archit_bbp_co_v1_04-06-2012

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DOCUMENT NUMBER:BBP_CO_V1.0 PAGE: 1 of 229

TITLE: Controlling(CO)

ADDENDUM/AMENDMENT #: New Document SUPERSEDES: N/A

Project: ARCHITProject: ARCHIT

ARCH Pharmalabs Limited

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CONTROLLINGCONTROLLING

BBP_CO_V1.0BBP_CO_V1.0

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APPROVAL

ACTIVITY NAME TITLE SIGNATURE/DATE

PREPARED BY : Mr. JB BABU Zensar Consultant

REVIEWED BY : Ms. Himanshi Parekh CTM - Lead

REVIEWED BY :Mr. Govind JoshiMr. Sreenivasan A.

Project – Manager ArchZensar

APPROVED BY : Mr.Bhushan Punekar CO - BPO

AUTHORISED BY :

Mr. Paresh Jain VP- IA & IT Controls( Project Leader)Arch

© 2010 Zensar Technologies Limited of 229

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Document Control

Document ID : ZTL/2010/PRJ-252/CO/03

Compliance Status : Mandatory

Security Classification : Company Restricted

Issue Date : 3rd December, 2010

Document Status : Draft, Revised, Final

Prepared by : J B Babu

Quality Review : J N Rao

Authorized by : Srinivasan A

Distribution : Bhushan P – Arch Pharmalabs Limited

Document History : V1.0


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DOCUMENT CONTROL:

S NO Revision Creation Date Last Modified Remarks

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Table of ContentsTable of Contents

1 INTRODUCTION.............................................................................................................................. 11

2 Financial Accounting Key Components..................................................................................12

2.1 Financial Accounting.............................................................................................................................12

2.2 CO Module Overview.............................................................................................................................13

3 Enterprise Structure.................................................................................................................. 16

3.1 Client.....................................................................................................................................................16

3.2 Operating Concern................................................................................................................................17

3.3 Controlling Area....................................................................................................................................17

3.4 Company Code......................................................................................................................................18

3.5 Sales Organization.................................................................................................................................19

3.6 Distribution Channel..............................................................................................................................19

3.7 Divisions................................................................................................................................................20

3.8 Purchasing Organization.......................................................................................................................21

3.9 Plant......................................................................................................................................................22

3.10 Credit Control Area...........................................................................................................................25

3.11 Financial Management Area............................................................................................................25

3.12 Planning Plant and Maintenance Plant............................................................................................26

3.13 Chart of Account...............................................................................................................................28

4 CO Global settings.................................................................................................................... 30

4.1 Real Time Integration CO with FI...........................................................................................................30

4.2 Controlling Area Versions......................................................................................................................32

5 Controlling Master Data............................................................................................................33

5.1.1 BBP_CO_MD5.1.1 Cost Elements.................................................................................................345.1.2 BBP_CO_MD5.1.2 Cost Element Groups......................................................................................385.1.3 BBP_CO_MD5.1.3 Cost Center.....................................................................................................39


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5.1.4 BBP_CO_MD5.1.4 Cost Centre Groups........................................................................................415.1.5 BBP_CO_MD5.1.5 Activity Types.................................................................................................415.1.6 BBP_CO_MD5.1.6 Activity type groups........................................................................................425.1.7 BBP_CO_MD5.1.7 Statistical key Figures.....................................................................................425.1.8 BBP_CO_MD5.1.8 Internal Order.................................................................................................435.1.9 BBP_CO_MD5.1.9 Profit Centers.................................................................................................445.1.10 BBP_CO_MD5.1.10 Material Master.......................................................................................44

5.1.10.1 Raw / Packing and Lab Chemicals...............................................................................................47

5.1.10.2 Semi-finished and Finished Goods...............................................................................................48

5.1.10.3 Allied Products.................................................................................................................................48

5.1.10.4 Stores and Spares / Operating Supplies......................................................................................49

5.1.10.5 Capital – Inventory..........................................................................................................................49

5.1.10.6 Material Types, Valuation Type, Valuation Class........................................................................50

5.1.11 Controlling Master Data – Business Process Steps and Transactions......................................545.1.12 Controlling Master data – Integration:....................................................................................56

6 Business Processes – Controlling..........................................................................................58

6.1 Business Process Scenario.....................................................................................................................58

6.2 System Considerations...........................................................................................................................59

6.3 Solution in detail....................................................................................................................................606.3.1 BBP_CO_BP6.3.1 Cost Element Accounting.................................................................................606.3.2 BPP_CO_BP6.3.2 - Cost Centre Accounting..................................................................................66

6.3.2.1 Cost Center Planning......................................................................................................................66

6.3.2.2 Activity Type Planning.....................................................................................................................67

6.3.2.3 Activity Dependent Overhead Planning........................................................................................69

6.3.2.4 Activity Independent Overhead Planning.....................................................................................70

6.3.2.5 Statistical Key Figure planning......................................................................................................71

6.3.2.6 Periodic Allocation of Overheads:.................................................................................................71

6.3.2.7 Planning Profile................................................................................................................................74

6.3.2.8 Cost Splitting....................................................................................................................................74

6.3.2.9 Activity Prices for a Cost Center....................................................................................................74

6.3.2.10 Cost Center Planning -Transaction / Activity Chart:....................................................................75

6.3.2.11 Cost Center Planning – Integration:..............................................................................................77

6.3.2.12 Actual Posting in Cost Center Accounting....................................................................................77


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6.3.2.13 Period End Closing Activities in Cost Center Accounting...........................................................79

6.3.2.14 Periodic Reposting..........................................................................................................................79

6.3.2.15 Actual overheads Accruals.............................................................................................................80

6.3.2.15.1 Actual Allocation – Assessment Cycle...................................................................................80

6.3.2.15.2 Actual Allocation – Distribution Cycle.....................................................................................80

6.3.2.15.3 Variance Calculation.................................................................................................................81

6.3.2.15.4 Actual Activity Price Calculation..............................................................................................82

6.3.2.16 CCA –Period End Closing -Transaction / Activity Chart:............................................................83

6.3.2.17 CCA Period End Closing - Integration:.........................................................................................85

6.3.3 BPP_CO_BP6.3.3 Internal Order Accounting................................................................................876.3.3.1 Internal Order Planning...................................................................................................................88

6.3.3.2 Budget Management for Internal Orders......................................................................................88

6.3.3.3 Availability Control for Internal Orders..........................................................................................90

6.3.3.4 Actual Posting to Internal Order....................................................................................................90

6.3.3.5 Period End Closing - Internal Order Settlement..........................................................................91

6.3.3.6 Period End Closing - Carry forward to next year.........................................................................91

6.3.3.7 Internal order - Transaction / Activity Chart:................................................................................92

6.3.3.8 Internal order - Integration:.............................................................................................................92

6.3.4 BPP_CO_BP6.3.4 Product Cost Controlling..................................................................................936.3.4.1 Product Cost Planning....................................................................................................................93

6.3.4.2 Origin Groups...................................................................................................................................94

6.3.4.3 Overhead Cost Sheet.....................................................................................................................95

6.3.4.4 Costing Variant................................................................................................................................96

6.3.4.4.1 Valuation Variant........................................................................................................................98

6.3.4.4.2 Date Control..................................................................................................................................99

6.3.4.4.3 Valuation Strategy for Material Component:.........................................................................100

6.3.4.5 Cost Component Structure...........................................................................................................101

6.3.4.6 Standard Cost Estimate................................................................................................................103

6.3.4.7 Base Planning Object Costing.....................................................................................................104

6.3.4.8 Additive Cost..................................................................................................................................105

6.3.4.9 Costing BOM..................................................................................................................................106


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6.3.4.10 Product Cost Planning - Transaction / Activity Chart:...............................................................107

6.3.4.11 Product Cost Planning - Integration:...........................................................................................110

6.3.4.12 Product Cost Object Controlling..................................................................................................110

6.3.4.13 Result Analysis Version:...............................................................................................................110

6.3.4.14 Valuation Methods:........................................................................................................................112

6.3.4.14.1 Posting of calculated WIP:.....................................................................................................112

6.3.4.15 Variance Variants:.........................................................................................................................113

6.3.4.16 Settlement:.....................................................................................................................................114

6.3.4.17 Production Process:......................................................................................................................115

6.3.4.17.1 Creation of Process order:.....................................................................................................115

6.3.4.17.2 Process Order release...........................................................................................................115

6.3.4.17.3 Creation of batch number:.....................................................................................................116

6.3.4.17.4 Creation of Inspection lot:......................................................................................................116

6.3.4.17.5 Issue of materials to order:....................................................................................................116

6.3.4.17.6 Confirmation of Process order:.............................................................................................116

6.3.4.17.7 Technical Completion of Order:............................................................................................117

6.3.4.17.8 Revaluation of Process Orders.............................................................................................117

6.3.4.17.9 Order Settlement:....................................................................................................................117

6.3.4.17.10 Order closing:........................................................................................................................118

6.3.4.18 Product Cost – Period End Activities..........................................................................................118

6.3.4.18.1 Revaluation of Process order................................................................................................118

6.3.4.18.2 Work in Process for the Process Order................................................................................119

6.3.4.18.3 Settlement Profile....................................................................................................................119

6.3.4.18.4 Allocation Structure:................................................................................................................122

6.3.4.18.5 Process Order.........................................................................................................................124

6.3.4.18.6 Maintenance Order Cost........................................................................................................125

6.3.4.18.7 Research and Development Cost.........................................................................................126

6.3.4.18.8 Cost in Project System...........................................................................................................126

6.3.4.18.9 Cost in Job work-in.................................................................................................................128

6.3.4.19 Settlements and Transfer:............................................................................................................129


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6.3.4.20 Product Cost Controlling- Transaction / Activity Chart:............................................................133

6.3.4.21 Product Cost Controlling - Integration:........................................................................................135

6.3.5 BBP_CO_BP6.3.5 Inventory Valuation considerations and costing impacts...............................1366.3.5.1 Solvent Recovery should not absorb Overheads:.....................................................................136

6.3.5.2 Slow Moving and Non-Moving Stocks Information....................................................................136

6.3.5.3 Treatment of short receipt quantity.............................................................................................136

6.3.5.4 Stock Ageing Analysis..................................................................................................................136

6.3.5.5 Inventory Classification:................................................................................................................136

6.3.5.6 Loss In Transit during Inter location Transfers :........................................................................137

6.3.5.7 Invoice Booking Should be only after Quality Approval :..........................................................137

6.3.5.8 Transport Charges Treatment in STO:.......................................................................................137

6.3.5.9 Incidental Charges inventorisation on imports :........................................................................137

6.3.5.10 Treatment of Inventory Written Off :............................................................................................137

6.3.5.11 Impact in Costing while destroying Stocks :...............................................................................138

6.3.5.12 BOM Accuracy :............................................................................................................................138

6.3.5.13 Inventory Landed Cost Break UP :.............................................................................................138

6.3.5.14 Inventory Controls.........................................................................................................................138

6.3.5.15 Batch wise Recoveries Information With Quantities:................................................................139

6.3.5.16 FG/ Intermediataries Valuation:...................................................................................................139

6.3.5.17 Treatment of Materials Used in Cleaning Batches:...................................................................139

6.3.5.18 Treatment of Failed batches:.......................................................................................................140

6.3.5.19 Capacity Utilization / Idle capacity:..............................................................................................140

6.3.5.20 Re Process Batch Information :...................................................................................................140

6.3.5.21 Cost Component Structure information :....................................................................................140

6.3.5.22 Variance Details :..........................................................................................................................141

6.3.5.23 Cost Component Information of Intermediaries:........................................................................141

6.3.5.24 Batch Type Harmonization in the production:............................................................................141

6.3.5.25 Validation for posting of recoveries with rates:..........................................................................141

6.3.5.26 Average Inventory Holding Period:.............................................................................................141

6.3.5.27 Treatment of Second Crop Production:......................................................................................142

6.3.5.28 Cost of By-Product to be reduced from Main product...............................................................142


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6.3.5.29 Subcontract Recovered Stock valuation:...................................................................................142

6.3.5.30 Inter location job work cycle within a company code................................................................142

6.3.5.31 Subcontract Material Usage and Inventory Control:.................................................................143

6.3.5.32 Issue of processed material to cost centre:................................................................................143

6.3.5.33 Capture of R&D Expenses:..........................................................................................................143

6.3.5.34 Period Closure:..............................................................................................................................143

6.3.5.35 Effect and result of CSA:..............................................................................................................143

6.3.5.36 Expenses provision in finance to move to cost centers............................................................144

6.3.5.37 Payroll Expenses to post to cost centers:..................................................................................144

6.3.5.38 Sample should be form part of COGS :......................................................................................144

6.3.5.39 Reprocessing Cost Information:..................................................................................................144

6.3.5.40 : Optimum Product Mix.................................................................................................................144

6.3.5.41 Log Sheet Maintenance for Utilities:...........................................................................................144

6.3.5.42 Log Sheet Maintenance for Utilities:...........................................................................................145

6.3.5.43 Yield against Utility Cost:..............................................................................................................145

6.3.5.44 Coal Purchases tracking by source.............................................................................................145

6.3.5.45 Unauthorized PTN/PTNI Valuation:............................................................................................145

6.3.5.46 Unauthorized PTN/PTNI Valuation: Standard report MRN9 is available to compare the

inventory with material master price and the commercial price...................................................................145

6.3.6 BBP_CO_BP6.3.6 Profit Center Accounting...............................................................................1466.3.6.1 Automatic derivation of profit center in actual transactions......................................................147

6.3.6.2 Actual Posting in Profit Centre Accounting................................................................................150

6.3.6.3 Profit Centre Account Analysis....................................................................................................150

6.3.7 BPP_CO_BP6.3.7 Profitability Analysis.......................................................................................150

6.4 Business Process Steps & Transactions...............................................................................................1526.4.1.........................................................................................................................................................153Cost Element Accounting.........................................................................................................................1536.4.2.........................................................................................................................................................153Cost Centre Accounting............................................................................................................................1536.4.3.........................................................................................................................................................153Internal Order Accounting........................................................................................................................1536.4.4.........................................................................................................................................................153Product Cost Controlling..........................................................................................................................1536.4.5.........................................................................................................................................................153


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Inventory Valuation..................................................................................................................................1536.4.6.........................................................................................................................................................154Profitability Analysis.................................................................................................................................154

7 Functional Requirement.........................................................................................................154

8 Reporting Requirement..........................................................................................................194

9 Integrations Points.................................................................................................................. 212

9.1 CO – FI Integration..............................................................................................................................214

9.2 CO – Material Management................................................................................................................215

9.3 CO – Sales and Distribution.................................................................................................................215

9.4 CO – Production Process......................................................................................................................215

9.5 CO – Plant Maintenance......................................................................................................................216

10 Authorization............................................................................................................................. 216


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1 Introduction

The purpose of this document is to compile the requirements gathered during business

process design workshops. And also Arch has submitted the User Requirement document

documents based on the business process requirements of the company. With this, how the

company intends to run its business within the SAP System.

This document describes the design of the proposed solution and implications for the

business process. This document is to communicate the new business solution and

expected changes to the business process. The information needs to include:

Enterprise organizational structures

The proposed integrated business processes

Associated function definitions

Business requirements in term of reports/script and functionality

Authorizations

With the information conveyed by this document, the business should be able to approve the

proposed solution. The Process Definition Document becomes the master

deliverable/document, which serves as a basis for the entire project.


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2 Financial Accounting Key Components

2.1 Financial AccountingThe Financial Accounting Module is a complete accounting system capable of recording all

business transactions. The system has the following features:

Powerful tools for real-time evaluation and reporting of current accounting data.

Comprehensive tools (balance lists, journals, balance audit trails and other standard

reports) for documenting accounts.

The main components of FI Module include:

FI Module Components

Description

General Ledger

Accounting

The general ledger contains a record of all relevant accounting

transactions from a business point of view in the G/L accounts.

The central task of G/L accounting is to provide a comprehensive

picture for external accounting and accounts.

Accounts Receivable

Accounting

The Accounts Receivable application component records and

administers accounting data of all customers. It is also an

integral part of sales management.

Accounts Payable

Accounting

The Accounts Payable application component records and

administers accounting data for all vendors. It is also an integral


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part of procurement management

Asset Accounting Asset accounting component makes it possible to manage and

update values for all fixed assets and to monitor the accounting

procedures affecting fixed assets. The Asset Accounting

component is used for managing and supervising fixed assets

with the SAP System.

Bank Accounting This component is used to manage transactions that are entered

into with the various banks

2.2 CO Module Overview

Controlling provides the information for management decision-making. It facilitates

coordination, monitoring and optimization of all processes in an organization. This involves

recording both the consumption of production factors and the services provided by an

organization.

As well as documenting actual events, the main task of Controlling is planning. It determine

variances by comparing actual data with plan data. These variance calculations enable you

to control business flows.

Income statements are used to control the cost efficiency of individual areas of an

organization, as well as the entire organization.


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The various components of CO include:

CO Module Components

Description

Cost and Revenue Element Accounting

Cost and Revenue Element Accounting provides you with an

overview of the costs and revenues that occur in an organization.

It provides the structure for the assignment of CO data through

the classification of transaction line items according to the nature

of the cost or revenue posting to an object in CO. Most of the

values are moved automatically from Financial Accounting to

Controlling.

Cost Center Accounting

This component is used to track the occurrence of costs in the

organization. As costs are incurred, they are assigned or posted

to the appropriate Cost Center. The posting and assignment of

costs to Cost Centers not only makes Managerial Accounting

possible but is a vital step in using other CO components. The

standard hierarchy of the CO Area includes all Cost Centers and

provides the ability to analyze costs at different positions.

Internal Orders It is a very flexible tool that can be used for a wide variety of

purposes to collect costs and also Revenues, it provides

capabilities for planning and monitoring and allocation of costs.

While Overhead Orders are used to monitor overhead costs for

particular purposes, Investment Orders are used to collect costs

incurred in the creation of a Fixed Asset

Product Cost Controlling

It is concerned with all aspects of planning the cost of producing

products as well as analyzing and tracking the actual costs in the

production process. It has the following sub-components


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CO Module Components

Description

a. Product cost planning refers to the creation of cost

estimates for the production of goods.

b. Cost Object Controlling where the actual costs incurred in

the production of a good is collected using Process Orders. It

also provides the tools for calculating the Work in Process and

the variances at the period end closing.

Profitability Analysis (CO-PA)

Profitability Analysis analyzes the profit or loss of an organization

by individual market segments. The system allocates the

corresponding costs to the revenues for each market segment.

Profitability Analysis provides a basis for decision-making, for

example, for price determination, customer selection,

conditioning, and for choosing the distribution channel.

Profit Center Accounting (EC-PCA)

It lets you analyze internal profit and losses so that evaluating

different areas or units within an organization is possible. Profit

Structure can be structured according to the region, function or

product classifications.


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3 Enterprise StructureWithin the Financial Accounting Module, specific high-level organizational structures are

defined. These Enterprise Structures provide a direction for how the solution operates and

how business functions, data and reporting are defined.

The Enterprise Structure in SAP Financial Accounting and integrated Modules consists of

the following


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3.1 ClientThe client is the highest level in the SAP System hierarchy. Specifications or data entered at

this level are valid for all company codes and for all other organizational structures. Each

Client contains a separate and unique set of master data, and data tables.

Server Client Purpose

Development 100 Configuration and Development environment

Development 200 Pre-test, to conduct the initial testing by Consultant

Sandbox 310 Training / Testing / Practice to all users

Quality 500 Testing - Unit and Integration testing

Production 700 Production - To record all business transactions


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Solution

Manager 252 Project Implementation, Optimizer, EWA, Service Desk

3.2 Operating Concern

An operating concern represents an organizational unit of the company, which provides the

sales and marketing information in a uniform structure. It is the valuation level for Profitability

Analysis (CO-PA).

By setting off the costs against the revenues, an operating profit for the individual market

segments that are defined by a combination of classifying characteristics (such as product

group, customer group, country, or distribution channel) can be calculated. The market

segments are known as profitability segments in CO-PA.

Operating Concern Description

1000 Arch – Operating Concern

3.3 Controlling AreaControlling Area is an Organizational Unit in Controlling Module which is used for Cost

Accounting. Data in the Controlling Area is simultaneously updated with the various postings

in the Financial Accounting / Material Management / Sales and Distribution / Production

Planning / Human Capital Management modules.

The Controlling Area for Arch is given below:

Controlling Area Description

1000 Arch – Controlling Area


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Cross Company Code Controlling Area is going to be used to generate the internal reporting.

Arch and Avon are going to use common Chart of Account, Fiscal Year Variant and Currency.

Both the company codes (Arch and Avon) will be assigned to the Controlling Area (1000).

Controlling Area Usage - Cross Company Cost Accounting

Fiscal Year - V3 April – March with 4 Special Periods

Chart of Accounts - 1000 – Arch Group COA

Currency - INR – Indian Rupees

Cost Center Hierarchy - 1000STD – Arch CC Std. Hierarchy

Profit Center Hierarchy - 1000STD – Arch PC Std. Hierarchy

The following CO components will be activated:


Order Management

Commitment Management

Profitability Analysis (Costing based)

Profit Center Accounting

Project based accounting

Sales Order based costing (Make to order)

3.4 Company Code

Company Code is the Organizational Unit of Financial Accounting for which a complete self-

contained set of accounts can be drawn up for purposes of external reporting. This includes

recording of all relevant transactions and generating all supporting documents required for

financial statements. At each Company Code level Balance Sheet and Profit and Loss

Account and all financial statements can be generated. Statements required for Legal


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Reporting can be generated / balanced at Company Code level. Company code is used for

various processes within Financial Accounting in order to balance entries, post transactions

and manage security.

The Company Code for ARCH is given below:

3.5Sales OrganizationSales Organization is an organizational element, which represents all activities of Sales and

Distribution module with in SAP such as Sales, Distribution of goods and services, Billing. It

is an organizational unit within logistics that structures the company according to its sales

requirements.

The Sales Organizations for ARCH are:

Company Code

Sales Org Code Sales Organization Description

1000 1100 Arch – Domestic Sales Organization

1000 1500 Arch – Export Sales Organization

3000 3100 Avon – Domestic Sales Organization

3000 3500 Avon – Export Sales Organization

3.6 Distribution Channel

Distribution channels are the means through which the sold materials reach the customer.

A distribution channel can be assigned to one or more sales organizations.


Company Code Description Country Currency

1000 Arch Pharmalabs Limited India INR

3000 Avon Organics Limited India INR

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The Sales Distribution Channels are:

3.7 DivisionsA division can be defined as a Product group or business segment or line of business that

could be made up of a wide-ranging spectrum of products. This entity normally groups

together saleable materials and services for the purpose of responsibility and analysis.

The Sales Divisions for Arch are:

Division Description

10 Intermediates

20 API

31 CRAMS – Intermediates

32 CRAMS – API

40 Agro Chemicals

51 Services

90 Others

91 Job work

92 Scrap Sales


Distribution Channel

Description

10 Direct

20 Depot / Warehouse

30 Inter-company Sale

99 Stock Transfer

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3.8 Purchasing OrganizationPurchasing organization is an organizational unit responsible for procuring materials or

services for one or more plants and for negotiating general conditions of purchase with

vendors. The purchasing organization assumes legal responsibility for all external purchase

transactions.

Arch will have the following Purchasing Organizations

Purchase

Organization Description

1000 CPO (Central Purchase Office) – Mumbai

1071 Singapore Branch

1101 Arch - Tarapur factory

1102 Arch - Badlapur Unit

1103 Arch - Taloja G – 6 Unit

1104 Arch - Taloja R & D Unit

1105 Arch - Tarapur, Plot E-64 & E-82

1106 Arch - Dombivali unit

1107 Arch - Turbhe R & D Unit

1171 Arch – Tarapur WH – Not in Use

1172 Arch - Bhiwandi Warehouse

1173 Arch – Dombivli Warehouse

1200 Arch – Andhra Pradesh

1201 Arch - Merven Unit

1202 Arch - Siddipet Unit

1203 Arch - Sibra Unit

1271 Arch - Hyderabad W/H – Not in use


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Purchase

Organization Description

1272 Arch - Sibra W/H

1300 Arch – Haryana

1301 Arch – Vitalife Laboratories

1371 Arch - Vitalife Godown 1

1372 Arch - Vitalife Godown2

1471 Arch - Vadodara Godown

1071 Singapore Branch

3101 Avon - Solapur unit

3200 Avon - HO

3201 Avon - Sadasivpet unit

3401 Avon - Vadodara unit

3.9 PlantPlant is an organizational unit within a company code. A Plant is an organizational unit that

divides the enterprise according to production, procurement, distribution and Stock storage

area etc. It is a place where materials are produced, or goods and services are provided.

The following are the plants in Arch:

Company

Code Plant Plant Description Plant Location Activity

1000 1100 Head Office Mumbai ARCH HO


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Company


1000 1101 Arch Pharmalabs ltd - Tarapur factory Tarapur MFG

1000 1102 Arch Pharmalabs ltd - Badlapur Unit Badlapur MFG

1000 1103 Arch Pharmalabs ltd - Taloja G - 6 Unit Taloja MFG

1000 1104 Arch Pharmalabs ltd - Taloja R & D Unit Taloja R & D

1000 1105 Arch Pharmalabs Ltd- Tarapur, Plot- E-

64 & E-82

Tarapur MFG

1000 1106 Arch Pharmalabs ltd - Dombivali unit Dombivali MFG

1000 1107 Arch Pharmalabs ltd - Turbhe R & D

Unit

Turbhe MFG

1000 1151 Logical Port N/A Bonding


81

Tarapur MFG


80/L

Tarapur MFG

1000 1171 Arch Pharmalabs ltd – Tarapur WH –

Not in Use

Tarapur E Depot

1000 1172 Arch Pharmalabs ltd – Bhiwandi Bhiwandi E Depot

1000 1173 Arch Pharmalabs ltd – Dombivli

Warehouse

Bhiwandi E Depot

1000 1200 Arch Pharmalabs ltd – RO- Hyderabad Hyderabad ARCH RO

1000 1201 Arch Pharmalabs ltd – Merven Unit Hyderabad MFG

1000 1202 Arch Pharmalabs ltd – Siddipet Unit Hyderabad MFG

1000 1203 Arch Pharmalabs ltd – Sibra Unit Hyderabad MFG


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Company


1000 1271 Arch Pharmalabs ltd – Hyderabad WH-

Not in Use

Hyderabad E Depot

1000 1272 Arch Pharmalabs ltd – Sibra WH Hyderabad E Depot

1000 1301 Vitalife Laboratories (A division of Arch

Pharmalabs Ltd)

Gurgaon MFG

1000 1302 Vitalife Laboratories R&D (A divison of

Arch Pharmalabs Ltd)

Gurgaon R&D

1000 1371 Arch Pharmalabs ltd – Vitalife

Godown1-Not in use

Gurgaon E Depot

1000 1372 Arch Pharmalabs ltd – Vitalife Godown2 Gurgaon E Depot

1000 1471 Arch Pharmalabs ltd – Vadodara

Godown

Vadodara NE Depot

1000 1252 Vitalife Laboratories- Sri Krishna

Pharmaceuticals Ltd.

