Overview
of SAP Controlling Module
The Controlling (CO)
component of SAP R/3 system contains all accounting functions necessary for
effective controlling for businesses. Every organization normally have an
external and internal accounting viewpoints. The external viewpoints is
represented by Financial Accounting
(FI) component and Controlling
(CO) represents the internal accounting viewpoint. CO component of SAP
system offers a broad selection of functional tools that can be used to provide
management accounting information that are useful for management decision
making. Do remember that Financial Accounting and Controlling are independent
components of the SAP system. The data flow from the CO component to FI
component takes on a regular basis.
Components of Controlling (CO)
A. Overhead Cost Controlling (CO-OM)
Components of Controlling (CO)
A. Overhead Cost Controlling (CO-OM)
Cost
and Revenue Element Accounting (CO-OM-CEL)
This provides the
structure for assignment of CO data through the classification of transaction
items in accordance with the nature of the cost or revenue posted to a CO
object such as cost center, internal order, and etc.
This component is resposible for the structure of accounts where costs and revenues of an organization are automatically updated the CO objects.
Cost Center Accounting (CO-OM-CCA)
Cost Center Accounting provides information where costs occur in an organization. It tracks the sources of costs from the different organization of the company.
The design of cost center for each organization varies. However, the typical approach is to define a cost center for each low-level group or organizational unit that is responsible for managing costs.
Internal Orders (CO-OM-OPA)
Internal Orders in SAP system is normally a tool for planning, collecting, and settling the costs of internal jobs and tasks. This is a highly flexible CO tool that can be used for a wide variety of purposes to track costs and sometimes revenues within a specific controlling area.
Activity-Based Costing (CO-OM-ABC)
Activity-Based Costing application component of SAP system is helpful in allocating overhead costs to products and to other cost objects using the resource drivers. ABC allocation is more relevant and reliable compared with the traditional overhead allocation. In ABC approach, the resources consumed by the different business processes are assigned to the respective origin of costs.
B. Product Cost Controlling (CO-PC)
Product Cost Planning (CO-PC-PCP)
This area of Product Cost Controlling can use by companies to plan costs of materials without reference to any orders. It can be used also to set material prices and other cost object prices. Further more this can be used to plan and analyze the product costs e.g. material cost, service cost, and other add-on intagible costs.
PCP can be used to calculate the Cost of Goods Manufactured (COGM) and Cost of Goods Sold (COGS). COGM composes all the costs incurred to produce a product which includes material costs, direct labor and overhead costs. COGS is the sum of COGM and any direct costs incurred in selling the product to a customer.
It is very important to monitor efficiently and effectively the costs incurred to your producs. With SAP Product Cost Planning, the above goal can be achieved.
Cost Object Controlling
This area of Product Cost Controlling can be used to determine efficiently and effectively what are the costs incurred for each object.
This area is subdivided into; Product Cost by Order, Product Cost by Period, Product Cost by Sales Order, Cost for Intangible Goods and Services.
One of the basic common decision management normally dealt with is "Should we buy the materials or should we produce?". Normally, if everything is equal management will choose the decision that entails lesser costs.
Actual Costing/Material Ledger (CO-PC-ACT)
This component application accomplishes these basic objectives; Carry material prices in multiple currencies/valuations, and actual costing.
Normally, the values of material inventory (raw materials, semi-finished goods, finished goods) are reflected in the system in one currency which is the company code currency. With the material ledger there can be additional two currencies to manage the values of the materials in the system.
Product Cost Controlling Information System (CO-PC-IS)
This application component renders useful and extensive range of reports for Product Cost Planning, Cost Object Controlling, and Actual Costing/Material Ledger.
C. Profitablity Management
Profit Center Accounting (EC-PCA)
A profit center is a management-oriented organizational unit used for internal controlling.
For instance, you may treat each of your product group as profit center in the system. This enables you to monitor the revenues and costs attributable to each product group. You can do an evaluation on each profit center; profit and loss and balance sheet.
Profitability Analysis (CO-PA)
The profits and contribution margins for market segment of a company can be analyed using Profitability Analysis application component of SAP.
The objective of COPA is to support sales, product management, and corporate wide planning and decision making, using an external view from a market oriented perspective.
This component is resposible for the structure of accounts where costs and revenues of an organization are automatically updated the CO objects.
Cost Center Accounting (CO-OM-CCA)
Cost Center Accounting provides information where costs occur in an organization. It tracks the sources of costs from the different organization of the company.
The design of cost center for each organization varies. However, the typical approach is to define a cost center for each low-level group or organizational unit that is responsible for managing costs.
Internal Orders (CO-OM-OPA)
Internal Orders in SAP system is normally a tool for planning, collecting, and settling the costs of internal jobs and tasks. This is a highly flexible CO tool that can be used for a wide variety of purposes to track costs and sometimes revenues within a specific controlling area.
Activity-Based Costing (CO-OM-ABC)
Activity-Based Costing application component of SAP system is helpful in allocating overhead costs to products and to other cost objects using the resource drivers. ABC allocation is more relevant and reliable compared with the traditional overhead allocation. In ABC approach, the resources consumed by the different business processes are assigned to the respective origin of costs.
B. Product Cost Controlling (CO-PC)
Product Cost Planning (CO-PC-PCP)
This area of Product Cost Controlling can use by companies to plan costs of materials without reference to any orders. It can be used also to set material prices and other cost object prices. Further more this can be used to plan and analyze the product costs e.g. material cost, service cost, and other add-on intagible costs.
PCP can be used to calculate the Cost of Goods Manufactured (COGM) and Cost of Goods Sold (COGS). COGM composes all the costs incurred to produce a product which includes material costs, direct labor and overhead costs. COGS is the sum of COGM and any direct costs incurred in selling the product to a customer.
It is very important to monitor efficiently and effectively the costs incurred to your producs. With SAP Product Cost Planning, the above goal can be achieved.
Cost Object Controlling
This area of Product Cost Controlling can be used to determine efficiently and effectively what are the costs incurred for each object.
This area is subdivided into; Product Cost by Order, Product Cost by Period, Product Cost by Sales Order, Cost for Intangible Goods and Services.
One of the basic common decision management normally dealt with is "Should we buy the materials or should we produce?". Normally, if everything is equal management will choose the decision that entails lesser costs.
Actual Costing/Material Ledger (CO-PC-ACT)
This component application accomplishes these basic objectives; Carry material prices in multiple currencies/valuations, and actual costing.
Normally, the values of material inventory (raw materials, semi-finished goods, finished goods) are reflected in the system in one currency which is the company code currency. With the material ledger there can be additional two currencies to manage the values of the materials in the system.
Product Cost Controlling Information System (CO-PC-IS)
This application component renders useful and extensive range of reports for Product Cost Planning, Cost Object Controlling, and Actual Costing/Material Ledger.
C. Profitablity Management
Profit Center Accounting (EC-PCA)
A profit center is a management-oriented organizational unit used for internal controlling.
For instance, you may treat each of your product group as profit center in the system. This enables you to monitor the revenues and costs attributable to each product group. You can do an evaluation on each profit center; profit and loss and balance sheet.
Profitability Analysis (CO-PA)
The profits and contribution margins for market segment of a company can be analyed using Profitability Analysis application component of SAP.
The objective of COPA is to support sales, product management, and corporate wide planning and decision making, using an external view from a market oriented perspective.
