© 2009 SAP AG Controlling (CO) SAP University Alliances Version 1.0 Authors Bret Wagner Stefan Weidner Stephen Tracy Product SAP ERP 6.0 Global Bike Inc. Level Beginner Focus Cross-functional integration Controlling

SAP ERP SAP University Alliances Page 1-2 © 2009 SAP AG Cost Elements  A one-to-one linkage (mapping) between General Ledger expense accounts and CO cost elements is established to permit the transfer of FI expense information to CO  Postings in FI that impact cost accounts lead to an posting in CO to a cost element  In other words, expense account = cost element – just different words depending on whether FI object or CO object  Primary Cost Element -Originate in the General Ledger within FI and are automatically transferred to CO when an FI transaction is recorded in the General Ledger  Secondary Cost Element -Used exclusively in CO for allocations and settlements between and amongst cost centers

SAP ERP SAP University Alliances Page 1-3 © 2009 SAP AG Primary and Secondary Cost Elements Financial Accounting (FI) General Ledger Accounts Revenue Accounts Balance Sheet Income Statement Expense Accounts Managerial Accounting (CO) Aggregate Cost Elements Primary Cost Elements Secondary Cost Elements

SAP ERP SAP University Alliances Page 1-4 © 2009 SAP AG Posting Primary Cost Element Primary Cost Element Debit Credit 1,500 Cost Center A Debit Credit 1,500 Supplies ExpenseCash Financial Accounting (FI) Managerial Accounting (CO)

SAP ERP SAP University Alliances Page 1-5 © 2009 SAP AG Posting Primary Cost Element (FI) Transaction Document Amount G/L Account # Cost Center (CO) Transaction Document Cost Center Cost Element ,500 Cash Debit Credit Supplies Expense Debit Credit Cost Center 1,500 Financial Accounting (FI) Managerial Accounting (CO)

SAP ERP SAP University Alliances Page 1-6 © 2009 SAP AG Posting Secondary Cost Element Secondary Cost Element Debit Credit 1,500 Debit Credit 1,500 Supplies ExpenseCash CC 2 CC 3 Cost Center A Financial Accounting (FI) Managerial Accounting (CO)

SAP ERP SAP University Alliances Page 1-7 © 2009 SAP AG Statistical Key Figures  Provide the foundation for accurate and effective cost allocations between cost objects  Utilized to support internal cost allocations involving allocations, assessments, and distributions  Examples: number of employees, square footage, minutes of computer usage Copy Center Activity (20 Hours) 10 Hours 6 Hours 4 Hours Executive Offices Maintenance Department Information Services Department

SAP ERP SAP University Alliances Page 1-8 © 2009 SAP AG Posting Secondary Cost Element Debit Credit 1,500 Rent Expense Debit Credit 2,500 Supplies Expense Debit Credit 2,000 Labor Expense 1,500 2,500 2,000 1,800 3,000 1,200 Primary Cost Element Sec. Cost Element Copy Center Executive Offices Information Services Maintenance Department

SAP ERP SAP University Alliances Page 1-9 © 2009 SAP AG Types of Allocation  Distributions – primary cost elements  Assessments – combination of primary and/or secondary cost elements  Distribution -Method for periodically allocating primary cost elements -Primary cost elements maintain their identities in both the sending and receiving objects -Sender and receiver cost centers are fully documented in a unique Controlling (CO) document  Assessment -A method of allocating both primary and secondary cost elements -Primary and/or secondary cost elements are grouped together and transferred to receiver cost centers through use of a secondary cost element -Sender and receiver cost centers are fully documented in a unique Controlling (CO) document

SAP ERP SAP University Alliances Page 1-10 © 2009 SAP AG Distributions Sending cost center Primary cost element maintains its identity Receiving cost centers A010 – Administration Rent Expense $1,500 Distribution

SAP ERP SAP University Alliances Page 1-11 © 2009 SAP AG Distributions A010 – Administration Rent Expense $1,500 Distribution Sending cost center Primary cost element maintains its identity Receiving cost centers

SAP ERP SAP University Alliances Page 1-12 © 2009 SAP AG Assessments A020 – IT Software Expense $4,200 A020 – IT Supplies Expense $500 Assessment Sending cost center Primary and secondary cost elements Receiving cost center

SAP ERP SAP University Alliances Page 1-13 © 2009 SAP AG Assessments A020 – IT Software Expense $4,200 A020 – IT Supplies Expense $500 Sending cost center Primary and secondary cost elements Receiving cost center Assessment

SAP ERP SAP University Alliances Page 1-14 © 2009 SAP AG SAP CO Module  Fully integrated with other SAP modules including, but not limited to: -Financial Accounting (FI) -Materials Management (MM) -Sales and Distribution (SD) -Production Planning and Execution (PP)

SAP ERP SAP University Alliances Page 1-15 © 2009 SAP AG Summary  Purpose  SAP CO Organizational Objects  Revenue Elements  Cost Elements  Statistical Key Figures  Allocations  Integration

SAP ERP SAP University Alliances Page 1-16 © 2009 SAP AG The End