Controlling Module

Controlling Module

Explain the organizational assignment in the controlling module?

Company codes are assigned to the controlling area. A controlling area

is assigned to the operating concern.

Controlling Area is the umbrella under which all controlling activities of

Cost Center Accounting, Product costing, Profitability Analysis and Profit

Center are stored.

Operating Concern is the highest node in Profitability Analysis

What is primary Cost element and secondary cost element?

Every Profit and Loss GL account that needs to be controlled has to be

defined as a cost element in SAP. Just as in FI General Ledger Accounts

exist, in Controlling we have Cost element.

Each FI General Ledger Account that is a Profit and Loss Account is also

created as a Cost element in SAP.

Primary Cost Elements are those which are created from FI general

Ledger Accounts and impact the financial accounts eg. Travelling

expenses, consumption account infact, any Profit and Loss GL account

Secondary Cost Elements are those which are created only in

controlling and does not affect the financials of the company. It is used

for internal reporting only. The postings to these accounts do not affect

the Profit or Loss of the company.

The following categories exist for secondary cost elements:

21 Internal Settlement:

Cost elements of this category is used to settle order costs to objects in

controlling such as cost centers, pa segments etc.

31 Order/Results Analysis:

Used to calculate WIP on the order/project

41 Overhead

Used to calculate indirect costs from cost centers to orders

42. Assessment

Used to calculate costs during assessment

43 Internal Activity Allocation

Used to allocate costs during internal activity allocation such as Machine

Labour etc

What are cost objects?

A cost object means a cost or a revenue collector wherein all the costs or

revenues are collected for a particular cost object. Examples of this could

be cost center, production order, internal order, projects, sales order

So whenever you look at any controlling function the basic thing you

need to ask yourself is What is the cost element(expense) I want to

control and what is the cost object ( i.e. either the production order, sales

order, internal order) I am using to control this cost element. Sounds

confusing read it again it is very simple

Controlling is all about knowing the cost element and the cost

object. Every time pose this question to yourself what is the cost

element what is the cost object.

At the end of the period all costs or revenues in the cost object are settled

to their respective receivers which could be a gl account, a cost center,

profitability analysis or asset.

It is very important that you understand this otherwise you would

struggle to understand Controlling.