© 2008 sapficoconsultant.com all rights reserved. no part of this...

© 2008 sapficoconsultant.com All rights reserved. No part of this material should be reproduced or transmitted in any form, or by any means, electronic or mechanical including photocopying, recording or by any information storage retrieval system without permission in writing from www.sapficoconsultant.com “SAP” is a trademark of SAP AG, Neurottstrasse 16, 69190 Walldorf, Germany. SAP AG is not the publisher of this material and is not responsible for it under any aspect. Warning and Disclaimer This product is sold as is, without warranty of any kind, either express or implied. While every precaution has been taken in the preparation of this material, www.sapficoconsultant.com assumes no responsibility for errors or omissions. Neither is any liability assumed for damages resulting from the use of the information or instructions contained herein. It is further stated that the publisher is not responsible for any damage or loss to your data or your equipment that results directly or indirectly from your use of this product.

Table of contents Introduction........................................................................................................................4 1. Define Functional Area ............................................................................................6 2. Activate Cost of Sales Accounting for Preparation...........................................10 3. Updating Functional Areas in Master data .........................................................11

3.1 Enter Functional Area in G/L Account Master Data .......................................11 3.2 Enter Functional Area in Cost Element Master Data .....................................21 3.3 Enter Functional Area in Cost Center categories ...........................................28 3.4 Functional areas in the Order types .................................................................29 3.5 Enter Functional Area in Cost centers .............................................................36

4. Assign Scenarios and Customer Fields to Ledgers..........................................40 5. Define and Activate Substitution for Cost-of-Sales Accounting ......................43 6. Activate Cost of Sales Accounting .......................................................................85 7. Value flow in cost of sales accounting ................................................................86

7.1 Balance in Process orders. ................................................................................86 7.2 Posting using cost center as an assignment object.......................................95 7.3 Derivation from GL account ...............................................................................96 7.4 Postings to Real Internal order ..........................................................................98

8. Reports in Cost of Sales Accounting. ...............................................................109 8.1 Create Library.....................................................................................................109 8.2 Create report ......................................................................................................114 8.3 Create Report Group.........................................................................................138

Introduction

The profit and loss statement of a company can be created according to two different methods:

ü Period accounting ü Cost of sales accounting

Period accounting is the traditional way of preparing a profit & loss account showing income and expenditure as various heads of expenses. Cost of sales accounting method compares the sales revenue for an accounting period with the total costs incurred for generating the sales. The expenses are shown as per the functions undertaken by the company. Functions carried out by an organization are typically administration, advertising, marketing, Research & Development, Stock keeping etc. These functions are defined as functional areas in the cost of sales accounting approach. Cost of sales accounting identifies where costs originate in a company. In this document we use the above concept and use this functionality in a more powerful way to reconcile the FI and CO module and enable to do a fast close of the month end closing activities. Often in the month end process we come across situation where the FI and the CO-PA module profits do not match. This could be on account of various reasons. We have tried to list a few of them keeping in mind the cost of sales functionality:- 1) All production orders/process orders were settled in the month end closing. It was later found that somebody from PP team (shop floor) has posted some entries on the process orders after the settlement was done in the reporting period. The entries were posted when the period was open and some of the co closing activities were being executed. RM consumption Debit $5000 (process order) RM Inventory Credit $5000 This has resulted in a mismatch between FI and COPA module to the extent of $ 5000, since the process order has remained unsettled. A direct report is not available in Standard SAP which lists down the process order having the balance for the reporting month. It really becomes a nightmare for the support consultant to find out the relevant production/process orders which is not settled.

