cobw01

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http://slidepdf.com/reader/full/cobw01 1/45

Introduct ion toControlling

Reporting Requirements for

Cost and Profitability Management

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© SAP AG 2001, Title of Presentation, Speaker Name 2

Introduct ion to Controlling

Controlling: Integrating financial and operational information What the online transaction processing system (OLTP) does

Why add Business Information Warehouse?

Introduction to Overhead Management Typical reporting requirements

What an online analytical processing system (OLAP) adds

Introduction to Product Cost Controlling Typical reporting requirements


Introduction to Profitability Analysis Drill-down reporting in R/3

What a dedicated online analytical processing system(OLAP) adds

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What is Controlling?

Integrating financial and operational information

Overhead Cost Management

Activity Based Costing

Product Cost Planning

Cost Object Controlling

Actual Product Costing

Profitability Analysis by Market Dimensions

Responsibility Accounting by Profit Centers

Transfer Pricing

Integrated Sales & Net Profit Planning

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http://slidepdf.com/reader/full/cobw01 4/45© SAP AG 2001, Title of Presentation, Speaker Name 4

CO: Integrat ing financial and operat ional information

ECEC--PCAPCA

P r of i t C en t er A c c o un t i n g

Product Cost

Controlling

Product Cost

Controlling

Profitability AnalysisProfitability Analysis

Profitability

segment

COCO

PCPCOverhead Cost ManagementOverhead Cost ManagementCOCO

OMOM

COCO

PAPA

Activity

types

Cost Center

Processes

Sales Order

Projects

Manu-

facturing

Order

Internal

orders

Material-

valuation

Material-

valuation

Cost Element AccountingCost Element AccountingCOCO

CELCEL

HRHR HumanRessource

Sales andDistribution

Sales andDistribution

MaterialsManagement

MaterialsManagement

MMMM SDSDVertriebVertriebProductionPlanning

ProductionPlanning

PPPP

Financial AccountingFinancial AccountingAsset

RevenueExpense

FIFI

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Cost Flow s: Overhead Management

Act. Plan

Documents

Value flows

Salaries

Benefits

FIFI Direct

postings

Goods Issues

FIFI--AAAA

Planning

HRHR

COCO--

OMOM

Allocations

- Activities

- Orders

Depreciation

MMMM

Cost Center

Salaries-Salaries

-Social Expense

Travel

-Hotel

-Drive

Office

-Building

-Office Supplies

Shared Services-Maintenance

-Energy

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Cost Flow s: Product Cost Controlling

Act. Plan

DocumentsValue flows

MMMM Goods

COCO--

OMOM Activity UsageOverhead

COCO--

ABCABC

Goods Receipt

Settlement

Planning

MMMM

Manu-

facturing

Order

Process Usage

Material Usage

Labor Machine Time

Overhead

Procurement

Deliver to Stock

i s s u e s

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Revenue and Cost Flow s: Profitability Analysis

Sales quantity

Sales revenue

- Rebates

Net revenue

- Direct costs

- Var. prod. costsContrib. margin I

- Fixed prod. costs

Contrib. margin II

- Variances

- Overhead costs

Operating profit

Act. Plan

DocumentsValue flows

SDSDTransfer of

billing docs

FIFI

COCO--

PCPC

Direct p o s t i n g s Valuation

using costestimates

COCO--

PCPC FIFI

COCO--

OMOM

Transfer of

overhead

Planning

Profitability

segment

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Replicate transactional data in Business Information

Warehouse

Free resources in OLTP (Online Transaction

Processing) system

Optimize OLAP (Online Analytical Processing)system for reporting needs

Unify reporting across all functional areas and R/3

applications

Include non-R/3 data in reports

Make reports available to occasional users via Web

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Controlling: Integrating financial and operational information

What the online transaction processing system (OLTP) does


Introduction to Overhead Management Typical reporting requirements


Introduction to Product Cost Controlling Typical reporting requirements




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Overhead Management in Brief

Generally Involves:

Real time assignment of expenses to cost center Expenses may also be assigned to orders, projects,

or business processes

Allocation of costs to profitability segments or other

cost centers using tools such as distribution and

assessment, often at period close

Planning of anticipated expenses

Advanced Overhead Management:

