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AC412 Cost Center Accounting: Advanced Functions AC412

Release 470 04/11/2006

AC412 Cost Center Accounting: Advanced Functions

AC412
Cost Center Accounting: Advanced Functions
SAP AG 2001 SAP AG

R/3 System Release 4.6 C January 2001 Material number 5004 4284

Copyright

Copyright 2004 SAP AG. All rights reserved. No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG. The information contained herein may be changed without prior notice.

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Course Prerequisites

AC410 - Cost Center Accounting AC415 - Overhead Orders (recommended) Theoretical knowledge and practical experience in Cost Center Accounting.

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Target group

Audience
Project team members who are responsible for implementing Overhead Cost Controlling extended functions. Financial accounting employees responsible for efficient activity allocation, extended planning functions and differentiated analysis of target costs, variances, marginal costs, or actual price revaluation.

Duration: 2 days

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Course Overview

Contents:
Course Goals Course Objectives Course Content Course Overview Diagram Main Business Scenario

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Course Goals

At the conclusion of this course, you will be able to: Distinguish various controlling concepts for responsibility areas Configure and use the advanced functions for planning and activity allocation Analyze information and effects of various cost accounting systems in overhead cost controlling

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Course Objectives
At the conclusion of this course, you will be able to: Describe and maintain the advanced planning functions for quantity-based planning Use plan reconciliation, plan cost splitting, and plan activity price calculation Use the various tools for activity allocation of actuals Investigate and analyze variances between plan or target costs and actual costs in detail Distinguish various cost accounting systems and their effect in overhead cost controlling

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Course Content

Preface Unit 1 Unit 2 Unit 3 Unit 4 Unit 5 Unit 6 Course Overview Activity allocation: Concept and Master Data Enhanced planning techniques Actual cost allocation Period-End Closing Allocations and Analysis Summary

Appendix

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Course Overview Diagram

Activity Allocation: Concept and Master Data

Advanced Planning Techniques

Actual Cost Allocation

Period-End Closing: Allocations and Analysis


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Main Business Scenario


A fictitious firm is portrayed, which produces computers. A detailed analysis of actual data and variances is required for each area of responsibility. The value flows and cost incurring factors in the enterprise are to be explained as clearly as possible for internal activity allocation. This is to be done without causing any large amounts of data entry work. The options provided by different cost accounting systems (such as variable costing or revaluation at actual prices) are to be examined for medium-term cost accounting purposes.

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Business Scenario: Enterprise Structure

Service Quality Assurance

Production Production of Computers

Energy Production of Chips Repairs

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Activity Allocation: Concept and Master Data

Contents:
Activity Allocation: Concept Master Data: Activity Type

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Activity Allocation: Unit Objectives

At the conclusion of this unit, you will be able to: Distinguish between the concepts of cost assignment and activity allocation Interpret the goals of each concept Enter the most important basic settings for master data Activity type.

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Activity Allocation

Activity Allocation: Concept and Master Data

Advanced Planning Techniques

Actual Cost Allocation

Period-End Closing: Allocations and Analysis


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Activity Allocation: Business Scenario

To establish the cost accounting concept for your enterprise, you: Work out the major benefits and disadvantages of activity allocation for the enterprise Create activity types for the cost centers whose costs have to be analyzed by reference to operating levels

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Value Flows in Controlling


CO PA

Profitability Analysis

Profitability segment

ECECPCA

Profit Center Accounting

CO OM

Overhead Cost Controlling


Cost centers
Internal orders Sales orders, Projects

CO PC

Product Cost Controlling

Activity types

Make-tostock Processes

Material Material valuation valuation

CO CEL

Cost Element Accounting

FI

Financial Financial Accounting Accounting

Asset

Expense

Sales Revenues

HR

Human Resources

MM

Material Material Mgmt. Mgmt.

PP

Production Production

SD

Sales and Sales and Distribution Distribution

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Controlling provides you with information for management decision-making. It facilitates coordination, monitoring and optimization of all processes in an organization. This involves recording both the consumption of production factors and the activity provided by an organization. Therefore, all cost-relevant data flows automatically to Controlling from Financial Accounting. As part of this process, the system assigns the costs and revenues to different CO account assignment objects such as cost centers, business processes, projects or orders. The relevant accounts in Financial Accounting are recorded in Controlling as cost elements or revenue elements. You use Cost Center Accounting for controlling purposes within your organization. It is the appropriate tool for monitoring all of the overhead costs incurred and allocating them appropriately to the place where they were incurred. Product Cost Controlling calculates the costs arising from the manufacture of a product or the provision of a service. It enables you to calculate the minimum price at which a product can be profitably marketed. Profitability Analysis analyzes the profit or loss of an organization according to individual market segments. The system allocates the corresponding costs to the revenues for each market segment. Profitability Analysis provides a basis for decision-making, price determination, customer selection, conditioning, and for choosing the distribution channel.
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Responsibility Area Controlling


CO PA

Profitability Analysis

ECECPCA

CO OM

Overhead Cost Controlling


Internal orders Processes

CO PC

Profit Center Accounting

Product cost Controlling

CO CEL

Cost Element Accounting

- Quantity-based planning and reconciliation - Price calculation - Target cost calculations - Variance analysis - Cost accounting system

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Overhead costs are costs that cannot be directly assigned to the manufacture of a product, or the provision of a particular service. You assign all overhead costs to the locations at which they were incurred, or to the activities from which they arose. The cost center represents a separate location of cost occurrence within a controlling area. You can create cost centers according to a number of criteria, including functional considerations, allocation criteria, activities provided, or according to their physical location and/or management area. Activity types define the type of activity that can be provided by a cost center. Activity provided by one cost center to other cost centers, orders, or processes, represent the utilization of resources of the sender cost center. You valuate activities using a price calculated on the basis of certain business or management information. Business processes combine sequences of activities within an organization over and above individual cost centers. They can be used to control organizational processes in line with particular functions. Internal orders are used to plan, collect, and analyze the costs arising from internal activities. There are different methods for allocating values and quantities, depending on the type of CO object in question. You can use advanced analysis tools at period-end on quantity allocations: The system uses

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the operating rate (target costs) to compare the planned costs with the corresponding actual costs. You can then analyze the variances identified, and their causes.

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Cost distribution
Method
Cost Center Transaction-Based Reposting costs Reposting line iems Manual cost allocation Periodic Accrual calculation Periodic reposting Distribution Assessment

Cost Center

Profitability segment Processes

Advantages
Sender controlled allocation Simple or no planning Primary and secondary cost distribution Analysis: plan/actual or actual/actual comparison

Orders Projects

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Assigning costs to cost centers enables you to determine where costs are incurred within the organization. If you plan costs at cost center level, you can check cost efficiency at the point where costs are incurred. Actual cost entry: Primary costs are transferred to Cost Accounting from other components, for example, Materials Management (MM), General Ledger Accounting (FI-GL), Asset Accounting (FIAA) and Payroll Accounting (PY). Additional costs or valuation differences are periodically entered using the accrual method, or the overhead or plan=actual processes. Actual Cost Allocation: You can use various methods to allocate the actual costs you have recorded. The system distinguishes between transaction-based allocations, which occur within one period, and period-based allocations, which occur at period end. Characteristics of the cost allocation methods: Either no planning or only simplified planning is necessary The sender specifies the allocation amount. Both primary and secondary costs can be transferred

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Various reports are available for the cost center analysis, which are based on plan-actual or actualactual comparisons.

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Activity Allocation
Method
Cost Center
Activity Type

Cost Center
Activity Type

Profitability segment Processes

Transaction-Based Direct activity allocation (confirmation from orders) Periodic Indirect activity allocation Target=actual activity allocation Template allocation

Advantages
Fixed and variable costs Receiver-controlled receiver input (demand) Plan reconciliation Price calculation with cost component split Analysis: Target/actual comparisons and advanced variance analysis

Orders Projects

Production Orders
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More advanced methods of overhead cost allocation are also available. You can use these methods throughout the organization, or in separate particular problem areas. They can help determine what internal activities are needed to supply services or products, and to market them. This enables you to allocate overhead costs according to resource consumption and activity utilization. The SAP R/3 System can automatically determine the quantities used in many cases, considerably reducing the expense of activity allocation. This removes an argument often given in organizations favoring simple assessment and overhead calculation methods. Along with time-saving automatic allocations, the integration of Overhead Cost Controlling in the R/3 System environment minimizes entry of actual data and reduces the work involved in planning. Activity (Type) Allocation: Activity allocation uses the activity produced by a cost center as the allocation base for the costs. You can use activities to measure the operating rate or the rate of capacity utilization for a cost center. The target costs of the cost center refer to the activity output. When you allocate internal activity, you enter the quantity of the activity to be allocated. If not, then the system derives this quantity automatically. The system needs an activity price to allocate costs and to allocate activity. You can either set this price manually, or you can calculate it, using planned or actual costs.

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Goals of Each Concept


Cost Distribution
Plan Costs Actual Costs Plan/actual comparison? Actual/actual comparison? Balance? Time

Activity Allocation
Costs
K (Plan)

Allocated actual costs Target costs Actual costs Plan costs

Kfix (Plan)

Target/actual comparison? Marginal costs? Variances?

h (Plan)

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h (Actual)

Activity (hrs)

Overhead costs from planning, management, quality control, and coordination in such areas as research and development, procurement, and work preparation grow ever more important in comparison to actual product manufacture. Although direct activity output provides a great deal of cost transparency to which an organization can apply proven cost controlling methods to reduce costs, most managers have already exhausted most of these options. The interconnections in overhead costs, however, often remain unclear and the optimization potential unrealized. At the end of the period, you can use the methods of activity allocation to compare the planned costs (target costs) and their corresponding actual costs, based on the operating rate. You can make a source-based analysis of the resulting target/actual variances, and use the analyses for further managerial accounting measures within Controlling. Unlike the analysis tools used in the cost assignment procedure, more detailed Controlling instruments are also available: Statistics on the costs dependent on the current operating level Advanced variance analyses Comparison and, if required, revaluation at actual prices

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Activity Allocation: Master Data - Activity Type

At the conclusion of this topic, you will be able to: Identify the most important indicators for activity types Describe the importance of the activity type categories Describe the importance of the various price indicators

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Activity Type: General Settings

Activity Type Edit Goto Extras Environment System Help

Activity Type
Activity Type Controlling area Valid from Basic data Name Description Activity unit Cost center categories 1414 1000 01.01.1997 Indicator CPU Minutes CO Europe to Output 31.12.9999 History

CPU Minutes CPU Minutes, indirect calculation MIN * Minute

Basic Data: Unit, allowed cost center category Indicator: blocked Output: alternative quantity unit History: change documents Environment: use of activity types
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Activity types classify the activities provided by a cost center. If a cost center provides activities for other cost centers, orders, processes, and so on, then this means that the resources of this cost center are being used. The costs of these resources need to be assessed to the receivers of the activity. Activity types serve as tracing factors for this cost allocation. In an internal activity allocation, the quantity of the activity, such as the number of repair hours, is entered into the system (manually or automatically). The system calculates the associated cost based on the activity price and generates a debit to the receiver and a credit to the sender for both the quantity and costs. The internal activity allocation is carried out via secondary cost elements, which are stored in the master data of the activity types as default values. You can restrict the use of the activity type to certain cost element types, by entering the allowed cost center types in the activity type master record. You can enter up to eight allowed cost center types, or leave the assignments "unrestricted" by entering an asterisk (*). If you change the cost center type, be careful to avoid inconsistencies with information stored in the cost center master data. You can assign any number of activity types, or none at all, to a cost center. An activity type is assigned to a cost center during planning.

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Activity Type Category

Which method should be used to allocate the activity type? Activity Type

Allocation default value Activity Type Category Allocation cost element Price indicator Actual quantity set Plan quantity set 2 639100 1 Average prices PreDistribFixedCosts indirect calculation, indirect allocation IAA EDP assets automatically calc. based on planned activity

Variance values for actual allocation Activity type category actual Actual price indicator As in plan

Should the actual activity type be allocated using a different method?

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The activity type category is used to determine whether and how and activity type is recorded and allocated. For example, for some activity types you can allow certain activities to be allocated directly based on transactions, while having others allocated automatically. In activity type maintenance, you have the option of entering separate plan and actual activity type categories. An actual activity type category is required only if actual allocation varies from plan allocation. Otherwise, the R/3 System automatically adopts the plan activity type category in the actuals. Actual quantity set: This setting determines whether you can post a manual activity quantity in addition to the allocated quantity that credited the cost center. Manual posting is advisable when you want to determine the allocated activity quantity automatically, but you do not yet know the actual quantity from the sender side. Plan quantity set: If you select this indicator, the planned activity quantity is not changed by plan reconciliation even where planning for the object is not to be reconciled.

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Activity Type Categories: Time Spent Entering Quantities


Cost Center
Activity-related entry of sender and receiver quantities; "Activity Allocation"

Cost Center
Activity Type

Cost Center

3 4

Enter sender activity: Periodic "Indirect Activity Allocation" No entry: Periodic "Indirect Activity Allocation" (backflush) No entry: Periodic "target/actual activity allocation" (actual data only)

Enter sender activity: "No allocation"

2 5

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Activity Type Category 1: You plan activity quantities manually for activity types in this category. You enter actual activity quantities in internal activity allocation, based on business transactions. Plan activities are allocated to the receivers, using activity input planning. It may be necessary to reconcile the planned sender quantities and the planned scheduled activity. Activity Type Category 2, 3 and 5: these allow you to automatically plan and allocate quantities. They will save you time and effort regarding postings and plans. Category 5 can be used only with actual data. Categories 2 and 3 are assigned using cycles and segments related to the planning or the period-end closing work. More detailed information on the differences is provided in later chapters. Activity Type Category 4: You plan activity quantities manually for activity types in this category. The entry of actual activity quantities is transaction based. You cannot specify receiver objects for this. You cannot allocate to other objects. For this activity type category, you can nevertheless calculate target costs. Changes between activity type categories 1, 2, 3, and 5 are possible, even if the individual activity type has already been used for planning, as these are only estimated amounts for activity planning. You can only make changes in activity category 4, or from activity type category 4 to a different category, if you have not yet posted in the planning or actual data of the fiscal year with each activity type.

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Activity Type: Price indicator

Cost Center
PLAN: 1: Iterative: Plan costs / plan activity 2: Iterative: Plan costs / plan capacity 3: Manually entered plan price Optional: Actual prices: 5: Iterative: actual costs / actual activity 6: Iterative: Actual costs / capacity 7: Manual actual price No calculation Optional Indicators: - Average price - Predistribution of fixed costs

Cost Center
Activity Type

Cost Center
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To plan and allocate the activities, the system records quantities, which are measured in activity units. The valuation of the activity quantity results in a price. This price is recorded in separate fixed and variable portions, depending on the activity amount of an activity type. The apportionment of activities to the cost centers should therefore reflect the allocation of costs to the activity types. You can specify the planned activity price manually or use a function to let the system automatically calculate the price. Prices can be calculated either on the basis of planned costs or actual costs. If you set value 1 or 2 in the plan, new prices are calculated when the plan price is calculated. If you set value 3, you have to set the price of the activity type manually. For actual allocations, you can enter a price indicator different from that in the plan. If you do not enter a price indicator for the actual allocation, the system uses the same price indicator for the actual and planning data. The price indicators Actual 5 and 6 are used during the actual price calculation to determine new prices and revaluate existing price allocations in CO-OM. Value 7 allows you to determine an actual price manually. These indicators enable you to set a price that is scheduled and varies from the plan.

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Activity Allocation: Summary

You are now able to: Distinguish between cost assignment and activity allocation Interpret the goals of each concept Enter the most important basic settings for master data Activity type.

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Exercise Data AC412


Explanation of the symbols in the exercises and solutions Exercises Solutions Unit Objectives

Business Scenario

Tips & Tricks

Warning or Caution

Exercise Data Type of Data


Controlling area Company code Business areas Profit center Standard hierarchy Standard hierarchy node used in course Cost centers

Data in The Training System


1000 1000 1000, 7000 1015, 1400, 1500 H1 H-AC412 Ener00 Rep00 PC00 Chip00 Qual00 - Ener20 - Rep20 - PC20 - Chip20 - Qual20
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Cost elements

400,000 Raw materials 403,000 Operating supplies 404,000 Spares 415,000 External activities 415,100 External processing 416,100 Energy basic charge 416,200 Energy consumption 417,000 Purchased services 420,000 Wages 430,000 Salaries 470,000 Room costs 473,100 Telephone 476,000 Office supplies 476,100 IT supplies 489,000 Accrued depreciation 613,000 DAA Setup 620,000 DAA Machine costs 628,000 IAA Quality 639,200 IAA Energy

Activity types

(created by course participants) QuaH00 kWh00 MaH00 RueH00 - QuaH20 - kWh20 - MaH20 - Rueh20

Statistical key figures

NPROD units produced

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Activity Allocation: Concept and Master Data Exercises


Unit: Activity Allocation: Concept and Master Data Topic: Master Data

At the conclusion of these exercises, you will be able to: Describe the functions of activity types as master data Explain what activity type categories are used for Explain what the price indicator does

The exercises use the example of a firm that produces computers. You will use advanced analysis methods and various allocation techniques to monitor the costs of areas of responsibility. Target costs and variances will be analyzed in order to establish a relationship between the internal costs and the activities. You will therefore create a number of different activity types for your firm, which will reveal what activities caused the costs. Because not all activity quantities can be measured in practice, you can use activity type categories. Activity type categories enable automatic calculation and allocation of activity flows.

The exercises and solutions use the following menu paths: CCtr: IMG: Accounting > Controlling > Cost Centers Tools > AcceleratedSAP > Customizing > Edit Project > SAP Reference IMG

Familiarize yourself with the company used in this exercise. Analyze the existing structures in the system, and make your own user-defined settings. 1-1 Display your node H_TECH## (## is your PC number in the classroom) in the standard hierarchy of controlling area 1000 (under the node H9500-H-AC412). How many cost centers are there in the various areas of your firm? Enter your cost centers in the organization chart.

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H_TECH__

H_PROD__

H_SERV__

1-2

Make your user settings in the information system. These default settings will facilitate entering data later.

Controlling area: 1000 Cost center group: H_TECH## Planning: Current fiscal year, periods 1 12 Reporting period: Current fiscal year, periods 1 12 Plan version: Version 0 1-3 Go to the information system and analyze the plan and actual costs incurred by your firm up to this point. Call up the Plan/Actual Variance report for your cost center group H_TECH##. Make sure that no actual or plan costs have been posted for the current fiscal year.

Now create the activity types that you will use to measure the efficiency of your cost centers. At the end of the period, the costs incurred by each cost center will be compared against the activity output. All master data should be valid from January 1 of the current fiscal year to 12/31/9999. When you create the activity types, follow the instructions exactly. Check whether you have entered the correct activity type categories and price indicators for the activity types (if necessary, look at the solutions to be sure). Do not set any indicators that are not mentioned in the exercises (such as predistribution of fixed costs, actual quantity set, or plan quantity set).

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2-1

Create activity type MAH## (machine hours ##) in hours (h), which you will use later to measure the output of your chip production and PC production cost centers. This activity type can only be used by production cost centers (F). The activity should use transaction-based allocation in plan and actual data (activity type category 1). Choose an appropriate secondary cost element (such as 620000), since this passes on the origin of the allocation operation to the receiver. At the close of planning, plan prices are calculated iteratively by the system based on the planned activity (PI 1). Actual prices are calculated based on the actual activity quantity (Actual PI 5). Create activity type SETH## (setup time ##) in hours (h). This is used later to measure the setup time of PC production. This activity type can only be used by production cost centers (F). The activity should use transaction-based calculations in the plan and actual (Type1). Choose an appropriate secondary cost element (such as 613000), since this passes on the origin of the allocation operation to the receiver. At the close of planning, plan prices are calculated iteratively by the system based on the planned activity (PI 1). Actual prices are calculated based on the actual activity quantity (Actual PI 5). Create activity type QUAH## (quality check ##) in hours (h). This is used later to measure the time needed for quality checks of PCs and chips. This activity type may be used by all service cost centers (H). In plan data, the activity should be recorded manually (Type 1). In actual data, it should be recorded using indirect activity allocation (Actual Type 3). Choose an appropriate secondary cost element (such as 632000), since this passes on the origin of the allocation operation to the receiver. At the close of planning, plan prices are calculated iteratively by the system based on the planned activity (PI 1). Likewise, actual prices should be calculated at period-end based on the activity output (Actual PI 5). Create activity type REPH## (repair hours ##) in hours (h) which will be used to measure the activity output. This activity type may only be used by cost centers with cost center category R. The activity should allocated manually in the plan and actual data (Type 1). Choose an appropriate secondary cost element (such as 615000) so that the origin of the allocation is passed on to the receiver. At the close of planning, plan prices are calculated iteratively by the system based on the planned activity (PI 1). When the period is closed, the system calculates an actual price based on the actual activity quantity (PI 5). Create activity type ENH## (energy costs ##) in units of kWh which will be used to measure the energy consumption of the production cost center. This activity type may be used only by cost centers with cost center category G. In the plan data, the activity should be recorded manually (Type 1), and in the actual data it should be recorded using target=actual activity allocation (Actual Type 5). Choose an appropriate secondary cost element (such as 639200), since this passes on the origin of the allocation to the receiver. At the close of planning, plan prices are calculated iteratively by the system based on the capacity (PI 2). This ensures that the high fixed costs
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needed to supply the activity are not allocated to the receivers of the activity. At period-end closing, the system calculates actual prices based on the capacity (PI 6). 3 Check the activity types you created. Go to collective processing and display the activity types you created. 3-1 3-2 Create an activity type group (AT##) that contains all activity types you entered. In collective processing, choose your activity type group ## and note the allocation indicators of your activity types. To do this, configure a layout (or choose an existing one) that shows you the following indicators for allocation control.

Using the solutions, check to be sure the indicators entered are correct. Activity Type ENH## MAH## QUAH## REPH## SETH## AllocCost Elem. 639200 620000 632000 615000 613000 CCtr Categ. G F H R F ATC ATC actl PI
Plan price ind.

API
Act. price ind.

1 1 1 1 1

5 3

2 1 1 1 1

6 5 5 5 5

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Activity Allocation: Concept and Master Data: Solutions


Unit: Activity Allocation: Concept and Master Data Topic: Master Data

The exercises and solutions use the following menu paths: CCtr: IMG: Accounting > Controlling > Cost Centers Tools > AcceleratedSAP > Customizing > Edit Project > SAP Reference IMG

1-1

Enterprise Structure CCtr: Master data > Display Standard Hierarchy: Expand node H_TECH## and all lower-level nodes (the nodes are under H9500 and HAC412).
Diagrammtitel H_TECH##

H_PROD##

PC## PC Production CHIP## Chip Production H_SERV##

ENER## Energy REP## Repair QUAL## Quality Check

1-2

User Settings CCtr: Information System > User Settings Basic data: Controlling area: 1000 Cost center group: H_TECH##

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Planning period: Current fiscal year, periods 1 12 Reporting period: Current fiscal year, periods 1 12 Further entries: Plan version: Version 0 Save

1-3

Plan/Actual Comparison H_TECH##: You should receive a message telling you that no costs have been planned or posted up to now. CCtr: Information System > Reports for Cost Center Accounting > Plan/Actual Comparisons: Cost Centers: Fiscal year: Periods: Plan version: Cost center group: Actual/Plan Variance Current year 1-12 0 H_TECH##

Create activity types When you create the activity types, follow the instructions exactly. Check whether you have entered the correct activity type categories and price indicators for the activity types (if necessary, look at the solutions to be sure). Do not set any indicators that are not mentioned in the exercises (such as predistribution of fixed costs, actual quantity set, or plan quantity set). 2-1 Activity type MAH## (machine hours ##) CCtr: Master Data > Activity Type > Individual Processing > Create Activity type: Valid: Enter Activity unit: h F 620000 Cost center categories: Activity type category: 1 Allocation cost element: Price indicator: 1 Actual price indicator: 5 MAH## January 1 of current year to 12/31/9999

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Save 2-2 Activity type SETH## (setup hours ##) CCtr: Master Data > Activity Type > Individual Processing > Create Activity type: Valid: Enter Activity unit: h F 613000 5 Cost center categories: Activity type category: 1 Allocation cost element: Price indicator: Actual price indicator: Save 2-3 Activity type QUAH## (quality checks ##) CCtr: Master Data > Activity Type > Individual Processing > Create Activity type: Valid: Enter Activity unit: h H 632000 Cost center categories: Activity type category: 1 Allocation cost element: Price indicator: 1 QUAH## January 1 of current year to 31.12.9999 1 SETH## January 1 of current year to 31.12.9999

Actual activity type category: 3 Actual price indicator: 5 Save 2-4 Activity type REPH## (repair hours ##) CCtr: Master Data > Activity Type > Individual Processing > Create > Activity type: Valid: Enter Activity unit:
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REPH## Jan. 1 of current year h R


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to

12/31/9999

Cost center categories:

Activity type category: 1 Allocation cost element: Price indicator: Save 1 Actual price indicator: 5 615000

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Activity type ENH## (energy costs ##) CCtr: Master Data > Activity Type > Individual Processing > Create > Activity type: Valid: Enter Units: kWh G 639200 Cost center categories: Activity type category: 1 Allocation cost element: Price indicator: 2 ENH## Jan. 1 of current year to 12/31/9999

Actual activity type category: 5 Actual price indicator: 6 Save 3


3-1

CCtr: Master Data > Cost Centers > Cost Center Group > Create > AT## Insert activity types enh## mah## quah## reph## seth## Save, return

3-2

Collective Processing CCtr: Master Data > Activity Type > Collective Processing > Display > Cost center group: AT##

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Execute Choose layout: 1-SAP02 (Allocation control) Continue

Activity Type ENH## MAH## QUAH## REPH## SETH##

AllocCost Elem. 639200 620000 632000 615000 613000

CCtr Categ. G F H R F

ATC 1 1 1 1 1

ATC actl 5 3

PI 2 1 1 1 1

API 6 5 5 5 5

Check the data using the solution. If you find incorrect settings in the control indicators, change these indicators in individual processing.