Solution: We use the cost of sales accounting functionality to help us find out the relevant production/process orders. 2) All WBS (Work break down structure) elements /Network in the project system modules were settled in the month end closing. It was later found that somebody from PS team (Project team) has posted some entries on the WBS after the settlement was done in the reporting period. Expenses Debit $15000 ( WBS) Vendor Credit $15000 This has resulted in a mismatch between FI and COPA module to the extent of $ 15000, since the WBS/Network has remained unsettled. A direct report is not available in Standard SAP which lists down the process order having the balance for the reporting month. It really becomes a nightmare for the support consultant to find out the relevant production/process orders which is not settled. Solution: We use the cost of sales accounting functionality to help us find out the relevant WBS/Network. We can also use this functionality to trace balance on the real internal orders/ plant maintenance orders and CO orders. We therefore recommend implementing the cost of sales accounting functionality as an additional check point for the month end closing process. Let’s proceed for the configuration of cost of sales accounting.

1. Define Functional Area SAP Customizing Implementation Guide à Financial Accounting (New)à Financial Accounting Global Settings (New) à Ledgersà Fields àStandard Fields àFunctional Area for Cost of Sales Accounting àDefine Functional Area A functional area is an account assignment characteristic that sorts operating expenses according to functions. Functions carried out by an organization are typically administration, advertising, marketing, Research & Development, Stock keeping etc. These functions are defined as functional areas in the cost of sales accounting approach. Let us create the functional areas such as:- Sales COGS Variance Prod orders Other Var. Prod cc Valuation diff. in stocks Commission expenses Marketing costs, Administration costs and so on.

Click on

Update the following:-

Click Update the following:-

Click on

2. Activate Cost of Sales Accounting for Preparation SAP Customizing Implementation Guide à Financial Accounting (New)à Financial Accounting Global Settings (New) à Ledgersà Fields àStandard Fields àFunctional Area for Cost of Sales Accounting à Activate Cost of Sales Accounting for Preparation Cost of sales accounting is activated for our company code as a part of the preparation. It makes the Functional area field available for entry in the master data of G/L accounts, cost elements and cost center master data allowing you to enter the functional area. No functional area will yet be derived and updated for posting.

Update the following

Click on

3. Updating Functional Areas in Master data

You can add the functional area to the master data of various objects: ü G/L account ü Cost element ü Cost center ü Orders

Ø Order type Ø Internal order Ø Sales order for make-to-order production and requirements class Ø Maintenance, service, and QM order Ø Production order, process order, product cost collector and cost object

hierarchy ü WBS elements

Ø Project profile and project definition Ø WBS element

ü Networks Ø Network type Ø Network header Ø Network activity

During posting, the system derives the functional area from the master data of the assigned objects.

3.1 Enter Functional Area in G/L Account Master Data SAP Customizing Implementation Guide à Financial Accounting (New)à Financial Accounting Global Settings (New) à Ledgersà Fieldsà Standard Fields à Functional Area for Cost of Sales Accounting à Enter Functional Area à Enter Functional Area in G/L Account Master Data The functional area field is only ready for input in the master data of P&L statement accounts.


Click


Update Z101 in WIP change account.


Then select

And select

Click on

3.2 Enter Functional Area in Cost Element Master Data SAP Customizing Implementation Guide à Financial Accounting (New)à Financial Accounting Global Settings (New) à Ledgersà Fieldsà Standard Fields à Functional Area for Cost of Sales Accounting à Enter Functional Area à Enter Functional Area in Cost Element Master Data


The functional area automatically gets updated in the cost element which can be seen below:-

Update functional areas in secondary cost element

Click

Take a drop down in the field

Click on

Click Likewise update the following secondary cost elements with functional area as follows:- Cost element Cost element

description Functional area

996002 Administraton overhea E013 996003 Marketing Costs E005 996004 Advertising costs E006 996005 Stock Keeping & Pac E007 996006 Outward Freight Tran E004 996007 Comission Expenses E001 996008 Other Vari. Prodn cc C003 996009 Gain/loss sale of fa

E011

996010 Write back of Receiv E008 996011 Write Off of Receiva E009

3.3 Enter Functional Area in Cost Center categories SAP Customizing Implementation Guide à Financial Accounting (New)à Financial Accounting Global Settings (New) à Ledgersà Fieldsà Standard Fields à Functional Area for Cost of Sales Accounting à Enter Functional Area à Enter Functional Area in Cost Center Categories This can be used to default functional area when cost center categories are selected.