Andhra

Pradesh

LL Plant

1000 1253 Loan Licensing Plant – 2 Andhra

Pradesh

LL Plant

1000 1571 Arch Pharmalabs ltd – Vitalife Bhiwadi

Godown – Not in use

Gurgaon E Depot

1000 1071 Singapore Branch Singapore Depot

3000 3171 Avon Organics Limited – Bhiwandi WH-

Not in Use

Bhiwandi E Depot

3000 3101 Avon Organics Limited – Solapur unit Solapur MFG

3000 3200 Head Office Hyderabad AVON-HO


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Company


3000 3201 Avon Organics Limited – Sadasivpet

unit

Hyderabad MFG

3000 3251 Logical Port N/A Bonding

3000 3401 Avon Organics Limited – Vadodara unit Vadodara MFG

3.10 Credit Control AreaCredit Control Area is an organizational unit that represents an area responsible for granting

and monitoring credit limit of Customers. Credit information can be made available per

customer within a credit control area.

The following is the Credit Control Area for Arch:

Credit Control Area Description

1000 Arch – Credit Control Area

3000 Avon – Credit Control Area

3.11 Financial Management Area

The Funds Management Area is the organizational unit within an organization, used

to represent a closed system for funds management, budgeting, and budget

execution. The Funds Management Area also contains attributes or settings that

impact master data and/or transactions within the FM Area. FM Area is linked to

Company Code and Controlling area, which will enable integration with all other

organizational units within an enterprise. Funds Management within an Enterprise is

controlled through Master Data called (a) Funds Centers and (b) Commitment Items.


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Funds Center represents the organizational areas of responsibility for budgetary

monitoring and reporting. It is linked to Cost Center. Funds Center identifies where in

the organization revenue, expense, and budget are managed, reported, and

controlled. Budget is assigned to Funds Centers and postings can be controlled

against this budget based on the linking of other organizational objects. Funds

Center usually represents the lowest levels of the organization where management

responsibility exists.

Commitment Item represents budget classification. It is used to reflect the type of

revenue and expenditure being budgeted and also to detail balances in FM.

Commitment Items are linked to revenue and expense general ledger accounts, as

well as primary and secondary cost elements. Additionally, Commitment Items may

be created for specific budgetary and carry forward needs. Commitment Item

identifies the business transaction for which budget is consumed.

Essentially commitment items will get mapped to General Ledger Account(s) or

group of GL Accounts based on nature of Expenditure. Commitment hierarchies are

maintained in the preparation of commitment items for the grouping of commitment

items of similar nature and reporting purpose.

The following FM area will be used:

Company Code Financial

Management Area

FM Area Description

1000- Arch Pharmalabs Limited1000 Arch Group FM Area

3000- Avon Organics Limited

Funds Management will be activated in Second Phase after Go-Live.


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3.12 Planning Plant and Maintenance Plant

In Plant Maintenance, a distinction is made between the organizational units

"planning plant" and "maintenance plant".

Maintenance plant is the organization in which technical objects and main

work centers can be maintained

In a Planning plant, maintenance task lists are defined for the respective

maintenance plants, material planning is carried out on the basis of bills of

material in task lists and orders, maintenance plans are managed and

scheduled, maintenance notifications are created and maintenance orders

can be handled.

NOTE: Planning Plant and Maintenance plants - both are same i.e. 1101, 1201,

3101

Comp

any

Code

Maintena

nce Plant

Plant Description Maintenan

ce

Planning

Plant

Plant Description

1000 1101

Arch Pharmalabs ltd - Tarapur

factory 1101

Arch Pharmalabs ltd -

Tarapur factory

1000 1102

Arch Pharmalabs ltd - Badlapur

Unit 1102


Badlapur Unit

1000 1103 Arch Pharmalabs ltd - Taloja G - 1103 Arch Pharmalabs ltd -


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6 Unit Taloja G - 6 Unit

1000 1104

Arch Pharmalabs ltd - Taloja R &

D Unit 1104


Taloja R & D Unit

1000 1105

Arch Pharmalabs Ltd- Tarapur,

Plot- E-64 & E-82 1105

Arch Pharmalabs ltd.

1000 1106

Arch Pharmalabs ltd - Dombivali

unit 1106


Dombivali unit

1000 1107

Arch Pharmalabs ltd - Turbhe R

& D Unit 1107


Turbhe R & D Unit

1000 1161


Plot- E-81

1105 Arch Pharmalabs ltd

1000 1162


Plot- E-80

1105 Arch Pharmalabs ltd

1000 1201

Arch Pharmalabs ltd - Merven

Unit

1201 Arch Pharmalabs ltd -

Merven Unit

1000 1202

Arch Pharmalabs ltd - Siddipet

Unit

1202 Arch Pharmalabs ltd -

Siddipet Unit

1000 1203 Arch Pharmalabs ltd - Sibra Unit

1203 Arch Pharmalabs ltd - Sibra

Unit

1000 1301

Vitalife Laboratories (A divison

of Arch Pharmalabs Ltd)

1301 Vitalife Laboratories (A

divison of Arch Pharmalabs

Ltd)

1000 1302

Vitalife Laboratories R&D (A

divison of Arch Pharmalabs Ltd)

1301 Vitalife Laboratories (A

divison of Arch Pharmalabs

Ltd)


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3000 3101

Avon Organics Limited - Solapur

unit

3101 Avon Organics Limited -

Solapur unit

3000 3201

Avon Organics Limited -

Sadasivpet unit

3201 Avon Organics Limited -

Sadasivpet unit

3.13Chart of Account

A chart of accounts provides a framework for the recording of values, in order to ensure an

orderly rendering of accounting data. The general ledger accounts they contain are used by

one or more company codes. Arch will be using the 8 digits as GL Account ID.

Arch will operate under the single chart of accounts that will be centrally maintained.

Chart of Accounts Description

1000 Arch – Chart of Accounts

The numbering logic for Arch GL account, the first digit represented as follows,:

1 - Liabilities

2 - Assets

3 - Revenues

4 & 5- Material Consumption & Manufacturing Expenses

Employee Benefits & Administrative Expenses

Selling Expenses & Interest and other charges

Depreciation, Deferred Expenses & Appropriations

Noted Items

9 - Secondary Cost Elements


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4 CO Global settingsPosting of Financial Transaction in SAP require the following global settings and the same

has been incorporated in the FI Blue Print

Non-Leading Ledger

Currency

Group Currency

Fiscal year variant

Posting Period variant

Document types

Document numbering

Document posting keys (debit/credit)

Posting period variant to determine the open and close periods

Field Status Group

Exchange Rates

Tax Procedure

For more details refer the FI Business Blue Print under the Chapter “4 Global Settings”

4.1 Real Time Integration CO with FI

During allocations in Controlling, most of the postings will not affect Financial Accounting.

These postings do not update any G/L account transaction figures in General Ledger, they

are posted within Controlling. If, however, an allocation in Controlling leads to a change in

Profit Center or Segment, that is relevant for evaluations in Financial Accounting, a shift

occurs between the affected items in the profit and loss statement. For this reason, this


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information has to be transferred to Financial Accounting. This reconciliation between

Controlling and Financial Accounting takes place by means of real-time integration.

As a result of real-time integration, all Controlling documents that are relevant for General

Ledger Accounting are transferred from Controlling to General Ledger Accounting in real

time. This means that Financial Accounting is always reconciled with Controlling.

A document is created in Financial Accounting for each posting in Controlling. This means

that the detailed information contained in the CO documents is always available in reports in

New General Ledger Accounting.

Value flows within Controlling that are relevant for General Ledger Accounting – such as

assessments, distributions, confirmations, and CO-internal settlements – are transferred

immediately. The FI documents are posted with the business transaction COFI. They contain

the number of the CO document. This means that you can call up the CO document from the

FI document, and vice versa.

If a document could not be transferred because the posting period was blocked in Financial

Accounting or no account was found, for example, the document is included in a post

processing work-list.

The following variant will be created and assigned to the Company Code 1000 and 3000.

Z001 – Arch CO-FI Real Time Integration Variant

The Variant activated with the scenarios of:

Document Type used to post the CO to FI

Z0 – CO-FI Real Post

Real Time Integration – Active

Account determination – Active

The following integration scenarios will be checked:

Cross – Company Code


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Cross – Profit Center

Cross – Segment

Cross – Fund

The following Account Assignment will be made:

40190099 CO to FI – Document Splitting

4.2 Controlling Area Versions Versions enable to have independent sets of planning and actual data. In planning, versions

can be used to maintain alternative scenarios based on different assumptions. For example,

the different versions can represent different markets, price and wage increases, or sales

programs.

The plan and actual data for version 0 can be used in plan/actual comparisons and variance

analysis.

The following are Predefined Versions in SAP System:

Version Version name

0 Plan/actual version

1 Plan Version: Change 1

2 Plan Version: Change 2

3 Actual Costs vs. Target Costs

100 PS: Progress Version

110 PS: Forecast Version


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The Versions are used:


Overhead Orders

Profitability Analysis

Profit Center Accounting

Project Systems


5 Controlling Master DataThe Master data for Controlling, the following items are covered.

Ref No. Description

1 Cost element

2 Cost Element Groups

3 Cost center

4 Cost Center Groups

5 Activity type

6 Activity type Groups

7 Statistical Key figures

8 Internal Order

9 Internal Order Group


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10 Profit Center

11 Profit Center Groups

12 Material Master

5.1.1 BBP_CO_MD5.1.1 Cost Elements

The cost element tells the nature and origin of cost. Cost Element is used for entering all

costs within the entire cost accounting system.

Cost element is of two types –

Primary cost element: A primary cost element is an item in a chart of accounts, which is

used within controlling area to record the value-assigned to cost objects.

Secondary cost element: Secondary cost element exists only in Controlling. Second Cost

Element will be used to allocate costs within CO. Secondary cost element will not have any

link to GL in financial accounting.

Important Fields in Cost Elements

Name: The cost element name is used for online displays and evaluations. When create a

primary cost element, the SAP R/3 System uses the corresponding general ledger account

name as the default for the cost element name.

Cost Element category: Number identifying a Cost element category, used only in the

Controlling (CO) component.

Primary Cost Element Categories: The following cost element categories used for primary

cost elements:

Cost Element Category Description

01 Primary costs/cost-reducing revenues


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11 Revenues

12 Sales deduction

22 External settlement

90 Cost element for balance sheet accounts in Financial

Accounting (Asset Reconciliation account type to check the

budget check)

The Cost element category for the Secondary Cost Elements differ from primary cost

element. For secondary cost element below categories are used.

Cost Element Category Description

21 Internal Settlement

31 Order/project results analysis (For Order Analysis)

41 Overhead Rates

42 Assessment (Allocation purpose)

43 Internal activity allocation (Activity Type purpose)

50 Project Sales Revenues


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Primary Cost elements will be created with reference to General Ledger Accounts, for which

data need to be transferred to Controlling. The list of Primary cost elements will be finalized

based GL Account master data.


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The following secondary cost elements will be created in the system to make use of in CO-

Business Process:

Cost Element ID Description

Element Category Descriptin Of Category

90021150 RA-PRIMARY-PS 21 Internal settlement

90021160 RA-SECONDARY-PS 21 Internal settlement

90021170 RA-REVENUE-PS 21 Internal settlement

90021210 MAINTENANCE (PRIMARY 21 Internal settlement

90021220 Settlement Cost Elmt 21 Internal settlement

90021230 MAINTENANCE(INTERNAL 21 Internal settlement

90031100 RA- TECHNICAL 31Order/project results analysis for Calculation of WIP

90031110ORDER/PROJECT RESULT 31

Order/project results analysis for Calculation of WIP

90031120ORDER/PROJECT RESULT 31

Order/project results analysis for Calculation of WIP

90031130 RESULT ANA-SE 1 31Order/project results analysis for Calculation of WIP

90031140 RESULT ANA-SE 2 31Order/project results analysis for Calculation of WIP

90031150 COS-REV 31Order/project results analysis for Calculation of WIP

90031160 COP-REV 31Order/project results analysis for Calculation of WIP

90031170 PS-REV COST ELEMENT 31Order/project results analysis for Calculation of WIP

90041100 ADMIN OVERHEADS 41To Allocate Overhead Through Cost Sheet

90041110 SELLING OVERHEADS 41To Allocate Overhead Through Cost Sheet


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90042100 ASSMT-POWER COST 42 Assessment90042110 QUALITY COST 42 Assessment90042120 UTILITIES COST 42 Assessment90042130 FACTORY SERVICES 42 Assessment

90043110OVERHEAD-MACHINEHOUR 43

Internal activity allocation For Process Orders

90043120 OVERHEAD-LABOUR-INTE 43Internal activity allocation For Process Orders

90043130 OVERHEAD-LABOUR-EXT 43Internal activity allocation For Process Orders

90043140 OVERHEAD-POWER 43Internal activity allocation For Process Orders

90043150 OVERHEAD-WATER 43Internal activity allocation For Process Orders

90043160 OVERHEAD- FUEL 43Internal activity allocation For Process Orders

90043170 Overhead-Liquid Nitrogen 43Internal activity allocation For Process Orders

90043210 REPAIR INTERNAL LABO 43Internal activity allocation For Maintenance Orders

90043220 REPAIR EXTERNAL LABO 43Internal activity allocation For Maintenance Orders

90043310RESOURC COST-CHEMIST 43

Internal activity allocation for Project Systems

90043320RESOURCE -GROUP LEAD 43

Internal activity allocation for Project Systems

90043330 RESR COST-SCIENTIST 43Internal activity allocation for Project Systems

5.1.2 BBP_CO_MD5.1.2 Cost Element Groups

Cost elements will be grouped for the purpose of allocation, planning, analysis and reporting.

One cost element can be assigned to multiple groups, based on the reporting requirements.

The following are some of the Cost Element Groups for Arch:

Cost Element Group Description

GENCOSTS General costs


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MATCOST Material Cost (A1Settlement Structure)

OTH COST Other Costs (A1 Allocation Structure)

PERSONNEL Personnel Costs - A1 Source Structure

PM_001 ZM-Material Cost - Allocation Structure

PM_003 ZM External procurement -Allocation Stru

PM_005 ZM Personnel costs- Allocation Structure

PM_009 ZM Miscellaneous costs-Allocation Stru

PM_020 ZM Activity allocation- Allocation Stru

PM_025 PM Settlement Group

COPAINVREV CO-PA Inventory Revaluation Elements

REVENUE Revenue Cost Element Group

SECCOST Secondary Costs

5.1.3 BBP_CO_MD5.1.3 Cost Center

Cost center is the smallest organizational unit within the company’s overall organizational

structure which collects cost for the purpose allocation, analysis and reporting.

Creation of new Cost Center: Whenever a new Cost Center is to be created, the Cost

Center Group and the Profit Center for the same would have to be determined.

Change Cost Center: It will be possible to change the Cost Center Group for a Cost Center

in case the need arises.

Delete Cost Center: Cost Center can be deleted if there are no actual postings and if there

are no plan data for the same

Cost center will be codified in 10 digits and the following convention will be adopted:


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1 2 3 4 5 6 7 8 9 10

Profit CenterCost Group

Cost Center

increment number

Cost Center Hierarchy -1000STD has been maintained for Arch Pharmalabs Limited as

given as Annexure-A to this document.

Important Fields in Cost Center

Person responsible : Person responsible for the given cost center

Cost Center category: Cost center categories determine the type of activity /

department of the Cost Center belong to. For each category, default values can be

transferred to the master, for “Lock" and "Record quantity" indicators. Maintain these

indicators only if the entry diverges from the default cost center category.

The following are the Standard Cost Center Categories:

E Development

F Production

G Logistics

H Service cost center

L Management

M Material

S Social


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V Sales

W Administration

Department: In this field, enter the name of the department to which the cost center

belongs. Then it can be used for evaluations

Hierarchy Area: under which hierarchy group the cost center going to be creating.

Company Code: For which company code cost center is created (1000 or 3000)

Profit center: The actual postings made to the Cost Center are updated to this Profit

Center – As per the requirement.

5.1.4 BBP_CO_MD5.1.4 Cost Centre Groups

To combine similar cost centers to form cost center groups. You may then combine similar

groups into further groups to create a cost center hierarchy

You can use cost center groups:

In the information system to create reports for selected cost centers

To process multiple cost centers in a single transaction:

Cost center planning

Distribution

Assessment

Maintain the standard hierarchy for controlling area in the master data.


sapevent:DOCU_LINK%5CDS:SIMG.SIMG_CFMENUORKSOKEO

sapevent:DOCU_LINK%5CGL:distribution

sapevent:DOCU_LINK%5CGL:cost_center

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5.1.5 BBP_CO_MD5.1.5 Activity Types

The Activity Type classifies the specific activities that are provided by one or more Cost

Centers. If a Cost Center provides activities for other Cost Centers, Orders, Processes, etc.

then it implies that its resource is being used. The costs of these resources need to be

allocated to these receivers of the activity. Activity Types serve as the tracing factors for this

cost allocation. To plan and allocate the activities, the system records quantities that are

measured in activity units. The Activity Types are created as below:

Important Fields Activity Unit: For production related activity type unit of measure “hour” is used.

Cost Center categories: Indicator determining for which cost center types an activity type is allowed for planning and as a sender in internal activity allocation.

List of Activity TypesActivity ID Activity Description UOM SCE

1100 Machine Hours HR 90043110

1200 Overhead-Labour-Inte HR 90043120

1300 Overhead-Labour Exte HR 90043130

1400 Power KWH 90043140

1500 Water (Lts) L 90043150

1600 Fuel (KG) KG 90043160

1700 Liquid Nitrogen KG 90043170

2100 Maint. Internal HR 90043210

2200 Maint. External HR 90043220

3100 Resource Cost-Chemist HR 90043310

3200 Resource Cost-Scient HR 90043320

3300 Resource Cost-Group HR 90043330


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5.1.6 BBP_CO_MD5.1.6 Activity type groups

Activity type groups will be created for the purpose of analysis and reporting. The following

are the Activity Groups for Arch:

Activity Type group Name

1000 Arch - Activity Group (Production Group)

2000 Arch – Activity Group (Maintenance)

3000 Arch – Activity Group (Project)

5.1.7 BBP_CO_MD5.1.7 Statistical key Figures

Statistical key figures serve as a basis for internal allocations and as references in the key

figure analysis framework.

Till now, the following Statistical Key Figures are identified. Additional SKF’s will be kept in

KDS.


Statistical Key Figure

NameUOM

10 PS: Non-aggregated Percent of completion

20 PS: Aggregated Percent of completion

30 PS: Results Analysis % of completion

EMPLYE No of Employees No

EFLUEN Affluent Generated NO

No of Batches No

SOLVEN Solvent Processed Kgs

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5.1.8 BBP_CO_MD5.1.8 Internal Order

Internal Orders are used to plan, collect and settle the cost of specific activity or task. They

can be monitored through their entire life-cycle i.e. from their initial creation, the planning and

posting of actual costs and the final settlement wherever required.

Statistical Internal Orders can be used for monitoring objects in Cost Accounting whereas

real orders will be used to capture and monitor the costs, as a cost object.

Internal order Type Z001 – is being used for the purpose of capital assets purchasing,

without Project Systems, for monitoring of budget.

Internal order Type Z005 – Statistical postings, is being used to create the internal orders, to

capture the additional details, vehicles, telephone, etc. These internal orders will be used

along with cost center, to capture the cost each sub-element wise (i.e. Telephone or Vehicle

as the case may be).

5.1.9 BBP_CO_MD5.1.9 Profit Centers

A profit center is a management oriented organizational unit used for internal controlling

purposes. Dividing company into profit centers allows to analyze areas of responsibility and

to delegate responsibility to decentralized units, thus treating them as “companies within the

company”.

Important fields in Profit CenterProfit Center Group: The standard hierarchy is a tree structure which displays the

organization of all the profit centers in one controlling area. Each profit center must be

assigned to a node in the standard hierarchy for its controlling area. This ensures that the

standard hierarchy contains all the profit centers in the controlling area.


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Profit centers will be created each company code, Product and Location combination. This

will be assigned in the respective master data. The profit center will be 6 digits and the

following convention will be followed:

1 2 3 4 5 6

Plant / Location Product / Common /

Corporate Group

Profit Centers for the Arch Pharmalabs Limited (1000) and Avon Organics are being placed

in the Annexure B.

5.1.10 BBP_CO_MD5.1.10 Material Master

Material master will be created part of the Logistics module.

For more details on the material types and material master refer the Business Blue Print

“BBP_MM_MD_BP01: Material Master”

Some of the important fields need to be updated in the Material master Costing Views ; the

same has been discussed below.

Important fields in Costing View

Origin Group: The combination of Cost Element and Origin Group is being updated in the

Cost Component Structure. ARCH will be using Origin Groups for some of the key Material.

This enables the analysis of material costs in the information system in more detail.


Business Blue Print




Define calculation bases for determination of overhead rates for particular material

groups.

Define cost components in product costing for particular material groups.

Create rules for activating work in process for each material group.

The following are the Origin Groups assigned in the Material Master:

1001 – Key Material

1002 – Solvents

Material Origin: Origin group is a subdivision of Cost Element. When material costs are

calculated, each material is given a general ledger account to post the consumptions and

thus is assigned to a primary cost element. If origin group is maintained in the material

master, the combination of source group and cost element is updated.

If this indicator is selected, the material number will be written to the cost element itemization

in Controlling.

Based on this key, Cost of the materials will to be identified in a different line item, in cost

component structure.

With Quantity Structure: This indicator determines whether the material is costed using

costing with or without a quantity structure.

If you always cost your materials (including raw materials) using costing with quantity

structure, you should turn on this indicator. This improves performance, because the system

does not search in vain for existing cost estimates without a quantity structure for every

material when it explodes the BOM. Therefore, only turn on this indicator if you normally cost

the materials using costing without quantity structure.

Regardless of the setting, you can cost a single material with or without quantity structure.

However, you should bear in mind that this setting is always used in the Costing Run.


sapevent:DOCU_LINK%5CDS:GLOS.quantity_structure

sapevent:DOCU_LINK%5CDS:GLOS.cost_estimate_without_quantity_structure

sapevent:DOCU_LINK%5CDS:GLOS.cost_estimate_with_quantity_structure

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Meaning of Quantity Structure: Quantity structure means the combination of a bill of material

and a routing for the material to be costed. When you create a cost estimate for a material, you

always use a costing variant. This variant is the link between the cost estimate and the quantity

structure control

Variance Key: A key that ensures the object is selected during variance calculation. Also

controls whether scrap costs are reported in a separate category.

Variances can only be calculated for the orders for which a variance key has been entered.

This key is defaulted through the costing view in the material master record. If the variance

key is activated variance calculation in the variance key, the value of the scrap is calculated

at target cost and subtracted from the actual costs before the variances are determined.

Standard Variance Key “000001- Variance Calculation for orders” will be used.

Costing lot size is used as the basis for costing of the material. The base quantity of the Bill

of Material should be maintained as the Costing lot size. BOM Header quantity will be

Created for the same quantity as costing lot size.

In standard Functionality direct validation is not possible with the costing lot size and BOM

header quantity. An enhancement need to be written in consultation with the PP Team.

Do not Cost the material is excluded from selection and BOM explosion, so that no cost

component split will be created by the costing process. The following is not possible, if this is

activated:

Material cost estimate

Sales order cost estimate

Profit Center- In the material master profit center will be assigned. Based on the

assignment, while posting the financial transactions for the material movement, system will


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determine the Profit Center, automatically from the Material master. Based on the material /

product segment, relevant profit center need to be assigned in the Material Master.

5.1.10.1 Raw / Packing and Lab Chemicals These materials are procured from the External vendor through Purchase order Process.

The material can be procured different source of supply and need to be classified based on

its duties / tax payment status. To meet this requirement, these materials are maintained

based on the following split valuation types:

Raw Materials

o Domestic purchase

o Domestic Excise Paid (excise inventorised)

o Imported purchase (Customs duty paid)

o Imported purchases (against advance license – No customs duty payment )

Lab Chemicals

o Domestic purchase

o Imported purchase

Packing Materials

o Domestic purchase

The price control for all the above materials are “V” Moving Average Price.

5.1.10.2 Semi-finished and Finished GoodsIn general goods which are manufactured internally are known as Semifinished goods or

Finished goods, based on its stage of manufacturing. In case of Arch some of the materials

are manufactured internally and purchased from external source. In view of this it is decided

to use a common material code, whether manufactured or procured. To identify the source

of the material, it has been decided to have the split valuation for the materials.


Business Blue Print




In case of Semi-finished goods the following are the split valuation types and their price

control as follows:

Inhouse – Manufacturing - S

Domestic – Job work - V

Domestic – Purchase - V

Imported – Purchase - V

In case of Finished goods the following are the split valuation types and their price control as

follows:

Inhouse – Manufacturing - S

Domestic Purchase - V

Imported Purchase - V

For some of the CRAMS products, Price Control will be maintained as V in the

manufacturing plant even though these material are Semi Finished/Finished materials. In all

the Depots the price control will be maintained as ‘V’ for all material types.

5.1.10.3 Allied Products

Arch procuring some of the materials, based on the market demands and supplying to

customers and these materials are not manufactured internally. These materials are

identified as Allied Products and received in Depots and sold to the customers from depots.

In case of Allied Products the following are the split valuation types and their price control as

follows:




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5.1.10.4 Stores and Spares / Operating SuppliesSpares and Operating supplies are in the nature of maintenance materials. Some of the

spares and consumables are being stored in the stores and consumed based on the

maintenance schedule or breakdown maintenance. Some of the materials are used as

regular consumption i.e. Consumables, Fuel, Coal, etc.,

In case of Stores and Spares the following are the split valuation types and their price control

as follows:



In case of Operating supplies the following are the split valuation types and their price

control as follows:



Power / Fuel / Diesel - V

5.1.10.5 Capital – Inventory

Some of the materials, for construction of fixed assets and maintained as inventory, in the

stores. As and when required by the Project Engineering Department, stores department will

issue the goods to the project. All these nature of materials are created under the material

type Capital inventory. These materials can be procured locally and imported.

