sap profit center accounting ppt

Profit Center Accounting

Course Objectives

Understand the functions in Profit Center Accounting.

Explain Profitability management in SAP. Describe and maintain CO-PCA master data. Identify the source of actual values. Execute planning. Use the CO-PCA information system.

Module 1: Overview

Module 2: Profitability Management

Course Map

Table of contents

Module 5: Planning

Module 3: Master Data

Module 4: Transfer Prices

Module 6: Actual Data

Module 7: Information System

PCA Overview

Profit center accounting, in conjunction with transfer pricing, enables:- Structuring of the A Group according to Strategic Business Units

(SBUs), leading to:Full Income Statements according to lines of business (Product Groups rolled up to SBU/Sectors)

Selected reporting of Balance Sheet items by Product Group/SBU and Sector (e.g. Payables/Receivables, Fixed Assets. Inventories).

The ability to reflect material movements between SBUs at commercial prices rather than cost

Accounting Methods Period Accounting Cost-of-Sales Accounting

Values Gross Sales Net Sales Variances

Ratios Return on Investment Margins Economic Profit Cash Flow Contribution Margin

Terms used in Profitability Management

How profitable are individual market segments?

Overhead Cost ControllingHow can we reduce our overhead?

Are the responsibility areas working efficiently?

How high are the organisational activity costs? Are they within their budgets?

How can we optimise our internal business processes?

ECECPCAPCA

Pro

fit Cen

ter A

cc

ou

ntin

g

How Profitable are

Individual areas ?

Overhead Cost Controlling

What costs occur within the organisation?COCO

CELCEL

COCOPAPA

COCOOMOM

Profitability Analysis

COCOPCPC Product

CostControlling

What are the

Manufacturing

Costs of a product?

CO Module Overview

Profitability AnalysisProfitability Analysis

Pro

fit Cen

ter Acco

un

ting

HumanResources

Financial Accounting

FI

S&DSales andMaterials

ManagementMaterials

Management

COCOPAPA

COCOOMOM

ECEC -PCAPCA

Distribution

CO Components

Cost Element AccountingCOCOCELCEL

HR MM SD

Financial Accounting

Cost Element Accounting

Cost centers Internalorders

Profitabilitysegment

Asset RevenuesExpense

Activitytypes

Internal Orders

Company Code (9100 A Ltd, 9200 A1 Ltd

Operating concern (9100 – A Grp)

Overhead Cost Controlling Product CostControlling

StandardCost Estimate

Product Cost Collector

Controlling area (9100 – A Grp)

Organisational Units & Master Data

A1 Ltd9200

A Ltd9100

HQ1000

Cost Centers Purchasing13…

Gen Services

14…

Company Codes

Orders Cost Objects

Sales andMarketing

15…

R & T16…

Other Cost Objects

Operating Concern

Controlling Area

A Grp OperatingConcern (9100)

A Grp ControllingArea (1000)

EthylenePropylene

Pharma Polyolefins PowerTelecommunication

Information

technology

Corporatecommon

Profit Centers

Module 1: Overview

Module 2: Profitability Management

Course Map

Table of contents

Module 5: Planning

Module 3: Master Data

Module 4: Transfer Prices

Module 6: Actual Data

Module 7: Information System

Aspects of Profitability Management

Revenue 2000

Discounts 100

COGS 230

Contr. Margin 1440

Revenue 2000

Salaries 468

Materials 230

Profit

DistributionProductionProcurement Sales

Advertising

Profitability Analysis By Market segment

(Market oriented)

Responsibility Accounting

(Company oriented)

Profit Centers

PCAPCA PAPA

Segments

External Market

Profitability

Aspects of Profitability Management

CharacteristicsCO-PA

costing-based

EC-PCA

profit center

Enterprise

controlling

Aims of

profitability

accounting

Key figures

Calculation

of profits

Reconciliation

with FI

profit-related

key figures

posted and

imputed values

Sales and

profitability

controlling

period accounting

and cost-of sales

methods

cost-of-sales

method

profit-rel. key fig.

balance sheet fig.

posted values

Typical Questions in Profit Center Acctng.

