SAP CO concepts


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General Understanding

  • What practices are followed by organizations to control cost? How SAP helps organizations in cost control?
  • What do organizations try to control? Why cost control has become a challenge for organizations?
  • Cost is accumulated in various cost objects. What are cost objects in SAP?
  • How cost objects are used in SAP to book cost?
  • Profit and loss accounts require cost object but not balance sheet accounts?
  • How cost objects help in analyzing and controlling cost?
  • Cost element accounting
  • Cost center accounting
  • Internal order
  • Profit center accounting
  • What is the difference between FI document and CO document?
  • For what transactions a CO document s generated? Is it necessary that whenever a FI document is generated, a CO document will also get generated?
  • Just like FI periods are open and close, similarly CO periods are also open and close for posting?

 

 

Enterprise structure

  • What is controlling area? What settings are maintained under controlling area?
  • Can an organization have multiple controlling areas? Can a company code be assigned to multiple controlling areas?
  • What is cost center hierarchy? How do organizations decide cost center hierarchy?
  • Can an organization have multiple cost center hierarchy? Cost center hierarchy once created is fixed or does it keep changing on an on-going basis?
  • What is profit center hierarchy? How do organizations decide profit center hierarchy?
  • Can an organization have multiple profit center hierarchy? Profit center hierarchy once created is fixed or does it keep changing on an on-going basis?

 

 

Cost Element Accounting

  • What is a cost element? How is cost element different from GL account?
  • What is primary cost element? What is secondary cost element? What is the need of secondary cost element?
  • What is cost element category? What specific purpose is served by each cost element category?
  • How a primary cost element master data is created?
  • How a secondary cost element master data is created?

 

 

Cost Center Accounting

  • What is a cost center? How do organizations use cost centers to analyze and control cost?
  • How do organizations decide cost center hierarchy?
  • How a cost center hierarchy is created in SAP? How a cost center hierarchy is changed in SAP?
  • Understanding cost center categories in SAP? Why do we have different cost center categories in SAP?
  • Understanding the significance of various fields in cost center master data?
  • Real cost center vs statistical cost center?
  • What are cost center allocation cycles? Explain cost center allocation cycle in detail.
  • How to organizations use cost center allocation cycles?
  • How a distribution cycle different from assessment cycle?
  • What cost center reports are offered by SAP? How do organizations make use of these reports?

 

 

Profit Center Accounting

  • What is a profit center? What do you understand by profit center accounting?
  • How do organizations decide profit center hierarchy?
  • How a profit center hierarchy is created in SAP? How often a profit center hierarchy is changed?
  • Understanding the significance of various fields in profit center master data?
  • Profit & loss account or balance sheet account, every line item in a document must have profit center.
  • Profit center in a line item is either manually entered/ derived from real cost object master data/ substituted by substitution rule.
  • Profit center in a line item is derived from real cost object only and not from statistical cost object. Explain with examples.
  • What profit center reports are provided by SAP? How organizations use these reports?
  • Why profit center are considered as statistical cost object?
  • How profit centers along with cost centers help in analyzing profit? Explain with examples.

 

 

Internal Order

  • What is internal order? How internal order is different from cost object?
  • Under what business scenarios internal order is used?
  • Understanding the significance of various fields in internal order master data?
  • What is meant by internal order settlement?
  • What configuration is needed for internal order settlement? What is settlement profile? What is settlement rule?
  • How internal order settlement is performed in SAP? Is internal order settlement a periodic activity? What accounting entry is generated as a result of settlement?
  • Line item in a document derives cost center from internal order master data?
  • Real internal order vs statistical internal order?
  • What internal order reports are provided by SAP? How organizations make use of these reports?

 

 

Work Breakdown Structure (WBS)

  • What is WBS? How WBS help organizations in cost controlling?
  • Since internal order and WBS both are cost objects, under what business scenarios organizations prefer WBS over internal order? Explain the use of WBS with examples?
  • Understanding the significance of various fields in WBS master data?
  • What is meant by WBS settlement? Similar to internal order, WBS is also settled periodically. Explain with example.
  • What configuration is needed for WBS settlement? What is settlement profile? What is settlement rule?
  • How WBS settlement is performed in SAP? What accounting entry is generated as a result of settlement?

 

 

Product Costing

  • How product costing is done in actual business? Different business processes require different approach of product costing. Explain
  • What are the benefits of doing product costing in SAP? How actual business process is replicated in SAP?
  • In order to configure product costing in SAP, we need to understand actual production process followed by business.
  • Production order vs process order? Under what scenario production order is preferred over process order?
  • How product costing is performed in SAP? What activities are performed in SAP to arrive at cost of a product in SAP?
  • Actual production process involves a set of activities to be performed. Every activity involves cost (material cost, labor cost, machine cost). Once an activity is completed in production process, activity confirmation is performed in SAP.
  • What are milestones in production process? What is the significance of milestones in product costing?
  • What documents are posted in SAP at different stages of production process?
  • How SAP helps in analyzing and keeping a product cost within budget? How cost analysis is performed for a product?
  • Let’s understand the terminologies used in SAP before moving on to configurations required for product costing.

Configuration for product costing in SAP


 

 

Profitability Analysis (PA)

  • What is meant by profitability analysis?
  • When we already have SAP FI and SAP CO which provides us with numerous reports then what is the need of profitability analysis? How PA helps achieve better analysis?
  • Let’s understand profitability analysis with example.
  • Terminologies used in PA. Let’s understand what is meant by characteristics field and value field.
  • What activities populate value fields and characteristic fields?
  • What configuration is required to populate data in value fields?
  • How reports can be developed in SAP for profitability analysis?