Production cost centers use activity types to

allocate machine time, labor and so on to

manufacturing orders

Cost Center

Other cost centers use activity types or business

processes to allocate costs to profitability segments

Activity/process prices and quantities

Cost component split for each activity price

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Overhead Management: User Groups

Manager:

Responsible for one or more cost centers Cost center reporting is not main job

Also uses HR reports

Also uses reports from other areas

Manager‘s reports need to be

Easy-to-use

Intuitive

Just like those in other areas Cost Accountant:

Responsible for wider functional area

Familiar with powerful reporting tools

Big picture and detail

Cost Accountant‘s reports need to

Support tasks like planning, period close

Support trend analysis

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InfoCube for Cost Center

Total Actual Costs in Thousands

1999 2000 2001

Production Material 120 150 190

Salaries 240 250 300

Energy 100 230 340

Sales Material 100 100 90


Energy 123 123 156Administration Material 23 27 28


Energy 45 47 48

Facts

Year

CostCenters

Cost Elements

Total ActualCosts in

Thousands

Production

Sales

Administration

1999 2000 2001

Material

EnergySalaries

4745

InfoCube

48

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Overhead Costs for the Line Manager

Task: Analyze total actualcosts for your cost center

by cost element and year

Total Actual CostsSales Sales

Cost Elements 1999 2000

Material 100 100

Salaries 102 114

Energy 123 123

Total by Cost Element 325 337

WorkbookProduction

Sales

Administration

1999 2000 2001

Year

CostCenter

Material

EnergySalaries

Cost Elements

Total Actual Costs

Query

O h d C t f C t A t t (1)

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Overhead Costs for Cost Accountant (1)

Task: Analyze actual

costs for 2000 by cost

centers and cost

elements

Production

Sales

Administration

1999 2000 2001

Year

CostCenters

Material

EnergySalaries

Cost Elements

Total actual costs

Query

Actual costs: 2000

Cost Center / Cost Element Material Salaries Energy

Production 150 250 230

Sales 100 114 123

Admini stration 27 193 47

Total for Cost Centers 277 557 400

Workbook

O h d C t f C t A t t (2)

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Overhead Costs for Cost Accountant (2)


salary costs by cost

center and fiscal year

Production

Sales

Administration

1999 2000 2001

Year

CostCenters

Material

EnergySalaries

Cost Elements

Total actual costs Query

Cost Centers1.999 2.000 2.001

Production 240 250 300

Sales 102 114 149

Ad mi nistrat ion 176 193 198

Total for Cost Centers 518 557 647

Workbook

Di i f I f C b f O h d M t

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Dimensions of InfoCube for Overhead Management

Partners

Cost Element

Value Type/Version Unit of Measure

Time

Data Packet

Valuation

Currency Type

AccountAssignment Object

Cost Center

Order

Network

Network ActivityWork Breakdown

Structure Element

Reinventing order and project reporting

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Reinventing order and project reporting

Show me the

costs for allResearch and

Development

projects

Cost Center

Jobs/

Orders

Projects

Networks

Show me thecosts for all

Marketing

orders

Show me the

costs for allMaintenance

orders

Why keep Overhead Management in R/3?

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Why keep Overhead Management in R/3?

Cost Center Accounting receives costs from HumanResources, Asset Management, MaterialsManagement modules

Transfer of overhead to Profitability Analysis using

assessment cycles or activity allocations

Transfer of overhead to Product Cost Controllingusing activity allocations and surcharges

Further transparency if Activity Based Costing used

Why use BW for Cost Center Reporting?

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Why use BW for Cost Center Reporting?

Benefit from OLAP structure:

Which costs did my cost center incur?

How have wage costs increased over time?

Which cost centers incurred wage costs?

Special infocube for orders and projects assigned to cost centers Integrated report rather than jumps via „partner object“

View all relevant data

Multiple currencies and valuations Multiple plan versions

Build highly personalized queries and workbooks for occasional users

Only show what is relevant (not whole CO menu)

Only show „my cost center“, „my orders“ (no more confusing selection screens)

Show year-to-date, current month (no more manual entry of period to be

reported)

Publish to Web

Should I st ill report in R/3?

