profit center accounting
DESCRIPTION
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. Table of contents. - PowerPoint PPT PresentationTRANSCRIPT
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.