SAP CO_overview EN

CO - 13
Overhead Determination: based on historic figures
HISTORY CURRENT Production Order
overhead rate
PRODUCTION
act.
WORK CENTER
Accrual CC
PRODUCTION DEPT
Raw material cost Machine hour Labour hour Setup + indirect variable cost
PRODUCTION ORDERS
P1 P2
OPERATIONS
posted productionrelevant Fixed overhead
direct costs MANAGEMENT CC direct costs
RATED OVERHEAD
CO - 14
Variable costing
Also called direct costing & marginal costing

Basic idea: For short term decisions, only the variable cost are relevant

Also called full costing The oldest and easiest method
All direct manufacturing cost is attributed to the product
- material cost - labour - machine time - setup/teardown
Example: Last minute offers

Consequence for costing sheet: Fixed overhead is not included in product cost but posted as period expense
VARIABLE
total costs of product FIX

Absorption costing
Direct material costs
+
Material overhead
=
Material costs
+
Direct labor costs
+
Manufacturing overhead
=
Manufacturing costs
COSTINGSHEET
= Costs of goods manuf. + Administrative overhead + Sales overhead = Cost of sales
OVERHEAD COST
overhead rate
PRODUCTION
act.
WORK CENTER
PRODUCTION DEPT apportion
overhead rate
PRODUCTION
act.
WORK CENTER
PRODUCTION DEPT Production Order
Essentially a 2-stage process
Controlling
Overview
Referent:
Copyright
Copyright 1995 Coopers & Lybrand. All rights reserved. Neither this training manual nor any part thereof may be copied or reproduced in any form or by any means, or translated into another language, without the prior consent of Coopers & Lybrand. The information contained in this document is subject to change and supplement without prior notice. Certain parts of this training material are taken from SAP material, made available by SAP AG, for internal use by C&L Unternehmensberatung.
CO - 2
Agenda
Introduction
Costing methods Responsibility Accounting Profit Calculation Controlling in SAP Project Issues
CO - 3
Why Cost Controlling
only the variable portion is relevant
CO - 15
Variable costing
Direct material Direct labour Manufacturing overhead indirect material indirect labour rent of premises / machines depreciation of premises / machines

For statutory reasons: stock valuations For decision making (also tactical or strategic decisions) For responsibility accounting (controlling cost deviations)
CO - 8
Costing Methods
SAP allows ...

Classical approaches: Absorption Costing Variable Costing New approach: Activity Based Costing

CO - 9
Absorption co Flow
SETTLE TO ASSET BUSINESS TRANSACTIONS
FI Expense
(in FI)
ORDERS
SETTLE
COST CENTERS
ALLOCATE
Controlling with the CO system
SD MM PP
FI
ECEIS
CO

CO - 4
What are costs?

Expenses incurred in the real world of business Thus: expenses posted in FI (as debit on expense accounts) Acquisition of consumer goods (non-asset) or supplies Depreciation of assets grouped by topic (= cost center) as a 2nd sort key
CO - 11
Absorption costing
Direct material Direct labour Manufacturing overhead indirect material indirect labour rent of premises / machines depreciation of premises / machines



CO - 17
Activity-Based Costing
G/L accounts
FI
Cost center 1 using activity types Process 1
Cost center 2
Cost center 3
CO-CCA
ABC Process 2
Cost object 1
Cost object 2
Cost object 3
cost object controlling
CO - 18
Activity-Based Costing
Determination of the consumer-producer model that applies to a given organization is essential = Business Process (re)Engineering Especially useful for service organisations, majority of costs are fixed, it is necesssary to trace costs to individual products/services Thus costs per business process can be controlled as well as comprehensive manufacturing and sales cost. ABC does not preclude cost apportionement of costs (!) Installing and running ABC is expensive. One must investigate the cost of getting the information!
Pressing
welding
BOM
direct costs % apportion apportionable overhead CC
lathing
direct costs