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Use standard R/3 reports to check that extractors are functioning

correctly and queries are defined correctly

Support period close activities

Assessment cycles

Target Costs

Actual activity prices

Variances

Audit trail

Line items

Documents from other areas

Corrections


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Introduction to Overhead Management

Typical reporting requirements


Introduction to Product Cost Controlling





Product Cost Controlling in Brief

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Product Cost Controlling in Brief

Generally Involves:

Calculating standard costs for product at start of year or period

Calculating material usage via BOM (bill of material)

and activity usage via routing

Tracking actual costs via goods issues and

confirmations to manufacturing order

Calculating variances and work in process at period

close

Advanced Product Cost Controlling: Calculating actual costs for product at period close

Updating costs for all products to include variances

Manu-

facturing

Order

from purchasing and production

Multiple currencies and valuations

Make to Order Environments:

Manufacturing order linked to sales order or project

Stock valuation per sales order

Product Cost Controlling: User Groups

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Product Cost Controlling: User Groups

Manager:

Primary responsibility is production

Also needs cost impact of decisions

Manager‘s reports need to

Highlight impact of scrap, rework, ...

Identify orders for sales order X

Cost Accountant:

Responsible for wider functional area

Familiar with powerful reporting tools

Big picture and detail

Cost Accountant‘s reports need to

Support tasks like planning, period close

Support trend analysis

InfoCube for Manufacturing Order

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InfoCube for Manufacturing Order

Total Actual Costs in Thousands

1999 2000 2001

Glassware Material 120 150 190Labor 240 250 300

Overhead 100 230 340

Ceramics Material 100 100 90

Labor 102 114 149

Overhead 123 123 156Plastics Material 23 27 28

Labor 176 193 198

Overhead 45 47 48

Glassware

Ceramics

Plastics

1999 2000 2001

Material

OverheadLabor

Year

ProductGroups

Cost Elements

484745

Facts

Total ActualCosts in

ThousandsInfoCube

Product Costs for the Line Manager

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oduct Costs o t e e a age

Task: Analyze total actual

costs for product groupCeramics by cost element

and year

Glassware

Ceramics

Plastics

1999 2000 2001

Year

ProductGroups

Material

OverheadLabor

Cost Elements

Total Actual Costs

Query

Total Actual CostsCerami cs Cerami cs

Cost Elements 1999 2000

Material 100 100

Labor 102 114

Overhead 123 123

Total by Cost Element 325 337

Workbook

Product Costs for Cost Accountant (1)

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( )


costs for 2000 by product

groups and cost elements

Year

Glassware

Ceramics

Plastics

1999 2000 2001

ProductGroups

Material

OverheadLabor

Cost Elements


Product Group / Cost Eleme Material Labor Overhead

Glassware 150 250 230

Ceramics 100 114 123

Plastics 27 193 47

Total for Product Groups 277 557 400

Workbook

Product Costs for Cost Accountant (2)

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( )


labor costs by product

group and fiscal year

Glassware

Ceramics

Plastics

1999 2000 2001

Year

ProductGroups

Material

Overhead

Labor

Cost Elements


Product Group 1.999 2.000 2.001

Glassware 240 250 300

Ceramics 102 114 149

Plastics 176 193 198

Total for Product Groups 518 557 647

Workbook

Dimensions of InfoCube for Cost Objec t Controlling

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j g

Partner Object:

Material Input

Partner Object:

Business Process

Partner Object:Cost Center/Activity

Type

Partners

Cost Element

Controlling

Area/Plant

Value Type/Version

Unit of Measure

Time

Data Packet

Order/Material

Currency/Valuation

Reinventing the audit t rail

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g

Which

productsused

machine

hours?

Milling Machine

Machine

Hours

Product/ProductionOrder Procure

Raw Materials

GOODS ISSUE

Which

products

used raw

material X?

Which

products

required the

procurement

process?

Which

products did

my costcenters work

on?

Why keep Product Cost Controlling in R/3?

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Product Cost Controlling perfectly integrated withvalue flow in R/3

Standard Costs based on BOMs and routings inLogistics

Standard Costs provide basis for inventoryvaluation

Cost tracking per production order, process order,

sales order...

Work in process at period close

Detailed variance analysis

Actual Costs based on multi-level actual costing atperiod close

Why use BW for Product Cost Report ing?

