What is SAP Controlling | Key sub-modules involved | CO Planning methods

What is SAP Controlling (CO)?

SAP Controlling gives an analysis of the money being spent on different activities in an organization.

SAP Controlling is essentially an internal cost accounting tool. It gives an idea of how the money flow is taking place inside the organization. And it gives you the information that helps in the analysis of business and thereby proper decision making.

SAP CO Organizational Structure:

Important sub-modules of SAP controlling system:

Cost Center Accounting – This is used to perform all the controlling activities in an organization. Cost Center gives the individual costs incurred during a particular period of time. Since transparency of the cost incurred is an essential factor for every activity; Cost Center Accounting plays its role here.

Cost Object Controlling is a component of Cost Center Accounting which records the cost incurred for a particular activity like the cost of manufacturing a product and the cost for which the product has to be sold.

Cost Element Accounting – This gives an overview of all the costs incurred and the revenues generated in an organization.

Activity-Based-Accounting – The role of analyzing cross-departmental business activities is played by Activity Based Accounting.

Internal Orders – Internal Orders look after particular jobs that are in the controlling area. It performs things like allocation of budgets to the jobs, action-oriented planning, and monitoring of the jobs.

Profitability Analysis – Profitability Analysis looks into the profit or loss by individual market segments of an organization which gives an idea to determine price, distribution channel, market segment etc.

It is used to analyze the profit or loss of an organization by individual market segments. Profitability Analysis provides a basis for decision making. For example, it plays a major role in determining prices, conditioning, customer, distribution channel, and market segment.

Profit Center Accounting − It is used to evaluate the profit or loss of individual, internal areas within an organization. It also analysis the fixed capital and other things like ‘statistical key figures’ like no. of employees, the area of the working area etc.

Cost Center Hierarchy:

SAP CO Planning Methods:

It has a major role in the overall business planning process and is an essential component for standard costing. It gives figures for activities, costs, prices or statistical key figures for cost center for a planning period.

The main objectives of Cost Center Planning are:

i). Planning a structure

ii). Controlling business methods

iii). Monitoring efficiency       

Areas like Cost Element, Primary Cost, Secondary Cost, Revenue, Activity Type, and Statistical Key Figures.

This is just a brief on SAP Controlling (CO).

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