In case of Capital Items the following are the split valuation types and their price control as

follows:




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5.1.10.6 Material Types, Valuation Type, Valuation Class

MTyp ValCatVal. Type ValCl Prc

ZCAP H DOM 7000 VZCAP H IMP 7050 VZFIN A DOM 4050 VZFIN A IMP 4100 VZFIN A JOB 4025 VZFIN A MFG 4000 SZINT A DOM 3100 VZINT A IMP 3150 VZINT A IMPAL 3150 VZINT A JOB 3050 VZINT A MFG 3000 SZLAB H DOM 1100 VZLAB H IMP 1150 VZOPS 6500 VZOPS H DOM 6100 VZOPS H IMP 6150 V

ZPKG H DOM 1200 VZPKG H IMP 1250 VZRAW H DOM 1000 VZRAW H DOMEP 1000 V

ZRAW H IMP 1050 VZRAW H IMPAL 1050 V

ZSPA H DOM 6000 V

ZSPA H IMP 6050 VZTRG H DOM 4500 VZTRG H IMP 4550 V

PlntProfit Ctr AAG Depot


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1071 107110 10 X1071 107120 20 X1071 107190 90 X1100 110000 0 X1100 110010 10 X1100 110020 20 X1100 110051 51 X1100 110052 51 X1101 110110 10 1101 110120 20 1101 110131 31 1101 110132 32 1102 110210 10 1102 110220 20 1102 110231 31 1102 110232 32

1102 110290 90 1103 110310 10 1103 110320 20 1103 110331 31

1103 110332 32 1103 110390 90

1104 110451 51 X

1104 110452 51 X1105 110510 10 1105 110520 20 1105 110531 31 1105 110532 32 1105 110590 90 1106 110610 10 1106 110620 20 1106 110631 31 1106 110632 32


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1107 110731 31 1107 110732 32 1151 115110 10 X1151 115120 20 X1151 115190 90 X1161 110510 10 1161 110520 20 1161 110531 31 1161 110532 32 1162 110510 10 1162 110520 20 1162 110531 31 1162 110532 32 1171 117110 10 X1171 117120 20 X1171 117190 90 X1172 117210 10 X1172 117220 20 X1172 117290 90 X1173 117310 10 X1173 117320 20 X1173 117390 90 X1200 120000 0 1201 120110 10 1201 120131 31 1201 120132 32 1202 120210 10 1202 120231 31 1202 120232 32 1203 120310 10 1203 120320 20 1203 120331 31 1203 120332 32 1203 120390 90 1252 125220 20 X


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1253 125320 20 X1271 127110 10 X1271 127120 20 X1271 127190 90 X1272 127210 10 X1272 127220 20 X1272 127290 90 X1301 130110 10 1301 130120 20 1301 130131 31 1301 130132 32 1301 130190 90 1302 130252 51 X1371 137110 10 X1371 137120 20 X1371 137190 90 X1372 137210 10 X1372 137220 20 X1372 137290 90 X1471 147110 10 X1471 147120 20 X1471 147190 90 X1571 157110 10 X1571 157120 20 X1571 157190 90 X3101 310110 10 3101 310120 20 3101 310131 31 3101 310132 32 3101 310190 90 3171 317110 10 X3171 317120 20 X3171 317190 90 X3200 320000 0 X3200 320010 10 X


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3200 320020 20 X3201 320110 10 3201 320131 31 3201 320132 32 3251 325110 10 X3251 325120 20 X3251 325190 90 X3401 340110 10 X3401 340120 20 X3401 340190 90 X

GAP-(ABAP-Enhancement): While creating/Changing the Material, standard SAP

system will not do the validation with the above combination. For this purpose

enhancement need to the written

5.1.11 Controlling Master Data – Business Process Steps and Transactions

Sl.No Transaction T.code Input Output User Role Controls

1 Primary Cost

Element

KA01 /

KA02 / KA03

GL Account

Number

Validity Period

Cost Element

Type

Primary Cost

Element will be

created

CO User

FI Master

User

GL account

must be

created in the

system

2 Secondary Cost

Element

KA06 CO User No GL

Account

created with

same ID

3 Delete Cost

Element

KA04 Cost Element

Number

Cost Element

will be deleted

CO BPO No postings

should made

4 Display Changes to

Cost Element

KA05 CO User


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5 Cost Element

Group

KAH1 / KAH2

/ KAH3

Group ID

Group Name

Assign the Cost

Elements

CO User

6 Cost Center

Standard Hierarchy

OKEON /

OKENN

Controlling Are Controlling

Area Standard

Hierarchy

CO BPO

7 Cost Center KS01 /

KS02 /

KS03

External 10 digit

Code

Validity Date &

other master

data

Cost Center is

created or

displayed in

the screen

CO User Cost

authorization

need to be

maintained

8 Delete Cost center KS04 CO BPO If the postings

are not made

can be deleted

9 Display Changes to

Cost Center

KS05 CO User

10 Cost Center Groups KSH1 /

KSH2 /

KSH3

External ID

Assign the cost

centers

CO User

11 Activity Types KL01 /

KL02 /

KL03

4 Digit External

number

CO User

12 Delete Activity Type KL04 CO BPO

13 Display changes to

Activity Type

KL05 CO User

14 Activity Groups KLH1 /

KLH2 /

KLH3

Group ID

Assign Activity

Types

CO User

15 Statistical key

Figures

KK01 / 4 Digit code for CO User


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KK02 /

KK03

Cost Center

16 Delete Statistical

key Figures

KK03DEL CO BPO No postings

17 Profit Center

Standard Hierarchy

KCH1 /

KCH5N

KCH6N

Standard

Hierarchy

COBPO

18 Profit Centers KE51 /

KE52 /

KE53

6 Digit Code for

profit center

CO User

19 Delete Profit Center KE54 Profit center to

delete

CO User No postings

20 Display Profit

Center Changes

6KEA Change in the a

report

CO User

21 Profit Center

Groups

KCH1 /

KCH2 /

KCH3

Profit Center

Group ID

CO User

22 Internal Orders KO01 /

KO02

KO03

Order type

IO Number

CO User

23 Internal Order

Groups

KOH1 /

KOH2 /

KOH3

Group ID

Assign the IO

CO User Will be used in

reporting

24 Material Master MM01

MM02 /

MM03

Material Type

Industrial Sector

Plant

Valuation Type,

etc.,

Material

Master will be

maintained

MM Master

User

Display to

CO User

Need to be

maintained all

the relevant

views


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5.1.12 Controlling Master data – Integration:

The following are the integration points:

Sl No Module Details

1 FI To create the Primary Cost Elements, it is required to have the corresponding

General Ledger Account in the FI System.

Cost center and Profit center will be assigned corresponding Company code.

Profit Center is being for financial reporting

2 MM Material Master is being created in Material Management module. Costing

Views will be extended to the materials. When Standard Cost Estimate is

released from CO Module, the same will be updated into the Material master.

And material valuation will be carried out accordingly.


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6 Business Processes – Controlling

6.1 Business Process Scenario

Organization Structure from CO perspective

The following are the business Processes considered in Controlling:

Cost Element Accounting

Cost Centre Accounting

Internal Order Accounting



Operating Concern -1000

Controlling Area - 1000

Company Code-1000 Company Code-3000

30003000

Assignment of company code – controlling –operating concerns

prospective

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Profit Centre Accounting


6.2 System Considerations

The following considerations will be taken in Controlling:

Cost elements

Activity Types

Controlling Versions

Statistical Key figures

Planning Profile

Assessment and Distribution cycles

Internal order types

Budget Profiles

Costing Variant

Cost Component Structure

Base Planning object

Settlement profiles

Result Analysis Version

Allocation Structures

Characteristics and Value Fields in Profitability Analysis


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6.3 Solution in detail

Business process in Overhead cost management:

6.3.1 BBP_CO_BP6.3.1 Cost Element Accounting

Cost Element Accounting is the part of accounting where you enter and organize costs

incurred during a settlement period. It is thus not an accounting system as such, but rather a

detailed recording of data that forms the basis for cost accounting.

In an integrated accounting system such as the SAP ECC 6.0 System, you do not need to

enter cost data in a special way. This is because each business transaction relevant to cost


Cost element accounting

Budget and planning of order for

different business process

Settlement of order to

different R/3 objects

Cost element creations

Period end closing

activities

Internal order management

Using cost elements for

different business process

Cost center accounting Cost center planning

with activity types

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accounting provides the (CO) component with detailed information for the cost element, and

for the account assignment object itself. Each consumption transaction in Material

Management (MM), each billing in Sales and Distribution (SD) (= revenue), and each

external transaction for invoice verification flows directly through the G/L Account (= cost

element) to the corresponding account assignment object.

It is a prerequisite to create relevant general ledger accounts in FI, in order to create

corresponding primary cost elements in CO. Examples for primary cost elements are

material costs, salary costs. To be able to post to a primary cost element, We require cost

carrying object such cost centre or internal order etc. to identify the origin of the cost.

Secondary cost elements are used exclusively in CO to record internal value flows like

assessments, activity allocations and settlements. Secondary cost elements can be created

only in Controlling and they do not have any corresponding general ledger accounts in FI.

Cost and revenue elements (Accounts) describe the origin of costs, revenues. Cost

elements are defined as either primary cost elements or secondary cost elements.

Cost Element Groups are created to group together the cost elements of similar kind of

nature to process the cost elements collectively in cost centre planning, assessment etc.

The cost elements can be created in the system automatically or manually. If a new GL

Account is created, based on the category mentioned in the system, Cost Element can be

created automatically.

For more details on General Ledger Master record details, refer the FI Business Blue Print

“5.1.1. FI Master Data – General Ledger “


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The following is the sample list, of GL account assignment to create the Cost element

automatically. Based on finalization of GL Account Master necessary values will be

maintained, based on the requirement. Otherwise Cost elements will be created manually.

Account From Account To Cost Element Category

21311000 23109900 90 Statistical

21111000 21124300 90 Statistical

31010010 31040010 11 Revenues

31040020 31040050 11 Revenues

40111000 40111000 01 Primary costs

40111010 40111040 01 Primary costs

40111055 40121050 01 Primary costs

40121065 40131100 01 Primary costs

40131110 40141150 01 Primary costs

40151200 40173230 01 Primary costs

40173245 40173245 01 Primary costs

40173255 40173255 01 Primary costs

40173275 40173310 01 Primary costs

40184005 40184005 01 Primary costs

40184055 40184055 01 Primary costs

40184105 40184170 01 Primary costs

40313900 41101160 01 Primary costs

41101180 41108050 01 Primary costs

41199990 41199990 22 External Settlement

42101010 51130040 01 Primary costs


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1. Normal Material Consumption Accounts - (Primary Cost Element Category- 1).

Process Order will be the cost object.

2. Job Work Out Accounts (Sub-contracting ) (Account Key - BSV, FRL, VBO) – No

Cost Elements

3. Input Materials Variance Accounts – price variance (PRD), Scrapping (VNG),

inventory variance (INV) – Cost Element type 1. Default Cost Center derivations will

be maintained to trigger the cost centre based on the plant.

4. Revaluation (UMB) will be triggered to CO-PA as CO Object.

5. Input Materials Sampling Cost Accounts – (VQP, VQY) – cost elements will be

created. Default cost centre will be derived based on Plant.

6. Small Difference Posting – (DIF) – No Cost Element

7. Purchase (EIN) / Purchase offsetting (EKG) – Purchase Freight (FRE)- No Cost

Element

8. Goods Receipt against process order – (GBB-AUF), Process order Settlement –

GBB- AUA - Cost Element will be created – (Primary Cost Element Category- 1).

Process Order will be the Cost Object.

9. Manufactured Materials Variance Accounts – price variance (PRD), inventory

variance (INV), Scrapping (VNG) – Primary Cost Element Category -1. Process

Order will be the Cost object

10. Manufactured Materials Sampling Cost Accounts – (VQP, VQY) – cost elements will

be created. Process Order will act as Cost Object.

11. Manufactured Small Difference Posting – (DIF) – No Cost Element

12. Goods issue to Cost Center – GL account will be proposed by system based on the

consumption account. Cost object will be assigned manually in the screen.

13. General ledger account relating to Calculated WIP Account will not be created as a

cost element.


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14. General ledger accounts relating to Production Variances will be created as cost

elements, (Primary Cost Element Category- 1). Process Order will be the Cost

Object.

15. “Make to Stock Scenario “- General ledger accounts relating to ‘Cost of Goods Sold’

posted without account assignments, will not be created as Cost Elements. (Account

Key VAX).

16. “Make to Order Scenario“- General ledger accounts relating to ‘Cost of Goods Sold’

posted with account assignments, will be created as Cost Elements. (Account Key

VAY / VKA /VKP). This is required in case of Make to Order / Make to Project

scenario. (Primary Cost Element Category- 1). The Concerned Project/Sales Order

will be the Cost Object.

17. Without Reference – Goods Receipt – (ZOB 501 / ZOF-521/531).Cost Elements will

be created. User will enter the cost center manually.

18. General Ledger Accounts between 30000000 & 39999999 will be recognized as

revenue elements. CO-PA acts as CO Object.

19. Sales Deduction accounts, if any(like Sales Discount) will be created with Cost

element category 12. CO-PA acts as CO Object.

The following are the list of GL Accounts, for which Cost Elements will not be created as per

Arch Requirements.

Chart Of Acts GL Acct. GL Description

1000 32060010 Asset Sale Clearing1000 40111005 Cons of RM - Dom for JW1000 40111050 COGS of Input Materials – Dom1000 40121055 Cons of RM - Imp for JW1000 40121060 COGS of Input Materials – Imp1000 40131105 Cons of Lab Chemi-Dom for JW1000 40141155 Cons of Lab Chem-Imp for JW1000 40151205 Cons of PM - Dom for JW1000 40161255 Cons- PM-Imp-JW1000 40173005 Cons of Semi Finished - Mfg for JW


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1000 40173050 Cons of Semi Finished – JW1000 40184106 Cons of Finished Goods - JW in JW1000 40173110 Cons of Semi Finished Goods-Dom-JW1000 40173160 Cons of Semi Finished Goods-Imp-JW1000 40173230 Chg. in Inv. - Semi Finished – JW1000 40173240 COGS - Semi Finished – Mfg1000 40173250 COGS - Semi Finished – Dom1000 40173260 COGS - Semi Finished – Imp1000 40173270 COGS - Semi Finished – JW1000 40184000 COGS of Finished Goods – Mfg1000 40184050 COGS of Finished Goods – Dom1000 40184100 COGS of Finished Goods – Imp1000 40173330 COGS - Packing Material - Dom1000 40173350 COGS - Packing Material-Imp1000 40184025 COGS-Finished Goods-JW1000 41101175 COGS-Stores & Spares-Imp1000 40199900 Change in Work in Process1000 40211000 Purchase - Raw Materials – Dom1000 40211010 Purchase-Delivery Cost1000 40211050 Purchase - Raw Materials – Imp1000 40211100 Purchase - Lab Chemicals – Dom1000 40211150 Purchase - Lab Chemicals – Imp1000 40211200 Purchase - Packing Materials-Dom1000 40211250 Purchase - Packing Materials-Imp1000 40213100 Purchase - Semi Finished Goods-Dom1000 40213150 Purchase - Semi Finished Goods-Imp1000 40214050 Purchase - Finished Goods – Dom1000 40214100 Purchase - Finished Goods – Imp1000 40216000 Purchase - Stores & Spares – Dom1000 40216050 Purchase - Stores & Spares – Imp1000 40216100 Purchase - Consumables – Dom1000 40216150 Purchase - Consumables – Imp1000 40216500 Purchase - Power & Fuel1000 40217000 Purchase - Capital Items – Dom1000 40217050 Purchase - Capital Items – Imp1000 40220100 Purchase Off-Setting A/c1000 41101170 COGS of Stores & Spares1000 41108060 Material Small difference account1000 42207010 Donations1000 42209010 Directors Sitting Fees1000 42212010 Profit \ Loss on sale of asset1000 42212020 Profit \ Loss on sale of Investment


Business Blue Print




1000 42213050 Listing Fees1000 42213060 ROC Fees1000 42213070 AGM Expenses1000 42404030 Interest & Penalty-Service Tax & Excise1000 42404040 Interest paid- Others1000 42505010 Exch. Fluct. G/ L – Export1000 42505020 Exch. Fluct. G/ L – Import1000 42505030 Exch. Fluct. G/ L – Loan1000 42505040 Exch. Fluct. G/ L ( Unrealised) - Export1000 42505050 Exch. Fluct. G/ L ( Unrealised) - Import1000 42505059 Exch. Fluct. G/ L ( Unrealised)-Others1000 42505060 Exch. Fluct. G/ L ( Unrealised) – Loan1000 43110100 Foreign Cur Monetary Item Trans Diff - W1000 44110010 Prior Year Expenses1000 51110010 Provision for Taxation1000 51110020 Provision for Deferred tax1000 51110030 Short/Excess Provision for Taxation1000 51120010 Transfer to Debenture Redemption Reserve1000 51120020 Transfer To General Reserve1000 51130010 Dividend-Equity1000 51130020 Dividend Tax - Equity Shares1000 51130030 Dividend - Preference Shares1000 51130040 Dividend Tax – Preferance Shares

6.3.2 BPP_CO_BP6.3.2 - Cost Centre Accounting

Cost Centre Accounting would be used for controlling purposes within an organization. Cost

Centre Accounting lets you analyze the overhead costs according to where they were

incurred within the organization.

To assign overhead costs accurately to individual products, services or market segments,

further allocation of costs to those cost centers directly involved in the creation of the

products or services is needed. We can then use different methods to assign the activities

and costs to the relevant products, services and market segments from these cost centers.


Business Blue Print




The costs of each cost-accounting-relevant business transaction portrayed in the SAP ECC

System can be assigned through Cost and Revenue Element Accounting (CO-OM-CEL) to

an account assignment object in the Controlling component (CO). For overhead costs this

can be cost centers, internal orders, business processes or overhead projects.

GAP(ABAP-Enhancement): Standard authorizations are not available to restrict the users

to post only to authorized cost centers. If the cost centre authorization is needed, validation

by exit will to be activated.

6.3.2.1 Cost Center PlanningCost centre planning involves entering plan figures for costs, activities, or statistical key

figures for a particular cost centre and a particular planning period. You can then determine

the variances from these figures when you come to compare these plan values with the

costs actually incurred.

6.3.2.2 Activity Type Planning

Activity types are used to determine the quantity-based output of a cost center. The plan

activity quantities of production and service cost centers must be reconciled with the master

production schedule of Process Orders. This determines the required plan activity quantity,

as well as the plan capacity.

Secondary Resources will facilitate the following.

In standard SAP in an operation we can assign 6 Activities in an operation.

Secondary Resource will facilitate to have this facility.

It will absorb the costs from the same cost centre, in which the costs were incurred.

No need to do separate assessment cycles for the sake of this.


Business Blue Print




Cost Split will be avoided.

Better control over the Utility cost as variable cost.

The following are the Activity Types Identified for Product Costing:

SL No Activity Type Activity Type Description

1 1100 Machine Hours

2 1200 Labour Hours – Internal

3 1300 Labour Hours – External

4 1400 Power Units

5 1500 Water

6 1600 Fuel

7 1700 LIQUID NITROGEN

Activity types are used primarily to control the activity quantities on the cost centers. This

enables to measure the operating planned rate or the rate of capacity utilization of a cost

center.

In Cost Center Accounting, activity types can be defined uniquely using the bases “Plan

activity”, “Capacity”, “Output quantity”, “Price” and “Equivalence number” for each production

cost center wise. The price can be calculated by the system or entered manually.

Plan Activity Quantities in the following characteristics :

Version

From Period - To Period

Fiscal Year


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Cost Center Range

Activity Type Range

Plan Cost Center Vs. Activity Type combination, the Plan Activity and Capacity Activity,

quantities. As the Activity independent costs (Service Cost Center costs) will be absorbed

through Machine Hours, keep the Equivalence Number as one for Machine hour and rest of

the activity types (Labour, Power, Water and Fuel) the Equivalence Numbers should be

Zero.

The following are the Activity Types Identified for Maintenance and planning will be carried

out similarly as Activity Dependent Planning:

Activity ID Activity Description UOM SCE

2100 Repair Internal Labor HR 90043210

2200 Repair External Labour HR 90043220

The following are the Activity Types are Identified for R & D Cost monitoring and planning

will be carried out similarly as Activity Dependent Planning:

Activity ID Activity Description UOM SCE

3100 Resource Cost-Chemist HR 90043310

3200 Resource Cost-Scientist HR 90043320

3300 Resource Cost-Group HR 90043330


Business Blue Print




6.3.2.3 Activity Dependent Overhead Planning

Activity – Dependent cost planning for primary costs will be made, based on the following

combinations:

Cost Center

Activity Type

Cost Elements

Some of the cost can be directly identifiable in the above combinations. This involves

entering the planned costs that arise from the consumption of goods, services procured

externally, expenses incurred. The planned figures will be entered in the local currency INR

using the following versions.

Version Description

0 Plan / actual Version

Overheads will be planned, in this activity. The overheads can be Fixed or Variable. The

following Cost Center / Cost Center groups will be planned Activity Dependent planning (i.e:

those are associated with production resource).

Example for plant 1101:

Cost Center Group / Cost Center Cost Element Group

Activity Type Remarks

1101101005, 10,20

etc

Direct Costs – overhead cost

element groups - of Labour 1200 & 1300

Primary resource

activities

1101105005,

1101105020,

1101105045

Direct Costs – overhead cost

element groups - of Utility

related

1400, 1500,

1600

Secondary resource

activities


Business Blue Print




Activity Dependent Planning for Secondary Resource:-

Some of the service cost center costs are directly allocable / identifiable to the product lines.

These costs are being transferred to products through service Activity Type. These service

cost are being planned to Service cost center Vs. Activity Type. These service cost center

and activity type will be used in the Secondary Resource of Product Recipe. Based on the

Secondary Resource assignment, cost will be absorbed by the product. Since the Secondary

Resource does not allow to confirm the from the same plants, these need to be created at

the HO plants.

6.3.2.4 Activity Independent Overhead Planning Activity – independent cost planning for primary costs without referring to specific Activity

Types. This involves entering the planned costs that arise from the consumption of goods

and services procured externally and indirect overheads, to be distributed to Production cost

centers. The planned figures will be entered in the local currency INR using the following

Versions in the following combinations:

Version

Period From – To

Fiscal Year

Cost Centers or Cost Center Groups

Cost Elements or Cost Element Groups

The Activity-independent primary costs are planned for the combination of Cost Centers and

Cost Elements. The costs will be initially planned for the whole fiscal year and equally

distributed among the various periods or based on the distribution key or manual distribution

among the periods.


Business Blue Print




Normally service cost center will be planned activity independent planning. As a period

process these cost will be transferred to production cost centers.

6.3.2.5 Statistical Key Figure planning This process is required for entering cost centre wise planned Statistical Key Figures. These

will be used in Distribution and Assessment cycle, for allocation of overheads from Service

Cost Center to Production associated cost centers.

Arch will maintain the Planned Statistical Key Figures Vs. Overhead receiver cost center.

Based on these values, system will distribute the overheads and transfer the same to the

receiving cost center.

The Cost Center Vs. Statistical Key Figure will be kept in the KDS Document in the following

format.

SKF Cost Center Weight factor Purpose of usage

6.3.2.6 Periodic Allocation of Overheads:In SAP System two methods of overhead allocation is possible:

Distribution: The original cost element is retained.

Assessment: The original cost elements are assigned cumulatively, or in groups, to assessment (secondary) cost elements. The original cost elements are not recorded on the receivers. The receiver side, Assessment Cost Element will be seen.


Business Blue Print




These are indirect overhead allocation methods. The following are the user defined

allocation methods:

TYPE BASIS

Fixed basis Fixed percentage

Fixed basis Fixed portions (Ratio)

Fixed basis Fixed amount

Variable basis Actual cost of receiver

Variable basis Planned cost of receiver

Variable basis Actual SKF of receiver

Variable basis Planned SKF of receiver

Variable basis Actual Activities of receiver

Variable basis Planned Activities of receiver

Arch will be creating the Assessment cycles for distribution of overheads plant wise. The

details of Assessment Cycles will be maintained in the KDS in the following format.

Plan Assessment Cycles

Assessment Cycle

Start Date Text

1101C1 01.01.2010 Tarapur

1102C1 01.01.2010 Badlapur Unit

1103C1 01.01.2010 Taloja G - 6 Unit

1104C1 01.01.2010 Taloja R & D Unit

The following is the format for the Segments.

Segment Assessment Sender cost Receiver cost Basis % or


Business Blue Print




cost Element

& Basis

center center variable potion

As per the Arch requirement Allocation Cycles will be maintained in the system. The similar

assessment cycles will be created even for actual data allocation.

Overheads Absorption to Projects- CAPEX, Product/Process Development project, DMF .

It was proposed by Costing team that Overheads pertaining to Project management ,

Process Engineering , Purchase Engineering , Process Development Lab can be

absorbed to the Project by maintaining different activity Types for these Cost

Centers.

However, PS team/Commercial team cannot plan Overheads for these activities

separately for Product Costing & for Project along with Activity Quantity for

developing the different rates for absorption.

Further, project team cannot confirm the actual no of hours spent by Project

management Staff, Process Engineering staff, Purchase Engineering staff for

different types of projects.


Business Blue Print




Hence, different activity types will not be maintained for absorbing these costs. Since these costs pertain to Project Only, Costing team will not load Process

Development lab Exp , Project management Staff, Process Engineering, Purchases

Engineering for HO & Plant to regular products. Commercial team will absorb the

same to Different types of Projects based on their assumption.

6.3.2.7 Planning Profile

To load the overhead planning through Excel Sheet, a new custom developed planning

profile will be created. So that user can easily load the data through excel sheet.

ZARCH – Arch CC Planning - Excel

6.3.2.8 Cost Splitting

Since Arch is not using Cost Splitting Process, this process is removed from BBP.

6.3.2.9 Activity Prices for a Cost Center

The activity price is determined per Cost Center/ Activity Type either manually or in

automatic activity of price calculation by the system using the Activity Price calculation

process.

Before processing the price calculation, user need to complete the indirect overhead

allocation process and cost splitting process.

System will calculate the Activity prices based on overheads in the Cost center (direct +

allocated) and planned activity quantities for the cost center.


Business Blue Print




This Activity Price or rate is used in product cost planning / controlling to arrive at the

planned cost of production or standard cost estimate and actual production costs.

This price can also be maintained manually in the system.

6.3.2.10 Cost Center Planning -Transaction / Activity Chart:


1 Activity Output

Planning & Prices

KP26 Cost Center and

Activity Type

Production

Cost center

output and

Activity Prices

CO User Based on planned

production, output

quantity need to be

maintained

2 Overhead

Planning

KP06 Cost Center,

Activity Type

and Cost

Element

OrCost Center and

Cost Element

Overhead

planning

Activity

Dependent or

Activity

Independent

CO User Need to be

synchronized with FI

expenditure

postings

3 SKF Planning KP46 Version, Period,

Fiscal year,

Cost Center,

SKF

Statistical Key

figures will be

maintained for

a Cost Center

CO User Planned values will

be maintained for

Allocation

4 Plan Distribution

Cycle

KSV7 /

KSV8

Maintain Plan

Distribution

Cycle – to

allocate the

service cost to

production cost

Cost can be

distributed

based Sender

cost center to

receiver cost

center

CO User Allocation ratios

need to be identified


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centers

5 Plan Assessment

Cycle

KSU7 /

KSU8

Maintain Plan

Assessment

Cycle – to

allocate the

service cost to

production cost

centers

Cost can be

transferred

based on

Sender cost

center to

receiver cost

center

CO User Allocation ratios


6 Execute the

Distribution

KSVB Assign the

Distribution

Cycle, Month,

Year

Cost can be

transferred

based on

Sender cost

center to

receiver cost

center

CO User Need to be

identified the nature

of expenditure to be

used for Distribution

7 Execute the

Assessment

KSUB Assign the

Assessment

Cycle, Month,

Year

Cost can be

transferred

based on

Sender cost

center to

receiver cost

center

CO User Need to be

identified the nature

of expenditure to be

used for Distribution

8 Cost Splitting KSS4 Cost Center

Group, Period,

Year

Cost will be

assigned to

Cost Center

and Activity

Type

CO User

9 Activity Price

Calculation

KSPI Calculate the

activity prices

10 Review the Activity

Prices

KP26 Review the prices

calculated by the


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system

6.3.2.11 Cost Center Planning – Integration:

The following are the integration points:

Sl No Module Details

1 PP Cost centers and activity types are being assigned in the PP Resource / work

centers. These resources are being used to manufacture the products. Based

on product mix, planned capacity need to be arrived and maintained in the

Cost Center output

2 FI Based on the actual expenses incurred in the previous month / years,

expenses plan will be maintained in the system, as a cost center planning

6.3.2.12 Actual Posting in Cost Center Accounting

The actual values are posted online to monitor costs on an ongoing basis. These postings

enable us to recognize variances at an early stage, and to take the necessary counter

measures.