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Advanced Planning Techniques

Contents:
Planning Scenarios Manual Planning Automatic Planning Techniques Plan Closing

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Advanced Planning Techniques: Unit Objectives

At the conclusion of this unit, you will be able to: Explain the difference between various planning scenarios and analyze their results Use the different methods of manual and automatic cost and activity planning Perform the final planning activities such as plan reconciliation, plan cost splitting, and plan price calculation

SAP AG 1999

(C) SAP AG

AC412

3-2

Course Overview

Activity Allocation: Concept and Master Data

Advanced Planning Techniques

Actual Cost Allocation

Period-End Closing: Allocations and Analysis


SAP AG 2001

(C) SAP AG

AC412

3-3

Advanced Planning Techniques: Business Scenario

You want to use activity-oriented planning as a basis for detailed target cost analysis of your cost centers. You want to plan important activities manually. Other activities, such as those for service cost centers, you want the system to calculate automatically to minimize your planning effort. An overview of capacity and bottlenecks for all of your firm's activities is another requirement. You want information on the fixed and variable prices for the activities of the primary cost centers that allocate directly to cost objects. This price information should include all of the firm's costs.

SAP AG 1999

(C) SAP AG

AC412

3-4

Advanced Planning Techniques: Planning Scenarios

At the conclusion of this unit, you will be able to: Describe and interpret the methods and results of different planning scenarios Describe and change the configuration of the individual planning screens

SAP AG 1999

(C) SAP AG

AC412

3-5

Planning: Scenarios
Cost Planning
Value planning Analysis: Plan/Actual comparisons

Plan Costs

Cost center

Activity Planning
Activity planning: Plan Costs Quantity output/Cost center (activityCost planning independent) (activity-independent) Manually entered price (or iterative fixed price)
Cost center

Plan Assessment - Distribution - Reposting

Plan activity

manual

Advanced Cost Accounting Systems


Plan costs dependent on output (activity-dependent) Iterative price calculation with fixed and variable portions Analysis: Target/actual comp. Flexible standard costing Optional marginal costing Optional actual costing
SAP AG 2001

d Fixe
Plan Costs (activityindependent)
Cost center

Plan activity

Plan Costs (activity-dependent)

Vari able

Cost center planning forms part of the overall business planning process, and is a prerequisite for standard costing. The main characteristic of standard costing is that you plan values and quantities for specific imeframes, independently of the actual values from previous periods. In planning you determine the control criteria for the subsequent analysis. Cost planning enables you to compare the plan and actual costs for areas of responsibility after periodend closing. If you use cost and activity planning, you can obtain actual values for your activity flow. At period-end you can compare plan and actual prices. In contrast to cost planning, you can compare a price calculated from planned costs with the prices of external providers. You can also follow the price development over various periods. If you include fixed and variable plan costs per activity type in your cost planning (=activity-dependent planning), you can use the advanced analysis tools: - You can analyze your area of responsibilities based on target costs. This enables you to assess performance, not only based on plan data, but also on their activity (control of management effectiveness). - You can simulate planning that calculates costs automatically for different outputs. Only the variable costs rise (plan reconciliation).
(C) SAP AG AC412 3-6

- You can also determine the cost of an additional activity unit (short-term lower price limit, marginal costs).

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AC412

3-7

Advanced Planning Techniques: Manual Planning

At the conclusion of this unit, you will be able to: Differentiate between activity output on the one hand, and cost element planning or activity input planning on the other Explain the difference between activity-dependent and activity-independent planning Use the various methods of manual cost and activity planning

SAP AG 1999

(C) SAP AG

AC412

3-8

Activity Output

Machine Hours (Cat. 1)

Plan activity

Cost Center
Setup time (Cat. 1)

Plan activity

Change Activities/ Prices


Year Periods Cost Center Activity Type MAH SETH 2001 1 to 12 4275 Production Plan acty Capacity 12 000 1 200 14 000 1 500 Unit Fixed H price H

Output
Variable PPI 1 1 Cat. 1 1 Sched'd 0 0

SAP AG 2001

Activity types are used to determine the quantity-based output of a cost center. They can be used to calculate the operating rate and target costs. They help control activities in cost centers, since the level of use can be measured at cost center level. Activity types are allocated under a secondary cost element, which is stored as a default value in the activity type master data. Activity types can be clearly defined in cost center accounting using the plan activity, capacity, output quantity, price and equivalence number. The price can be set iteratively or manually. The iterative approach considers all activity relationships between cost centers calculated by the SAP system. You can also overwrite the default value of the activity type category in the activity type master record. The System saves the new activity type category in the fiscal year and version in which you are currently planning. For activity type planning, SAP provides the Standard-Layout 1-201, assigned to the Standard planner profile SAPALL.

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AC412

3-9

Cost Element Planning

Planned Costs Activity-independent

Production

Mach.Hrs

Plan Activity: 12,000 h

Fixed Costs on Cost Center

Planned Costs Activity-dependent

Fixed / Variable Costs of Plan Activity (12000 h)

Cost Element Planning


Year Periods Cost Center Activity Type Mach.Hrs 2001 1 to 12 Production Cst Elmnt 430.000 415.000 Fix. Value Variable 100.000 50.000 30.000

Input
Fix. Quantity Variable DK 1 1

SAP AG 2001

The activity-independent primary costs, which are organized into cost elements, are planned on the cost centers to which the actual costs are later assigned. If you plan activity-independent primary costs, you can only plan the fixed costs. For cost centers that use activity types, you can assign these fixed assigned to the cost center activity types during splitting. To do this, you use either the equivalence number, which you determine in the plan for the respective activity type, or the plan splitting structure. In price calculation, these fixed costs are used to calculate the fixed portion of the activity price. Activity-dependent primary cost planning enables you to plan primary costs on a cost center, when these primary costs arise based on an activity (activity type). You can plan the costs that are dependent on these activities in fixed and variable portions. Variable costs are those that change relative to the volume of activity. If the cost center produces several activities, you can plan fixed costs based on both the individual activity types and on the activity-independent costs affecting the cost center. This means that the activity type price can include two fixed cost portions: - Activity-independent planned costs for the cost center - Activity-dependent fixed planned costs for the activity type The standard layout 1-101 contained in the SAP profile SAPALL helps you to plan activity-dependent and -independent primary costs. Whether or not you enter an activity type in the initial screen of the planning decides if you plan activity-independently or -dependently.

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AC412

3-10

Activity Input Planning (Manual)


Fix. Consumption for Cost Center
SETH Input Activity-independent

Plan activity Plan activity

Repairs

REPH Cat. 1

Plan activity

Production
MAH

Energy

KWH Cat. 1

Plan activity

Input activity-dependent

Fixed / Variable Consumption of Activities

Activity Input Planning


Year Periods Cost Center E-Acty. MAH SETH 2001 1 to 12 Production SE-CCtr Repairs Energy Energy SE-Acty. REPH ENH ENH Fix. Quantity 100 h 0 kWh 200 kWh

Input
Variable 25,000 kWh 100 kWh Fix. Value 10.000,5.000,4.500,Variable 25.000,1.000,-

SAP AG 2001

In addition to primary costs, secondary costs are often incurred by a cost center, because cost centers use services (activity inputs) from other cost centers. You can plan activity input as activity-independent and activity-dependent. Planning of secondary costs from activity allocations always requires a sender and a receiver cost center. You can use the standard layout 1-102 assigned to the profile SAPALL for this. If you need services (for example service hours) that are not specific to one activity type, you choose activity-independent. This can occur when a cost center incurs costs that cannot be assigned to an activity type. You plan the quantity of the "sender" activity type that is made available from the sender cost center to the receiver cost center. To determine secondary costs, the fixed and variable prices of the activity type supplied by the sender cost center are combined and multiplied by the activity quantity consumed by the receiving cost center. The activity-independent secondary costs that are planned for a receiver cost center are always fixed costs. Choose activity-dependent if you require activities for a specific activity type, for example programming hours. This may be the case when you plan programming for a machine that is used for only one activity type. For activity-dependent secondary costs, you plan the quantity of activity input to a receiver cost center dependent on a activity type produced by the receiver center. When planning, you must therefore specify the sender cost center, the sender activity type, the receiver cost center, and the receiver activity type.
(C) SAP AG AC412 3-11

Advanced Planning Techniques: Automatic Planning

At the conclusion of this unit, you will be able to: Distinguish between the different concepts of automatic activity allocation in your plan Use the various methods of automatic activity allocation in your plan (indirect activity allocation and template planning)

SAP AG 1999

(C) SAP AG

AC412

3-12

Indirect Activity Allocation in Planning Data (Category Three)


Cycle Flow:
- allocation of planned activities from sender to receiver

Cost Center

3.
Cycle definition: Distribution of sender quantity: - Planned quantities - Fixed quantities

4.

Cost Center

Cat. 3

Receiver input is automatically planned

1. 2.
Plan the activity provided

based on tracing factors per receiver - Percent - Fixed quantities - Plan statistical key figures - Planned costs - Planned activities - ...

3.
Cost Center
Plan any tracing factors

SAP AG 2001

Indirect activity allocation automatically assigns activities in the plan. In contrast to manual activity planning, you define the key to be used for automatic plan allocation. As with other periodic allocation procedures, indirect activity allocation uses segments and cycles to define sender and receiver relationships. You define the processing methods for each segment. Different methods can occur together within a given segment. The costs are allocated under a secondary cost element from category 43. The cost element assignment is defaulted from the activity type master data for the cost center/activity type plan, and can be overwritten. Cost centers function as senders in indirect activity allocation. The receivers of an indirect activity allocation can be cost centers, WBS elements, internal orders, cost objects, or business processes. Depending on the the activity type cateogry, you can choose between two different allocation methods. When you determine the total activity for the sender, use indirect activity allocation to distribute the planned activity quantities from the sender to the receiver based on specific keys. For activities that are to be planned on a sender object, use activity type category three (manual entry, indirect allocation). The corresponding segment must use the sender rule "Posted quantities". All receiver rules are valid here except "fixed quantities".
(C) SAP AG AC412 3-13

Indirect Activity Allocation in Planning Data (Category Two)


Cycle Flow: 3.
- allocation of planned activities to sender and receiver

Cost Center

2.
Cycle definition:
Derivation of sender quantity from: of tracing factors
- Inversely calculated - Sender values: x per tracing factor

Cost Center

Sender activity and Cat. 2 receiver input are automatically planned

Distribution of the receiver quantities based on tracing factors


- Percentages - Fixed quantities - Planned statistical key figures - Planned costs - Planned activities - ...

1.

2.
Cost Center
SAP AG 2001

Plan any tracing factors

For activity types where the plan (output) quantities cannot be calculated or whose calculation is time-consuming, the R/3 System determines the activities using the following methods: The sender activity quantity is derived from the receiver tracing factors (with global or a weighted factor that is defined per sender) or from the corresponding entries in the segment definition (as a fixed sender or receiver quantity). This second form of indirect activity allocation uses activity type category two (indirect entry, indirect allocation). The given segment must either use the sender rule for inversely calculating quantities, and any receiver rule, or the identical sender and receiver rules for fixed quantities. If you use sender rule for inversely calculating the quantity, the sender-specific weighting factors mentioned above are calculated with the sender values function (Default Value = 1). When you indirectly allocate activity in the planning data, the system determines the fixed and variable quantity portions according to the receiver category and its tracing factor in each segment. - If the receiver is a cost center, activity type or business process, all quantities are posted as variable - If the receiver is an order, cost object or WBS element, all quantities are posted as variable - In all other cases (for other receiver categories or other receiver tracing factors) the system posts all of the quantities as fixed.
(C) SAP AG AC412 3-14

If a price exists for a sender object, the costs are distributed in the same way as as they are during the valuation of activity-dependent activity input planning.

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AC412

3-15

Cycle Overview
Cycle Overview
Cycle overview Edit Goto Settings System Help

Cycle Tree Structure Entries found Controlling area 1000 Internal Activity Allocation Plan cycles Selection criteria General information Cycle Validity

Iterative Cycle Information Runtime analysis - Formal check - Changes I-IAA1 - Cycle run groups 1.1.1998 - 31.12.2400 - Segment overview - Previous executions (documents)
............ ............... Receiver rule Scaling ......

I-IAA1
Repairs Service Telephone Energy I-IAA2 I-IAA3

x
Executed 1999

Iteratively

.............

Information on selected segment Segment Repairs Sender rule Planned value 100%

Variable portions Statist. key fig. Standard

Posted amounts Variable portions

Receiver
PC Production Chip Production Customer Service

Sender

SAP AG 2001

The cycle overview provides an overview of all cycles from one category, including all relevant segments. The cycles for the selected allocation are displayed in a structure tree. In each case, the segments are assigned one level lower in the hierarchy. On the Selection criteria tab strip, you specify the cycles and additional information to be displayed in the tree structure. On the Cycle information tab strip, you can display data for a particular cycle or segment. This provides information on the general data, the number of segments for the cycle, and the last time the cycle was run or reversed. For segments, you are provided with information on the segment definition and the sender. If you want to process iteratively, activate the indicator in the cycle definition. The System also includes cyclical relationships in the cost center network (a receiver can also be a sender of costs). The formal check function enables you to test an individual cycle prior to an update run. You can use the error log to correct faulty segements and iterative relationships (Customizing). For example, the system checks that the total of percentage rates adds up to 100%, and whether the fixed value rules are the same for both senders and receivers. Parallel processing of cycles saves a lot of time. To process cycles of one allocation type in parallel, you must assign them to different cycle run groups. You define the cycle run groups in the cycle header data. When you execute a cycle, you can start a consistency check. The system checks whether you are allowed to execute the selected cycles in parallel. If you activated the runtime log, you can display this after processing by choosing Technical statistics

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AC412

3-16

Plan Template Allocation


Statistical Key Figures Primary Costs

Cost Center

Activity Type

Functions
Template Cost Center

1 i= m m 27

Cost Center

Activity Type

Activity Type

Sender activity and receiver input are planned automatically! Additional SAP Data
SAP AG 1999

External Systems

Template allocation is used to calculate the quantities that are consumed from each individual receiver cost center. The costs are calculated by valuating the quantities with prices. To calculate the required data, the template uses R/3 standard or user-defined functions. The templates make it possible to reference specific field contents and to apply complex algorithms using operative data from the R/3 System. To describe the allocation quantity in the plan, assumptions are usually made that estimate expected quantities based on this data. Template allocation can be made to a cost center independent of the activity and/or depending on the activity. A requirement for template allocation to a cost center is that a template must be assigned to the cost center. You make this assignment by entering a template in the master data of the cost center. You can base the allocation on periods or fiscal years. In addition to cost centers and cost center/activity types, the receiver objects for template allocations can be profitability segments, cost objects, and business processes.

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AC412

3-17

Template Definition
Template

m 1 i= m 27

Template
Object Activation Condition Plan: Plan: Variable Quantity Factor Fixed Qty Function Function

Type

CCtr/AT 1000/1410

Which cost center/ activity type?

Under what conditions?

Variable allocation quantity factor?

Fixed allocation quantity?

Plan Template Allocation:


When condition met, plan quantities are calculated based on template
SAP AG 1999

A template is a dynamic tool that uses functions and formulas to calculate values, and that determines the result of Boolean expressions (true or false). It consists of a table (row/column) structure. In the object column, you can enter an object yourself (such as cost center 1000 and activity type 1410) or you can have the system determine this information automatically during evaluation (for example, the cost center of a specific cost center category). You can use it to set the value of an item to active or inactive, to define conditions that are checked during the evaluation or to set requirements for allocations. In activity-independent template allocation, the variable quantity factor determines the planned sender output quantity by multiplying the output quantity of the receiver object with the variable factor. You can enter a constant value for the factor, or allow the system to calculate it automatically during the time of evaluation. The fixed planned quantities represent fixed consumption quantities that you enter as constant values or have the system calculate automatically during evaluation.

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AC412

3-18

Advanced Planning Techniques: Plan Closing

At the conclusion of this unit, you will be able to: Reconcile the internal network of activities manually or automatically Assign the fixed costs of cost centers to activity types using plan cost splitting Configure, execute, and analyze plan price calculation Configure and use the cost component split

SAP AG 1999

(C) SAP AG

AC412

3-19

Information System: Reconciliation Reports

Planning
Fixed costs 1,000 Var. prim.costs 400 Planned acty: 40 h Sched. acty. 50 h

Bottleneck!

Overcapacity!

Maintenance

kWh

Var. input Var. prim.costs Planned acty Sched. acty.

50 h 500 30 kWh 20 kWh

No MRP in PP!

Energy
Var. input Var. prim.costs Planned acty Sched. acty. 20 kWh 200 80 Mh 0 Mh

Reconciliation Reports: Plan Schedule? Manual Plan Adjustment?

MAH

Production

SAP AG 2001

Each cost center plans its own activity output and the required activity input. This can result in differences between the plan data of the sender and receiver cost centers. For this reason you should execute plan reconciliation. The differences can result from overcapacities (planned activities exceed scheduled activities) or undercapacities (planned activities are less than scheduled activities). To control the activity relationships across the entire enterprise, the R/3 System offers two standard reports: Activity types: Reconciliation: Shows the planned and scheduled activities for each cost center. Variances are shown as percentages and as absolute values. The column for capacity allows you to determine how much you can manually increase the planned activity of a cost center. Activity types: Receiver Plan: Shows which receiver cost centers have scheduled activities and how much higher or lower they are than the planned activity. If needed, you can also adjust the planning manually to fit the activity relationship using the information in the report.

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AC412

3-20

Automatic Plan Reconciliation

Planning
h
Fixed costs 1,000 Var. prim.costs 400 Planned acty: 40 h Sched. acty. 50 h

Plan reconciliation
Fixed costs 1,000 Var. prim.costs 420 Planned acty: 42 h Sched. acty. 42 h

+5%

Maintenance

kWh

Var. input 50 h Var. prim.costs 500 Planned acty 30 kWh Sched. acty. 20 kWh

Var. input 42 h Var. prim.costs 420 Planned acty 25 kWh Sched. acty. 25 kWh

-16%

Energy
Var. input 20 kWh Var. prim.costs 200 Planned acty 80 MaH Sched. acty. 0 MaH Var. input Var. prim.costs Planned acty Sched. acty. 25 kWh 250 100 MaH 100 MaH

+25%

MAH

Production

PP
SAP AG 1999

Transfer of the scheduled activity:


100 MaH

Automatic plan reconciliation is used to check and reconcile the internal activity flow. If Production Planning is active, you can transfer the planned activity for the production orders to the production cost centers. This approach normally results in differences between the activity quantity planned by the sender cost centers, and the activity scheduled by the receiver cost centers or production orders. You can use plan reconciliation to automatically adjust all of the plan activity quantities from the sender to the scheduled quantities of the receiver. In the next step, the plan reconciliation adjusts the variable portion of activity-dependent primary costs and variable portion of activity-dependent activity inputs according the new plan activity. The plan reconciliation does not change activity-independent primary costs, activity-independent activity inputs, the fixed portions of activity-dependent activity inputs, or primary costs. The plan reconciliation is executed iteratively. This means that recursive activity relationships between cost centers are taken into account. Recursive activity relationships occur, for example, when a cost center plans to consume activity from a cost center, to which it also provides activity. Posting a plan reconciliation leads to an automatic adjustment of your planned activities and variable planned costs in the enterprise. If the indicator for plan quantity is set in an activity type, the planned activity quantity is not changed by the plan reconciliation, even if planning for the object is not intended to be reconciled.
(C) SAP AG AC412 3-21

Plan Cost Splitting

?
540,000 fixed
Machine Hours
Plan activity qty 10,000 h

Activity-independent costs

Production
Setup Hours
Plan activity qty 800 h

300,000 fixed 360,000 var.

OK

120,000 fixed 60,000 var.

Activity-dependent costs
SAP AG 1999

If you want to allocate all plan costs to the activities, the planned costs not directly assigned (activityindependent planned costs) must be assigned to activity types. Here the question arises as to how the fixed costs of the cost center can be allocated to the activity types on a cause-effect basis. Plan cost splitting assigns the activity-independent planned costs of a cost center to the individual activity types. The activity-independent costs need to be split up among the activity types before the price of the activity units can be calculated. The R/3 price calculation function automatically calculates the plan prices. The activity-independent costs become fixed costs of the price. Although the plan price calculation function splits the plan costs automatically, you can also split the costs manually. This provides you with an overview of the costs debited to the activity types. The plan costs can be split using two different methods.

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AC412

3-22

Plan Cost Splitting: Methods

Fair distribution of fixed costs?


MAH

Equivalence numbers: 540,000 fixed


- ... in planning/activity output: E.g. Machine hours "1" > 270,000/ MAH Setup hours "1" > 270,000/ SETH

Execute Splitting SETH

Activity-Independent Costs

OR

Production

Splitting structure:
- Create in Customizing - Assign cost elements - Assign distribution rule. For example, the methods:
- Activity quantity / receiver - Capacity - Statistical key figure - Output - No splitting

MAH Execute Splitting SETH

SAP AG 2001

- Assign cost center to splitting structure

The simplest method of plan cost splitting is to use an equivalence number (default value = 1) in manual planning for each activity type. All planned activity-independent cost elements are split in accordance with the equivalence number. If you want to assign different cost element groups to the activities (on the basis of the plan quantity or the activity types, for example), you can define a splitting structure. The splitting structure and the splitting rules establish a number of criteria that are used to assign activity-independent costs to activity types. A splitting structure contains one or more assignments in which you specify splitting rules for the corresponding cost element(s) or cost element groups. You can restrict the selection of cost elements or cost element groups, as well the activity types over which the costs are split. Splitting methods are then assigned to the splitting rules. These methods specify how the costs are split. The methods provided in the standard R/3 System can be used to split the planned costs as described above. In addition, you can use weighting indicators to control whether the tracing factors are weighted when the costs are split. You should set the indicator if the individual values of the tracing factor use different units of measure. If the Conversion indicator is active, these values are multiplied by the equivalence numbers of the activity types. This makes the different units of measure of the tracing factor values comparable.
(C) SAP AG AC412 3-23

Plan Cost Splitting: Result


All costs are assigned to the activity types:
- Costs / activity - Requirement for price calculation

540,000 fixed

Activity-Independent Costs

Splitting
by activity

Costs per activity type:


Acty.-dependent: Acty.-independent: 660,000 491,000

Machine Hours

Plan activity qty 12,000 h

1,150,000
180,000 49,000

Production
Setup h Hours Plan activity qty Acty.-independent: 1,200 h

Acty.-dependent:

229,000

300,000 fixed 360,000 var.


Activity-dependent costs
SAP AG 1999

120,000 fixed 60,000 var.

