Cost Management and Profitability Analysis helps you to adjust plans

and allocate resources to accommodate rapid market changes and align

performance with strategy. You can gain a deep understanding of cost
drivers and responsibilities with structuring your costs along cost centers
and projects. You can understand detailed costs and margins incurred by
your products to manage your product portfolio, and calculate the Cost Of
Goods Manufactured (COGM) or the Cost Of Goods Sold (COGS) as broken
down by each step of the production process. Use cost information gathered
about products automatically to perform period-close activities, including
calculation of work in progress, variances and scrap, and settlement of
product costs. With flexible and powerful insights, business users have the
support they need to optimize decisions.

Cost management and profitability analysis include:

 Overhead Cost Accounting

o This application area covers the journal entries for Overhead
Cost Accounting. It captures costs by cost center and defines the
output of the cost center in terms of activity types. It allows you
to enter statistical key figures as a basis for your allocations at
period close.
 Profitability and Cost Analysis
o This application area enables you to analyze the profitability of
your market segments and single cost objects. It shows
contribution margins in real time and offers detailed views for
further analysis.
o You can analyze market segments by product, product group,
customer, customer group, and sales organization.
 Budget Availability Control
o You can control the budgets in your projects and cost centers.
The available budget is checked with each expense posting to
determine whether the budget consumption has reached a
defined limit.