Actual cost entry involves transferring primary costs from upstream components to the

Controlling (CO) application component. In the CO component, this transfer occurs real-time

from the components Financial Accounting, Asset Accounting, Materials Management,

Production Planning and Payroll Accounting. This is achieved by entering a cost accounting

object (such as a cost centre or an internal order) during account assignment.


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Primary costs entered in other systems are allocated further using internal allocations and as

true to source as is possible. To enable this, costs are determined for each business

transaction, based on the valued internal activity. They are then posted real-time to the

sender and receiver object(s) (debit and credit postings).

Errors are unavoidable and may result particularly during initial days of SAP live operations.

Thus, there will be occasions where postings are assigned to the wrong controlling object,

and ARCH should be able to rectify posting errors related to erroneous assignment to

controlling objects.

ARCH can repost primary costs from one controlling object to another using transaction-

based transfers; the original cost element is always retained. This function is designed to

correct posting errors. Posting errors should preferably be corrected in the application

component where they originate, so that external and internal accounting (FI and CO) is

always reconciled.

In ARCH, the assignment of CO objects to the transactions in other modules like FI, MM, SD

etc. is taken care of where ever possible, to post the entries automatically to the respective

CO objects, in order to reduce the chances of error occurrence.

Posting errors involving assignment to a controlling object (cost centre or internal order) can,

however, is corrected using a transaction-based reposting in CO. The reposting costs (or

revenues) transaction is simple transfer of cost (or revenue) from one controlling object to

another.

Alternatively, ARCH can repost line items from CO documents. To do this, the CO reposting

document must reference the original FI document that posted the costs to CO. This


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enables to track the movement of cost with in CO, and still preserve the link with the

originating FI document. In repost line items, facility is provide to enter multiple receiver

objects for a line item reposting, but the full amount of original line item must be reposted.

For some of the Cost Elements, users can not assign the Cost Object. Hence the cost

object need to be derived based on the Plant or Profit Center. The assignment of cost object

to the cost elements, will be identified, based on the GL Accounts (cost elements)

finalization.

6.3.2.13 Period End Closing Activities in Cost Center AccountingPeriod-end closing in Overhead Cost Controlling is part of the work carried out at period-end

throughout the entire organization.

The tasks required at period-end, and the sequence in which they must be carried out,

depend on what system functions can be used and which cost accounting method. This topic

describes the basic elements of period-end closing. The explanations assume that all the

features available are being used.

ARCH will allocate the Costs collected on a cost center during the planning / actual posting,

during the accounting period to receivers, based on user defined ratio. The Activity-

independent primary costs which are planned / posted in the combination of Cost Centers

and Cost Elements, need to be allocated to Production Cost Centers/secondary resource

cost centers, by using the Assessment and Distribution method.

6.3.2.14 Periodic Reposting


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Actual Transactions are being posted from FI / SD / MM / PP components of SAP. Errors are

unavoidable and may result particularly during initial days of SAP live operations. Thus,

there will be occasions where postings are assigned to the wrong controlling object and

ARCH should be able to rectify posting errors related to erroneous assignment to controlling

objects.

ARCH can repost primary costs from one controlling object to another using transaction-

based transfers; the original cost element is always retained. This function is designed to

correct posting errors. Posting errors should preferably be corrected in the application

component where they originate, so that external and internal accounting (FI and CO) is

always reconciled.

6.3.2.15 Actual overheads Accruals

Arch is not using Actual Overhead Accruals.

6.3.2.15.1 Actual Allocation – Assessment Cycle

Assessment is a method of allocating the Costs in Cost Center Accounting. The following

information is passed on to the receivers:

The original cost elements are assigned cumulatively, or in groups, via secondary

cost elements (assessment cost element). The original cost elements are not

recorded on the receivers.

Sender and receiver information

Allocation through assessment is useful when the composition of the costs is unimportant for

the receiver.

6.3.2.15.2 Actual Allocation – Distribution Cycle

Distribution is used to allocate the primary costs of a cost center. The following information is

passed on to the receivers:


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The Original Cost Element

Sender and receiver information

You can analyze the distribution results according to sender and receiver relationships.

To transfer the costs Assessment or Distribution cycles will be created in the system. The

cycles are split into various segments, if the distribution ratios are changed:

From the Sender Cost Center & Sender Cost Element will be transferred to receiving cost

center based on a tracing factor / percentage / identified ratio.

Costs collected in a Cost Center during a period are further allocated to other Cost Centers.

ARCH will be using Assessments & Distribution as a method of allocating both Primary and

Secondary Costs. The original Cost Elements are assigned cumulatively or in groups to

Assessment (Secondary) Cost Elements.

Sender-receiver relationships between the various Cost Centers will be defined in the

various segments of the Assessment Cycle. During assessment, the original cost elements

will be summarized into the Assessment Cost Element. Line items are posted for both the

sender and receiver Cost Center while recording the allocation using the Assessment Cost

Element.

Statistical Key figures are used for Allocation of Electricity, Telephone, Cleaning, Gardening,

Maintenance expenses etc.

6.3.2.15.3 Variance Calculation


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Variance calculation categorizes and display variances incurred on cost centers by cost

element. Variance calculation is based on the results of actual cost entry and the allocation

methods as well as planning.

Variances in the Controlling component (CO) at period-end closing can be due to several

causes:

Planning was overshot/undershot

The actual costs on the cost centre differ from the target costs

Over-/under-absorption occurs on the cost centre

Variance calculation is based on the reconciled planning of internal activity between cost

centers and the costs thereby incurred. Variances are the differences between actual costs

and plan costs. They are displayed separately for a cost center, for an activity type of a cost

center, divided into fixed and variable portions. Where possible, they are classified by cost

element.

Variance calculation distinguishes between cost centers with activity types (such as

production cost centers) and those without (such as administrative cost centers). Actual

costs are always posted as activity-independent. To determine the activity input, you

therefore need to split the actual costs and the activity-independent plan or target costs of

cost centers with activity types on the activity types. In this way, analyze the reasons for the

Variances for a given cost center activity. Variance calculations compare detailed planning

on the activity type level with the corresponding actual costs.

Variance calculation allows, to analyze the actual balance. The system determines the

variances of the target costs from the actual costs split on the activity types, as well as from

the allocated actual costs in the different variance categories by cost element for each cost

center/activity type.


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6.3.2.15.4 Actual Activity Price Calculation

During the actual price calculation, the system calculates iterative prices for activity types

based on actual costs and actual activities. The calculation takes into account all activity

exchanges between cost centers.

Price calculation which carried out during planning, is based on planned costs and planned

activity.

After running actual price calculation, revaluate actual activity at actual prices. This

revaluates the activity using the difference between plan and actual prices. By revaluing the

actual activity with actual prices, can fully balance sender cost centers.

6.3.2.16 CCA –Period End Closing -Transaction / Activity Chart:


1 Manual Reposting KB11N Cost Center

Cost Element

Amount

CO Document

will be created

CO User Periodic review

need to be carried

out by the CO User.

Inform to the

respective users, if

any deviations

noticed

2 Maintain Statistical

Key figures (SKF)

KB31N/

KB32N /

KB33N

Posting Date

Rec. Cost

Center

SKF

Quantity

CO Document

will be created

to post the

Statistical Key

Figure

CO User This SKF will be

used in Overhead

distribution


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3 Maintain Activity

for Secondary

Resource

KB51N /

KB53N

Posting Date

Cost Center

Activity Type

Quantity

CO document

will be created

to post the

Activity Types

CO User User has to know,

how much actual

quantity is being

produced, cost

center wise / activity

type wise.

Cost Center Vs.

Activity relation

must be established

in the Planning

4 Manufacturing –

Process Order

COR1 /

COR2 /

COR3

Material

Number

Plant

Process Order

Type

Batch Quantity

Batch Number

Start Date, etc.,

Process Order

will be created

with an unique

number

PP User Data will be copied

from the Recipe

(BOM / operations).

Material availability

will be checked

Cost will be

calculated

Review the Process

orders and its

statuses

5 Process Order

Confirmations

COR6N

CORRProcess Order

number

Phase

(operation

number)

Actual Activity

Quantity

Confirmation

will be posted

PP User Actual Activity

Quantity need to be

confirmed by the

user

Review the Order

confirmations

6 Goods Issue to MIGO / Process order Goods Issue PP User Material Must be


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Process order MB1A number document will

be posted

available in the

identified Storage

location

Review the Goods

Issue

7 Goods Receipt

against the

Process Order

MIGO Process Order

number

Movement Type

Goods

Receipt

document will

be posted

PP user Check the material

prices

Review the Goods

receipt against the

process

8 Maintain Actual

Distribution Cycle

to allocate the

service cost center

overhead

KSV1 /

KSV2 /

KSV3

Cycle ID

Validity date

Segments

Method of

Distribution

Sender Cost

Center

Cost Elements

Receivers

Distribution

Cycle will be

created

CO Core

Team

Distribution ratios


and maintained

9 Maintain Actual

Assessment Cycle

to allocate the

service cost center

overhead

KSU1 Cycle ID

Validity date

Segments

Cost Element

Method of

Assessment

Sender Cost

Center

Cost Elements

Assessment

Cycle will be

created

CO Core

Team

Allocation ratios


and maintained


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Receivers

10 Cost Splitting KSS2 Cost split need

to be carried out

based on the

Cost center and

Activity Type for

the splitting rule

maintained

Splitting Structure

and Strategy need

to be maintained

11 Actual Activity

Price Calculation

KSII Actual Activity

price calculation

in the system

12 Actual Activity

price

KBK6 /

KBK7

Period, year,

Cost Center and

Activity Type

Review the

prices

calculated by

the system

6.3.2.17 CCA Period End Closing - Integration:

Sl.No Module Details

1 FI / MM While posting the actual transactions, user not in a position to enter the Cost

object (cost center / internal order, etc). This need to be defaulted by

assigning the Cost Center based on a plant or profit center, through

configuration.

2 PP-PI Part of the Manufacturing process, Process Orders will be created Goods

Issue, Confirmations and Goods Receipt will be posted in the system.

Review the open process order and Technically completed process orders.

3 PM Maintenance order will be consuming the materials from stores and

maintenance activities as identified. Activity price arrived through CO process

and absorbed based on the actual activity hours confirmation in the system.


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4 PS Planned Orders will be created through project MRP. Planned orders will be

converted to process orders. The Consumption of materials and activity

confirmations will be happened to the process orders. Finally process orders

will be settled to projects. All the actual expenses and inventory will be

transferred to the project systems from Process Order. Project stock report

can be viewed from T. Code MBBS. The project systems will finally be

transferred to CO-PA to analyse WBS wise information with regard to

Revenue and cost. The finished goods inventory will be posted with Project

moving average price maintained in the system.


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6.3.3 BPP_CO_BP6.3.3 Internal Order Accounting

Internal orders are normally used to plan, collect, and settle the costs of internal jobs and

tasks. The system monitors the internal orders throughout their entire life cycle from initial

creation, through the budgeting and posting of all the actual costs, to the final settlement.

Orders used only for monitoring objects in Cost Accounting (such as, advertising,

trade fair or civil work orders).

Productive orders that are value-added, that is, orders that can be capitalized (such

as in-house construction of an asset).

The following table describes the high-level process flow for the Internal Order Master

Maintenance.

No Process Description

1 Internal Order Types One Internal Order type for each of the tasks

namely CAPEX, Employee, Maintenance, Special

Events, Non-Operating Revenue, Sales Promotion

can be created. The number range and settlement

profile can be defaulted from Internal Order type.

Order type Z001 used for Investment Orders.

Order type Z010 used for all statistical Orders.

2 Internal Orders. Internal Orders would be created under any of the

Internal Order Types defined and would carry the

no either internally generated or eternally assigned

depending on the configuration of the Number

Range assign to the Internal Order Type.


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Internal Orders could be defined as True or

statistical depending on the settlement plan for the

particular internal order. Statistical Order can not

be settled on any other cost or FI object

3 Internal Order Group Internal Order groups can be created for the

purpose of analysis or reporting requirements.

The following Internal Order Number ranges are used for internal orders of Arch.

Order Type Description Number Range

Z001 Internal orders: Investment 1700000001 TO 1799999999

Z010 Other Statistical Orders 1800000001 TO 1899999999

6.3.3.1 Internal Order PlanningDuring internal order planning, you enter costs, activities and business processes that you

expect to incur during the life cycle of an order. Using internal order planning, you can

compare plan and actual costs, and carry out a differentiated variance analysis.

6.3.3.2 Budget Management for Internal OrdersThe budget is the approved cost structure for an order and differs from the cost plan in that it

is binding. Having estimated the costs as accurately as possible using the different tools


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during the planning phase, we then prescribe the funds available for the order in the form of

a budget. The budget is the device by which management approves the expected

development of order costs over a given timeframe.

The following different budget types exist:

Original Budget

This is the budget originally assigned, before any updates were made.

Budget Updates

Unforeseen events, additional requirements, for example, price rises for external activities,

and so on. This may mean you need to update the original budget, in the form of:

Supplements Returns Current BudgetThis is derived from the budget types already mentioned:

Original budget

+ Supplements

- Returns

= Current budget

Z001 – Arch IO – with Budget

o Internal Number Assignment

o Settlement Profile as – Z3 – IO Settlement Profile

o Budget Profile – Z00001 – Budget profile for Arch


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Z00001- Budget Profile for Arch Group

o Time Frame for Past 1 year

o Time Frame for Future 3 year

o Total Value – to budget overall values

o Annual Values- to budget annual values

o Availability check is active

o Budget Activation will be automatic

More details refer the FI Business Blue Print - Assets under Construction with Internal Order.

6.3.3.3 Availability Control for Internal OrdersAvailability control enables to control costs actively by issuing warnings and error messages

when costs are incurred. As per availability control ARCH is expecting the warning message

issue once budget consumption reaches 90%.Once the budget consumed fully (100%)

system issues error message. These controls assigned to the budget profile and as per this

assignment, system will give warning message once budget consumption reaches 90% and

gives error message and stop posting to order once budget consumption reaches 100%.

6.3.3.4 Actual Posting to Internal OrderAn actual posting to internal order enables up-to-date monitoring of the costs incurred by the

organization. In this way, the variances can be identified at an early stage and correct them.

The following table describes the high-level process flow for the Posting to Internal Order.

No Process Description

1. Data flow from Financial

Accounting

All invoices and other entries related to the event

will be posted to true or statistical internal order for


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information and plan checking.

2. Data flow from Materials

Management

All internal goods issue and all service order and

service entry sheet related to particular task will be

posted to Internal Order.

Expenses Vouchers Derive the Internal Order

From Purchase Order if defined in purchase order

6.3.3.5 Period End Closing - Internal Order Settlement

An internal order is usually used as an interim collector of costs and an aid to the planning,

monitoring, and controlling processes needed. When the job has been completed, you settle

the costs to one or more receivers (cost center, fixed asset, profitability segment, and so on).

At ARCH, Internal orders are planned to be used for capturing costs of prospective orders

and for Assets under construction. In addition, a separate order type will be created for

budgetary control over Assets purchase, which will be statistical in nature.

When the job has been completed, user can settle the costs to one or more receivers. For

example, in the case of prospective orders if the order is firmed up, the accumulated costs

will be settled to the job and if it does not materialize, the costs will be settled to the

marketing cost center.

Periodic settlement of these internal orders will always be to the cost center which incurred

the costs


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Settlement of orders would be based on the settlement rule for Internal Orders. This in turn

is controlled by the settlement profile for the order type. An Internal Order could be settled to

a GL Account or Fixed Asset, where as a capital Internal Order is always settled to Assets

under Constructions. Once the Order is approved for Capitalization, it would be settled to a

Fixed Asset manually.

6.3.3.6 Period End Closing - Carry forward to next yearIn case of job is carried forward to next year the budget for that order has to be carried

forward.

6.3.3.7 Internal order - Transaction / Activity Chart:


1 Manual Reposting KB11N Cost CenterCost ElementAmount

CO Document will be created

CO User Periodic review need to be carried out by the CO User. Inform to the respective users, if any deviations noticed

2 Budgeting KO22 Budget amount for the Order

Budgeted amount

CO User When expenses exceeding 90% it gives warning message

3 Carry forward internal order Budget

KOCO Selection VarientFiscal YearDocument date

Transfer Document will be created

CO User As a year end activity, this can be executed.

4 Budget Supplement

KO24 Internal order to be entered

CO document will be created

CO User User will enter the changed values .

Budget Returns KO26 Internal order to be entered

CO document will be created

CO User User will enter the changed values .


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6.3.3.8 Internal order - Integration:


1 FI Internal order will be created to budget the plug in assets or directly usable,

without any, installation process. For which budgeting is being carriedout

through Internal order

Some of the expenses are being posted to the statistical internal order to

capture cost in additional dimension.

6.3.4 BPP_CO_BP6.3.4 Product Cost Controlling

6.3.4.1 Product Cost PlanningPlanned cost of the product is calculated

Using the BOM and the master records of the materials in the BOM

Using the recipe, resource where the respective operations are carried out, the cost

centers, and the activity types.

When process order is released, the planned cost is calculated as follows:-

Cost Component Quantity Rate Resource

Material Standard BOM Price from Material

Master

Not

applicable

Labour Cost (Internal /

External)

Standard activities

in Recipe

Plan price Primary

Resource

Machine Cost Standard activities Plan price Primary


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in Recipe Resource

Power Cost Standard activities

in Recipe

Plan price Secondary

Resource

Water Standard activities

in Recipe


Resource

Fuel Standard activities

in Recipe


Resource

Liquid Nitrogen Standard activities

in Recipe


Resource

Overhead Cost Sheet Based on the Primary

cost (materials and / or

Labour) over head rate

mentioned in the

costing sheet

6.3.4.2 Origin Groups

Origin groups serve to subdivide the material costs based on the origin group assigned in

the Material Master. For controlling purposes, materials assigned to the same cost element

by automatic account determination can be separated into origin groups. Account

determination assigns each material to a G/L account and thus also to a primary cost

element.

If an origin group is entered in the costing view of the material master record, the

combination of origin group and cost element is updated in the Controlling module.


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If the Material origin indicator in the costing view of the material master record is

specified in addition to the origin group, the costs are updated under the combination

of material number, origin group and cost element in the Controlling component.

These Origin groups can be used in

o Calculate Overhead

o Assignment in Cost Component Structure

o Variance calculation

o Work in process calculation

The following Origin Groups will be used to differentiate the costs:

1001 – Key Materials

1002 – Solvent Materials

6.3.4.3 Overhead Cost Sheet Overhead cost sheet controls and transfers the overheads to product, while releasing

standard cost estimate / valuating the materials. Overhead rates can be maintained to

transfer the value to inventory.

Overhead Cost Sheet contains the following elements;

Calculation Base - The calculation base determines on which cost elements

overhead need to be applied. Assign individual cost elements or cost element groups

with or without origins, to form a calculation bases.


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Overhead Rates: An overhead rate specifies the conditions under which overhead is

applied to an object. Overhead rates are limited in duration, periodically need to be

maintained. Overhead key also specify what are dependent key combinations,

i.e.Plant, company code, Overhead Key, Order type, etc.

Credits: Cost allocation is part of the process of determining overhead rates. If this

leads to an object being debited with actual costs, another object in Cost Accounting

must be credited at the same time, to balance the cost document in CO. This can be

either a cost center or order. This type of posting is recorded under a secondary cost

element of cost element category 41(overhead rates) in the SAP System.

ZP-PC1 – ZP-PC1 Cost sheet ARCH

ROW BASE Overhead DescriptionFrom row

To row

Credit

10 B000 Material

20 C000 Material OH 10 E01

30 Material usage

40 B010 Production

50 C001 Manufacturing OH 40 E02

60 Production costs

70 Cost of goods

manufactured

80 C002 Admin Overhead 10 E03

90 C003 Selling Overhead 10 E04

The following components are being used:


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B000 Material – Assigned the Cost Element – 40111000

C002 Admin Overhead - Overhead 15% is being maintained

C003 Selling Overhead - Overhead 15% is being maintained

E03-Cred. Administration - Cost Element 90041100

E04-Cred.Sales & Dist - Cost Element 90041110

The overhead is not part of the Valuation, the Secondary cost elements will be

assigned to the Cost Component Structure, which are part of the Cost of Goods

Sold.

6.3.4.4 Costing Variant

Costing Variant is a variant that contains all control parameters for costing, including

parameters that control how cost estimates are executed and the material prices or activity

prices that are used to valuate the costing items.

In material costing, the costing variant determines the following:

The purpose of the cost estimate (costing type)

The prices that are selected to valuate the quantity structure and calculate overhead

expenses (valuation variant)

The dates that apply to the actual cost estimate and to the explosion and valuation of

the quantity structure (date control)


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How the BOMs and routings are selected to create the quantity structure (quantity

structure control; only relevant for cost estimates with a quantity structure)

In unit costing (base object costing and unit costing for orders), the costing variant

determines the following:

The purpose of the cost estimate (costing type)

The prices that are selected to valuate the costing items (valuation variant)

Whether the individual costing items are assigned to cost elements

The following Costing Variants are being used for Arch

Costing Variant

Description Costing Type Valuation Variant Date Control

1. Costing Variants used in Standard Cost Estimate

PPC1 Standard

Cost Est.

(Mat.)

01-Standard Cost Estimate 001-Planned

Valuation Material

PC01-Std.

Cost Est.

Z001 SCE

Commercial

Price

11-Inv Costing Commercial

Price

Z01- Valuation

Material CP

PC01-Std.

Cost Est.

Z002 Arch

Material

Value to

Tax Price

10- Inv Costing – Tax Law Z01- Valuation

Material CP

PC01 – Std

Cost

Estimate

2. Costing Variants used in Production Process

PPP1 Production

Order:

06- Production Order 006-Production Order


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Planned Planned Planned

PPP2

Production

Order:

Actual

07- Production Order Actual 007-Production Order

Actual

3. Costing Variants used in Project

PS02

Network:

Planned

06-Production Order

Planned

010-Network Planned

PS03

Network:

Actual

07-Production Order Actual 011-Network Actual

PG

Base

Planning

Object

02 – Base Planning Object 012 – Base Planning

Object

6.3.4.4.1 Valuation Variant

Valuation Variant determines the prices that the SAP System selects to valuate the quantity

structure of a material cost estimate or order, or to valuate the costing items of a unit cost

estimate.

The valuation variant controls how the materials and activities in the cost estimate are

valuated. The valuation variant specifies the following parameters:

The price in the material master (such as the standard price) or in the purchasing info

record (such as the net order price) that is used to cost a material in the BOM

The planned or actual price that is used to valuate the internal activities


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The version in Cost Center Accounting that is used to valuate internal activities

The cost sheet that is used to calculate overhead

Whether, and to what extent, a BOM item or an operation in the routing is relevant to

costing

The different valuation strategies for materials, internal activities, external activities, and

subcontracting are stored as strategy sequences.

6.3.4.4.2 Date Control

Date Control that controls the dates for material cost estimates. Date control to define the

day for selecting the quantity structure when costing with a quantity structure, cost estimate

validity dates. “Costing Date from”, is the date on which the cost estimate has to be released

other wise another cost estimate has to be made and released on released date.

The following dates are relevant for a material cost estimate and a costing run:

Quantity structure date Valuation date Costing date from/to

The quantity structure date determines how the system selects a valid quantity structure for the cost estimate. Based on this date, a BOM and a routing are selected, exploded and costed.

The valuation date determines how the system searches for valid data to calculate the following prices:


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Prices for stock materials from the material master record Activity prices for activity types from cost center planning

You set the validity period of the cost estimate with the Costing date from and Costing date

to indicators. The validity period of the cost estimate is relevant for Cost Object Controlling.

The results of the standard cost estimate are used in the calculation of Variances during that

period.

6.3.4.4.3 Valuation Strategy for Material Component:

Strategy sequence that determines the valuation of the materials used in the cost estimate . The materials

are valuated using the price in the material master record or the values calculated in a material cost

estimate. You can enter a single strategy, or you can enter multiple strategies in the form of a strategy

sequence. If you enter multiple strategies, the priority of the strategy determines what price or what values

are selected.

the following strategy sequence is entered for material valuation for ARCH

Priority Strategy Sequence

1 4 Planned Price

2 7 Valuation Price According to Price Control in Material

Master

3 9 Future Standard Price

4 G Future Price From Accounting

5 B Valuation Price 1 Based on Commercial Law


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6.3.4.5 Cost Component Structure

This shows the costs calculated in a material cost estimate or sales order cost estimate

across all production levels, broken down into cost components. Analyze the costs of the

cost component split for the cost of goods manufactured and the costs of the primary cost

component split.

The results of a cost estimate are updated as cost components (this is called a cost

component split). The cost components break down the cost of a material across the entire

production structure into material costs, production costs, material overhead, production

overhead, and other costs. The costs for internal activities normally flow into the cost

component split under secondary cost elements. In order to present primary costs for

internal activities, use a primary cost component split as an alternative way of outlining the

cost components.

The cost component split enables:

Analyze the cost origin across multiple production levels.

Analyze the value added within a multilevel production structure. The costs of the

Cost Component Structure Consists of internal activities and the overhead costs that

are incurred at that level and material components.

In the cost component view, specify which cost elements are displayed in the report.

For example, select the cost of goods manufactured or the cost of goods sold, or the

costs that are relevant to inventory valuation. Specify various cost component views

in for Product Cost Planning. For each cost component, you can decide which share

of the costs contained therein (fixed, variable, full) is displayed in which cost

component view.


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10 – Arch Cost Component View, details are as follows:

ID ID Description Type Origin Cost Elements10 Materials - Key COGM 1001 40111000,40121050,40161250,

40173000,4017310040173150,

40173200,40173310,40184120,

40184160,40313900,41108010.

20 Material - Solvents COGM 1002 40111000,40121050,40161250,

40173000,4017310040173150,

40173200,40173310,40184120,

40184160,40313900,41108010.

30 Materials -Others COGM 40111000,40121050,40161250,

40173000,4017310040173150,

40173200,40173310,40184120,

40184160,40313900,41108010.

41109010

40 Packing Materials COGM 40111200 to 40151225,

40161220

50 Overhead – Labour COGM 90043120 to 90043130

60 Overhead - Power COGM 90043140

64 Overhead – Water COGM 90043150

68 Overhead – Fuel COGM 90043160

69 Overhead – Liquid

Nitrogen

COGM 90043170

70 Overhead – Other

Mfg.

COGM 90043110

90 Admin Expenses COGS 90041100

95 Selling Expenses COGS 90041110


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Cost component Structure Z1- Arch Stat.Mat.Value Tax, will be used for the purpose of

calculation of only material costs. It does not have the overheads part of the inventory value.

This is being associated with cost costing variant Z002.

6.3.4.6 Standard Cost Estimate

Create a standard cost estimate for a material at the beginning of a fiscal year or a new

season or a period. The standard cost estimate then remains valid for the entire year or

period or season. It will be used to establish a standard price for materials for the time

period.

