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Cost of Sales Accounting for Preparation

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Cost of Sales Accounting for Preparation © 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 the following:- Click Click Click Update the following:- Update Z101 in WIP change account. Update the following:- Then select And select Click on Click 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
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