What is the operating profit for a profit center?

What asset value is attributed to

A profit center?

Which responsibility areas

Exceeded their plan for last month?

What goods and services are exchanged within

The corporation?

Returnoncapital

Costmanagement

Managementof internalsales & services

Contribution oforganizationalunit

Responsibility Accounting

Reporting Dimensions

Profit Centers

Answers

Profit

Sales RevenueSales DeductionsCost of Goods SoldOperating Profit

LiabilitiesAccounts ReceivablesInvested Capital in AssetsInventoryCost of Capital

Return on Investment

Accounts

ROIEquity TurnoverReturn on SalesEconomic Profit Invested

Capital

Determine and analyze profit, balanceand financial ratios by Profit Center

Company 3A2 Ltd

GroupCompany 1

A LtdCompany 2

A1 Ltd

Profit Center 1

Profit Center 2

You use valuation views to represent different ways of viewing business transactions in a company. Legal view (Individual enterprise) – For transactions between company codes. Group view – For a consolidated view of the corporation. Profit center view – For business transactions between profit centers.

Legal Profit Center

AGroup

Valuation Views

Parallel Currencies in Profit Center Acctn.

Profit Center AccountingECEC--PCAPCA

TransactionCompany Special

Code EC - PCACurrency Currency Currency

Module 1: Overview

Module 2: Profitability Management

Course Map

Table of contents

Module 5: Planning

Module 3: Master Data

Module 4: Transfer Prices

Module 6: Actual Data

Module 7: Information System

Organisational Units & Master Data

A1 Ltd9200

A Ltd9100

HQ1000

Cost Centers Purchasing13…

Gen Services

14…

Company Codes

Orders Cost Objects

Sales andMarketing

15…

R & T16…

Other Cost Objects

Operating Concern

Controlling Area

A Grp OperatingConcern (9100)

A Grp ControllingArea (1000)

EthylenePropylene

Pharma Polyolefins PowerTelecommunication

Information

technology

Corporatecommon

Profit Centers

Master Data in Profit Center Accounting

Profit Centers

Profit Center Groups

Accounts P&L, Balance Sheet Items

Statistical key figures

Master Data - Profit Center (1)

Profit Center

Organizational unit in Accounting that reflects a management-oriented structure of the organization for the purpose of internal control. Profit Center groups are collections of Profit centers with similar characteristics.In the case of A Grp this structure is by Product Group.

Address /

Communications

Data

Basic data

Company Code

Assignment

Master Data – Profit Center (2)

Validity

Period

Profit

Center

Address /

Communications

Data

Basic data

Indicators:Dummy Profit Center

Master Data – Dummy Profit Center

Validity

Period

Dummy Profit

Center

Profit Profit CenterCenter

Profit Profit CenterCenter

Profit Profit CenterCenter

Profit Profit CenterCenter

Mass Processing

Company CodeCompany CodeAssignmentAssignment

Master DataMaster DataMaintenanceMaintenance

Profit Center Profit Center Comp. Cd1 Comp. Cd2

Ethylene Styrene ..........

Profit CenterProfit Center Depart . Responsible. Responsible

Collective Master Data Processing

N.N.

N.N.

Ethylene

StyreneXXX

YYY.....

9

ControllingControlling

Revenue elements

1 2 3

Assets

4

Liabilities Equity

Financial AccountingFinancial Accounting

Expenseaccounts

8Revenue

Profit Center AccountingProfit Center Accounting

1 Currentfinancialassetsandshort-termcapital

2 Non-opera-tingcosts,revenue

3 Materialinventory

Accounts in PCA

A Grp Chart of Accounts

Primarycostelements

Secondarycost elements

4 8

Master Data Groups

WagesWages SalariesSalaries

PersonnelPersonnel

Cost Cost ElementsElements

PHR1PHR1 PHR2PHR2

R&T R&T PROD.PROD.

