FICO II

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FI/CO II

• Controlling

2
Components of Controlling
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EC-PCA
CO-PA
Profitability Segment
Profitability Analysis
CO-OM
CO-PC
Overhead Cost Controlling
Product Cost Controlling
Material Valuation
Cost Centers
Profit Center Accounting
Material
Labor
OH
Process
InternalOrders
ProductionOrders
FI
Assets
Financial Accounting
WIP
Revenue
Inventory
HCM
Warehouse
Sales
Procurement
Production
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Flow of Values in Controlling
Overhead Cost Controlling
Profit CenterAccounting
Cost Center
InternalOrder
Process
Product Cost Accounting
Cost Object
Cost Object
Cost Element Accounting
Profit Center
Profitability Analysis
Profitability Segment
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Organizational Units
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Organizational Units

• Controlling Area
• Self-contained organizational structure for which
  costs and revenues can be managed and allocated.
   
• One or more company codes can be assigned to a
  controlling area, which enables you to carry out
  cross-company code cost accounting between the
  assigned company codes.

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Organizational Units

• Operating Concern
• Used for Profitability Analysis (CO-PA)
• The operating concern represents the structure of
  external market segments for the enterprise.
• You can assign several controlling areas to each
  operating concern so you can analyze them
  together.

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Cost Centers

• The cost center is an organizational unit in a
  controlling area representing a clearly delimited
  location where costs occur.
• Cost centers can be based on functional,
  settlement-related, activity-related, spatial,
  and/or responsibility-related standpoints.
• Use cost centers for differentiated assignment of
  overhead costs to organizational activities based
  on utilization of the relevant areas and for
  differentiated controlling of costs arising in an
  organization.

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Standard Cost Center Hierarchy
H1
Cost centers areorganized in a hierarchical
structure calledthe standardhierarchy. The
standardhierarchy existswithin a
ControllingArea.
IDES Europe
Cost CenterGroups
H1000
H2000
Spain
UK
H1010
H1020
H1030
Corporate
Sales
Finance
1200
1201
1202
1203
Canteen
Telephone
Motor Pool
Power
Cost Centers
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Cost and Revenue Elements
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Cost and Revenue Elements
G/L Accounts
Financial Accounting
Financial Accounting
0
1
2
3
4
7
8
9
CurrentAssets
Nonoperat. costs,rev.
Mat. Inv.
ExpenseAcc.
WIP
Rev.
Closing
When expense and revenueG/L accounts are
created they are linked to a cost orrevenue
element.When values are posted to the G/L
account, a matchingdebit entry is made to the
cost or revenue element.
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4
5
6
Cost and RevenueElements
Rev.Elem.
PrimaryCostElem.
Sec.CostElem.
Sec.CostElem.
Controlling
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Primary Cost Elements

• Every posting to a G/L expense account causes a
  simultaneous posting to a primary cost element
• The posting to the cost element is a one sided
  debit posting
• The primary cost element is associated with a one
  cost center but the cost may be reposted to other
  cost objects or cost centers

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Secondary Cost Elements

• Secondary cost elements are used to transfer
  costs within controlling
• Transfers are made from a sender to a receiver
• Transfers within controlling are two sided
  postings with a debit and credit

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Activity Types
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Activity Types
Rates for Activity Types are determined through
the Cost Center planningprocess.
Senior Electrical Technician
Activity Types arecreated in customizing.
Project
Cost Center Maintenance
Cost Center
626200 -3,000
Internal Order 626200 3,000
Activity Document 10 Hours
Secondary Cost Elementused to allocate cost
fromCost Center providing the service
Many different types of objectscan receive the
cost
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Allocations
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Allocations

• Costs often have to be transferred within an
  organization
• A cafeteria prepares meals for employees and
  incurs expenses in the process
• The costs must be allocated to various cost
  centers based on a formula such as, for example,
  the number of employees in the receiving cost
  centers
• Costs are allocated from a sender to a receiver
  based on a tracing factor

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Periodic Allocation
This type of tracing factor is called a
statistical key figure.
Sending Cost Center Energy
Receiving Cost Center Administration
Costs to be allocatedMaterial
3000Wages 4000
M2 Floor Space 40 Allocated Costs Material
300 Wages 400
Tracing FactorM2 of floor space
Receiving Cost Center Production
Cost center responsible for providingenergy
periodically allocates its costs to other cost
centers based on tracing factor whichis the
proportion of floor space. Another type of
allocation is direct activityallocation (DAA)
using activity types.
M2 Floor Space 360 Allocated Costs Material
2700 Wages 3600
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Sender(Debit)
CE
Receivers
Used to accruecosts of trade fair
CE
Units to transfer Costs
CE
Settlement
When the tradefair is done wesettle the
coststo the cost center responsiblefor
organizing thetrade fair.
Allocation
Tracing Factor(Allocation Base)
We may want to reallocate costs to other cost
centers(maybe sales organizations for the
product linesrepresented at the fair) so we
perform an allocation using a tracing factor
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Cost Center Planning
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Cost Center Planning

• Cost center planning is the process of
  forecasting costs within the company
• A variety of inputs are used in the planning
  process
• HCM planning
• Sales and production planning
• Manual input of projected costs
• Etc.
• Planned costs are allocated within the cost
  center hierarchy so that cost centers can
  complete their planning
• Once the planning process is completed, cost
  centers can compute activity type rates
• Cost center planning is a necessary step in
  product cost accounting

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Product Cost Accounting
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Product Cost Accounting
Product Cost Planning
Cost Object Controlling
Actual Costing
Quantity Structure
Preliminary Costing
Material Movements
Plan Costs, Actual Costs
Order
Material Labor Overhead ProcessTotal
Process
BOM
Routing
Value Structure
Final Costing,Period End Closing
Value Structure
Material Prices Activity Prices Process
Prices Overhead
Work in Progress Scrap Variances Settlement
Material Movements
Material Ledger
Standard Price
Actual Costs
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Profit Center Accounting
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Profit Centers

• Profit centers are used to evaluate the
  profitability of internal segments of the
  organization
• Unlike CO-PA which evaluates external
  profitability
• Allows the organization to create internal
  balance sheets and P/L statements
• If PCA is used, every posting in CO creates a
  simultaneous statistical posting to a profit
  center
• Statistical postings are not real