Budget Unlocked PDF

SSA ERPLN 6.
Controlling
Student Manual and Exercises
(06/2005)
This material is for SSA Global internal training only and not for customer distribution
Copyright © 2005 by SSA Global Technologies, Inc.
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SSA ERPLN Controlling
Copyright © 2005 SSA Global Technologies, Inc.
All rights reserved. Printed in the United States of America.
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• SSA ERPLN is a trademark of SSA Global Technologies, Inc. in the United States and/or other countries.
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respective owners.
Contents
Contents........................................................................................iii
About this course....................................................................... vii
Course Goal.....................................................................................................viii
Course Objectives............................................................................................viii
Who Should Attend this Course......................................................................... x
Audience ........................................................................................................ x
Prerequisites .................................................................................................. x
Organization of Course Materials ..................................................................... xi
Lesson Objectives......................................................................................... xi
Lesson Materials ........................................................................................... xi
Lesson Reviews ............................................................................................ xi
Lesson Exercises .......................................................................................... xi
Flows............................................................................................................. xi
Icons Used Within this Course ......................................................................xii
Navigation ........................................................................................................xiv
Menu Paths .................................................................................................. xv
Course Agenda ................................................................................................xvi
Duration........................................................................................................xvi
Course Introduction ................................................................. xvii
Budgeting Setup & Static Budgeting ................................... 1-1
Budgeting Setup .............................................................................................1-3
Controlling 1 Parameters ............................................................................1-3
Budgets .......................................................................................................1-4
Exercise: Create Budget Code ................................................................1-6
iii
Controlling
Entering Budget Amounts and Quantities ...................................................1-7

Exercise: Create a Distribution Code ....................................................1-18
Delete/Archive Budgets.............................................................................1-19
Static Budget Analysis ..................................................................................1-20
Print Budgets.............................................................................................1-20
Compare Budgets .....................................................................................1-21
Compare Budget with Actual Data ............................................................1-24
Report Structures ......................................................................................1-24
Lesson Review..............................................................................................1-27
Review Questions .........................................................................................1-28
Flexible Budgeting .................................................................... 2-1
Set up Flexible Budgeting ...............................................................................2-2
Budgets .......................................................................................................2-2
Reference Units ..........................................................................................2-2
Business Examples .................................................................................2-2
Exercise: Create Reference Units ...........................................................2-5
Performance Budget ...................................................................................2-7
Business Example ...................................................................................2-9
Exercise: Create a Performance Budget .................................................2-9
Flexible Budget by Year ............................................................................2-11
Calculate Amount from Source Relations .................................................2-13
Business Example .................................................................................2-15
Exercise: Flexible Budget ......................................................................2-15
Effective Rates by Reference Units ..........................................................2-16
Allocation Relations...................................................................................2-17
Exercise: Allocation Relations ...............................................................2-21
Copy Budget Period Allocation Relations into Actual................................2-22
Lesson Review..............................................................................................2-24
Cost Allocation .......................................................................... 3-1
Process Actual Cost Allocation .......................................................................3-2
Import Actual Costs.....................................................................................3-2
Process Cost Allocation ..............................................................................3-5
Integration of Results ..................................................................................3-6
Exercise: Integrate results with the financial budgeting system ..............3-8
Retrograde Calculation ...............................................................................3-9
Business Example ...................................................................................3-9
Exercise: Cost Allocation .......................................................................3-10
Cost Allocation Analysis................................................................................3-12
Budget Allocation Results .........................................................................3-12
Actual Cost Allocation Results ..................................................................3-13
Deviations .................................................................................................3-13
Delete/Archive Cost Analysis Data ...........................................................3-15
Lesson Review..............................................................................................3-17
iv
Contents
Cost Price Calculation .............................................................. 4-1

Lesson Objectives.......................................................................................4-2
Set Up Cost Prices..........................................................................................4-4
CPR Parameters .........................................................................................4-4
Cost Components .......................................................................................4-5
Cost Component MC1 .............................................................................4-7
Cost Component CL1 ..............................................................................4-8
Exercise: Define a Cost Component .......................................................4-9
First Cost Component..............................................................................4-9
Operation Rate Codes ................................................................................4-9
Exercise: Define an Operation Rate ......................................................4-12
Price Calculation Codes............................................................................4-13
Exercise: Define a new Price Calculation Code ....................................4-16
Cost Price Calculation Data ......................................................................4-17
Operation Rates ........................................................................................4-19
Item Surcharges........................................................................................4-22
Exercise: Add an Item Surcharge ..........................................................4-26
Subcontracting Rates................................................................................4-28
Exercise: Define a Subcontracting Rate ................................................4-29
Simulate Purchase Prices .........................................................................4-30
Simulate the Purchase Price .................................................................4-31
Simulate the Cost Price Calculation..........................................................4-32
Calculate Cost Prices....................................................................................4-35
Exercise: Calculate the Standard Cost Price.........................................4-38
Exercise: View the Item Cost Data ........................................................4-39
Actualize the Cost Price ............................................................................4-40
Exercise: Calculate Subcontracting Rates ............................................4-41
Exercise: View the Current Cost Price for an Item ................................4-44
Exercise: Link Operation Rate Code to a Work Center .........................4-46
Exercise: Calculate Cost Price ..............................................................4-47
Exercise: View New Cost Price Structure..............................................4-48
Exercise: View Cost Price Details .........................................................4-49
Print Multi-level Cost Price Calculation .....................................................4-50
Lesson Review..............................................................................................4-54
Controlling Integrations............................................................ 5-1
Controlling Integrations ...................................................................................5-3
Integration Scheme for Cost Price Calculation ...........................................5-3
Integration Scheme for Hours .....................................................................5-7
Integrate Variances with General Ledger....................................................5-9
Integrate Results Process .........................................................................5-10
Controlling
Lesson Review..............................................................................................5-21
vi
About this course
The Controlling course is designed to provide you with the skills and knowledge
necessary to execute the functionality within the Controlling module of the SSA
ERPLN Financials package
This section contains information that will help you use this course material
effectively both during training and as a performance tool after training.
This information includes:
Course Goal and Objectives
Who Should Attend this Course
Organization of Course Materials
Navigation
Course Agenda
Course Introduction
vii
Controlling
Course Goal
The objective of this training is to learn about the concepts and functionality of
Budgeting, Product Costing and Activity Based Costing, the link with the Cost
Price Calculation of an item and the cost drivers of SSA ERP Operations Mgt.
Course Objectives
After completing this course, you will be able to:
Enter the setup necessary to create a budget
Create a static budget
Enter Amounts and Quantities into a static budget
Print the budget for analysis
Compare budgets
Create Reference Units
Create a Performance Budget
Create a Flexible Budget
Set up Effective Rates by Reference Unit
Create Allocation Relations
Import Actual Costs
Process Cost Allocation
Integrate Cost Allocation results to GLD
Analyze Cost Allocation results
Delete/Archive Cost Analysis data
Set up cost prices
View cost price parameters
Define cost components
Create operation rate codes
viii
About this course
Define price calculation codes
Define cost price calculation data
Define an operation rate
Add an item surcharge
Define subcontracting rates
Define item surcharges for an item
Simulate a purchase price for an item
Calculate the cost and the valuation price for an item
View Cost Price results
Create Integration Scheme for Cost Price Calculation
Create Integration Scheme for Hours
Integrate Variances with GLD
Process integration results
ix
Controlling
Who Should Attend this Course
Audience
This course is designed for individuals that require an in-depth knowledge of the
Controlling module. It is recommended that participants possess a general
understanding of financial concepts, such as ledger accounts and dimensions as
well as Manufacturing concepts. Participants may include consultants, sales and
product support personnel, as well as new SSA ERPLN customers.:
Prerequisites
These courses should be completed before taking Controlling:
ERP Navigation
ERP Manufacturing
Financials Overview
x
About this course
Organization of Course Materials

This course is organized into lessons. Each lesson focuses on a major concept
relating to Controlling
Lesson Objectives
The objectives at the beginning of every lesson enable you to see the functions
and concepts you will master by the end of the lesson.
Lesson Materials
Each lesson sequentially presents concepts and guides you through step-by-step
procedures. You may see items such as figures, screens, bulleted text, notes,
business examples, and/or definitions intended to help you follow along with the
procedures and focus on important ideas.
Lesson Reviews
After each lesson, conceptual and knowledge based questions are provided to
assess and reinforce your understanding of the lesson topics and corresponding
concepts presented.
Lesson Exercises
Lesson exercises are included to give you hands-on practice with the important
skills you will learn in the lessons.
Flows
Flows provide a sequential listing of key sessions or activities required to execute
the functionality within the software. Each box within the flow states an activity
you will perform. This activity statement is written at the top half of the box. In
some cases, however, activities or tasks may be optional, which may be
xi
Controlling
represented by additional lines drawn from one box to another. Flows containing
session names and codes tell you where in the software the activity is to be
completed. Alternatively, you may also see Flows that only contain activity
statements.
The Flow: Sample Flow
Start
Set up invoice factoring

companies for handling supplier
payments
Factoring Companies
(tcmcs0125m000)
Create bank account details for

factoring companies
Bank by Factoring Company
(tcmcs0126m000)
Associate factor with pay-to

business partner
Business Partners
(tccom4500m000)
End
Icons Used Within this Course

These icons may be used within the lesson materials:
NOTE: A Note icon alerts you to additional and helpful information or hints
regarding the topic.
xii
About this course
WARNING: A Warning icon calls attention to information or procedures that must

be followed explicitly.
PROCEDURE: A Procedure icon identifies a sequential set of steps or tasks that

show you how to complete an activity or task.
EXERCISE: An Exercise icon designates when you will complete an exercise to

practice the task.
GUIDED TASK: The Guided Task icon alerts you to complete a set of steps with
your instructor.
INDEPENDENT TASK: The Independent Task icon informs you to complete a

task independently.
INSTRUCTOR DEMONSTRATION: The Instructor Demonstration icon alerts you

to watch your instructor complete a set of steps and listen to the explanation.
xiii
Controlling
Navigation
®SSAERPLN Webtop uses a Graphical User Interface (GUI) to operate on the
Windows operating system. Sessions contain icons and menus, which allow you
to navigate and execute activities within the software. The sample Toolbar
displays the icons and menu options you will commonly encounter within the
sessions. You may see different icons and menu options depending upon the
session you are in.
Sample Toolbar
Icon Icon Name Description

Save and Close Saves the current record and input data and closes the
session.
Save Saves the current record and input data.
Print Prints a report of the session data. You will be
prompted to select a report type for printing or enter the
data range for printing.
New (Insert) Creates a new record for inserting data within the
session.
Duplicate Copies the data from a selected record to a new
record. You can then modify the new record to create a
unique entry. This enables faster data entry for similar
records.
Delete Deletes the selected record.
Revert to Saved Cancels any changes made to a record since it was
last opened or saved. To redisplay the changes press
CTRL + E.
Find (Binoculars) Searches and filters for a specific record. You can use
multiple search arguments to find an individual record.
Text Creates or displays Text linked to the selected record.
Show the Creates or enables viewing of documents attached to
Attachments the selected record. This option is only applicable when
the Object Data Management module is implemented.
xiv
About this course
Icon Icon Name Description

Refresh If you are running more than one session, and you
have made changes in one session that affects
information displayed in another session, the Refresh
icon will display the affected and updated information
for all related sessions.
You must always save your changes before you can
use Refresh to make the changes visible in another
open session.
First Record(s) Displays the first record in the current Group.
Previous Record(s) Displays the prior sequential record within the current
Group.
Next Record(s) Displays the next sequential record within the current
Group.
Last Record(s) Displays the last record in the current Group.
New Group Creates a new Group entry enabling you to input data
for a new Group.
First Group Displays the first Group record.
Previous Group Displays the previous sequential Group record.
Next Group Displays the next sequential Group record.
Last Group Displays the last Group record.
Menu Paths
You may see several menu paths in the lessons and exercises. These paths
illustrate where you must navigate to within the software to find the appropriate
session.
In the lesson exercises, menu paths direct you to the appropriate sessions in the
software. Within each exercise, you will normally open the session listed in the
menu path and view or insert a new record. Sub-sessions may also be required
during exercises and (in most instances) can be accessed from the main session
listed in the menu path.
Sample Menu Path

\\ Financials \ Controlling \ Master Data \ General \ Controlling 1 Parameters
(tffbs0500m000)
Sub-session: Controlling 1 Parameters (tffbs0100s000)
xv
Controlling
Course Agenda
The key topics covered within this course include:
Budgeting Setup and Static Budgeting
Flexible Budgeting
Cost Allocation
Cost Price Calculation
Controlling Integrations
Duration
Virtual (VT) Classroom (ILT)

N/A 03 Days
xvi
Course Introduction
The cost prices of the products are built up of direct costs, for example, the costs
of raw material, and indirect costs, for example, the depreciation costs of the
assets such as housing, and so on. The indirect costs must be allocated from the
cost centers to the products as accurately as possible.
General (budgeted) costs such as depreciation, energy, and so on are, therefore,

first registered on a primary cost center. For example, the depreciation costs are
registered on the housing cost center, and the electricity and water costs are
registered on the energy cost center. From these primary cost centers, the
(budgeted) costs are allocated to the main departments, such as the Production
department, and to the products.
The Cost Accounting (Controlling) department periodically compares the actual

costs with the budgeted costs. If differences occur, you must take action to rectify
this.
Controlling is the coordination task of budgeting, auditing, and providing

information to improve business procedures in organizations.
Through cost allocation, you can establish multiple performance dependencies

between cost centers, but also between various dimension types, and calculate
the correct allocation rate.
xvii
1
Budgeting Setup &
Static Budgeting
In SSA ERP LN there are two types of budgets: Static and Flexible.
Static Budget: A budget that can be based on ledger accounts and/or

dimensions.
Flexible Budget: A budget that is based on the performance of a cost center

(dimension).
The static budget can spread the budget costs per ledger account over a
maximum of five dimension types, as defined in the General Ledger. The flexible
budget, however, will be budgeted per dimension, for which the costs can be split
into fixed and variable costs.
Ledger accounts are budgeted by dimension in a flexible budget, and dimensions

are budgeted by ledger accounts in a static budget.
A static budget is not performance driven, which means that (budget) costs
cannot be allocated between dimensions. A flexible budget is performance driven
and can, therefore, perform cost allocations between dimensions, and can even
import the performances from Operations Management.
1-1
Controlling
Lesson Objectives
After completing this lesson, you will be able to:
Enter the setup necessary to create a budget
Compare budgets
1-2
1 Budgeting Setup & Static Budgeting
Budgeting Setup
Before the user can enter budget amounts and quantities, the user must first set
up a static budget.
Because the setup sessions are also used for flexible budgeting, detailed
information about these sessions will be found in this lesson and only specific
information relating to flexible budgets will be explained in the flexible budgeting
lesson.
Controlling 1 Parameters
\\ Financials \ Controlling \ Master Data \ General \ Controlling 1 Parameters
(tffbs0500m000)
Sub-session: Controlling 1 Parameters (tffbs0100s000)
Controlling 1 Parameters
Field Description
Hierarchy The default hierarchy that is used for budgeting and cost
analysis in Controlling.
Home Currency for In Controlling, the data is stored in one home currency.
Controlling Define which of the three home currencies is the default
home currency.
1-3
Controlling
Field Description
Reaction on Changed If a budget is already created and the budget
Performance Budgets performance is changed, the rate will be automatically
recalculated. However, if the performance changes, the
variable costs most likely are also different.
Change Rates: A performance change only calculates a
new rate.
Change Variable Amounts: A performance change first
updates the variable costs and then calculates a new
rate.
Use Effective Rates (check Use Effective Rates An effective rate is a comparison
box) rate to express the price that:
You expect from your own
investments.
You could earn with alternative
investments.
If this check box is selected, the effective rates can be
maintained in the flexible budgeting process.
Automatic Rebuild Sublevel Select this check box if the parent ledger accounts and
for Static Budgets (check parent dimensions must be calculated immediately
box) when the budget is entered.
Budgets
A budget is a plan of units or amounts that can be spent on particular objects,
such as ledger accounts, departments, item groups, and so on. This plan can
subsequently be evaluated with the actual figures, and compared with other
budgets. In addition, you can simulate various scenarios.
Before the user can enter budget amounts, the user must first define a budget
code.
1-4
\\ Financials \ Controlling \ Master Data \ Budgets \ Budgets (tffbs0503m000)

Sub-session: Budget (tffbs0103s000)
Budget
Field Description
Budgeting Method Bottom-up: Budget amounts and quantities are
recorded by ledger account and/or by dimension, using
the Budget Amounts session and the Quantities
session. You can only enter ledger accounts or
dimensions with sublevel 0. Ledger accounts or
dimensions with a parent/child structure are
automatically built up for the parent accounts.
Top-down: If you use this method, you can define
budget amounts and quantities for ledger accounts
and/or dimensions with sublevels greater than or equal
to zero. However, you do not have to compare the
budget amounts to other ledger accounts and/or
dimensions within the same parent/child structure. You
can stop on every level.
Link with Ledger Account For a static budget, you can specify whether the budget
(check box) amounts can be created for ledger accounts. For a
flexible budget, this check box is automatically selected.
1-5
Controlling
Field Description
Number of Budget Periods In this field, you can define the number of periods in a
budget. Because the budget will be compared with the
actual costs/revenues, the budget periods must be
equal to the fiscal periods defined in the General
Ledger, with the exception of the correction period. You
can also define one period for an annual budget.
Dimensions Applicable Select the check box for each dimension for which a
(check boxes) budget must be created.
Quantities (group box) If Quantities are selected, you can budget quantities on
ledger accounts that have quantities enabled.
Use these check boxes to compare the quantity on the
actual ledger account with the budget quantity.
Exercise: Create Budget Code