If a splitting structure is created in Customizing and assigned to the cost center, the system uses that splitting structure to apportion the costs. Otherwise, it uses the equivalence number. The advantage of the splitting structure is that the tracing factors can be determined automatically using the splitting rules and limited to cost elements or activity types, whereas changed equivalence numbers must be maintained manually. Once plan cost splitting has been executed, all costs (those that were to be assigned to activity types) are assigned to activity types. This fulfills the requirements for price calculation and for complete target cost calculation.

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AC412

3-24

Plan Price Calculation


Activity Output:
Planned Price Indicator: 1: Plan costs / Plan acty or 2: Plan costs/ Capacity or 3: Manual price

Service: Prim.costs: 2,200 Sec.costs: - Energy/ kWh x - Prod./ Mh x


100 SerH

SerH
k 00 20 Wh

S 20

erH

50 SerH

10 MaH

Energy: Prim.costs: 7,000 kWh Sec.costs: - Service / SerH x


500 0 kW h

MaH
200 MaH Production: Prim.costs: 10,000 Sec.costs: 50 RueH - Energy/ kWh x - SerH / MaH x RueH

SAP AG 2001

Planned prices can be calculated for every activity type of a cost center. Based on the plan activity flows between cost centers, the R/3 System calculates the activity price in an iterative process by dividing the plan costs by the plan activity. As an alternative, you can also calculate the fixed portion of the price from the relationship between the plan costs and the capacity. This is useful when you don't want idle-capacity costs for the maximum activity quantity to influence product costing. For example, a cost center that supplies energy must be capable of supplying the maximum level of activity at any time -- even when the maximum level is not actually required. In this case, the fixed costs of supplying the activity should remain on the supplying cost center, since the full amount cannot be assigned directly to the product costs. In the plan version, you can set up the determination method for the plan activity price calculation. You can choose between average activity price and periodic activity price. If you have manually set prices in addition to iterative prices, you can set the indicator purely iterative in the version. This ensures that the prices calculated from your planning (a mixture of iterative and manual prices) are calculated using purely iterative methods. This means that an additional purely iterative price is calculated for all activity types on all cost centers. The manual prices are ignored. This enables you to see the overall effects of your manually planned prices on the activity prices.

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AC412

3-25

Cost Component Split


Cost Components
Production: Wages 10,000 Material 10,000 Depr. 10,000 Accrual 10,000 Sec.cost 25,000 65,000

MaH

Cost Components
Personnel Material Assets Accruals 17,000 20,000 15,000 13,000 65,000 (26%) (31%) (23%) (20%)

Energy: Wages: 7,000 Material:10,000 Material:10,000 Depr.: 5,000 Accruals:3,000 Accruals:3,000 25,000

25

,0

00

h kW

1 EUR/ kWh

COCOPC
Cost Components

Personnel 7,000 (28%) Material 10,000 (40%) Assets 5,000 (25%) Accruals 3,000 (12%) 25,000

COCOPA

SAP AG 1999

Price calculations with a cost component split (breakdown of costs into cost components) enhance the transparency of the prices calculated iteratively by the R/3 System. For example, you can see how much of the price is material costs and how much is wages. When plan activities are allocated, the cost components of the sender are visible on the receiver. Before you can see the cost components of the prices, you must first do the following: Create a cost component structure: In the version, you specify the cost component structure you want to use for price calculation. If no cost component structure is specified in the version, the prices will not be broken down into cost components. Assign cost components to cost component structure: A cost component contains all the costs of the range of cost elements assigned to it. You assign cost components to the cost component structure based on your organizational requirements. You can use the detailed price information (cost components) in Product Cost Planning (CO-PC). The cost elements in Cost Center Accounting are assigned to the cost components in Product Cost Planning by means of a cost component structure in Product Cost Planning. Transferring the cost information in cost estimates from Product Cost Planning to Profitability Analysis (CO-PA) enables the cost components in those cost estimates to be analyzed in CO-PA as well.

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AC412

3-26

Cost Component Split: Optional Switching Structure


Cost Components

Production: ... ... ... Energy 25,000

MaH

xxxxxxxxxxx xxxxxxxxxxxx xxx

Energy 25,000
h kW

Energy: Wages: 7,000 Material:10,000 Material:10,000 Depr.: 5,000 Accruals:3,000 Accruals:3,000 25,000

25

,0

00

1 EUR/ kWh

COCOPC
Cost Components:
Energy 25,000 / 100%

COCOPA
SAP AG 1999

You have the option of deactivating the cost component split for particular cost centers/activity types. If you want to use a different component split for the sender than for the receivers, create a switching structure for your cost component structure. The switching structure determines which sender cost components go into which receiver cost components. You assign a switching structure to the combination of cost center/activity type in activity type planning. Example: The Energy cost center allocates activity to multiple production cost centers. All costs from the Energy cost center (labor and materials) flow into the receiver cost component Energy. The switching structure Energy is assigned to the cost component structure IE. The switching structure contains the following information: When activities are allocated, labor costs assigned to cost component 2 (Personnel) flow to target cost component 4 (Energy). Materials assigned to sender cost component 1 (Raw materials) also flow to cost component 4 (Energy). The target cost component Energy contains costs from the cost components Personnel and Raw materials.

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AC412

3-27

Typical Sequence for Planning


Plan statistical key figures Plan activity output Plan cost elements (activity-dependent / -independent) Plan activity input (activity-dependent / -independent) Copy planning Plan indirect activity allocation Plan template allocation Plan reconciliation (Plan cost splitting) Plan price calculation Lock planning
SAP AG 2001

Cost center planning is different in almost every organization. The type of industry, organization structures, and management areas are all factors that affect planning. When defining the sequence of planning activities, SAP recommends certain rules. A sample scenario might include the following points: You can use statistical key figures to calculate cost center characteristics, and to support cycle allocations and the splitting as tracing factors. You begin with activity planning and tracing factor planning, because both plan activity quantities and plan capacity influence the total volume of costs. At the completion of activity planning, you know the required volume of activity quantities and can plan primary costs, which can be either activity independent or dependent. The next step in the planning scenario is secondary cost planning. You plan secondary costs manually (activity inputs), or automatically (using plan assessment or indirect activity allocation). At the end of the planning process, you can use plan reconciliation to check and reconcile internal activity exchanges. Activity price calculation is the final stage in planning. The planning process is not a one-off event, rather an iterative process which goes through several cycles. Therefore you can save plan data in different versions.

(C) SAP AG

AC412

3-28

Advanced Planning Techniques: Unit Summary

You are now able to: Explain the difference between various planning scenarios and analyze their results Use the different methods of manual and automatic cost and activity planning Perform the final plan activities such as plan reconciliation, plan cost splitting, and plan price calculation

SAP AG 1999

(C) SAP AG

AC412

3-29

Exercises
Unit: Advanced Planning Methods Topic: Manual Planning

At the conclusion of these exercises, you will be able to: Plan activity output Plan cost elements or activity input Distinguish between activity-dependent and activity-independent (input) planning Use the different methods of manual cost planning and activity planning for different purposes. You want to plan costs for your enterprise manually. Therefore you manually plan for both production cost centers (chip and PC) and for the three service cost centers (quality assurance, repairs and energy) - the output first, and then the input. You want activity-based planning, so you assign the activity types to your cost centers, which you use later to monitor cost effectiveness. Then you plan the primary costs of the cost centers. These can be fixed costs of the cost center, or, fixed or variable costs that differ from the plan activity of your activity types. Likewise, for the input of internal activities, such as internal energy supply, you manually plan the planned input quantity on the receivers.

You need to follow the instructions for this exercise on manual planning as exactly as possible. To ensure clarity, the following units provide results that should match yours if the all steps have been carried out correctly.

Planning preparation: In the following, ensure that you plan for all periods (1-12) of the current fiscal year. 1-1 Choose the SAPALL planner profile and save it in your user master.

Because you want to use activity type category 1 for all cost centers, you plan all cost center activity types manually.
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Plan the activity output for the current fiscal year by going to the single values (using the formbase) from the initial screen of your cost center group H_TECH## and your activity type group AT##. Scroll through the cost centers. Why does the system not display all the possible activity types of group AT## for your five cost centers?.

Remain on the planning screen.

2-1 Your energy cost center (ENER##) plans to supply 1,500,000 kWh. The capacity is 3,000,000 kWh. The annual activity is to be evenly distributed among the periods (distribution key=DK 1). The price is to later be automatically calculated, based on the capacity (plan price indicator=PI 2). The capacity reflects the maximum possible activity quantity, which is set higher than the plan. Leave any other rows empty and remain on the planning screen. 2-2 Your quality checks (QUAL##) plan 1,500 inspection hours (with a capacity of 1,800 hours). Later, the price is to be automatically calculated, based on plan activity (PI 1). The activity is to be evenly distributed among the periods (DK 1). Leave any other rows empty and remain on the planning screen. 2-3 Your repair cost center (REP##) plans 1,200 repair hours (with a capacity of 1,500 hours). The price is to be automatically calculated based on planned activities (PI 1). The activity is to be evenly distributed among the periods (DK 1). Leave any other rows empty and remain on the planning screen. 2-4 Your production cost center PC (PC##) plans 12,000 machine hours and 1,200 setup hours. Later, both prices are to be automatically calculated based on planned activities (each PI 1). The activities are to be evenly distributed among the periods. Capacity is not planned. Leave any other rows empty and remain on the planning screen. 2-5 Your production cost center Chip (CHIP##) is also to provide machine hours (MAH##). Later, the price is to be automatically calculated, based on plan activity (PI 1). Go from the MAH## row to the period screen since you want to plan different activity quantities for each period. The planned activity from January to May and then from October to December is to be 350 h per month, and in the remaining four summer months only 200 h per month. Leave capacity empty. The total planned activity for the year is 3,600 h (overview screen). Although the cost center output fluctuates periodically, you want to work with constant yearly prices (average prices). Set the corresponding indicator.
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Set-up hours are not planned here. Therefore, leave row SETH## empty. Check all your values again, and post your total plan value. 2-6 Compare all allocation control indicators for the planned activities for your cost centers (H_TECH##) and activity types (AT##) with the solution. The control indicators layout in activity planning shows you the indicators that are set in the planning, and that are important for later activities (for example, allowed allocation methods and actual price indicators). This time, choose free entry. Check your entries carefully, by scrolling through the cost centers (make any necessary changes).

Pl

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Cost Element Planning

3-1 Plan the salary costs and the room rental for your cost center group (H_TECH##) as fixed costs (that is, activity-independent). Page to layout 1-101 for this. To start with, choose the complete current fiscal year (form-based entry) and your cost center group H_TECH## and the cost element group FIX412. Leave field activity types/groups empty.

Cost El em en t

Fixe DK

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430000 Sa lar ies

60,0

470000 Ro o m co sts Q 430000 Sa lar ies

18,0

120,

470000 Ro o m co sts R 430000 Sa lar ies 470000 Ro o m co sts P 430000 Sa lar ies 470000 Ro o m
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108,

12,0

480,

60,0

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co sts C 430000 Sa lar ies 470000 Ro o m co sts All fixed planned costs should be distributed over the periods evenly (distribution key 1). Check the data again and save your entries. 3-2 Now plan the primary costs for your cost center, which you can uniquely assign (activity-dependent) to specific activity types. These can contain fixed and variable portions. Where appropriate, plan for the entire current fiscal year. Remain in the same layout 1-101. In contrast to activity-independent planning, you fill in the "Activity type" field in the initial screen. 3-2-1 Plan the activity-dependent costs for your quality cost center as follows: In the initial screen, choose (form-based) cost center QUAL##, activity type QUAH## and the cost element interval 415000 to 420000. The distribution key for each is 1. 36,0 120,

Cost Element

Fixe

Plan

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415000 Extern al activiti es

90,00

420000 Wages

60,0

30,00

Save your entries. 3-2-2 Plan the activity-dependent costs for your repair cost center as follows: In the initial screen, choose (form-based) cost center REP##, activity type REPH##, and cost element 415100. The distribution key is 1. For the purchases of planned external activities (415100), which you plan for 1,200 h for 100,- UNI per hour, enter for the variable cost of 120,000 the corresponding variable consumption of 1,200 h. Do not forget the unit h, and the quantity indicators.

V Unit

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Save your entries. 3-2-3 Plan the corresponding activity-dependent costs for the energy cost center (ENER##) as follows. The distribution key for each is 1.

Fixe

Variable P l a n n e d C o st s

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18,000

24,0

180,000

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Save your entries. 3-2-4 Plan the corresponding activity dependent costs for the PC production (PC##), activity dependent (activity type group AT##) in cost element interval 420000 489000 (distribution key for each 1).

Cost Center Activity P

Cost Element 4

Fixed Planned Costs 240,

DK Variable Planned Costs 300,000

DK

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60,0

60,000

120,

60,000

Save your entries. 3-2-5 Plan the activity independent costs for the chip production (CHIP## with distribution key 1).

Fix

Variable Pl an ne d C os
3-40

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240

150,000

12,

120,000

Save your entries.

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3-3 Now manually plan the secondary costs / activity inputs of both production cost centers. To do this, scroll to layout 1-102 Activity Inputs. As before, plan using the distribution key 1 for the entire year. 3-3-1 Production PC## requires (activity-dependent) activity inputs from cost center group H_SERV## (repairs, quantity assurance and energy) for its activity MAH##. For the sender activity types, enter activity type group AT##. Choose form-based entry and distribution key 1 for each one. C Fi Va

1,2

1,2

1,2

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Save your entries. 3-3-2 Chip production CHIP## also requires (activity-dependent) secondary costs of cost center group H_SERV## with sender activity type group AT## for its activity MAH##. Choose form-based entry and distribution key 1 for each one.

Fi

Va

30

60

Save your entries.


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Check your planned costs by going to the information system in the plan/actual comparison for your cost center group H_TECH## and the entire current year. Go to the variation in each cost center and note the planned debit and the planned activity for each.

Planned Debi t

Activi

Planned Activity

ENH#

REPH

QUA

MAH

SETH

MAH

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Compare these with the solutions.

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Exercises
Unit: Advanced Planning Methods Topic: Plan Closing

At the conclusion of these exercises, you will be able to: Explain and distinguish between the various concepts of automatic activity allocation in planning. Automatically or manually reconcile the internal network of activities. Assign the fixed costs of cost centers to activity types using plan cost splitting. Configure and use the plan price calculation. Configure and use cost component splitting in Overhead Controlling. After manual planning is complete, discuss the various concepts of automatic activity allocation in planning. However, you have decided to use these methods (such as indirect activity allocation or template allocation) only in the actual data because this will save you the most amount of effort. To complete plan closing, you initially reconcile the plan to check for bottlenecks and overcapacity in the enterprise. Afterwards, you want to assign the (activity-independent) fixed planned costs to your activity types. You decide on a splitting structure that distributes all (activity-independent) planned costs according to the activity quantities. You have now fulfilled the prerequisites for calculating the prices in your enterprise. You want to determine the components of your prices using the cost component split. These prices can be forwarded to other modules (CO-PC and CO-PA). 5 Optional text task: You saw the manual planning of activity input in the last exercise. Which methods are available to you for the automatic allocation of activities in the planning?

To repeat these functions, complete the following table and compare it with the solutions. For each, you need to know the following: - Which object in this plan allocation can be the sender (for example, cost center or order)?
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- Which allocation tool can be used for this plan allocation (for example, overhead structure)? - Which tracing factors can be used to distribute the sender quantities?

Method Assessment Indirect activity allocation (posted qty) Indirect activity allocation (inverse) Template allocation

Sender Cost Center

Alloc. Tool Cycle

Tracing Factor Receiver rule in cycle

Plan reconciliation

6-1 Check report Activity Types: Reconciliation for the planned and scheduled activities for the current fiscal year in your sender cost center (cost center group H_SERV##).

Cost Center/Activity Type ENER## / ENH## QUAL## / QUAH## REP## / REPH##

Scheduled Activity

Plan Activity

Variances (Scheduled<> Plan)

Capacity

How do you check your activity network and how can you reconcile it?

6-2 Understanding the concepts: What would be the consequences for a price calculation if the planning were not reconciled and had the following combination:
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Scheduled Activity > Plan Activity? Think about this situation carefully (you will find notes in the settings for price calculation) or compare your answer with the solutions.

6-3 Go to the Planning Overview report for your cost center QUAL## (since this does not have a reconciled plan), and check the total costs and the activity quantities planned there.

Cost Center Ind. Costs Fixed QUAL## Variable

Dep. Costs /QUAH##) Fixed Variable

Plan Activity (total)

6-4 Execute the plan reconciliation for your cost center group H_TECH## only for the current fiscal year, in the Test run and without business processes. For which cost center does the system recommend a plan adjustment, and how much? Cost center: _____________ Changes: ___________

Accept the automatic plan adjustment by posting the results of the plan reconciliation for your cost centers only. 6-5 In the planning overview compare the costs on your cost center QUAL## with the results of exercise 2-3. Which costs have changed due to the plan reconciliation?

Cost Center Ind. Costs Fixed QUAL## Variable

Dep. Costs /QUAH##) Fixed Variable

Plan Activity (total)

Tasks 7 and 8 do not need to be done if you do the optional exercises.


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Plan cost splitting Due to the lock logic, the instructor has now assigned your cost center PC## to splitting structure AC. This allows the system to split the activity-independent costs of this cost center between activity types MAH## and SETH##, using the planned activity quantity.

The planned price calculation is also now posted by the instructor.

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Optional Exercises
Unit: Advanced Planning Methods Topic: Plan Closing and Differentiated Planning Analysis

These exercises are not part of the standard course. They also include differentiated allocations and analyses to increase your understanding of planning. For illustration purposes, several results are given in the solutions, which you should get if you carry out all the above tasks correctly. Even if some of your results are different, you will be able to learn a great deal from the exercises.

After your instructor has assigned your cost center PC## to splitting structure AC, you prepare the splitting of your activity-independent plan costs between the activity types: 9-1 Examine the splitting structure AC. Which cost elements are part of the splitting? Cost elements: Remain in the splitting structure.

9-2

Which method is used for the splitting? Method:

9-3

Split the plan costs only for your cost center PC## as a test run. What ratio is used to split the activity-independent plan costs of cost center PC## between the MAH## and SETH## activities? Compare the proportions with the specified plan activity.

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Plan Activity MAH## SETH##

Cost

Plan Activity 12,000 h 1,200 h

When the proportions of the split costs reflect those of your plan activities, post the split in an UPDATE RUN. 10 Plan price calculation 10-1 View the settings for the price calculation in customizing. Which method is used for the price calculation in the plan for version 0? Method: ____________________

Remain in the settings for the version.

10-2

Think back to the exercises for manual planning. Which one of your cost centers/activity types ignores the Periodic Price method? (Review the Activity output/prices planning for your cost center group H_TECH## and all activity types [*]. ) Cost Center/Activity Type: ________________ ____________ Method:

10-3

To which cost component structure for cost component splits is the price calculation in version 0 assigned? Cost component structure:__________________

10-4

Examine the corresponding cost component structure. Which cost element intervals are assigned to the External activities component in the chart of accounts INT? Component Cost elements: 1.) 2.)

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11

Plan price calculation 11-1 Calculate the plan price in a test run for the current fiscal year and your cost center group H_TECH## - without business processes. In the following table, enter the calculated price and base (capacity or activity). Choose price unit 1 and the display variant total/variable for the illustration. Enter the price in period 1 in the following table.

Cost Center

Activity Type MAH## ENH## MAH## SETH## QUAH## REPH##

Overall Price

Variable Price

Base (from plan price indicator)

CHIP ENER## PC## QUAL## REP##

Now post the result and remain in the results screen for the price calculation.

11-2

Go to the period view of your price MAH## for cost center CHIP##. What do you notice? Remain in the results screen for price calculation.

11-3

Go to the cost component split for cost center PC## and activity type MAH##. What costs occur in each period that contains component 60 external activities, and cost elements 451000 419000 and 451000 459000 Costs in component 60 (per period): _______________________

11-4

Open an new session and go to the Plan/Actual Variance report for period 1 and cost center PC## only in the information system. What costs are planned for intervals 415000 419000 and 451000 459000 for period 1? Compare this with the costs in component 60 for activity type MAH## (PC##) in period 1. Why is this different?

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11-5

Examine the balance of each of your cost centers in the plan in the Plan/Actual Comparison report for group H_TECH##. Call up the report for version 0 and the entire current fiscal year.

Cost Center CHIP## ENER## PC## QUAL## REP##

Plan Balance (periods 1-12)

Comments on the Balance

Not all cost centers in the plan have been completely credited. Consider the possible causes and check them using the solutions. 11-6 Analyze the price report for your cost center group H_TECH## with activity type group AT## for all periods of the fiscal year. Set the indicator display all prices and display in price unit 1. What additional information is provided if the indicator purely iterative is set in the version? In particular, examine the MAH## price for the CHIP## cost center in the period view as compared to both available price indicators (PI 1 <> PI 4).

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Solutions
Unit: Advanced Planning Methods Topic: Manual Planning

You need to follow the instructions for this exercise on manual planning as exactly as possible. To ensure clarity, the following units provide results that should match yours if the all steps have been carried out correctly.

1-1

Planning preparation

CCA: Planning > Set planner profile: SAPALL Save in the user master record Enter 2 Activity output Not every activity type is allowed for all cost center types. You limited each activity type in the master data to certain cost center types. This is why a production cost center (for example, PC##) can only provide activity types MAH## and SETH##, but not REPH## (repair hours). CCA: Planning > Activity output / prices Plan version: Time period: Cost center group: Activity type group: Entry: Overview Remain on the planning screen. 0 1-12 current year H_TECH## AT## Form-based

2-1

Activity output energy cost center (ENER##)

Scroll to cost center ENER##:


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In row ENH## Plan activity: 1,500,000 kWh Distribution key (DK): 1 kWh DK: 1 Plan Plan price indicator (PPI):2 Capacity: 3,000,000

Leave any other rows empty and remain on the planning screen.

2-2

Activity output quality check (QUAL##)

Scroll to cost center QUAL##: in row QUAH## Plan activity: 1,500 h DK 1 Capacity: 1,800 h DK 1 PPI: 1

Leave any other rows empty and remain on the planning screen.

2-3

Activity output repair cost center (REP##)

Scroll to cost center REP##: In row REPH## Plan activity: 1,200 h DK: 1 Capacity: 1,500 h DK: 1 PPI: 1

Leave any other rows empty and remain on the planning screen.

2-4

Activity output production cost center PC (PC##)

Scroll to cost center PC##: in row MAH# Plan activity: 12,000 h DK: 1 PPI: 1 DK: 1 PPI: 1 in row SETH## Plan activity: 1,200 h

Leave any other rows empty and remain on the planning screen.
2-5 Activity output production cost center chip (CHIP##)

Scroll to cost center CHIP##: Select row MAH## Go to the period screen. In the period screen enter the following planned activities:
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Jan May and Oct Dec.: Jun Sep: 200 h each

350 h each

Go to the overview screen again: Planned activity = 3,600 h DK: 0 (=manual) was automatically set. Set the indicator for average prices in the row for MAH##. Price indicator: 1 Set-up hours are not planned here. Therefore, leave row SETH## empty. Check all your values again, and post your planning.

2-6

Allocation-related control indicators for the planned activities

CCA: Planning > Activity output / prices Scroll to the layout: Version: Time period: Cost center group: Activity type group: Free entry Overview screen: Compare these with the solutions. 1-204 control indicators 0 Total for current fiscal year H_TECH## AT##

Check your entries carefully, by scrolling through the cost centers (make any necessary changes).

Cost Center ENER## QUAL## REP## PC## PC## CHIP##


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Activity Type ENH## QUAH## REPH## MAH## SETH## MAH##

Price ind. (PI - Plan) 2 1 1 1 1 1

Price ind. AllocCost (PI - Actl) Elem. 6 5 5 5 5 5 639200 632000 615000 620000 613000 620000

Cat(plan) 1 1 1 1 1

Cat (Act) 5 3

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* Any additional rows that are displayed, and have cost elements and activity type categories that are ready for input are not planned.

3
3-1

Cost element planning


Cost Center Group (H_TECH##)

CCA: Planning > Cost elements/activity inputs Version 0 Time period: Cost center group: Activity Types/Groups Cost Element Group: Entry: 1-12 current year H_TECH## FIX412 Form-based

Page to the corresponding cost centers and make the following entries:

Cost Center ENER## QUAL## REP## PC## CHIP##

Cost Element 430000 Salaries 470000 Room costs 430000 Salaries 470000 Room costs 430000 Salaries 470000 Room costs 430000 Salaries 470000 Room costs 430000 Salaries 470000 Room costs

Fixed Planned DK Costs 60,000 1 18,000 1 120,000 1 24,000 1 108,000 1 12,000 1 480,000 1 60,000 1 120,000 1 36,000 1

Check the data again and save your entries.