We will not update here anything since we will be manually updating cost centers with functional areas. Here you can set functional areas as defaults in cost center categories, when you update it in the cost center master data.

3.4 Functional areas in the Order types Here we assign functional areas in the order types. Process order type SAP Customizing Implementation Guide à Production Planning for Process Industries à Process Order à Master Data à Order à Define Order Types You can update functional area Z101 in process order type, though this step will not be required since we are implementing substitution. Nevertheless we still update the functional area.

Double click

Click on

Production order type SAP Customizing Implementation Guide à Production à Shop Floor Control à Master Data à Order à Define Order Types You can update functional area Z101 in production order type, though this step will not be required since we are implementing substitution. Nevertheless we still update the functional area.

Double click

Click on

3.5 Enter Functional Area in Cost centers We will now update functional area in all our cost center master data. Transaction code: KS02 Update the following:-

Update functional area C003

Click on

Click Similarly update all other cost centers with relevant functional areas.

4. Assign Scenarios and Customer Fields to Ledgers SAP Customizing Implementation Guide àFinancial Accounting (New) àFinancial Accounting Global Settings (New) à Ledgers àLedger àAssign Scenarios and Customer Fields to Ledgers The cost of sales accounting scenarios needs to be assigned to the ledger which is being planned to use. The Cost of Sales accounting scenario is generally assigned to the Leading ledger as can be seen below. We do not need cost of sales accounting for other ledgers.

Select

Double click

Cost of sales accounting scenario is not assigned to the Ledger Y1 as can be seen below.

Cost of sales accounting scenario is not assigned to the Ledger Y2 as can be seen below.

5. Define and Activate Substitution for Cost-of-Sales Accounting

SAP Customizing Implementation Guide à Financial Accounting (New)à Financial Accounting Global Settings (New) àToolsàValidation/Substitution à Define and Activate Substitution for Cost-of-Sales Accounting The system derives functional area for the following postings;-

1) Primary postings (posting in Financial accounting) to a profit and loss account. 2) Secondary postings (allocations in controlling)

The functional area is not derived in the following cases:-

1) Posting to balance sheet accounts 2) Entry of statistical key figures

The system derives the functional area during document entry based on the information available in the coding block. Functional area is derived as follows: 1. From the master records of the assigned objects (cost centers, internal orders, wbs, networks, plant maintenance orders). If an object (cost centers, internal orders, wbs, network, plant maintenance orders) is used during a GL posting, the system checks whether a functional area has been

entered in the master record of the object. The system retains this functional area provisionally from the object. 2. From the master record of the G/L account or the cost element The system checks whether a functional area is entered in the master record of the cost element or the profit and loss account. This functional area overwrites the functional area derived from the assigned object (cost centers, internal orders, wbs, network,plant maintenance orders). 3. Using substitution for the component Financial Accounting, event 0006. If a functional area has already been determined, this is overwritten with the functional area obtained via substitution. Standard derivation therefore does not work for our requirement of populating functional areas in production/process order, plant maintenance orders, wbs and internal orders. Reason the standard derivation will not work since it might be overwritten by functional area of gl codes. We have to define substitution for the application component FI (in case New GL is not is used) callup point 0005. When New GL is used the substitution needs to be defined using callup point 0006. When creating the substitution rule, the following information sources are available for deriving the functional area (applicable for Old GL): Fields of structures ACCIT and ACCHD Master records of the assigned CO objects We will create substitution rule to populate functional areas in the process orders, sales orders for revenue and costs, plant maintenance orders, work break down structure, internal orders so as to have a control on the balance on these orders at month end.

Click on


Select call up point 0006 since we have implemented New GL. Update the following:-

Click

Create

Click

Select

Click

Let us now set up a substitution rule to populate functional area Z101 in production/process/CO orders. Update the following:-

Click

Double click

Double Click

Double Click


Click

Double Click

Double Click

Double Click Double Click


Click

Double Click

Double Click

Double Click Double Click


Click

Click


Click on

Click Let us now set up a substitution rule to populate functional area Z102 in plant maintenance orders.