HOURSHOURS

Activity Activity TypesTypes

TempsTempsTenuredTenured

EmployeesEmployees

Statistical Statistical Key FiguresKey Figures

DomesticDomestic ForeignForeign

Labour : Labour : contractcontract

CostCostElementsElements

F1F1 F2F2 F3F3

FertilizersFertilizers

ProfitProfitCentersCenters

Cost centerCost center

Internal orderInternal order

Sales order

Material

ProfitabilityProfitabilitySegmentSegment

Asset

Production order

Profit Profit CenterCenter

Profit Center Assignments

Monitoring Assignments

MaterialsMaterials Cost CentersCost Centers OrdersOrders

Material fastassignment

Profit centerswithout

cost centers

Objects per profit center

NotassignedCheck Assignments for:Check Assignments for:

Module 1: Overview

Module 2: Profitability Management

Course Map

Table of contents

Module 5: Planning

Module 3: Master Data

Module 4: Transfer Prices

Module 6: Actual Data

Module 7: Information System

Definition of a Transfer Price

A transfer price is a price used to valuate the transfer of goods and services between independent organizational units.

Enterprise Controlling

Legal View – that of independent legal companies Group View – that of the organization as a whole Profit center view - that of the decentralized responsibility areas

Division A

Division B

America Europe Middle East

Asia

BRA

MEX

USA

KSA

UK

Transfer Prices in SAP

Controlling area (Corporate Group)

PCAPCA

FIFI

COCO

Transfer price from the group viewpoint = group production costs

Transfer price from the profit center viewpoint = management price

Transfer price from the legal viewpoint = sales and purchase price

Company code(Legal View)

Profit Center(Negotiated prices)

Assumed Plan = Actual => No Variances

Company code 9100 A3 Ltd

PrCtr1 PrCtr2

+5

L 80

G 80

P 85

L 80

G 80

P 85

G 70

L 70

P 70

Company code 9300 A Ltd Company code 9200

A1 Ltd PrCtr2

85

CCtr 20

L 120

G 100

P 120L 120

G 100

P 120

100

PrCtr3

P 220

G 100

L 220220

220

Transfer Pricing

CCtr 10

Ethylene Butene-1 Polyethylene PolyethyleneButene-1

L 100

P 85

G 70

L 70

P 70

PrCtr3

G 100

Transfer prices in PCA

Profit Center 1 Profit Center 2

PCA

Quantity flow

Parallel value flows

120

MaterialProductionorder

Logistics

FI/CO

Transfer price120

Module 1: Overview

Module 2: Profitability Management

Course Map

Table of contents

Module 5: Planning

Module 3: Master Data

Module 4: Transfer Prices

Module 6: Actual Data

Module 7: Information System

Profit Center Planning Objectives

Plan Integration

Planning Methods

Plan Data Transfer

Plan Integration

Sales 100,000Discounts 5,000Cost of Sales 50,000Marketing Expenses 10,000Admin. Expenses 15,000Number of Sales Orders 1,000….

Profit Center PlanProfit Center Plan

CostCenter

InternalOrder

Microsoft Excel

CO ProductionOrder

Planning methods in PCA

Plan Allocations

New Plan

Final Plan

Plan data transfer Manual entryCopy existing data

Excel-Upload

Plan Profit Center

Revenue 100,000Marketing 50,000Admin 10,000….….