3-2

Activity-dependent planning

3-2-1 Activity-dependent costs of the quality cost center (QUAL##) CCA: Planning > Cost elements/activity inputs
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Layout: Plan version Time period: Cost center: Activity Type: Cost elements: Entry: Overview

1-101 0 1-12 current year QUAL## QUAH## 415000 to 420000 Form-based

Cost Center QUAL##

Acty QUAH## QUAH##

Cost Element 415000 External activities 420000 Wages

Fixed Planned Variable Costs Planned Costs 60,000 90,000 30,000

All planned distribution keys should be set to 1. Save your entries. 3-2-2 Activity dependent costs of the repair cost center REP## CCA: Planning > Cost elements/activity inputs Layout: Version: Time period: Cost center: Activity Type: Cost element Entry: Overview 1-101 0 1-12 current year REP## REPH## 415100 Form-based

CCtr

Acty

Cost Element 415100 External activity

Fixed Planned Costs -

Variable Planned Costs 120,000

Fixed Cons. -

Variable Unit M Cons. 1,200 h X

REP##

REPH##

Do not forget the unit h and the quantity indicator that calls up a warning message during FI postings for account assignments of quantities. Save your entries.
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3-2-3 Activity-dependent costs from the energy cost center (ENER##) CCA: Planning > Cost elements/activity inputs Version: Time period: Cost center: Activity Type: Entry: Overview 0 1-12 current year ENER## ENH## Form-based

Cost elements: 404000 to 416200

Cost Center ENER##

Activity ENH## ENH##

Cost Elem 404000 Spares 416100 Energy (base/fix. charge) 416200 Energy (use/var. charge)

Fixed Planned Costs -

DK Variable Planned Costs

DK

18,000 1 24,000 1 -

ENH##

180,000 1

Save your entries. 3-2-4 Activity dependent costs for PC production (PC##) CCA: Planning > Cost elements/activity inputs Version: Time period: Cost center: 0 1-12 current year PC##

Activity Type: MAH## to SETH## Cost elements: 420000 to 489000 Entry: Overview Form-based

Cost Center Activity

Cost Element

Fixed Planned Costs


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Variable Planned Costs

DK

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PC##

MAH## MAH##

420000 Wages 489000 Accrued costs 420000 Wages

240,000 60,000

1 1

300,000 60,000

1 1

SETH##

120,000

60,000

Save your entries. 3-2-5 Activity dependent costs for chip production (CHIP##) CCA: Planning > Cost elements/activity inputs Plan version: Time period: Cost center: Activity Type: Entry: Overview 0 1-12 current year CHIP## MAH## Form-based

Cost elements: 420000 to 489000

Cost Center Acty CHIP## MAH## MAH##

Cost Element 420000 Wages 489000 Accrued costs

Fixed Planned DK Variable Planned Costs Costs 240,000 12,000 1 1 150,000 120,000

DK 1 1

Save your entries.

3-3

Activity input for both production cost centers

CCA: Planning > Cost elements/activity inputs Scroll to the layout: 1-102, activity inputs Plan version 0 Time period: 1-12 current year 3-3-1 Activity input for production PC##
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Cost center: Activity Type: SE Cost center group: SE- Activity type group: Entry: Overview

PC## MAH## H_SERV## AT## Form-based

Cost Center Activity PC## PC## PC##

SE-CCtr

SE-AT ENH## QUAH## REPH##

Fixed Variable Unit Consumption Consumption 1,200,000 kWh 1,200 H 1,200 H

MAH## ENER## MAH## QUAL## MAH## REP##

Ensure that all distribution keys are set to 1, and save your entries. 3-3-2 Activity input for chip production (CHIP##) Cost center: Activity Type: SE Cost center group: SE- Activity type group: Entry: Overview CHIP## MAH## H_SERV## AT## Form-based

Cost Center Activity CHIP##

SE-CCtr

SE-AT ENH## QUAH## REPH##

Fixed Variable Consumption Consumption -

Unit

MAH## ENER## MAH## QUAL## MAH## REP##

300,000 kWh 600 H

Ensure that all distribution keys are set to 1, and save your entries. 4 Plan/actual Comparison for your cost center group H_TECH##: CCA: Infosystem > Reports for cost center accounting > Plan/Actual Comparison: Cost Centers: Fiscal year: Periods: Plan version:
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Cost center group:

H_TECH##

Go to Variation in the single value

Cost Center ENER## REP## QUAL## PC##

Planned Debit 300,000 240,000 324,000 1,380,000

Activity Types ENH## REPH## QUAH## MAH## SETH##

Planned Activity 1,500,000 kWh 1,200 h 1,500 h 12,000 h 1,200 h 3,600 h

CHIP##

678,000

MAH##

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Solutions
Unit: Advanced Planning Methods Topic: Plan Closing

5 Optional text task Comparison of methods for automatic allocation of activities in the plan.

Method Assessment

Sender Cost center/Business Process

Alloc. Tool Cycle

Tracing Factor Receiver rule in cycle Receiver rule in cycle Receiver rule in cycle Variable functions and tracing factors in the template

Indirect acty. alloc. (posted qty.) Indirect acty. alloc. (inverse) Template allocation

Cost Cycle Center/Activity Type, category 3 Cost Cycle Center/Activity Type, category 2 Cost center or Template business process

Plan reconciliation For the purpose of illustration, results are provided in the solutions, which you should also get if you do all the above tasks correctly. Even if some of your results are different, you will be able to learn a great deal from the exercises. 6-1 The Activity Types report: Reconciliation QUAL## CCA: Information System > Reports for Cost Center Accounting > Planning Reports > Activity types: Plan reconciliation Time period: Cost center group: 1-12 current year H_SERV##
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Cost Scheduled Center/Activity Activity Type ENER## / ENH## QUAL## / QUAH## REP## / REPH##

Plan Activity

Variances (Scheduled<> Plan) 20 % -

Capacity

1,500,000 kWh 1,500,000 kWh 1,800 h 1,200 h 1,500 h 1,200 h

3,000,000 kWh 1,800 h 1,500 h

On the Quality Assurance cost center, you have a bottleneck because 20% more activity is be required than the cost center has planned as activity output. You can now reconcile the plan manually (decentralized plan change by the cost center manager) or use automatic plan reconciliation. 6-2 Understanding the concepts: Scheduled Activity > Plan Activity? The plan price calculation would trigger an error message because the plan prices would not exactly reflect all planned costs (it is possible to determine the tolerance in the settings for price calculations). Example: Sender cost center: 10,000 planned costs at 100 h plan activity = 100 / h. If 120 h (receiver cost center) have been scheduled, 12,000 in planned costs are sent to the receiver via the price calculation, although only 10,000 in planned costs exist. 6-3 Planning overview of cost center QUAL## CCA: Information System > Reports for Cost Center Accounting > Planning reports > Planning overview: Time period: Cost center: Execute 1-12 current year QUAL##

Cost Center

Ind. Costs

Dependent Costs (QUAH##)


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Fixed QUAL## 144,000

Variable (independent are always fixed)

Fixed 60,000

Variable 120,000

(total) 1,500 h

6-4

Plan reconciliation: only for cost center group H_TECH## CCA: Planning > Planning aids > Plan reconciliation: Cost center group: No business process Periods 1 12 in current year TEST RUN Cost Center QUAL## New plan activity 1,800 h (+ 300 h or 20%) H_TECH##

Accept the automatic plan adjustment by posting the results of the plan reconciliation for your cost center group.

6-5

Planning overview of cost center QUAL## (according to plan reconciliation) CCA: Information System > Reports for Cost Center Accounting > Planning reports > Planning overview: Time period: Cost center: Execute 1-12 current year QUAL##

Cost Center

Ind. Costs

Dependent Costs (QUAH##) Variable (independent are always fixed) Fixed 60,000 Variable 144,000 (+ 20 %)

Plan Activity

Fixed QUAL## 144,000

(total) 1,800 h (+20 %)

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The plan activity and the variable costs were each increased by 20% (activitydependent variable costs from 120,000 to 144,000). Variable activity input (or quantity consumption) would likewise have been increased by 20% , but does not exist here. Exercises 7 and 8 do not apply if you do the optional exercises. 7 Plan cost splitting Due to the lock logic, the instructor now assigns your cost center PC## to splitting structure AC. This allows the system to split the activity-independent costs using the planned activity quantity (MAH## and SETH##). 8 The planned price calculation is also now posted by the instructor.

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Solutions: Optional Exercises


Unit: Advanced Planning Methods Topic: Plan Closing and Differentiated Planning Analysis

These exercises are not part of the standard course. They contain additional differentiated allocations and detailed questions to increase your general understanding of planning. For illustration purposes, several results are given in the solutions, which you should get if you carry out all the above tasks correctly. Even if some of your results are different, you will be able to learn a great deal from the exercises. 9 9-1 Plan cost splitting Cost elements in the splitting structure AC IMG: Controlling > Cost Center Accounting > Actual Postings > Period-End Closing > Activity Allocation > Splitting > Define Splitting Structure > Maintain Splitting Structure Splitting structure AC > Assignments > Selections for The Assignment Cost elements: 400000 699999

Remain in the splitting structure.

9-2

Splitting method structure AC IMG: Controlling > Cost Center Accounting > Actual Postings > Period-End Closing > Activity Allocation > Splitting > Define Splitting Structure > Maintain Splitting Structure Splitting structure AC > Assignment 10: Rule AC Splitting rule AC. Method 12 = Activity quantity

9-3
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Plan cost splitting for cost center PC##


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CCA: Planning > Allocations > Splitting Cost center: PC## Version: TEST RUN 0 Time period: 1-12 current year

Plan Activity MAH## SETH##

Cost ~ 490,000 ~ 49,000

Plan Activity 10,000 h 1,000 h

The same proportions as the plan activity. Splitting in an update run. 10 Plan price calculation 10-1 Methods for price calculation in the plan in version 0 IMG: Controlling > General Controlling > Organization > Maintain versions Version: Settings per fiscal year Current year 0 (select) (level 5) Double click

Methods for price calculation in the plan: Periodic price Remain in the settings for the version.

10-2

Cost center that does not calculate your price as a periodic price: Cost center CHIP## with price MAH## calculates the price as an average yearly price. The average price indicator is set during planning. Reason: The cost center has fluctuating periodic activities (low production in the summer). However, the prices should be held constant for the entire year.

10-3

Cost component structure for cost component split IMG: Controlling > General Controlling > Organization > Maintain versions Version: Settings per fiscal year 0 (select) (level 5)
AC412 3-68

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Current year

Double-click

Cost component structure IE provides the components of the price calculation.

10-4

Component external activity IMG: Controlling > Cost Center Accounting > Planning > Allocations > Activity Allocations > Price Calculation > Settings for Cost Component Split > Define Cost Component Structure: IE: Select Assignment: cost component - cost element interval Chart of Accounts: INT

Component 060 external acty.

Cost elements:

1.) 415000 419000 2.) 451000 459000

11

Plan price calculation 11-1 Price calculation for cost center group H_TECH## CCA: Planning > Allocations > Price calculation: Cost center group: No business processes All periods in the current fiscal year UPDATE RUN Execute H_TECH##

Edit > Display > Price > Price unit 1 Edit > Display > Total/variable values

Cost Center CHIP## ENER## PC##


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Activity Type MAH## ENH## MAH##

Overall Price 234.00 0.17 152.00


AC412

Variable Price 99.00 0.13 61.00

Base (from PI) Plan activity Capacity Plan activity


3-69

SETH## QUAL## REP## QUAH## REPH##

191.00 193.00 200.00

50.00 80.00 100.00

Plan activity Plan activity Plan activity

(Given prices are rounded) Remain in the results screen. 11-2 Period view of price MAH## of cost center CHIP##. In price results select CHIP## with MAH## Go to: Periods The price remains constant, although different activity quantities occur in each period (=average price). Remain in the results screen for price calculation. 11-3 Cost center PC## and activity type MAH##: Cost component split. In the price result Select row PC## / MAH## Go to: Components Cost component 60 external activities contains about 28,800 costs in each period, most of which is variable.

11-4

Plan/actual variance for period 1 and cost center PC## System Create session: CCA: Infosystem > Reports for cost center accounting > Actual/Plan Comparison: Actual/Plan Variance Cost center: Period: Execute No cost elements from interval 415000 419000 and 451000 459000 are planned for cost center PC##. Reason: The cost component split takes into consideration not only the primary cost elements of a cost center, but also the corresponding original cost elements for each iterative price that is allocated (secondary costs) to the cost center in the plan. Although cost center PC## did not consume any external activities, your activity type Machine Hours (MAH##) contains externally activity costs. These external activity PC## 1

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costs for one machine hour originate, in this case, from service cost centers repairs, quality assurance and energy. 11-5 Plan balance of each cost center CCA: Infosystem > Reports for Cost Center Accounting > Actual/Plan Comparison: Actual/plan variance Cost center group: Execute Go to the individual cost centers via the variation H_TECH## All periods in the fiscal year

Cost Center CHIP## ENER## PC## QUAL## REP##

Plan Balance (periods 112) 0 51,000 0 0 0

Short Explanation (but periodic balance > average price) (price based on capacity)

Cost center ENER## has not been credited of all plan costs. As a result of the price calculation (based on capacity), all fixed costs of the cost center are distributed via capacity, not via the planned credit (=Schedule). The remaining costs stay there and must be posted to PA (preparation costs at a higher level). Calculation of the balance: 102,000 fixed costs / 3,000,000 kWh capacity * 1,500,000 kWh plan activity. You can view the corresponding distribution of fixed costs in the planning overview report. The CHIP## cost center (average price MAH## for fluctuating periodic activity) also has a balance in each period. However, this balance levels out during the year (see Plan/Actual Comparison for one period only). All other cost centers, which calculated your planned prices based on the plan activity, and do not have an average price, have a periodic plan balance as well as a total plan balance of zero. 11-6 Price report for cost center group H_TECH##: Purely-iterative indicator CCA: Information System > Reports for Cost Center Accounting > Prices > Cost Centers: ActivityPrices: Cost center group:
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H_TECH##
AC412 3-71

Period: Execute

Display all selected prices

Select rows CHIP## / MAH## / PI 1 Go to the period view: Result: All allocated prices are equally high per period Select rows CHIP## / MAH## / PI 4 (purely-iterative) Go to the period view: Result: The system displays various prices (purely-iterative) in the periods Price indicator 4 (purely-iterative) shows you an additional comparison value, for example, when you use manual prices or average prices. This value shows you how high a comparable price would be, that has been periodically iterated. For example, select row CHIP##, MAH## (average price) using price indicator 4 (purely-iterative), and go to the period view. There you can see what the periodically exact price for each period would be, although a yearly average price is used here for the allocation. This purely-iterative price is calculated using period costs / period activities, while the average price uses yearly costs / yearly activities.

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Actual Cost Allocation

Contents:
Transaction-Based Activity Allocations Periodic Activity Allocations

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4-1

Actual Cost Allocation: Unit Objectives

At the conclusion of this unit, you will be able to: Explain the concept of actual cost and activity allocation Perform transaction-based activity allocations Explain and implement the techniques of periodic activity allocation

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Allocating Actual Costs

Activity Allocation: Concept and Master Data

Advanced Planning Techniques

Actual Cost Allocation

Period-End Closing: Allocations and Analysis


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4-3

Actual Cost Allocation: Business Scenario

Activities are allocated in the actuals after planning is completed.

You post activity allocations and execute initial transaction-based checks by means of reports.

At the end of the period, the activities that were not allocated manually can be allocated automatically using period-based techniques.

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Actual Costs: Transaction-Based Activity Allocation

At the conclusion of this topic, you will be able to: Explain the concept of actual cost and activity allocation Execute, cancel, and repost transaction-based activity allocations Describe and implement the concept of "Entering Sender Activities"

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4-5

The Concept of Actual Account Assignment

FI

HR
Actual Costs

Cost Center
Activity Type

Actual Activity

CO

MM

Plan

pric e

SAP AG 2001

When actual costs are entered, primary costs are transferred from the previous component to cost accounting. In the Controlling component (CO), the actual costs are transferred in real time from the components Financial Accounting (FI), Asset Accounting (FI-AA), Materials Management (MM), Production Planning (PP), and Personnel Administration (PA-PA). The costs recorded in these components were assigned to an object of cost accounting (such as a cost center or internal order). In Controlling, all manual actual postings are structured according to the same principle. You can enter data either with individual entry (for complex allocations) or list entry for cases where large quantities of data are involved. In contrast to planning (activity dependent), account assignments are not made directly to the activity type. Instead, the assignments are made only to the responsible CO object. This minimizes the effort involved in data entry. Activity allocation assigns only quantities to accounts. These quantities are valuated using an existing plan price. This enables real-time information to be provided on debits and credits for the receiver and sender.

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Direct Activity Allocation


10 h

Production

Programming PrgH Cat. 1

3h
Customer Service

5h
Enter activity allocations
Entry var: to CCtr/Order Sender CCtr. Program Program Program Se-Acty. PrgH PrgH PrgH
List Entry

QuantityRec. CCtr Rec. Order 10 3 5


Production Cust. Serv. Project 1

Orders, Projects

SAP AG 1999

Direct activity allocation means that the internal activities provided are measured, entered, and allocated. To execute direct activity allocation, create an activity type with activity type category 1. Note that before you can execute direct activity allocation, you must define which cost centers are providing which activity types. The activity types must, therefore, be planned on the sender cost center in the R/3 System. To enter a direct activity allocation, enter the cost center providing the activity (sender), the cost center receiving the activity (receiver), the type of activity, and the quantity of the activity provided. Note that only one cost center can be the sender of a direct activity allocation. The receiver can be any true controlling object (such as a cost center, an order, or a project). Direct activity allocation credits the sender cost center and debits the receiver cost centers. The debits and credits are made using a secondary cost element (category 43). The debits and credits equal the activity quantity provided, multiplied by the activity price where appropriate. The cost element used during the direct allocation of internal activity is defaulted by the master data for the activity type. However, you can change this in the cost center/activity type plan. The cost element cannot be changed in the allocation transaction. Direct activity allocation is transaction-based and documented by sender and receiver line items.

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Manual Actual Price

Planning unchanged

ic n pr Pla

e
2001

January

FI

HR

Actual Activity

Actual Costs
CO MM

Cost Activity Center Type

2001

July

Actual Activity

Manu
Forward scheduled price changes
SAP AG 2001

al A ctua l Pr ice

You can manually enter actual prices during activity allocations without having to wait until revaluation. It is still possible to calculate actual prices. You can manually enter an actual price for an activity type of a cost center independent of actual price calculation. Particularly in later periods, the planning data is often obsolete. However, there is more specific information available on changing prices to cover cost differences. With this manual or planning price, you can cover cost differences without changing the planning data. This price is used to valuate activity relationships between cost centers. Depending on the price indicator, the price can be set manually or overwritten retroactively by the actual price calculation. The standard planner profile SAPALL contains the planning layout 1-N01 for manual entry of an actual price for activity types of cost centers. The layout also shows you the posted data that exists for the plan price. You can set the fixed or variable portion of the actual price for an activity type per cost center. Furthermore, you can specify the actual price unit and actual price indicator.

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Entering Sender Activities

Cost Center

G
Cost Center

- Activity Type Cat. 3: Entry for Indirect Activity Allocation - Activity Type Cat. 4:
Operating Rate and Target Cost Calculation

All Cats

O A

- Activity Type Cats. 2, 5: Compare measured

with allocated quantity Variance Analysis

Enter sender activities: e.g. 4,960 kWh

L S

Cost Center

SAP AG 2001

This function enables you to enter measured activity quantities for a cost center and compare them with the allocated activity quantity. For example, if you allocated activities using indirectly-determined activity quantities (compare target=actual activity allocation or indirect activity allocation), variances can occur in the actual quantities determined. If you use a measured quantity, the system is able to determine a more precise operating rate. This provides more detailed information on target costs and the causes of variances. If the allocated quantity differs from the measured quantity, output quantity variances occur during variance calculation. If you set the corresponding indicator for the cost center's activity type in the activity master data, you can post these activity quantities for all activity type categories. You can overwrite this default during activity planning for cost centers. Activity Type Category 4: You can also use this function to enter an activity quantity produced by your cost center that is not allocated to other Controlling objects. You enter this quantity for the purposes of cost center control. This allows the System to calculate the operating rate (actual activity divided by plan activity) for your cost center and, consequently, the target costs and variances. This is what distinguishes activity type category 4 from a statistical key figure. Activity type category 4 is normally used by administration and sales cost centers to allocate costs to Profitability Analysis (CO-PA) using the assessment method.

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Periodic Activity Allocation: Unit Objectives

At the conclusion of this topic, you will be able to: Describe and use the techniques for periodic activity allocation: Target = actual accrual cost calculations Indirect activity allocation Actual template allocation Target = actual activity allocation

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4-10

Calculation of Accrued Costs

FI
Expense = Costs COCOCEL

FI

COCOCEL

Accrued costs: - Valuation diff. - Additional costs

Method:
COCOOM
SAP AG 1999

COCOOM

- Accrual in FI - Percentage method - Target=actual method for accrual calculation

Expenses are often allocated differently in Financial Accounting (FI) than in Controlling (CO). For example, these may be expenses that are only assigned to single periods in FI, but in CO need to be distributed evenly throughout the periods (valuation differences, such as annual oil costs). These could also be costs that are incurred for CO, but are not entered in FI (additional costs, such as accrued rent). The distribution and posting of these accrued costs is called accrual calculation. You can calculate accruals in two ways: You can post accrued costs by recurring entry in Financial Accounting and thus pass them on to Controlling. You can calculate accrued costs in cost accounting using the costs posted there. You can use the following approaches: Accrual calculation using the percentage method (overhead percentage rate) Accrual calculation using the target=actual method (postings based on the amount of planned accrued costs in actual data, either dependent or independent on activity)

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Target=Actual Accrual Methods


Plan activity: 1,000 h Production
Actual: 11 000

1.

Cost element category 4

MaH Actual activity: 1,200 h

4. 2.
Plan Costs Activity Dependent:
489 000 Accrued Costs: 5 000 fix 5 000 var.

3.
IMG: T=A Accrual:
Assign credit object to cost element 489 000 Order

Execute accrual

5.

5 000 fix + 5 000 var * 120% = 11 000

Order
Actual: -11 000
SAP AG 2001

The target=actual method is used for the accrual calculation of activity-dependent costs. This method is particularly useful where you can plan accrual on a period basis and where the costs are activity-dependent. You plan activity-dependent primary costs using an accrual cost element (cost element category 4) for the following: Cost centers for which you want to calculate accrual The time period in which you want to execute accrual calculations When calculating accrual in actual, the System determines the target costs of the relevant cost center based on an activity type, and inserts the target values in the actual value fields. In target=actual accrual calculation, you determine which credit object (cost center or order) is credited for each target=actual cost element. Before you define a target=actual accrual calculation, you must: Create target=actual cost elements (category 4). Run activity type planning for the cost centers and activity types. Plan activity-dependent primary costs under a target=actual cost element. The activity-dependent plan costs are used in target cost calculations to determine the accrual amounts for the target=actual method. The target costs of a cost center or activity type are determined using the following calculation: Fixed plan costs plus variable plan costs, multiplied by the operating rate of the activity type of the cost center.

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Indirect Activity Allocation in Actual Data (Category 3)


Enter sender activity Cost Center

1.

3.
Cycle definition:

Cost Center

Cat. 3

Receiver input is automatically posted

Distribution of the sender activities: - Posted quantities - Fixed quantities based on tracing factors per receiver - Percentages - Fixed quantities - Actual statistical key figures 2. - Actual costs - Actual activity - ...

4. Cycle Flow:
- Allocation of actual activity per cycle rules
SAP AG 2001

3.
Cost Center

Indirect activity allocation automatically assigns activities in the actual data. Unlike the direct, manual allocation of activity, you need to define keys to be used for the automatic periodic allocation of actual activities. In the same way as all other periodic allocation methods, indirect activity allocation uses segments and cycles to define sender and receiver relationships. You define the processing methods for each segment. Different methods can occur together in one cycle. The costs are allocated using a secondary cost element from category 43. The cost element assignment is defaulted from the master data of the activity type for the cost center/activity type plan, and can be changed. Cost centers function as senders in indirect activity allocation. The receivers of an indirect activity allocation can be cost centers, WBS elements, internal orders, cost objects, or business processes. Depending on the activity type category, you can use one of two allocation methods: If you can calculate the total activity for the sender, use indirect activity allocation to distribute the posted activity quantities from the senders to the receivers, using specific keys. If activities are to be posted to a sender object, use activity type category 3 (manual entry, indirect allocation). The corresponding segment must use the "Posted quantities" sender rule. All receiver rules are valid here except "fixed quantities".