Click

Select

Click

Click


Click

Double click

Double click Double click Double click


Click

Click on Update the following:-

Click Let us now set up a substitution rule to populate functional area Z103 in sales orders with revenue and costs.

Click

Click

Click

Click

Double click

Double click

Double click When Classic GL (or old GL) is implemented use ACCIT-KDAUF

Double click

Click

Click


Click on

Click Let us now set up a substitution rule to populate functional area Z104 in Capital internal orders or real internal orders.

Click

Click


Click

When Classic GL (or old GL) is implemented use ACCIT-AUFNR and ACCIT-CO_KAAUF and ACCIT-AUTYP Double click Double click Double click Double click

Click

Double click

Double click Double click

Double click


Double click

Double click Double click

Double click


Double click Double click Double click


Double click Double click Update the following:-

Double click

Double click

Double click Update the following:-

Double click Double click Update the following:-

Click

Click

Click Let us now set up a substitution rule to populate functional area Z107 in Networks.

Click


When Classic GL (or old GL) is implemented use ACCIT-NPLNR Click

Click Let us now set up a substitution rule to populate functional area 9999 (Dummy) where no functional area information is available from master data or the assigned object.

When Classic GL (or old GL) is implemented use ACCIT-FKBER


Click on Click till you reach

Take a drop down in the field Activation level

Click on

6. Activate Cost of Sales Accounting SAP Customizing Implementation Guide à Financial Accounting (New)à Financial Accounting Global Settings (New) à Ledgersà Ledger à Activate Cost of Sales Accounting Having configured the cost of sales accounting we are now ready to activate it. This means that when you post to the company code, the functional areas are derived and updated.

Now change the status to active

Click on

7. Value flow in cost of sales accounting

7.1 Balance in Process orders. Use tcode KE5Z (Profit center line item display):- Update the following:- Functional area is Z101 Update the following:-

Click

Let us know bring in the process order and the functional area as additional fields

Click Position cursor on Functional area

Press Ctrl button and click

The balance on process orders are 500,000 and the process orders numbers are as seen above.

Click to save the variant for later use

7.2 Posting using cost center as an assignment object The functional area is derived from the cost center since the GL in this case is not maintained with functional area.

Credit posting on cost centers

7.3 Derivation from GL account Postings to the Work in Process Change account is from GL account master data

7.4 Postings to Real Internal order In the below example we are posting an expense to a real internal order.

Click

Double click

The functional area Z104 is now derived from the substitution rule set by us.

Click Click on

Settlement of internal order:-

Click

Click

Double Click

Click

Use KE5Z to display the balances on internal order

8. Reports in Cost of Sales Accounting. You can create your own reports in Cost of sales accounting. We use the profit center to generate a cost of sales report for us.

8.1 Create Library Path:- SAP menu àAccounting àControlling àProfit Center Accounting àInformation System àTools àReport Painter àReport Writer àLibrary àGR21 - Create Transaction code – GR21 Standard Library 8A0 does not have the functional area activated. Therefore we copy from 8A0 and create a new library.

Click on

8.2 Create report Path:- SAP menu àAccounting àControlling àProfit Center Accounting àInformation System àTools àReport Painter àReport à GRR1 - Create Transaction code: GRR1

Click and update description

Double click

Select


Click


Click

Click

Similarly in the next rows update the following:-

Click on the row below

Select

Click

Click

Click

Click

Double Click

Click

Double click

Click

Click Click on

Also update all Z functional areas.

Click

Click

Click

Select

Click to move the fields


Click Click on

Click

8.3 Create Report Group Path:- SAP menu àAccounting àControlling àProfit Center Accounting à Information System àTools àReport Painter àReport Writer à Report Group à GR51 - Create Transaction code: GR51 Update the following:-


Click


Click on Click

Click

Click Click


Click on Click on

Click


Click

Double click

Select

Hope you enjoyed reading cost of sales accounting

Do insist and implement cost of sales accounting for your customers, since it has a lot of advantages for them as seen above.

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