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Use

You can transfer the costing results ( cost component split) into the Profitability Analysis (CO-PA) module.

You can use the cost components from the cost estimate in Profitability Analysis for profit planning and to valuate the plan/actual data of billing documents. In this way, Profitability Analysis enables you to obtain detailed information on the origin of your costs, and to analyze your contribution margins.

If you carry out profitability analysis and costing in separate systems, you can distribute the costing results to Profitability Analysis by using ALE.

Prerequisites

You make the necessary settings to transfer data from costing into Profitability Analysis in Customizing for Profitability Analysis.

You can transfer the cost of goods sold to Profitability Analysis when you do the following:

To calculate the planned costs of the products using material costing, you assign in Customizing the cost components to the value fields of an operating concern (such as the stock value, sales overhead, and administrative overhead) and connect these values to the quantity field sales quantity.

To calculate the actual costs of the products using variance calculation, you must do the following:

Features

Profit Planning

For profit planning, you can calculate the planned costs of the products to be sold either using the price in the material master record (the standard price or the moving average price) or with material costing. For further information, see the following:

Calculation of Variances

In Product Cost by Order or Period, you can calculate variances by comparing the results of the standard cost estimate with the actual costs for the production order or run schedule header. Variance calculation assigns each variance to a variance category (such as price variance, resource-usage variance, or quantity variance). You can settle these variances to Profitability Analysis to valuate the quantity sold with the actual costs (that is, planned costs according to standard cost estimate plus variances.

For more information, see Structure link Variance Calculation and Structure link Variance Categories.

Contribution Margin Accounting

You can valuate the quantity sold in the period concerned with the results of the material cost estimate to calculate the contribution margin for each product.

The quantities sold in the accounting period can be valuated with the costs calculated by the cost estimate to determine the cost of sales for each product. The cost of sales is compared with the sales revenues to determine the contribution margin for each product.

Profitability Analysis accesses quantity fields and value fields. Here, the quantity field contains the sales volume. The value fields contain values from the cost estimate (such as the cost of goods manufactured, sales and administration costs) and values from the sales system (billing documents).

Contribution margins can be calculated based on the following costs:

Marginal costs are cost components that are flagged as variable costs via the cost component structure.

Full costs are the fixed costs plus the variable costs.

Production variances are calculated in Product Cost by Order or Period and are settled to Profitability Analysis.

Note

For short-term profit/loss cost accounting, you have various analytical options. These include analyzing contribution margins, sales figures, and operating profits by product group, division, sales quantity and market segment, and profit center.

Activities

  1. Define an operating concern.

    2. Here you specify the level at which profitability analysis is carried out. You can assign one or more controlling areas to an operating concern. More than one company code can be assigned to a controlling area.

  2. You define which characteristics and value fields may be used in this operating concern.

    3. Examples of characteristics are customers, materials, material types, and divisions.

  3. Examples of value fields are stock value, sales overhead, administrative overhead, price variances, and quantity variances. These value fields are filled with information at different times.

    4. Example

    If you transfer a billing document into Profitability Analysis, the sales volume is valuated with the results of the specified cost estimate.

    If you settle a production order to stock, the variances are settled to Profitability Analysis in accordance with the PA settlement structure.

  4. Define a valuation strategy.

    5. Here you determine that the sales volume is valuated via the cost estimate.

  5. Define a costing key.

Here you create a key for selecting cost estimates. You link this key to the following parameters:
    1. Costing variant
    2. Costing version (if applicable)
    3. Indicator for additive cost estimate (if applicable)
    4. Time base

You can enter either the costing date (such as 1/1/1996), the period and the fiscal year of costing (such as 001/1996), or you can enter a period indicator (such as current standard cost estimate, previous standard cost estimate, or future standard cost estimate).
  1. Assign this costing key to a material or material type.

In this step, you assign the key for the cost estimate to the material type or the material, and specify the following:
    1. The date on which valuation is to be carried out
    2. Which operation is to be valuated (in this case, the billing document)
    3. Which plan version is to be used
    4. The date until which the assignment is to be valid
  1. You assign the costing elements of the cost estimate to the value fields to be valuated in Profitability Analysis.

In this step, you assign the cost components of a cost component structure to the value fields of an operating concern. You can assign more than one cost component to a value field. However, you cannot assign a cost component to more than one value field.

You also specify whether the values are fixed costs, variable costs or full costs.

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