Profitability Management

Profitability Analysis (CO-PA) provides you with an external view of your profitability. Profitability analysis allows you to monitor and analyze  the contribution of your market segments and units, structured according to products, customers, orders and summarizations.

Profit Center Accounting (EC-PCA)

Enterpise Controlling’s Profit Center Accounting (EC-PCA) provides you with an internal view of your profitability. EC-PCA makes it possible to evaluate the operating profit of different areas or unit within your enterprise.

Posting In Controlling

When an FI document is created that posts to an expense (or revenue) account for which a responding primary cost element was created in CO, and a valid controlling object (such as a cost center or internal order) is identified for the expense/revenue line item, a controlling document is also created.

This CO document with its own unique number contains the following details:

-          controlling object post to

-          the cost elemet used

-          the amount

-          the date

When primary cost is initially posted into CO, it is treated as a one-sided journal entry, unlike a traditional balanced financial accounting journal entry

Integration

In the integrated SAP R/3 system, you can tranfer data to Cost Center Accounting from the following aplicatin components:

-          Financial Accounting (FI)

-          Assets Accounting (FI-AA)

-          Materials Managemet (MM)

-          Material Consumption

-          Production Planning (PP)

-          Personnel Administration and Payroll (PA)

Financial Accounting

Financial Accounting

·         General Ledger (FI-GL) General Ledger is fully integrated with the other SAP Modules. It is within the General Ledger that all accounting postings are recorded. These postings are displayed in real-time providing up-to-date visibility of the financial accounts.

·         Accounts Payable (FI-AP) Accounts Payable records account postings generated as a result of Vendor purchasing activity. Automatic postings are generated in the General Ledger as well. Payment programs within SAP enables the payment of payable documents by check, EDI, or transfers.

·         Accounts Receivable (FI-AR) the FI accounts receivable component is responsible for monitoring and controlling customer accounts within SAP R03’s financial accounting component

·         Accounting documents. The accounting document respresent the original document in the system. The other processing documents can be used to simplify documents entry. The document remains as a connecting unit in the system until it is archived.

·         Payments. When you enter documents, the system checks whether the minimum accounts assignments have been made, for example, document date, posting date, document type, posting key, account number and anount.

·         Travel Management (FI-TV) Travel Management provides management of all travel activities including booking trips and handling of expenses associated with travel.

·         Payment and transfer to payroll Accounting

Components of management accounting

The my SAP financial key functional area:

•  Management Accounting is comprised of application components in the Controlling (CO)
•  Enterprise controlling (EC) areas

The components of CO and EC include the following key capabilities: Key Controlling capabilities:

Cost  center Accounting

You use cost center accounting for controlling purposes within your organization. It is useful for a source-related assignment of overhead costs to the location where they occurred

Internal Orders

You use internal orders to collect and control cost according to the job that incurred the cost. Can assign budgets for these jobs, which the system monitors, to ensure that budgets are not exceeded

Activity Based Costing

Activity Based Costing analyze cross-departemental business processes. The goals of the whole organization and the optimization of business flows are prioritized.

Product cost controlling

Product cost controlling calculates the cost that occur during manufacture of a product,or provision of a service. It enables you to calculate the minimum price at which a product can be profitably marketed

Profitability Analysis

Profitability analysis analyzes the profit or loss of an organization by individual market segments.

Key enterprise controlling capabilities

Profit Center Accounting, evaluates the profit or loss of individual, independent areas within an organization

Consilidation, enterprise controlling consilidation (EC-CS) provides the ability to consolidate financial data for both external (legal) and internal (profit center) accounting perspectives.

Master Data

Organization Elements in Controlling

-         contolling area

-         company code

-          profit center

Overhead cost controlling,

The mySAP Financial Overhead Cost Controlling (CO-OM) component helps you plan, allocated, control, and monitor overhead in your organization. By plan in overhead areas, can develop standards that allow you to control cost and valuate internal activities. 

Cost center Accounting, the cost center accounting component determines where cost appear in the organization. By recording and allocating costs, you not only make cost controlling possible, you also lay important groundwork for other Controlling components, such as cost object controlling.

Internal Order, the SAP R/3 enables you to monitor internal ordered throughout their entire cost life cycle; from initial creation, through the planing and posting of all the actual costs, to the final seltemet and archiving.