Standard Cost Estimate should not change during this time. The standard costs then remain

constant and are not influenced by price fluctuations or changes in the production structure

during the planning period.

Valuate the planned quantity structure of a standard cost estimate with standard prices. A

standard cost estimate for a material is not associated with an order or production version.

Create a cost estimate based on a costing variant. For a standard cost estimates, the

costing variant contains the following defaults:

Costing type specifies that the costing results can be updated to the material master as the

standard price.

Valuation variant specifies that the materials are valuated at the standard price or planned

price or according to the price control of the material master.

Date Control specifies that the validity dates of Quantity Structure, Valuation, Cost estimate

valid from and valid up to.


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The standard cost estimate calculates a standard price for materials and updates the price

control S in the material master. When Standard Cost Estimate is marked, the system writes

the result of the cost estimate to the costing view of the material master record as the future

standard price. This price can be used to valuate a material component in the cost estimate.

When Standard Cost Estimated is released, the system writes the result of the standard cost

estimate to the material master record in Accounting 1 View standard price field. This price is

then active for Financial Accounting and is used to valuate the material until the next time a

standard cost estimate is released. From this period onward, all transactions involving

products produced in-house are valuated in Logistics using the standard price (that is, the

result of the standard cost estimate). In Arch it is decided that the moving average price ‘V’

will be maintained at the depots. When a material with standard price control is transferred to

the warehouse, system will update the inventory of receiving plant with the sending plant

inventory value. Moving average price will be updated automatically.

6.3.4.7 Base Planning Object Costing

Base planning objects will be used in the following purposes:

At the beginning of the planning phase

At the draft stage of planning new products

No master data (material master, BOM, master recipe) in the system

When base planning object is created, necessary master data can be referenced from the

system. This data includes materials and material cost estimates, internal activities, services,

cost centres, cost elements and activity types, work centres, and other base planning

objects.


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Costing Variant used by the system by default – PG – Base Planning Object. The costing lot

size can be specified as per the requirement of the product.

The entries are maintained in the system manually by the user, if the reference data existing,

it will copy other wise user can enter the prices manually.

M - Material items (category M),

E - Internal activity items (category E),

B - Base planning objects (category B),

V- Variable items (category V)

S – Total (category S)

L – Subcontracting (category L)

O – Arithmetical Operation

T – Text Item

Based Object planning can be defined and kept for reference and re-use.

The following Base Planning Object Groups are being used to define the base plant object:

1001 Arch New Product - Intermediates

2001 Arch New Product - API

3001 Arch New Product - CRAMS - Intermediates

3005 Arch New Product - CRAMS- API

9000 Other Products

The Base Object Group is assigned in the master data of a base object costing. By

assigning the base object costing to a base object group you can divide the base object

costing into logical groups.


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6.3.4.8 Additive Cost

Additive costing will allow the user to add costs to a material cost estimate, inaddition to cost

calculated based on Recipe.

As a rule, costing calculates the costs of a material on the basis of the quantity structure.

This type of cost estimate is performed automatically by the system. However, user can also

manually enter estimated values for costs that cannot be calculated by the system. This

allows to add costs to a cost estimate that was calculated automatically.

The main prerequisite for including additive costs in an automatic cost estimate is to carry

out both automatic and additive costing on the basis of the same costing variant and costing

version.

The valuation variant must allow to include the additive cost part of the cost estimate part of

the product cost planning.

If any change in additive cost manually for a material, these costs are not automatically

rolled up. Need to create a new material cost estimate or execute a new costing run so that

the changes are included and rolled up. If additive costs have been included, the system

sets the Additive costing exists indicator in the overview screen of the cost estimate.

The additive costs are added in their line item form to the itemization of a cost estimate with

quantity structure, in doing so item categories S (total) and T (text) are not transferred.

Additive cost estimates with dates that are not within the period of validity of the automatic

cost estimate are not included in the automatic cost estimate.


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Arch would like to add the cost of samples, as part of the Standard Cost Estimate. Based on

the requirement Arch will maintain the additive cost estimate for the manufactured materials.

While releasing the standard cost estimate for that product, system will automatically

considers the cost based on the Quantity structure and additive cost estimate.

6.3.4.9 Costing BOM

In SAP system the BOM usage can be assigned, while defining the bills of materials. Costing

BOM Usage type can be used to value the material, based on the Cost BOM. The cost BOM

will be explored by the system, while calculating the cost estimate. Cost BOM will not

relevant for consumption or MRP.

Arch would like to use the costing BOM to value the by-products / recovered materials. As

these materials are being assigned in the BOM as negative quantity. To have the inventory

value and to post the credit the manufacturing material, associated BOM will be created with

usage type as “6 - Costing BOM”.

GAP: BOM can be created as Recursive BOM. Material will be costed in that cycle

iteratively. Iteration ends after the convergence criterion "Total amount of all price changes is

zero" has been reached.

Prerequisites for a successful cost estimate are as follows:

- The solution is positive

- The usage is less than the yield

- The yield is significantly higher than the usage

When no solution exists and the cost estimate does not converge, the system recognizes this and

issues an error message.


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Then the component which is recursive in nature, “Not Relevant to costing” has to be

activated. Pairing has to be maintained with an alternate material to give the costing effect.

6.3.4.10 Product Cost Planning - Transaction / Activity Chart:


1 Display BOM CS03 Material, Plant,

BOM Usage

Displays the

BOM

CO user BOM need to be

created for the Plant

2 Display Resource CRC3 Plant, Resource Displays the

identified

resource data

CO User Resource need to

be defined in the

system

3 Display Recipe C203 Material, Plant Displays the

Master Recipe

CO User Recipe must be

defined in the

system

4

Create Cost

Estimate (single)

CK11N Material, Plant,

Costing Variant,

Costing Version,

Costing Lot size

System

derives the

Standard cost

of the

selected lot

size

CO User Necessary master

data and costing

planning must be in

place

5 Price update

(single)

CK24 Period/ year,

Material,

Company Code,

Plant

Marking and

releasing ,

CO User Cost must be saved

before release in

CK11N

6 Costing Run CK40N Costing Run ID,

Date,

Description,

Costing Variant

Co Code

Different

levels of

execution will

be carried out.

Selection,

CO BPO Necessary Master

data in place


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Controlling Area

Costing Version

Structure

Explosion,

Costing

Analysis

Marking

Release

7 Base Planning

Object

KKE1 /

KKE3 /

KKE4

Object ID

Base Unit

Plant, Company

Code, Profit

Center,

Description,&

detailed

planning

Re-usable /

refrencable

base planning

object has

been created

CO User Freely definable

7 Additive Cost

Object

CK74N/

CK75N/

CK76N

Material

Plant

Costing Variant

Resource

Cost Element

Price

Additive Cost

has been

created for a

material.

CO User Freely definable


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6.3.4.11 Product Cost Planning - Integration:


1 PP-PI Integrated with production process. The master data of PP is being used to

release the standard cost estimate

2 MM Material master and prices are being taken from the Material Management

6.3.4.12 Product Cost Object Controlling

CO-PC Cost Object Controlling component deals, with actual cost of product. The process

order captures all the cost, which are incurred during the production process.

6.3.4.13 Result Analysis Version:

Result Analysis data is the data in, work-in-Process in the Product Cost by Period

component, and work in process or reserves for unrealized costs in the Product Cost by

Order component will be calculated in results analysis is updated on the order with reference

to the Results analysis version.

The results analysis version shows the following:

Which valuation view the results analysis data was updated in i.e. Legal Valuation

Whether the version is relevant to settlement. The version relevant to settlement is

the results analysis version of operational valuation view and the results analysis

versions of multiple valuation views referring to that version.


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Whether the data is transferred to Financial Accounting. Transfer the results analysis

versions of multiple valuation views to Financial Accounting.

Result Analysis Technical RA Cost Element. Assigned the Cost Element 90031100 –

RA Technical, with secondary cost element type 31. This element used by the

system to calculate the valuated cost in the order.

The following Result Analysis Keys will be used:

000002 WIP Calculation at Actual Costs

000003 WIP Calculation at Target Costs

Result Analysis Key specifies that the object is to be selected during results analysis or

when work in process is calculated.

The following valuation control parameters are linked to the Result Analysis Key:

whether results analysis is revenue-based, quantity-based or manual

on which basis (planned or actual data) results analysis is carried out

whether the inventory, reserves and cost of sales are to be split


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6.3.4.14 Valuation Methods:

Based on the Status of the process order the valuation need to be carried out. The following

strategy will be adopted:

CC

Area

RA

Version RA Key Status

Status

Types RA Type

1000 0 000002 PREL 1 WIP Calculation on Basis of Actual Costs

1000 0 000002 REL 2 WIP Calculation on Basis of Actual Costs

1000 0 000002 DLV 3

Cancel Data of WIP Calculation and Results

Analysis

1000 0 000002 TECO 4


Analysis

1000 0 000003 PREL 1 WIP Calculation on Basis of Target Costs

1000 0 000003 REL 2 WIP Calculation on Basis of Target Costs

1000 0 000003 DLV 3


Analysis

1000 0 000003 TECO 4


Analysis

6.3.4.14.1 Posting of calculated WIP:

The General ledger Accounts of Financial Accounting to which the work in process is settled.

Based on the results analysis / cost element / a group of results analysis cost elements to

two G/L account (PL account and Balance Sheet account). The following accounts will be

used to post the WIP Values:

Calculated WIP Balance Sheet Account - 23106099-Work-in-Process(BS)


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Calculated WIP Profit and Loss Account - 40164099-Work-in-Process (PL)

6.3.4.15 Variance Variants:

Standard Variance Key “000001 – Variance Calculation for orders” will be used and

assigned to the all manufacturing plants.

The Standard Variance Variant “001- Standard”, will be capture the following variance types:

Input Price Variance

Mixed Price Variance

Output Price Variance

Resource usage variance

Input Quantity variance

Scrap Variance

Process Order Variances Can be settled to CO-PA for the following value fields.

Z0 - Arch Process Order –COPA

Line

ID Line Description

Sender CE

Group

Variance

Type Variance Description

Value

Field

110 Mat-Input price variance MATCOST PRIV Input Price Variance VV350

120

Mat-Input quantity variance MATCOST QTYV

Input Quantity

Variance VV350

130 Mat-Resource-usage

variance MATCOST RSUV

Resource-Usage

Variance VV350

140 Mat-Remaining input

variance MATCOST INPV

Remaining Input

Variance VV350


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150 Mat-Mixed-price variance MATCOST MXPV Mixed-Price Variance VV350

160 Mat-Output price variance MATCOST OPPV Output Price Variance VV350

170 Mat-Lot size-/fixed-cost

varia MATCOST LSFV

Lot SizeVar/Fixed-

CostVar VV350

180 Mat-Remaining variance MATCOST REMV Remaining Variance VV350

190 Mat-Scrap MATCOST SCRP Scrap VV350

210 OH-Input price variance SECCOST PRIV Input Price Variance VV355

220

OH-Input quantity variance SECCOST QTYV

Input Quantity

Variance VV355

230 OH-Resource-usage

variance SECCOST RSUV

Resource-Usage

Variance VV355

240 OH-Remaining input

variance SECCOST INPV

Remaining Input

Variance VV355

250 OH-Mixed-price variance SECCOST MXPV Mixed-Price Variance VV355

260 OH-Output price variance SECCOST OPPV Output Price Variance VV355

270 OH-Lot size-/fixed-cost

varian SECCOST LSFV

Lot SizeVar/Fixed-

CostVar VV355

280 OH-Remaining variance SECCOST REMV Remaining Variance VV355

290 OH-Scrap SECCOST SCRP Scrap VV355

6.3.4.16 Settlement: Settlement transfers the actual costs assigned to the order to one or more receivers

(normally the material being manufactured, in case of process orders). The variances

between the original inventory valuation and the actual costs are transferred to Financial

Accounting and Profitability Analysis. Work in process is always settled by period.


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This settlement rule determines the settlement receiver (such as a material or sales order).

The settlement rule is linked through Settlement profile.

6.3.4.17 Production Process: Product costing is closely tied to production. The financial and costing entries automatically

result from the daily production transactions entered into the system. The month-end

processes are necessary to complete the financial picture for product costing.

The following process to be adopted for Product Costing:

6.3.4.17.1 Creation of Process order:

For every batch of production a process order is raised in the production department. The

process order contains the details of BOM and recipe.

The Bill of Material (BOM) details the raw material and packing material in the required

portions that are required for production.

The recipe contains the details process of production activity including resource such

as manufacturing vessel, equipment. Each operation is assigned to its resource and

each resource assigned to relevant activities such as Labour, fuel, power etc.

(maximum of six parameters for each resource as a primary activity types). Secondary

resources are being used to capture utility cost to the products (Activity types like

Power, Fuel, Water and Nitrogen There is no limitation on the secondary Activities) .

Each resource is attached to a cost centre.

The recipe and BOM are copied to process order automatically when the order is

created. The quantities of materials and activities are determined at standard levels

(Planned costs).


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6.3.4.17.2 Process Order release

Reservation of material for an order will be done at the time of release of order. Material will

be reserved batch wise for the order. The reservation also serves as pick list for picking

materials from stores. Any unplanned issues will have to be added manually.

6.3.4.17.3 Creation of batch number:

A unique batch number has to be assigned to the order. Batch number can be internally

generated / manually as per the logic decided.

6.3.4.17.4 Creation of Inspection lot:

Release of process order will result in generation of inspection lot. The inspection lot will be

used to record quality parameters for the order.

6.3.4.17.5 Issue of materials to order:

Issue of materials to an order can be done either before execution of the order or at the time

of confirmation (Back flushing)

6.3.4.17.6 Confirmation of Process order:

Confirmation of the order means declaration of production against the order. The order has

to be confirmed completely. Confirmation is possible for release order only. Confirmation will

result in stock up of product, reduction in stock of all raw materials.

At the time of confirmation standard activities (machine, labour) & quantities as per BOM are

proposed. Changes can be done at this stage. The actual cost is updated depending upon

the actual quantities confirmed. Goods receipt quantity (Yield) is posted to storage location

specified.

Following data are confirmed at confirmation stage phase wise:


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Quantities – Confirmation of quantity processed in a phase.

Activity data – Confirmation of activity used to carry out the phase, such as the

duration of the processing time.

Times and dates – Confirmation of start and finish time of phase

Resource – confirmation of the resource at which the phase was carried out

Posting date - A posting date is to be entered for every completion confirmation. The

system automatically proposes the current date as the posting date. One can,

however, enter a different date.

Long text - Long text can be entered to describe the completion confirmation

6.3.4.17.7 Technical Completion of Order:

It is the completion of a process order from the logistics point of view. This function is used

to terminate execution of an order prematurely, or if the order was not properly executed and

we want to delete open requirements of the order (for example, reservations, capacity

requirements).

The following actions are carried out when the order is technically completed:

The order is not indicated as relevant to MRP anymore

The reservations are deleted

The capacity requirements are deleted

Purchase requisitions that may exist for externally processed operations are deleted

The system status Technically Completed (TECO) is set for the order and the

operations

6.3.4.17.8 Revaluation of Process Orders

Initially cost planned in cost centre accounting against activity types are used for valuating

the materials that are produced. At the month end when actual cost are booked from


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financial accounting, revised activity price calculation is carried in cost centre accounting and

with this prices the Process Orders are revalued. The revaluation is carried to the extent of

difference between planned vs. actual activity prices. The revaluation Process Orders will

not be carried, if the Process Order is settled immediately on TECO.

6.3.4.17.9 Order Settlement:

Settlement rule will be derived from the process order (i.e. process order type). For other

objects like maintenance order type will defaults the Settlement rule. In case of Project

systems, project profile will default the settlement rule, where ever the clear guidelines are

available.

Settlement transfers the actual costs assigned to the order to one or more receivers

(normally the material being manufactured, in case of process orders). The variances

between the target costs in the process order and the actual costs are transferred to

Financial Accounting and Profitability Analysis. Work in process is always settled by period.

Target Cost: When the process order is created system will create the planned cost based

on the production order quantity and the standard cost estimate of the material. Target Cost

means the standard cost estimate for the material being produced.

6.3.4.17.10 Order closing:

It is the final closure from production point of view. The Closed (CLSD) status is set in the

Process Order. It has the following characteristics:

No more costs can be posted to the order, that is, confirmations and goods

movements are no longer permitted for the order.


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The order can no longer be changed.

All actions relating to the status technically completed (TECO) are executed.

6.3.4.18 Product Cost – Period End Activities

6.3.4.18.1 Revaluation of Process order

Calculation of actual activity prices carried out in cost center accounting. At the time of

activity confirmation system posts activity cost at planned price. In the month end we

calculate actual activity price on the basis of actual cost incurred and actual activity quantity.

Once calculate actual activity price, revaluate the process orders with actual activity prices.

System will recognize the variances if any at Process Order level. System will show new

variances after revaluation.

6.3.4.18.2 Work in Process for the Process Order

If the process orders still open at month end we need to calculate work in process to update

financial accounts. WIP calculated on the basis of status of process order.

When the WIP runs , WIP calculated Process orders with a Released (REL) and partially

delivered (PDLV) status, When the WIP process is run, WIP is canceled for production

orders with a status of Finally delivered (DLV) and Technically complete (TECO)

At month-end, for closing the books of accounts, we need to realize any Work-in-process out

of the material consumption posted, which can be shown as inventory. If a process order is

open, the balance of the order (costs debited minus standard cost of completed finished

goods credited) is calculated to be the WIP amount. Result Analysis cost elements created

to track the WIP amounts so that these amounts are not directly posted to the process order.


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The WIP cost elements are then used to make the entry to the G/L during production order

settlement.

6.3.4.18.3 Settlement Profile

The WIP previously described update secondary cost elements, but these values remain in

CO. When process order settlement is run at the end of each period, the WIP and variance

values are posted to FI and the appropriate G/L accounts are updated. Settlement Profile is

being taken from the respective objects.

Sample Accounting Entries

Process Accounting Entry

Recognition of Work-in-process at period-

end

Work-in-process Stock (B/S) A/c 23109900

Dr.

To Work-in-process stock change A/c (P&L)

40199900

Reversal of Work-in-process at period end

(subsequent month)

Assume that Process Order is completed

Variances in the Process Order Order settle- Finish GL a/c 40184170 Dr

To Price Difference A/c -40184130


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This settlement rule determines the settlement receiver (such as a material or sales order).

The settlement rule is linked through Settlement profile. The following are the settlement

profiles are being used:

Actual Costs

Allocation Structure

Default Object

Valid Receivers Indicators

Other Parameters

40 Maintenance Measure Used in the Maintenance OrdersTo Be Settled in Full

ZM - Arch PM Structure

CTR - Cost Center

Cost CenterOrderWBS ElementFixed Asset

Settlement %Equivalence numbers

Doct. Type SL

AI Settlement assets under const. Direct AUC Settlements - in Fixed Asset Module

To be Settled in Full

A1-Co Allocation FXA-Fixed Asset

Fixed Assets Settlement %Equivalence numbers

Doct. Type - AA

PI01 Process order Process Order SettlementsTo be Settled in Full

A1-Co Allocation Mat- Material

Cost CenterOrderWBS ElementMaterialSales OrderCost ObjectsOrder Item

100% ValidationSettlement %

Doct. Type - SLNo of Lines -3Res. Time - 3

ZPS1 Project Settlement – PSG Project Systems settlement to PA SegmentTo be Settled in Full

Z1-PS Allocation Structure

PSG - Profitability Segment

Profitability Segment



ZPS2 Project Settlement - Cost Center Project Systems settlement to Cost CenterTo be Settled in Full


CTR - Cost Center

Cost Center Settlement %Equivalence numbers

Doct. Type - SLNo of Lines -1Res. Time -


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12ZPS3 Project Settlement - Intl Ord Project Systems settlement to a OrderTo be Settled in Full


ORD – Order

Order Settlement %Equivalence numbers


ZPS4 Project Settlement – General Project Systems settlement - General ObjectsTo be Settled in Full


G/L – GL Account

G/L AccountOrderWBS Element



ZPS5 PS Settlement to Fixed Asset Project Systems settlement - Fixed AssetsTo be Settled in Full


FXA - Fixed Assets

Fixed Assets Settlement %;Equivalence numbers;Amount Settlement


ZSD1 Sales order make-to-order prod Sales Order SettlementTo be Settled in Full

A1-CO Allocation StructureZ3- PA Transfer Structure

PSG – Profitability Segment

Profitability Segment

Settlement %;Equivalence numbers;


6.3.4.18.4 Allocation Structure:

During settlement, costs incurred under the primary and secondary cost elements by a

sender are allocated to one or more receivers. When cost are settled by cost element, settle

using the appropriate original cost element.


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An Allocation Structure comprises one or several settlement assignments. An assignment

shows which costs (origin: cost element groups from debit cost elements) are to be settled to

which receiver type (for example, cost center, order, and so on).

You have two alternatives in settlement assignment:

Assign the debit cost element groups to a settlement cost element.

Settle by cost element - that is, the debit cost element is the settlement cost element.

Each allocation structure must fulfill the following criteria:

o Completeness

An allocation structure is assigned to each object to be settled. All cost

elements in which costs are incurred, must be represented in the appropriate

allocation structure.

o Uniqueness

Each cost element in which costs are incurred may only appear once in an

allocation structure. Only one settlement cost element may be assigned to a

source within a particular allocation structure.

The following allocation structure are required for Arch to use in various application:

ZM – Arch PM Allocation Structure

Receiver Receiver Receiver Receiver Receiver

ID ID Description SourceSettlement- FXA

Settlement-CTR

Settlement-ORD

Settlement-WBS

Settlement-G/L

001 Material costs PM_001 41199990 90021210 X X X

003External procurement PM_003 41199990 90021210 X X X

005 Personnel costs PM_005 41199990 90021210 X X X

009Miscellaneous costs PM_009 41199990 90021210 X X X


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020 Activity allocation PM_020 41199990 90021220 X X X

025 Settlement PM_025 41199990 90021230 X X X

A1 – CO Allocation Structure


ID ID Description SourceSettlement-CTR

Settlement-ORD

Settlement-WBS

Settlement-G/L

Settlement-SDI

010 Personnel costs PERSONNEL X X X X X

020Raw-/service material consump. MATCOST X X X X X

030 Other costs OTHCOST X X X X X

040 Secondary costs SECCOST X X X X 90021220

050 Revenues REVENUE X X X X X

Z1 – PS Allocation Structure


ID ID Description SourceSettlement-FXA

Settlement-PSG

Settlement-CTR

Settlement-ORD

Settlement-WBS & G/L

010 Personnel costs PERSONNEL X X X X X

020Raw-/service material consump. MATCOST X X X X X

030 Other costs OTHCOST X X X X X

040 Secondary costs SECCOST 41199990 X X X X

050 Revenues REVENUE X X X X X060 RA-Primary-PS 90031150 90021150 90021150

070 RA-Secondary-PS 90031160 90021160 90021160

080 RA-Revenue-PS 90031170 90050100 90021170

6.3.4.18.5 Process Order


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Process Order will be acting as a cost object to transfer the costs to Controlling.

Process order will be having the following costs:

Goods Issue - Material Costs based on goods issue to the process order and

price from the material master

Activity Costs – based quantity confirm actual activity confirmed, with respect

the planned activity price

Goods Receipt – Bi-products – Based on the standard price in the Material

Master

Goods Receipt – Main Material – Based on the Price control in the material

master

Process order will be having the planned cost and actual costs. The plan costs will

be based on the Standard Cost Estimate made to the product.

Actual cost will be based on actual good issue, goods receipt and Activity

confirmation postings. As a month end process, process order will be revaluated and

variance will be calculated by the system.

Till “Final Confirmation” made, system will recognize the Work in process, based on

the Process Order status / values.

6.3.4.18.6 Maintenance Order Cost


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Maintenance order will be created to perform the maintenance process. Maintenance

order will be having the following costs:

Material - Stores and spares

Material - Operating supplies

Services – External repairs

Services – Employee services - Activity hours

Material costs will be transferred to the Maintenance orders based on the goods

issue. Employee service costs will be transferred to the maintenance orders based

on the activity type confirmation in the Maintenance order.

Maintenance cost center overheads need to be planned for the Activity type -

Repairs, to arrive the absorption rate towards maintenance costs. The cost will be

transferred to the maintenance order based on the planned rate.

Maintenance order will be settled to the identified cost center. Corresponding

settlement rule need to be maintained, as a receiver. The following are possible

receivers:

Cost center - Based on Equipment / functional area

Cost Center – Based on manual entry in the Maintenance Order

The other receivers can be as follows;

Assets – in case any maintenance cost need to capitalized

Project – WBS – in case of project based maintenance and cost need to be

absorbed by the project

Settlement Order (internal order) – to collect the total maintenance and re-

distribute the same to, different receivers.


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Part of the Maintenance order the settlement profile is – 40 and allocation structure

is ZM is being used.

6.3.4.18.7 Research and Development Cost

R & D is being carried out at R & D plant. The plants are approved by the competent

authority. The expenses incurred at this plants will get special exemptions. Hence the cost

will be captured and reported in a separate cost centers.

6.3.4.18.8 Cost in Project System

In Project System there is a facility to use cost planning to monitor and control cost

variances in a report. Plan the services for internally/externally-processed work, and the

required resources in network activities. The system uses the quantity and price structures

defined in the network to calculate the planned costs likely to occur as the work is executed.

Whenever the project structure is created, planned cost will be updated (CJ40)ie. Cost

estimation. CO Team will compare the cost with the notification. After comparing the same

with notification, project status will be updated by CO Team. After changing the status, it

shows as ‘CEPR CO Cross Checked’.

Once a project is planned and released we start executing the activities and confirm the

actual work carried out against the planned work in each Activity and/or Activity Element.

After confirmation the updated planned and actual costs and its variance can be seen in

report.


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Costs and revenues are temporarily collected and stored in projects ,which need to be

settled to one or more receivers as part of period-end processing.

Overheads Absorption to Projects- CAPEX, Product/Process Development project, DMF .

It was proposed by Costing team that Overheads pertaining to Project management ,

Process Engineering , Purchase Engineering , Process Development Lab can be

absorbed to the Project by maintaining different activity Types for these Cost

Centers.

However, PS team/Commercial team cannot plan Overheads for these activities

separately for Product Costing & for Project along with Activity Quantity for

developing the different rates for absorption.

Further, project team cannot confirm the actual no of hours spent by Project

management Staff, Process Engineering staff, Purchase Engineering staff for

different types of projects.

Hence, different activity types will not be maintained for absorbing these costs. Since these costs pertain to Project Only, Costing team will not load Process

Development lab Exp , Project management Staff, Process Engineering, Purchases

Engineering for HO & Plant to regular products. Commercial team will absorb the

same to Different types of Projects based on their assumption.

6.3.4.18.9 Cost in Job work-in


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Arch will be carrying out the job work for external customer or internal customer. In case of

job work, the requirement material will be supplied by the customer. In this case, the material

received from the customer should not be form part of our valuation. Inview of this, it is

required to treat these materials as non-valuated materials. When the materials are

received from the customer, goods receipt will be made with the non-valuated material code.

Even manufacture / FG code will be non-valuated. These materials will be controlled only

for quantity.

Separate Process order type will be used to manufacture these goods. So that user will

know the details based on the process order and reports can be drawn accordingly.