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Indirect Activity Allocation in Actual Data (Category Two)


Cost Center

2.
Cycle definition:
Derivation of sender activities from: of tracing factors
- Inversely calculated - Sender values: x per tracing factor

Sender activity and receiver input are Cost Center Cat. 2 automatically posted

1.

Distribution of the receiver quantities based on tracing factors


- Percentages - Fixed quantities - Statistical key figures - Costs - Activities - ...

3. Cycle Flow:
- Allocation of actual activities to sender and receiver
SAP AG 2001

2.
Cost Center
Plan any tracing factors

If you cannot calculate the actual activity quantity for certain activity types, or if this is too time-consuming, the R/3 System determines the activity using the following methods : The sender activity quantity is derived from the receiver tracing factors (with global or a weighted factor that is defined per sender) or from the corresponding entries in the segment definition (as a fixed sender or receiver quantity). This second form of indirect activity allocation uses activity type category 2 (indirect entry, indirect allocation). The affected segment must either use the sender rule "Inversely Calculated Quantity" along with any receiver rule, or the identical sender and receiver rules "Fixed Quantities". If you use sender rule for inversely calculating the quantity, the sender-specific weighting factors mentioned above are calculated with the sender values function (Default Value = 1). When the cycle is run, the system first calculates the allocation bases of the receivers, to determine how the activities of the sender should be distributed. The sum of the tracing factors multiplied with the "sender values" is the total activity of the sender. This quantity is then credited to the sender and debited to the receivers accordingly.

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4-14

Actual Template Allocation


Statistical Key Figures Primary Costs

Cost Center

Activity

Functions
Template Cost Center

1 i= m m 27

Cost Center

Activity

Activity

Additional SAP Data


SAP AG 1999

External Systems

Template allocation is used to calculate the quantities consumed by the receiver cost centers. The costs are calculated by valuating the quantities with prices. To calculate the required data, the template uses R/3 standard or user-defined functions. These functions make it possible to reference specific field contents or apply complex algorithms to operative data from the R/3 system. Template allocation can be made to a cost center independent of the activity and/or depending on the activity. A requirement for template allocation to a cost center is that a template must be assigned to the cost center. You make this assignment by entering a template in the master data of the cost center. The allocation is based on periods and fiscal years. In addition to cost centers and cost center/activity types, the receiver objects for template allocations can be profitability segments, cost objects, and business processes.

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Template Definition
Template

m 1 i= m 27

Template
Object Activation Condition Actual: Variable Actual: Quantity Factor Fixed Qty Function Function

Type

CCtr/AT 1000/1410

Which cost center/ activity type?

Under what conditions?


1 im =
m 27

Variable allocation quantity factor

Fixed allocation quantity

Actual Template Allocation:


When condition met, quantities are calculated based on template
SAP AG 1999

A template is a dynamic tool that uses functions and formulas to calculate values and that determines the result of Boolean expressions (true or false). It consists of a table (row/column) structure. You can enter an object yourself (such as cost center 1000 and activity type 1410) in the object column, or you can have the system determine this for you during evaluation (for example, the cost center of a specific cost center category). You can use it to set the value of an item to active or inactive, to define conditions that are checked during the evaluation or to set requirements for allocations. In activity-independent template allocation, the variable quantity factor determines the planned sender output quantity by multiplying the output quantity of the receiver object with the variable factor. You can enter a constant value for the factor, or allow the system to calculate it automatically at the time of evaluation. The planned fixed quantities represent fixed consumption quantities that you enter as constant values or have the system calculate automatically at the time of evaluation.

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Target=Actual Activity Allocation (Cat. 5)


Sender activity and receiver input are posted automatically 1.
Plan acty qty Production 1 MaH Actual activity

4.
i ac t put y in vit

2.

Energy

Cat. 5
(Actual)

Plan activity act ivit y in pu t

Actual acty/ Plan activity qty = Operating rate

3.
Target=Actual Activity Allocation:
actual activities of the sender based on the operating rate of the receiver
SAP AG 2001

Plan activity Production 2 MaH Actual activity

The target=actual activity allocation is a particular type of indirect activity allocation for actual quantities. In contrast to the other forms of indirect activity allocation, it uses iterative (step-by-step) calculations based on the activity network and the operating rate as a tracing factor. The procedure for target=actual activity allocation is as follows: - Plan your activity relationships as usual. The sender cost centers plan their activity output and use activity type category 1,2, or 3 in the planned data. Category 1 is normally used. - The receivers plan their activity input of the activities produced by the cost centers. This gives you your planned activity network. The target=actual method requires a completely reconciled plan at period level. - After posting the actual activities to the receivers, the system can determine an operating rate. Using this rate and the (fixed/variable) plan activity output, the system calculates the target activity output for the receiving cost centers. This results in the target activity of the sender cost centers. - The variable portion of the plan activity quantity is adjusted by the target=actual activity allocation for the receiver cost centers/activity types, and is updated as the variable actual activity quantity. The fixed part is transferred from the plan to actual in the target=actual activity calculation. This actual allocation requires the use of the actual activity type category 5 (target=actual allocation). The target=actual allocation is iterative, which means that recursive activity relationships are taken into account.
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Target=Actual Activity Allocation: Example


1.
Production PC Plan: 1,000 h
MaH

Actual: 1,200 h

3.

20 % 00 te: 1 ,0 g ra y = 120 in erat ctiv it Op al a ble ria Actu va h kWh KW 00 ,0 100

4.
120%

Energy

kWh Cat. 5
(Actual)

Plan: 125,000 kWh


25 ,00 0

kW Ope hv rati ari Act ng ab rate ual le acti v ity = 92 % = 23 3. ,000 kW h

92%

2.
Production Chip Plan: 350 h
MaH

Actual: 320 h

3.
Target=Actual Activity Allocation
SAP AG 2001

As a rule, target=actual activity allocation is primarily used if the service cost center's activity is directly dependent on the operating levels of the primary cost centers. In the example on the slide, the target=actual activity allocation of a energy cost center is described: 1. First, all cost centers plan their activity output. 2. When planning activity input, the two production cost centers determine how many kWh they want to consume. 3. After the actual activities have been posted to the receivers (machine hours), an operating rate can be derived for each production cost center (in this case: 92% and 120%). 4. During target=actual activity allocation, the fixed planned input quantities are posted in the actual data. The variable input quantities are multiplied by the operating rate and corresponding actual postings are made. Result: The energy cost center produces an actual quantity of 125,000 kWh (plan 100,000 kWh), of which the receivers consume an actual quantity of 120,000 kwh (plan 100 kWh) and 23,000 kWh (plan 50 kWh) respectively.

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Actual Cost Allocation: Summary

You are now able to: Describe the concept of actual activity allocation Perform transaction-based activity allocations Explain and use the techniques of periodic activity allocation

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4-19

Exercises
Unit: Actual Cost Allocation

At the conclusion of these exercises, you will be able to: Execute transaction-based postings and activity allocations Use the target=actual procedure for accrued cost calculations Describe the concept of entering sender activities Configure and use automatic periodic procedures for activity allocations, such as indirect activity allocation or target=actual activity allocation After closing the planning, post various costs in the current period to your cost centers. Additionally, allocate your activity types from category 1 to the receiver (based on transactions). Post the accrued costs from both production cost centers using the target=actual procedure using the operating rate of the receiver cost center. You want to make certain postings and allocations at period-end closing that were not possible to do manually because they could not be measured or because the effort to measure them would have been too great (activity type categories 2, 3 and 5). Post the sender activities of the quantity assurance cost center (category 3), and allocate them according to statistical key figure produced units to the production cost centers. Allocate and post the activities of the energy cost center (category 5) using the operating rate of the receiver. This ensures that the activity fluctuations of the production cost centers affect the consumption of energy activities.

1 1-1

Transaction-Based Postings Preparation: Change your user settings so that the analysis period for planning and the reporting period are set to the current period. G/L account posting:

1-2

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Enter the following actual postings for your cost centers in the current period. Make the posting using the current date and choose the entry variant with cost center. Choose the V0 (no control) control indicator and enter the following items. To simplify the process, you can select the Template AC412a and replace the cost center number with your number. Check your entries before making the posting.

G/

Debi

Amou

Cost

40

3,00

ENE

41

2,00

ENE

41

15,0

ENE

43
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AC412

5,00

ENE
4-21

47

1,50

ENE

41

6,00

QUA

42

8,00

QUA

43

10,0

QUA

47

2,00

QUA

42

60,0

PC#

43

40,0

PC#

47
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AC412

5,00

PC#
4-22

42

32,5

CHI

43

10,0

CHI

47

3,00

CHI

11

203,

1-3

Activity allocations

Allocate the activities of your production cost centers PC## and CHIP## directly to a production order. To simplify the transaction, allocate them all to order AC412. Execute the allocation in the entry variant Order and enter the following in the list entry:

Sender Cente r

Sender Activi ty Type MAH## SETH##

Receiver Orde r

Un

Total quan tity

PC## PC##
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AC412

H H

1.200 100
4-23

CHIP##

MAH##

AC412

320

2 Period-end closing allocations 2-1 Target=Actual Method for Accrual Calculation

The cost centers PC## and CHIP## there is a yearly cost for waste disposal related to production. You have already planned these accrued costs under cost element 489000 (misc. accrued costs). Because these costs occur only once a year, you want to accrue the costs evenly over the months. As these costs fluctuate depending on activity, use the target=actual accrual method 2-1-1 Analyze the cost element 489000. Which cost element category contains the cost element? 2-1-2 Go to the planning overview for your cost center PC##: Which fixed and variable costs are planned under this cost element (489000) for the current period? Name the activity type (activity dependent) for which you are planning.

Fixed P l a n n e d C o s t s

Variable Plan ned Cost s

2-1-3 Check the target=actual accruals in Customizing. Which object serves as the accrual object for the target=actual accrual for cost center PC## (note: the cost center belongs to business area 1000).
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Accrual object:

_______________________

2-1-4 Check the operating rate of cost center PC## for activity type MAH## using the Plan/Actual Variance Report.

Operating rate

(=%Variance + 100) P M %

2-1-5 Execute the accrual for the current period and both of your production cost centers (H_PROD##) in an update run. Which costs are posted in actual to the cost centers under cost element 489000? Describe the results of the actual cost calculation for cost center PC## Cost element 489000 C A Total Va lue Fix. Value

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Calculation for PC## with activity type MAH##: 2-1-6 Check the results of the accrual in the Plan/Actual Variance Report for cost center PC##. Which costs are posted to the cost centers in actual for the current period?

Cost

Actual C o s t s

Plan C o s t s

PC#

2-2

Indirect Activity Allocations

General Description: For the cost center Quality Assurance (QUAL##), you can enter the exact actual activity per period (sender activity), but you can not enter which receiver cost centers consumed these activities (too complex). However, you know from experience that the quality assurance hours depend on the number of produced units. As different units are produced (PCs and Chips), you must determine a weighted average/ratio that reflects the inspection effort.
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2-2-1 Sender activities: Enter the sender activities for cost center QUAL## for today (160 h of activity type QUAH##). Since the activity type category is Actual 3, you can enter this sender activity. The allocation of these posted quantities should automatically occur every period through the use of indirect activity allocation. 2-2-2 Enter the statistical key figure NPROD (produced units) for both production cost centers PC## and CHIP##, under today's date. This statistical key figure serves as the basis for the allocation of quality checks.

Receiver Ce nte r PC## CHIP## 2-2-3 Cycle processing: General Explanation:

Statistical key fig ure NPROD NPROD

Quantity

120 400

You want to allocate the activities of cost center QUAL## to the production cost centers. To do this, you use the quantities already entered, and distribute them to the receiver cost centers (cost center group H_PROD##) using the statistical key figure NPROD. Based on your experience, you know that inspections for PCs take 10 times as much effort as they do for Chips, and therefore you apply a weighted ratio. 2-2-3-1 Create a cycle named ILVQ## beginning at the start of the current fiscal year, that takes the corresponding defaults into consideration. In the first segment (S1) you define the for the segment header, 100% of the actual posted quantities are to be allocated according to the receiver tracing factor Variable portion based on the actual statistical key figure. Enter the cost center QUAL## with the activity type QUAH## as sender and the cost center group H_PROD## as receiver. Define the statistical key figure NPROD as the receiver tracing factor. Using weighting factors, you determine that cost center PC## (for example, 1000) requires ten times as much effort as cost center CHIP## (for example, 100). Assign the cycle to a cycle run group, which you create under a new run group AG## (with Parallel Processing). This ensures that all cycles can run in parallel in the course.
(C) SAP AG AC412 4-27

Check and save the cycle. 2-2-3-2 Run your cycle ILVQ## in the test run for the current period. What quantities are allocated from the sender? How many quality hours are posted to the receiver?

Explain the quantity calculation Repeat the cycle in the update run. 2-2-3-3 Go to the cycle overview and display all cycles for indirect actual activity allocation. Change the overview layout so that the columns Last changed by, Cycle run group and Last executed on are also displayed. From the overview go directly to the cost accounting document that you generated. Document number: _____________________ What amount was credited to Sender QUAL##? QUAL## >
(C) SAP AG AC412 4-28

C H IP ## QUAL## > P C ## 2-3 Target=actual activity allocation for cost center ENER##:

General Explanation: As you cannot exactly measure the activity of the energy cost center, but still want to distribute it fairly to the receiver, you use the target=actual activity allocation. This allows you to determine the activity flow from the sender relative to the operating rate of the receiver cost centers. 2-3-1 Enter cost center ENER## in the planning overview for the current period. What quantity of energy activities ENH## are to be transferred (fixed and variable) to receivers PC## and CHIP##? C A RR Fixed Var. Q u a n t i t y

CHI

kWh

kWh

PC#

kWh

kWh

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AC412

4-29

2-3-2 Use the Actual/Plan Variance report to analyze the current operating rate for the receiver cost centers PC## and CHIP## in the current period.

Pl

Operating rate

(%Varianc e+ 100 ) P M h %

2-3-3 Execute Target=Actual activity allocation in test run for the current period, and your cost center group H_TECH## in version 0 What operating rate did cost center ENER## have in the current period? Operating rate from ENER##. Post the results __________ %

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4-30

2-3-4 Use the Actual/Plan Variance Report to determine which actual costs from cost center ENER## were allocated to the receiver PC##. Go to the line items of cost element 639200 and choose display variant Activity Allocation.

Sender / Ac tivi ty Ty pe ENER## / E N H# #

Receiver/Activ ity Type

Qty

Valu

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AC412

4-31

Solutions
Unit: Actual Cost Allocation

Transaction-Based Postings
1-1 Preparation: User Settings

CCA: Information System > User Settings Planning period: Select the current period and fiscal year. Reporting period: Select the current period and fiscal year. Save and return.
1-2 G/L account posting:

Accounting > Finance > General Ledger > Posting > Post G/L Account Enter Document Date: Choose: todays date Screen variant: "With cost center"

Choose Template AC412b and change the cost center numbers. Before saving, ensure that all values are correct and then choose: Post

De

Amou

Cost

(C) SAP AG

AC412

4-32

3,00

ENE

2,00

ENE

15,0

ENE

5,00

ENE

1,50

ENE

6,00

QUA

(C) SAP AG

AC412

4-33

8,00

QUA

10,0

QUA

2,00

QUA

60,0

PC#

40,0

PC#

5,00

PC#

4
(C) SAP AG

32,5
AC412

CHI
4-34

10,0

CHI

3,00

CHI

203,

Disregard possible warning messages by pressing enter.


1-3 Activity allocations

CCA: Actual posting > Enter activity allocation Choose the screen variant Order Choose the list variant. Enter the given items.

Sender Center

Sender Activity Type MAH## SETH## MAH##

Receiver Order AC412 AC412 AC412


AC412

Unit

Total quantity

PC## PC## CHIP##


(C) SAP AG

H H H

1,200 100 320


4-35

Post the allocations. 2 Period-end closing allocations


2-1 Target=Actual Method for Accrual Calculation

2-1-1 Analyze cost element 489000 CCA: Master Data > Cost Element > Individual Processing > Display Cost element 489000 4: Accrual according to Target=Actual Cost Element Category:

2-1-2 Planning overview of cost center PC## CCA: Information System > Reports for Cost Center Accounting > Planning Reports: Cost Centers: Planning Overview Cost center: Period: Version: Execute Enter the values given in the table PC## current period 0

Fix

Planned v a ri a bl e C o st s

5,0

5,000

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AC412

4-36

2-1-3 Accrual object for Target=Actual accrual IMG: Controlling > Overhead-Controlling > Cost Center Accounting > Actual Posting > Period-End Closing > Accrual > Target=Actual Method > Maintain Target=Actual Credit: Maintain Target=Actual Credit Cost element 489000 Detail Screen Objects in company code 1000 and business area 1000 are defined by Order: 9AEUDE1000 T

2-1-4 Operating rate of cost center PC## CCA: Information System > Reports for cost center accounting > Cost centers. Actual/plan variance Cost center: Period: Version: Execute PC## current period in current year 0

Operating rate

(=Variance + 100) P M 1, 1, 120 %

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AC412

4-37

2-1-5 Execution of the accrual: CCA: Actual postings > Period-end closing > Individual Functions > Accrual Cost center group: Period: Execute Cost element 489000 C A Total Va lue Fixed Val ue Update Run H_PROD## current period in current fiscal year

11,000

5,000

The fixed costs (5,000) are posted in Actual as planned. The variable plan costs for hazardous waste are multiplied with the operating rate and posted in Actual (5,000 * 120% = 6,000). This posting results in the above order being credited. All FI postings regarding hazardous waste will then be posted to this order. 2-1-6 Results of accrual calculation CCA: Information System > Reports for cost center accounting > Actual/PlanVariance Cost center: Period: Version:
(C) SAP AG

PC## current period in current fiscal year 0


AC412 4-38

Execute

Cost

Actual C o s t s

Plan C o s t s

PC#

11,000

10,000

2-2

Indirect Activity Allocations 2-2-1 Sender activities CCA: Actual Postings > Enter Sender Activities Go to the list screen. Sender Center: Activity Type: Activity Quantity: 160 h Save 2-2-2 Enter statistical key figure NPROD CCA: Actual Postings > Statistical Key Figures > Enter Go to the list screen. QUAL## QUAH##

Receiver Ce nte r PC##


(C) SAP AG

Statistical Ke y Fig ure NPROD


AC412

Qty

120
4-39

CHIP## Choose Save. 2-2-3 Cycle processing: 2-2-3-1 Create Cycle

NPROD

400

CCA: Period-End Closing > Individual Functions > Allocations > Indirect Activity Allocation Create additional cycle Cycle: Enter Text: Enter Segment name: S1- Indirect Activity Allocation (IAA) Quality ## Sender values: Rule: Portion: Receiver tracing factor: Rule: Type: Sender/Receiver: Sender - Cost Center: Sender Activity Type: QUAL## QUAH## Variable portions Actual statistical key figures 100% Posted amounts Actual values Allocation Quality ## ILVQ## Start date: 01.01. Current fiscal year

Attach segment

Receiver Cost Center Group: H_PROD## Receiver tracing factor: Variable portion type): Statistical key figure: Actual statistical key figures NPROD

Receiver weighting factors (per 100)


(C) SAP AG AC412 4-40

CHIP##: PC##:

100 1000

(Produced units of PCs require 10x as much effort to inspect as Chips.) Header Screen Check Save Goto > Cycle Run Group: Enter AG## and choose Create Text: Enter with parallel processing Confirm with Enter Save Return Save the entire cycle and exit screen. 2-2-3-2 Execute Cycle CCA: Period-End Closing > Individual Functions > Allocations > Indirect Activity Allocation Periods: Fiscal year: Cycle: Enter Select Test run Execute Results: S er: current to current Current fiscal year ILVQ##

-160 h Q

##:

40 h

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4-41

120 h Repeat the cycle in an update run. Reason: The 160 h from cost center QUAL## (posted actual quantities) are allocated as follows: CHIP## receives 40 h: Calculation basis: 400 allotments (posted statistical key figure NPROD = 400 pieces) * 1 (weighting factor) PC## receives 120 h: Calculation basis: 1,200 allotments (posted statistical key figure NPROD = 120 pieces) * 10 (weighting factor) 2-2-3-3 Cycle Overview CCA: Period-End Closing > Individual Functions > Allocations > Indirect Activity Allocation Additional > Cycle > Display Overview Select "Indirect activity allocation" and "actual", and then choose Execute selection Change the overview layout so that the fields "Previous Processing" and "Cycle run group" are added to the display. Select the cycle and choose "Previous Processing" Enter Document number: ____________________ Double-click on the document: QUAL## > C H I P #
(C) SAP AG

~7

(40 h * 193 Planned Price)

AC412

4-42

# QUAL## > P C # # ~ 23 (120 h * 193 Planned Price)

(C) SAP AG

AC412

4-43

2-3

Target=actual activity allocation for cost center ENER##:

2-3-1 Planning overview for cost center ENER## CCA: Information System > Reports for cost center accounting > Planning reports > Cost Centers: Planning Overview Cost center: Version: Execute ENER## 0 Time period: Current period in current fiscal year

R-

Var.

CHI

PC#

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AC412

4-44

2-3-2 Operating rate for receiver cost centers PC## and CHIP## CCA: Information System > Reports for cost center accounting > Cost Centers >Actual/Plan-Variance Cost center: Period: Execute PC## current period in current year

Pl

Operating Ra te

(Variance + 10 0) P M 1 120 %

35

91 %

(C) SAP AG

AC412

4-45

20

160 % **

** Cost center had planned activities of 200 h in periods 6-9, and 350 h in the remaining periods. 2-3-3 Execute target=actual activity allocation CCA: Period-End Closing > Individual Functions > Allocations > Target=Actual Activity Allocation Cost center group: Version: Time period: TEST RUN Execute H_TECH## 0 Current period in current fiscal year Business processes: None

Operating rate from ENER##. (periods 6-9: 128%) Post the results.

114 %

2-3-4 Results of the target=actual activity allocation CCA: Information System > Reports for cost center accounting > Cost centers. Actual/plan variance Cost center: Period: Version Execute Select the line item for cost element 639200 (allocated actual costs) Double-click
(C) SAP AG AC412 4-46

ENER## current period in current fiscal year 0

Choose the Actual Line Items. In the line item, choose: Display variant Secondary costs: Activity allocation

Sender / Ac tivi ty Ty pe ENER## / E N H# #

Rece

Qt

Value

PC#

- 19,920

Planned Price 0.166 * 120,000 kWh

(C) SAP AG

AC412

4-47

Period-End Closing

Contents:
Plan/Actual Comparison Target Cost Analysis Variance Analysis Actual Price Revaluation Marginal Costs

SAP AG 1999

(C) SAP AG

AC412

5-1

Period-End Closing: Unit Objectives

At the conclusion of this unit, you will be able to: Explain the various methods of managing costs for responsibility areas in R/3 Use the period-end closing scenario that is appropriate for your company Discuss and analyze alternative period-end closing scenarios.

SAP AG 1999

(C) SAP AG

AC412

5-2

Period-End Closing

Activity Allocation: Concept and Master Data

Advanced Planning Techniques

Actual Cost Allocation

Period-End Closing: Allocations and Analysis


SAP AG 2001

(C) SAP AG

AC412

5-3

Period-End Closing: Business Scenario

The plan and actual costs have been entered and allocated, and now you want to utilize various cost control and analysis methods offered by the R/3 System. Because the operating levels in your company may fluctuate, you are mainly interested in a target cost analysis that examines how the actual costs vary with the operating level. You wish to use extended variance analysis to determine the causes of cost variances. Actual prices should be calculated for some activities and, if needed, the activities revaluated for the receivers. You also learn how to allocate marginal costs for mid-term cost controlling.