For the current year, you must create a flexible budget code.
1. Create budget code.
\\ Financials \ Controlling \ Master Data \ Budgets \ Budgets (tffbs0503m000)

Field Input Value
Budget 10
Description Annual Budget
Flexible Budget Select this check box
Periods 12
Link with Dimensions Select the Dimension Type: Cost Center and Cost
Objects check box
Quantities Select the Quantity 1 check box
Click Save and Close to exit the session.
2. Budgets per Year.
\\ Financials \ Financial Budget System \ Master Data \ Budgets and Budget

Defaults \ Budgets per Year (tffbs0505m000)
Field Input Value
Year 2005
1-6
Field Input Value

Budget 10
Budget Currency USD
3. Set the actual company budget.
The budget code you have now created will be used in the General Ledger
module to compare the budget amounts with the actual amounts. Therefore, you
must define this budget code as the default budget. In addition, this budget code
will be used to import actual costs from the general ledger.
This budget code will also be used to import actual data from the General
Ledger.
\\ Financials \ General Ledger \ General Data \ General \ Company

Parameters (tfgld0503m000)
Field Input Value
Actual Budget 10
Entering Budget Amounts and Quantities

To enter budget amounts and quantities manually in a static budget, you can
copy an existing budget, or generate a budget based on actual figures.
You can copy budget amounts and quantities from one budget into another
budget, or from one year into another year, for example, by using an inflation
factor to modify the budget amounts.
To enter budget data, you can also use the actual figures from the General
Ledger. Subsequently, you either copy actual figures in the Copy Budgets
session or you can Recalculate a Budget Based on Actual Figures.
You can, of course, also enter budget data manually. You also have the option to
copy or recalculate actual figures to manually modify the budget data created.
When you create Budget Data by Year, SSA ERP LN automatically splits up the
year budget amount into period budget amounts, taking into account the
distribution used.
1-7
Controlling
Copy Budgets
You can use copy budgets session to accumulate budgets or to forecast
budgets:
You can copy budget (or actual data) into an existing budget.
You can also use this session to create a new static budget for the next year
(forecasting). This new budget can be based on either budget data or actual
data. You can use a multiplier to correct, for example, price inflation.
\\ Financials \ Controlling \ Budgets \ Utilities \ Copy Budgets

(tffbs1202m000)
Copy Budgets
Field Description
Data Type Budget Data: All source budget data is copied into a
defined target budget. If the target budget has a Bottom-
up budgeting method, budgets at higher sublevels are
rebuilt. You cannot copy from a static budget to a
flexible budget.
Actual Data: Specified actual data (amounts and
quantities) on ledger accounts and dimensions defined
in the General Ledger module is copied to the specific
target static budget.
1-8
Field Description
Periodic Distribution Mode A method for spreading out budgeted or actual year
totals to a number of periods. Both quantities and
amounts can be spread out.
Use Distribution code: The distribution code of the
target budget is used to spread out the amounts and
quantities over the periods.
Equal Distribution: The number of target budget
periods is used to spread out the amounts and
quantities over the periods.
Not Applicable: The amount and quantities are created
per period. If this check box is selected the Periodical
Data check box is available.
Accumulate (check box) If this check box is selected, the actual data or source
budget data is accumulated with the target budget data.
For example, an expense budget and a sales budget
are accumulated into a total budget.
Use Multiplier on Period Select this check box if you want to use the multipliers
Level (check box) from the source budget periods.
Multiplier If the Use Multiplier on Period Level check box is
cleared, you can fill in the factor by which the source
budget data or actual data is multiplied to the target
budget. The default is 1.
Amount (check box) If this check box is selected, the amount of the selected
budget data or the actual data is copied.
Quantity (check box) If this check box is selected, the quantities of the
selected budget or actual data will be copied. This check
box is disabled when in the source budget no quantities
are used.
Periodical Data (check box) Select this check box if the period amount and quantities
must be copied.
Non-finalized transactions Select this check box if the Data Type is Actual Data
(check box) and you wish to include non-finalized transactions.
On the Source Range tab, you can select which periods, ledger accounts, and
dimensions must be copied from the source budget/actual data into the target
budget.
1-9
Controlling
Recalculate Budget Data based on Actual Data

You can recalculate the budget amounts and quantities based on the actual
amounts stored in the general ledger history tables, for example, if the market
conditions change dramatically, and the original budget cannot be met for a
particular year.
Before you recalculate a budget, it’s a good idea to copy the budget first. In this
way, you can compare the old budget data with the recalculated budget data.
\\ Financials \ Controlling \ Budgets \ Utilities \ Recalculate Static Budget

Data Based on Actual Values (tffbs1205m000)
Recalculate Static Budget Data Based on Actual Values
Field Description
Year/Period Enter the range of budget periods that you want to
recalculate.
Period in GLD The range of fiscal periods from which the actual data
are taken.
Budget Period The range of budget periods that are used as the
calculation base.
The following two sums are built:
Sum A: For each dimension and ledger account combination, the sum of the
actual amounts in the Period in GLD range.
1-10
Sum B: For each budgeted dimension and ledger account combination, the
sum of the budget amounts in the Budget Period range.
For each budgeted dimension and ledger account combination the new budget
amount is calculated as follows:
New budget amount = old budget amount * (sum A/sum B)
According to the distribution mode of the ledger account the budget is updated
with the new budget amounts for the budget year or for the budget periods.
Budget Amounts and Quantities

You can maintain static budget data either by year or by period. Based on the
distribution mode, the year data can be split up over the periods.
\\ Financials \ Controlling \ Budgets \ Static Budgets \ Budget Amounts and

Quantities by Year (tffbs1500m000)
Budget Amounts and Quantities by Year
1-11
Controlling
Sub-session: Budget Amount and Quantities by Year (tffbs1100s000)
Budget Amount and Quantities by Year
Field Description
Ledger Account Enter the ledger account for which the budget amount
and/or quantity will be entered. Depending on the
budget method (Top-down or Bottom-up), you can
select parent/child ledger accounts, or only child ledger
accounts.
Dimensions Enter the dimensions for which the budget amount
and/or quantity will be entered. Depending on the
budget method (Top-down or Bottom-up), you can
select either parent/dimensions or only child
dimensions.
1-12
Field Description
Periodic Distribution Mode The year budget amount the user inserts in this session
will automatically be split up over the budget periods.
The distribution mode defines how this split up must be
made:
Equal Distribution: The year amount will be divided by
the number of periods defined in the budget.
Use Distribution Code: The year amount will be
divided over the periods based on the percentages or
factors of the distribution code entered in the
Distribution field.
Not Applicable: No year amount can be entered. You
must maintain the budget amounts and quantities per
period.
Distribution If the Periodic Distribution Mode is Use Distribution
Code, in this field, you can fill the distribution code that
is used to split up the year budget data over the period
budget data.
If you have entered a comparison budget to this static budget, on the Annual
Comparison tab, you can immediately compare the amounts and quantities
entered with the comparison budget.
If the parent-child relation in the Ledger Account Structure and Dimension Master
is changed, you can rebuild the parent ledger account and parent dimension
budget amounts. In the Budget Amounts and Quantities by Year (tffbs1500m000)
overview session, from the Specific menu, click Rebuild Sublevels to start the
Rebuild Static Budget Sublevels (tffbs1204m000) session. You can also start this
session from the Menu Browser.
Flexible budget data also appears in this Budget Amounts and Quantities by
Year (tffbs1500m000) session.
In the Budget Amounts and Quantities by Year (tffbs1500m000) session, from

the Specific menu, you can click Budget and Quantities by Period to start the
Budget and Quantities by Period (tffbs1101m000) session.
1-13
Controlling
\\ Financials \ Controlling \ Budgets \ Static Budgets \ Budget Amounts and

Quantities by Year (tffbs1500m000)
Sub-session: Budget Amounts and Quantities by Period (tffbs1101m000)
Budget Amounts and Quantities by Period
You can only maintain the amounts and quantities in this session if the Periodic
Distribution Mode in the Budget amounts and Quantities by Year (tffbs1100s000)
session is Not Applicable. If the Periodic Distribution Mode is set to either Equal
or Distribution Code the system automatically calculates the period amounts and
quantities, and you cannot modify these amounts.
If you want to enter the budget amounts by year, but the period amounts must be
nicely rounded, first use the periodic distribution mode Equal or Distribution Code
to enter the year budget, and then change the periodic distribution mode to Not
Applicable. You can then modify the period amounts and quantities.
1-14
Budget Distribution
Distribution codes enable you to distribute budget amounts and the budget
quantities over a number of periods, according to a user-defined distribution
code.
\\ Financials \ Controlling \ Master Data \ Budgets \ Budget Distribution

(tffbs0101m000)
Budget Distribution
Field Description
Distribution A code that the user can link to a budget to
automatically spread out the budget amount and
quantity over the periods.
Distribution Method Percentage: The total budget amounts and quantities
are distributed based on a percentage. As a result, the
total percentage of all periods within the same budget
distribution code must be 100 percent.
Factor: The total budget amount is distributed based on
the factor assigned to each period. This factor, divided
by the total of all factors, determines the part of the
budget assigned to a period.
Distribution Periods The number of periods over which the budget is
distributed. The number must be greater than one.
Be aware that, to compare budget data with actual data, the budget must have
the same number of periods as the fiscal year. Otherwise, for example, you
cannot create a quarterly budget, since if you define four periods, the system
sees the first four periods of the fiscal year as periods mentioned. Therefore, it is
advised that you use the same number of periods for a budget as the number of
periods defined as for fiscal periods (without the correction period).
Select a distribution code and, from the Specific menu and click Generate
Distribution Data by Period.
1-15
Controlling
Generate Budget Distribution Data per Period
Field Description
Percentage/Factor Increase per Period: The percentage or factor will be
Generation Method increased stepwise for the specified period range. In
case of a percentage distribution method, the Default
Percentage Value field will be available. In case of a
factor distribution method, the Default Factor Value field
will be available.
Decrease per Period: The percentage or factor will be
decreased stepwise for the specified period range. In
case of a percentage distribution method, the Default
Percentage Value field will be available. In case of a
factor distribution method, the Default Factor Value field
will be available.
Default value per Period: The default value will be
applicable for the specified period range (equal
distribution over the periods).
Multiplier Generation Increase per Period: The multiplier increases stepwise
Method for the specified period range.
Decrease per Period: The multiplier decreases
stepwise for the specified period range.
Default value per Period: The default value will be
applicable for the specified period range.
1-16
Field Description
Step Size The step size for the increment or decrement of the
multiplier for the specified period range.
Note: You can enter a value in this field if the
Generation Method field has the value Increase per
Period or Decrease per Period.
Click Generate. The percentages/factors and multipliers are now created in the
Budget Distribution Data by Period (tffbs0102m000) session based on the
generation settings.
Sub-session: Budget Distribution Data by Period (tffbs0102m000)
Budget Distribution Data by Period
1-17
Controlling
Field Description
Percentage The percentage of the total budget amount to be
assigned to the selected period. The total percentage
must not exceed 100. You can only access this field if
the distribution code is based on percentages.
Factor The distribution factor for the specified budget period.
The period amount is the year amount*(period
factor/sum of factors). This field is only available if the
distribution code is based on factors.
Multiplier If you copy a budget into a new budget, you can use the
multiplier to create the new budget value per period.
Exercise: Create a Distribution Code

A distribution code is used to spread out budgeted or actual year totals to a
number of periods. To copy budgets into a new budget, for example, for a next
year, you can use multipliers. A multiplier can, for example, represents an
inflation figure.
\\ Financials \ Controlling \ Master Data \ Budgets \ Budget Distribution

(tffbs0101m000)
Create a distribution code and choose Percentage as the distribution method

and use 12 periods. Select your just created distribution code and from the
Specific menu, click Generate Distribution Data by Period.
Field Input Value

Distribution 100
Description New Distribution Code
Distribution Method Percentage
Distribution Periods 12
Sub-session: Generate Budget Distribution Data per Period

(tffbs0202m000)
Field Input Value
Generation Method Default value per Period
Percentage / Factor
Period 1 through 12
Generation Method Default value per Period
Multiplier
1-18
Field Input Value

Period 1 through 12
Multiplier 1.05
Click Generate and Close to exit this session.
If you now start the Budget Distribution Data by Period (tffbs0102m000) session,
you see that percentages and multipliers are spread equally over the 12 periods.
In period 12, the rounding difference of the percentages calculated is

automatically listed. If you do not want the difference calculated in the last period,
you can manually change the distribution percentages over the other periods.
The total must be 100%.
Delete/Archive Budgets
If a budget is no longer required in the operational company, you can archive
and/or delete the budget data.
\\ Financials \ Controlling \ Budgets \ Utilities \ Archive and/or Delete

Budgets (tffbs1201m000)
Archive: The selected budget data will be copied into an archiving company, and
deleted from the current company.
By default the archive company from Company Parameters (tfgld0103s000) is

entered.
Delete: The selected budget data will be deleted from the current company.
1-19
Controlling
Static Budget Analysis

When budget data is created, several sessions are available to monitor the
budget.
Print Budgets
You can print the budget amounts and quantities from the following sessions:
Budget Amounts and Quantities by Year (tffbs1500m000)
Budget Amounts and Quantities by Period (tffbs1101m000)
If you click Print in these sessions, the following session appears:
Print Budget Amounts and Quantities
Field Description
Budgets per Year Only If this check box is selected, only the budget values per
(check box) year are printed. If this check box is not selected, period
data within the specified period range is printed.
Statutory Ledger Accounts If this check box is selected, the amounts and quantities
(check box) budgeted on statutory ledger accounts are printed.
1-20
Field Description
Complementary Ledger If this check box is selected, the amounts and quantities
Accounts budgeted on complementary ledger accounts are
printed.
Aggregate Child Budgets If this check box is selected, child budgets that belong to
(check box) the selected budgets are aggregated for their parent
budgets.
Child Budgets (check box) Select this check box to print the child budgets in the
selected range also.
Apply Range to Child If this check box is selected, only child budgets within
Budgets (check box) the specified range are considered when aggregating
and/or printing the selected parent budget. If this check
box is not selected all child budgets of the parent are
considered.
From this session, you can print both static and flexible budgets.
Compare Budgets
You can compare budget amounts and quantities between a base budget and a
comparison budget in terms of percentages and amounts.
You can display the budget data of the actual budget and the comparison budget
in the Budget Amounts and Quantities by Year (tffbs1100s000) and Budget
Amounts and Quantities by Period (tffbs1101m000) session. In the Budget by
Year (tfbfs0105s000) session, on the Relation tab, you must fill in the
comparison budget code.
A special display/print session is also available, in which you can compare

budgets. In this session, however, the user can compare a budget with any other
budget, regardless of the comparison budget you enter in the Budget by Year
(tffbs0105s000) session.
1-21
Controlling
\\ Financials \ Controlling \ Budgets \ Static Budgets \ Compare Budgets

(tffbs1203m000)
Compare Budgets (Comparison Data tab)
Field Description
Base Budget The budget that is used as the basis for comparison in
percentages.
Currency for Comparison The currency in which the comparison amounts are
expressed.
Base Budget Currency If the currency in the Currency for Comparison field
(check box) differs from the base budget currency, select this check
box and fill in the rate and rate factor between the
currency for comparison and the budget currency.
Comparison Budget If the currency in the Currency for Comparison field
Currency (check box) differs from the comparison budget currency, select this
check box and fill in the rate and rate factor between the
currency for comparison and the comparison budget
currency.
Conversion Rates to Home If the currency in the Currency for Comparison field
Currencies differs from the home currency, select this check box
and fill in the rate and rate factor between the currency
for comparison and the home currency.
1-22
Compare Budgets (Comparison Options tab)
Field Description
By Amount (check box) If this check box is selected, you can enter the minimum
difference amount that must be taken into account. If
you clear this check box, all records are selected
irrespective of the comparison level.
By Percentage (check box) If this check box is selected, SSA ERP LN takes into
account only the minimum difference percentage. If you
clear this check box, all records are selected,
irrespective of the comparison level.
Year Total (check box) If this check box is selected, only the year total is printed
for the selected range.
Aggregate Child Budgets If this check box is selected, the child budgets are
(check box) aggregated for the selected range.
Consider Absolute If this check box is selected, the absolute differences for
Differences for Comparison comparison are considered for the selected range.
(check box)
This check box is only available if the By Percentage
check box is selected.
Click Print to print the comparison budget.
Click View to display the comparison budget.
1-23
Controlling
Compare Budget with Actual Data