Activity Based Cost, is a relatively new cost accounting method used by some companies to monitor costs by business process rather than costs centers. The goal of ABC is to determine the cost performing a business process.

Product Cost Controlling, is part of mySAP Financial Controlling aplication component and is a tool for managing costs related to the manufacturing process and the rendering of services.

Product cost controling includes the following tools:

• product cost planing
• cost object controlling
• actual costing
•   information system

Product Cost Controlling can help:

1. plan your product cost accurately
2.  compare alternative cost estimates to optimize your business decisions
3. monitor your product cost in every stage of the manufacturing process
4. carry out detailed variance analysis on each order, product, and product group
5. calculate actual cost by period
6. put alternative values on your inventory for balance sheet purposes
7. answer recurring questions on the cost of goods manufactured by plant, product group, product, or order
8. answer one-of questions about the cost of goods manufactured

Accounting Foundation

Accounting Foundation

The accounting system with its various sub-units is a critical part of the SAP solution. The integration of the various aspects of accounting with each other and with logistics and human resources applications becomes a management tool for all company departement.

                       

SAP R/3 provides all the necessary functions for developing a uniform accounting system that can be consolidated across international borders.

SAP R/3 offers flexible software that can be used in different countries. The system meets the needs of major industrial nations of the world with its multilingual approach, flexible currency handling, and country-specific functions for taxes, reporting, and payment transactions.

The SAP R/3 Accounting System consists of several components:

·         Financial Accounting (FI)

·         Corporate Finance Management (CFM)

·         Profitability and Sales Accounting

·         Product Cost Controlling

·         Overhead Cost Controlling

·         Investment Management (IM)

·         Project Management

 Components Financial Accounting (F1)

·         G/L Accounting

·          Accounts Payable and Accounts Receivable

·         Asset Accounting

 Components Corporate Finance Management (CFM)

·         Corporate Finance Management (planning, analysis, decision support, financial transactions, payments, and risk capabilities in various group environment)

Profitability and sales accounting 

Profitability Analysis

Components Product Cost Controlling 

·         Product Cost Planning

·         Cost Object Controlling

Components Overhead Cost Controlling 

·         Cost Centers

·         Internal orders

·         Activity-Based Costing

Investment management

Allows company-wide planning of capital investment programs and control of individual capital investment measures.

Project management 

Allows efficient planning, cost-sensitive control, and target-oriented implementation of projects with comprehensive integration with Controlling and Logistic.

Concept of company, company code, business area, functional area, profit center

·         Company

This represents a legally autonomous entity, composed of one or more company codes.

·         Company code

This represents the tax law (national ) view of the company. Fiscal calendar ,local currency and tax reporting requirements determine the design of the complete and reconciled tracking system.

·         Business area

This helps depict internal structures for external segment reporting

·         Functional area

This are displays the profit and loss statement according to cost of sales accounting

·         Profit center (management accounting)

With its flexible design , this controlling term is used to deciept internal areas of responsibility.

Chart of account, 

Is a created list of the accounts used by a business entity to define each class of items for which money or the equivalent is spent or received. It is used to organize the finances of the entity and to segregate expenditures, revenue, assets and liabilities in order to give interested parties a better understanding of the financial health of the entity.

The chart of accounts can be respresented in the SAP system as one of three function:

As an operational chart of accounts

As a local chart of accounts

As a group chart of accounts

Vendor master - account payable 

The vendor master -- account payable contains all the information a company needs for its business relationships with vendors. This data controls the posting transaction as well as the processing of posting data.

Vendor master - account payable

Overview of all data for a given vendor

Flexible data access

Baseline data used to control payment transactions and to represent business processes

General data

Includes address and telecommunications data (telephone, fax & telex information), general data vendor information ( coporate group, industry branch) as well as bank details.

Company code data

Includes company specific policies concerning payment transaction, dunning procedures and correspondence information.

Purchasing organization data

Includes inquiry, order and invoice verification information.

Asset management

Increasing automation makes palnning and monitoring of fixed assets for external and internal accounting purpose ever more important.

Asset class, asset master record

Support the structuring and classification of fixed assets.

Account balance

A line item display provides an overview of the open, cleared and parked items from an account.