SAP AG 1999

(C) SAP AG

AC412

5-4

Period-End Closing: Plan/Actual Comparisons: Topic Objectives

At the conclusion of this topic, you will be able to: Analyze and evaluate standard reports such as plan/actual comparisons Explain the limitations of plan/actual comparisons Explain the application goals and possibilities of the enhanced R/3 analysis and allocation tools

SAP AG 1999

(C) SAP AG

AC412

5-5

Cost Center Balance


Cost Elements 415100 External activities 404000 Spares 430000 Salaries * Debit 619000 DIAA Repair * Credit ** Under/Overabsorption Actual Costs Plan Costs 12,100 900 10,000 23,000 -28,000 -28,000 10,000 20,000 -20.000 -20,000 0 3,000 -8,000 -8,000 -5,000 10,000 Var. (absol.) 2,100 900

How high are the cost center results? Under/Over Absorption (Balance Act. Costs)

-5,000

Costs (C)

Allocated Actual Costs Actual Costs


Plan Costs

C (Plan)

Cfix (Plan)

Reasons?
an = Pl ice /h Pr 200
SAP AG 2001 h (Plan)

Activity (h)

As soon as all periodic allocations are executed (accrual allocations, periodic repostings, distributions, assessments, indirect activity allocations, target=actual activity allocations) you can execute closing analyses for your areas of responsibility. The Controlling functions available depend on the functions you have used during the period and the cost accounting system that you implement. The information system plays a crucial role here. Therefore, a review of the simple analytical functionals is advisable at this point , so that you can master the more advanced fucntions covered later in this unit. In the plan/actual comparison (in the Under/Over Absorption Actual Costs column), you can analyze the balance of the cost center: This specifies the debits on the cost center and how much of these debits the cost center has passed on. If the cost center has assessed all its costs, the balance is zero. For cost centers that allocate activity-related costs using plan prices, the balance is usually transferred to Profitability Analysis using assessment. For activity types/cost centers and constant period prices (in this case, 200 UNI/quantity unit), the allocated costs are in line with the target credits as opposed to the actual activity (see above illustration). A negative balance (as shown above) shows that the actual costs incurred were less than the activity costs debited to the receiver (-5,000 UNI).
(C) SAP AG AC412 5-6

Plan/Actual Comparison: Debit Side


Cost Elements 415100 External activities 404000 Spares 430000 Salaries * Debit 619000 DIAA Repair * Credit ** Under/Overabsorption Actual Costs Plan Costs 12,100 900 10,000 23,000 -28,000 -28,000 -5,000 10,000 20,000 -20,000 -20,000 0 10,000 Var. (absol.) 2,100 900

Plan/Actual Comparison (Debit Side)

3,000
-8,000 -8,000 -5,000
Allocated Actual Costs

Costs (C)
C (Actual) C (Plan)

Actual Costs Plan Costs

Cfix (Plan)

e ic Pr an /h Pl 200 =
SAP AG 1999 h (Plan)

Reasons?

Activity (h)

A simple way to judge the efficiency of a cost center in standard costing is to do a plan/actual comparison on the debit side. The actual costs are compared directly with the planned costs in this case. In the above report, the actual costs exceed the planned costs by 3,000 UNI. That is, higher costs were actually incurred than were planned. However, this report does not take into account the output of the cost center, so we cannot realiably judge its efficiency from this data.

(C) SAP AG

AC412

5-7

Plan/Actual Comparison: Credit Side


Cost Elements 415100 External activities 404000 Spares 430000 Salaries * Debit 619000 DIAA Repair * Credit ** Under/Overabsorption Actual Costs Plan Costs 12,100 900 10,000 23,000 -28,000 -28,000 -5,000 10,000 20,000 -20,000 -20,000 0 3,000 -8,000 10,000 Var. (absol.) 2,100 900

Are the allocated costs higher than the planned costs? (credit side)

-8,000
-5,000

Costs (C)
C (alloc.)

Allocated Actual Costs


Actual Costs

C (Plan)

Allocated Plan Costs


Cfix (Plan)
ice Pr an 0/h Pl 0 =2

Reasons?

SAP AG 1999

h (Plan)

Activity (h)

The plan/actual variance on the credit side tells us what costs were allocated as compared with the planned allocation for the cost center. In this example, the variance on the credit side is negative. This means that the receivers of the activities (or costs) of the cost center are burdened with higher debits than planned. The illustration shows a simple case with only one activity type that is allocated with an iterative plan price of 200 UNI.

(C) SAP AG

AC412

5-8

Period-End Closing: Extended Scenario


Target Cost Analysis
Operating rate

Actual Price Calculation

Target/actual comparisons Variances -> result

Cost centers should be completely credited Variances -> activity receiver Actual costing

Variance Analysis
Causes of variances

Marginal Costs

Variance reports Variances -> result

Activity allocation with variable prices Fixed-cost allocation in blocks (predistribution of fixed costs) Variance analysis

SAP AG 1999

Variances -> result

You can use various methods in R/3 for advanced analysis of responsibility areas. The appropriate method depends on the company's goals and its cost controlling approach. Therefore, four period-end closing scenarios are illustrated below, each with its own distinctive information and effect. The scenarios are designed to clearly illustrate the importance, goals, tools, required steps (Customizing) and the ideal procedure relevant in each case. In certain cases these scenarios can be combined with each other. For example, you can combine marginal cost allocation with variance analysis, but not with revaluation at actual prices. You will find more detailed information in the following scenarios.

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AC412

5-9

Target Cost Analysis: Topic Objectives

At the conclusion of this topic, you will be able to: Explain the concept of continuous calculation of target costs Interpret target/actual comparisons of cost centers Use target cost analysis as an instrument for cost and activity controlling in cases of operating fluctuations

SAP AG 1999

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AC412

5-10

Target Cost Analysis: Objective

Target Cost Analysis


Objective: Analyze cost centers with regard to actual operating level
How high is the operating rate of my activities? Target/actual comparisons: How have costs changed relative to the operating rate? How do I interpret the target/actual variance of my cost center?

SAP AG 1999

To enable detailed analyses of the actual costs, the number of activities actually used as compared to those planned in the cost center must be considered. Cost center analysis is based on the target costs. The target costs are determined based on the cost center's plan costs and the activities rendered (operating rate). Target costs are those expected for certain activities. The operating rate indicates the actual capacity utilization of an activity by a cost center, and is given as the ratio (in percent) of the actual activity to the plan activity.

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AC412

5-11

Target Costs: Concepts and Calculations


Cost Elements Actual Costs Target Costs Plan Costs T/A-Var.(abs)

415100 External acty. 404000 Replacement 430000 Salaries * Debit

12,100 900 10,000

14,000

10,000

-1,900 900

Plan costs: Remain constant Actual costs: Increase with resource consumption Target costs (variable): Increase with own activity

10,000

10,000 20,000

23,000

24,000
-28,000 -28,000

-1000

619000 DILV Production -28,000 * Credit -28,000

-20,000 -20,000

** Under/Overabsorption

-5,000

-4,000

-1,000

Activity-Based Calculations of Target Costs/Cost Center


Debit side: Fixed plan costs + Variable plan costs (or qty) * operating rate = Target costs Credit side: = Target credit (actual qty at full cost prices)
SAP AG 1999

The system can continuously calculate the target costs directly. This makes it possible to obtain an actual/target comparison before the end of the period. Target costs deviate from the plan costs only when activity-dependent planning has taken place. Increases in target costs and actual activities of an activity type are correlated for the cost center. Target costs that appear in the standard report Target/Actual Comparison are calculated as follows: Debit side: Activity-independent planned costs: Plan costs = (fixed) target costs Activity-dependent planned costs: Fixed planned costs = fixed target costs Variable planned costs * operating rate = variable target costs (Secondary costs are calculated using fixed or variable quantities) Credit side: Target credit = allocated quantities * iterative plan prices (full cost basis)

(C) SAP AG

AC412

5-12

Target Costs: Areas of Responsibility

Production

Production:
Actual Costs 200,000 Target Costs 185,000 Plan Costs 200,000

Computer Production

Computer Production: Actual Costs Target Costs Plan Costs 120,000 125,000 100,000 --------------------------------------------------------------------MaH Operating rate: 120% SetH Operating rate: 130%

Chip Production

Chip Production: Actual Costs Target Costs Plan Costs 80,000 60,000 100,000 ---------------------------------------------------------------------MaH Operating rate: 60%

SAP AG 1999

Target costs can be used in reporting to represent various areas of responsibility, such as cost centers and cost center groups. The Variation function allows you to go from one area of responsibility to another. You can analyze the actual and target costs for each area. Furthermore, you can see the appropriate activity types for each area, along with the respective operating rates. The above example shows how target costs can provide more detailed information than the plan costs. When the actual costs are higher than the target costs, this can be due to the following reasons: The actual costs are too high The actual activity quantity is too low

(C) SAP AG

AC412

5-13

Target - Actual Comparison


Cost Elements 415100 External activities 404000 Spares 430000 Salaries * Debit Actual Costs Target Costs Plan Costs 12.100,900,10.000,23.000,10.000,24.000,-28.000,-28.000,10.000,20.000,-20.000,-20.000,0,-1.000,14.000,10.000,T/A-Var.(abs) -1.900,900,-

-1.000,-

What costs were incurred? => Target/Actual Variance, Debit Side


t cr rg e Ta ed it

619000 DIAA Production -28.000,* Credit -28.000,** Under/Overabsorption -5.000,-

-4.000,-

Costs (C)

Allocated Actual e Curv Costs Cost t


e Targ

Target Costs
C (Plan)

Actual Costs
Planned Costs

Cfix (Plan)

100/hr le variab

Fixed costs

10,000

What costs were over or under allocated? => Balance Target Costs

SAP AG 2001

100 hrs (plan)

140 hrs (actual)

Activity (h)

The target/actual variances from the target cost analysis are used to check the economic variances of the debit side. Here, the incurred cost center costs are compared with those that should have been incurred. The above report shows that the cost center incurred less costs than it should have at the same level of operation, even though more actual costs are shown than plan costs. The cost center had a favorable (negative) target/actual variance for the debit side (-1,000 UNI). This stems from a higher level of activities than planned. The target/actual comparison report shows the operating rate for each individual activity type of the cost center. Furthermore, the over/under absorption value details what costs were allocated too high, or too low (compared to the target costs). These are variances of the estimated costs (target costs) that are debited too high or too low to the receiver. In the example above, the receiver is allocated with activity costs that are too high (4,000 UNI), which then works out favorably for the sender cost center (negative variance 4,000 UNI). The illustration shows that the balance (under/over absorption of actual costs) is the sum of the target/actual variances for the debit side plus the under/over absorption of the target costs.

(C) SAP AG

AC412

5-14

Target Cost Analysis: Procedure

Target Cost Analysis


Create activity types Activity planning, activity-dependent cost planning and plan price calculation Cost and activity allocation Target/actual comparisons Variances -> result COPA

SAP AG 1999

Normal sequence for target cost analysis: The period-end closing scenario with target cost calculation differs from standard analyses in that the actual activities, and not just the actual costs, are examined to evaluate the cost center's performance. You can obtain meaningful target costs that increase with the actual activity output (and thus favorably affect the cost center) only with activity-dependent planning. The actual costs for activity-independent planning would always equal the plan costs. To fully interpret the results, you should first execute plan reconciliation to calculate the exact prices to be allocated. Aside from that, this analysis is easy to perform and offers current target cost calculations. The balance of the cost centers is normally transferred to profitability analysis, as is the case with plan/actual analyses.

(C) SAP AG

AC412

5-15

Variance Analysis: Topic Objectives

At the conclusion of this topic, you will be able to: Explain actual cost splitting and how to execute it Distinguish between the variance categories of the input side and the output side Explain the causes of the variances Implement variance analysis effectively

SAP AG 1999

(C) SAP AG

AC412

5-16

Variance Analysis: Objective

Variance Analysis
Objective: Accurately determine the causes of the variances
Actual cost splitting: How are the actual costs distributed across the activities? Variance categories: What caused the variances? Variance reports: Who is responsible for the variances?

SAP AG 2001

Variances are caused by differences between actual and target data. If you want to analyze the causes of the cost center variances described in the previous unit in more detail, you can use a tool available in R/3 for automatic variance calculation. This tool is especially useful when the target-actual variances do not, by themselves, reveal the causes of the differences and show who carries the responsibility for them. Automatic variance calculation involves a number of steps. You must differentiate between the system configuration in Customizing, which is a prerequisite for variance calculation, and the additional steps executed during variance calculation itself. The latter include: Target cost calculation Actual cost splitting Once you complete these steps, the R/3 System can calculate the variances. You can also run actual cost splitting independent of variance calculation. However, if you calculate variances, the R/3 System performs these steps automatically.

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AC412

5-17

Actual Cost Splitting

FI

CO

What was the real cost of my activities?

CO

Actual Costs:
(not assigned to activity type) - Primary costs - Secondary costs
Example: Salaries 10,000

Production

MaH

Salaries 10,000

SetH

?
Fixed - variable?
SAP AG 2001

Actual costs in Cost Center Accounting are normally posted only to the cost center, and not to the combination 'cost center/activity type' (see unit on actual allocations). However, to calculate variance or the actual price, you need to distribute the actual costs to the activity types. In the actual data, you need to split these activity-independent costs among the activity types before the variance analysis. The aim of splitting actual costs is to determine the total cost for the activity types. This is required for the variance calculation, which can be calculated for each cost element and activity type/cost center. Actual costs are also split to enable a target/actual comparison when the costs are separated into fixed and variable portions. Actual costs are automatically split into two steps. The system's internal process is described on the following slides.

(C) SAP AG

AC412

5-18

Actual Cost Splitting: First Step


Actual Cost Splitting per Cost Element
Cost Elements 430,000 CCtr.
Cost center Cost center Cost center Cost center Cost center Cost center

Acty. h

Plan Costs 10,000 fxd

Target Costs 10,000 fxd

Actual Costs 10,000 ?

404,000

900 ?

1.
415,100 h

Operating rate
10,000 variable 14,000 variable

2.

3.

12,100 ? 12,100 variable 4.

Prerequisite: Activity-dependent planning of the Splitting according to target costs cost element First Step:
(per cost element or cost element group) SAP AG 2001

Consequences:
Distribution to the activity type(s) according to target costs: Fixed/variable ratio as in plan

First splitting step: In the first step, the cost center's actual costs are divided up among the activity types according to the target costs per activity type. This step takes place for each cost element. Thus: Primary costs are distributed according to target costs. [Ext.] Secondary costs are distributed according to target quantities, if these exist. If not, they are distributed according to the target costs. If target costs do not exist for a cost element, costs are split according to the target costs of the assigned cost element group (in the customizing of the target version). All target costs of cost elements in this group are used for splitting. If no target costs exist for the entire group, the costs are split in the second step. If a cost element has activity-dependent and independent planned costs, they are split and distributed to the activity type/cost center in the same ratio that they were planned. The actual costs that have been split to the cost center remain there for the second splitting step. The actual costs (planned as activity-dependent) are distributed in fixed and variable portions in the same ratio as they were planned.

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AC412

5-19

Actual Cost Splitting: Second Step


Actual Cost Splitting per Cost Element
Cost Elements
430,000

CCtr.
Cost center Cost center Cost center Cost center Cost center Cost center

Acty.
h

Plan Costs
10,000 fxd

Target Costs
10,000 fxd

Actual Costs

1.

10,000 ?

2.

3.

10,000 fixed 4.

404,000

900? 900 fixed

415,100

10,000

14,000

12,100 variable

Second Step:
Splitting based on splitting rules:
- Activity quantity - Statistical key figures - Capacity - Output... or

or:
no existing -independent Prerequisite: planning of the cost element Consequences: existing splitting the actual costs activity among the activity type(s) -independent using splitting rules planning of the cost element (actual fixed costs)

equivalence numbers
SAP AG 2001

A second splitting step is necessary if: No target costs or target quantities exist for the cost element or cost element group. In this case, there is no tracing factor for the split (for example, no planning for the cost element exists). Activity-independent target costs (or quantities) exist. In this case, the portion of actual costs remains on the cost center, corresponding to the portion of activity-independent target costs (target quantities) of the total target costs (target quantities). In the second step, the actual costs that remain in the cost centers are distributed to the activity types, according to splitting rules, which you can set up yourself. If no rules are defined, the cost center costs are divided up among the activity types, using equivalence numbers (similar process to that used for plan cost splitting).

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AC412

5-20

Actual Cost Splitting: Result


Actual Cost Splitting / Cost Element
Cost Elements 430,000
Cost center

CCtr. h

Acty.

Plan Costs 10,000 fxd

Target Costs 10,000 fxd

Actual Costs 10,000 ?

10,000 fixed

404.000

Cost center

900

900 fixed 12,100 var.

415,100

Cost center

10,000 var.

14,000 var.

TOTAL

Cost center

20,000

24,000

23,000 (fixed/var.)

Result:
all actual costs for the cost center are assigned to the activity types... Prerequisites for: 1. Variance calculation/activity type 2. Actual price calculation/activity type

SAP AG 2001

The result of the second splitting step means that All cost elements in actual data are distributed to the activity types (if required). Plan or target costs are comparable to actual costs at the activity level. The requirements for the variance analysis (and the actual price calculation) are filled. Special case: Assigning activity types directly affects the actual cost split as follows. The system requires the correct and complete assignment of the costs to the activity types. Activity types that are directly assigned to an account are not included in the first splitting step. The system merely breaks the costs down into fixed and variable costs. In the second splitting step, the activity-independent costs are distributed to activity types that are directly assigned to an account.

(C) SAP AG

AC412

5-21

Variance Calculation: Categories


= Cost Center Balance

Total Variance

Input Side
Input Price Variance

Output Side
Output Price Variance

Input Quantity Variance

Output Quantity Variance

Resource-Usage Variance

Fixed-Cost Variance

Remaining Input Variance

Remaining Variance

SAP AG 1999

Variance calculation is a tool that helps you analyze problematic variances. It enables you to compare actual costs and the allocated actual costs with the target costs. The following data is reported: Variances on the input side (actual costs minus target costs) Variances on the output side (target costs minus allocated actual costs) The sum of these variances is the total variance and therefore the balance of the cost center. This total arises when the debits to the cost center are not the same as the credits from the activity allocation (actual cost minus allocated actual costs). System requirements for variance calculation Create target cost version Determine the version from which the plan and actual data is read or in which the split actual costs and the variances are posted (in CO-OM only with version 0). As an option, determine the cost element group on which actual cost splitting is based in the first step, and determine the variance variant on which variance calculation is based. Create variance variant and assign it to the target cost version In the variance variant, you specify which variance categories you want the system to calculate. Variances belonging to variance categories that are not activated in the variance variant are reported as remaining variances.

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AC412

5-22

Variance Analysis: Input Side


Cost Elements 415100 External acty. 404000 Replacement 430000 Salaries * Debit Actual Costs Target Costs Plan Costs 12,100 900 10,000 23,000 10,000 24,000 -28,000 -28,000 -4,000 10,000 20,000 -20,000 -20,000 0 -1,000 Allocated Actual Costs 14,000 10,000 T/A-Var.(abs) -1.900 900

-1,000

Prices? Quantities? Structure?


u rv e

619000 DILV Production -28,000 * Credit -28,000 ** Under/Overabsorption -5,000

c ost et c g Tar

Costs
C (Plan)

Target Costs Actual Costs


Plan Costs

100/hr el variab

Fixed costs 10,000

Why have my actual costs changed in relation to the target costs? Variance on the input side
100 hrs (plan) 140 hrs (actual)

SAP AG 1999

Activity (hrs)

Comparison of the target costs with the actual costs of the cost center: Variance categories on the input side The input side includes the sum of all debits and some of the credits of the cost center. Credits such as repostings belong to the input side because they can be interpreted as a reduction in the costs of activity production. Credits due to activity allocations belong to the output side. The variances on the input side are divided into the following variance categories: Price variances Quantity variances Resource-usage variances Remaining input variances In order to calculate price and quantity variances, the system must know both quantities and costs. You will get a warning message while assigning quantities to an account if: 1. The corresponding indicator is selected in the relevant cost element and cost center, or 2. The quantity indicator is selected in cost element planning The variance categories of the input side are then shown with cost elements.

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AC412

5-23

Variances: Input Side


Target Actual Category
Input price variance

Responsibility

external?

Input quantity variance

internal?

Cost elem. 417.000

Resource-usage variance

internal?

Repairs
Remaining input variance

Minor differences, other categories not active

SAP AG 1999

Input price variances result from changes in costs due to price fluctuations. Input price variances represent differences between target costs and actual costs due to discrepancies between the planned and actual prices of materials or services. Input quantity variances result from under- and overconsumption of cost elements. These variances represent differences between target costs and actual costs caused by lower or higher quantities being consumed than were planned. Input price variances include variances caused by both price and quantity differences. Resource-usage variances result from different inputs being used than were planned. A resource-usage variance will occur if you post an unplanned cost element in your actuals, or if no actual data exists for a planned cost element. Remaining input variances are differences between target costs and actual costs that cannot be assigned to any of the above categories. Remaining input variances will occur if you deactivate one of the above variance categories in the variance variant. For many organizations, the remaining input variance category often represents the classical consumption variance (input quantity variance). Cost elements that react quickly to price changes are recorded by quantity, which ensures an exact calculation of input price variances and input quantity variances for these cost elements. For cost elements subject to only minimal price changes, the difference between actual costs and target costs can be traced to increased consumption. This procedure
(C) SAP AG AC412 5-24

reduces the requirements for entering plan and actual data, but lets you display results for individual cost elements.

(C) SAP AG

AC412

5-25

Variance Analysis: Output Side


Cost Elements 415100 External acty. 404000 Replacement 430000 Salaries * Debit Actual Costs Target Costs Plan Costs 12,100 900 10,000 23,000 10,000 24,000 -28,000 -280,000 10,000 20,000 -20,000 -20,000 0 -1,000 -1,000 14,000 10,000 T/A-Var.(abs) -1900 900

r tc ge r Ta

ed

it

619000 DILV Production -28,000 * Credit -28,000 ** Under/Overabsorption -5,000

Allocated Actual Costs Target Costs


Actual Costs Plan Costs

-4,000

Costs (C)
C (Plan)

Prices? Quantities? Fixed Costs?

c ost et c g Tar

u rv e

Cfix (Plan)

100/hr el variab

Fixed costs 10,000

Why were the expected costs not allocated? Variance on the allocation side

SAP AG 1999

100 hr (plan)

140 hrs (actual)

Activity (hrs)

Comparison of the target costs with the allocated actual costs of the cost center: Variance categories on the output side The output side includes all debits from the activity allocations of the cost center. Allocated actual costs are compared with the target costs from the output side. The variances on the output side are broken down into the following categories: Output price variances Output quantity variances Secondary fixed-cost variances Remaining output price variances The output prices of the activity types can be managed by implementing the following: Use of average prices; use of the capacity instead of the planned quantity in price calculation; use of manually set prices; difference between target credit and allocated actual costs that results from a variance between the actual activity and the allocated activity.
(C) SAP AG AC412 5-26

Variances: Output Side


Target Allocated Category
Output price variance Iterative Manual

Description
Changed prices (such as manual price, average price)

Measured: 4960 kwh

Allocated 5000 kwh

Output quantity variance

Measured quantity quantity of allocation (example: indirect activity allocation)

10,000 var. 10,000 fixed


100 var. 100 fixed

14,000 var. 14,000 fixed


100 var. 100 fixed

Fixed-cost variance

100 hrs

140 hrs

With operating fluctuations: through proportioned fixed costs, allocated fixed costs too high or too low

Remaining variance

Minor differences, other categories not active

SAP AG 1999

An output price variance occurs if you use a price that differs from the plan price that is calculated iteratively each month based on planned activity. The target credit (= plan price times actual activity) therefore deviates from the actual credit (= allocated price times actual activity) of the cost center. An output price variance can occur in the following cases: - Average prices are used instead of period-based prices - Price calculation is based on the capacity of the activity type - A manual price is used Output quantity variances result from discrepancies between target costs and allocated actual costs due to the use of allocated activity quantities which are not measured exactly on the sender cost center during allocation (indirect activity allocation). If the quantity can be measured exactly, it can be entered on the sender cost center and then compared with the allocated quantity. A difference results in an output quantity variance. Fixed-cost variances occur when the actual operating rate varies from the plan operating rate and some of the planned fixed costs are either underabsorbed or overabsorbed due to the credit postings. The system only reports a fixed cost variance if the operating rate is not 100%. Remaining variances are discrepancies between target costs and actual costs that cannot be assigned to any of the above categories. Remaining variances will be reported if you deactivate one of the input-side or output-side variance categories in the variance variant.
(C) SAP AG AC412 5-27

Variance Analysis: Procedure

Variance Analysis
Target cost version and variance categories Indicator: Record quantity Create activity types Activity planning and price calculation Cost and activity allocation Actual cost splitting Variance analysis: Categories Variance reports Variances results
SAP AG 1999

COCOPA

Model procedure for variance analysis: To analyze variances, you must first create a target cost version in Customizing that specifies a variance variant (determination and use of variance categories). Furthermore, the target cost version must be entered in plan version 0 where variances are posted for overhead cost controlling. To determine quantity and price variances precisely, you should activate the indicator Record quantity for the corresponding cost elements and cost centers (or during planning). After executing the planning, postings, and activity variances in the actuals, you can perform variance calculation. This automatically performs an actual cost split in order to bring all costs to the activity types. You can execute variance analysis in the application, or after postings are made in the information system for individual costs centers or also cumulated for cost center groups. The variances are not allocated further, but are normally posted to profitability analysis using assessment. If you want to perform subsequent adjustments of your variances to the receiver, then you must consider performing actual price calculation.

