Sales and Profit Planning and Cost Planning 
Purpose
The planning of activity quantities, costs, and revenues is the basis for efficient cost management. Planning is used:
- As the starting point for target cost determination and thus as the basis for target/actual comparisons
- To provide a measure of organizational performance
- To provide targets for cost center managers and for the product managers from Production (Product Cost Controlling) and Sales (Profitability Analysis)
- As a control method for the persons responsible for cost centers, product costs, or profitability analysis
- As a basis for the preparation of planned cost records from analytical planning
- As a basis for the valuation of activity input quantities in the production process (standard cost accounting)
- As a basis for allocating the standard cost of sales to Profitability Analysis
- As a basis for inventory valuation of products that are carried with standard prices
You can implement planning flexibly with the R/3 System using all current cost accounting methods, such as flexible or fixed standard costing.
Prerequisites
A prerequisite for planning is the processing of the necessary master data. In this phase, you define the following for your organization:
- Cost and revenue elements
- Cost centers and activity types
- Market segments (characteristics) and key figures (value fields)
To ensure the acceptance of the planning in the organization, you should coordinate this together with the appropriate responsibility areas (cost center, product managers, etc.). If, for example, the actual values on a cost center differ from the plan or the target, the responsible cost center manager can be aware of this variance.
Process Flow
Using the sales plan in Profitability Analysis, generate the warehouse and production planning of the logistics areas.
As the basis for quantity-based activity planning, define the plan operating level for all primary activity types (activity type planning).
To be able to produce the planned production quantities, the system transfers the activity and material requirements for production to the primary cost centers or business processes. It uses the BOMs and routings to do this. The planned activity requirements for production are compared on the given cost centers as scheduled activity of the plan operating rate and reconciled.
Plan the activity quantities for all secondary activity types (such as workmen’s hours).
You have now determined the net requirements for primary and secondary activity types.
Plan the primary and secondary overhead costs. Note the business usage of planning techniques and implement the planning aids provided by the system (planning copy, plan revaluation, plan reconciliation).
For example, the time-consuming calculation and measurement involved with ABC analysis is only justified for the few "A" cost elements on a cost center, which often make up 70% of the cost volume. The rest of the cost volume is distributed over a variety of B and C cost elements, for which you can reduce planning time by using planning aids.
Determine the plan activity price for each cost center / activity type. This fixes a target for the procurement side and enables the analysis of variances by quantity and price variance portions for all evaluations. These activity prices are used for activity assignment and for the valuation of the quantity structure in costing.
The R/3 System now uses the costing result for each product for the valuation of the previously planned product sales quantities at standard costs.
Lock the current plan version.
This locks the plan data against further changes. Planning is completed.
Result
The plan data is now available as a data basis for the periodic plan/actual or target/actual cost comparisons.
Reporting tools are available even at the planning stage. This means that the requirements for tracking the value flow parallel to the logistical quantity flow are met at all times.