Business Blueprint Document

Business Blueprint Document

Enterprise Area : CO-Controlling

Business Scenario : CO1-Cost Center Accounting
Process Groups : CO1A-Cost center accounting

Version 1.1

432633089.doc Page 1 of 12
 Business Blueprint Document

Document Control:

Author Prathamesh Parkar

File Name CO1A_BBP _Cost center accounting_V1.1
Created 06-10-2017

Signatories Name Department Signature Date

Author(s) Prathamesh J Parkar

PwC-FICO

Core Team
member(s) Mr Varun K Finance &
Accounts

Process Owner(s)

Authorized by

Note: Authorization signatories indicates that document has been prepared,

reviewed and authorized as per standard SAP process and requirements of
Advanced Enzyme Group

432633089.doc Page 2 of 12
 Business Blueprint Document

Document Version Control

Document name Date Version Revision history

CO1A_BB_Cost 06.10.2017 1.1
Center
Accounting_v1.0

432633089.doc Page 3 of 12
 Business Blueprint Document

Table of Contents
BUSINESS BLUEPRINT DOCUMENT..........................................................1

1 . INTRODUCTION.....................................................................................5

2. BUSINESS PROCESS...............................................................................5
2.1 PROCESS DIAGRAM..................................................................................................5
2.2 GENERAL EXPLANATION..........................................................................................6
2.2.1 COST CENTER...................................................................................................6
2.2.2 COST CENTER GROUP:......................................................................................7
2.2.3 STATISTICAL KEY FIGURES.................................................................................7
2.2.4 COST ELEMENT..................................................................................................7
2.2.5 COST ELEMENT GROUP......................................................................................8
2.3 PROCESS..................................................................................................................9
2.3.1 AUTOMATIC FLOW OF ENTRIES BETWEEN FI AND CO.........................................9
2.3.2 POSTING AND REPOSTING OF EXPENSES WITHIN CO..........................................9
2.3.3 ALLOCATION THROUGH DISTRIBUTION AND ASSESSMENT
10
3 EXCEPTION/ASSUMPTIONS AND VARIATIONS.................................10

4 IMPROVEMENT AREAS:...................................................................10

5 KEY INTEGRATION AREAS..................................................................11

6 INTERFACE CONSIDERATIONS...........................................................11

7 GAPS AND SOLUTIONS........................................................................11

8 REPORTING REQUIREMENT..............................................................11

10 Authorization.............................................................................................................11

432633089.doc Page 4 of 12
 Business Blueprint Document

. Introduction

Enterprise Area : CO - Controlling

Business Scenario : CO1 – Cost center accounting
Currently client is working on SAP B1 wherein instead of cost
center’s they are using project codes to punch expenses based on
location
Process Groups : CO1A – Cost center accounting
Process/es Covered :

CO1A.1 - Cost center Master Data

CO1A.2 - Reposting
CO1A.3 - Cost elements and groups
CO1A.4 - Distribution and Assessment cycles

432633089.doc Page 5 of 12
 Business Blueprint Document

2. Business Process

2.2.1Process Diagram

432633089.doc Page 6 of 12
 Business Blueprint Document

2.2.1 General Explanation

Master Data:-

2.2.1 Cost Center

A cost center is an organizational unit within a controlling

area that represents a separate location of cost incurrence.
The definition can be based on:
1. Functional requirements
2. Allocation criteria
3. Physical location
4. Area of responsibility
Cost centers will be treated as Departmental breakdown of
Legal Entity Structure. Cost center is a lowest level of
Organization where you want to collect and Analyze Costs.

Cost Center Coding logic = Cost Center is combination of plant name

initial followed by Cost center Category and then Segments

2.2.2 Cost Center Group:

Similar cost centers can be grouped into Groups in order

to meet specific reporting requirements (based on group
of cost centers)

2Statistical Key Figures

Statistical Key Figure (SKF) is used as a basis of allocation

of costs from one cost center to another cost center. While
methods of allocation (Distribution and Assessment
Cycles) define the sender and receiver cost centers, the
basis of allocation viz. Employee Number, Production etc
are defined as Statistical Key Figures. The following are
the examples of Statistical Key Figures – Salary (Based on
Employee Number), Depreciation (Site Wise) etc.
Statistical Key Figure may be of fixed category or Total
Category.
1. Fixed Category: SKF values of fixed category are
432633089.doc Page 7 of 12
 Business Blueprint Document

defined once and the same value will be copied for all
the posting periods until the value changed in any
posting period.

2. Total Category: Key Figures defined as total values

are only valid in the posting period and need to be
updated in every posting period. Unless the SKF values
are entered in each period, system does not perform or
complete allocation cycles and gives an error message.
Example for Total Category: Production Units

3Cost Element

In SAP Cost Element Accounting, cost elements track the

type of costs or spend. They form categories of costs that
are independent from external or financial reporting
requirements, but help management to track costs
according to internal accounting policies.
In SAP Cost Element Accounting, there are two types of
Cost Elements that can be created:
Primary cost elements
Primary cost elements can be created by selecting the
Account Type “Primary costs or revenue” at the time of GL
Account creation and providing the necessary Cost
Element category in the Control Data tab of GL Account
Master Data.
Secondary Cost Elements
Secondary Cost elements can be created by selecting
Account type “Secondary costs” at the time of GL Account
creation and providing necessary Secondary cost element
category in the Control data tab of GL Account Master
Data.
Examples of secondary cost elements include:
1. Assessment cost elements
2. Cost elements for Internal Activity Allocation
3. Cost elements for Order Settlement

With the Introduction of Simple Finance, Both Primary

and Secondary Cost Elements need to be created as GL
Accounts.