(C) SAP AG

AC412

5-28

Actual Price Calculation: Unit Objectives

At the conclusion of this topic, you will be able to: Describe the significance of actual price calculation and its procedures Configure and execute actual price calculation. Use the cost component split in Overhead Cost Controlling. Describe revaluation at actual prices in Product Cost Controlling

SAP AG 2001

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AC412

5-29

Actual Price Calculation: Objective

Actual Price Calculation:

Act.

Objective: Actual prices are to be calculated and, if required, borne by the activity receivers
Actual prices: What was the real cost of my activities? Actual cost component split: What caused the changes in the actual prices? Revaluation: Should the cost center variances be carried by the products or the receivers of the activities?

SAP AG 2001

The actual prices are calculated during period-end closing, and revaluates the difference between the existing plan price valuation and actual price valuation. The revaluation can take place in your own data records, or by changing the previous allocation postings. Cost and price planning (plan prices) are not necessarily required for actual cost allocation. The quantity flow is initially posted without valuation. The valuation with actual costs occurs at period-end by means of the actual price calculation. Requirements for actual price calculation: Processing the settings in the version for the actual price calculation and revaluation. Setting the actual price indicator (for each activity type to be revaluated) to 5 or 6. For activity types that do not have this indicator, the system calculates a purely iterative actual price without revaluating the activity flows. Activities that return to Cost Center Accounting through orders are also revaluated. This is only possible if the corresponding orders are settled periodically to cost centers. Orders or projects (such as those in CO-PC) can also be revaluated if you trigger the revaluation from the corresponding application.
(C) SAP AG AC412 5-30

Actual Price Calculation


Activity Output:
Actual price indicator: 5: Actual costs / actual activity or 6: Actual costs / capacity or 7: Manual actual price : No actual price

Service: Act. Costs: 24,500


100 SerH

SerH
20 Se rH

0 20

Wh 0k

50 SerH

Energy:
kWh

10 MaH

Act. Costs: 77,000


500 0 kW h

MaH

Production:
Fixed/variable actual prices based on the split actual costs

200 MaH

Act. Costs: 52,000


RueH

50 RueH

SAP AG 2001

During the actual price calculation, the system includes all the activity flows between cost centers and calculates the price iteratively by dividing the actual costs by the actual activity. The actual price is calculated as follows: First, the primary costs are divided by the activity quantity. Using the resulting preliminary price, the system revaluates the activity input of other cost centers. In the following steps, the calculated actual prices are used to valuate other activity flows in an iterative process, until the exact price for a cost center has been calculated. Procedure for Price Calculation: The price differs per period because the costs are divided by the activity quantity for each respective period. This method can yield different prices. The cumulative price is calculated by dividing the cumulative costs of the current and previous periods by the cumulative activity quantities. This levels out price fluctuations during the fiscal year. Adjustment postings are made in the current period for allocations posted in previous periods. This method ensures that the sender cost center is fully credited at the end of each period. The cumulative price can only be used for actual data.

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5-31

Actual Cost Component Split of the Prices


Cost Center Energy:
Plan Costs Wages: 7,000 Material: 10,000 Depr.: 5,000 Accruals: 3,000 25,000 Activity: 25,000 kWh Actual Costs: Wages: 12,000 Material: 10,000 Depr.: 5,000 Accruals: 3,000 30,000 Activity: 24,000 kWh

Act.

1.00 UNI

1.25 Planned activity: 25,000 kWh UNI Plan price Cost Components:
Personnel 7,000 (28%) Material 10,000 (40%) Fxd assets 5,000 (20%) Accruals 3,000 (12%) 25,000

Actual activity: 24.000 kWh

Act. price
Cost Components:
Personnel 12,000 (40%) Material 10,000 (33%) Fxd assets 5,000 (17%) Accruals 3,000 (10%) 30,000

SAP AG 2001

The activity allocation to a receiver cost center means that many different cost elements can be represented by a single secondary cost element in one posting. Using the cost component split for activity price calculation enables the activity price to be clearly structured on the receiver. This is useful, for example, in determining the portion of personnel costs and depreciation costs included in the price. When this allocation is valuated at an actual price, the actual cost component split of the sender is transferred to the receivers in such a way that the receivers also have an exact component split of their activity. You can deactivate the component split for certain cost centers/activity types for actual data in the same way as in the plan cost component split. You do this by using the switch layout. This assigns the allocated costs to a new cost element. (See also slide in the unit on "Extended Planning Methods").

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5-32

Revaluation of CO Objects using Actual Prices


Revaluation using Actual Price Calculation Revaluation using Own Transaction

Cost Center

Act. price
AT

Internal Orders Production Order Maintenance Order


Projects

Cost Center

Cost Object

WBS Elements

Processes Production Cost Collector Profitability segment


SAP AG 2001

Networks

When calculating the actual price you have the option to revaluate actual activities with actual prices. You can differentiate between the following revaluation options: To revaluate cost centers, business processes, and profitability segments, you have to set the revaluation indicator in the version. The revaluation will then automatically occur during the actual price calculation. You have the following options when using this revaluation: The difference between the allocation valued at the plan and actual prices is posted under a separate data record (setting: 'with separate transaction'). The revaluation is updated in the original data record. You can use this approach if there are no plan prices, meaning the original allocation was not valued. (setting: 'original business transaction') To revaluate internal orders, production orders, maintenance orders, WBS elements, networks, and so on, you have to use the revaluation transaction. The transaction can be found in the corresponding applications. The revaluation data is always stored in a separate record on the System data base. This enables you to compare the results of actual costing with those of standard costing. Executing the revaluation using the actual price calculation and the revaluation transactions, means that the sender cost center can be fully credited.

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5-33

Actual Price Revaluation: Result


Cost Elements 415100 External activities 404000 Spares 430000 Salaries * Debit Actual Costs Target Costs Plan Costs 12,100 900 10,000 23,000 10,000 24,000 -28,000 -28,000 -4,000 10,000 20,000 -20,000 -20,000 0 -1,000 -1,000 14,000 10,000 T/A-Var.(abs) -1,900 900

619000 DIAA Production-23,000 * Credit -23,000 ** Under/Overabsorption

Should the variances be carried by the curve Plan cost receivers? Total Variance = 0

Costs (C)

C (Actual)
C (Plan)

C (Act. fxd)
Cfix (Plan)

Act. costs = Allocated Actual Costs

Ac
SAP AG 2001

= ce pri t.

/h 164

New: Actual price (fixed/variable)


h (Plan) h (Actual)

Activity (h)

The results of the revaluation transactions are shown in the above report. Here, the credits to the cost center, which were 28.000 UNI before, are reduced to 23.000 UNI. The original receivers have a credit calculated thus: consumed quantity x original price - actual price (here, 36.00/hour). When all revaluation transactions are executed, the balance of the cost center will be reduced to 0. Thereby, all variances are passed on to the receiver. The illustration clearly shows this. By adjusting the original allocated prices from 200- UNI to 164UNI, the allocated costs now reflect the actual costs exactly. You can analyze the variances of the cost center afterwards as well. The input variances remain unchanged in the variance analysis. Only one additional allocation price variance is stated, which is so high, that it brings the original total variance to 0. Even if you do not want to execute any revaluations, the actual price calculation can support the actual price purely iteratively, if you set the corresponding indicator accordingly. If needed, you can contrast the various prices in the price reports. No revaluation is executed for activity types with actual price indicators 5 or 6.

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5-34

Actual Price Calculation: Procedure

Act.

Actual Price Calculation


Activate revaluation in version
original bus. trans. <-> own bus. trans. procedure for price calculation

Create activity types


Set actual price indicator to 5 or 6

Optional activity planning and plan price calculation Cost and activity allocation Actual cost splitting Actual price calculation (and possibly revaluation) Optional revaluation of orders
SAP AG 2001

Typical process for actual price calculation/revaluations: If you want to execute revaluations for actual prices for the purpose of actual costing, you must activate the corresponding indicator and procedure in the version. You can also enter a cost component structure, which provides more detailed information on the composition of the actual prices. When creating activity types that should be revaluated, you must activate either the price indicator 5 or 6, which differentiates itself only in the calculation of the fixed portion of the price (basis activity or capacity). If you want to work with preliminary plan prices, or analyze fixed or variable including actual prices, then you must first execute an activity plan and an activity dependent cost plan. If you do not want to execute any planning, you must at least maintain the cost center's planned activity with the corresponding activity type (create master records for combination cost centers/activity types). All quantitative preliminary allocations will then be executed without valuations. As a requirement for the actual price calculation, you must execute the actual cost splitting or set the indicator 'actual cost splitting' in the basic setting for the price calculation. If you want to revaluate your cost object at the end of the period, you must set this in the corresponding application.

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AC412

5-35

Marginal Costs: Unit Objectives

At the conclusion of this topic, you will be able to: Explain the business reasoning behind marginal cost allocations in CO-OM Describe the concept of and procedure for predistribution of fixed costs Configure and use the predistribution of fixed costs in overhead cost controlling Explain what needs to be considered for special cases of predistribution of fixed costs.

SAP AG 2001

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5-36

Marginal Costs: Objective

Marginal Costs
Objective: No proportional allocation of fixed costs in overhead cost controlling
Activity types with predistribution of fixed costs: What is the cost of an additional activity unit (marginal costs)? Predistribution of Fixed Costs: Should fixed costs be allocated in blocks? Variance analysis: What effect does the predistribution of fixed costs have on my cost center results?

SAP AG 2001

Marginal costing is a relatively modern cost accounting system, that does not consider fixed costs in fair cost allocations. The fixed costs should not be allocated proportionally because they do not increase with increases in activity, but are dependent on time. The focus of marginal costing is more on variable costs, which can change at short notice, depending on the activity quantity. Marginal costing can support concept decisions such as 'make or buy', or clarify short term lower price limits. There are several ways of assigning fixed costs by cause: A source-related assignment of fixed costs can, for example, be required on different hierarchy levels, such as company codes, plants, product groups, or the cost centers who requested or planned the corresponding activity input. This problem can be resolved in Cost Center Accounting by predistributing fixed costs. Senders of activity types with predistributed fixed costs can be cost centers. Receivers of predistributed fixed costs can also be cost centers and business processes. You cannot used plan integrated orders or projects as receivers for this. However, if these are to be settled to a cost center in the planning data, then fixed costs are predistributed to the receiving cost center.
(C) SAP AG AC412 5-37

Predistribution of Fixed Costs: Planning


What is the cost of an additional activity unit? (marginal cost)

Production

60 h
Plan Debit: 60 h

ProgramProgramming
10 fixed

predistribute fixed costs

Program.

Fixed 600

Var 1,800

30 var.

Plan Credit: 100 h


Fixed Prod. - 600 Cust. serv.- 400 Variable - 1,800/ 60h - 1,200/ 40h

40 h

Customer Service

Plan Debit: 40 h
Fixed Program. 400 Var 1,200

SAP AG 1999

For exact predistribution of fixed costs, you need a reconciled plan that calculates the fixed and variable cost portions of prices. You can do this by selecting the indicator predistribution of fixed costs for the activity types in the master records or the planning, and plan as described in the unit Advanced Planning Techniques. It is important to do the planning as activity dependent for specific costs or activity consumption because this is the only way to calculate the variable portion of the price. To complete the planning, you need to execute plan reconciliation, plan cost splitting, and plan price calculation. The illustration shows an example of a plan that has been reconciled with a sender and two activity receivers. As can be seen, the activity input in programming hours consumed by the receivers is completely variable. The price of the activity (10 fixed and 30 variable) is debited to the receivers in the same proportions.

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Predistribution of Fixed Costs: Actual Activity Allocation

80 h * 30 var.

Production Plan Debit: 60 h


Progr. Fixed 600 Variable 1,800/ 60 h

ProgramProgramming 10 fixed 30 var. Plan Credit: 100 h


Fixed Prod. - 600 Cust.Serv. - 400

Actual Debit:

80 h
2,400/ 80 h

predistribute fixed costs

Progr.

Variable - 1,800/ 60 h - 1,200/ 40h

30 h * 30 var.

Customer Service Plan Debit: 40 h


Progr. Fixed 400 Variable 1,200/ 40 h

Actual Credit:
Prod. Cust.Serv.

110 h
- 2,400/ 80 h - 900/ 30 h

Actual Debit: 30 h
Progr. 900/ 30 h

SAP AG 1999

If the predistribution of fixed costs indicator is selected for an activity type, only the variable costs (variable prices multiplied by activity quantities) are debited to the receiver cost centers. Likewise, the sender cost center is credited only with its variable costs. In the above example, the actual quantity flows are multiplied only with the variable activity price, and the result debited to the receivers and credited to the sender. The planned fixed costs of the sender cost center are not allocated at this point. This approach debits the receiver cost centers Customer Service and Production only with the additional units of costs (marginal or variable costs) of 30 UNI. The cost center for programming carries its own fixed costs.

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5-39

Predistribution of Fixed Costs: Transaction

Production Plan Debit: 60 h


Fixed Program. 600 Variable 1,800/ 60 h

ProgramProgramming 10 fixed
30 var.

Actual Debit:

80 h
2,400/ 80 h

predistribute fixed costs


Variable - 1,800/ 60 h - 1,200/ 40 h

Program.

600

Plan Credit: 100 h


Fixed Prod. - 600 Cust.Serv. - 400

Customer Service Plan Debit: 40 h


Fixed Program. 400 Variable 1,200/ 40 h

Actual Credit:
- 600 Prod. Cust.Serv. - 400 -

110 h
- 2,400/ 80 h - 900/ 30 h

Actual Debit: 30 h
SAP AG 1999

Program.

400

900/ 30 h

The predistribution of fixed costs transaction distributes the plan fixed costs as actual fixed costs to the cost centers that planned the corresponding activity inputs. To predistribute the fixed costs, you must first complete planning. Predistribution is then executed with separate transactions for certain cost centers or cost center groups, or for the entire controlling area. It can also be executed within plan price calculation if the corresponding indicator is set. In a predistribution scenario, you define the plan fixed costs in version 0 for each sender activity type of a cost center, and then distribute these costs as actual costs to the cost centers that planned the activity inputs. Predistribution is based on the assumption that, in a reconciled activity plan, sender cost centers provide activities only because receiver cost centers have planned those activity requirements. Predistribution of fixed costs ensures that costs incurred through additional capacity becoming available are not allocated on the basis of the operating rate. If you use predistribution of fixed costs, you can avoid fixed-cost variances. Predistribution of fixed costs transfers the fixed costs of the plan credits and debits to actual postings. This guarantees that plan fixed costs are covered regardless of the operating rate.

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AC412

5-40

Predistribution of Fixed Costs: Special Cases in Actuals


No plan consumption: Actual: 10 h * 30 var.
Human Resources No plan debit:
Program. Fixed 0 Variable 0/ 0 h

ProgramProgramming 10 fixed
30 var.

Actual Debit:

10 h
300/ 10 h

predistribute fixed costs

Program.

Plan Credit: 50 h
Fixed Personnel -0 Order -500 Variable -0 / 0 h -1,500/ 50 h

Orders, Projects
(plan-integrated) Order: Actual: 60 h * 40 total Plan Debit: 50 h

Actual Credit:
-0 Personnel Order -600

70 h
- 300/ 10 h -1,800/ 60 h

Fixed Program. 500

Variable 1,500/ 50 h

Actual Debit: 60 h
Program. 600 1,800/ 60 h

SAP AG 1999

The following cases may arise in the predistribution of fixed costs: 1. If the receiver of the activity is a cost center, activity allocation allocates only the variable costs. This is true regardless of whether the cost center has planned activity input as activity-dependent or activity-independent, or whether it has planned no activity input at all. When predistribution is executed, only the fixed costs are allocated to the receiver that planned an activity input, regardless whether the input is activity-dependent or not. Receiver cost centers that have not planned activity inputs are therefore debited only with the variable costs. 2. If the receiver is a cost object - such as an order or project - it is debited with the full costs (fixed and variable price multiplied by the activity quantity). (See the special case "backflow" in the next slide.)

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Predistribution of Fixed Costs: Backflow


Plan-integrated order settles to cost center Order
predistribute fixed costs
10 fixed 30 var.

Cost Center 1:
Activity: Plan: 10 h Actual: 20 h Credit: Plan: Fxd - 100 1. Activity Var. - 300 input

(plan-integrated)

Cost center 2
Input: Plan Actual 10 h 20 h

Input: Plan Actual

10 h 20 h

Plan costs 100 + 300

2. Plan settlement

Plan costs + 100 + 300 Actual costs:

Actual costs: Fxd Var. - 100 - 200 - 600 + 200

Actual costs: 4. Activity allocation 5. Actual settlement (backflow) + 200 + 600 - 200 + 600

3. Predistrib. of fixed costs + 100

5. Actual Settlement

+ 600

SAP AG 1999

Special case: Fixed-cost backflow for plan-integrated orders that settle to cost centers Orders and projects in integrated planning cannot be used as receivers in fixed-cost predistribution. Such orders and projects are always debited with fixed and variable costs in activity input planning and in actual activity allocation. However, if you settle plan-integrated orders to a cost center in your planning, fixed costs are predistributed to the receiver cost center. As a result, the receiver cost center is already debited in the actuals with fixed costs that will also be debited to the plan-integrated order during actual activity allocation. When orders are settled in the actuals, the system moves these excess fixed costs back to the sender (backflow) during activity allocation. To ensure that this posting occurs in the correct period, settlement must be period-based for the affected orders.

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5-42

Predistribution of Fixed Costs


Costs (C) Elimination of over- or underallocated fixed costs Allocated using actual quantity times variable prices
Target Cost Curve

Costs Not Allocated


C (Plan)

Allocated Variable Costs


Plan costs

Allocated costs = target costs Actual costs

e iabl V ar r i ce p plan 00/h =1

Cfix (Plan)

Fixed Cost Block

Allocated using predistribution of fixed costs

x (Plan) SAP AG 1999

x (Actual)

Quantity (x)

The illustration shows the allocation of a cost center with an activity type that takes part in predistribution of fixed costs. In contrast to allocation without predistribution of fixed costs, activity allocations credit the cost center only with the variable price (100 UNI). If fixed costs are predistributed, the fixed cost block also can be allocated to the receiver in the amount planned. In contrast to allocations without fixed-cost predistribution, therefore, fluctuations in the operating rate do not affect the amount of fixed costs allocated: the allocated fixed costs are always the planned fixed costs. (Shaded area above is not allocated) There are no fixed-cost variances. In the textbook case where the allocated quantity equals the actually measured quantity, and using constantly allocated iterative plan prices, the allocated costs equal the target costs.

(C) SAP AG

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5-43

Marginal Cost Allocation: Procedure

Marginal Costs
Create activity types Do not set indicators for predistribution of fixed costs or actual prices Activity planning, plan reconciliation and price calculation Activity allocation (variable prices) Optional predistribution of fixed costs Optional variance analysis Variances via result
SAP AG 2001

Ideal typical procedure for marginal costing allocations in overhead cost controlling: When you create the activity types, you need to the indicator for predistributed fixed costs in the corresponding activity types. You should not set the "Actual" price indicator because a predistribution of fixed costs contradicts an actual price calculation in the system. You should try to plan activity-independent and especially activity-dependent costs as precisely as possible. This ensures exact iterative plan prices with fixed and variable components. Before the price calculation, you should make sure that the activity input quantities from the senders tie in with the activities of the sender by using automatic plan reconciliation. Only variable prices are used for activity allocation between cost centers. Predistribution of fixed costs (which you also trigger from the plan price calculation) enables you to allocate the planned fixed costs using the same actual value to the receivers. If you wish to analyze variances, start the automatic variance calculation. No fixed cost variances are displayed there. There may be too many or too few fixed costs allocated to the orders integrated in the remaining variance.

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Period-End Closing: Unit Summary

You are now able to: Analyze and evaluate standard reports such as plan/actual comparisons Explain the limitations of plan/actual comparisons Explain the application goals and possibilities of the enhanced R/3 analysis and allocation tools

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Period-End Closing: Exercises


Unit: Period-End Closing: Allocations and Analysis Topic: Target Costs, Variances, and Actual Prices

At the conclusion of these exercises, you will be able to: Analyze standard reports such as plan/actual comparisons Describe how target costs are updated Configure and use the variance analysis function Analyze variance categories Explain the concept of actual price calculation, and configure and use the function for revaluation at actual prices Which analysis tools are most appropriate depends on your cost management goals. You can choose your analysis tools after learning about advanced planning and the methods for transaction-based and periodic actual costs and activity allocations. You will use the repair cost center REP## to decide which analysis tools will provide you with the information you need for cost center analysis in overhead cost controlling. You will run a number of different scenarios that will provide you with various types of information and results.

Target Cost Analysis 1-1 Preparation: In your user settings, delete group H_TECH## from the cost center group, and enter cost center REP## instead. Check the planned costs No actual costs have been posted to your cost center REP## for the current period. View the planned values by going to cost element planning (version 0, current period, cost center REP##, activity type * [=all], cost elements 400000 699999, free entry). Which three cost elements have been planned up to now? What values were planned for these cost elements? For which cost element did you set the record quantity indicator?

1-2

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Cost center: REP## for the current period: Activity Type Cost Element Fixed Plan Costs Variable Fixed Qty Variable Unit Q

(If the field for activity type is blank (or #), then activity-independent/fixed was planned.) Compare your plan with the solution, and change the values if needed. 1-2-2 Analyze the planned output of your cost center REP## in the planning of the activity output. What activity quantities (activity type *) were planned in the current period? What price did you calculate earlier for this quantity (the price was automatically transferred into the planning during price calculation)? What activity quantity was scheduled? Compare this with the value in the solutions and make changes if necessary.

Cost center REP## in the current period: Activity Type REPH## 1-2-3 Analyze cost center REP## using the target/actual comparison report in the information system. Have any actual costs been posted? Have any activities been output during the period? Interpret the target costs using the known values. Interpret the plan costs using the known values (go to the next page in the report). Planned Activity Fixed Price Variable Price Scheduled Activity

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Cost center: REP## Actual costs: Actual activity: Target costs: Plan costs:

Interpretation:

1-3-1

From sender cost center REP##, allocate 140 hours of activity type REPH## to cost center PC## using direct activity allocation (since the activity type is of activity type category 1). Perform the allocation in the screen variant cost center with list entry. Analyze the target costs again for cost center REP##. How high are the target costs on the debit side (previously 10,000), since the operating rate is 140%? How did the system calculate this?

1-3-2

Cost center REP##, current period Target costs: Calculation: 1-3-3 Now post the actual costs of cost center REP## in component FI. Use the current date and choose the screen variant with cost center and quantity. For the tax code, select V0 (without tax). Dont forget to enter the quantity 110 h in the detail screen of cost center 415100. To simplify entry, you can use account assignment template AC412b and just change the cost centers to your number ##.