In the Controlling module you can compare the budget data with actual data in
the Budget Amounts and Quantities by Period (tffbs1101m000) session.
In addition, in the General Ledger, several display and print sessions are
available that show the actual costs and the budget costs.
Ledger History (tfgld3501s000)
Dimension History (tfgld3520m000)
Print Trial Balance (tfgld3402m000)
Print Trial Balance – With Dimensions (tfgld3405m000)
Print Trial Balance – Dimension Type/Dimension Code (tfgld3408m000)
Print Trial Balance – Ledger Account/Dimensions (tfgld3404m000)
Print Trial Balance – Dimension Code/Ledger Accounts (tfgld3406m000)
Report Structures
In Controlling you can create a user-defined report structure to print desired
information. In a report structure, a user can define which ledger accounts and
dimensions must be printed. You can only use a report structure in the print
sessions in combination with a hierarchy.
\\ Financials \ Controlling \ Master Data \ Cost Analysis \ Report Structure

per Dimension Type (tffbs0140m000)
Click New Group to select the dimension type for which you want to create a
report structure.
Click New to insert a report structure and link it to a hierarchy.
Select the report structure and from the Specific menu, click Report Structure
Lines.
1-24
Sub-session: Report Structure Lines (tffbs0141m000)
Report Structure Lines
Field Description
Report Line Type The type of line that must be printed in the reports.
Ledger Account: Values of specific ledger accounts will
be printed.
Sum of Report Lines: A number of specific report lines
will be printed.
Ledger Account If the report line type is Ledger Account specify the
ledger account that must be printed.
Report Line Description By default, the description of the ledger account appears
in this field. You can, however, overwrite this setting.
Select a sum of reports lines and, from the Specific menu, click Summation
Rules for Lines.
Sub-session: Summation Rules for Report Structure Lines (tffbs0142m000)
Summation Rules for Report Structure Lines
In this session, you must define which ledger account report lines must be
summarized in the sum of report lines.
1-25
Controlling
You can also start the Report Structure Lines (tffbs0141m000) session and the
Summation Rules for Report Structure Lines (tffbs0142m000) session from the
Menu Browser.
1-26
Lesson Review
In this lesson, you learned how to:
Enter setup necessary to create a budget
Compare budgets
1-27
Controlling
Review Questions
4. What is the difference between a static budget and a flexible budget?
5. Budget amounts and quantities are recorded by ledger account and/or by

dimension, using the Budget Amounts session and the Quantities session.
You can only enter ledger accounts or dimensions with sublevel 0. Ledger
accounts or dimensions with a parent/child structure are automatically built up
for the parent accounts. This describes which budgeting method?
A. Bottom-up
B. Top-down
C. Sideways
D. Flexible
6. Which session is used to analyze budget data?
A. Compare Budgets
B. Budget Amounts and Quantities by Year
C. Print Trial Balance
D. All of the Above
7. If a budget is no longer required it could be deleted OR archived?
A. True
B. False
1-28
2
Flexible Budgeting
In SSA ERP LN, a flexible budget will be used to financially budget variable and
fixed costs for dimensions, for example, cost centers.
Lesson Objectives
2-1
Controlling
Set up Flexible Budgeting

Before you can begin using a flexible budget, some setup must be completed.
Budgets
In the Budgets (tffbs0503m000) session, you must create a flexible budget code.
Reference Units
A reference unit is a performance measure of a cost center and a calculation
base to determine rates and surcharges.
Business Examples
Housing is a primary cost center where the costs for depreciation, maintenance
housing, and so on are booked. Periodically, the costs are allocated to the main
cost centers based on square meters. For the Housing cost center, the reference
unit can be square meters.
The Production cost center has two machines. For each machine, you must
determine the costs to define the rate by machine. You can create each machine
as a reference unit for the Production cost center.
Cost centers (dimensions) can have one, several, or no reference units.
2-2
2 Flexible Budgeting
\\ Financials \ Controlling \ Master Data \ General \ Reference Units per

Dimension (tffbs0530m000)
Sub-session: Reference Unit by Dimension (tffbs0130s000)
Reference Unit by Dimension (General tab)
Field Description
Reference Unit A reference unit can be a cost driver that is used for
allocating costs, for example, square meters, number of
sales orders, etc. A reference unit can also be a
measurement of a dimension for calculating a rate or
surcharge, for example, a machine.
Reference Unit Type Quantity Based – costs are distributed on the base of
quantities such as percentages or square meters.
Amount Based – specify an amount as the base of the
surcharge calculation. On the Performance Link tab,
you can fill in a ledger account to determine the
surcharge base in case of actual costs.
Planning Type The planning type determines the dependency between
the performance quantity and allocation relations.
Progressive: Total performance of the source reference
unit determines the performance quantity for the
destination reference unit while defining allocation
relations. You can also carry out direct maintenance of
the performance quantity.
Retrograde: The performances defined in allocation
relations are used to determine the performance of this
reference unit as a source for allocation relations.
2-3
Controlling
Field Description
Equivalence Factor The factor by which actual amounts are split up with
respect to other reference units, while importing the
reference units, in the same dimension.
Periodic Distribution Select this check box if the annual performance must be
Percentage (check box) used as period performance as well.
Example:
Performances will be inserted per year in the
performance budget, and automatically split up into
period performances. As a result, if the total of available
man-hours is 2.000 per year, depending on the
distribution mode, these hours will be split up over the
periods. However, if the performances are, for example,
square meters, you must not split up the total number of
square meters in periods, but must maintain the total for
each period.
Link with Logistics You can import actual performances from Operations
Management. For each reference unit, you must define
which logistic performance must be linked, or if the link
with logistic performances is not applicable.
Link with Cost Price Calc. The result of a flexible budget will be a rate or surcharge
per reference unit. This rate or surcharge can be linked
with the Cost Price Calculation module.
Rate: The flexible budget result is a rate.
Surcharge: The flexible budget result is a surcharge. If
the Reference Unit Type is Quantity, the link will
automatically be a surcharge.
Reference Unit by Dimension (Performance Links tab)
2-4
Field Description
Surcharge Base Ledger The amount that is present on this ledger account is
Account used as the base amount for deriving the surcharges for
the performance budgets and the actual performances.
Quantity Measurement Unit The logistic unit for the specified reference unit.
Relation with Ledger A/C Quantity 1: Performance quantity per reference unit is
Qty. related to the first quantity of the ledger account.
Quantity 2: Performance quantity per reference unit is
related to the second quantity of the ledger account.
None: Performance quantity per reference unit is not
related to the ledger account.
To print the reference units, you can use the Print Reference Unit by Dimension
(tffbs0430m000) session.
A reference unit can be an activity. In that case, the performance budget of the
activity (reference unit) can be retrograde calculated based on the actual
performances from Operations Management.
For example, the warehouse department has two activities, or reference units:
Material handling
Packaging
The material handling activity costs are allocated based on the number of bill of
material lines of a product, and the packaging activity costs are allocated based
on the number of sales orders of a product.
Calculating the total number of sales orders and the total number of bill of
material lines in Activity-Based Costing is called Generate Bill of Activities. In
SSA ERP LN Finance, this can be seen as retrograde calculation.
Exercise: Create Reference Units

Reference units are used to indicate the performance of a certain cost center.
The following two reference unit types can be distinguished:
Amount-Based: An amount can be defined as the base of the rate surcharge

calculation in the Performance Budget by Year (tffbs1120m000) session.
Quantity-Based: Quantities can be defined with the logistic unit and rate,
and can be calculated on the basis of this quantity in the Performance Budget
by Year (tffbs1120m000) session.
2-5
Controlling
The two planning types are the following:
Progressive: In this case, the total performance of the source allocation

relation is checked against the budgeted performance quantity, while defining
allocation relations. Direct maintenance of the performance quantity is not
possible.
Retrograde: In this case, the performances defined in allocation relations are

used to determine the performance of this reference unit as a source for
allocation relations.

1. Cost centers
Add reference units to the following cost centers:
Field Input Value

Cost Center 162
Reference Unit MH (man hours)
Ref Unit Type Quantity based
Equivalence Factor 1
Planning Type Progressive
Link with CPC Rate
Quantity Measurement Unit H
Field Input Value

Cost Center 161
Reference Unit KWH
Ref. Unit Type Quantity Based
Planning Type Retrograde
Link with CPC Rate
Quantity Measurement Unit KWH
Click Save to save the settings.
2-6
2. Cost objects.
The products have the following reference units:
Field Input Value

Cost Object A
Reference Unit PCS
Reference Unit Type Quantity based
Link with CPC Surcharge
Quantity Measurement Unit Pcs
Field Input Value

Cost Object B
Reference Unit PCS
Reference Unit Type Quantity based
Link with CPC Surcharge
Quantity Measurement Unit pcs
Click Save and Close to exit session.
Performance Budget
In the performance budget, for each reference unit, you define the performance
quantity or surcharge base amount per year, depending on whether the
reference unit type is quantity based or amount based. Based on the
performances and the budget amounts, the rate/surcharge per reference unit will
later be calculated in the flexible budget.
2-7
Controlling
\\ Financials \ Controlling \ Budgets \ Flexible Budgets \ Performance

Budget by Year (tffbs1120m000)
Performance Budget by Year
Field Description
Reference Unit Insert a reference unit that has been created for the
dimension code.
Reference Unit Type Display field only. The value will be either Amount or
Quantity.
Period Distribution Mode The distribution method of performances over periods.
Use Distribution Code: The budget year performances
will be distributed among the budget periods using a
distribution code. This option is applicable only if the
number of budget periods is greater than zero (0).
Equal Distribution: The budget year performances will
be equally distributed among budget periods.
Not Applicable: You can manually enter the budget
performances by period in the Performance Budget per
Period (tffbs1121m000) session, after which the budget
year performance is updated. This option is not
applicable if the periodic distribution mode is zero.
Distribution Insert a budget distribution code if the period distribution
mode is Use Distribution Code.
Surcharge Base Amount If the reference unit type is Amount, in this field, you
must fill in the amount on which the surcharge must be
calculated.
Performance Quantity If the reference unit type is Quantity, you must fill in the
quantity on which the rate will be calculated in this field
Click New Group to select the year and flexible budget code for which the
performances are applicable. Click New to insert new performances for a
dimension/reference unit combination.
2-8
You can only create a performance budget for reference units with the planning
type Progressive. Reference units with the planning type Retrograde cannot be
created or maintained, but are automatically calculated when you fill in the
relations in the Allocation Relations (tfcat4500m000) session and after you run
the Retrograde Calculation (tfcat4213m000) session.
Business Example
A company books all of their energy costs, including electricity, water, gas, and
oil costs to a primary cost center Energy. Based on the kilowatt-hours each main
cost center uses, the energy costs are allocated. For the next year, the following
expectations are made:
Assembly department 1700 Kwh
Warehouse department 600 Kwh
Sales department 200 Kwh
Based on the quantity of Kwh the main cost centers use, the calculated
performance quantity for the Kilowatt-hour reference unit of the Energy
department is 2500 Kwh.
When the performance budget by year is created, the performance budget by

period is also automatically created. Select a reference unit line, and from the
Specific menu, click Performance Budget per Period. Based on the period
distribution mode, the period performances will be calculated. You can maintain
the performances by period only if the Period Distribution Mode in the
Performance Budget by Year session is set to Not Applicable.
To round the period performances calculated by the Performance Budget by

Year session, if the Period Distribution Mode is Equal Distribution or Use
Distribution Code go back to the Performance Budget by Year session and
change the Period Distribution Mode to Not Applicable.
To print performance budgets, you can use the Print Performance Budgets by
Year (tffbs1420m000) session.
Exercise: Create a Performance Budget

Fill in the performance budget for each reference unit by cost center and cost
object. For distribution, use Equal Distribution.
\\ Financials \ Controlling \ Budgets \ Flexible Budgets \ Performance

Budget per Year (tffbs1120m000)
3. Cost centers
2-9
Controlling
Field Input Value

Cost Center 162
Reference Unit MH
Perf. Qty / Sur. Base amt 6
Field Input Value

Cost Center 163
Reference Unit SM
Perf. Qty / Sur. Base amt. 15
No performances are entered for the machine hours of the production

department and the kilowatt-hours of the energy department. Performances for
those reference units will be calculated through retrograde planning.
Click Save to save the settings in the session.
4. Cost objects
Field Input Value

Cost Object A
Reference Unit PCS
Performance Qty 1200
Field Input Value

Cost Object B
Reference Unit PCS
Performance Qty 1200
2-10
Flexible Budget by Year

In a flexible budget, costs and/or revenues are budgeted by dimension/reference
unit.
\\ Financials \ Controlling \ Budgets \ Flexible Budgets \ Flexible Budget by

Year (tffbs1510m000)
Click New Group and enter the dimension and reference unit to which you want
to create budget amounts by ledger account.
If a ledger account structure is defined, the system asks if you want to copy this
structure into this budget. You can also copy the ledger account structure
manually. In that case, in the Flexible Budget by Year session, from the Specific
menu, select Copy from Ledger Account Structure.
Click New or double-click a ledger account line that you created when you copied
the ledger account structures to create or maintain the budget values. The
following session starts:
2-11
Controlling
Sub-session: Flexible Budget by Year (tffbs1110s000)
Field Description
Ledger Account Enter the ledger accounts that belong to the
dimension/reference unit combination. The ledger
accounts can be primary and secondary ledger
accounts. The primary ledger accounts are used to fill in
the budget amounts. The secondary ledger accounts
are used for the cost allocation to and from dimensions.
For a secondary ledger account, you must fill in a zero
budget amount. The cost allocation process generates
values on the secondary ledger accounts, if allocation
relations are defined for the dimension/reference unit.
Periodic Distr. Mode The distribution method of amounts over periods.
Use Distribution Code: The budget year values will be
distributed among the budget periods, using the
distribution period data. This option is applicable only
when the number of budget periods is greater than zero.
Equal Distribution: The budget year values will be
equally distributed among periods.
Not Applicable: You can manually enter the budget
data per period in the Flexible Budget by Period
(tffbs1111m000) session, after which the year budget is
updated. This option is not applicable if the periodic
distribution mode is zero.
Distribution Insert a budget distribution code if the Period
Distribution Mode is Use Distribution Code.
2-12
Field Description
Debit/Credit By default, the debit or credit value of the ledger account
created in the Chart of Accounts (tfgld0508m000)
session appears. You can, however, change the value if
the credit value must be shown in the budget as a
negative. In that case, you fill in debit, and as base rate,
you fill in a negative amount.
Variability % Enter the portion of the budget amount of this ledger
account that is variable.
Base Rate Specify the rate of one unit of this ledger account.
Example: the average costs (rate) for one employee is
$20.000 per year.
Base Units Specify the number of units of this ledger account.
Example: two employees are budgeted to work on the
cost center Facilities.
Budget Amount The total budget amount is the Base Rate * Base Units.
Depending on the variability of the ledger account, the
total costs will be split up in fixed and variable costs.
Eff. Cost Rate/Surc. The budget amount and the performance budget of the
dimension/reference unit will result in a budget cost rate
or surcharge per reference unit quantity. If the
calculated budget cost rate/surcharge is not competitive,
you can manually enter an effective cost rate/surcharge.
If rates/surcharges are integrated with the Cost
Calculation module of SSA ERP LN Manufacturing, the
effective cost rate/surcharge will be integrated.
The amounts for the secondary ledger accounts are filled through the cost
allocation process.
If you create a flexible budget by year, the flexible budget by period is also
automatically created. Select a ledger account and, from the Specific menu, click
Flexible Budget by Period. Depending on the Period Distribution Mode, the
period budget data will have been calculated.
The performances can be maintained by period only if the Period Distribution

Mode in the Flexible Budget by Year session was Not Applicable,
Calculate Amount from Source Relations

In either the Flexible Budget by Year (tffbs1510m000) session or the Flexible
Budget by Period (tffbs1111m000) session, from the Specific menu, you can
2-13
Controlling
select Calculate Amount from Source Relations. You can use this functionality
if a relation exists between ledger accounts, as defined in the Relations between
Ledger Accounts (tffbs0121m000) session.
Relations Between Ledger Accounts

If a fixed relation exists between the budget amount of ledger accounts, you can
use the Relations Between Ledger Accounts (tffbs0121m000) session if the
budget amounts in the Flexible Budget by Year (tffbs1510m000) session or the
Flexible Budget by Period (tffbs1111m000) session are created.
\\ Financials \ Controlling \ Master Data \ Budgets \ Relations Between

Ledger Accounts (tffbs0121m000)
Relations Between Ledger Accounts
Click New Group to select the dimension and target ledger account.
Field Description
Dimension Type Enter the dimension type for which the ledger-account
relations must be defined.
Target Ledger Account For this ledger account, the budget amount will
automatically be calculated based on the source ledger
account budget amounts.
Source Ledger Account The budget amount of this ledger accounts multiplied by
the relation percentage results in the budget amount for
the target ledger account.
Relation Percentage from The percentage of the source ledger account budget
Source that is used to calculate the target ledger account
budget.
2-14
Business Example
Payroll costs are 25 percent of employee salaries. Therefore, if the budget for
employee salaries is known, the company can calculate the budget for payroll
costs as well.
Exercise: Flexible Budget

You must now enter the cost budget for your cost centers and cost objects.
\\ Financials \ Controlling \ Budgets \ Flexible Budget \ Flexible Budget by

Year (tffbs1510m000)
1. Cost centers.
The following table lists the budget on the primary ledger accounts (debit) for all
the cost centers:
Description Code B. rate B. unit Var Fix

CC Maintenance 162
Ref.unit MH
L/Acc. WAGES 35,000 1 35,000
TEMPLAB 15,000 3 45,000
SOCIALEXP 8,750 1 8,750
INTERESTEXP 4,800 1 4,800
MISCELLEXP 3,600 1 3,600
SECFACILIT 0 1 0
SECALLCC 0 1 0
Description Code B. rate B. unit Var Fix

CC Facilities 163
Ref.unit SM
L/Acc. DEPRECEXPENS 480,000 1 480,000
INTERESTEXP 498,000 1 498,000
SECMAINT 0 1 0
SECALLCC 0 1 0
2-15
Controlling
Click Save to save the settings in the session.
2. Cost objects.
Descr. Code Qty Base rate Var Fix

CO Product A A
Ref.unit PCS 1,200
L/Acc. REVENUES $2.158.800
DIRECTMAT $1.488.000
SECMAT 0 0
SECLAB 0 0
SECADM 0 0
Descr. Code Qty Base rate Var Fix