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6.3.4.19 Settlements and Transfer:

If the Controlling Object is having the balance of cost and the same can be settled to

different receiver. The following are the Settlement Transfer being used at Arch:

In case of process orders/Projects/Maintenance Order the Teco will be done by the

Concerned PP/Project team/Maintenance Team. Settlement and closure will be done

by CO Team.

Sl. No Sender Possible Receiver Dependent Structures

1 Process Order – With make

to stock (i.e. without

account assignment project

or sales order)

The following are the Order

Types:

BT01 Manufacturing

BT02 Packaging

BT03 Reprocessing A

BT04 Repacking

BT05 Rework

BT08 Crams

The balance cost will be

represented as Variance in the

Process Order. Balance will be

settled to CO-PA value filed.

Variances will be posted the

financial accounting using the

Settlement profile PI01- Process

order.

The Variance also Transferred to

CO-PA using the Transfer

Structure

“Z0- Arch Process Order – COPA”

2 Process Order – With make

to order (i.e. job work in

with account assignment

sales order). The following

are the Process Order

Types:

The Job work in is being

handled through non-valuated

materials. The Process order

will be having the costs relating

to overheads. Process order

will be settled to the Sales


order is being used.

The Process order does not have

any variances and total cost will be

transferred to the Sales Order. In


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BT09 Job Work

Manufacturing

BT10 Job Work Packing

BT11 Job work

Reprocessing

BT12 Job work

Repacking

BT13 Job work Rework

BT14 Job work

equipment cleaning

order. The cost in the process

order will be transferred to

Sales order.

this case, the sale order become

the cost object.

3 Process Order –

Manufacturing towards

Projects. The following

Process Order Type is

being used.

BT08 Crams

The Material cost and

manufacturing overhead will be

transferred to the project.

Necessary settlement rule need

to be maintained in the Process

Order.


order is being used.

4 Process Order – Some of

the costs in the order type

need to be settled based

on the requirements. These

order types are:

BT06 Equipment

Cleaning

BT07 Exhibit

BT15 Validation Batches

Based on the business call, CO

Team will maintain the

settlement rule, before settling

the process order


order is being used


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5 Project Settlement – AUC /

Capex

Project Profile – Z000003-

Capex Projects

Cost will be captured by direct

posting to project from FI or

MM or settlement of

Maintenance order. When

Project is settled the cost will

be transferred to AUC Asset,

on periodic basis. When project

finally settled, it will transfer the

cost from AUC to regular asset

based on the settlement rule

maintained.

In case of AUC asset, based on

investment profile (Z00001)

system will create the AUC

asset under the Asset Class

5300.

Settlement Profile – ZPS5 - PS

Settlement to Fixed Asset

6 Project Settlement – with

sales Revenue – COPA


CRAMS Projects

Mfg. Cost will be transferred

from Process Order to Project

WBS element. On settlement of

Process Order, if any variance

between the planned cost

determined at the time of

release Vs. actual cost, will be

transferred to Project WBS

element.

From WBS can be settled down

to Profitability Segment, total

revenue and cost will be

transferred to CO-PA.

Settlement Profile – ZPS1 - Project

Settlement – PSG

CO-PA Transfer Structure –

Z1 - PA Transfer Structure PS

7 Project Settlement – The cost will be settled to Cost Settlement Profile


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Expenses – Cost Object


Expense Projects

Center or a Profitability

Segment

ZPS4-Project Settlmnt - Genl

COPA Transfer Structure

Z2- PA Tran Struct PS Dev Projects

8 Sales Order – The Job

work in is being handled

through non-valuated

materials against Sales

Order as assignment. The

Process order will be

having the costs relating to

overheads. Process order

will be settled to the Sales

order. The cost in the

process order will be

transferred to Sales order.

The sales Order costs and

revenue need to be settled

to COPA Segment

Sales order Type

ZO18- Jobwork Ord No

Excise

ZO19- Jobwork Ord –

Excise

Sale order will be settled to

Profitability Segment.

Settlement Profile –

ZSD1 - Sales order make-to-order

prodn.

COPA Transfer Structure:

Z3 PA Transfer Structure PS

9 Maintenance Order

ZM01 Break Down Order

ZM02 Preventive

Maintenance Order

ZM03 Preventive

Maintenance Quality Dept.

Maintenance order will be

having the cost posted through

material consumption, activity

confirmation, etc.

Settlement Profile –

40 - Maintenance measure


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Ord

ZM04 Calibration Order-

Engineering

ZM05 Quality Department

Calibration Order

ZM06 Re-Validation / Re-

Qualification Order

ZM07 small Modification

from user department

ZM08 Modification Order

Through PS

These cost need to be settled

to Cost center based on the

functional location or

equipment or Projects if the

services are being used for

project or a general cost center

based on the manual

assignment of settlement rule

6.3.4.20 Product Cost Controlling- Transaction / Activity Chart:


1 Display BOM CS03 Material, Plant, BOM

Usage

Displays the

BOM

CO user BOM need to be

created for the

Plant

2 Display Resource CRC3 Plant, Resource Displays the

identified

resource data

CO User Resource need to

be defined in the

system

3 Display Recipe C203 Material, Plant Displays the

Master

Recipe

CO User Recipe must be

defined in the

system

4 Create Cost

Estimate (single)

CK11N Material, Plant,

Costing Variant,

Costing Version,

Costing Lot size

System

derives the

Standard

cost of the

CO User Necessary master

data and costing

planning must be

in place


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selected lot

size

5 Price update

(single)

CK24 Period/ year, Material,

Company Code, Plant

Marking and

releasing ,

CO User Cost must be

saved before

release in CK11N

6 Costing Run CK40N Costing Run ID, Date,

Description, Costing

Variant

Co Code

Controlling Area

Costing Version

Different

levels of

execution will

be carried

out.

Selection,

Structure

Explosion,

Costing

Analysis

Marking

Release

CO BPO Necessary Master

data in place

7 Process order CR03 Process Order Provide the

details of the

process

order,

materials,

cost, etc

CO User Process Order

Type

8 Revaluate

Process Order

MFN1 /

CON2

Process order /

Period / Fiscal Year

Revaluate

the process

order based

on actual

activity price

CO user Plant

9 Work in Process KKAX /

KKAY

Process order /

Period / Year / RA

Key

Calculates

the WIP

CO User Plant


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10 Variance KKS2 /

KKS1

Process Order /


Variance will

be calculated

order wise

CO User Plant

11 Settlement KO88 /

CO88

Process Order /


Variance /

WIP will be

posted to the

Financial

Accounting

CO User Plant

12 Close CO period OKP1 CO Area, Period,

Year

Select the

business

process /

month to

close

BPO Period control

6.3.4.21 Product Cost Controlling - Integration:


1 PP BOM, Resource and Recipe details are taken from the PP module. Standard

Price arrived in Product cost controlling is compared with the actual of PP

module

2 FI Integrated with Financial Accounting to arrive the actual overheads

3 PS Cost of Project System will be settled using the Settlement Structure of CO.

Based on the Allocation structure (which is derived from the settlement

structure), necessary senders and receivers will be identified. The Senders

will be identified through Cost element groups.

4 PM Maintenance cost will be captured to Maintenance Orders. These cost can be

settled using the Settlement Structure, to respective cost centers or projects

or other maintenance orders.

5 SD Job-work orders will be followed as Make-to-order and product will be

manufactured against specific orders.


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6 CO-PA When the process Orders are settled to, system will post the variances to the

Costing based CO-PA.

6.3.5 BBP_CO_BP6.3.5 Inventory Valuation considerations and costing impacts

6.3.5.1 Solvent Recovery should not absorb Overheads:This bi-product will be identified and costing BOM will be maintained for the valuation. To

activate costing, this BOM should not be a recursive BOM. If the BOM is maintained as

Recursive BOM, The recursive component has to be maintained as “Not Relevent for

Costing’.

6.3.5.2 Slow Moving and Non-Moving Stocks Information

SAP tracks the details based on the goods movements of the materials and provides

the necessary information by way of reports (T.code MC46 and MC50)

6.3.5.3 Treatment of short receipt quantity.GR has to be made for actual quantities or based on the Arch policy the process of debit

note can be followed.

6.3.5.4 Stock Ageing Analysis.

In case of material with Batch management, it is possible. As per Arch, every

location the batch number is getting changed and new batch is being created. This is

a GAP in standard functionality, an ABAP program need to be developed.


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6.3.5.5 Inventory Classification:

Classification – own inventory, job work in inventory, job work out inventory, usable

inventory, rejected inventory is possible in standard system by taking material type

wise inventory reports with the combination of Split Valuation

6.3.5.6 Loss In Transit during Inter location Transfers :

Prepare GRN for full quantity and post the loss in transit stock as Blocked stock.

Subsequently the loss in transit needs to be issued to a cost center or post the

physical inventory difference.

6.3.5.7 Invoice Booking Should be only after Quality Approval :

Invoice will be allowed even before QC approval. But it will be blocked for payment in case

of QC not approved in the standard SAP functionality. It is a GAP in standard SAP. An

enhancement is to be made to get this facility.

6.3.5.8 Transport Charges Treatment in STO: At the time of PO preparation it should be included in one of the conditions. If the receiving

end the price control in the Material Master is V- system will add the transportation cost to

the materials. If the price control is S – system will valuate based on the Material master

price and difference will be posted to the Stock transfer difference account

6.3.5.9 Incidental Charges inventorisation on imports: To load the Transit Insurance, Warehousing charges and clearing charges to the inventory

these terms need to be maintained in the Purchase order as conditions.


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6.3.5.10 Treatment of Inventory Written Off: SAP system is having the following process:

1. Goods issue to Cost Center2. Scrapping3. Physical Inventory differenceSystem will post the corresponding accounting entries to financial accounting and to Controlling.

6.3.5.11 Impact in Costing while destroying Stocks :

Based on the process adopted by Arch, the inventory value will be charged off. If the

goods are issued to a Cost Center and the same can be analyzed

6.3.5.12 BOM Accuracy : System will provide the details of Material components in the Bill of Materials. Hierarchical

BOM, will provide the various stages of material components.

6.3.5.13 Inventory Landed Cost Break UP : Necessary conditions need to be maintained in the Purchase order. Based on which system

will valuate the material and update the inventory. Exact report is a GAP in standard SAP.

To present the same in the required format, a Report need to be developed.

6.3.5.14 Inventory Controls.PO Amendment after GRN : Standard SAP allows to amend the PO even

after GRN.


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Control on GR Reversal: It Is Possible to restrict the system not to

allow to reverse GRN, unless the corresponding MIRO against that GRN is

reversed. System will give error message

Difference in Inventory Valuation between Finance & Logistics: SAP

System will maintain the integration between the Material accounting and

Financial accounting system. Values are flown automatically to Financial

Accounting from the logistics and no difference between both modules.

Not to allow manual postings to Inventory Accounts & Invenory

Consumption Accounts:

While creating the general ledger accounts the Automatic Posting fields

needs to be selected. These field will made be made mandatory for the stock

related GL accounts. But if this control is activated to Consumption accounts,

system will not allow to do WBS Consumption procurements.

To allow the WBS Consumption while making the purchase order, “Post

Automatically Only” check box has to be removed from the GL master. In

order to facilitate to control the consumption accounts from other manual

postings, an enhancement need to be written. It is a GAP standard SAP.

Inventory Revaluation Authorization for MR21/MR22 will be given to

authorized users.

6.3.5.15 Batch wise Recoveries Information With Quantities: Manufacturing will be taking place for each batch and corresponding process order will be

created. Recoveries (Solvents /Crude Mother/ liquor)are being posted against the Process

Order and details can be drawn against the process order (i.e. batch)


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6.3.5.16 FG/ Intermediataries Valuation: FG/ Intermediataries Valuation Can be achieved through Standard cost estimate. Based on

recipe and overhead rates maintained in the system, material will be valuated when user

release the Standard Cost Estimate

6.3.5.17 Treatment of Materials Used in Cleaning Batches: Separate Process Order type is being used for cleaning activity and data will be captured at

process order level, in case of campaign change.

In case of batch to batch cleaning activity, the cost will be captured through machine activity.

Necessary material will be issued to the respective cost centers/ process order.

6.3.5.18 Treatment of Failed batches: In case of failed batch, user has to make the GR against the Process order. These materials

are being tested by the Quality Control team and identify them as failed batch. Based on

which these batches need to be scrapped or reprocessed. The goods can be issued to the

respective process order. The process represents more variances.

If no output is being generated, no yield will be reported and final confirmation will be made

and process order has to be settled with variances.

6.3.5.19 Capacity Utilization / Idle capacity:User need to identify the capacity, part of the planning activity. The same need to be

maintained, in the system part of the CO planning. The actual values will be posted by the

system based on the confirmation of Process orders. The actual values can be seen against

the cost center. User can see the actual value and planned value against a cost center

6.3.5.20 Re Process Batch Information: Separate order type is being used for re-process of the materials. Based on the process

order, user can arrive at the cost of re-processing i.e. material consumed and activity types


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used. If settlement rule is maintained, the cost of the Re-process can be settled to the main

process order

6.3.5.21 Cost Component Structure information: Planed costs can be seen cost component structure wise after completion of cost estimate at

material level or plant level. Actual costs are available only for the particular level

components and activities.

Actual cost of Raw Material Packing Material break-up at each stage of production is not

possible for each stage of production. It is not feasible to develop the same. It is a GAP in

the System.

6.3.5.22 Variance Details: Variances will be calculated based on the process order. In case of 2nd Crop process order

the same need to be settled to the main process order to arrive the total variances of the

order.

6.3.5.23 Cost Component Information of Intermediaries: As per the BOM and Recipe standard cost will be updated in the Material Master. Actuals

are available only for the particular level components and activities.

GAP: Actual cost of Raw Material Packing Material break-up at each stage of production is

not possible for each stage of production. It is not feasible to develop the same. It is GAP in

standard SAP Functionality.

6.3.5.24 Batch Type Harmonization in the production: In SAP System it is being created different Process order types to represent the Batch

Types. Based on the Order types, user can draw the reports and analyze the same.


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6.3.5.25 Validation for posting of recoveries with rates: It is required to have the same quantity of costing lot size in the BOM header quantity. It is a

GAP as per requirements and direct control is not possible to have the same costing lot size

in the BOM header quantity. Still if this is need to be controlled, ABAP enhancement need to

be done in consultation with PP Module.

6.3.5.26 Average Inventory Holding Period: Based on the specified formula, the report need to calculate the raw material stock on hand,

in terms of sales. The report is a GAP in the standard functionality and ABAP report has to

be developed.

6.3.5.27 Treatment of Second Crop Production: SAP will post Goods Receipt for the recovered materials, based on the BOM components.

6.3.5.28 Cost of By-Product to be reduced from Main product.This can be achieved by defining the costing BOM for bi-product. System will reduce the

value of the byproduct from the main product.

6.3.5.29 Subcontract Recovered Stock valuation: Valuation will be associated with Sending plant inventory valuation. Valuation will be

automatically updated by the system when the sub-contract stocks were entered while

making the GRN against sub-contracting PO.

6.3.5.30 Inter location job work cycle within a company codeSending plant will follow the Sub-contracting process, as if the material sent to external

vendor. The receiving plant follows the Job work in process, as if the material received from

the external customer. The material codes used in the job work in process are non-valuated

materials. There is no relation between the JW in and JW out process. Both will be


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operating independently. Job work charges can be maintained as condition type in the

purchase order. System will post the financial charges at the time of GR. In order to load the

transportation charges necessary conditions are to be maintained in the sub-contracting

purchase order.

GAP: Information On Changes to Sub-Contracting BOM While Executing Transaction :

While consuming the Sub-Contracting Stocks against the GR, system will not have any

standard validation on the component consumption quantities against the Sub-Contracting

BOM. There is no process to give warning to the any users about the changes in the sub-

contracting components. standard report ME80FN is available to show the sub-contracting

header quantity and the components consumptions against sub-contracting purchase order.

The Validation with regard to BOM quantity & quantity issued in case of Sub Contracting PO,

will be decided in MM Module. The same point will be covered in BBP of MM Module.

6.3.5.31 Subcontract Material Usage and Inventory Control: System need to provide the information Raw material Vs. Finished Goods, based on the

BOM maintained in the system. ABAP Program need to be developed, if the format of

standard program is not sufficient.

6.3.5.32 Issue of processed material to cost centre: Inventory is being valued based on the Price Control. The price control will be S for the

Manufactured materials. The Standard Price will be inclusive of Material price and

overheads. It is not possible to isolate the overhead part and it is a GAP.


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6.3.5.33 Capture of R&D Expenses: Need to be created these departments as Cost Centers. All relevant expenses can be

posted to the respective cost centers. Based on the cost centers a report can be drawn

6.3.5.34 Period Closure: Part of the CO Processes, user need follow the necessary closing steps to complete the

periodic process

6.3.5.35 Effect and result of CSA: Necessary allocation cycles need to be created to transfer the service cost center costs to

production cost center

6.3.5.36 Expenses provision in finance to move to cost centers. Part of the period reporting, it is required to make necessary provisions, in Financial

accounting. Based on the provisions made in FI the expenses will be available in CO for

reporting

6.3.5.37 Payroll Expenses to post to cost centers:

Payroll details are being maintained in the external system. Payroll details will be loaded into

SAP Cost Center wise, through an interface program. Since SAP payroll is not implemented

it is a GAP in standard SAP. An ABAP interface program need to be developed.

6.3.5.38 Sample should be form part of COGS:

These can be form part of billing from Sales and Distribution module


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6.3.5.39 Reprocessing Cost Information:

Reprocessing is being carried out through another Batch type. Based on which necessary

cost analysis can be carried out

6.3.5.40 : Optimum Product Mix

Based on the standard cost and contribution of the product, user has to arrive the Optimum

Product Mix

6.3.5.41 Log Sheet Maintenance for Utilities: Part of the Plant Maintenance module, necessary log sheet will be maintained for utility

consumption. Fuel consumptions can be tracked by way of issues to the cost centre. Yield

from the cost centre can be recorded through plant maintenance measuring points.

6.3.5.42 Log Sheet Maintenance for Utilities: Utility per unit cost is being arrived in the respective cost centers. Based on the secondary

resource usage, utility cost will be transferred to product. Quantities will also be captured to

the cost centre.

6.3.5.43 Yield against Utility Cost: Information is available in the cost centers. If any specific output formats are needed, it is a

GAP. An ABAP Report need to be developed, as per Arch requirement

6.3.5.44 Coal Purchases tracking by sourceBased on the Purchase order, the same can be known about the source of supply. If

required the same can be maintained in the split valuation


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6.3.5.45 Unauthorized PTN/PTNI Valuation: System will valuate the materials, based on the Goods receipt and as per the price in the

material master based on the price control

6.3.5.46 Unauthorized PTN/PTNI Valuation: Standard report MRN9 is

available to compare the inventory with material master price and the

commercial price.

6.3.6 BBP_CO_BP6.3.6 Profit Center Accounting


Profit center accounting Profit center PlanningPeriod-end closing of

PCA

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A profit center is a management-oriented organizational unit used for internal controlling

purposes.

Dividing the company into profit centers allows you to analyze areas of responsibility and to

delegate responsibility to decentralized units, thus treating them as “companies within the

company”.

The profit center differs from a cost center. The cost centers merely represent the units in

which capacity costs arise, whereas the person in charge of the profit center is responsible

for its balance of costs and revenues. The main aim of Profit Center Accounting is to

determine profit for internal areas of responsibility. It lets you determine profits and losses at

each profit centre.

Every profit center is assigned to the organizational unit Controlling Area. The profit centers

in a company code belong to a standard profit center hierarchy that is also assigned to the

Controlling Area.

All profit-relevant business transactions are updated in the profit center hierarchy according

to G/L account at the same time they are processed in the original module of the SAP

system. This ensures that the entire flow of goods and services within a company is

transformed in goods and services relationships between profit centers. This is true both with

actual postings and in planning.

In SAP all P & L account postings originating from either Logistics or Finance will be passed

on real time to PCA.

Versions


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Versions are required for collection of plan and actual data for one Controlling Area.

Versions enable to carry parallel sets of planning data for the same object. The planning

data should be updated in the version for the revenue element at the Profit Center level in

the format of Profit Center/ Revenue Element.

Actual data is always compared against the plan values set in version 0. Typically, version 0

corresponds to approve Budget figures for meaningful comparison.

Version Purpose Version Name

Approved Values Version – 0

Plan Values Version – 1

6.3.6.1 Automatic derivation of profit center in actual transactions

The profit center can be maintained in the masters and while doing actual transactions the

profit center is derived. The profit center derivation logic is explained in the following table.

Sl. No.

Particulars Logic

1. Expenditure Cost of goods sold: Each Material at plant level is

assigned to a Profit Center at the material master. At

the time of booking of sale the Profit Center will be

automatically derived from the Material master.

Price Difference: The same will be derived from the

Material master.

Internal consumption: At the time of booking of

consumption, Cost Center / order is a mandatory


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field. This will in turn derive the Profit Center.

Inventory Shrinkage/Lost in transit: The same will

be booked to a Cost Center, which in turn will derive

the Profit Center.

Other Direct and Indirect Expenditure: At the time

of booking of expenditure Cost Center is to be given.

This will in turn derive the Profit Center.

The Cost Center field should be mandatory in case

of booking of any expenditure.

2. Income Sales of material / Scrap: Each material / Service

at plant level is assigned to a Profit Center at the

master level. At the time of booking of sale the Profit

Center will be automatically derived from the material

master.

Other operating income: in case of manual FI

entry, Profit Center has to be manually entered at the

time of entry. The same has to be a mandatory field.

3. Fixed Assets At the time of booking of fixed asset, Profit Center

will be derived from the cost center assigned in the

asset master.

4. Inventory Each Material at plant level is assigned to a Profit

Center at the Material master.


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5. Debtors and other

related special GL

transactions

(excluding advance

received)

The Profit Center will be derived from the offsetting

line item. In case there are multiple offsetting line

items, the system will break the debtors in the ratio

of the offsetting line item.

6. Advance received

from customers

Manual entry at the time of booking

7. Creditors and other

related special GL

transactions

(excluding advance

given)

Same as Debtors

8. Advance given to

vendors

Manual entry at the time of booking

9. Share Capital Profit Center can be attached at the GL level

10. Secured and

Unsecured Loans

Profit Center can be attached at the GL level

6.3.6.2 Actual Posting in Profit Centre AccountingAll the postings in Financial Accounting, Materials Management, Asset Management and

Sales and Distribution and Controlling that affect profits are reflected in Profit Centre


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Accounting. Profit centers cannot receive direct postings in the SAP ECC System. Instead,

the data is posted to other objects and passed on from there to a profit centre in Profit

Centre Accounting. This makes it possible to display company’s results by profit centre

based on the original postings and with no additional work.

6.3.6.3 Profit Centre Account AnalysisClassic profit centre accounting is not activated in Arch. In new ledger concept, profit centre

is acting as financial Organizational element than controlling organizational element. The

information system lets one analyze all the Data in Profit Centre Accounting individually as

well as in a summarized form according to different criteria. The reports in the Profit Centre

Accounting information system can be classified into two groups:

Drilldown reports

S_AC0_52000888: Payables Profit centre wise

S_AC0_5200087: Receivables profit centre wise

FAGLL03: GL Line item report with profit centers

Report Painter reports (and Report Writer reports)

Profit centre wise trial balance

Profit centre wise balance sheet

6.3.7 BPP_CO_BP6.3.7 Profitability Analysis

Detailed Business Blue print on Controlling – Profitability Analysis is being provided in a

separate document.


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6.4 Business Process Steps & Transactions

Main Process Description Process Of SAP Transaction Code


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6.4.1

Cost Element Accounting

This Will cover

the cost

Element

Reports.

Cost element Display

Display Cost Elements

KA03

KA23

6.4.2

Cost Centre Accounting

This Will cover

the cost centre

reports.

Actual cost line items : CC

Wise

Breakdown by partners.

Breakdown by transactions

Quarterly Comparision

Range – Cost Elements

Cost Centre Master Reports

Activity Prices List

KSB1

S_ALR_87013615

S_ALR_87013616

S_ALR_87013623

S_ALR_87013613

KS13

KSBT

6.4.3

Internal Order Accounting

This Will cover

the Internal

order Reports.

Actual Line Items Internal

Order

Order Plan/Actuals

List : Cost Elements By Order

KOB1

S_ALR_87012993

S_ALR_87012997

6.4.4


This will cover

the product

Cost Reports

Process Order Information

Syst

Results Of Costing Run

Price Vs.Cost Estimate

Variances between two runs

COOIS_PI

S_ALR_87099930

S_ALR_87099931

S_ALR_87099931

6.4.5

Inventory Valuation

This will cover

the inventory

reports of

Maaterial

Stock On Posting date

Display wharehouse stocks

Material Document List

Valuated Sales order or proj

MB5B

MB52

MB51

MBBS


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management stk

Stock Overview

MMBE

6.4.6


This will cover

the Reports of

Profitability

analysis

CO-PA Line Item Report

CO-PA Plan Line Item Report

KE24

KE25

7 Functional RequirementURS Req. No

URS Req. Details

SAP Process BBP

No

Status

Valuation and consumption cost of Raw Material/ Packing

Material/ Lab Chemicals

001/001 The stock needs to

be valued as soon

as the GRN is

entered in the

system.

SAP System will value the

goods based on the Goods

Receipt, based on the

Purchase Order terms and

post the value to

corresponding General Ledger

Accounts

BBP_C

O_MD5.1.10.1

to

5.1.10.6

Standard

001/002 Proper System to

capture expenses

incidental to

purchase of

material to form

part of landed cost

All the delivery cost need to be

maintained in the purchase

order, to add to the inventory

cost and to arrive the landed

cost

BBP_C

O_MD5.1.10.1

Standard


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URS Req. No

URS Req. Details

SAP Process BBP

No

Status

of that material.

001/003 Proper Coding

structure for

purchased,

produced and sub

contracted material

should be there.

Based on the Material types

and Split valuation process the

same will be achieved

BBP_C

O_MD5.1.10.6

Standard

001/004 Controlled Price

Products details

should be

available.

A Pricing condition will be

provided to maintain the

Controlled price of a product.

The price will be maintained in

the sequence of Company

Code and Material Code.

BBP_S

D_MD5

Standard

001/005 System to ensure

inventory

classification – raw

material, packing

material, lab

chemicals,

intermediates,

finished goods, bi

product, fuel items

and engineering

items.

Materials are classified based

in the Material Types. Split

valuation has been activated

to obtain the source of the

materials. Correspondingly

these materials are linked to

respective Valuation class to

post the Corresponding

General ledger accounts

BBP_C

O_MD5.1.10.6

Standard

001/006 Non Moving and

slow moving

SAP tracks the details based

on the goods movements of

BBP_C

O_BP

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

stocks. the materials and provides the

necessary information by way

of reports (T.code MC46 and

MC50)

6.3.5.2

001/007 Proper treatment of

short receipt

quantity.

GR has to be made for actual

quantities or based on the

Arch policy the process of

debit note can be followed.

BBP_C

O_BP 6.3.5.3

Standard

001/008 Ageing Analysis of

Stocks. History

should be carried

forward in case of

interlocation

transfer of material

with the first GRN

date to carry for

ageing purpose.

In case of material with Batch

management it is possible. As

per Arch every location, the

batch number is getting

changed and new batch is

being created. This need to be

developed as a report, as per

the specifications of Arch.

