SAP S/4HANA End-to-End Lab

The last part of this series, based on a practical ERP cost management course, covers process costing in a mass-production environment and the month-end cost close procedure. The cost close is not a CO-only task. It is an integrated process that runs after the production, purchasing, sales and finance actuals have all been closed. 1. Process costing splits cost between finished units and work in process Job costing suits cost tracking per production order. In mass production, only part of the input is completed and the rest remains in process, so the input cost has to be allocated between finished units and WIP. Method Suited to Cost is split between Job costing Cost tracking per production order Individual orders Process costing Mass production Finished units and work in process 2. Beginning WIP and degree of completion When beginning WIP exists, the weighted average method or the FIFO method can be applied. Equivalent units, which reflect the...

Part 2 of this series, based on a practical ERP cost management course, covers the master data that forms the backbone of cost calculation, job costing, manufacturing overhead allocation and joint costs. Before choosing a costing method, the first question to settle is: where is cost collected, and on what basis is it allocated to which product? 1. Cost master data determines the calculation result Master data object Role Examples from the course Cost center Responsibility unit that plans and collects cost — Cost element Classifies the nature of expenses and revenues — Activity type Expresses an activity quantity Labor hours, machine hours Internal order Tracks cost of a specific purpose Events, campaigns 2. Cost classification criteria Cost is classified by purpose. The direct/indirect and variable/fixed distinctions in particular have a large effect on allocation and on decision making. Criterion Catego...

This series is based on a practical ERP cost management course and summarizes the cost flow of a manufacturing company and the structure of cost management in an ERP system. Part 1 covers why cost management accounting is needed, how material cost, labor cost and overhead flow into products and cost of goods sold, and how an integrated ERP connects that flow. Note: the actual process and master data differ by company, depending on the production method and the ERP configuration. 1. Starting point of practical ERP cost management Cost management is not a stand-alone calculation. It links purchasing, production, inventory, sales and finance data into one flow. The series moves step by step from cost concepts to actual costing and the period-end close. 2. Structure of the course The course has two parts. This series concentrates on the main flow of Part 1. Part Topics Covered in this series Part 1 Cost concepts, actual costing, manufacturing overhead allocation...

The final part of the SAP CO overview covers CO-PA (Profitability Analysis). Where the financial statements show the profit of the company as a whole, CO-PA answers a narrower question: which product, sold to which customer, through which channel, produced the profit. Note: data structures, screens, T-codes and reports vary by SAP version and by how each company operates CO-PA. 1. CO-PA splits profit by characteristic The top-level organizational unit of CO-PA is the Operating Concern. It defines the characteristics and value structure used for analysis. The combination of characteristic values forms the analysis unit, the Profitability Segment, on which P&L items such as revenue, discounts, cost of goods sold and selling expenses are collected. Typical characteristic Example Product Product, product hierarchy Customer Customer, customer group Sales organization Sales organization Distribution channel Distribution channel Plant ...

Part 3 of the SAP CO overview covers Product Cost Controlling. Product cost is not simply the sum of material cost. It also covers what was consumed and in what quantity, which operations were performed, why plan and actual differ, and how that difference is reflected in inventory and cost of goods sold. Note: screens, T-codes and closing procedures vary by SAP version, production method, whether the Material Ledger is active, and company-specific configuration. 1. Cost is classified differently depending on purpose and behavior The same cost carries a different meaning depending on the classification used. No classification is more correct than another; the point is to pick the view that fits the decision at hand. Classification basis Categories Nature of cost Material, labor, expenses Relation to the product Direct cost, indirect cost (overhead) Relation to activity level Variable cost, fixed cost Relation to manufacturing Manufacturin...

Part 2 of the SAP CO overview covers Overhead Cost Controlling. Overhead is cost that cannot be attributed directly to a specific product or service. In SAP it is first collected on a cost center or an internal order, then allocated or settled to the final cost object using a defensible basis. Note: screens, menus, T-codes and processing steps vary by SAP version and company-specific configuration. 1. Cost Center Accounting makes cost responsibility explicit A cost center is the management accounting unit where costs arise and where someone is responsible for them. Cost centers can follow teams or departments in the HR organization, but separate cost centers are also created for cost management or allocation purposes. CO-CCA role Description Planning and budgeting Cost plan and budget per cost center Actual collection Actual costs originating in FI are collected on the cost center Variance analysis Plan versus actual comparison Allocation ...

This post opens a four-part overview of SAP CO (Controlling, management accounting). Part 1 starts from the question "why does SAP need CO at all?", then covers the difference between FI and CO, the CO sub-modules, the organizational structure, and how data created in other modules ends up in CO. Note: this series is reorganized from SAP CO overview training material. Screens, menus, T-codes and processing steps vary by SAP version and company-specific configuration. 1. Every business activity ends up as cost or revenue Take a manufacturing company as an example. Each logistics module owns one part of the process, FI records the accounting result, and CO reuses that data for analysis. Module What it manages SD To whom, and under which conditions, products are sold MM Purchasing and inventory of raw materials PP What is produced and how, based on BOM and Routing FI Receivables, payables, expenses, assets and revenue arising from...