CO Product B B
Ref.unit PCS 1,200
L/Acc. REVENUES $1.918.800
DIRECTMAT $1.104.000
SECMAT 0 0
SECLAB 0 0
SECADM 0 0
Effective Rates by Reference Units

In the flexible budget, the rates and surcharges are calculated per ledger
account. If the calculated rate or surcharge for a dimension/reference unit is not
according to the market standards, the rates/surcharges can be overwritten as an
effective rate.
You can enter an effective rate/surcharge for each dimension/reference unit in

the Effective Rates by Reference Unit (tffbs1112s000) session.
2-16
\\ Financials \ Controlling \ Budgets \ Flexible Budgets \ Effective Rates by

Reference Unit (tffbs1112s000)
Effective Rates by Reference Unit
The effective cost rate/surcharge entered in this session is the total

rate/surcharge for the dimension/reference unit. In the flexible budget, however,
a rate/surcharge is also created by ledger accounts for each dimension/reference
unit. If the total effective rate/surcharge is changed in the Effective Rates by
Reference Unit (tffbs1112s000) session, the effective rate/surcharge for each
ledger account is also automatically changed, and vice versa.
You can only change effective rates in this session if the Use Effective Rates
check box is selected in the Controlling Parameters 1 (tffbs0100s000) session. If
the check box is not selected, the budgeted rate/surcharge will automatically be
copied as effective rate.
Print the effective rates in the Print Effective Rates by Reference Unit
(tffbs1412m000) session.
You can copy budget cost rates into effective rates in the Copy Budget Cost
Rates into Effective Rates (tffbs1210m000) session. This can be required if you
cleared the Use Effective Rates check box if you created a budget, but now
want to use effective rates.
Allocation Relations
If budgeted (and actual) costs in SSA ERP LN Finance are booked on
dimensions (cost centers), you can periodically allocate these costs to other
dimensions.
2-17
Controlling
The allocation relations between the various dimensions must be defined for
each period, which will later be used for the periodical cost allocation.
\\ Financials \ Controlling \ Cost Allocation \ Cost Allocation Processing \

Allocation Relations (tfcat4500m000)
Allocation Relations
In the Allocation Relations (tfcat4500m000) session, you must first create a new
group for the Actual relation and the applicable year and period. Then, click New
to insert the allocation relations. The Allocation Relations (tfcat4100s000) details
session appears:
Sub-session: Allocation Relations (tfcat4100s000)
Allocation Relation (Performance tab)
2-18
Field Description
Source Dim. Type The dimension type from which the costs are allocated.
Source Dimension The dimension from which the costs are allocated.
Source Ledg. A/C A profit and loss account with the allocation type
Secondary Credit.
Ref. Unit The reference unit of the destination dimension to which
the (budget) costs are allocated.
Destination Dim. Type The dimension type to which the costs are allocated.
Destination Dimension The dimension to which the costs are allocated.
Destination Ledg. A/C A profit and loss account with the allocation type
Secondary Debit.
Allocation Type Amount - A fixed amount will be allocated.
Percentage - A percentage of the total costs of the
source dimension will be allocated.
Quantity - Cost allocation will be based on quantities
used by the destination dimension/reference unit.
Quantity Specify the quantity used by the destination
dimension/reference unit in a period. You can only edit
this field if the allocation type is Quantity.
Amount Enter the amount that must be allocated from the source
dimension to the destination dimension in a period.
You can only edit this field if the allocation type is
Amount.
Percentage Specify the percentage that must be allocated from the
source dimension to the destination dimension in a
period.
This field is only available if the allocation type is
Percentage.
Period.Distr.Perc. This field is automatically filled. If the check box
Periodic Distribution Percentage is selected in the
source reference unit, this field will be set to 100%. If the
check box is cleared, this field has the value 0%.
Note: The value of this field is important for the way in
which the cost allocation amounts are calculated.
2-19
Controlling
Allocation Relation (Valuation tab)
Field Description
Valuation You can perform a valuation based on actual or budget
figures. Budget relations are always based on budget
figures. Actual relations are based on actual figures from
the Cost Accounting (CAT) module, or are based on
budget figures from the Single Budget (FBS) module.
Budget Figures - SSA ERP LN derives the amounts for
calculating the allocation costs from the flexible budget
per year/period. For a budget year/period relation, the
budget of the relation is used. For an actual relation,
SSA ERP LN uses the actual budget as defined in the
Company Parameters (tfgld0103s000) session.
Actual Figures - SSA ERP LN derives the amounts for
calculating the allocation costs from the actual costs by
reference unit. Budget allocation relations can only be
valuated with budget figures. Actual allocation relations
can be valuated either by budget figures or by actual
figures.
2-20
Field Description
Valuated Portion The portion of the budget or costs that is allocated to the
destination dimension.
Fixed Costs - Only the fixed costs, which are costs that
are independent of the output performance of a cost
center for a certain period) are allocated.
Variable Costs - Only the variable costs are allocated
Variable costs are costs that are directly dependent of
the output performance of a cost center. An increase of
the performance also causes a proportional increase of
the total variable costs.
Total Costs - Both the fixed and variable costs are
allocated.
Cost Category Enter a cost category if the costs in the destination
dimension must be split up towards the type of original
costs.
Note: For the valuation of the allocated quantity or
percentage, only the amounts of those ledger accounts
that belong to the entered cost category are taken into
account.
Destin. Variability The percentage of the allocated costs at the destination
dimension/reference unit that is variable.
The default value will be the variability of the destination
ledger account, as defined in the budget defaults.
In the Allocation Relations (tfcat4500m000) session, from the Specific menu, you
can click Copy into Actuals to copy the budget allocations for each period into
actual allocations by period. However, you can only copy these budgets for the
budget that is the actual budget in the Company Parameter (tfgld0103s000)
session.
To print the allocation relations, you can use the Print Allocation Relations
(tfcat4400m000) session.
Exercise: Allocation Relations

1. Select dimension 162 (Maintenance), and mark the ledger account

SECALLCC (Allocation to CC).
2-21
Controlling
2. Insert a new allocation relation. The tfcat4100s000 session appears.
3. Fill in the destination where the target dimension/reference unit/ledger

account is the dimension/reference unit/ledger where the allocated amount is
posted. Choose Quantity as Allocation Type, and Valuated Portion Total.
The following tables provide more information to fill in.
Cost center allocation relations
From CC To CC Ref.unit Consumption Target deb.acc

162 163 SM 750 SECMAINT
Total output performance 750 SM
From CC To CC Ref.unit Consumption Target deb.acc

163 162 KWH 100 SECFACILIT
Total output performance 100 KWH
Allocation from 162 to 163 and then back from 163 to 162 is called recursive
allocation.
Copy Budget Period Allocation Relations into Actual

If you must compare actual costs and performances with the budget, you must
also define allocation relations for the actual data. You can define these relations
manually for each financial period in the Allocation Relations (tfcat4500m000)
session, or you can copy allocation relations from the actual budget into the
actual allocation relations.
The actual budget is defined in the Company Parameter (tfgld0103s000) session.
2-22

Sub-session: Allocation Relations (tfcat4100s000)
Sub-session: Copy Budget Period Allocation Relations into Actuals
(tfcat4200m000)
Copy Budget Period Allocation Relations into Actual
Field Description
Valuation Budget Figures - SSA ERP LN derives the amounts for
calculating the allocation costs from the flexible budget
per year/period. For a budget year/period relation, the
budget of the relation is used. For an actual relation,
SSA ERP LN uses the actual budget as defined in the
Actual Figures - SSA ERP LN derives the amounts for
calculating the allocation costs from the actual costs by
reference unit. You can only valuate budget allocation
relations with budget figures. You can valuate these
actual allocation relations either by budget figures or by
actual figures.
Overwrite (check box) If this check box is selected, SSA ERP LN overwrites
existing relations.
2-23
Controlling
Lesson Review
2-24
Review Questions
4. A performance measure of a cost center and a calculation base to determine
rates and surcharges is known as a:
A. Performance Budget
B. Reference Unit
C. Allocation Relation
D. Flexible Budget
5. Reference Units can be either quantity or amount based.
A. True
B. False
6. Allocating costs from one dimension to another is done by creating:
A. Effective Rates
B. Reference Units
C. Allocation Relations
D. Flexible Budgets
7. In the flexible budget, the rates and surcharges are calculated per:
A. Ledger account
B. Cost center/dimension
C. Reference Unit
D. Allocation Relation
2-25
3
Cost Allocation
Periodically, a company must allocate actual costs from source cost centers into
destination cost centers.
Lesson Objectives
Import Actual Costs
3-1
Controlling
Process Actual Cost Allocation

First, the user must import the actual costs from the General Ledger. Next, in the
Controlling module, the user must allocate the costs through the cost allocation
process, and finally, integrate the calculated allocation results back with the
General Ledger.
Import Actual Costs

This session enables you to import the actual cost amounts on ledger accounts
and dimensions from the General Ledger to the Cost Accounting module for cost
allocations. The user can only import costs if an actual budget code is available
in the Company Parameters (tfgld0503m000) session, and if that budget is also
applicable for the year in which the costs are imported. Technically, whether this
budget is a flexible budget or a static budget is irrelevant. However, in case of a
flexible budget, the allowed costs and deviations for the actual budget will be
updated immediately.
\\ Financials \ Controlling \ Cost Allocation \ Import Actual Values \ Import

Actual Costs from GLD (tfcat2210m000)
Import Actual Costs from GLD
3-2
3 Cost Allocation
Field Description
Distribution Method The way in which the actual dimension costs must be
split up over the reference units of that specific
dimension. The split up options are:
- Total Costs
- Variable Costs
- Fixed Costs
- Equivalence Factor
Include Non-Finalized Non-finalized transactions from the General Ledger are
Transactions (check box) only imported if the costs are registered with a
transaction type that has the update method set to Real-
Time or End-of-Session.
Amounts from If these check boxes are selected, amounts from
statutory/complementary statutory accounts and/or complementary accounts are
accounts (check boxes) imported from the General Ledger module.
Overwrite (check box) If this check box is selected, SSA ERP LN overwrites
the existing values.
You can view the result of the imported actual costs in the Actual Costs by
Dimension (tfcat2511m000) session.
Actual Costs by Dimension and Reference Unit

The result of the import of the actual costs from the General Ledger will be that
the actual costs by dimension will be calculated in the Actual Costs by Dimension
(tfcat2511m000) session and the actual costs by reference unit will be calculated
in the Actual Costs by Reference Unit (tfcat2510m000) session.
3-3
Controlling
\\ Financials \ Controlling \ Cost Allocation \ Import Actual Values \ Actual

Costs by Dimension (tfcat2511m000)
Actual Costs by Dimension (Total Costs tab)
Actual Costs by Dimension (Actual Costs tab)
On the Actual Costs tab, the costs are split up in fixed and variable costs. SSA
ERP LN has found the variability from the flexible budget.
The user can only split up the fixed and variable costs if the actual budget in the
Company Parameter (tfgld0103s000) session was a flexible budget.

Costs by Reference Unit (tfcat2510m000)
The costs by dimension are split up into the costs by reference unit based on the
distribution method chosen in the Import Actual Costs from GLD (tfcat2210m000)
session. The options were:
3-4
3 Cost Allocation
Total Costs
Variable Costs
Fixed Costs
Equivalence Factor
To print the imported actual costs, you can use the following sessions:
Print Actual Costs by Reference Unit (tfcat2410m000)
Print Actual Costs by Dimension (tfcat2411m000)

If the actual costs have been imported, the cost allocation process can start.

Process Cost Allocation (tfcat4210m000)
Field Description
Relation Select Budget Year, Budget Period, or Actual to
allocate the costs.
Year/Period Specify the year and fiscal period for which the costs
must be allocated.
3-5
Controlling
Field Description
Termination (group box) Termination Costs can be allocated from a source
dimension to a destination dimension, and vice versa.
The Termination parameter defines when this vice-
versa allocation must stop.
Termination Criterion Deviation of Rates: The process stops when the values
calculated are less than the entered deviation of rates,
compared with the values of the previous cycle.
Number of Cycles: After this number of cycles is
allocated, the process stops.
Restart Cost Allocation If this check box is selected, the previous allocation data
(check box) is used as the basis for this allocation run.
Calculated Rates by Ledger Account

In the Calculated Rates by Ledger Account (tfcat4512m000) session, you can
view the result of the allocation process.

Calculated Rates by Ledger Account (tfcat4512m000)
Calculated Rates by Ledger Account
To print the calculated rated by ledger account, you can use the session Print
Calculated Rates by Ledger Account (tfcat4412m000).
Integration of Results
After you complete the cost allocation, you must reintegrate the results with the
General Ledger module (GLD).
3-6
3 Cost Allocation
ERP LN books the allocated results in the Transaction Type for Allocation
Results defined in the Controlling 2 Parameters (tfcat0100s000) session.

Integrate and/or Post Cost Allocation Results (tfcat4211m000)
Integrate and/or Post Cost Allocation Results
Field Description
integrate the allocated costs.
Integrate into Flexible If the relation is Budget Year or Budget Period, this
Budget (check box) check box is selected.
Integrate into Cost Analysis If the relation is Actual, this check box is selected by
(check box) default. The result is that the allowed costs and
deviations will be updated.
Integrate into General Select this check box to integrate the allocation results
Ledger (check box) with the GLD. A financial batch is then automatically
created. The allocated actual results will be booked in
the Transaction Type for Allocation Results that is
defined in the Controlling 2 Parameters (tfcat0100s000)
session.
3-7
Controlling
Field Description
Delete after Integration If this check box is selected, the allocation data is
(check box) removed from the tables after the data is integrated. If
this check box is not selected, you can also delete the
results tables manually with the Delete Cost Allocation
Results Tables (tfcat4212m000) session.
The result of the integration of allocation results will be that a financial batch is
created. That batch must still be finalized in the General Ledger module.
Exercise: Integrate results with the financial budgeting system

Integrate the Cost Allocation results to the budget.
\\ Financials \ Controlling \ Cost Allocation \ Cost Allocation Process \

Integrate and-or Post Cost Allocation Results (tfcat4211m000)
Field Input Value
Relation Budget Year
Year Current Year
Budget 10
Because you selected the Budget Year relation, the Integrate to Flexible
Budget check box is automatically selected.
Click Integrate and Close to exit the session.
1. Clear cost allocation results tables (optional)
Because, in Step 2, you integrated the allocation results with the budgeting
system, you can clear the results in the Cost Allocation sessions.
\\ Financials \ Controlling \ Cost Allocation \ Utilities (tfcat4512m000)
2. Check the flexible budget.
In flexible budget, you will see that the amounts of the primary ledger accounts
are allocated through the secondary (credit) ledger accounts into other cost
centers or cost objects (secondary debit ledger accounts).
In addition, the rates of the reference units will have been calculated.
3-8
3 Cost Allocation
Retrograde Calculation
For reference units of the type Retrograde Planning, the user must (re)calculate
and adjust the performance quantities to the related quantity for allocation
relations, according to the destination variability. This must be done before the
cost allocation processing.
Business Example
All the energy costs, such as electricity, water, gas, and oil costs are booked on a
primary cost center, Energy. Based on the kilowatt-hours each main cost center
uses the energy costs are allocated.
For the next year the following expectations are made:
Assembly department: 1.700 Kwh
Warehouse department: 600 Kwh
Sales department: 200 Kwh
Based on the quantity Kwh used by the main cost centers, the calculated
performance for the kilowatthour reference unit of the Energy department is
2.500 Kwh.

Retrograde Calculation (tfcat4213m000)
Retrograde Calculation
3-9
Controlling
Field Description
calculate the performance quantities for the retrograde
planning reference units.
Number of Cycles Enter the number of cycles for which after the allocation
relations have been retrograded, the process will stop.
Exercise: Cost Allocation

The allocation process is used to handle allocations from one place in your
organization to another place, for example, cost centers and cost objects.
Assuming you have a primary cost center with a reference unit quantity (KWH)
that was based on retrograde planning, you must first calculate the total
performance (KWHs) of this reference unit before you can start the allocation
process.
1. Retrograde calculation.

Retrograde Calculation (tfcat4213m000)
Field Input Value
Year The current year
Budget 10
Number of Cycles 5
Click Calculate and Close to exit the session.
Check the Performance budget and the Cost budget (Flexible budget) if anything
has changed for your KWH cost center.
2. Cost allocation.

