using the report/report interface, you can drill down to the information systems of other
components.
The graphic below shows how a report is built in the cost-of-sales approach.
1. The revenues and the costs of sales are listed in the report rows by account.
2. Variances in production orders are assigned via the accounts to which the data was posted. You
can assign all debits and credits to the production cost centers using a separate function area,
for example Production, for the variances in the production cost centers. The difference which
arises gives you the desired variances.
3. The rest of the overhead for the period is entered in the corresponding report rows by function
area.
4. The report rows for data from non-operating results are found using the corresponding accounts.
We can find out which objects are not assigned to profit centers by analyzing the postings assigned to
the profit center. We can also assess or distribute data from the dummy profit center to the desired profit
centers.
It may happen that some objects in our system are inadvertently left without an assignment to a profit
center. In this case, postings to accounts which are defined as revenue or cost elements are assigned to
the dummy profit center of the controlling area to which the object posted to belongs. This ensures that
us internal and financial accounting data are reconciled.
The dummy profit center is structured just like a normal profit center. The only difference is a flag
indicating that it is the dummy profit center.
The other “dummy” profit centers are specific for KSA. They’re characteristics/definitions are like normal
profit centers.
(**) Dummy- profit centre are “allocation” profit centers. They will be used for cost allocations.
NRG BU
Oil & Gas FIN
Industry SFB
Building
Building
ITB
ITB
Yemen
Yemen
S2
S2 B
We can only assign objects from one controlling area to a profit center
These assignments make it no longer necessary for us to post our data explicitly to profit centers. The
system automatically transfers the data to CO-PCA when it is posted to the original object. We can
reflect both actual and plan data from the assigned objects in Profit Center Accounting in this manner.
Assignments of materials to profit centers provide the default values for assignment of sales orders and
manufacturing orders.
With internal goods movements also (such as stock transfers or material withdrawals) the profit center is
derived from the material master, if no other account assignment has been made.
The assignment of materials also forms the basis for the transfer of material stocks to Profit Center
Accounting.
In KSA, all materials will be assigned to the related profit centers in master data. Core Unit products and
LV products will be managed in the same plant (SA01). The differentiation for common materials
between profit center will be made on the CO objects. (sales orders, production orders, etc.)
We need to assign cost centers to profit centers so that we can reflect all the primary costs from
Financial Accounting and all secondary allocations from Cost Center Accounting in Profit Center
Accounting.
The assignment of a cost center also implicitly assigns all the assets which belong to that cost center to
the profit center.
Cost
Profit
Center short Text of the CC
Center
s
By assigning assets to profit centers, we can represent profits and losses due to the sale of assets as
well as accrued depreciation and interest in Profit Center Accounting.
This assignment also makes it possible to transfer asset portfolios to Profit Center Accounting.
An asset is always transferred implicitly to Profit Center Accounting via an assigned internal order or cost
center. Where the asset is assigned to both objects, it is transferred to the profit center contained in the
master data for the internal order.
The transaction data in Profit Center Accounting is stored in the accounts contained in the chart of
accounts for our controlling area. These accounts include those from Financial Accounting which are
used in Controlling (primary revenue and cost elements) and accounts which occur only in controlling
(secondary revenue and cost elements).
In addition, we can also transfer some accounts used only in Financial Accounting (payables/receivables,
material stocks, work in process, and so on) in order to analyze assets, material inventories, product
stocks, and changes in stock by profit center. These particularly include payables and receivables,
material stocks; work in process, and others.
We can define any number of hierarchical structures of accounts for use in the information system,
allocations and planning. These structures are called account groups. These account groups are only
valid in Profit Center Accounting.
Statistical key figures provide information on non-monetary data for profit centers, such as the number of
employees, number of machines, capacity usage, market information, and so on. We can group
statistical key figures together into statistical key figure groups.
4.3.9.5 Planning
Planning will not be done in CO-PCA. Only actual data will be monitored on profit centers.
All the postings in Financial Accounting, Materials Management, Assets Management and Sales and
Distribution and Controlling which affect profits are reflected in Profit Center Accounting.
Profit centers cannot receive direct postings in the R/3 System. Instead, the data is posted to other
objects and passed on from there to a profit center in Profit Center Accounting. This makes it possible to
display our company’s results by profit center based on the original postings and with no additional work.
As we can see from the graphic, the profit center for an MM goods movement can be determined either
dynamically (the material/plant combination in the document is decisive here) or indirectly via the
preceding document.
The graphic below illustrates how the system determines the profit center for an SD billing document. In
Profit Center Accounting, the data in the MM document is posted to the profit center determined by the
system.
