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Muhammad Hani


The role of SAP-CO in the business environment.

Main components of SAP-CO.
Controlling integration with other SAP modules.
Implementing SAP-CO.
Overview of the organizational structure.
Cost center and profit center accounting.
Internal Orders.
Product Costing
Profitability analysis.
Conclusion, Questions, and discussion.

The rule of SAP-CO in the business


Controlling (CO) is the term by which SAP refers to

Managerial Accounting.

Managerial accountingis concerned with the

provisions and use ofaccountinginformation to
managers within organizations, to provide them with
the basis to make informed business decisions that
will allow them to be better equipped in their
management and control functions.

Managerial VS Financial accounting

Components of SAP-CO

Cost Center Accounting

Profit Center Accounting

Internal Orders

Product Costing

Profitability Analysis


Controlling implementation depends on how

well is the implementation of the other


SAP recommends Controlling implementation

to be carried out in 3 phases:
Enhancement and Optimization.

Controlling Integration

Financial module plays the role of a Feeder

All Financial transactions relevant to profit and
loss accounts are updated in the controlling in
real time.
This happens in real time through the
component Cost Element Accounting.
Any transaction in non-financial modules like
MM-SD that have a financial impact on profit
and loss are updated in controlling instantly.

Integration in event- based posting

Organizational Structure

Cost Center Accounting

Used for internal controlling purposes

and make the costs more transparent in
an organization.
If you have overhead costs, they need to
be allocated to the actual department
that owns that cost.
Focus is on managing cost per plan.
Performance is managed by comparing
planned and actual costs.

Cost Center AccountingContd

The structure of cost centers is heavily

dependent on each organization.
Before creating a cost center, you should
outline the standard hierarchy of the
cost centers.
Standard hierarchy allows you to
visualize the organization from the
controlling perspective.

Activity types and planning

Used to measure the output or the

contribution of cost centers to the
Ex: Quality control cost center ,the output
which is Inspection Hours is an activity
Activity inputs -which are primary cost
elements- and activity output quantities
and prices are planned and compared to
actual values so that any variance can be
measured and analyzed.

Activity flow and allocation

Cost center: Budget Planning

Cost center accounting also allows you

to set up a monthly budget by cost

You can compare the actual values

against the budgeted values and
establish timely availability checks in
case the budget is exceeded.

Profit Center Accounting

Primarily used for management-related

reporting for internal purposes.
Defining an organizational element as a
profit center entails that the unit is being
managed independently by a person
who is responsible for the
profit(revenues and costs).
Difference between profit center
accounting and profitability analysis.

Internal Orders

Used for managing small projects that need

to be budgeted and managed
independently .
Ex: setting up a marketing kiosk in a
cultural event.
Internal orders accounting allows you to
plan, budget, collect ,and settle the costs of
a mini project in a process oriented fashion.
Real and statistical orders.
Settlement process and receivers (Fixed
Assets-Cost Centers-Profitability Segment-

Internal orders

Product Costing

The basic question that CO-PC aims to

answer is this: what is the material cost
of a product?
Measuring the value added by each
process and organizational unit.
Supports make or buy decisions.
Determine true inventory and COGS
Come up with price floor for unit cost.

Product costing integration

CO-PC is heavily integrated with PP and

is effective only in conjunction with PP
and MM.
All of the master data of CO-PC depends
on PP for BOM, routing, work centers,
and relies on cost center accounting for
activity types prices.
Product cost planning and standard cost
Planning with or without Quantity

Costing Variant

Profitability Analysis (CO-PA)

The key difference between CO-PA and

profit center accounting (EC-PCA) is that
PA is the external view of the
organization while PCA is the internal
view of the organization for
management reporting.
CO-PA is a market oriented perspective,
you can report profitability by customer,
customer group, division, product,
product group, distribution channel, and
so on.

Reporting features, an example

CO-PA Integration


Controlling can help your


Improve productivity and insight.

Reduce costs through increased flexibility.
Support changing industry requirements.
Provide immediate access to enterprise


Thank You