Process Cost Allocation (tfcat4210m000)
Field Input Value
Year The current year
3-10
3 Cost Allocation
Field Input Value

Budget 10
Termination Criterion Number of Cycles
Number of Cycles 5
Click Cost Allocation and Close to exit the session.
3-11
Controlling
Cost Allocation Analysis

If costs (budgeted and actual) are allocated to other dimensions, the results will
become visible in the flexible budget in the Controlling module of SSA ERP LN
Financials.
Budget Allocation Results

In the Flexible Budget by Year (tffbs1510m000) session, you can recognize the
allocated results, because budget amounts on the secondary ledger accounts will
be filled now.
You can also print these allocated results per dimension in a budget cost
allocation sheet.
\\ Financials \ Controlling \ Cost Analysis \ Cost Analysis Sheets \ Print

Budget Cost Allocation Sheet (tffbs1413m000)
Print Budget Cost Allocation Sheet
Field Description
Report Structure Select a report structure that was defined for the
dimension type selected.
3-12
3 Cost Allocation
Field Description
Hierarchy Select a hierarchy that was defined for the report
structure and dimension type selected.
Click Print. You can also start this print session from the Flexible Budget by Year
(tfgld1510m000) session.
You can print a cost allocation comparison by year in the Print Budget Cost
Allocation–Comparison Sheet by Year (tffbs1414m000) session.
Actual Cost Allocation Results

You can print the actual cost allocation sheet for a range of periods by year and
dimension/reference unit. The following information is printed on this sheet using
a predefined report structure:
Actual costs
Allowed costs
Budgeted costs
Deviations
\\ Financials \ Controlling \ Cost Analysis \ Cost Allocation Sheets \ Print

Actual Cost Allocation Sheet (tfcat2480m000)
Select a flexible budget and select a report structure and hierarchy that was
defined for the dimension type selected.
Deviations
The comparison of the actual costs and budgeted costs can result in several
variances. These variances can be:
Consumption deviation
Occupation deviation (only applicable for full costing)
Over coverage/Under coverage
3-13
Controlling
Consumption Deviation
In SSA ERP LN, efficiency variances are described as consumption deviation.
Consumption deviation is the difference between the actual costs minus the
allowed costs.
Consumption deviation can occur for both the full and variable cost accounting
system.
Full costing is also known as direct costing.
Occupation Deviation
In SSA ERP LN, absorption variances are described as occupation deviation.
Occupation deviation is the planned fixed costs versus actually charged portion
of fixed costs.
Occupation deviation can occur only for the full cost accounting system.
Over Coverage/Under Coverage

Over coverage/under coverage in SSA ERP LN means that the calculated
budget rates are manually changed into effective rates.
Effective rates are only applicable if the Use Effective Rates check box is
selected in the Controlling 1 Parameters (tffbs0100s000) session.
You can enter effective rates in the flexible budget by budgeted ledger account or
in the Effective Rates by Reference Unit (tffbs1112s000) session.
The over coverage/under coverage is the effective rate minus the calculated rate
multiplied by the actual performance:
In SSA ERP LN, these variances are automatically calculated for the actual
budget as defined in the Company Parameter (tfgld0103s000) session if you
maintain the following:
Flexible budget
Performance budget
Actual costs by reference unit
Actual performances by reference unit
3-14
3 Cost Allocation
\\ Financials \ Controlling \ Cost Analysis \ Variance Analysis \ Allowed

Costs and Variances (tfcat2540m000)
Allowed Costs and Variances
You can print the variances in the Print Allowed Costs and Variances
For budgets that are not the actual budget, you can also calculate the deviations.
To do so, you must first derive the allowed costs and variances for that budget.
\\ Financials \ Controlling \ Cost Analysis \ Variance Analysis \ Derive Costs

and Allowed Variances (tfcat2240m000)
Based on the allocation relations of the (not actual) budget, the variances are
calculated. The results can be viewed in the Allowed Costs and Variances
The variances calculated for the not actual budgets in the Company Parameters
(tfgld0103s000) session cannot be integrated with the General Ledger. Rather,
only variances of the actual budget can be integrated with the General Ledger.
Delete/Archive Cost Analysis Data

If in the operational company cost analysis data is no longer required, you can
archive and/or delete the data.
3-15
Controlling
\\ Financials \ Controlling \ Cost Analysis \ Utilities \ Archive and/or Delete

Cost Analysis Data (tfcat2881m000)
Archive and/or Delete Cost Analysis Data
Field Description
Delete only (check box) If this check box is selected, the selected data will be
deleted from the current company and no archiving will
take place. If you do not select this check box, you can
fill in the archive company number.
Actual Costs (check box) If this check box is selected, the actual costs that can be
viewed in the Actual Costs by Dimension
(tfcat2511m000) and Actual Costs by Reference Unit
(tfcat2510m000) sessions are deleted from the
operational company.
Actual Performance (check If this check box is selected the actual performances
box) that can be viewed in the Actual Performance
(tfcat2120m000) session is deleted from the operational
company.
Allowed Costs and If this check box is selected, the allowed costs and
Deviations (check box) deviations that you can view in the Allowed Costs and
Variances (tfcat2540m000) session are deleted from the
operational company.
Archive Company This field is available if the Delete Only check box is
cleared. You can find the default archive company in the
3-16
3 Cost Allocation
Lesson Review
Import Actual Costs
3-17
Controlling
Review Questions
1. The first step in the cost allocation process is to:
A. Import Actual costs from GLD
B. Retrograde Calculation
C. View Actual Costs by Dimension
D. Process Cost Allocation
2. After the cost allocation process is finished you must:
A. Print the Budget Allocation Sheet
B. Reintegrate the results to the GLD
C. Delete the Cost Analysis Data
D. Process Cost Allocation again
3. The cost allocation process works the same regardless if the budget is static
or flexible.
A. True
B. False
3-18
4
Cost Price Calculation
The Cost Price Calculation (CPR) module is used to simulate or set the costs of
production items and purchase items. The cost price calculates and compares
costs generated on the shop floor and also determines the inventory valuation.
Cost prices can be broken down into material, operation, and overhead costs.
To get the cost price for an item, first the operation cost, or the cost to produce
the item in terms of labor costs and machine costs are retrieved. Operational cost
information comes from the item routing for a manufactured item. The costs of
all materials to make the item are added for the cost. The material costs come
from the bill of material for manufactured items and from the item data for
purchased items. Finally, any overhead or surcharges are added to get a total
cost. Overhead costs can be associated with either material or operations.
You can use cost information to calculate the standard cost for an item. The
standard cost can help you to determine an appropriate selling price. For
example, if it costs you $120.00 US dollars to produce each item, you want to set
a selling price higher than that to allow for a good profit margin. You can also use
standard costs to:
Calculate inventory values.
Provide the basis for reporting production cost information to Finance.
The Cost Price Calculation module provides features that allow you to simulate
and compare methods of costing your production items. Once cost price
calculations have been performed, reports are available to analyze the cost
structure of an item. When you have completed your simulations, you can update
the actual prices in a process called actualizing.
4-1
Controlling
Conditions for Cost Price Calculation

CPR Parameters and item structures must already be defined in order to use
cost price calculations. You must set up the Item Costing Data before you can
perform any calculation on the item. You perform the Item Costing Data setup in
the Item Costing Data (tcibd0107s000) session.
This process flow provides information required to generate costs for purchased
and manufactured item
Lesson Objectives
Set up cost prices
View cost price parameters
Define cost components
4-2
4 Cost Price Calculation
Create operation rate codes
Define price calculation codes
Define cost price calculation data
Define an operation rate
Add an item surcharge
Define subcontracting rates
Define item surcharges for an item
Simulate a purchase price for an item
Calculate the cost and the valuation price for an item
4-3
Controlling
Set Up Cost Prices

Cost price calculation provides you numerous methods to record and analyze
information relating to production costs. Cost information can be categorized and
calculated according to your company’s needs. You can either categorize costing
information in specified details or calculate the item cost based on operational
costs. You must set up the cost price master data in order to dictate how
standard costs should be calculated.
The Flow
Start
Define cost price parameters

CPR Parameters
(ticpr0100s000)
Define cost components for

grouping costs
Cost Components
(tcmcs0148m000)
Create operation rate codes to

group operation rates
Operation Rate Codes
(ticpr0150m000)
Define price calculation codes for

actual and simulated prices
Price Calculation Codes
(ticpr1500m000)
End
CPR Parameters
CPR Parameters define the rules to set up costing data and calculate the costs
of items in your company. The Standard Price Calculation Code defined is the
4-4
code the system searches for when actualizing the cost price of an item during
Cost Price Calculations. The Type of Operation Rates determines where you will
retrieve Operation Rates (by work center or task). This rate calculates operation
costs from the Routing.
Cost Components
Detailed categories can be defined for production costs according to your
company’s needs. Production costs can be broken down into several types or
accounts to enable detailed analysis on the types of costs incurred for the
production of an item. Cost components categorize production costs into specific
groups called Cost Types. The Cost Type categorizes the costs for the
production process, such as, material costs. The cost component is user defined
to allow maximum flexibility in the allocation and analysis of product costs. You
can define a cost component and description to represent multiple machine,
material, transfer, and surcharge costs, which are all part of the production
process.
4-5
Controlling
\\ Manufacturing\ Cost Price Calculation\ Cost Price Master Data\ Cost

Components (tcmcs0148m000)
Cost Components
Field Description
Cost Type Identifies the nature of the production cost and links to a cost
component. The seven cost types available for selection are:
Surch. on Operation Costs: An additional cost or discount
associated with a routing operation.
Surch. on Material Costs: An additional cost or discount
associated with purchased material.
WIP Transfer Costs: Any costs that may be incurred when
transferring Work-In-Process (WIP) from one machine or work
center to another.
General Costs: Any additional administration costs, such as freight
charges. This cost type is linked to cost items.
Not Applicable: Cost components with this cost type are used
within project or service industries and are not applicable to cost
price calculation.
4-6
Field Description
Material Costs: Costs derived from the purchase price of raw
materials. You can link cost components of this type to standard,
customized, project, and service items, as well as calculation parts.
Operation Costs: Costs derived from the operation rates and
subcontracting items. You can link cost components of this cost
type to subcontracting items and operation rate codes.
Define a Cost Component

Cost Components provide the ability to categorize production and material costs
for an item. A new work center has been added to your production process and
will be used during the manufacturing of a new steel chair frame. You will create
a new cost component to categorize the costs for materials and machining for the
new chair frame in the new work center.

Define two new Cost Components, MC1 and CL1, to represent the machine and
labor costs for the new chair frame in the new work center.
1. Click the New icon to begin a new record insert.
Cost Components
2. Create the Cost Component MC1 and CL1 to represent the new Operation
Rates for the manufacturing of the Chair Frame.
Cost Component MC1

Field Input Value
Cost Component MC1
Description Chair Frame Machine Rate
4-7
Controlling
Field Input Value

Cost Type Operation Costs
Cost Component CL1

Field Input Value
Cost Component CL1
Description Chair Frame Operation Rate
The result is a new entry for Cost Component MC1 and CL1 both specified as an
Operation Cost. These new Cost Components will represent the labor and
machine costs, which are types of Operation Costs, used to produce the new
Chair Frame.
Cost Components
4-8
Exercise: Define a Cost Component

You have added a new Welding Machine to your production floor. The new
Welding machine requires one skilled operator. To track the costs for the new
welding machine and the skilled operator, you will define two new cost
components.

Define the components for the operation rates of the new welding machine
First Cost Component

Cost Component XXM
Field Input Value
Cost Component XXM (replace XX with your initials)
Description Welding Machine Operation Rate
Second Cost Component

Cost Component XXL
Field Input Value
Cost Component XXL (replace XX with your initials)
Description Welding Machine Labor Rate

Operation rate codes define what rates will be used for the labor, machine, and
overhead portions of the cost calculation. Operation rate codes are linked to
tasks and/or work centers. The Operation Rate Codes are used to further define
the hourly rates and Cost Component details used for operation costs.
Each task and/or work center can have a unique Operation Rate Code consisting
of operation rates that are specific to that task and/or work center. Operation
Rate Codes are defined by currency in the Operation Rates Codes
(ticpr0150m000) session.
4-9
Controlling
\\ BAAN Manufacturing \ Cost Price Calculation \ Cost Price Master Data \

Operation Rate Codes (ticpr0150m000)
Field Description
Operation Rate Code A code that identifies the operation labor/machine
cost rates. The rate code can be linked to a task or
work center depending on the CPR Parameter
settings. This code can also be linked to a cost
price calculation code.
Currency The currency used to calculate the Operation Rate
when using this operation rate code.
4-10
Create an Operation Rate Code

You must create a new operation rate that will group the operation costs
associated with the new Fabric Cutting Machine. The operation rate code will
then be used to link the appropriate machine, labor, and surcharge rates to the
work center or task.
\\ BAAN Manufacturing \ Cost Price Calculation \ Cost Price Master Data \

To define a new operation rate code for the new Fabric Cutting Machine:
1. Click the New icon
2. Enter these values for your new operation rate code:
Field Input Value

Operation Rate Code XXX (Replace XXX with your initials)
Description Cutting Machine Rates
Currency EUR
4-11
Controlling
Exercise: Define an Operation Rate

The manufacturing process for your chair uses a work center defined as the
Chair Work Center. This work center has hourly operation rates for labor,
machine, and overhead. The costs are unique to this work center and are
represented by an Operation Rate Code and a currency.
\\ Manufacturing \ Cost Price Calculation \ Cost Price Master Data \

Create a new operation rate code using these values:
Operation Rate Codes – ticpr0150m000

Field Input Value
Operation Rate Code XX1 (Replace XX with your initials)
4-12
Field Input Value

Description Chair Wk Cntr. Rates
Currency EUR

Production costs may be calculated several different ways. A price calculation
code is used to define how a cost or sales price is calculated. The standard cost
price is calculated and can only be updated or actualized by using the price
calculation code defined in the CPR Parameters (ticpr0100m000) session. You
can define any number of price calculation codes for calculating cost price
simulations
Typically, you should create one Price Calculation Code to represent and
calculate your Standard (or Actual) costs. Additionally, you can create one or
more Price Calculation Codes that are linked to different Operation Rate Codes
to simulate changes in operation costs (labor rate or machine rate changes) to
analyze the affect on your pricing.
\\ Manufacturing \ Cost Price Calculation \ Cost Price Master Data \ Price

Calculation Codes (ticpr1100m000)
4-13
Controlling
Field Description
Price Calculation Code Determines the cost-price calculation data that is used
to calculate a cost, valuation, or sales price. Cost
calculation data (such as, operation rates, surcharges,
subcontracting rates, and simulated purchase prices)
are stored under this code.
Calculation Code Type Determines how a cost, valuation, or sales price is
calculated. Two code types are available for selection:
Cost Price: Calculates only a cost or valuation price. A
valuation price may vary from the cost price and is used
for accounting purposes, such as inventory valuation.
Sales Price: Calculates sales prices. Warehouse
surcharges may not be defined for a sales price
calculation.
Priority of Purchase Price Purchase prices will only apply if the code type is Cost
(Group box) Price. A priority determines the order of the selected
purchase price types when a cost price is calculated. A
purchase price type specifies the origin of the purchase
price .If a purchase price is not specified for the first
priority, then the search will continue to the second
priority, and so on, until the fourth and final priority has
been checked. If a purchase price cannot be determined
from the search priority, then the standard cost for the
item will be zero. Four purchase price types are
available:
Si (Simulated Purch. Pr.): A price calculation code can
be created and used to simulate a purchase price.
These prices are for a unique item and cost price
calculation code in the Simulated Purchase Prices
(ticpr1570m000) session.
Cp (Current Purch. Price): The current purchase price
is manually entered in the Item Purchase Data
(tdipu0101s000) session.
Ap (Average Purch. Price): The average purchase
price is automatically calculated by the system based on
all previous purchase receipts, when the receipts are
matched and approved in the Finance Package.
Lp (Latest Purch. Price): The latest purchase price is
calculated based on the most recent purchase receipt,
after the receipts are matched and approved in the
Finance package.
4-14
Field Description
Direct Costing Allows overhead costs to be included or excluded from
the cost price calculation. If this field is selected, then
overheads will be excluded from the cost price
calculation.
If the box is not selected, the overhead costs will be
included in the standard cost price of the item.
Business Example
A price calculation code will be used to calculate the actual cost price of all
manufactured items, including the chair you will manufacture. It is decided that
any additional costs that occur from machinery maintenance are to be
incorporated into the existing cost price calculation code
Define a Price Calculation Code

In order to execute price change simulations, a Price Calculation code is required
that is different from the actual Price Calculation code in the parameters. This
new code will be used for simulations and will not affect current cost prices of the
items in the Item master.
\\ Manufacturing \ Cost Price Calculation \ Cost Price Master Data \ Price

Calculation Codes (ticpr1100m000)
You must define a new price calculation code using the simulated calculation
method. You must name the new code SP as well as define the priority of the
purchase price.
To define a new price calculation code for simulating cost prices:
1. Click the New icon and enter the values to define a new code.
Field Input Value

Price Calculation Code SP1
Description Simulated Price Calculation Code
Calculation Code Type Cost Price
First Priority Si (Simulated Purch. Price)
Second Priority Cp (Current Purch. Price)
Third Priority Ap (Average Purch. Price)
Fourth Priority Lp (Latest Purch. Price)
4-15
Controlling
You can now view your new price calculation code in the Price Calculation Codes
(ticpr1100m000) session
Exercise: Define a new Price Calculation Code

You are purchasing a new machine and you must identify the potential changes
that will exist in your production costs due to the new machine’s production rate.
4-16
Therefore, you must define a price calculation code to use for simulating the cost
price changes based on this new machine’s production rate.
Define a price calculation code for your new machine using these values
Price Calculation Code

Field Input Value
Price Calculation Code SMP
Description Simulated Machine Rate
Calculation Code Type Cost Price
First Priority Si (Simulated Purch. Price)
Second Priority Cp (Current Purch. Price)
Third Priority Ap (Average Purch. Price)
Fourth Priority Lp (Latest Purch. Price)
Cost Price Calculation Data

After you set up cost price calculation codes, you can define the cost price
calculation data, such as the operation rates, subcontracting rates, and item
surcharges. Cost price data for operation rates and surcharges is required in
order to accurately calculate the production costs of an item. An appropriate
sales price can then be derived for your products/items based on defining your
cost price calculation data.
You can also simulate costs for purchase items. This is a very effective
management tool when considering factors such as price fluctuations from
suppliers.
4-17
Controlling
The Flow: Cost Price Calculation
Start
Define Operation Rates for

machine, labor, and overhead
Operation Rates
(ticpr1150m000)
Define Cost Componets used to

capture costs
Cost Components
(tcmcs0148m000)
Add item surcharges

Item
Yes Item Surcharges
Surcharges
(ticpr1110m000)
No
Apply Subcontracting rates

