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    Controlling

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    Pallavi Chitti
    General Controlling provides essential information for management decision-making by facilitating the coordination, monitoring, and optimization of all organizational processes, including recording production factor consumption and services provided. Cost elements are collected into groups with similar characteristics and assigned to cost centers reflecting the organizational structure, defining the basis for overhead reporting and cost determination. Profit centers are organizational units for internal control allowing analysis of operating results using cost-of-sales or period accounting approaches to also use them as investment centers by calculating fixed capital.

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    Controlling

    Uploaded by

    Pallavi Chitti
    26 views21 pages
    General Controlling provides essential information for management decision-making by facilitating the coordination, monitoring, and optimization of all organizational processes, including recording production factor consumption and services provided. Cost elements are collected into groups with similar characteristics and assigned to cost centers reflecting the organizational structure, defining the basis for overhead reporting and cost determination. Profit centers are organizational units for internal control allowing analysis of operating results using cost-of-sales or period accounting approaches to also use them as investment centers by calculating fixed capital.

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    Controlling in sap

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    General Controlling provides essential information for management decision-making by facilitating the coordination, monitoring, and optimization of all organizational processes, including recording production factor consumption and services provided. Cost elements are collected into groups with similar characteristics and assigned to cost centers reflecting the organizational structure, defining the basis for overhead reporting and cost determination. Profit centers are organizational units for internal control allowing analysis of operating results using cost-of-sales or period accounting approaches to also use them as investment centers by calculating fixed capital.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    26 views21 pages

    Controlling

    Uploaded by

    Pallavi Chitti
    General Controlling provides essential information for management decision-making by facilitating the coordination, monitoring, and optimization of all organizational processes, including recording production factor consumption and services provided. Cost elements are collected into groups with similar characteristics and assigned to cost centers reflecting the organizational structure, defining the basis for overhead reporting and cost determination. Profit centers are organizational units for internal control allowing analysis of operating results using cost-of-sales or period accounting approaches to also use them as investment centers by calculating fixed capital.

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    © All Rights Reserved
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    General Controlling provides you with information for management decision-making.

    It facilitates the coordination,


    monitoring, and optimization of all processes in an organization. This involves recording both the consumption of
    production factors and the services provided by an organization
    BUSINESS PROCESS ASSOCIATED WITH THE SAP CO MODULE:
    A primary cost or revenue element is a cost or revenue-relevant item in the chart of accounts, for which
    a corresponding general ledger (G/L) account exists in Financial Accounting (FI).
    Cost Element Groups
    You can collect cost elements with similar characteristics in cost element groups.
    The Cost Center in SAP reflect the organizational structure of a company and displays the areas of
    responsibility. The cost center structure is very important because it defines the basis for other modules
    and overhead reporting.

    Purpose –

    The cost centers for differentiated assignment of overhead costs to organizational activities, based on
    utilization of the relevant areas (cost determination function) and for differentiated controlling of costs arising
    in an organization (cost controlling function). You can assign activity types to a cost center.
    Definition –
    A profit center is an organizational unit in accounting that reflects a management-oriented
    structure of the organization for the purpose of internal control.

    You can analyze operating results for-profit centers using either the cost-of-sales or the period accounting approach.

    By calculating the fixed capital, you can also use your profit centers as investment centers.

    Benefits –

    Profit Center Accounting at the profit center level is based on costs and revenues. These are assigned
    statistically by multiple parallel updating to all logistical activities and other allocations of relevance for a profit center.
    How to measure the performance of a manager of a Profit Centre?

    It is important to monitor the performance of cost, profit and investment centre to judge how both the
    center is performing economically and how their managers are performing as managers. It is important
    not to judge managers for elements of performance for which they have no responsibility.
    Product Cost Planning:

    Product Cost Planning (CO-PC-PCP) is an area within Product Cost Controlling (CO-
    PC) where you can plan costs for materials without reference to orders, and set prices for materials and other
    cost accounting objects.

    •To determine cost estimate of the product.(Standard price)

    We can use this price for the valuation of Inventory.

    OBJECTIVES OF PRODUCT COSTING:

    •To determine the cost of a product or service.


    •To determine the detailed cost of a Product.
    •Managerial decision-making.
    •Valuation of Inventory and WIP.etc.
    CO-PA Organization Structure –

    In order to used functionality of CO-PA (Profitability Analysis), the operating


    concern must be created which is highest hierarchical unit in combined FICO module. The structure and assignment of
    operating concern, controlling area and company code is shown in the figure below,
    The Operating Concerns contains the list of characteristics and value fields,

    Characteristic:

    Characteristic defines the level at which you see the report. e-g; company code, sales area , customer and product.
    Following are the types of characteristics in CO-PA,

    Fixed Characteristics: When we generate an operating concern there are some fixed characteristic which already generated
    in operating concerns.
    e-g; Product, Company Code and sale area etc.

    Predefined Characteristics: We can include more characteristics in an operating concern. These characteristics are already
    present in the field catalog and explicitly added to operating concern.
    e-g; Sales Employee and Material group.

    Customer -defined Characteristics: In field catalog we can also defined our own characteristics and from there we include
    them in our Operating Concern.

    Profitability Segment Characteristics (Segment-Level Characteristics): Profitability segment is a unique combination of


    selected characteristics. i-e; Only the characteristics selected for the setting will be used in profitability segments as shown
    below.
    In order to sustain and thrive in this contemporary and dynamic environment rapid and timely decision-making is more
    essential than making the right decision. Organizational profitability is one of the core parameters to assess when it
    comes to designing organizational goals, objectives, and strategies to achieve them.

    The two useful tools provided by SAP to analyze the profitability of an organization are Profitability Analysis (CO-PA) and
    Profit Center Accounting (EC-PCA).

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