Andi Surya Alamsyah

0113U103
Integrated Planning Process in Management Accounting
Unit Overview
This unit discusses the importance and role of planning in Management Accounting.
Creating plan data enables you to make a plan/actual comparisons and
target/actual comparisons, which make Management Accounting more efficient and
effective.
Unit Objectives
After completing this unit, you will be able to:

List the application components in the integrated planning cycle

Describe the effects of the individual application components in the
integrated planning cycle
List the master data used in Product Cost Accounting and explain the purpose
Explain how the integrated planning cycle is used in the manufacturing and
service industries
List the additional characteristics and functions that are available in the
integrated planning cycle when ABC is used
Carry out some of the basic planning functions with business processes

Unit Contents
Lesson: Integrated Planning
Cycle146
Exercise 7: Integrated Planning
Cycle.165
Lesson: Integration of Activity-Based
Costing.175
Exercise 8: Planning with Activity-Based
Costing181

Figure 80: Price Update

Marking and releasing a standard cost estimate updates the standard price for the
material in the material master record. This results in the inventory being
revaluated (important for Financial Accounting).
The following prerequisites must be met before a standard cost estimate can be
marked or released:

Standard cost estimate must be free of errors (status KA, costed without
errors).
The marking release must be allowed. The authorization should be set up
once per period by the employee responsible. If you mark a standard cost
estimate, the results are updated in the material master records as the future
standard price.

When you release the standard cost estimate, these future prices are updated as
the current standard price.
1. You can release a standard cost estimate only once per period, unless you
delete the previously released standard cost estimate (using a special
program) from the database. You should also always check the standard cost
estimate to ensure that it is correct before you release it for a product.
Specialized reports in the Information System allow you to do this.
Exercise 7: Integrated Planning Cycle
Exercise Objectives
After completing this exercise, you will be able to:

Create and release a standard cost estimate

Use the integrated plan cycle to help clarify the flow of the planning results

Business Example
Because the company plans to manufacture products and to provide services based
on market demand, a decision was made to start the planning cycle in Profitability
Analysis. The resulting sales plan (business plan) was transferred to Sales and

Operations Planning (SOP), and the required material quantities and production
resources were calculated.
Task 1:
Check fixed and variable prices for activites.
1. Before a standard cost estimate is created, you must check the calculated
price for one of the production activities in pump assembly routing R-F1##.
Review the planned activity price for activity price for activity type 1421 and
cost center 4230. Make a note of the fixed and variable plan prices for the
activity.
Task 2:
Following cost center planning, you have to recalculate the cost of goods
manufactured for R-F1##. To accomplish this, create a standard cost estimate
taking into account the planned activity prices.
1. Create a standard cost estimate for material R-F1## with costing variant
PPCI and a lot size of 500 pieces. Change the default for the Costing From
Date to today. Leave the other defaults data for Costing Date To, Quantity
Structure and Valuation as is.
Lesson: Integrated Planning Cycle
Lesson Overview
This lesson describes integrated planning from the point of view of
Management Accounting.
Much of the plan data does not necessarily have to be entered by controllers,
rather it can be transferred from other components, such as Profitability
Anlaysis, Profit Canter Accounting, and Product Costing, via integration.
Lesson Objectives
After completing this lesson, you will be able to:

List the application components in the integrated planning cycle

Describe the effects of the individual application components in the
integrated planning cycle
List the master data used in Product Cost Accounting and explain the purpose
Explain how the integrated planning cycle is used in the manufacturing and
service industries

Business Example

Having reviewed planning in Overhead Management Accounting (with various

costing and allocation methods), you want to take a close look at the integrated
planning cycle. Exactly how these integrated planning tools are use depends on
the industry sector.
Introducing the Integrated Planning Cycle
The integrated planning cycle begins with a sales plan. In the Sales Information
System (SIS), a component of the Logistics Information System (LIS), the
company can plan sales quantities at product group level for the following year.
Similiarly , sales quantity planning can be accomplished in Profitability Analysis
(CO-PA).

2. On the Create Material Cost Estimate with Quantity Structure screen, check
the cost calculation results.
Expand the panel on the left side of the screen. Select the pump and expand
the subtree to display all the material components in a hierarcy.
3. Display all the details (resources) used for each of these materials, including
production activities, components, processes and overhead rates.
To do this, select the pump and choose Display Only Materials/All Items.
Locate activity type 1421 and cost center 4230 and verify that the price listed
matches the price that you reviewed in the the first task, Check fixed and
variable prices for activities.
Reduce the size of the panel on the left again.
4. Now analyze the itemization displayed in the lower section of the screen. You
can expand the upper edge of the screen by dragging it upward with the
mouse.
Change the costing allocation base to 1 piece by choosing. Settings Cost
Display.
What is the cost of pump R-F1##?________________________
Select other layouts to obtain a cost display with a different layout (for
example, layout 1SAP09 for a list sorted by cost elements).
5. Save the costing with itemization and log.
Task 3:
Release the cost estimate.
1. To use the results of this costing as the future standard price, you must mark
the cost estimate by choosing Price Update from the menu.
Inputs for integrated internal orders, the scheduled activity is posted to the sender
cost center/sender process. In addition, planned settlements and periodic repostings
of integrated orders to cost centers/processes are allowed.