Cost Center

Internal /

On-line Plan Data TransferAND/OR

Subsequent Postings

Plan Data Transfer

CO Production Order

Module 1: Overview

Module 2: Profitability Management

Course Map

Table of contents

Module 5: Planning

Module 3: Master Data

Module 4: Transfer Prices

Module 6: Actual Data

Module 7: Information System

Actual Values Overview

Flow of Actuals in Profit Center Accounting Overview Flow from Profit and Loss accounts

Flow from materials management Flow from sales and distribution

Flow from Balance Sheet items – Period end closing Flow from Asset Management Transfer of Material Stock Transfer of Work In Process Flow from Accounts payable and receivable

Flow from controlling – Period end closing Flow from Overhead Cost Management Profit Center Document Entry Assessment & Distribution

Actual Values Overview

Flow of Actuals in Profit Center Accounting Overview Flow from Profit and Loss accounts

Flow from materials management Flow from sales and distribution

Flow from Balance Sheet items – Period end closing Flow from Asset Management Transfer of Material Stock Transfer of Work In Process Flow from Accounts payable and receivable

Flow from controlling – Period end closing Flow from Overhead Cost Management Profit Center Document Entry Assessment & Distribution

FIFI

COCO--PCPC

COCO--PAPA

COCO--OMOM

Overview of Value Flow in PCA

E E

Business process

VVAALLU U

F F LLOOWW

ECEC--PCAPCA

ProductionGoods

Sales/BillingProcurement

MMMMMMMMPPPPPPPP SDSDSDSDMMMMMMMM

E

Profit Center Accounting

Movement

Primary Costs

Actual Values Overview

Flow of Actuals in Profit Center Accounting Overview Flow from Profit and Loss accounts

Flow from materials management Flow from sales and distribution

Flow from Balance Sheet items – Period end closing Flow from Asset Management Transfer of Material Stock Transfer of Work In Process Flow from Accounts payable and receivable

Flow from controlling – Period end closing Flow from Overhead Cost Management Profit Center Document Entry Assessment & Distribution

Material/Plant of Sales OrderSubstitution

Material/Plant of Purchase Order

Material/Plant

Indirect /Manual Assignment

Customized AutomaticAccount Assignment

Invoice ReceiptInvoice Receipt

Goods MovementGoods Movement

Direct Posting from Direct Posting from FIFI

Other Other P&L AccountsP&L Accounts

Source TransactionProfit Center

Billing DocumentBilling Document

Determination of Profit Centers in P&L

Business process

VVAALLU U

F F LLOOWW

ECEC--PCAPCA

FIFI

PPPPMMMM

Material Expense400000

Raw Materials119400

500

500

500

Consumption Production Order

COCO--PCPC

Material Expense 500

Flow from materials management (1)

E

Material Expense400000

Business process

VVAALLU U

F F LLOOWW

ECEC--PCAPCA

FIFIFIFIFI

PPPP MMMM

Finished Products119430

450

450

Delivery to Stock Production Order

450

M. Expense

500

Production Output - 450

COCO--PCPC

Production Output462001

Flow from materials management (2)

E

Production Output462001

Business process

VVAALLU U

F F LLOOWW

FIFI 6,028.50-

Cost of Goods Sold 462002

Inventory - Finished Product (FG)

119430

6,028.50

Goods Issue

MMMMMMMM

Flow from sales and distribution (1)

E

Stock

Change Stock

ECEC--PCAPCA

Flow from sales and distribution (2)

Business process

VVAALLU U

F F LLOOWW

Sales/Billing

SDSD

Receivables…

10,000

Sales810000

10,000

EFIFI

Sales810000

10,000

ECEC--PCAPCA

Actual Values Overview

Flow of Actuals in Profit Center Accounting Overview Flow from Profit and Loss accounts

Flow from materials management Flow from sales and distribution

Flow from Balance Sheet items – Period end closing Flow from Asset Management Transfer of Material Stock Transfer of Work In Process Flow from Accounts payable and receivable

Flow from controlling – Period end closing Flow from Overhead Cost Management Profit Center Document Entry Assessment & Distribution