For an SD billing document, the profit center is - with one exception - always determined indirectly via
the preceding document.
The exception to this rule is an SD billing document with valuated project stock. With this type of billing
document, the profit center is determined dynamically from the WBS element contained in the actual SD
billing document.
The graphic below illustrates how the system determines the profit center for FI and FI-AA postings. In
Profit Center Accounting, the data in the FI or FI-AA document is posted to the profit center determined
by the system.
The profit center is always determined dynamically from the FI or FI-AA document.
We can transfer the following balance sheet items to Profit Center Accounting in the standard R/3
System at end of period:
Payables and receivables
Material stocks
Assets
Work in Process
Assessment and distribution are described under the umbrella term Allocations.
Assessment and distribution of relevant overhead costs is performed at period closing (actual data) or
plan closing (plan data). This is usually done directly in CO and then reflected in the data in Profit Center
Accounting.
If we have an allocation profit center in our profit center hierarchy, we may need to assess or distribute
costs again in Profit Center Accounting.
In Profit Center Accounting, the allocation function allows you to allocate the following plan and actual
data.
Costs (assessment and/or distribution)
Revenues and sales deductions (assessment and/or distribution)
Balance sheet items (distribution)
Assessment is made using a special cost/revenue element.
Profitability analysis in CO-PA is based on the cost-of-sales accounting method. In KSA, we will activate
“Costing-based Profitability Analysis”.
Costing-based Profitability Analysis represents costs, revenues, and revenue deductions for internal
controlling purposes. The direct costs are collected from the relevant material cost estimate for the
product sold. All values are stored in value fields.
Profitability Analysis makes it possible evaluates market segments, classified by product, by customer,
by profit center, and so on. This CO module can answer this type of =S= questions like margin by
customer, by country, by DAS activity and by product family.
4.3.10.1 Characteristics
The characteristics in Profitability Analysis represent those criteria according to which you analyze your
operating results and your sales and profit plan. Valid values of these characteristics are combined to
form profitability segments.
Profitability Segment:
Object within Profitability Analysis to which costs and revenues are assigned.
Field Name Description Use Data Type Length Orig. Table Data Element
Fixed Characteristics
BUKRS Company Code F Char 4 BUKRS
FKART Billing Type F Char 4 FKART
GSBER Business Area F Char 4
KAUFN Sales Order F Char 10
KDPOS Sales Order Item F Numc 6
KNDNR Customer F Char 10 KNA1 KUNDE_PA
KOKRS CO Area F Char 4 KOKRS
KSTRG Cost Object F Char 12 KSTRG
Field Name Description Use Data Type Length Orig. Table Data Element
PPRCTR Partner Profit Center F Char 10 PPRCTR
PRCTR Profit Center F Char 10 MARC PRCTR
PSPNR WBS Element F Numc 8 PS_PSP_PNR
RKAUFNR Order F Char 12 AUFNR
SPART Division F Char 2 MARA SPART
VERSI Version F Char 3 RKEVERSI
VKORG Sales Organization F Char 4 MVKE VKORG
VRGAR Record Type F Char 1 RKE_VRGAR
VTWEG Distribution Channel F Char 2 MVKE VTWEG
WERKS Plant F Char 4 WERKS_D
Copied
Characteristics
ORTO2 Zone (District) F Char 35 KNA1
VKBUR Sales Office (Region) F Char 4 VBAK
VKGRP Sales Group (Sub F Char 3 VBAK
Region)
KDGRP Customer Group F Char 2 KNVV
KVGR1 Customer Group-1 F Char 3 VBAK
KVGR2 Customer Group-2 F Char 3 VBAK
Customer Hierarchy-1
Customer Hierarchy-2
Customer Hierarchy-3
Product Hierarchy-1
Product Hierarchy-2
Product Hierarchy-3
Product Hierarchy-4
Product Hierarchy-5
Product Hierarchy-6
AUART Sales Order Type F Char 4 VBAK
Project Number
Country
KOKRS – CO Area
ME01 – Schneider Electric KSA
SPART – Division
6 16 Building automation
&security
7 17 Indusrtry
8 18 ITB
9 19 Schneider internal sales
Export
10 21 Energey efficeancey
11 22 S2
12 23 Yemen -KSA
WERKS – Plant
SA01 – EPS
In costing-based profitability analysis, value fields represent the highest level of detail at which we can
analyze quantities, revenues, sales deductions, and costs for profitability segments in profitability
analysis or contribution margin accounting. We are free to define which revenues and costs go into which
value fields for profitability reports or sales and profit planning when we set up our system.