BBP_C

O_BP 6.3.5.4

ABAP

Developm

ent

001/009 Material Mix –

Local & Imported.

Split Valuation will be

activated to classify the local

and imported material values

and identify the stock

separately.

BBP_C

O_MD 5.1.10.6

Standard

001/010 Proper Inventory

System for

Classification –

own inventory, job

It is possible in standard

system by taking material type

wise inventory reports with the

combination of Split Valuation.

BBP_C

O_BP 6.3.5.5

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

work in inventory,

job work out

inventory, usable

inventory, rejected

inventory.

001/011 Inter location


and loss in transit

treatment in the

system.

Prepare GRN for full quantity

and post the loss in transit

stock as Blocked stock.

Subsequently the loss in

transit needs to be issued to a

cost center or post the

physical inventory difference.

BBP_C

O_BP 6.3.5.6

Standard

001/012 Invoice Should be

allowed to book

after it is approved

by QC

Invoice will be allowed even

before QC approval. But it will

be blocked for payment in

case of QC not approved.

BBP_C

O_BP 6.3.5.7

Standard

001/013 Transportation of

interlocation

transfer to be

loaded on

inventory

At the time of PO preparation

it should be included in one of

the conditions. If the receiving

end the price control in the

Material Master is V- system

will add the transportation cost

to the materials. If the price

control is S – system will

valuate based on the Material

master price and difference

BBP_C

O_BP 6.3.5.8

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

will be posted to the Stock

transfer difference account

001/014 System to work out

Transit Insurance,

Warehousing

charges and

clearing charges to

be loaded on

inventory in case of

import.

All the terms need to be

maintained in the Purchase

order to add the same

inventory cost.

BBP_C

O_BP 6.3.5.9

Standard

001/015 System treatment

for write off of

material and

accounting

treatment thereof

SAP system is having the

following process:

4. Goods issue to Cost Center

5. Scrapping6. Physical Inventory

differenceSystem will post the

corresponding accounting

entries to Financial

accounting.

BBP_C

O_BP 6.3.5.10

Standard

001/016 Goods destroyed

effects in costing

Based on the process adopted

by Arch, the inventory value

will be charged off. If the

goods are issued to a Cost

Center and the same can be

analyzed

BBP_C

O_BP 6.3.5.11

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

001/017 Bill Of Material

should be accurate

to capture requisite

quantity of Raw

materials required

at various stages

of recipie.

System will provide the details

of Material components in the

Bill of Materials. Hierarchical

BOM, will provide the various

stages of material components

BBP_C

O_BP 6.3.5.12

Standard

001/018 Break up of landed

cost of Raw

Material ie basic

price & other add

up cost

components

Necessary conditions need to

be maintained in the

Purchase order. Based on

which system will valuate the

material and update. To

present the same in the form

of Cost component model, a

Report need to be developed

BBP_C

O_BP 6.3.5.13

ABAP

Developm

ent

001/019.A Controls-

- The System

should not allow to

amend the P.O

after the first GRN

is prepared.

Standard SAP allows to

amend the PO even after

GRN

BBP_C

O_BP 6.3.5.14

Standard

001/019.B - If the MIRO is

booked against

GRN, system

should not allow to

It is possible restrict GRN

reversal after MIRO posting.

System will give error

message.

BBP_C

O_BP 6.3.5.14

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

reverse GRN,

unless the

corresponding

MIRO against that

GRN is reversed.

001/019.C -There should not

be any difference

in Raw Material

valuation between

MM Module & FI

Module.

SAP System will maintain the

integration between the

Material accounting and

Financial accounting system.

Values are flown automatically

and no difference between the

system.

BBP_C

O_BP 6.3.5.14

Standard

001/019.D - No Manual

postings should be

allowed in Raw

Material related

Automatic GL

Accounts ie Stock

of Raw Material ,

Raw Material

consumed.

While creating the general

ledger accounts the Automatic

Posting fields needs to be

selected. These field will

made be made mandatory for

the stock related GL accounts.

BBP_C

O_BP 6.3.5.14

Standard/

ABAP to

control

Cosumptio

n

Accounts

001/019.E - No Authorization

to anybody for

artificially changing

Authorization to price change

transaction code i.e.MR21 will

be provided to identified user.

BBP_C

O_BP 6.3.5.14

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

valuation of Raw

Material - ie MR21,

MR22.

Valuation and consumption cost of Semi-Finished Materials

002/001 System for batch

wise recoveries of

solvents/ crude/

spent/ mother

liquor needs to be

in place.

Manufacturing will be taking

place for each batch and

corresponding process order

will be created. Recoveries

are being posted against the

Process Order and details can

be drawn against the process

order (i.e. batch)

BBP_C

O_BP 6.3.5.15

Standard

002/002 Accurate

information on

material content

and usage of the

recovered material

needs to be

captured.








order (i.e. batch)

BBP_C

O_BP 6.3.5.15

Standard

002/003 Intermediate at

Avon Organics

needs to be valued

properly.

Can be achieved through

Standard cost estimate.

Based on recipe and overhead

rates maintained in the

system, material will be

valuated when user release

BBP_C

O_BP 6.3.5.16

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

the Standard Cost Estimate.

002/004 Harmonization in

different batch type

for production,

which are not used

diligently.

In SAP System it is being

created different Process

order types to represent the

Batch Types. Based on the

Order types, user can draw

the reports and analyze the

same

BBP_C

O_BP 6.3.5.24

Standard

002/005 Material used in

cleaning batches

should be treated

as a direct cost

rather than

overheads to the

products in the

system.

Separate Process Order type

is being used for cleaning

activity and data will be

captured at process order

level, in case of campaign

change.

In case of batch to batch

cleaning activity, the cost will

be captured through machine

activity. Necessary material

will be issued to the respective

cost centers.

BBP_C

O_BP 6.3.5.17

Standard

002/006 Solvent recovery

batches should not

absorb overheads,

coz it is not a

production.

This bi-product will be

identified and costing BOM will

be maintained for the

valuation. To activate costing,

this BOM should not be a

recursive BOM. If the

BBP_C

O_BP 6.4.4.1

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

component is recursive in

nature, then it has to be

activated “Not Relevent to

costing”. Pairing has to be

maintained to give the costing

effect.


structure for

purchased,

produced and sub

contracted material

It is achieved through split

valuation for materials

BBP_C

O_MD 5.1.10.6

Standard


Products details

should be

available.







BBP_S

D_MD

5.0

Standard


inventory


material, lab

chemicals,

intermediates,

finished goods, bi

product, fuel items

and engineering

Materials types are being

identified and codification has

been made accordingly. In

addition to the material types,

split valuation is being

activated to identify the stocks,

based on source of supply and

inventory value.

BBP_C

O_MD 5.1.10.6

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

items.


Stocks. History

should be carried

forward in case of

interlocation


with the first

production date to

carry the ageing.



per Arch every location, the

batch number is getting

changed and new batch is

being created. This need to be

developed as a report, as per

the specifications of Arch.

BBP_C

O_BP 6.3.5.4

ABAP

Developm

ent


failed batches

where there is no

output. It should be

taken as an

abnormal loss.

In case of failed batch, user

has to make the GR against

the Process order. These

materials are being tested by

the Quality Control team and

identify them as failed batch.

Based on which these batches

need to be scrapped or

reprocessed. The goods can

be issued to the respective

process order. The process

represents more variances.

If no output is being

generated, no yield will be

reported and final confirmation

will be made and process

BBP_C

O_BP 6.3.5.18

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

order has to be settled with

variances.

002/012 Capacity Utilization

and idle capacity.

User need to identify the

capacity, part of the planning

activity. The same need to be

maintained, in the system part

of the CO planning. The

actual values will be posted by

the system based on the

confirmation of Process

orders. The actual values can

be seen against the cost

center. User can seen the

actual value and planned

value against a cost center

BBP_C

O_BP 6.3.5.19

Standard

002/013 TRT hrs utilized in

each production

cost centre for our

own production

and third party

production (job

work – in) for each

product.

Separate order Type are being

created to track the own

production and job-work

production. Based on order

types data will be accumulated

and provided the information,

through summarization reports

BBP_P

P-

PI_BP0

3

Standard

002/014 Reprocess batch

details with

material loss and

Separate order type is being

used for re-process of the

materials. Based on the

BBP_C

O_BP 6.3.5.20

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

overheads incurred

in reprocessing.

process order, user can arrive

the cost of re-processing i.e.

material consumed and

activity types used. If

settlement rule is maintained,

the cost of the Re-process can

be settled to the main process

order

002/015 Separate Raw

material and

overhead cost

component

breakup of the

material at every

stage of production

for each product.

Planed costs can be seen cost

component structure wise

after completion of cost

estimate at material level or

plant level. Actual are

available only for the particular

level components and

activities

BBP_C

O_BP 6.3.5.21

GAP

002/015 Variance in yield

batch wise, product

wise (including 2nd

crop) and loss

thereof.

Variances will be calculated

based on the process order.

BBP_C

O_BP 6.3.5.22

Standard


slow moving

stocks.



the materials and provides the


of reports (T. code MC46 and

BBP_C

O_BP 6.3.5.2

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

MC50 )


System for

Classification –

own inventory, job

work in inventory,

job work out

inventory, usable

inventory, rejected

inventory.




BBP_C

O_BP 6.3.5.5

Standard

002/018 Interlocation


and loss in transit

treatment in the

system.

Prepare GRN for full quantity;

in same GRN maintain loss

stock as Blocked stock. Goods

need to be written off, as per

the accounting policy.

BBP_C

O_BP 6.3.5.6

Standard


interlocation

transfer to be

loaded on

inventory.

At the time of PO preparation

it should be included in one of

the conditions.

BBP_C

O_BP 6.3.5.8

Standard


for write off of

material and

accounting

treatment thereof.

It is possible in Inventory

Management module with

movement type 551/553/558

in MIGO or MB1A. Based on

the Arch accounting policy the

accounting treatment of these

BBP_C

O_BP 6.3.5.10

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

materials can be posted into

the system.

002/021 Intermediates

valuation should

consist of following

cost components ie

Raw Material,

Direst Cost,

Power/Fuel,

Manufacturing

Ohds

As per the BOM and Recipe

standard cost will be updated

in the Material Master. If the

actual Raw Material

components need to be seen

at all stages, a custom system

will provide report based on

the cost estimates and at plant

level or at material level.

BBP_C

O_BP 6.3.5.23

Standard

002/022 Controls--There should not

be any difference

in Intermediates

valuation between

MM Module & FI

Module.

- No Manual

postings should be

allowed in

Intermediates

related Automatic

GL Accounts ie

Stock of

Intermediates ,







system.

MR21 will not be allowed for

automatically posting GL

accounts

BBP_C

O_BP 6.3.5.14

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

Change in

Inventory –

Intermediates ,

Cost of Goods

Sold

- No Authorisation

to anybody for


valuation of

Intermediates - ie

MR21, MR22.

Valuation and consumption cost of Finished goods

003/001 System for

batchwise

recoveries of

solvents/ crude/

spent/ mother

liquor needs to be

in place.








order (i.e. batch)

BBP_C

O_BP 6.3.5.15

Standard

003/002 Accurate

information on

material content

and usage of the

recovered material

needs to be

Based on the inspection plan

and testing of the materials,

the results can be recorded

into the system. Based on

which user, has to do the

analysis and take the decision

BBP_C

O_BP 6.3.5.15

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

captured. on its usage

003/003 Finished goods at

Avon Organics

need to be valued

properly.

Finished goods can be valued

at standard price. The

manufactured finished goods,

will be having the Recipe

(BOM & Operations), based

on which system will valuate

the Material cost and

overheads to manufacturing

the finished good.

BBP_C

O_BP 6.3.5.16

Standard

003/004 Harmonisation in

different batch

types for

production, which

are not used

diligently.

In SAP System it is being

created different Process

order types to represent the

Batch Types. Based on the

Order types, user can draw

the reports and analyse the

same

BBP_C

O_BP 6.3.5.24

Standard

003/005 Material used in

cleaning batches

should be treated

as a direct cost

rather than

overheads to the

products in the

system.

These materials should form

part BOM to include in direct

cost

BBP_C

O_BP 6.3.5.17

Standard

003/006 Solvent recovery This bi-product will be BBP_C Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

batches should not

absorb overheads,

coz it is not a

production.

identified as no cost relevancy O_BP 6.4.4.1


structure for

purchased,

produced and sub

contracted material

Coding structure completed

properly

BBP_C

O_MD 5.1.10.6

Standard


Products details

should be

available.







BBP_S

D_MD5.

0

Standard


Stocks. History

should be carried

forward in case of

interlocation


with the first

production date to

carry the ageing.



plant specific batch number is

getting activated, at each plant

level new Batch is getting

generated. Hence custom

developed report need to be

generated

BBP_C

O_BP 6.3.5.4

ABAP

Developm

ent


failed batches



BBP_C

O_BP

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

where there is no


taken as an

abnormal loss.










represents more variances. In

some cases, without reporting

the yield process will be

closed and variances will be

reported to that process order.

6.3.5.18

003/011 Reprocess batch

details with

material loss and

overheads incurred

in reprocessing.

Separate order type is being

used for re-process of the

materials. Based on the

process order, user can arrive

the cost of re-processing i.e.

material consumed and

activity types used.

BBP_C

O_BP 6.3.5.20

Standard

003/012 Report on capacity

Utilization and idle

capacity.

User need to identify the

capacity, part of the planning

activity. The same need to be

maintained, in the system part

of the CO planning. The

BBP_C

O_BP 6.3.5.19

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

actual values will be posted by

the system based on the

confirmation of Process

orders. The actual values can

be seen against the cost

center. User can seen the

actual value and planned

value against a cost center

003/013 TRT hrs utilized in

each production

cost centre for own

production and

third party

production and for

each product.

Separate order Type are being

created to track the own

production and job-work

production. Based on order

types data will be accumulated

and provided the information,

through summarization reports

BBP_P

P-

PI_BP0

3

Standard


material and

overhead cost

component break

up of the material

at every stage of

production for each

product.

As per the BOM and Recipe

standard cost will be updated

in the Material Master. It is a

GAP in the system and not

feasible to develop the report.

BBP_C

O_BP 6.3.5.21

GAP


batch wise, product

wise. (including

Process Order wise variances

can be seen and the data can

be summarized at Product

BBP_C

O_BP 6.3.5.22

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

2nd crop) and loss

thereof

level.

In case of 2nd Crop process

order the same need to be

settled to the main process

order to arrive the total

variances of the order.


slow moving

stocks.






MC50)

BBP_C

O_BP 6.3.5.2

Standard


System for

Classification –

own inventory, job

work in inventory,

job work out

inventory, usable

inventory, rejected

inventory.




BBP_C

O_BP 6.3.5.5

Standard

003/018 Interlocation


and loss in transit

treatment in the

Prepare GRN for full quantity,

in same GRN maintain loss

stock as Blocked stock.

BBP_C

O_BP 6.3.5.6

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

system.


interlocation

transfer to be

loaded on

inventory.

Can be achieved by

maintaining price indicator V in

material master of receiving

plant

BBP_C

O_BP 6.3.5.8

Standard


for write off of F.G.

and accounting

treatment thereof.

Goods can be written by way

issuing the same to Cost

Center or posting the physical

inventory difference. System

will post the accounting

document automatically

BBP_C

O_BP 6.3.5.10

Standard

003/021 F.G. valuation

should consist of

following cost

components ie

Raw Material,

Direst Cost,

Power/Fuel,

Manufacturing

Ohds

This can be achieved through

product cost estimate

BBP_C

O_BP 6.3.5.21

Standard

003/022 Controls-

-There should not

be any difference

in F.G. valuation

between MM






BBP_C

O_BP 6.3.5.14

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

Module & FI

Module.

- No Manual

postings should be

allowed in FG

related Automatic

GL Accounts ie

Stock of F.G.,

Change in

Inventory – F.G.,

Cost of Goods

Sold

- No Authorisation

to anybody for


valuation of F.G.-

ie MR21, MR22.


system.



accounts

Valuation of recovered material

004/001 System for batch

wise recoveries of

solvents/ crude/

spent/ mother

liquor needs to be

in place.








order (i.e. batch)

BBP_C

O_BP 6.3.5.15

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

004/002 Accurate

information on

material content

and usage of the

recovered material

needs to be

captured.

Based on the inspection plan

and testing of the materials,

the results can be recorded

into the system. Based on

which user, has to do the

analysis and take the decision

on its usage

BBP_C

O_BP 6.3.5.15

Standard


Stocks. History

should be carried

forward in case of

inter-location


with the first MRT

date to carry the

ageing.








generated

BBP_C

O_BP 6.3.5.4

ABAP

Developm

ent


slow moving

stocks.






MC50)

BBP_C

O_BP 6.3.5.2

Standard

004/005 There needs to be

a validation for

posting recoveries

only after updation

Since Costing BOM is

maintained recoveries will be

updated with standard cost

BBP_C

O_BP 6.3.5.25

ABAP

Developm

ent


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

of rates.

004/006 Bill Of Materials

should be accurate

to capture correct

% of Solvents

recovered at

various stages of

recipe.

Production department should

give correct inputs for BOM

BBP_C

O_BP 6.3.5.12

Standard

Valuation of work in progress

005/001 Unauthorized PTN/

PTNI should be

valued at cost of

production.

System will valuate the

materials, based on the Goods

receipt and as per the price in

the material master based on

the price control

BBP_C

O_BP6.

3.5.45

Standard


failed batches

where there is no


taken as an

abnormal loss.












represents more variances.

BBP_C

O_BP 6.3.5.18

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status


material and

overhead cost

component break

up of the material

at every stage of

production.

Planed costs can be seen cost

component structure wise



plant level. Actuals are



activities

BBP_C

O_BP 6.3.5.21

GAP

005/004 Material Mix –

Local & Imported

for purchase,

consumption and

stocks.

If the Material is subject to

split valuation it is possible to

get the details of consumption

split valuation type wise

BBP_C

O_MD 5.1.10.6

Standard

005/005 Controls-

-There should not

be any difference

in S.F.G. valuation

between MM

Module & FI

Module.

- No Manual

postings should be

allowed in S.F.G.

related Automatic

GL Accounts ie

Stock of S.F.G.,







system.



accounts.

BBP_C

O_BP 6.3.5.14

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

Change in

Inventory – S.F.G.,

- No Authorization

to anybody for


valuation of S.F.G.-

ie MR21, MR22.

Valuation of Traded goods


be valued as soon

as the GRN is

entered in the

system.





post the value to


Accounts

BBP_C

O_MD 5.1.10.1

to

5.1.10.6

Standard


capture expenses

incidental to

purchase to form

part of landed cost

Enter the delivery cost

conditions in PO to capture

the cost. Unplanned cost can

be entered at the time of IR

preparation provided stock is

available

BBP_C

O_MD 5.1.10.1

Standard


structure for

purchased,

produced and sub

contracted

Material types are being

identified, based on the

material usage. Split Valuation

also activated based on the

source of supply

BBP_C

O_MD 5.1.10.6

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

material.


Stocks. History

should be carried

forward in case of

interlocation


with the first GRN

date to carry the

ageing.








generated

BBP_C

O_BP 6.3.5.4

ABAP

Developm

ent


slow moving

stocks.






MC50)

BBP_C

O_BP 6.3.5.2

Standard

006/006 Inventory Holding

Period Average

Based on the specified

formula, the report need to

calculate the raw material

stock on hand, in terms of

sales

BBP_C

O_BP 6.3.5.26

ABAP

Developm

ent

006/007 Break up of landed

cost of traded

goods ie basic

price & other add

up cost

Details are available in the

Purchase order. If need to be

printed in a specified form,

need to developed

BBP_C

O_BP 6.3.5.18

ABAP

Developm

ent


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

components


be any difference

in Traded goods

valuation between

MM Module & FI

Module.

- No Manual

postings should be

allowed in Traded

goods related

Automatic GL

Accounts ie Stock

of Traded goods ,

Change in

Inventory – Traded

goods , Cost of

Goods Sold

- No Authorization

to anybody for


valuation of Traded

goods - ie MR21,

MR22







system. MR21 will not be

allowed for automatically

posting GL accounts

BBP_C

O_BP 6.3.5.14

Standard

Valuation and consumption cost of subcontract material


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status


be valued as soon

as the GRN is

entered in the

system





post the value to


Accounts.

BBP_C

O_MD 5.1.10.1

to

5.1.10.6

Standard

007/002 Actual material

cost of the

processed product

should be net of bi

product cost

This can be achieved by

defining the costing BOM for

bi-product.

BBP_C

O_BP 6.3.5.27

Standard

007/003 Actual cost of

second crop

production has to

be accounted by

valuing the mother

liquor recovered at

job workers place

SAP will post Goods Receipt

for the recovered materials,

based on the BOM

components.

BBP_C

O_BP 6.3.5.27

Standard

007/004 Stock of recovered

solvent and mother

liquor lying at job

workers place

should be

accounted and

included in our

Valuation will be associated

with Sending plant inventory

valuation. Valuation will be

automatically updated by the

system

BBP_C

O_BP 6.3.5.27

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

stock


structure for

purchased,

produced and sub

contracted material

Based on the Material Type

and Split valuation, system will

provide the necessary break.

BBP_C

O_MD 5.1.10.6

Standard


Stocks. History

should be carried

forward in case of

interlocation


with the first

production date to

carry the ageing.








generated

BBP_C

O_BP 6.3.5.4

ABAP

Developm

ent

007/007 Proper Mapping of

inter location job

work cycle within a

company code.

Sending plant will follow the

Sub-contracting process, as if

the material sent to external

vendor. The receiving plant

follows the Job work in

process, as if the material

received from the external

customer. The material codes

used in the job work in

process are non-valuated

materials. There is no relation

BBP_C

O_BP 6.3.5.30

GAP


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

between the process. Both

will be operating

independently.

007/008 Determination of

job work charges in

case on inter

location job work.

Job work charges are

maintained in the Sub-

contracting PO and Sales

order

BBP_C

O_BP 6.3.5.30

Standard

007/009 Financial impact of

inter location job

work

Necessary receivables and

payables are being posted in

the system and the same

need to be adjusted

BBP_C

O_BP 6.3.5.30

Standard


slow moving

stocks.






MC50)

BBP_C

O_BP 6.3.5.2

Standard


material and

overhead cost

component break

up of the material

at every stage of

production

. Planed costs can be seen

cost component structure wise



plant level. Actuals are



activities

BBP_C

O_BP 6.3.5.21

GAP

007/012 Material Mix – Split valuation is active for BBP_C Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

Local & Imported

for purchase,

consumption and

stocks.

local and imported, based on

which separate GL

O_MD 5.1.10.6

007/013 Material Usage &

Inventory Control

System need to provide the

information Raw material Vs.

Finished Goods, based on the

BOM maintained in the system

BBP_C

O_BP 6.3.5.31

ABAP

Developm

ent


batch wise, product

wise. (including 2nd

crop) and loss

thereof

Process Order will be created

for each batch and yield will

be recorded for each process

order wise. Even for 2nd crop,

another process order will be

created and analysis can be

carried out

BBP_C

O_BP 6.3.5.22

Standard

007/015 Transportation and

other expenses to

be loaded on

subcontract

material.

Necessary Conditions need to

be maintained in the sub-

contracting purchase order. If

the manufactured material’s

price control is V, the

transportation cost will be

added to the material value.

BBP_C

O_BP 6.3.5.30

Standard

Valuation and consumption cost of Engineering Material


be valued as soon

as the GRN is




BBP_C

O_MD 5.1.10.1

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

entered in the

system.


post the value to


Accounts

to

5.1.10.6


capture expenses

incidental to

purchase to form

part of landed cost.

Enter the delivery cost

conditions in PO to capture

the cost. Unplanned cost can

be entered at the time of IR

preparation provided stock is

available

BBP_C

O_MD 5.1.10.1

Standard

008/003 Harmonization in

coding structure

and categorization

of material

Materials are being classified

based on the Material Types

and Split Valuation. This will

helps the users to identify the

materials and post the values

to Financial accounting.

BBP_C

O_MD 5.1.10.6

Standard


inventory


material, packing

materials, lab

chemicals,

intermediates,

finished goods, bi

product, fuel items

and engineering

System will recognize the

materials with material type

code

BBP_C

O_MD 5.1.10.6

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

items.


slow moving

stocks.






MC50)

BBP_C

O_BP 6.3.5.2

Standard


be any difference

in engineering

items valuation

between MM

Module & FI

Module.

- No Manual

postings should be

allowed in

engineering items

related Automatic

GL Accounts ie

Stock of

engineering items ,

engineering items

consumed.







system.



accounts

BBP_C

O_MD 5.1.10.6

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

- No Authorization

to anybody for


valuation of

engineering items -

ie MR21, MR22.

Primary and Secondary allocation of expenses

009/001 Robust System to

ensure proper cost

centre accounting.

Financial Accounting has been

integrated with Controlling.

Expenses GL Accounts are

being identified as Cost

Elements. Each department

has been identified as the cost

center. When ever user

posting a transaction, system

looks for a cost object, i.e.

Cost Center. So that data will

automatically flow to CO.

BBP_C

O_BP 6.3.2

Standard

009/002 Accurate and

better keys for

apportioning of

expenses.

SAP is having the Activity

Types and Statistical Key

figures, to use as keys for

apportionment of expenses.

BBP_C

O_BP 6.3.2.2

Standard

009/003 When a processed

material is issued

to cost centre, it

should not take the

Inventory is being valued

based on the Price Control.

The price control will be S for

the Manufactured materials.

BBP_C

O_BP 6.3.5.32

GAP


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

overhead part of it. The Standard Price will be

inclusive of Material price and

overheads. It is not possible to

isolate the overhead part.

009/004 System to capture

expenses on

process

development and

R&D

Need to be created these

departments as Cost Centers.

All relevant expenses can be

posted to the respective cost

centers. Based on the cost

centers a report can be drawn

BBP_C

O_BP 6.5.5.33

Standard

009/005 Period Closure

discipline needs to

be there

Part of the CO Processes,

user need follow the

necessary closing steps to

complete the periodic process

BBP_C

O_BP 6.3.5.34

Standard

009/006 Effect and result of

CSA.

Necessary allocation cycles

need to be created to transfer

the service cost center costs

to production cost center

BBP_C

O_BP 6.3.5.35

Standard

009/007 Overhead

Absorption and idle

time loss.

Based on the Activity

confirmation, system will

absorb the overhead. User

can arrive the idle time based

on the planned capacity and

actual time confirmed

BBP_C

O_BP 6.3.2.9

Standard

009008 Variance

Reporting.

Variances can be calculated in

Product cost controlling,

BBP_C

O_BP

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

based on planed cost Vs.

actual postings. The details

can be drawn each process

order wise.

6.3.2.15

.3

009/009 Proper

Provisioning of

expenses and

liabilities.

Part of the period reporting, it

is required to make necessary

provisions, in Financial

accounting. Based on the

provisions made in FI the

expenses will be available in

CO for reporting

BBP_C

O_BP 6.3.5.36

Standard

009/010 Cost Centre wise

payroll and

reimbursement

accounting.

Payroll details are being

maintained in the external

system. Payroll details will be

loaded into SAP Cost Center

wise, through an interface

program.

BBP_C

O_BP 6.3.5.37

Standard

009/011 Samples should

form part of cost of

sales.