Before transferring the planned quantities in Profitability Analysis to an SOP plan,

you should consider the master data for logistics. This master data is important for
integration between Materials Management, Sales and Distribution, Management
Accounting and other applications.
Figure 76: Integrated Planning Product Cost Planning
For costing, product cost planning uses master data from other SAP applications, for
example, bills of material, routings and work centers from production planning, as
well as cost centers, activity types, and business process from Overhead Cost
Controlling.
You can use various tools for product cost planning whether or not data is available
from Manufacturing:

Product costing with quantity structures

Product costing without quantity structures
Reference and simulation costings

Figure 84: Integrated Planning in Profit Center Accounting

Profit center planning is, therefore, an integral part of overall business planning.
Profit centers illustrate particularly well the integrated nature of business planning
because the planning data is essentially generated by other applications and
supplemented of modified in the profit centers. Profit center planning is part of
short-term business planning that covers one fiscal year.
Figure 83: Integration of Services In Planning
You should plan the resources necessary for your planned services so you can
transfer the resources and/or process quantities become the scheduled activity
and/or process quantities. You can use a plan-integrated order to plan resources.
Integrated Planning in Profit Center Accounting
To enable internal areas of responsibility to be controlled and valuated effectively,
you should restrict profit center planning to those factors that are measureable and
that can be influenced directly. The responsible profit center employess can use the
planning data only if they are in a position to influence the costs, revenues, and
stocks in their area.
You use the transfer control indicator to specify that you either want to use an
existing cost estimate for material components or create a new cost estimate. You
can analyze the results of the cost estimate directly in the information system.
Figure 78: Overhead Rate

You can use a costing sheet to calculate your own overhead costs. If you use the
traditional method, you apply the overhead costs to the reference object as a
percentage or quantity rate. In the costing sheet, you determine how the overhead
costs are calculated for the costs of goods manufacture and the cost of goods sold.
Figure 71: Master Data in Product Cost Accounting

The material master is used to represent raw materials, assemblies, and

products.
A bill of material (BOM) is a list of the components used in a assembly or
product.
A work center is physical location where operations are performed. When the
master record for a work center is created in production planning, it is linked
to the cost center and to the various activity types of the cost center.
A routing describes a sequences of work steps and determines the activity
quantities used by Cost Center Accounting.

Figure 82: Transferring the Costing Results to Profitability Analysis

The cost components from material costing can be used in Profitability Anlaysis to
valuate the plan or actual data of billing documents. This enables you to see
detailed information in Profitability Analysis on the origin of your product costs and
to analyze your contribution margins.
Use of Integrated Planning Cycle in Service Industries
Services that do not depend on production plans are realized using a template in
the integrated planning cycle.
When you calculate overhead costs, the system choses the costing item category G.
The overhead costs are updated according to the costs elements that you created in
the costing sheet. The standard system contains predefined costing sheets. In
addition, you can create your own costing sheets are required.
Figure 79: Cost Rollup in Product Cost Planning
Cost rollup is used to ensure that the cost of goods manufactured (material and
production costs) of all materials in a multilevel bill of material (BOM) are included
in the cost estimate of the higher-level material. This is archieved by assigning the
costs in a cost estimate to cost components.
The personal costs planned in Persinel Administration can be transferred to the
affected cost centers. Integrated planning between Cost Canter Accounting and
personel planning enables you to plan personnel costs for target wages, playroll
results, or basic pay, and then transfer these costs to Costs Center Accounting.
Figur 75: Planning Internal Orders

Cost are normally planned for orders that have a long life cycle. Orders with a short
life cycle, such as for unexpected small repairs, are normally not planned.
Three different cost planning levels are available for planning internal orders:

Overall planning is the simplest level for planning order costs. You can plan
overall values and annual values irrespective of the cost elements.
Primary/secondary costs and revenue planning can be used if you have
detailed information about an internal order. For manual planning purposes,
primary/secondaryncosts and revenue planning comprises the planning of
primary costs, activity inputs, and revenues. If the order is plan integrated,
you can, for example, credit plan values with settlement to a cost center.
Unit consting can be used to carry out more detailed planning than is possible
on cost elements.

