Profitability Analysis
Explain the organizational assignment in the
PA module?
The operating Concern is the highest node in Profitability
Analysis.
The operating concern is assigned to the Controlling Area.
Within the operating concern all the transactions of Profitability
Analysis
are stored.
The operating concern is nothing but a nomenclature for defining
the
highest node in PA.
What is the functionality of the PA module?
PA module is the most important module when it comes to analyzing
the
results of the organization.
In this module you basically collect the revenues from the sale
order , the
costs from the production order, cost center or internal order and
analyze their results.
The interesting part about this module is that when it collects
the costs
and revenues it also collects the characteristics associated with
the costs
and revenues and this is what makes it stand out
So for e.g. using PA module you can find out the following:
Profit of a certain product
Profit of a certain product in a certain region
Profit of a certain product in a certain region by a certain
customer
Profit of a certain product in a certain region by a certain sales
person
And the list can go on in depth
It is one of the most wonderful modules in the SAP
How do you get all those characteristics
defined above and how do
you analyze them?
To do so while defining Operating concern one has to define
Characteristics and Value fields.
What are characteristics and Value Fields?
In the operating concern two things are basically defined
a) Characteristics
b) Value Fields
Characteristics are nothing but those aspects on which we want to
break
down the profit logically such as customer, region product,
product
hierarchy, sales person etc
Value Fields are nothing but the values associated with these
characteristics
Eg Sales, Raw Material Cost, Labour Cost, Overheads etc
Once you define the characteristics and value fields these values
are
updated in the table.
From where does the characteristics come from?
The characteristics which are defined above basically comes from
either
the Customer Master or the Material Master.
How does various values( revenues and costs)
flow into PA?
The Sales Revenue comes from the Condition Type in SD.
We need to map the Condition Type in SD to the respective value
fields in
customizing to have the revenue flow into PA.
The Cost comes from Cost estimates which are transferred using the
PA
transfer structure which we have covered in the Product costing
section.
The various cost components of the cost component structure is
assigned
to the value field of PA module and this is how the costs come
into PA.
Once the actual revenue and the std cost defined above are
captured in
PA the variances are also transferred into PA.
This way the std cost variances equal the actual cost.
So actual revenue- actual cost helps us determine the profit.
How do you configure the assignment of
variances from product
costing to COPA module?
The variance categories from product costing along with cost
element is
to be assigned to the value fields in COPA
Once you have captured all the costs and
revenues how do you
analyze them?
The costs and revenues which we have captured in the above manner
are
then analysed by writing reports using the Report Painter
Functionality
in SAP.
What is characteristic Derivation in
Profitability Analysis Module?
Characteristic Derivation is usually used when you want to derive
the
characteristics . An example of this could be say you want to
derive the
first two characteristics of product hierarchy.
In such cases you define characteristic derivation where you
maintain
the rules, which contain the table names of the product hierarchy
fields
and the number of characters to be extracted, and it also
specifies the
target characteristic field in PA.
What is the basic difference in customizing in
Profitability analysis
as compared to other modules?
In PA when we configure the system i.e. creating operating
concern,
maintain structures no customizing request is generated. The
configuration needs to be transported through a different
transaction
called as KE3I.
What is the difference between Account based
Profitability Analysis
and Costing based Profitability Analysis?
Account based Profitability analysis is a form of Profitability
analysis (PA)
that uses accounts as its base and has an account based approach.
It
uses costs and revenue elements.
Costing based Profitability Analysis is a form of profitability
analysis that
groups costs and revenues according to value fields and costing
based
valuation approaches. The cost and revenues are shown in value
fields.
What are the advantages and disadvantages of
Account based
profitability analysis vis-à-vis costing based
profitability analysis?
The advantage of Account based PA is that it is permanently
reconciled
with Financial accounting.
The disadvantages are that it is not powerful as the costing based
PA,
since it uses accounts to get values. No Contribution margin
planning
can be done since it cannot access the standard cost estimate.
Further
no variance analysis is readily available.
The advantages of the Costing based PA are manifold. They are as
follows: -
· Greater Reporting capabilities since lot of
characteristics are
available for analysis.
· This form of PA accesses the Standard cost
estimate of the
manufactured product and gives a split according to the cost
component split (from the product costing module) when the bills
are posted.
· Contribution margin can be planned in this
module since the
system automatically accesses the standard cost estimate of the
product based on the valuation approaches.
· Variance analysis is ready available here
since the variance
categories can be individually mapped to the value fields.
Disadvantages:-
Since it uses a costing based approach, it does not sometime
reconcile
with financial accounting.
Can both Account based and Costing based
Profitability analysis be
configured at the same time?
Yes. It is possible to configure both types of costing based
profitability
analysis at the same time.
What is the advantage of configuring both the
type of Profitability
analysis together?
The advantage of activating account based profitability analysis
along
with costing based PA is that you can easily reconcile costing
based
profitability analysis to account based profitability analysis,
which means
indirectly reconciling with Financial accounting.
Is there any additional configuration required
for Account based
profitability analysis as compared to costing
based profitability
analysis?
No. There are no special configurations required except for
activating the
account based profitability analysis while maintaining the
operating
concern.
What is the difference between Profitability
analysis and Profit
center accounting?
Profitability analysis lets you analyze the profitability of
segments of your
market according to products, customers, regions, division. It
provides
your sales, marketing, planning and management organizations with
decision support from a market oriented view point.
Profit center accounting lets you analyze profit and loss for
profit centers.
It makes it possible to evaluate different areas or units within
your
company. Profit center can be structured according to region,
plants,
functions or products (product ranges).
What configuration settings are available to
set up valuation using
material cost estimate in costing based
profitability analysis?
In Costing based Profitability analysis you define costing keys. A
costing
key is a set of access parameters which are used in valuation to
determine which data in Product cost planning should be read. In
the
costing key you attach the costing variant.
In the costing key you specify whether the system should read the
current standard cost estimate, the previous standard cost
estimate or
the future standard cost estimate or a saved cost estimate.
The configuration settings to determine this costing key is as
follows:-
1) Assign costing keys to the products – Three costing keys can be
attached to a single product for a specific point of valuation,
record
type, plan version.
2) Assign costing keys to Material types
3) Assign costing keys to any characteristics – You can use your
own
strategy to determine the costing keys. This is through user
defined assignment tables.
Call/ticket loggin- The SAP FI user faces a problem and loggs the ticket for the resolution of the issue. The call loggin mechanism could be on a tool like remedy etc or it could be even a voice call. Some organization even use the traditional email. The latest tool for this could be SAP solution manager helpdesk