Sub-
Yes Subcontracting Rates
Contracting
(ticpr1160m000)
No
Simulate the purchase price

Simulate Purchase Prices
(ticpr1170m000)
End
Operation rates and item surcharges are used as the basis of cost price
calculations. Simulation prices for purchased items provide an insight into
possible cost or sales price implications. Cost price calculations can be used to
illustrate possible changes, in addition to actual changes.
4-18
Operation Rates
Operating costs are calculated based on the hourly operation rates linked to the
Tasks or Work Centers specified in an item’s routing. An operation rate typically
is defined with a dollar value used to calculate the per hour rate for labor,
machine, and production overhead costs. Once defined, operation rates for labor,
machine, or overhead costs are linked to a price calculation code and an
operation rate code. When the standard cost is calculated, the item routing is
referenced to identify each task or work center involved in the manufacturing of
the item.
Fixed and Variable Costs

An Operation Rate can be identified as a fixed cost or a variable cost. A cost that
is indirectly related to the number of items produced could be considered
variable, such as the maintenance costs on a machine. Maintenance can be
scheduled for a machine based on the number of hours a machine is run or the
number of items produced. The Maintenance can be identified as a variable cost
and not included in the calculation for that operation rate. Therefore, the number
of hours of machine use is related to the number of items produced. In this case,
the maintenance cost is a variable cost. As a second example, you may track
overhead costs that can be charged as an operation rate for a machine to
represent depreciation. Depreciation is independent of the number of items
produced and can be represented as a fixed cost
4-19
Controlling

Operation Rates (ticpr1150m000)
Operation Rates
Field Description
Type of Operation Costs The type of cost that will be linked to the Operation
Rate. Four operations costs types are available:
Labor: Operation rates are based on a labor rate/cost.
Machine: Operation rates are based on a machine
rate/cost.
Overhead on Man Hours: Any overhead costs
associated with labor or man-hours. The overhead costs
are calculated by multiplying the number of man-hours
by the entered rate/surcharge.
Overhead on Machine Hours: The rate/surcharge
represents overhead costs, which are based on man-
hours associated with a machine. The overhead costs
are calculated by multiplying the number of machine
hours by the entered rate/surcharge
Rate The hourly rate applied to labor, machine, or overhead
costs. This rate is multiplied by the number of hours
required by the operation to calculate the total
production costs.
Cost Component The operation rate is linked to a predefined cost
component to categorize production costs before
transferring them into the Finance module for analysis.
4-20
Field Description
Variable Cost Adds the operation costs maintained in the Operation
Rates (ticpr1150s000) session to the valuation price of
an item, as a variable cost. The variable cost is then
considered when calculating the cost price of an item.

You can define an operation rate for a given Operation Rate Code.

Operation Rates (ticpr1150m000)
To create a new Operation Rate for Operation Rate Code XXX:
1. Click the New Group icon and enter the Price Calculation Code and
Operation Rate Code using the table values.
Field Input Value

Price Calculation Code 001
Operation Rate Code XXX
Operation Rates
4-21
Controlling
2. Click the New icon to enter the new Operation Rate using the table data:
Field Input Value

Sequence 10
Description Computer Controlled
Type of Operation Costs Machine
Rate 75
Cost Component MC1
You have just created your new Operation Rate that is linked to Operation Rate
Code XXX. You can view the rate in the Operation Rates (ticpr1150m000)
session.
Item Surcharges
Surcharges are divided in to either item surcharges or Warehouse surcharges.
You can define surcharges by:
Item group- The surcharge applies to the cost price of all items in the defined
item group. If the Bookings Triggered By field in the Item Surcharges
(ticpr1110m000) session Receipt, the surcharges are added to the receipt
Valuation Price stored in the Item Calculated Valuation Prices (ticpr2540m000)
session.
Item- The surcharge applies to the cost price of the item. If the Bookings
Triggered By field in the Item Surcharges (ticpr1110m000) session is Receipt,
the surcharge is added to the receipt Valuation Price stored in the Item
Calculated Valuation Prices (ticpr2540m000) session.
Warehouse- If the item is linked to the selected warehouse, the surcharge is

added to the item’s cost price. If the item is a component in a BOM, the
corresponding warehouse determines whether the surcharge is added to the cost
price of the item on the highest BOM level. You must select the Surcharges by
Warehouse check box in the Items-Costing (ticpr0107m000) session if you want
to have each warehouse/item combination its own surcharge.
Warehouse/item group-If the item is assigned to the selected warehouse and to

the selected item group, the surcharge is added to the item's cost price. If the
item is a component in a BOM, the warehouse assigned to the component
determines if the surcharge is added to the cost price of the item on the highest
BOM level. You must select the Surcharges by Warehouse check box in the
4-22
Items-Costing (ticpr0107m000) session if you want to have each warehouse/item

combination can have its own surcharge.
Item/warehouse-The surcharge is added to the cost price if the item is linked to

the warehouse. If the item is a component in a BOM, the warehouse assigned to
the component determines if the surcharge is added to the cost price of the item
on the highest BOM level. A surcharge is used to make an adjustment to an
existing cost. The adjustment can be positive or negative. A surcharge can be
expressed as a fixed amount or as a percentage of an existing cost. For
instance, a surcharge could be used to charge a customer for storage costs.
Surcharges allow indirect costs to be considered when calculating production
costs. Surcharges can be applied at the Item Group, Item, or Warehouse level.
If no warehouse is specified, the surcharge applies to the item for all transactions
regardless of the warehouse it is in.
If a warehouse is specified in the Item Surcharges (ticpr1110m000) session, the

surcharge is an item warehouse surcharge. Based on the setting of the Booking
Triggered by field, the surcharge is only applied when the item is issued or
received into the warehouse specified in the Warehouse field. The warehouse
surcharge is included in the standard cost only if the warehouse specified
matches the default warehouse in the General Item Data (tcibd0101m000)
session.
4-23
Controlling
\\ Manufacturing \ Cost Price Calculation \ Cost Price Master Data \ Item

Surcharges (ticpr1110m000)
Item Surcharges (General Tab)
Field Description
Price Calculation Code Determines the cost-price calculation data that is used
to calculate a cost, valuation, or sales price. Cost
calculation data (such as, operation rates, surcharges,
subcontracting rates, and simulated purchase prices)
are stored under this code.
Booking Triggered by The moment at which the surcharge is added to the
valuation price of the item or item group. Two Booking
Triggered By options are available:
Receipt: Surcharges are added to the valuation price
when the items are received into the warehouse.
Issue: Surcharges are added to the valuation price
when an item is issued from the warehouse to work-in-
process or as material on a service order.
4-24
Field Description
Calculation Line type Determines how a surcharge is calculated. Three
calculation line types are available:
Surcharge: Directly applies a surcharge.
Subtotal: Calculates a sub total for all surcharges made
for reporting purposes only.
Cumulative Cost Price: Calculates a sub total for all
cost prices including material, operation, and surcharge
costs. This is only for reporting purposes.
Variable Cost Includes the surcharge as a variable cost. The variable
cost is then considered when calculating the cost price
of an item.
Entering surcharge data is only required if the Calculation Line Type field within
the General tab is set to Surcharge. The Surcharges tab provides the ability to
determine the method of the surcharge.
Item Surcharges (Surcharges Tab)
4-25
Controlling
Field Input Value

Surcharge Method The method used to determine a surcharge. Five
surcharge methods are available:
Fixed Amount: The surcharge is based on a fixed
amount and can be either positive or negative.
% of Total Costs: The surcharge is based on a
percentage of the cost price and can be positive or
negative.
% of Added Costs: The surcharge is based on the
percentage of the additional costs incurred by a
manufactured item, such as the direct operation costs.
Costs of this type are excessive and therefore demand a
surcharge.
% Selective (Total Costs): The surcharge is based on
a percentage of the total cost price. It allows surcharges
to be applied for an item by cost component.
% Selective (Added Costs): The surcharge is based on
a percentage of the added cost price. It allows
surcharges to be applied for an item by cost component
but only for added costs.
Surcharge Component The cost component to which the surcharge is linked.
Only cost components of the type Surch. on Operation
Costs and Surch. on Material Costs can be used for a
surcharge.
Business Example
In order to recoup the tooling costs for the injection mold machine, a fixed
amount surcharge can be created and charged as an Surcharge against an Item
or Item group that use the Injection Mold machine. The surcharge amount must
be equal to the cost of the tooling.
Exercise: Add an Item Surcharge

You can add a surcharge to an item that will be added to the standard cost of
that item. Item surcharges are the basis for extra costs and discounts (in terms of
the percentage of fixed amounts) in the cost/valuation price structure for items.
You can add a surcharge to such item costs as Operation, Overhead, Materials,
etc.
It is assumed that you have defined data such as:
Item Costing (ticpr0107m000) – Enable Surcharges
4-26
Warehouse-Item (whwmd2510m000) – Set FTP (Fixed Transfer Price) as the

Valuation Method.
\\ Manufacturing \ Cost Price Calculation \ Cost Price Master Data \ Item

Surcharges (ticpr1100m000)
To define a new Item Surcharge for an item (that will be included in the Standard
Cost for that item):
1. Click the New Group icon and enter the New Group values:
Field Input Value

Item Group Leave Blank
Item STEEL_TUBE_1
2. Click the New icon and insert the new Surcharge data in the table:
General
Field Input Value
Booking Triggered By Receipt
Warehouse 001
Sequence Number 10
Description Std Item Surcharge
Calculation Line Type Surcharge
3. On the Surcharges tab enter the values:
Surcharges
Field Input Value
Surcharge Method Fixed Amount
Surcharge Amount $15.00
Surcharge Component 300
You can now view your new item surcharge that will be added to the standard
cost of the item.
4-27
Controlling
Subcontracting Rates
Subcontracting rates allow you to define and capture costs you incur from having
outside vendors perform some of the operations in your manufacturing process.
To capture subcontracting costs in your standard cost price, you must define a
subcontracting rate as well as a subcontracting task. The subcontracting task is
then inserted into the routing operation for the item you wish to calculate the
standard cost.
Subcontracting operation rates are applied based on the task being linked to the
item routing. The task must be linked to a work center, which is defined as a
subcontract work center in the Work Center (tirou0501m000) session.
To use subcontracting rates, you must set up prerequisite data before you begin.
The required setup information for subcontracting rates consists of:
• A subcontract item defined in the General Item Data (tcibd0501m000)

session.
• A subcontracting Business Partner defined in the Business Partners

(tccom4500m000) session. In addition, the Subcontracting check box
within the Invoice-from Business Partners (tccom4122s000) session must
be selected.
• A Subcontracting Work Center defined in the Work Center

(tirou0501m000) session.
After the subcontract Item, subcontract Business Partner, and subcontracting

Work Center exist, the Subcontracting Rate can be defined and a new task for
the subcontracting activity created. The routing for the item is then updated to
include the operation containing the Subcontracting task. Once the standard cost
price is calculated again, the cost will then include the subcontracting rate.
4-28

Subcontracting Rates (ticpr1160m000)
Subcontracting Rates
Field Description
Task The subcontracting rate is linked to a task. This defines
which task the rate is linked.
Subcontractor The Business Partner who will be performing the
subcontracting operation or service defined in the
subcontracting rate.
Cost Component The cost component, which must be and Operation
Cost, that estimated subcontracting costs can be viewed
in cost price and production order costing.
Subcontracting Rate The rate charged for the subcontracting activity.
Calculation Method for The method used to calculate the subcontracting cost.
Subcontracting Costs
Subcontracting Item The item used to represent the subcontracting activity.
This item must be of the item type Subcontracting.
Exercise: Define a Subcontracting Rate

You have decided to subcontract custom embroidering on the chair your
company manufactures.
4-29
Controlling
Remember you would first have to set up a: subcontract item, subcontract

Business Partner, and a Subcontract Work Center.
Your subcontracting rate links the Subcontract Business Partner, the Task, the
Rate, and the Subcontract Work Center for the subcontracting operation. Define
the new Subcontract Rate representing the embroidery operation.

Subcontracting Rates (ticpr1160m000)
1. Insert a New Group record for Price Calc code 001 and Subcontractor
SUP000001
2. Insert a New record for the task information.
Field Input Value

Currency EUR
Subcontracting Rate $50.00
Calculation Method for Fixed Amount by Product
Subcontracting Costs
Cost Component Sub1
Subcontracting Item SUB-EMB-1
3. Save the record.
The new Subcontracting Rate is now defined for Business Partner SUP000001.
Simulate Purchase Prices

Purchase items will not necessarily be associated with operation costs like
manufactured items. The cost of a purchase item may fluctuate dramatically or
be unknown. If all item prices are not considered for a finished product, then the
total cost price of that product can be significantly lower than it actually is.
Purchase prices can be simulated to compensate for such factors as price
fluctuations. It is used in price calculations to attain the most accurate costing
information. A simulated purchase price must be associated with a price
calculation code.
4-30

Simulated Purchase Prices (ticpr1170m000)
Simulated Purchase Prices
Field Description
Simulated Purchase Price The simulated purchase price and currency are
recorded twice. The price in this field is related to the
item itself. The amount in the Sim. Pur. Pr. Mul. Curr.
field is related to the price of the supplier.
Simulated Purchase Price The simulated purchase price and currency are
Multi Currency recorded twice. The price in the Simulated Purchase
Price field is related to the item itself. The amount in this
field is related to the price of the supplier.
Cost Component The cost component to track the simulated price. This
must be of the type Material.
Simulate the Purchase Price

Once price changes have been entered, you will want to simulate the purchase
price to view the effect of the price change.

Simulated Purchase Prices (ticpr1170m000)
Simulate the purchase price for Cost Price Calculation Code SMR for the item
Cloth
4-31
Controlling
1. Click the New Group icon and enter the Cost Price Calculation Code SP1.
2. Click the New icon to enter the item data for the simulation using the table
data”
Field Input Value

Item Cloth
Purchase Currency EUR
Simulated Purchase Price $85.00
Cost Component 100
3. Save and exit.
Run the Calculate Standard Cost and Valuation Prices (ticpr2210m000) session
and view the new cost price.
\\ Manufacturing \ Cost Price Calculation \ Cost Price Calculation \

Calculations and Maintenance \ Calculate Cost and Valuation Prices
(ticpr2210m000)
The simulated purchase price will be reflected in the calculated cost price for item
CLOTH that you simulated the purchase price.
4. Enter the item or range of items you wish to view the change using the
simulated purchase price and click the Calculate button.
5. The new price for CLOTH is $85.00.
Simulate the Cost Price Calculation

Calculate the cost price for item SEAT_1. To simulate, do not Actualize the cost
price calculation. This enables viewing the potential change without changing the
standard cost.
\\ Manufacturing \ Cost Price Calculation \ Calculations and Maintenance \

Calculate Cost and Valuation Price (ticpr2210m000)
1. Enter Item SEAT_1
2. Do not select the box for Actualize Standard Cost and Valuation Prices.
4-32
Calculate Cost and Valuation Prices
View the Cost Price Data

To view the effect on the cost price from modifying the BOM, use the Item –
Costing Data (ticpr2501m000) session.
\\ Manufacturing \ Cost Price Calculation \ Overview \ Item – Costing Data

(ticpr2501m000)
Sub-session: Item – Cost Prices (ticpr2505m000)
3. Select item SEAT_1.
4. From the Specific menu select Cost Prices.
Notice the change in price from $86.25 before modifying the BOM for item
SEAT_1 to the new price of $96.25. This reflects modifying the BOM to include
two additional pcs of item RAW.0002 in the BOM for item SEAT_1.
The changes to the actual BOM for item SEAT_1 will now be in effect. The Cost
Price Calculation was simulated but the actual BOM was changed. You would
need to revert back to 2 pcs of item RAW.0002 unless these changes were to be
kept.
4-33
Controlling
Item – Specific Cost Prices
4-34
Calculate Cost Prices

It is advisable to use the most recent costing information when considering the
cost of an item. A cost price can be calculated or recalculated multiple times
using price calculation data. The price of an item will not be changed until the
information is actualized. This functionality is useful when simulating or
estimating prices for an item
The Flow: Calculate Cost Prices
Start
Calculate the standard cost for an

item
Caclulate Cost and Valuation
Prices
(ticpr2210m000)
Updte the standard cost price
Actualize Cost and Valuation
Prices
(ticpr2220m000)
Print multilevel cost prices

Print Multilevel Cost and Valuation
Prices
(ticpr2420m000)
End

You can calculate the standard cost, simulate costs, or perform valuation
calculations in the Calculate Cost and Valuation Prices (ticpr2210m000) session.
If the standard cost or a cost simulation is being performed on manufactured
items, the application will reference the routing for the operation rate codes to
obtain operation rates and the BOM for material costs. After the application
references the routing and BOM, then the item’s cost calculation is performed.
The costing information can be calculated based on two types of prices, cost
price and valuation price. The cost price uses Item Production Data, Bill of
Material, Routing, and Calculation Data to determine a fixed price. This price can
be used for simulation purposes and is known as the Fixed Transfer Price (FTP)
4-35
Controlling
or standard cost. The valuation price is calculated based on an inventory

valuation method, for example, LIFO or FIFO. The valuation method determines
the value of on-hand inventory and is defined for each item/warehouse
combination. Inventory value is likely to fluctuate over time; therefore the
valuation price is likely to be different from the cost price, if the valuation is
different than the Fixed Transfer Price.
Valuation methods
Inventory valuation is a function to calculate the inventory value by item and
warehouse. The valuation price is the result of this calculation and is the actual
price that is used in inventory valuation and financial transactions performed on
the item, for example, the cost price of goods sold, inventory transfer, and the
issue to work-in-progress value.
Valuation prices express the inventory value by item and warehouse. Calculation
of a valuation price is based on the receipt price, receipt surcharges, and current
valuation price.
The exact calculation used depends on the valuation method chosen. Baan ERP
provides the following five valuation methods:
Fixed Transfer Price (FTP)
Moving Average Unit Costs (MAUC)
Last In, First Out (FIFO)
First In, First Out (LIFO)
Lot price
FTP: In case of valuation by way of Fixed Transfer Price (FTP), the FTP by unit
is used to express the item inventory value.
MAUC: MAUC is the abbreviation for Moving Average Unit Costs. In valuation by
way of MAUC, the average value of the total current item inventory is used to
express the inventory value. This average changes due to inventory transactions
because of inventory quantity changes. The MAUC concentrates on the inventory
of the last periods and, therefore, can perform actual costing.
LIFO/FIFO: The background of LIFO (Last In, First Out) and FIFO (First In, First
Out) is that issuing items against prices according to the price levels of the
receipt is important.
LIFO and FIFO are two different valuation methods, though the two methods are
similar. The difference is at the issuing side. If goods are issued, LIFO issues
4-36
against the valuation price of the receipt recoded last. FIFO issues against the
receipt recorded first.
Lot Price: The valuation method Lot Pricing performs inventory valuation at lot
level. If a lot item is received, the lot price is taken for valuation, rather than from
the purchase price of FTP. Lot prices are expressed by item. Therefore, the lot
value is based on the new inventory quantity time’s unit price.