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Benefit from OLAP structure: Top-down: Product costs for material X

Bottom-up: Impact of raw material costs for all products

Time-line

Close functional gaps:

Price history for standard costs (MBEW only contains two periods)

Extract standard costs from material master each period

Material groupings from material master

Free OLTP for production

Extract CO-relevant data from production orders

Production orders can be archived as soon as final settlement is

complete

Should I still report in R/3?

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Use R/3 drill-down reports to check for dataconsistency when testing extractors

Analyze costing run before releasing results for

inventory valuation

Support period close activities

Check work in process

Check variances

Check actual costs (ML)

Check line items

Audit trail


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Introduction to Overhead Management



Introduction to Product Cost Controlling


Whatan online analytical processing system (OLAP) adds

Introduction to Profitability Analysis

Drill-down reporting in R/3

What a dedicated online analytical processing

system (OLAP) adds

Profitability Analysis in Brief

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Cost and revenue assignment to profitability

segment (group of characteristics) rather than one

object (cost center, order)

Revenue from billing document assigned to

dimensions customer, product, strategic business

unit, and so on

Different levels of cost assignment depending on

type of expense (costs of goods sold,advertising

costs, distribution costs)

Integration with CO-PC (standard costs and

production variances) and CO-OM (overhead,

activity types, processes)

Drill-down reporting in R/3

Profitability

segment

Drill-dow n Reporting in R/3

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Sales Organization

Division

Customer Group

Customer Group RevenueCustomer Group Revenue

01 Retail 2,000,000

02 Wholesale 3,500,000

03 Brokers 2,500,000

04 Mailorder 1,100,000

05 Direct 1,300,000

06 Outlet Malls 2,000,000

07 Factory Stores 1,000,000

S a l e s

O r g a n i z a t i o n

C u s t

o m e r

g r o u p

M a t

e r i a l

D i v

i s i o

n

C u s t o m e r

P l a

n t

Customer Group RevenueCustomer Group Revenue

01 Retail 1,000,000

02 Wholesale 2,500,000

03 Brokers 1,500,000

Customer Group

Sales Org. 1000

Division 007

Sales Organization

Division

Customer Group

Results 6,000,000

InfoCube for Profitability Analysis

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Customer

group

Dept. Stores

Wholesale

Retail

Glass- Ceramics Plastics Pottery Copper Pewter

ware

N

o r t h

S o u

t h

E a s t

R e g i o n

Division

Structure of InfoCube

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Mandatory

Unit of Measure

Time

Data Packet

WBS Element

Organizational

Structure

Plant

Company Code

Controlling Area

Business Area

Material

Material Group

Profit Center

Division

Customer

Customer Group

Sales Office

Distribution Channel

Sales Employee

Value Type

Valuation View

Version

Event Type

Currency Type

Profitability Analysis w ith BW

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Why keep Profitability Analysis in R/3?

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Profitability Analysis perfectly integrated with

value flow in R/3

Consistent matching of revenues earned withcosts incurred

Revenues and sales deductions from SD

Enriched real time with product costs and

accrued costs

Period end allocation of overhead, process

costs, variances

Why use BW for Profitability Report ing?

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No limitations on number of characteristics

No limitations on number of value fields

Consistent Reporting Interface

Reporting in dedicated system (OLAP)

Cross-application report data

Data Storage is used solely for report data

Integration with other SAP products, such as Customer

Relationships Management, Strategic Enterprise Management,…

When to Use Business Information Warehouse

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Multiple R/3 Systems

Combine data from differentorganizational subunits in asingle InfoCube

Harmonize heterogeneousoperating concerns

Group Profitability

Distringuish sales to customers

from sales to affiliated companies Use group cost estimate to

eliminate intercompany profit

Legacy systems

Use staging mechanisms for bulkimports of imported data

High-Volume and Cross- Application Reporting

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Collect ing Data from Several R/3 Systems

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CO-PA CO-PACO-PA

Collect ing Data from Legacy Systems

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Legacy

System

CO-PA


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Use R/3 drill-down reports to check for data

consistency when testing extractors

Use reconciliation reports to look for postinganomalies

SD/FI -> CO-PA

Order settlement -> CO-PA

Audit trail

Line items

Links to other documents

Corrections