The following value fields will be used based on the requirements known as of today:
Pricing conditions of SD module
PR00 – Gross price
PN00 – Net Price
Discount types:
ZD01 - % of basic discount
ZD02 - % of additional discount
ZD03 - % campaign discount
ZD05 - % Commercial discount
ZDO6 - % Contract Dis-1
ZDO7 - % Contract Dis2
ZDO8 - % Marketing Discount
4.3.10.3 Derivation
Derivation is the process by which the system automatically fills characteristic fields that do not have
values.
Derivation Rule:
Rule that we define in derivation using IF-THEN logic, which controls how certain target characteristic
values are automatically derived from source characteristic values.
Derivation Strategy:
The derivation strategy is a list of steps the system performs to derive unknown characteristic values
from known values.
In KSA, “customer hierarchy” and “product hierarchy” characteristics will be derivated in CO-PA. Other
derivation rules will be defined in Realization Phase, if needed.
4.3.10.4 Valuation
Valuation is the process of identifying or calculating cost accounting values in Profitability Analysis. We
can valuate both plan and actual data.
In KSA, “valuation using material cost estimates” method will be used. This method makes it possible to
determine the costs of goods manufactured when a transaction is updated in CO-PA. This method is the
main integration point between CO-PC and CO-PA.
Standard cost estimate results will be updated at the beginning of the period. All of the transactions will
be transferred to CO-PA with standard costing results. After period-end closing transactions in CO,
Material Ledger results will update related value fields in CO-PA.
Special conditions types will be used for configurable products in SD. Because, standard cost estimate
will be calculated in SD orders. The costing results will not update material master records. All of the
information will be kept in the sales orders. And the costing results will be transferred to CO-PA with
these special condition types. Necessary condition types will be defined during Realization Phase
according to the different scenarios.
Standard cost estimate, actual costing and costing for configurable products will be based on different
costing variants in CO-PC.
4.3.10.5.1 PA – MM
No actual data flow.
4.3.10.5.2 PA – PS
Cost planning
Actual costing
Settlement of cost and revenues
4.3.10.5.3 PA – FI
Not planned.
4.3.10.5.4 PA – CCA
Cost allocations
Overhead costs (administrative, technical, commercial, etc.)
4.3.10.5.5 PA – PC
Planned costs (standard costing results)
Actual costs
Variances
WIP calculations
Budget costs
4.3.10.7 Reporting
Standard reports provided for CCA,PCA,CO-PC & CO-PS apart from that the following reports also
available.
1.4.1 CO - PP
- Master data : BOM, routings, work center – cost center assignments
- Cost centers, activity types
- Standard values – activity types – costing formulas
- Production types
- Make-to-order
- Make-to-stock
- Collective orders
- Repetitive manufacturing
- District manufacturing
- Variant configuration
- PP order types
- Confirmations
- Settlement rules
- SOP, MRP results
- Information systems
- Special scenarios
- Reworks
- Scraps
- Subcontracting scenarios
- ……
- Costing and profitability analysis
2.4.1 CO – PS
- Project definition, WBS, WBS element, network, activity
- Budget planning
- Plan costing
- Modifications / revisions
- Confirmations
- Result analysis
- Settlement to COGS and to CO-PA
- Costing and profitability analysis
3.4.1 CO – CS
- Master data : task lists, work center – cost center assignments,
- Cost centers, activity types
- Service order types
- Confirmations
- Subcontracting scenarios
- Settlement rules
- Billing process
- Costing and profitability analysis
4.4.1 CO – MM
- MM movements (ML transactions)
- Consumption movements to CO object (production orders, projects, cost centers, service
orders, etc.)
- ML (stock valuation in different currencies)
5.4.1 CO – SD
- Pricing conditions
- Organizational structure (SD areas)
- SD document types (order types, billing types)
- Make-to-order strategy / plan costing in SD orders
- Budget process (Sales budget, estimated sales prices, forecasting methods, PA – SIS data
transfer, etc.)
- Profitability segment, profitability reports, etc.
- Settlement to CO-PA
6.4.1 CO – QM
- Cost of quality report
- QM orders
- Task lists, activity types, work center – cost center assignments
- Confirmations
7.4.1 CO – FI
- Primary cost element master data (cost & revenue elements)
- Posting from FI (invoice entries, etc.)
- Records from to FI to CO objects
- Transfer of balance sheet accounts to PCA
-
8.4.1 CO – FA
- DAI follow-up / real internal orders
- Depreciation costs on the cost centers
6 Interface requirements
6.2 Interfaces
No interfaces in current phase.