Calculations and Maintenance \ Calculate Cost and Valuation Prices
(ticpr2210m000)
Field Description
Price Calculation Code Determines how the cost price, valuation price, or sales
price is calculated. The code is linked to the Operation
Rate and determines the calculation.
The code defined in the CPR Parameters determines
the standard cost price. Other price calculation codes
are used for simulation purposes.
4-37
Controlling
Field Description
Cost Price Calculation Indicates how the system goes through an items
Method structure when calculating the cost. The methods are:
Top down: The calculation is performed only to the
selected item and any item that occurs at a lower level
in a multilevel BOM.
Bottom Up: The calculation is performed only to the
selected item and any item above the selected item in
the BOM that could change price due to the change in
price of the selected item.
Single Level: The cost price is calculated for the
selected item. Cost prices of items in a lower level in the
BOM are not adjusted.
Only Items without a If the check box is checked, the cost and valuation
Standard Cost Price prices are calculated for items which have not already
had the cost price calculated. When a number of items
have been created, you can select this option and a
range of items, only the new items will have the cost
price calculated. Item within the selection range that
already have a cost price will not be re calculated.
Actualize Standard Cost If the check box is selected, the cost and/or valuation
and Valuation Prices prices are updated for the item. If not selected, you can
view the calculation results, but the cost prices will not
be updated in the data base for the item.
Exercise: Calculate the Standard Cost Price

You can calculate the cost price for an item by running the Calculate Cost and
Valuation Prices (ticpr2210m000) session using the desired date range.

Calculate Cost and Valuation Prices (ticpr2210m000)
To calculate the standard cost price for a given range:
1. Enter your desired item or item range, but do not select the Actualize Cost
and Valuation Prices check box.
Field Input Value

From Item FAB.0001
To Item FAB.0001
Calculation Method Top Down
4-38
Field Input Value

Actualize Standard Cost Do not select the check box
and Valuation
Cost Price Calculation for item FAB.0001
Do not select the Actualize Cost and Valuation Prices check box unless you are
sure the results of the calculation are correct and you are ready to update the
standard cost price of the item.
The calculated cost price can be viewed before the cost is actualized.
Exercise: View the Item Cost Data

View the new cost price data from the calculation.
\\ Manufacturing \ Cost Price Calculation \ Cost Price Master Data \ Item –

Costing Data (ticpr3501m000)
Sub-session: Cost Prices (ticpr2500m000)
View the cost prices.
4-39
Controlling
Item Cost Data for item FAB.0001
Actualize the Cost Price

You can make the calculated standard cost price and the valuation price actual
as follows:
For standard items in the Calculate Cost and Valuation Prices

(ticpr2210m000) session and the Actualize Standard Cost and Valuation
Prices (ticpr2220m000) session.
For customized items in the Calculate Cost Prices by Project

(tipcs3250m000) session.
During the actualization process, the cost component structure (consisting of the
aggregated and detailed cost components), the cost price, and the valuation
price are made effective. In other words, the structure and prices are stored for
an item for a certain date. After the actualization, the effective cost component
structure can be viewed, for example, in the Effective Cost Component Structure
by Assembly Line and Item (ticpr3161m000) session.
If an item's cost component structure has changed, or the valuation price or cost
price for an FTP item, Warehouse Management adjusts the inventory value of a
warehouse. The inventory value adjustment processes the actual order price into
the inventory value of the items. The value correction is posted to Financials and
is stored under a revaluation order code. The revaluation order code is generated
automatically and can be viewed in the Item – Standard Costing Data
(ticpr3501m000) session. You can use the revaluation code in Warehouse
Management to track the valuation changes.
4-40

Calculation and Maintenance \ Actualize Standard Cost and Valuation
Prices (ticpr2220m000)
Actualize Standard Cost and Valuation Prices
Business Example
A supplier has confirmed the new purchase price for granular plastic. An
alternative supplier cannot be found at a more competitive price and so the
decision is taken to accept the price increase. The cost price calculation for the
seat assembly for the chair must now be actualized in order to update the item’s
standard cost to reflect the new standard cost
Exercise: Calculate Subcontracting Rates

The cost price calculation can be performed for item CHAIR_1 which has the
routing modified to include the routing operation SUB1. This represents the
embroidery outsourced to supplier SUP000001.
Calculate the cost price for item CHAIR_1 to view the change in the cost price
due to the addition of the subcontracting rate.
The cost price details for item CHAIR_1 are displayed for comparison.
4-41
Controlling

(ticpr2501m000)
Sub-session: Item – Cost Price Details (ticpr2505m000)
Item-Cost Price Details
Calculate the cost price for item CHAIR with the new subcontracting rate
included.

Calculate Cost and Valuation Prices (ticpr2210m000)
1. Enter the details for item CHAIR_1
4-42
2. Click Calculate.
3. View the results of the cost price calculation.

(ticpr2501m000)
Sub-session: Item – Cost Price Details (ticpr2505m000)
4. From the Item – Costing Data session, check the item CHAIR_1 and select
Cost Price Details from the Specific menu,
The Subcontracting costs are now included in the cost price for item CHAIR_1.
This subcontracting rate is represented by the cost component SUB1. The
charge is $50.00 added to the cost of item CHAIR_1. The cost price total
changed from $276.6667 to a new price of $326.6667.
4-43
Controlling
Item – Cost Price Details
Exercise: View the Current Cost Price for an Item

Item SEAT_1 has a routing that uses Operation Rate Code MAN linked to work
Center CWC1_1. You will view the current cost price structure of item SEAT_1.
Then you modify the work center to use a new Operation Rate Code XX1 that
you define. This new operation rate code consists of new machine and labor
costs used to manufacture the item SEAT_1. The Work Center is linked to the
Routing for item SEAT_1 and will change the standard cost price when you
indicate the new Operation Rate Code XX1 for the work center. You will then
recalculate the cost price for item SEAT_1 and view the result of modifying the
cost information for an item.

Standard Costing Data (ticpr3501m000)
Select the item SEAT_1 and from the Specific Menu select the Cost Prices
option.
View the Cost Price Details.
4-44
Standard Cost Prices for item SEAT_1
The standard cost price for item SEAT_1 is $97.50. Materials are the
components of item SEAT_1 and consist of $17.50 and the Operation rates
consist of labor and machine operations from the routing and are $80.00.

Manufacturing a chair requires the use of a welding machine. You must define an
operation rate code and the operation rates that represent the cost of operating
the machine. An operation rate to represent the labor rate and the machine rate
will be defined. Operation rates can be linked to an Operation Rate Code and
attached to a Task or Work Center.
Define an operation rate code for your welding machine (to represent both the
machine and labor rates) using these values.

Field Input Value
Operation Rate Code XX1 (Replace XX with your Initials)
Currency EUR
Field Input Value

Sequence Number 10
Description Welding Machine Rate
4-45
Controlling
Field Input Value

Operation Rate Type Machine
Rate $120.00
Cost Component XXM (Replace XX with your initials)
Sequence Number 20
Description Welding Labor Rate
Operation Rate Type Labor
Rate $45.00
Cost Component XXL (Replace XX with your initials)
Operation Rates
Exercise: Link Operation Rate Code to a Work Center

Item SEAT_1 has a routing that uses work center CWC1_1. This work center will
be assigned the new Operation Rate Code XX1 to represent a change in the
machine and Labor rate. When the new standard cost price is calculated, the
new machine and labor rate linked to the work center will be used.
Change the Operation Rate Code for Work Center CWC1_1.
\\ Manufacturing \ Routing \ Work Centers (tirou0101m000)

Change the Operation Rate Code from MAN to XX1 (Replace XX with your
initials)
4-46
Work Centers
Exercise: Calculate Cost Price

The new Operation Rate Code which defines the machine and labor rates
applicable to work center CWC1_1 will now be applied when a cost price
calculation is performed on an item that has a routing that uses work center
CWC1_1.
Calculate the cost price for item SEAT_1 again to view the changes to the cost
price calculation using the new machine and labor rates associated to operation
rate code XX1 (replace XX with your initials).
\\ Manufacturing \ Cost Price Calculation \ Cost Price Calculation \ Calculate

Cost and Valuation Prices (ticpr2210m000)
Enter the item SEAT_1 and check the box to Actualize Standard Cost and
Valuation Prices.
4-47
Controlling
Calculate the cost price
Calculate Cost and Valuation Prices for SEAT_1
Exercise: View New Cost Price Structure

View the new cost price for the item SEAT_1.

Select the record with the most current date stamp for item SEAT_1
From the Specific Menu select the Cost Prices option.
4-48
Standard Cost Price for Item SEAT_1
Notice the operation rates for item SEAT_1 have changed to $67.50 using the
new Operation Rate Code XX1 you linked to the work center in the routing. When
the system recalculated the standard cost price, it used the new operation rates
and gave a new standard cost price. Remember the original operation rate was
$80.00 that came from the Operation Rate Code MAN.
Exercise: View Cost Price Details

You can view the cost price component details as well for the item SEAT_1. This
is a breakdown of the aggregated operation rates. Remember you specified the
Cost Component for the Welding Machine Rate as XXM (replace XX with your
initials) and the Welding Labor Rate as XXL (replace XX with your initials)

Sub-session: Cost Price Details (ticpr3500m000)
Select the record with the most current date stamp for item SEAT_1
From the Specific Menu select the Cost Prices Details option.
4-49
Controlling
Standard Cost Price Details for SEAT_1
Notice the cost components are broken down into XXL and XXM representing
the individual costs for machine and labor rates you specified under Operation
Rate Code XX1. The total of the three cost components listed is the total
aggregated operation costs which are $67.50 as you saw in the Cost Prices sub
session.
Print Multi-level Cost Price Calculation

This session is used to print calculations of standard cost prices and valuation
prices for each level of a manufactured item's product structure. You can print
calculations of simulated cost/valuation prices as well.
If you only want to print calculations on the item level as specified in the Item
field, you must use the Print Cost Price Calculation by Item (ticpr2410m000)
session
4-50
\\ Common \ Cost Price Calculation \ Comparison and Calculation Reports \

Print Multilevel Cost Price Calculation (ticpr2420m000)
Print Multilevel Cost Price Calculation
Field Description
Cost Price The date for which you want to print cost price calculation data.
Calculation Date
The cost-price calculation date is important to simulate
cost/valuation price calculations on a date other than the current
date. It can lie in the future or in the past. On the basis of this
date, the system automatically simulates the structure of the
product and the routing as they exist on the given cost
calculation date. The current date is shown by default.
4-51
Controlling
Field Description
Economic Order If this check box is selected, the economic order quantity of the
Quantity Main Item main item is used to calculate the quantities of the sub-items.
The economic order quantity is entered in the Items – Ordering
(tcibd2500m000) session.
If this check box is cleared, you must enter a value in the Use
Order Quantity field. This value is used to calculate the
quantities of the sub-items.
Use Order Quantity The order quantity of the main item on which the cost price
calculation is based. You can only enter a value if the Economic
Order Quantity Main Item check box is not selected.
The default value of this field is the economic order quantity of
the main item as defined in the Items – Ordering
(tcibd2500m000) details session.
Economic Order This check box only applies to cost prices and valuation prices
Quantity Sub Items that are calculated with price calculation codes other than the
standard price calculation code in the Cost Price Calculation
Parameters (ticpr0100m000) session.
If this check box is selected, the cost/valuation prices of the sub-
items are based on the economic order quantity of the sub-
items. The system computes the cost/valuation price of the main
item using the sub-items' cost/valuation prices.
Example
Amount Ec.Order.Qty
Main Item Bicycle 1x 5
Sub-item Wheel 2x 15
Sub-item .... ...... etc
Cost price of Wheel based on 15 items is: 100
Cost price of Main Item:
2x Wheel at 100 = 200
Order quantity of Wheel is 5 x 2= 10
Cost price of Wheel is based on 10 items: 105
Cost price of Main Item:
2x Wheel at 105 = 210
Details by Cost If this check box is selected, the details of the cost/valuation
Component price calculation are printed by cost component.
Include Fixed Costs If this check box is selected, costs such as operation rates or
surcharges that you defined as fixed costs are printed.
4-52
Print a Multi-Level Cost Price Calculation

The item CHAIR is an end item consisting of a multilevel BOM. To view the Cost
Price structure of the chair and the components, print the multilevel cost price
calculation.
\\ Common \ Cost Price Calculation \ Comparison and Calculation Reports \

Print Multilevel Cost Price Calculation (ticpr2420m000)
The printed report contains multiple pages of data. The example here displays
the end item CHAIR and the multilevel cost price calculation for the component
SEAT and the level 2 components for the item SEAT. The amount in this
example is $0.00 because the routing and BOM are not set for the item CHAIR or
SEAT. Also, the purchase price for the level 2 components is $0.00.
Sample of Multi Level Cost Price Calculation for item CHAIR
Delete Cost Price Calculations

With the exception of the standard cost price calculation code stored in the Cost
Price Calculation Parameters (ticpr0100m000) session, and a price-calculation
code that is linked to a PCS project, you can remove all other cost price
calculation codes from ERP LN.

Delete Cost Price Data (ticpr2260m000)
You can select to only delete parts from the cost calculation for a specific or
range of price calculation codes. If you select the Delete Price Calculation
Codes check box, all the other check boxes are selected automatically.
4-53
Controlling
Lesson Review
In this lesson you learned how to:
Set up cost prices.
View cost price parameters.
Define cost components.
Create operation rate codes.
Define price calculation codes.
Define cost price calculation data.
Define an operation rate.
Add an item surcharge.
Define subcontracting rates.
Define item surcharges for an item.
Simulate a purchase price for an item.
Calculate the cost and the valuation price for an item.
4-54
Review Questions
1. Price Calculation Code 001 is defined in the CPR Parameters. You are
calculating costs for a range of items using Price Calculation Code 002. You
can simulate the cost price for the items with Price Calculation Code 002,
then select the Actualize option to update the standard cost of these items if
you are satisfied with the simulation.
A. True
B. False
2. The Cost price breakdown for a manufactured item consists of: (Enter a Yes
or No)
A. _____ The Material Costs
B. _____The Operation Costs
C. _____The Tax Charges
D. _____ The Carrying Costs
E. _____ The Overhead Costs
F. _____ The Sales Price.
3. Operation Rate Codes can be applied on the Operation or the Work Center or
on both the Operation and Work Center.
A. True
B. False
4-55
5
An integrated link must exist between the financial budget, the cost analysis, and
the cost prices.
Rates and surcharges are calculated in the flexible budget. You can integrate
these rates with the Cost Price Calculation module of Manufacturing.
The cost allocation of actual costs and actual performances will also result in
rates and surcharges, which can be integrated with the Cost Price Calculation
module, as well. In addition, when the actual and the budget costs are compared
this will result in variances (deviations). These variances can be integrated with
the General Ledger.
You can import actual performances from Operations Management into

Controlling and allocate costs based on these actual performances. This applies
to the actual hours registered in the Hours Accounting module and the actual
performances on cost drivers such as number of orders sold, items
manufactured, and so on.
This lesson describes in detail the various integration setups in the Controlling
functionality.
5-1
Controlling
Lesson Objectives
5-2
5 Controlling Integrations
Before you can integrate the rates and surcharges from Controlling with the Cost
Price Calculation module, you must first define what the link is between reference
units and logistic data, such as machines. In addition, you must also define the
link with actual performances from Operations Management, as well as the
integration for the variance results with the General Ledger.
In the Integration Scheme for Cost Price Calculation, the link between the rates
and surcharges calculated for the budget or the actual data for the
dimension/reference units must be linked with logistic data such as operation
rates and surcharges per item, item group, or warehouse.
Integration Scheme for Cost Price Calculation

The budgeted and actual rates and surcharges calculated both use the same
integration setup.
\\ Financials \ Controlling \ Master Data \ Integration Processing \