In product costing with quantity structures, costs are calculated for a material via
automatic derivation of the quantity structur fro bills of material and routings or the
master recipe, or from network resources.
In product costing without quantity structures, cost are calculated for a material
without a quantity structure being derived automatically.
With reference and simulation costings, costs are calculated for an abstract object
know as a base planning object.
Figure 77: Product Cost Planning: Overview
When you create a cost estimate with quantity structure, you must enter the
costing variant, the material, the plant, and the lot size. The dates proposed from
the costing variant specify the following:

The period of validity of the cost estimate (costing date from/to)

The selection date for the bill of material and routing (quantity structure date)
The pricing date for the material components and activities )valuation date)

Figure 81: Updating Sales Plan and Profitability Analysis

To transform sales planning (used in the planning cycle) from Profitability Analysis to
profit planning, you have to match the planned revenues and the costs of goods
manufactured that were generated on the basis of the plan. You can use the
valuation function to do this.
Use of Application Components in Planning Cycle
Profitability Analysis planning enables you to plan slaes, revenue and profitability
data for any profitability segments. The complete planning process for an enterprise
can, therefore, be mapped in accordance with the business requirements.

Figure 66: Integrated Business Planning

The activity requirements are then created, either in Sales and Operations Planning
or by using long-term requirements planning, and are then transferred as scheduled
activities to cost center planning.
In cost center planning, the plan activity quantities are created on the basis of
scheduled quantities from Sales and Operations Planning. Cost planning is
performed for cost centers and internal orders, as well as additional activity
planning for Overhead Cost Controlling.
The calculated plan activity prices go to Product Cost Planning, which estimates the
production costs of the planned products by using bills of material and routings
(quantity structures).
Figure 72: Transferring Activity Requirements to Cost Center Accounting
You can transfer the values calculated for the activity requirement during long-term
planning to Cost Center Accounting. The cost center records the transferred activity
requirements as scheduled activity quantities for the production sector (for
example, substituted by reconciliation objects from Sales and Operations Planning).
Because the contents and level of detail of individual plans can vary according to
role and area responsibility, the planning framework enables you to structure your
plan by planning level and content, which you can allocate to the individual
responsible.
To support the individual steps of the planning process, the planning tools for
Profitability Analysis provide numerous planning functions and planning aids that
you can use to create and change any plan data.
Figure 69: Top-Down Distribution Concept
With top-down distributions, data planned at one level in Profitability Analysis is
distributed to other levels. Distribution takes place on the basis of reference data,
which can be planning data or actual data from Profitability Analysis.
Plan values can be distributed on the basis of reference data by period or across
periods. If period-independent reference data is used as the basis for distribution,
the distribution percentages are aligned across the periods for the receivers.
When performing top-down distribution, you have to specify the field(s) in the
reference data whose values are to be used as the distribution basis.
Figure 70: Planning In Manufacturing
You can transfer a sales quantity plan created in Profitability Analysis to Sales and
Operations Planning (SOP). You can transfer the sales quantity either for individual

products or cumulatively at the product group level. You can select any market
segment (for example, all products from one division) and time frame (reporting
period) to transfer.
For plan integration, you use the following master data:

Material masters
Bills of material
Work centers
Routings

Master data enables cost objects to be created quickly and efficiently in the SAP
system. The data shown in the figure material master, BOM, work center, routing
is copied to the quantity structure of a production order.
After you have marked the costing, display the Costing 2 view of the material
master record for R-F1## and review the future price that is entered in the material
aster record.
2. Release the cost estimate for material R-F1## so that it becomes the current
standard price. Check this in the Costings 2 view in the material master
record.
After output quantities are planned, the costs are planned. The cost center manager
does not plan all the costs manually. Many costc can be taken from the plans in
other components. Planning data from the following components can be used:

Human Capital Management

Fixed Asset Accounting
Plan-integrated orders
Plan-integrated WBS elements (in the Project System)

After all this data has been transferred, the cost center manager plans the
remaining costs manually. Plan prices are calculated last.
Figure 74: Transferring Planned Values to Cost Centers
In integrated planning, data can be transferred form upstream systems of Cost
Center Accounting to cost center planning. If you have planned this data in
upstream systems and now want to transfer it unchanged to cost center planning, it
is not necessary to replan the data in Cost Center Accounting.
To be able to use integrated planning, several requirements must be met in Cost
Center Accounting and in the upstream systems. For example, if you want to
transfer planned values for statistical key figures, you must first create master
records for these key figures and then link them to the Logistics Information System.