These can be form part of

billing from Sales and

Distribution module

BBP_C

O_BP 6.3.5.38

Standard

009/012 Sales budgeting

product wise. (Qty

& Rate)

Sales budget can be

maintained part of the CO-PA.

BBP_C

O-PA

5.0

Standard

Product wise Profitability & FICO Reconciliation

010/001 Robust System to

ensure proper cost

Financial Accounting has been

integrated with Controlling.

BBP_C

O_BP

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

centre accounting. Expenses GL Accounts are

being identified as Cost

Elements. Each department

has been identified as the cost

center. When ever user

posting a transaction, system

looks for a cost object, i.e.

Cost Center. So that data will

automatically flow to CO.

6.3.2

010/002 Capacity utilization

and idle time cost.

Based on the Activity

confirmation, system will

absorb the overhead. User

can arrive the idle time based

on the planned capacity and

actual time confirmed. Idle

time need to calculated and

posted based on the

requirements. Other wise, can

be identified through an

activity type and confirmed

through process order to

capture the Idle time.

BBP_C

O_BP 6.3.5.19

Standard

010/003 Proper estimation

of Standard

overheads to be

derived.

Overheads are estimated with

help of historical data and the

same will be compared with

actual

BBP_C

O_BP 6.3.2.3

&

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

6.3.2.4

010/004 Manufactured

products sold

through depots,

such transactions

should be properly

mapped in to

derive the location

wise profitability

Area wise sales reports are

possible in COPA

BBP_C

O-

PA1.0

Standard

010/005 Job Work In

profitability.

It is possible in COPA reports BBP_C

O-

PA1.0

Standard

010/006 Reprocessing cost

incurred on failed

or rejected batches

Reprocessing is being

carriedout through another

Batch type. Based on which

necessary cost analysis can

be carriedout

BBP_C

O_BP 6.3.5.39

010/007 Proper mapping of

expenses

incidental to sales.

All the relevant expenses are

being posted to the Sales and

Marketing Cost Center.

BBP_C

O_BP 6.3.2.1.

2

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

010/008 Accurate and

better keys for

apportioning of

expenses.

Activity Types, Statistical Key

Figures, Fixed percentage or

Equalant number can be used

for apportionment of

expenses.

BBP_C

O_BP 6.3.2.1.

5.2

Standard

010/009 When a processed

material is issued

to cost centre, it

should not take the

overhead part of it.

Inventory is being valued

based on the Price Control.

The price control will be S for

the Manufactured materials.

The Standard Price will be

inclusive of Material price and

overheads. It is not possible to

isolate the overhead part.

BBP_C

O_BP 6.3.5.32

GAP

010/010 Period Closure

discipline needs to

be there.

Part of the CO Processes,

user need follow the

necessary closing steps to

complete the periodic process

BBP_C

O_BP 6.3.5.34

Standard

010/011 Optimum Product

Mix.

Based on the standard cost

and contribution of the

product, user has to arrive the

Optimum Product Mix

BBP_C

O_BP 6.3.5.40

Standard

010/012 Costing and

Profitability of R&D

Services.

Based on the costs and

revues, generated, a report

can be drawn in CO-PA

BBP_C

O-

PA1.0

Standard

Utility Cost

011/001 Log sheet in Part of the Plant Maintenance BBP_C Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

system relating to

utility to ensure

accuracy of data

module, necessary log sheet

will be maintained for utility

consumption

O_BP 6.3.5.41

011/002 Utility Costing &

efficiency thereof

Utility per unit cost is being

arrived in the respective cost

centers. Based on the

secondary resource usage,

utility cost will be transferred

to product

BBP_C

O_BP 6.3.5.42

Standard

011/003 Cost Centre Wise

Utility Details

Cost and quantities will be

captured utility cost center

wise.

BBP_C

O_BP 6.3.5.42

Standard

011/004 Yield for material

used to produce

utility

Report need to be developed,

as per Arch requirement

BBP_C

O_BP 6.3.5.43

ABAP

Developm

ent

011/005 Purchase of Coal

to be categorized

into purchase and

controlled source

Based on the Purchase order,

the same can be known about

the source of supply. If

required the same can be

maintained in the split

valuation

BBP_C

O_BP 6.3.5.44

Standard

011/006 Consumption of

fuel material with

output and yield

Fuel consumption can be

tracked, by way of issue to

cost center. The yield from the

cost center can be recorded

through Plant Maintenance

BBP_C

O_BP 6.3.5.41

Standard


Business Blue Print




URS Req. No

URS Req. Details

SAP Process BBP

No

Status

measuring points

011/007 Allocation of ETP

cost to the

products using it

Through CO allocation cycles,

the ETP cost center cost can

be transferred to production

cost centers

BBP_C

O_BP 6.3.2.6

Standard

Cost Chart 012/001 Cost Centre should

be opened for

various Production

Cost Centres,

Utility Centres,

Factory Services

Centre, Central

Services Centre

As per the Arch requirements,

the required cost centers can

be defined freely. Each

department / production bloc,

etc., is being identified as cost

center

BBP_C

O_BP 6.3.2

Standard

012/002 Coding of Cost

Centre should

indicate the Plant,

Profit Centre,

Department

As per the Arch requirement,

the Cost Centre condification

has been finalized. The cost

center is having 10 digit length

and Plant and profit center is

part of the code.

BBP_C

O_BP 6.3.2

Standard


Business Blue Print




8 Reporting RequirementURS Rpt No

Report Name BBP No. Reporting Categories

Stdandard/ABAP Development

Valuation and consumption cost of Raw Material/ Packing

Material/ Lab Chemicals

00

1/RE

P-

001

Stock Ledger BBP_CO

_BP6.4

Company Code,

Plant, Storage

Location, Material

Type, Material

Group, Date

Range

Standard T Code

MB5B

00

1/RE

P-

002

Stock Balance and

valuation (WAC)

BBP_CO

_BP6.4

Company Code,

Plant, Material

Type, Material

Group, Date

Range

Standard T Code

MB52

00

1/RE

P-

003

Material Movement

Summary

BBP_CO

_BP6.4

Company Code,

Plant, Storage

Location, Material

Type, Material

Group, Date

Range

Standard T Code

MB51

00

1/RE

P-

004

Plant wise Average

inventory Holding Period

for different Raw Material

types.

BBP_CO

_BP6.4

Company Code,

Plant, Storage

Location, Material

Type, Material

ABAP

Development


Business Blue Print




URS Rpt No



Group, Material

Code

00

1/RE

P-

005

Batch Consumption and

cost centre consumption

break up.

BBP_CO

_BP6.4

Company Code,

Plant, Storage

Location, Material

Type, Material

Group, Date

Range, Cost

Center, Process

order

Standard T Code

MB51

00

1/RE

P-

006

Quantitative details

required as per Sch VI to

the Companies Act as

under:

Opening Stock, Qty

Purchased, Qty

Consumed, Closing Stock.

(Above details required for

Local & Imported Raw

Material separately)

BBP_CO

_BP6.4.5

Company Code,

Plant, Storage

Location,

Valuation Class,

Material Type,

Date Range,

Material Code

Standard T Code

MB5B, MB51

Valuation and consumption cost of Intermediates

002/RE

P-001

Stock Ledger BBP_CO

_BP6.4.5

Company Code,

Plant, Material

Type, Material

Group, Date

Standard T Code

Standard T Code

MB5B


Business Blue Print




URS Rpt No



Range

002/RE

P-002

Stock Balance and

valuation (WAC)

BBP_CO

_BP6.4.5

Company Code,

Plant, Material

Type, Material

Group, Date

Range, Valuation

Class

Standard T Code

MB52

002/RE

P-003

Material Movement

Summary

BBP_CO

_BP6.4.5

Company Code,

Plant, Storage

Location, Material

Type, Material

Group, Date

Range

Standard T Code

MB51

002/RE

P-004

Production Transfer

Note Summary

Company Code,

Plant, Material

Type, Date

Range, Material

Code

PP Development

002/RE

P-005

Material Mix – Local &

Imported.

BBP_CO

_BP6.4.5

BBP_CO

_BP6.4.4

Company Code,

Plant, Material

Type, Material

Group, Date

Range, Material

Code

Standard T Code

MB5B,

COOIS_PI

002/RE Plant wise Average Company Code, ABAP


Business Blue Print




URS Rpt No



P-006 inventory Holding

Period for different

Intermediates Group.

Plant, Material

Type, Material

Group, Date

Range, Material

Development

002/RE

P-007

Monthly and yearly

actual cost Sheet of a

product.

Company Code,

Plant, Product

Code, Date

Range

ABAP

Development

002/RE

P-008


required as per Sch.VI

to the Companies Act

as under:

Opening Stock, Qty

Manufactured /

Purchased, Qty Sold,

Closing Stock.

BBP_CO

_BP6.4.5

Company Code,

Plant, Material

Type, Material

Group, Date

Range, Material,

Valuation Class

Standard T Code

MB5B, MB51

Valuation and consumption cost of Finished Goods

003/RE

P-001

Stock Ledger BBP_CO

_BP6.4.5

Company Code,

Plant, Storage

Location, Material

Type, Material

Group, Date

Range

Standard T Code

MB5B

003/RE Stock Balance and BBP_CO Company Code,

Plant, Material

Standard T Code


Business Blue Print




URS Rpt No



P-002 valuation (WAC) _BP6.4.5 Type, Material

Group, Date

Range, Valuation

Class

MB52

003/RE

P-003

Material Movement

Summary

BBP_CO

_BP6.4.5

Company Code,

Plant, Storage

Location, Material

Type, Material

Group, Date

Range

Standard T Code

MB51

003/RE

P-004

Production Transfer

Note Summary

Company Code,

Plant, Storage

Location, Material

Type, Material

Code, Date

Range

PP ABAP

Development

003/RE

P-005

Material Mix – Local &

Imported.

BBP_CO

_BP6.4.5

Company Code,

Plant, Storage

Location, Material

Type, Material

Group, Date

Range

Standard T Code

MB5B,

COOIS_PI

003/RE

P-006

Plant wise Average

inventory Holding


Company Code,

Plant, Storage

Location, Material

MM ABAP

Development


Business Blue Print




URS Rpt No



Product Segments. Type, Material

Group, Date

Range

003/RE

P-007

Monthly and yearly

actual cost Sheet of a

product.

Company Code,

Plant, Storage

Location, Material

Type, Material

Group, Date

Range

(PP / CO /

FI )ABAP

Development

003/RE

P-008


required as per Sch VI


as under:

Opening Stock, Qty

Maufactured/


Closing Stock.

BBP_CO

_BP6.4.5

Company Code,

Plant, Storage

Location, Material

Type, Material

Group, Date

Range

Standard T Code

MB5B, MB51

Valuation of Recovered Materials

004/RE

P-001

Material Movement

Summary

BBP_CO

_BP6.4.5

Company Code,

Plant, Storage

Location, Material

Type, Material

Group, Date

Range

Standard T Code

MB51

004/RE Stock Ledger BBP_CO Company Code, Standard T Code


Business Blue Print




URS Rpt No



P-002 _BP6.4.5 Plant, Material

Type, Material

Group, Date

Range

MB5B

004/RE

P-003

PTN Summary Company Code,

Plant, Material

Type, Material

Group, Date

Range, Material

Code

PP ABAP

Development

004/RE

P-004

Stock Balance and

valuation (WAC)

BBP_CO

_BP6.4.5

Company Code,

Plant, Material

Type, Material

Group, Date

Range

Standard T Code

MB52

004/RE

P-005


required as under:

Opening Stock, Qty

purchased/ recovered ,

Qty re-used, Closing

Stock.

BBP_CO

_BP6.4.5

Company Code,

Plant, Storage

Location, Material

Type, Material

Group, Date

Range

Standard T Code

MB5B, MB51

Valuation of Work in Progress

005/RE

P-001

Material Movement

Summary

BBP_CO

_BP6.4.5

Company Code,

Plant, Storage

Location, Material

Standard T Code

MB51


Business Blue Print




URS Rpt No



Type, Material

Group, Date

Range

005/RE

P-002

In process stock

details.

BBP_CO

_BP6.4.5

Company Code,

Plant, Storage

Location, Material

Type, Material

Group, Material

Code, Date

Range,

Standard T Code

MB52

Valuation of Traded Goods

006/RE

P-001

Stock Ledger BBP_CO

_BP6.4.5

Company Code,

Plant, Storage

Location, Material

Type, Material

Group, Date

Range

Standard T Code

MB5B

006/RE

P-002

Stock Balance and

valuation (WAC)

BBP_CO

_BP6.4.5

Company Code,

Plant, Material

Type, Material

Group, Date

Range

Standard T Code

MB52

006/RE

P-003

Material Movement

Summary

BBP_CO

_BP6.4.5

Company Code,

Plant, Storage

Location, Material

Standard T Code

MB51


Business Blue Print




URS Rpt No



Type, Material

Group, Date

Range

006/RE

P-004

Plant wise Average

inventory Holding


Product Segments.

Company Code,

Plant, Material

Type, Material

Group, Date

Range

MM ABAP

Development

006/RE

P-005


required as per Sch VI


as under:

Opening Stock, Qty


Closing Stock.

BBP_CO

_BP6.4.5

Company Code,

Plant, Storage

Location, Material

Type, Material

Group, Date

Range

Standard T Code

MB5B, MB51

Valuation and consumption cost of Sub-contract Materials

007/RE

P-001

Stock Ledger Job out

(Subcontract)

BBP_CO

_BP6.4.5

Company Code,

Plant, Vendor,

Material Type,

Material Group,

Date Range

Standard T Code

MB5B

007/RE

P-002

Stock Balance and

valuation (WAC)

BBP_CO

_BP6.4.5

Company Code,

Plant, Material

Type, Material

Group, Date

Standard T Code

MB52


Business Blue Print




URS Rpt No



Range

007/RE

P-003

Material Movement

Summary

BBP_CO

_BP6.4.5

Company Code,

Plant, Storage

Location, Material

Type, Material

Group, Date

Range

Standard T Code

MB51

007/RE

P-004

PTN Summary Company Code,

Plant, Vendor,

Material Type,

Material Group,

Date Range

PP ABAP

Development

Valuation and consumption cost of Engineering Materials

008/RE

P-001

Stock Ledger BBP_CO

_BP6.4.5

Company Code,

Plant, Storage

Location, Material

Type, Material

Group, Date

Range

Standard T Code

MB5B

008/RE

P-002

Stock Balance and

valuation (WAC)

BBP_CO

_BP6.4.5

Company Code,

Plant, Material

Type, Material

Group, Date

Range

Standard T Code

MB52

008/RE Material Movement BBP_CO Company Code, Standard T Code


Business Blue Print




URS Rpt No



P-003 Summary _BP6.4.5 Plant, Storage

Location, Material

Type, Material

Group, Date

Range

MB51

008/RE

P-004


required as under:

Opening Stock, Qty

Purchased, Qty

Consumed, Closing

Stock.

BBP_CO

_BP6.4.5

Company Code,

Plant, Storage

Location, Material

Type, Material

Group, Date

Range

Standard T Code

MB5B, MB51

Primary and Secondary Allocation of Expenses 009/RE

P-001

Cost Head Ledger BBP_CO

_BP6.4.2

Controlling Area,

Cost Center

Standard T Code

KSB1

009/RE

P-002

CSA BBP_CO

_BP6.4.2

Controlling Area,

Cost Center

Standard T Code

KSB1

009/RE

P-003

CSA Reconciliation. BBP_CO

_BP6.4.2

Controlling Area,

Cost Center

Standard T Code

KSB1

009/RE

P-004

GL to Cost Head

Report.

BBP_CO

_BP6.4.2

Controlling Area,

Cost Center

Standard T Code

KSB1

009/RE

P-005

Costing Trial Balance BBP_CO

_BP6.4.2

Controlling Area,

Cost Center

Standard T Code


Business Blue Print




URS Rpt No



KSB1

009/RE

P-006

Plant wise basis of

secondary allocation.

CO Controlling Area,

Cost Center

Standard

009/RE

P-007

Plant wise, production

block wise, absorption

rate (Variable & Fixed)

per every level of

activity.

(MHR,LHR,QCR,Powe

r)

BBP_CO

_BP6.4.2

Controlling Area,

Cost Center

Standard T Code

S_ALR_8701361

5

009/RE

P-008

P& L Reconciliation-

Over/ under absorption

of Overheads &

reasons for that ie

change in level of

activity, change in

planned cost.

BBP_CO

_BP6.4.2

Controlling Area,

Cost Center

Standard T Code

S_ALR_8701361

5


010/RE

P-001

CSA Reconciliation. BBP_CO

_BP6.4.2

Company Code,

Date

Standard T Code

KSB1

010/RE

P-002

Costing Trial Balance BBP_CO

_BP6.4.2

Company Code,

Date

Standard T Code

KSB1


Business Blue Print




URS Rpt No



010/RE

P-003

P& L Reconciliation-

Over/ under absorption

of Overheads &

reasons for that ie

change in level of

activity, change in

planned cost

Company Code,

Date

GAP

010/RE

P-004

Plant wise, Segment

wise, Product family

wise Gross Margin

Report

BBP_CO

_BP6.4

Company Code,

Plant, Product

family, Date

CO-PA

Development

010/RE

P-005

Cost Audit Record Company Code,

Date

GAP

010/RE

P-006

Raw Material Margin

report.

Company Code,

Date, Material

ABAP

Development

010/RE

Q-007

Unit cost of product

should consist of

following cost

components ie Raw

Material, Direst Cost,

Power/Fuel,

Manufacturing Ohds

BBP_CO

_BP6.4.6

Company Code,

Date

Standard T Code

KE24

010/RE

Q-008

Product wise, product

group wise , batch

wise profitability ,

BBP_CO

_BP6.4.6

Company Code,

Date

Standard T Code

KE24


Business Blue Print




URS Rpt No



location wise, business

segment wise, market

wise (local or export),

consignment wise,

customer wise,

therapeutic use wise

profitability.

010/RE

Q-009

Through COPA, real

time- on line Product

wise profitability should

be available in

following format.

Gross Sales

Less: Excise Duty

Less: Sales Tax

Net Sales – Level I

Less:

Discount/Commission

Less: Freight

Outward/Octroi

Net Sales – Level II

Less: Cost of Goods

Sold (R.M. Cost, Direst

Cost, Power/Fuel,

Manufacturing Ohds)

Company Code,

Date

COPA-

Development


Business Blue Print




URS Rpt No



Net Contribution

(Above information

should also be

available for per MT for

relative analysis )

Utility Cost

011/RE

P-001

Maintenance Template

(Utility Template)

BBP_CO

_BP6.4.2

Cost Center,

Date Range

Standard T Code

S_ALR_8701361

3

Cost Chart

012/RE

P-001

Cost Centre Chart BBP_CO

_BP6.4.2

Cost Centers,

Date Range

Standard T Code

KS13

URS Output Number

Out put Name BBP No. Output Categories/Data

Standard/Development

Valuation and consumption cost of Raw Material/ Packing Material/

Lab Chemicals

001/O

UT-001

RM/ PM/ LC is valued

at landed cost.

Company Code,

Plant, Storage

MM ABAP

Development


Business Blue Print




URS Output Number



Location, Valuation

Class, Material

Type, Date Range,

Material Code

001/O

UT-002

Closing Stock qty and

value.

BBP_CO_

BP6.4.5

Company Code,

Plant, Storage

Location, Valuation

Class, Material

Type, Date Range,

Material Code

Standard T

Code

MB5B

Valuation and consumption cost of Intermediates

002/O

UT-001

Intermediate is valued

at cost of production.

BBP_CO_

BP6.4.5

Company Code,

Plant, Material

Type, Material

Group, Date

Range, Material,

Valuation Class

Standard

MB5B

002/O

UT-002


value

BBP_CO_

BP6.4.5

Company Code,

Plant, Material

Type, Material

Group, Date

Range, Material,

Valuation Class

Standard

MB5B

Valuation and consumption cost of Finished Goods

003/O Finished goods are BBP_CO_ Company Code, Standard


Business Blue Print




URS Output Number



UT-001 valued at cost of

production.

BP6.4.5 Plant, Material

Type, Material

Group, Date

Range, Valuation

Class

MB52

003/O

UT-002


value

BBP_CO_

BP6.4.5

Company Code,

Plant, Material

Type, Material

Group, Date

Range, Valuation

Class

Standard

MB52

Valuation of Recovered Materials

004/O

UT-001

Recovered Material is

valued at standard

cost.

BBP_CO_

BP6.4.5

Company Code,

Plant, Material

Type, Material

Group, Date

Range, Material

Code

Standard T

Code

MB5B

004/O

UT-002


value.

BBP_CO_

BP6.4.5

Company Code,

Plant, Material

Type, Material

Group, Date

Range, Material

Code

Standard T

Code

MB52


Business Blue Print




URS Output Number



Valuation of Work in Progress

005/O

UT-001

WIP is valued at

actual material cost

and previous stages

overhead.

BBP_CO_

BP6.4.5

Company Code,

Plant, Storage

Location, Material

Type, Material

Group, Material

Code, Date Range,

Standard T

Code

MB52

005/O

UT-002


value.

BBP_CO_

BP6.4.5

Company Code,

Plant, Storage

Location, Material

Type, Material

Group, Material

Code, Date Range,

Standard T

Code

MB52

Valuation of Traded Goods

006/O

UT-001

Traded goods are

valued at landed cost.

BBP_CO_

BP6.4.5

Company Code,

Plant, Material

Type, Material

Group, Date Range

Standard T

Code

MB52

006/O

UT-002

Closing Stock Qty and

value.

BBP_CO_

BP6.4.5

Company Code,

Plant, Material

Type, Material

Group, Date Range

Standard T

Code

MB5B

Valuation and consumption cost of Sub-contract Materials

007/O Subcontract material BBP_CO_ Company Code, Standard T


Business Blue Print




URS Output Number



UT-001 is valued at cost of

production

BP6.4.5 Plant, Vendor,

Material Type,

Material Group,

Date Range

Code

MB5B

007/O

UT-002


value.

BBP_CO_

BP6.4.5

Company Code,

Plant, Material

Type, Material

Group, Date Range

Standard T

Code

MB5B

Valuation and consumption cost of Engineering Materials

008/O

UT-001

Engineering material

is valued at moving

average method.

BBP_CO_

BP6.4.5

Company Code,

Plant, Storage

Location, Material

Type, Material,

Date Range

Standard T

Code

MB52

Primary and Secondary Allocation of Expenses

009/O

UT-001

CSA BBP_CO_

BP6.4.2

Controlling Area,

Cost Center

Standard T

Code

KSB1

009/O

UT-002

Rate per TRT hrs. BBP_CO_

BP6.4.2

Controlling Area,

Cost Center

Standard T

Code

KSBT


010/O

UT-001

Product wise , product

group wise, batch

BBP_CO_

BP6.4.6

Company Code,

Date Range,

Standard T

Code


Business Blue Print




URS Output Number



wise, segment wise

profitability

Product group,

Segment

KE24

010/O

UT-002

Location wise

Profitability.

BBP_CO_

BP6.4.6

Company Code,

Date Range

Standard T

Code

KE24

Utility Cost

011/O

UT-001

Utility Cost Cost-

centre wise

BBP_CO_

BP6.4.2

Cost Center, Date

Range

Standard T

Code

S_ALR_87013

613

011/O

UT-001

Cost per unit of utility,

Yield and efficiency.

BBP_CO_

BP6.4.2

Cost Center, Date

Range

Standard Code

S_ALR_87013

613

9 Integrations PointsProcess BBP No. FI/PS MM SD PPQM/PM

Cost Element

creation

BBP_CO

_BP5.1.1

2

GL Account is

needed

Material

Master

BBP_CO

_BP5.1.1

2

Costing

views are

extended. In


Business Blue Print




Process BBP No. FI/PS MM SD PPQM/PM

material

master

FI Postings BBP_CO

_BP6.3.2.

17

While posting FI

Entry Cost Object is

necessary.

PP-PI-

Process

Orders

BBP_CO

_BP6.3.2.

17

As a part of

manufacturing

process

materials are

issued to

process order,

confirmations

will be done

and is

technically

completed for

settlements.

PM-

Maintenance

Order

BBP_CO

_BP6.3.2.

17

Maintenance

Orders will be

consuming

materials and

maintenance

activities will be

identified.

Activity prices


Business Blue Print





arrived through

CO process.

Internal order

– Integration

With

Assets/Expe

nses

BBP_CO

_BP6.3.3.

8

When the assets/ are

posted to internal

orders, system will

control the budgets.

Statistical postings

will be made to

capture additional

information

Cost Estimate BBP_CO

_BP6.3.4.

11

Integrated with FI to

arrive actual over

heads

Material

master

prices are

taken.

Master Data of

PP is used to

do cost

estimates

Integration with

projectsBBP_CO

_BP6.3.4.

21

Project System will

settle the expenses

through settlement

structure of CO.

Job work BBP_CO

_BP6.3.4.

21

Job

work

is

make

to

order

scenari


Business Blue Print





o

9.1 CO – FI IntegrationThe operating chart of accounts is being shared by Financial Accounting as well as

Controlling. The general ledger accounts in the chart of account, will be created as cost

elements, based on the requirements of Controlling. Some of the Costs are not relevant for

Controlling module, i.e. profit / loss on sale of assets, foreign exchange gain or loss, etc..

These accounts will not be created as cost elements. Any posting to Cost Element GL

Accounts, system looks for a Cost Center, i.e. Cost Object and data automatically available

for CO for futher use and Allocation.

9.2 CO – Material ManagementThe material master contains the profit center. Based on the material movement, value will

be captured to financial accounting along with profit center as account assignment. So that

profit center wise Balance sheet / Profit and loss account can be drawn.

At the time of goods issue, system looks for a cost object, if the consumption account /

expenses account is a cost element. User has to enter the Cost center if it is possible (i.e. to

cost center). In some of the process, user can not enter the cost center, and the same has

to be defaulted, based on the profit center or valuation area.

Cost of Goods sold will be transferred to CO-PA for profitability analysis at the time of Sale

of the goods.


Business Blue Print




9.3 CO – Sales and Distribution Revenue will be transferred to CO-PA at the time posting the billing document. Along with

revenue, system will also transfer the COGS to CO-PA, to arrive the product contribution.

Profit center is being identified to Sales order, based on the Product is being sold (i.e.

material master).

9.4 CO – Production Process

Cost Centres and Activity Types will be assigned in the PP Resources. Based on

this assignment, the overheads will be absorbed by the product and part of the

Standard Cost Estimate.

Process Order will be recognized as a cost object for posting of the values to CO.

The profit centre will be identified based on the material master (ie. Manufacturing

goods).

9.5 CO – Plant Maintenance

Maintenance activity is being carried out through maintenance order. The

maintenance cost inclusive of Spares consumption, external service charges and

Internal activity cost (labour charges). Based on actual consumption the cost will be

captured into the maintenance order. Based on maintenance activity, the settlement

rule will be maintained and transferred the cost to the respective cost object i.e.

Production cost centre or service cost centre, which will be determined based on the

equipment / functional location.


Business Blue Print




10 Authorization Authorization matrix will be prepared as per the Arch role matrix.


Business Blue Print




History of Change

Date Version Number

Section Reason for Revision


archit_bbp_co_v1_04-06-2012

Documents

cost center746

cost splitting746

cost elements345

cost center395

cost center accounting776

cost center accounting796

cost center planning666

cost centre accounting666