Integration Scheme for Cost Price Calculation (tffbs1530m000)
Click New Group to select the logistic company number to which you want to
create the integration (destination), and the dimension type from which the rates
and surcharges are integrated (source). Click New to insert the source and
destination data.
5-3
Controlling
Sub-session: Integration Scheme for Cost Price Calculation (tffbs1130s000)
Integration Scheme for Cost Price Calculation
Field Description
Dimension The dimension code from where the rate or surcharge
result is integrated.
Reference Unit The reference unit from where the rate of surcharge
Project The destination PCS project to which the rate or
surcharges will be integrated. This field is optional.
Operation Rate The logistic operation rate to which the calculated cost
rate is integrated.
Item Group Item group to which the calculated surcharge is
integrated.
Booking Triggered by The moment that item surcharges are added to the
valuation price.
Warehouse The warehouse in which the calculated surcharges must
be stored.
You can print the integration scheme for cost price calculation in the Print
Integration Scheme for Cost Price Calculation (tffbs1430m000) session.
The next step is to define cost components on which the operation rates and
surcharges must be stored in Operations Management.
5-4
\\ Financials \ Controlling \ Master Data \ Integration Processing \ Defaults

for Cost Price Calculation (tffbs1531m000)
Defaults for Cost Price Calculation
Click New Group to select the logistic company number. To specify detailed
operation rates and surcharges in Operations Management on various cost
components, you can integrate the rate and surcharge calculated in Baan ERP
Finance by ledger account with logistics. Next, insert the ledger account from
which the rate or surcharge must be integrated. If you leave the Ledger Account
field empty, the rates and surcharges calculated in Baan ERP Finance will be
integrated per dimension/reference unit for the total of fixed and/or variable costs.
Click New to specify the integration into cost components:
Field Description
Dimension Type The dimension type from which the rate or surcharge
Dimension The dimension code from which the rate or surcharge
Reference Unit The reference unit from which the rate of surcharge
5-5
Controlling
Field Description
Variable Cost (check box) If this check box is selected, the variable rate and
variable surcharge calculated in Financials will be
integrated with the cost components defined in this
session. If this check box is cleared, the fixed rate and
fixed surcharge calculated in Financials will be
integrated with the cost components defined in this
session.
Cost Component for Rates The cost component defined in Operations Management
to which the rate result must be integrated.
Type of Operation Costs This field defines he type of costs that the operation rate
relates to in Operations Management. The following
options are available:
Labor
Machine
Overhead on Man hours
Overhead on Machine hours
Cost Component for The cost component defined in Operations Management
Surcharges to which the surcharge result must be integrated.
Integration Cost Drivers

The user can import the logistic performances into the Cost Accounting module
through cost drivers (Reference Units).
5-6

Reference Unit by Dimension
Field Description
Link with Logistics This field defines what Operations Management cost
drivers must be used for the performance of this
reference unit. The following Operations Management
cost driver options are available:
Sales Orders, Number of Customers, Sales Order Lines,
Customers who ordered, Purchase Orders, Items
Purchased, Purchase Order Lines, Items Sold, Goods
Receipts, Items Manufactured, Deliveries, BOM Lines,
Item Groups, Routing Lines, Number of Suppliers,
Purchase Invoices, Suppliers where ordered, Sales
Invoices and Not Applicable.
Integration Scheme for Hours

In Hours Accounting, the actual machine hours and man-hours will be registered
on production orders. These actual hours can be imported into the Controlling
where these hours will be used for the cost allocation of the actual data.
To be able to import the actual hours registered you must first create a link
between SSA ERP LN People and the dimension /reference unit in Controlling.
5-7
Controlling

Integration Scheme for Hours (tfcat2521m000)
Click New Group to select the dimension type/dimension code/reference unit
combination to which the hours from ERP LN People must be integrated. Click
New to define the logistic data that must be used.
Sub-session: Integration Relation to SSA ERP LN People (tfcat2121s000)
Integration Relation to SSA ERP LN People
Field Description
Kind of Hours The type of hours to which the integration relation
applies. The following options are applicable:
Labor Time
Machine Time
Hours control object Specify Employee or Work center as the control object
and fill in the appropriate Integration Attribute.
5-8
Integrate Variances with General Ledger

When you compare the actual and budgeted costs, three types of variances can
be distinguished in the cost analysis:
Occupation deviation
Over coverage/Under coverage deviation
Occupation deviation, also called absorption variance, compares the planned

fixed costs versus the actually charged portion of fixed costs. Consumption
deviation, also called efficiency variance, compares the planned consumption
with the actual, which is actual costs – allowed costs. Over coverage/Under
coverage deviation, which is also called political variance or effective rate
variance, only occurs if effective rates/surcharges differ from calculated values.
These variances are stored by dimension/reference unit in Controlling and can

be integrated with dimensions in the General Ledger for financial reporting.

Integration Scheme For Variances (tfcat0504m000)
Click New Group to select the source dimension type and dimension code. Click
New to insert the link from the various deviations of this dimension code with the
General Ledger.
5-9
Controlling
Sub-session: Integration Scheme for Variances (tfcat0104s000)
Integration Scheme for Variances
Field Description
Cost Portion Specify if the deviations must be split up to various
destination (dimensions) and ledger accounts.
Credit Account Enter the ledger account to which the deviations will be
credited for the selected source dimension.
Destination Dimension The dimension type to which the deviation results will be
Type integrated.
Destination Dimension The dimension code to which the deviation results will
Code be integrated.
Debit Account The ledger account to which the deviations will be
debited for the selected destination dimension.
Because a financial transaction will be created for the integration of variances,

you must also predefine a transaction type. You must do this in the Controlling
Parameters 2 (tfcat0101s000) session.
Integrate Results Process

When you calculate the actual and budget rates and surcharges in Controlling,
you can integrate these rates and surcharges with the Cost Price Calculation
module of Manufacturing.
5-10
You can import the actual performances from Operations Management in the
Cost Accounting module, where you can use these performances for the
retrograde calculation and cost allocation. The actual performances also
immediately change the performances in the allocation relations, and recalculate
the allowed costs and deviations.
Several sessions are available to integrate the rates and surcharges. In

Operations Management, you can calculate the new cost prices based on the
new operation rates and surcharges.
Integrate variances and finalize the batch generated to be able to create financial
reports, including differences, for example, price differences, calculated from the
Operations Management processes through the integration-mapping scheme,
and the variances calculated in Cost Accounting.
Import Actual Performances

You can import actual performances from various places. For example, you can
import performances from Operations Management. In the Reference Units by
Dimension (tffbs0530m000) session, you define whether a reference unit has a
link with Logistics. For those reference units that have a link, you must import the
actual performances (cost drivers) for each period.
To import the actual hours from the SSA ERP LN People, you must have defined
the Integration Scheme for Hours (tfcat2521m000) session.
You can also import performances from the quantities of the ledger accounts or
from the budget.
5-11
Controlling
\\ Financials \ Controlling \ Cost Allocation \ Import Actual Values \ Import

Actual Performance (tfcat2220m000)
Import Actual Performance
Field Description
Logistic Company In case of a Logistic multi-company situation, you must
define from which logistic company the performances
must be imported.
Financial Budget System If you select this check box, you can insert a budget
(check box) code from which you want to import the performances.
The other options in this session will become
unavailable.
Logistics (check box) If you select this check box, the actual performances of
the Logistic cost drivers defined in the reference units
will be imported. These cost drivers are used particularly
in case of activity-based costing.
Quantities General Ledger If you select this check box, the actual performances will
(GLD) (check box) be imported from the quantities of the ledger account
history. You can also include the non-finalized
quantities.
Amounts General Ledger If reference units exist with type Amount-Based, you
(GLD) (check box) must select this check box to import the surcharge base
amount. You can also include the non-finalized
amounts.
Hours Accounting (Baan Select this check box to import the actual hours. You
People) (check box) must also define a unit for hours.
5-12
Field Description
Old Values You can import performances more than once, as long
as the cost allocation result is not integrated with the
GLD. The following options are applicable:
Accumulate: The new imported performances are
added to the old performances.
Replace: The old performances are replaced by the
new imported performances.
Keep: If performance exits, no new performance will be
imported. The old performance remains actual.
Insert Zero Values (check If no actual performances are available for a reference
box) unit, you can insert a zero performance. This keeps the
allocation relations valid, even if no performances are
applicable.
Process Report (check box) If this check box is selected, the imported actual
performances are printed in a report.
Be aware that if non-finalized quantities and/or amounts are imported from the
General Ledger, these quantities and amounts will be used in the cost allocation
process and that the cost allocation result can be integrated with the General
Ledger. No check is made on whether the imported non-finalized quantities
and/or amounts are still available in the General Ledger. Nor is a check
performed in the General Ledger when non-finalized quantities and/or amounts
are deleted if the cost allocation results have been integrated.
If you click Import, the actual performance table and the allocation relation table
are updated.
The allowed costs and variances are (re-)calculated.

Performance (tfcat2120m000)
Actual Performances
5-13
Controlling
In this session, you can manually modify the imported performances. If you
manually change the performances, the related allocation performances can also
be updated. If the performance total changes the underlying allocation relations
will be modified based on the relations the relations had with the old performance
value.
Integrate Budgeted Operation Rates and Surcharges

The rates and surcharges calculated in Controlling can be integrated into the
Cost Price Calculation module of Manufacturing. The integration of the rates and
surcharges takes place in two separate steps.

Integrate Budget Operation Rates (tffbs1230m000)
Integrate Budget Operation Rates
Field Description
define to which logistic company the budget rates must
be integrated (copied).
Budget The flexible budget of which the rates must be
integrated.
Cost Price Calculation The cost price calculation code to which the calculated
Code rates must be integrated.
5-14
Field Description
Unit for “Hours” The unit in which the hours must be expressed.
Standard Calculation If this check box is selected, rates are integrated for
(check box) standard, nonproject calculations.
Project/Budget Calculation If this check box is selected, rates are integrated for
(check box) PCS project calculations.
Integrate by Ledger If this check box is selected, all ledger accounts that
Account (check box) belong to the selected flexible budget per year and the
selected reference units are integrated into the Cost
Price Calculation (CPR) module. If you clear this check
box, budgeted operation rates are accumulated for each
reference unit and then integrated.
Overwrite Operation Rates If this check box is selected the operation rates in the
(check box) Cost Price Calculation module are overwritten with the
rates from the flexible budget. If you clear this check
box, the rates from the flexible budget are added to the
operation rates of the cost price calculation.
Process Report (check box) If this check box is selected, a report of all processed
data is printed if you maintain this session.
On the Selection Range tab, you can specify from which dimensions and
reference units the rates must be integrated.
Click Integrate to copy the rates from the flexible budget into the Cost Price
Calculation module.
5-15
Controlling

Integrate Budget Surcharges (tffbs1231m000)
Integrate Budget Surcharges
Field Description
define to which logistic company the budget surcharges
must be integrated (copied).
Budget The budget of which the surcharges must be integrated.
Code surcharges must be integrated.
Standard Calculation If this check box is selected, surcharges are integrated
(check box) for standard, non-project calculations.
Project/Budget Calculation If this check box is selected, surcharges are integrated
(check box) for PCS project calculations.
Integrate by Ledger If this check box is selected, all ledger accounts that
Account (check box) belong to the selected flexible budget per year and the
selected reference units are integrated into the Cost
Price Calculation (CPR) module. If you clear this check
box, budgeted surcharges are accumulated per
reference unit and then integrated.
Overwrite Surcharges If this check box is selected, the surcharges in the Cost
(check box) Price Calculation module are overwritten with the
surcharges from the flexible budget. If you clear this
check box, the surcharges from the flexible budget are
added to the surcharges of the cost price calculation.
Process Report (check box) If this check box is selected, a report of all processed
data is printed if you maintain this session.
5-16
reference units the surcharges must be integrated.
Click Integrate to copy the surcharges from the flexible budget into the Cost
Price Calculation module.
The budget rates and surcharges are integrated to the Cost Price Calculation
module per year.
Integrate Actual Rates and Surcharges

The actual calculated rates and surcharges can be integrated into the Cost Price
Calculation module of Manufacturing. The integration of the actual rates and
surcharges will take place in two separate steps.

Integrate Actual Operation Rates (tfcat2230m000)
Integrate Actual Operation Rates
Field Description
Logistic Company In case of a Logistic multicompany situation, you must
define to which logistic company the budget rates must
be integrated (copied).
Year/Period Select the fiscal year and period of which the calculated
rates must be integrated.
5-17
Controlling
Field Description
Code rates must be integrated.
Unit for “Hours” The unit in which the hours must be expressed.
Standard Calculation If this check box is selected, rates are integrated for
(check box) standard, nonproject calculations.
Project/Budget Calculation If this check box is selected, rates are integrated for
(check box) PCS project calculations.
Integrate by Cost Type If this check box is selected, all ledger accounts and the
(check box) selected reference units for which an actual rate is
calculated are integrated into the Cost Price Calculation
(CPR) module. If you clear this check box, actual rates
are accumulated for each reference unit and then
integrated.
Overwrite Operation Rates If this check box is selected, the operation rates in the
(check box) Cost Price Calculation module are overwritten by the
rates from the flexible budget. If you clear this check
box, the rates from the flexible budget are added to the
operation rates of the cost price calculation.
Print Process Report If this check box is selected, a report of all processed
(check box) data is printed if you maintain this session.
reference units the rates must be integrated.
Click Integrate to copy the rates from the flexible budget into the Cost Price
Calculation module.
5-18

Integrate Actual Surcharges (tfcat2231m000)
Integrate Actual Surcharges
Field Description
Logistic Company In case of a Logistic multicompany situation, you must
define to which logistic company the actual surcharges
must be integrated (copied).
Code surcharges must be integrated.
Standard Calculation If this check box is selected, surcharges are integrated
(check box) for standard, non-project calculations.
Project/Budget Calculation If this check box is selected, surcharges are integrated
(check box) for PCS project calculations.
Integration by Cost Type If this check box is selected, all ledger accounts and the
(check box) selected reference units for which an actual surcharge is
calculated are integrated into the Cost Price Calculation
(CPR) module. If you clear this check box, actual
surcharges are accumulated per reference unit and then
integrated.
Overwrite Surcharges If this check box is selected, the surcharges in the Cost
(check box) Price Calculation module are overwritten by the actual. If
you clear this check box, the actual surcharges
calculated are added to the surcharges of the cost price
calculation.
Print Process Report If this check box is selected, a report of all processed
(check box) data is printed if you maintain this session.
5-19
Controlling
reference units the surcharges must be integrated.
Click Integrate to copy the calculated surcharges from Controlling into the Cost
Price Calculation module.
The actual rates and surcharges are integrated to the Cost Price Calculation
module for each fiscal period.
Post Variances
The variance between the expected (planned, budgeted) costs and the actual
costs that can consist of the following elements:
Occupation deviation
Over coverage/under coverage is also described as uncharged costs or as

operating results.
Only the uncharged costs of the actual budget can be posted into the General
Ledger. A reason to integrate variances to the General Ledger is that you can
then group all variances, both from Controlling and from Operations Management
together in one financial statement, in the Financial Statement module.
Uncharged costs are posted according to the scheme that is defined in the
Integration Scheme for Variances (tfcat0504m000) session.
The actual budget is defined in the Company Parameter (tfgld0103s000) session.
\\ Financials \ Controlling \ Cost Analysis \ Variance Analysis \ Post

Variances (tfcat2840m000)
Select the year/period and dimensions you want the variances (uncharged costs)
to be integrated. Click Post to integrate the variances into the General Ledger.
The transaction type that is used is defined in the Controlling 2 Parameter
(tfcat0100s000) session.
5-20
Lesson Review
5-21

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SSA ERPLN 6.

Student Manual and Exercises

Entering Budget Amounts and Quantities ...................................................1-7

Cost Price Calculation .............................................................. 4-1

This information includes:

Course Goal and Objectives

Who Should Attend this Course

Organization of Course Materials

Enter the setup necessary to create a budget

Create a static budget

Enter Amounts and Quantities into a static budget

Print the budget for analysis

Create Reference Units

Create a Performance Budget

Create a Flexible Budget

Set up Effective Rates by Reference Unit

Create Allocation Relations

Import Actual Costs

Process Cost Allocation

Integrate Cost Allocation results to GLD

Analyze Cost Allocation results

Delete/Archive Cost Analysis data

Set up cost prices

View cost price parameters

Define cost components

Create operation rate codes

Define price calculation codes

Define cost price calculation data

Define an operation rate

Add an item surcharge

Define subcontracting rates

Define item surcharges for an item

Simulate a purchase price for an item

Calculate the cost and the valuation price for an item

View Cost Price results

Create Integration Scheme for Cost Price Calculation

Create Integration Scheme for Hours

Integrate Variances with GLD

Process integration results

Who Should Attend this Course

Organization of Course Materials

The Flow: Sample Flow

Set up invoice factoring

Create bank account details for

Associate factor with pay-to

Icons Used Within this Course

WARNING: A Warning icon calls attention to information or procedures that must

PROCEDURE: A Procedure icon identifies a sequential set of steps or tasks that

EXERCISE: An Exercise icon designates when you will complete an exercise to

INDEPENDENT TASK: The Independent Task icon informs you to complete a

INSTRUCTOR DEMONSTRATION: The Instructor Demonstration icon alerts you

Icon Icon Name Description

Icon Icon Name Description

Sample Menu Path

Budgeting Setup and Static Budgeting

Cost Price Calculation

Virtual (VT) Classroom (ILT)

General (budgeted) costs such as depreciation, energy, and so on are, therefore,

The Cost Accounting (Controlling) department periodically compares the actual

Controlling is the coordination task of budgeting, auditing, and providing

Through cost allocation, you can establish multiple performance dependencies

Static Budget: A budget that can be based on ledger accounts and/or

Flexible Budget: A budget that is based on the performance of a cost center