Cost Center/Internal OrderAssignment of Asset

Material/Plant

Material/Plant Account Assignment ofSales order/Purchase Order

AssetsAssets

Inventory ValuesInventory Values

Source Transaction Profit Center

Customizing AutomaticAccount Assignment

Accounts Accounts ReceivableReceivableAccounts Accounts PayablePayable

Other Other Balance Balance Sheet ItemsSheet Items

Determination of Profit Center for B/Sheet

Flow from Asset management

Business process

VVAALLU U

F F LLOOWW

E

Building Assets

100

Building Assets

100

Transaction Processing:Acquisition of Asset

Period End Closing:Transfer of Asset

Values

Periodic TransferOn-line

ECEC--PCAPCA

FIFI

Transfer of Material Stock

VVAALLU U

F F LLOOWW

E

Material Stock

1000

Material Stock

1000

Periodic TransferOn-line

ECEC--PCAPCA

FIFI

Transfer of Work in Process

VVAALLU U

F F LLOOWW

E

WIP

80

WIP

80

Periodic TransferOn-line

ECEC--PCAPCA

FIFI

Item 1Item 2Item 3

Carry out period -FI (payables and receivables are split according to profit center)

Run transfer program in Profit Center Accounting

Sales orderFISDSD

ECEC--PCAPCA

Profit center A Profit center BProfit center C

100020003000

A/R Profit Center C

3000

A/R Profit Center B

2000

A/R Profit Center A

1000

FI

Accounts Receivable

6000

Flow of value in AP and AR

1

2

closing activities for payables and receivables in

Actual Values Overview

Flow of Actuals in Profit Center Accounting Overview Flow from Profit and Loss accounts

Flow from materials management Flow from sales and distribution

Flow from Balance Sheet items – Period end closing Flow from Asset Management Transfer of Material Stock Transfer of Work In Process Flow from Accounts payable and receivable

Flow from controlling – Period end closing Flow from Overhead Cost Management Profit Center Document Entry Assessment & Distribution

Business process

VVAALLU U

F F LLOOWW

Auto Expenses

450017

COCO --OMOM

Auto Expenses 500

500

Transaction Processing:Post Vendor Invoice

Transfer from Controlling (1)

E

FIFI

Vendor

500

Auto Expenses

450017

500

ECEC--PCAPCA

Transfer from Controlling (2)

Business process

VVAALLU U

F F LLOOWW

E COCO--OMOM

R&T PROD. HR. - 500

Transaction Processing:Internal Activity

Allocation

R&T PROD. HR.500

Profit Center 2

Profit Center 1

Cost Center 2

500

Cost Center 1

5 hours

5 hours

500

ECEC--PCAPCA

COCO--OMOM

Business process

VVAALLU U

F F LLOOWW

E

Period End Closing:

Profit Center 2

Profit Center 1

8000

General costs to R&T.

8000

. ECEC--PCAPCA

Profit Center Document Entry

General costs to R&T

ECEC--PCAPCA

Statistical Key

Figure

Business process

VVAALLU U

F F LLOOWW

E

Period End Closing:Assessment

Profit Center 1112

Profit Center 7000

. ECEC--PCAPCA

Assessment

Profit Center 1114

. Others/

Allocations

Benzene

Butadiene

ECEC--PCAPCA

Module 1: Overview

Module 2: Profitability Management

Course Map

Table of contents

Module 5: Planning

Module 3: Master Data

Module 4: Transfer Prices

Module 6: Actual Data

Module 7: Information System

Line ItemReports

Profit Center Report

InteractiveReporting

List-oriented Reports

MasterData Index

SummaryRecords

Information System Overview

Report Output Types

Interactive Reporting Variable output areas Navigation tree / drag & dropCumulative display functionality

List – Oriented Reports Interface Report-to-Report Printing options Integration with MS Office

Course Summary

You should now: Have an understanding the functions in Profit Center

Accounting. Explain Profitability management in SAP. Describe and maintain CO-PCA master data. Identify the source of actual values. Execute planning. Use the CO-PCA information system.