Integration

432633089.doc Page 8 of 12
 Business Blueprint Document

Cost elements in Controlling (CO) are closely related to

the general ledger accounts used in Financial Accounting
(FI). This is because the SAP System is structured as an
Integrated Accounting System.
Cost elements document which costs (differentiated by
category) are incurred within a settlement period, and
with which amount. They provide information concerning
the value flow and the value consumption within the
organization. Cost Element Accounting and Cost Centre
Accounting/Internal Orders are closely linked in the SAP
System. Each posting to an account that is also a cost
element, is assigned either to a cost centre or order. This
ensures that at period-end the data is subdivided by cost
elements and cost centres/internal orders for analysis
purposes. The following section describes how you can
subdivide and characterize cost elements in the SAP
System.

4Cost Element group

You can collect cost elements with similar characteristics

in cost element groups.
The following graphic shows an example of a cost
element group.

You can use cost element groups in the information

system i.e. to define the row structure of your reports.
Totals are calculated in the report for each node.

432633089.doc Page 9 of 12
 Business Blueprint Document

Cost element groups can be used whenever you want to

process several cost elements in one transaction. For
example, in cost centre planning, distribution or
assessment.

2.2.1 Process

2Automatic flow of entries between FI and CO

This scenario describes automatic flow of transactions
posted in FI Module to CO. For automatic flow of FI
transaction in CO below are the prerequisites:
1) Required Profit & Loss GL accounts should be created as Cost
elements by assigning appropriate Cost Element Category.

2) The Chart of accounts and the definition of Cost centers will

be based on CO requirements to analyze the expenses i.e.
salaries and wages for production/marketing/ administration
etc. At the time of posting of expenses relevant cost centers
should be readily identifiable and bookings in common cost
centers should be minimized to reduce number of allocation
cycles in CO.

3Posting and reposting of expenses within CO

In case, user has selected an incorrect cost center during
actual cost posting the same can be rectified using either
manual reposting of costs or reposting of line items.

4Allocation through distribution and assessment

This scenario describes the allocation of expenses, which
can be done from one Cost Center to other cost center
within the same controlling area by using Distribution &
Assessment cycle. Depending upon the business
requirements, assessment and distribution cycles can be
used for the plan or actual data.

1) Distribution method will be used to allocate Primary

Cost, whereas Assessment method will be used to
allocate both (i.e. Primary & Secondary cost
elements),
2) Sender and receiver Cost Elements/Cost Centers have
to be identified for selecting the method.
3) Identify the basis of allocation of common cost.
4) Common Cost Center expenses needs to be allocated
within CO.

432633089.doc Page 10 of 12
 Business Blueprint Document

5) Running the Distribution & Assessment Cycle at the

month end once entire monthly FI postings are over,
6) In case of any additional flow of expenses to Cost
Centers, rerunning of the Assessment Cycle /
Distribution Cycle.
7) Relevant master data i.e. secondary cost elements for
Assessment (category 42) and for activity price
calculation (category 43), Statistical Key Figures
(SKF), cost center groups, cost element groups and
activity types will be created.

Business process details

1) The basis for allocation of cost in primary & secondary
cost elements (Machine hours/ no. of employees, etc.)
will be finalized.
2) Distribution will be used for transfer of cost from one
cost center to other cost centers under the same
primary cost element.
3) Assessment will be used for transfer of cost from
support cost centers to the beneficiary cost centers by
using the secondary cost elements,
4) Statistical Key figures will be used as the basis for
allocation. These are defined as master data and
maintained.
5) Common and support overheads will be allocated to
beneficiary cost centers across the organization (across
company codes or profit centers).

3 Exception/Assumptions and Variations

SR BUSINESS
NO. REQUIREMENT MAPPING IN SAP/REMARKS

4 Improvement Areas:

4.1 Real time report for under/over absorption for production

cost centers.
4.2 Marketing costs can be seen in product profitability
report.

5 Key Integration Areas

1 Integration with FI

432633089.doc Page 11 of 12
 Business Blueprint Document

In order to post depreciation directly to Cost centers the

same should be assigned to Asset masters in AA module.

2 Integration with PM
In order to automatically generate the settlement rule for
PM order, cost center should be mentioned in equipment
master in PM module.

3 Integration with PP
For confirmation of operations on production order, it is
required to assign the work centers created in PP module
to Cost centers.

6 Interface Considerations
7 Gaps and Solutions
8 Reporting Requirement

Report Name SAP T-code Remarks

(standard/
development: Y/N)
S_SL0_210000
Cost Elements: breakdown by Company Code 07
Controlling Documents: Actual Costs KSB5
Cost Elements: Master data report KA23
S_ALR_870136
Cost Centers: Actual/Plan/Variance 11
S_ALR_870136
23
Cost Centers: Quarterly Comparison
S_ALR_870136
24
Cost Centers: Fiscal Year Comparison

10 Authorization

Authorization Roles Description

432633089.doc Page 12 of 12