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G/L Account 404000 415100 430000 470000 113100

Debit/Credit Indicator Debit Debit Debit Debit Credit

Amnt 900 12,100 9,000 1,000 23,000

Tax V0 V0 V0

Cost Center REP## REP## REP## REP##

Qty

Unit

110

Compare all your numbers before you post. 1-3-4 You have now recorded your costs for the entire period, and you want to analyze the efficiency of the cost center using the target/actual comparison report. Analyze the balance of cost center REP##, the plan/actual variance, and the target/actual variance for the input side. Then answer the following questions: Cost center REP##, current period Plan/actual variance: (2nd page in report) Target/actual variance: _________% Assessment: favorable / unfavorable ________________________________ Underabsorption / overabsorption: _____________ ________% Assessment: favorable / unfavorable

(How much more or less was allocated than the cost center was actually debited?) 2 2-1 Variance Analysis Run variance analysis for the current period for your cost center group H_TECH as an update run (not a test run). How meaningful is the total variance for your cost center and activity types?
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___________________________________________________ In your opinion, which variance side provides the best information to assess the efficiency of a cost center? ___________________________________________________ Save your variances (if they were not saved automatically in the update run). We will now analyze the variances in the information system. 2-2 In the Cost Centers: Variances report, analyze the variances of your cost center group H_TECH## for the current period. Use variation to go to cost center REP##. Write down the corresponding figures in the following table. Indicate whether the variances are favorable or unfavorable. Optional: Briefly indicate the reason for the variances (a detailed explanation is given in the solution). Target/actual variance: (Input Side Variance) Favorable / Unfavorable

Categories Input side Resource-usage variance:

(go to page 3 of the report) Amount: (Cost element) Favorable / Unfavorable

Price variance:

Favorable / Unfavorable

Quantity variance:

Favorable / Unfavorable

Output side Fixed-cost variance:


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Amount:
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Reason:
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Actual Price Calculation: You now want to calculate actual prices for your entire cost center group, and revaluate the previous activity allocations. 3-1 3-2 Look at the settings for revaluation in the settings for the version by fiscal year (Customizing). Was revaluation activated? Execute actual price calculation only for your cost center group H_TECH## as an update run and without business processes. Choose the current period only. Post the price calculation and then exit. You analyze the results in the information system. Analyze the prices in the price report of the information system. Check how close the actual prices were to the planned prices. Run the price report only for the current period for cost center group H_TECH##. Before you run the report, ensure that the prices are displayed in price unit 1 and that only the prices used for allocation are displayed. For a better overview, sort the report by the three columns cost center, activity type, and price indicator (ascending).

3-3

Cost Center CHIP## ENER## PC## PC## QUAL## REP## 3-4

Activity Type Plan Price (PI 1/2) MAH## ENH## MAH## SETH## QUAH## REPH##

Actual Price (PI 5/6)

Go to the target/actual variance report and look at the actual balances for the current period for your cost center group (H_TECH##). Go to each cost center using variation. Look at the balances of the cost centers. What do you notice?

Cost Center ENER## QUAL## REP## PC##


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Balance

If balance is not zero, the reason for this

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CHIP##

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Period-End Closing: Optional Exercises


Unit: Period-End Closing: Allocations and Analyses Topic: Predistribution of Fixed Costs

At the conclusion of these exercises, you will be able to: explain the concept of predistribution of fixed costs in the R/3 Controlling execute the predistribution of fixed costs conceptualize and use a scenario involving activity types with predistributed fixed costs analyze variances that can stem from predistributed fixed costs After explaining and using various scenarios for period-end closing, you want to discuss the advanced applications available through the predistribution of fixed costs. To clarify the concept of this form of marginal cost allocation (namely, predistribution of fixed costs), answer the following questions. More than one answer is possible for each example.

1-1

Predistribution of Fixed Costs: Planning Which of the following points indicates a planning scenario with predistributed fixed costs? A) The activity types should have indicator Predistributed fixed costs set. B) You cannot plan prices (PI 3) manually. C) The planning should be reconciled. D) For the price calculation, you definitely need to set the indicator With predistribution of fixed costs. E) You can only set the indicator Predistributed fixed costs for activity type category 1. A) Correct B) Incorrect C) Correct D) Incorrect E) Incorrect

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1-2

Predistribution of Fixed Costs: Cost and Activity Allocations in Actual A) Activity allocations of activity types with predistributed fixed costs are valued in the cost center only with the variable price portion. B) The transaction predistribution of fixed costs allocates fixed costs in the actual to the receiver cost center just as they were planned there as activity inputs (in blocks). C) The transaction predistribution of fixed costs allocates fixed costs in the actual to the receiver orders just as they were planned there as activity inputs (in blocks). D) You can revaluate the variably allocated activity quantities with the actual price calculation using variable actual prices. E) The target=actual activity allocation cannot be combined with the predistribution of fixed costs. A) Correct B) Correct C) Correct D) Incorrect E) Incorrect

1-3

Predistribution of Fixed Costs: special cases A) Orders that are integrated into the plan can generally take part in the predistribution of fixed costs. B) Only those order integrated into the plan, which are settled to a cost center support the concept of predistribution of fixed costs. C) Cost centers that have no planned activity input are generally debited with full costs, even when the activity input in actual contains an activity type with preditributed fixed costs. D) Cost centers that have no planned activity input are generally debited only with variable costs, even when the activity input in actual contains an activity type with preditributed fixed costs. A) Incorrect B) Correct C) Incorrect D) Correct

1-4
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Predistribution of Fixed Costs: Description


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A) The predistribution of fixed costs allows you to carry out marginal cost allocations (allocations for variable cost portions are valued) between cost centers. B) The predistribution of fixed costs hinders the (variance category) fixed cost variance. C) The sender fixed costs must be further allocated periodically to the receiver cost center (through the predistribution of fixed costs). D) The predistribution of fixed costs provides information regarding costs that arise for additional activity units of a cost center (marginal costing). E) The predistribution of fixed costs is especially useful when you want to avoid fixed costs variances in the service cost centers. Without predistribution of fixed costs, activity allocations with proportionalized service cost centers (especially operational fluctuations) can lead to incorrect over or under allocations of fixed costs. A) Correct B) Correct C) Incorrect D) Correct E) Correct

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Period-End Closing: Solutions


Unit: Period-End Closing: Allocations and Analysis Topic: Target Costs, Variances, and Actual Prices

1
1-1

Target Cost Analysis


Preparation: User Settings

CCA: Information System > User Settings Basic data: Remove cost center group H_TECH## Enter cost center REP##
1-2 Check the planned costs

CCA: Planning > Cost and Activity Inputs > Change Layout: Version: Time period: Cost center: Activity type: Cost element: Free entry Overview Cost center: REP## for the current period: Activity Type Cost Element 430000 470000 REPH## 415100 Fixed Planned Costs 9,000 1,000 10,000 100 h X Variable Fixed Qty Variable Unit Q 1-101 0 Current period in current fiscal year REP## * 400000 to 699999

If the field for the activity type is empty, then the planning data is activity-independent (only fixed). Check your plan against the solution and make changes if necessary. The total planned cost is 20,000 UNI. Wages (430000) and office/building costs (470000) are fixed. The external activities (415100) are variable. External activities are given a
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variable quantity whose indicator Q together with unit h causes the system to issue a warning during actual postings to enter a quantity for account assignment. There are therefore a total of 10,000 in fixed costs and 10,000 in variable costs planned. 1-2-2 Analyze the activity output CCA: Planning > Activity Output/Prices > Change Version: Time period: Cost center: Activity type: Overview 0 Current period in current fiscal year REP## *

Cost center REP## in the current period: Activity Type REPH## Plan Activity 100 h Fixed Price 100 Variable Price 100 Scheduled Activity 100 h

The price should have been calculated automatically by the price calculation function in the exercise on planning (PI=1): Fixed cost / Plan activity = Fixed price: 10,000 / 100 h = 100/h fixed Variable cost / Plan activity = Variable price: 10,000 / 100 h = 100/h variable Compare your results against the solution and make changes if necessary. 1-2-3 Target/Actual Comparison Cost Center REP## CCA: Information System > Reports for Cost Center Accounting > Target/Actual Comparisons > Cost Centers: Target/Actual Variance Version: Time period: Cost center: Execute Cost center: REP## Actual cost: Actual activity: Target cost: 0 0h 10,000 Since the operating rate = 0: all plan fixed costs (Comparison costs if there is zero output) Plan cost:
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0 Current period in current fiscal year REP##

Interpretation

20,000 All fixed and variable plan costs


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(see next page of report on right-hand side) 1-3-1 Activity Allocation CCA: Actual Postings > Activity Allocation > Enter Choose the Choose the Sender: Sender activity type: Quantity: Receiver cost center: Save 1-3-2 Target costs of cost center REP## CCA: Information System > Reports for Cost Center Accounting > Target/Actual Comparisons > Target/Actual Variance: Version: Time period: Cost center: Execute 0 Current period in current fiscal year REP## screen variant Cost Center list variant REP## REPH## 140 h PC##

Cost center REP##, current period Target cost: Calculation: 24,000 10,000 fixed plan cost + 10,000 var. plan cost * oper. rate 140%

The target costs only changed for cost element 415100, since this item was planned as variable or activity-dependent. 1-3-3 Actual costs of cost center REP## Accounting > Financial Accounting > General Ledger > Document Entry > Enter G/L Account Document Enter Document date: todays date Choose: Screen variant: With cost center and quantity Enter the indicated values in the posting screen. If desired, choose account assignment template AC412b and replace the cost center numbers with your number ##.
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G/L Account 404000 415100 430000 470000 113100

Debit/Credit Indicator Debit Debit Debit Debit Credit

Amount 900 12,100 9,000 1,000 23,000

Tax V0 V0 V0

Cost Center REP## REP## REP## REP##

Qty

Unit

110

Before saving, make sure that all values are correct. Then choose: Post 1-3-4 Target/Actual Comparison of Cost Center REP## CCA: Information System > Reports for Cost Center Accounting > Target/Actual Comparisons > Target/Actual Variance: Version: Time period: Cost center: Execute Cost center REP##, current period Plan/actual variance: (2nd page in report) +15% Assessment: favorable / unfavorable 15% higher actual costs than planned Assessment: favorable / unfavorable 0 Current period in current fiscal year REP##

Target/actual variance: -4.17 %

4.17% lower actual costs than target costs Underabsorption/overabsorption: -5000 (allocation was 5,000 higher than the actual cost debit)

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2
2-1

Variance Analysis
Variance analysis for cost center group H_TECH##

CCA: Period-End Closing > Single Functions > Allocations > Variances Version: Time period: Cost center group: UPDATE RUN Execute The variances are saved automatically since it is an update run. The total variance does not say anything about efficiency, since it is only a comparison of the actual costs against the allocated actual costs (underabsorption/overabsorption of the cost center). The variances on the input side provide the most detailed information. (We will now analyze these variances in the information system.)
2-2 Report Cost Centers: Variances for cost center group H_TECH##

0 Current period and fiscal year H_TECH##

CCA: Information System > Reports for Cost Center Accounting > Target/Actual Comparisons > Variance Analysis > Cost Centers: Variances Version: Time period: Cost center group: Execute Choose cost center REP## using the variations. 0 Current period in current fiscal year H_TECH##

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Target/actual variance: (Input side variance) Categories Input Side Resource-usage variance: Price variance: (415100 external activities)

- 1,000 - 4.17%

Favorable / Unfavorable Total actual costs lower than target costs

(go to page 3 of the report) Amount (cost element) + 900 (404000 replacement) + 1,100 Favorable / Unfavorable Unplanned consumption of replacement parts Favorable / Unfavorable Price increase for additional purchase of external activities: Plan: 100 h at 100.00 per h Actual: 110 h at 110.00 per h (posting 12,100 with qty 110 h) 10.00 price variance * 110 h = price variance of 1,100. - 3,000 (415100 external activities) Favorable / Unfavorable 100 h were planned as variable external for a planned activity of 100 repair hours. The actual consumption, however, was 140 h, so the target quantity for the repair would be 140 h. But only 110 h were actually consumed (at a planned price of 100.00). -30 h * 100.00 = 3,000.00 quantity variance Reason: - 4,000 (Theoret.) Allocated costs were too high because of transactionbased allocation with proportionalized prices. Output fixed + variable 140 h * 100.00 140 h * 100.00

Quantity variance:

Output side Fixed-cost variance:

Amount

= 28,000.00 allocated actual costs - 24,000.00 target costs As with the target costs, the
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fixed costs should not have been multiplied by the quantity when they were allocated to the receiver (does not apply to predistribution of fixed costs). 3 3-1 Actual Price Calculation IMG: Controlling > General Controlling > Organization > Maintain Versions Version: Settings by fiscal year (level 5) Current year Double-click Revaluation: Own business transaction is activated 3-2 Actual price calculation for cost center group H_TECH## CCA: Period-End Closing > Single Functions > Price Calculation Cost center group: Time period: UPDATE RUN Execute Exit price calculation after making the posting. (Results are analyzed in the information system) 3-3 Price report in the information system CCA: Information System > Reports for Cost Center Accounting > Prices > Cost Centers: Activity Prices: Cost center group: Period: Price unit: Select: Execute Choose: Process > Sort Ascending > Choose in this order: Cost center, activity type, price indicator (all ascending: 1st button)
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Settings for Revaluation 0 (select)

H_TECH## Current period in fiscal year

No business processes

H_TECH## Current

1 Display only the prices used for allocation

Cost Center CHIP## ENER## PC## PC## QUAL## REP##

Activity Type MAH## ENH## MAH## SETH## QUAH## REPH##

Plan Price (PI 1/2) 234.39 0.17 151.84 190.91 193.33 200.00

Actual Price (PI 5/6) 205.63 (233.94**) 0.16 (0.15**) 133.66 (132.31**) 173.08 162.50 164.29

** The values in parentheses apply only to periods 6 to 9

3-4

Target/Actual Variance Report for Cost Center Group H_TECH## CCA: Information System > Reports for Cost Center Accounting > Target/Actual Comparisons > Cost Centers: Target/Actual Variance Cost center group: Period: Execute Go to the single value using the variation. H_TECH## Current

Cost Center ENER##

Balance 3,642
(3,060**)

If balance not zero, reason Special case: Cost center is not fully credited because the actual price is calculated based on the capacity. (Fixed preparation costs should not be fully allocated to the receivers)

QUAL## REP## PC## CHIP##

0 0 -23,602
(-25,222**)

Will be 0 if the cost object (order AC412) is revaluated at actual prices. Will be 0 if the cost object (order AC412) is revaluated at actual prices.

-9,204
(-144**)

** The values in parentheses apply only to periods 6 to 9

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Solutions to Optional Exercises


Unit: Period-End Closing: Allocations and Analyses Topic: Predistribution of Fixed Costs

1-1

Predistribution of Fixed Costs: Planning A) Correct B) Incorrect C) Correct D) Incorrect E) Incorrect

1-2

Predistribution of Fixed Costs: Cost and Activity Allocations in Actual A) Correct B) Correct C) Correct D) Incorrect E) Incorrect

1-3

Predistribution of Fixed Costs: special cases A) Incorrect B) Correct C) Incorrect D) Correct

1-4

Predistribution of Fixed Costs: Description A) Correct B) Correct C) Incorrect D) Correct E) Correct

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Summary

Activity Allocation: Concept and Master Data

Advanced Planning Methods

Actual Cost Allocation

Period-End Closing: Allocations and Analysis


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Course Objectives

You are now able to: Differentiate between the various controlling concepts regarding areas of responsibility in R/3 Configure and use the advanced functions for planning and activity allocation Analyze information and effects of various cost accounting systems in overhead cost controlling

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6-2

Recommended Follow-Up Courses

AC420 - Activity-Based Costing AC505 - Product Cost Planning AC605 - Profitability Analysis

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Recommended Exercises

Repeat the exercises with the IDES or your own data Read the online documentation Read the IMG documentation Read the release notes

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Appendix

Contents:
Optional: Account assignment to activity types Planning: Calculation of variable secondary costs Important system settings in customizing

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7-1

Optional: Activate Activity Type as Account Assignment Object

FI

HR
Actual Costs

Cost Center

Actual Activity Activity Type

CO

MM

Plan

pric

SAP AG 1999

It is possible to directly assign costs to the activity type of a cost center when actual postings are made. You can use an activity type as an account assignment object in the following application areas: Purchase requisitions, purchase orders, GR/IR, reposting of costs, reposting of line items, activity allocation, reposting of activity allocation, payroll (time sheets), depreciation (activity type in master data of asset), periodic repostings, assessments, indirect activity allocation Note that costs assigned to activity types are not included in later distributions. The direct assignments of costs to activity types has an effect on actual cost splitting (see unit on period-end closing). The system assumes that the costs assigned directly to the activity types were assigned correctly and in full. Therefore, activity types to which costs were assigned directly are not included in the first splitting step. The system merely breaks the costs down into fixed and variable costs. In the second splitting step, the activity-independent costs are apportioned to the activity types to which costs were assigned directly. To be able to assign costs to activity types, you must go to maintenance of the controlling area in Customizing (under General Controlling - Organization - Maintain Controlling Area) and select the indicator Account assignment: activity type active in the step Activate components/control indicators. To assign activity types to accounts during G/L account posting in FI, specify the activity type as an entry field in the field selection strings for the corresponding G/L accounts and in the posting keys.

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Planning: Calculation of Variable Secondary Costs

Receiver consumes 50 h (fixed) variable costs of sender Fixed costs of receiver

Variable price (sender) multiplied by variable consumption (receiver) Variable costs of receiver

Price (Sender)
Fixed (receiver) Variable (receiver)

Total: 100/ h Fixed Fixed: 50/ h Fixed Fixed Variable

Receiver consumes 50 h (variable) of fixed costs of sender Fixed costs of receiver


Variable (sender)

Fixed (sender)

Fixed: 50 h
SAP AG 2001

Total: 100 h

Consumption (receiver)

When activity quantities are incurred (regardless of the activity input level provided by the receiver cost center), you enter a fixed activity input quantity. Calculating the fixed debit for the receiver cost center enables you to set the variable portions of the sender costs to "fixed" for the receiver. The fixed debit of the receiver is the sum of the following: The total activity quantity multiplied by the fixed price The input of fixed activity quantity multiplied by the variable price The quantitiy of the activity type (that you entered as a variable activity input) keeps the variable and fixed cost portions of the sender. For this reason, the variable debit of the receiver cost center corresponds to the variable activity input multiplied by the variable price.

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System Settings / Customizing I


Version / Fiscal Year Settings: Purely iterative price Plan: Period Price <> Average Price Actual: Period Price <> Cumulative Price Revaluation / Business Transactions Cost Component Structure in CO Overhead Cost Controlling Controlling Area / Control Indicators: Activity type is account assignment object (optional)
Activate in controlling area FI: Activate in field status variant and posting keys

Variances (transaction-based posting of price variances in CO) Maintain Planner Profiles Authorizations, distribution key Maintain planning layout

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System Settings / Customizing II


Indicator: Record quantity Default value in cost center and cost element or Set indicator for planning combination Target cost version Control costs: version 0 Define variance categories in variance variant Define cost element groups for first split of actual costs Splitting structure Create structure
Assign rule: for example, based on activity quantity, activity-dependent statistical key figures, capacity, and so on Assign cost centers

Alternative: Equivalence numbers in activity type planning

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Cost Element List

Cost Element
400000 400001 400010 403000 404000 405000 410000 410001 415000 416100 416200 416300 417000 418000 419000 420000 421000 422000 430000 431000 432000 434000 435000 440000 445000 446000
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Name

Raw materials 1 Raw mat. scrapped Raw materials 2 Operating supplies Spare parts Packaging material consumption OEM products consume Scrapped trading goods External procurement Electricity base fees Electricity usage Water Purchased activity Training courses Provision: Loss of raw materials Direct labor costs Indirect labor costs Idle time pay Salaries Ancillary payroll costs Additional salary costs Pay scale benefits: Vacation allowance Pay scale benefits: Standard annual allowance Pension scheme contribution Pay scale benefits: Employee health insurance Workers Compensation Association contribution
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Cost Element
447000 449000 451000 452000 453000 459000 460000 462000 463000 464000 465000 466000 470000 471000 472000 473000 473110 473120 474100 474210 474220 474230 474240 474250 474280 474290 474295 475000 476000 476100 476500
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Name
Employee support costs Miscellaneous personnel costs Maintenance costs: Building Maintenance costs: Machinery & equipment Maintenance costs: Target=actual Other maintenance costs Net worth tax Bill of exchange tax Trading capital tax Motor vehicle tax Miscellaneous taxes Insurance expenses Office & Building Machinery rental Shipping costs Postage Fixed telephone costs Telephone usage Travel costs (flat-rate tax) Travel costs (accommodation) Travel costs (board) Travel costs (rail, road and air) Other travel costs Travel costs: Entertainment Travel costs: Flat-rate tax Travel costs: Advance Travel costs: Cash advance Vehicle costs Office supplies IT Materials Other admin expenses
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Cost Element
476900 477000 479000 481000 481100 482000 483000 484000 489000 611000 612000 613000 614000 615000 615500 616000 617000 618000 619000 620000 621000 622000 622500 623000 624000 625000 626100 626200 626300 629000 629010 629020
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Name
Miscellaneous costs Advertising & sales Bank charges Cost-accounting depreciation Low value assets Cost-accounting depreciation Accrued interest Accrued risks Other accrued costs DAA Production preparation DIAA Administration DAA Setup DAA: Internal transport DAA: Repair hours DIAA:Quality DAA Inspection DAA Energy DAA IT Services DAA Production hours DAA Machine costs DAA Engineering DIAA: HR administration DIAA: Site DAA Burn in DAA QA check DAA setup DAA Jr. Consultant DAA Sen. Consultant DAA Manager Time recording Payroll accounting Check credit status
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Cost Element
629030 629100 629110 629310 629500 629600 629610 629620 629700 629800 629900 630000 631000 631100 631200 631300 631400 631500 632000 633000 634000 635000 636000 637000 638000 638100 638500 639000 639100 639200 640000
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Name
Credit management Paint Dry Test non-stock material Purchase non-stock material Material staging 1 Material staging 2 Goods receipt of non-stock Sales order handling Order confirmation Production order handling General assessment Cafeteria assessment Vehicles assessment HR assessment Corporate Services assessment Cafeteria assessment Telephone assessment IAA Corporate Services IAA Cafeteria IAA Telephone units IAA Telephone (line rental) IAA Vehicles IAA Human Resources IAA Administration IAA Production IAA IT Service IAA Machine costs IAA IT installations IAA Power IAA ABC General
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Cost Element
641000 641100 641200 641300 641400 641500 641600 648000 648100 648200 648300 648400 649000 649100 649200 649300 649400 649500 649600 649700 649800 649900 649910 650000 651000 652000 652500 653000 655100 655110 655200 655300
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Name
IAA ABC Others IAA ABC Repairs IAA ABC Machines IAA ABC Burn In IAA ABC Specialist IAA ABC Material IAA ABC Sales ASM. ABC Schedule process ASM ABC Shop floor ASM ABC Assembly standard PC ASM ABC Assembly configurated PC ASM ABC Design ASM ABC General ASM ABC QA ASM ABC Finance & Administration ASM ABC Marketing ASM ABC Sales ASM ABC Inquiries ASM ABC Quotes ASM ABC Production ASM ABC Logistics ASM ABC Maintenance ASM ABC R&D Order settlement Order settlement: Material Order settlement: Internal activity Settlement interest Order settlement: Quality costs Order settlement: Raw materials Order settlement: Other materials Order settlement: Personnel Order settlement: Administration
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Cost Element
655400 666000 671110 671111 671112 671115 671120 671121 671130 671131 671140 671141 672111 672112 672121 672122 672131 672132 672141 672142 672200 672300 673111 673112 673121 673122 673131 673132 673141 673142 673211 673212
(C) SAP AG

Name
Order settlement: Sales & Distribution Settlement revenues Cost of sales: Direct costs WIP Creation - DC WIP Balance - DC Valuated revenues Cost of sales: Overheads Creation WIP overhead costs Cost of sales: Production costs Creation WIP overhead Cost of sales S&A Creation WIP S&A WIP direct costs Usage WIP direct costs WIP overhead costs Usage of WIP: Overhead costs WIP Production costs Usage of WIP: Production costs WIP S&A Usage WIP: S&A Capitalized profit Revenue in excess of billings Creation of reserves: Direct costs Usabe WIP: Direct costs Creation of reserves: Overhead costs Usage WIP: Overhead costs Creation of reserves: Production costs Usage WIP: Production costs Creation of reserves: S&A Usage WIP: S&A Build up reserves for imminent loss Usage reserves for imminent loss
AC412 9-11

Cost Element
673221 673300 674101 674103 674201 674202 674203 675100 675200 675300 675400 675500 690000 691000 692000 693000 694000

Name
Value adjustment: Reserves for imminent loss Revenue surplus POC profit increase POC profit decrease POC loss creation POC loss realization POC loss cancellation Calculated revenue Calculated costs Valuated actual costs Valuated actual costs: Commissions Revenues Assessment of PA: Administration Assessment of PA: Sales & Distribution Assessment of PA: Marketing Assessment of PA: Sales Assessment of PA: Production

(C) SAP AG

AC412

9-12