This coming June, I’ll be delivering a session at the Financials 2013 event, June 10-13 in Amsterdam, titled ”Practical Tips to Maximize Your Existing CO Solution and Achieve More Efficient Managerial Accounting”.
In my experiences as an SAP consultant, time and time again I’ve seen customers not utilizing all the capabilities within SAP CO. I believe that part of this reason is because the concept of having a separate module for Management Accounting (which is predominantly what the CO module is for) is almost exclusive to the SAP ERP system. Most legacy systems have a financial accounting module which includes cost centers (either as part of the G/L account number or separate) for departmental breakdown, but no options for management accounting tasks such as planning, allocation and “what-if” analysis. Companies are therefore unfamiliar (and reluctant to explore) the numerous options available with SAP’s CO module, and would rather rely on external tools such as Microsoft Excel for their managerial accounting functions. My goal during this 3-hour long session is to provide tips and insight that will help customers optimize their systems without the need for any new functionality or external consulting assistance.
During my session, one of the key components I’ll be covering is how to add a percentage upcharge to standard costs. There are certain costs that cannot be calculated by the system and, hence, need to be added to the cost estimate manually, examples include: freight costs, customs fees and duties, insurance costs, overheads and intercompany transfer prices. If these costs are not included in the standard cost of a product, then they will be reported as variances, and this can have the effect of creating a less accurate cost of sales value, and disguising the true variances that may reveal other discrepancies. SAP’s standard solution for adding costs to the standard cost estimate through the use of additive costs (transaction CK74N). However, there are some disadvantages to using additive costs:
- You can only apply additive costs to one material at a time
- You can only apply additive costs on an amount and not a percentage basis
- No easy way of indicating which specific materials are eligible for additive costs
One of the workarounds for this is through the use of overhead costing sheets. Overhead costing sheets allow you to add percentages to the standard cost estimate. Although this functionality is normally used for calculating overhead costs at month-end, it can also be used for other purposes.
In order to create an overhead costing sheet there are 5 steps you’ll need to take.
- Maintain overhead cost element using transaction KA06
- Define your calculation base using transaction KZB2
- Define your percentage overhead rate using transaction KZZ2
- Define credit using transaction KZE2
- Define your costing sheet using transaction KZS2
This is just one of the many tips I’ll be providing in my presentation, so for more info on SAP CO, join me June 10-13 in Amsterdam at Financials 2013. Also make sure to get the latest event updates by following #Financials2013 on Twitter.