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HERO MOTO CORP.

BUSINESS BLUEPRINT DOCUMENT

Financial Management

Controlling

Version: V.01

Date: 9th March 2012

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Document Information

Document Name CO _Business Blueprint_V1.0.doc

Title Financial Management – Controlling

Document Purpose Explain Business Process in Controlling

Key Words

Document Status processing

Contact for Enquiries Reliance FI/CO Team

Document Change Control :

Release Description Created by Date Reviewedby

Date Approvedby

Date

V.01 Controlling FI/CO Team 09/03/2012

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TABLE OF CONTENTS

1. Introduction.................................................................................................................................... .... 42. Requirements/Expectations.............................................................................................................. 43. General Explanations......................................................................................................................... 54. Explanations of Functions and Events.............................................................................................75. Organizational Considerations..........................................................................................................76. Process Diagrams.............................................................................................................................. 87. Changes to Existing Organization processes..................................................................................98. Description of Improvements............................................................................................................99. Solution in SAP...................................................................................................................................910. Description of Functional Deficits................................................................................................ 3711. Approaches to Covering Functional Deficits...............................................................................3712. Integration considerations.............................................................................................................37

13. Reporting Requirements................................................................................................................3814. Authorization Requirements..........................................................................................................3815. File Conversion / Interface Considérations..................................................................................3816. Workflow Requirement.............................................................................................................. ....38

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1. Introduction

Objective of the document

The Controlling business blue print document details the Organization Structure and businessprocess of the following entities to be mapped in SAP.

• Hero Motors Limited 1000

• Hero Marketing Limited 2000

It covers the business requirements gathered during the business requirement study phase withregard to the overheads capture, settlement, allocation and reporting requirements.

2. Requirements/Expectations

A brief / bulleted list of requirements and expectations

The expectation from CO module is to provide state of art information technology solution embeddingbest business practice to accomplish cost and managerial accounting and internal reporting needs of a business enterprise online real time.

Following are the key requirements of the client in this regard –

• The online real time updating of cost and managerial accounting transactions.

• Calculation of Price for Indirect Activity allocation.

• Classification of cost Centers into categories viz MOH, AOH & SOH.

• Plan, budget, Capture, monitor, report for expenses incurred for a specific event, Asset, etc.,

• Budget availability check at

- In combination of cost center and cost element level

- Specific event either it is revenue and capital

• Product costing

- Automation of line wise (BU,CF,Sheeting & Accessories, buyouts) mix and rawmaterial cost & conversion cost calculations for job cost estimates

- Calculation of cost of goods manufactured.

- Costs broken down for each product, and calculate the value added for each step of the production process

• Profitability Analysis and Profit Center

- Segment wise profitability analysis – with Actuals vs. Budgets vs. Prev. Year

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- Capturing of Key Performance Indicators : Actual and Plan Quantity and value of Order Intake & Shipment details for various reporting segments like products,customers, regions, order types

• Profit Center Accounting

- Planning for revenue, cost and relevant balance sheet items at the profit center level

- Overheads planning to be transferred from cost centers to profit centers

- Automatic derivation of profit center in actual transactions

- Allocations from one profit center to other profit centers

- Provision for passing Management entries.

3. General ExplanationsDescribe the business process in detail. This typically does not include any SAP specific terms, itshould relate purely to the business rules. Describe the naming and numbering convention in case of masters and enterprise structure

• The online real time updating of cost and managerial accounting transactions.

The Management Accounting needs a detailed real time updating of data with respect torevenue, cost of goods sold, conversion cost, Consumables cost, Employee cost or anydirect bookings in FI for cost centers, orders, projects etc that forms the basis for costaccounting & reporting

Cost centers should be assigned during transaction posting to track, manage, report andcontrol costs at cost center level.

If wrong object has been selected in FI, the system should facilitate to repost in CO

• Calculation of Price for Indirect Activity allocation.

HERO MOTO CORP requires that the Activity price has to be calculated by the system everymonth based upon the plan hours and plan cost for its manufacturing and maintenance costcenters

•

Classification of cost Centers into categories viz MOH, AOH & SOH.

HERO MOTO CORP requires a functionality to transfer primary and secondary costs fromone cost centre to other controlling objects. After allocation the original cost element datashould be retained in the receiver cost center and Information about the sender and thereceiver be recorded in the Controlling document.

.

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• Plan, budget, Capture, monitor, report for expenses incurred for a specific event,

Asset, etc

HERO MOTO CORP needs a functionality for planning, capturing and to analyze the costs

incurred on specific activities which cannot be attributable to a particular cost center. Thesaid functionality should enable us to settle the expenditure either to various departments or provide for capitalizing as an asset after completion of the activity. In the existing systemKSB Pumps is using a document called AFE to track the capital expenditure incurred for specific purpose. Capital work in progress is being used for the purpose of constrictionactivities. We are capturing all the costs incurred for that purpose, under a separate capitalwork in progress account. Once work is completed expenditure will be capitalized.

• Budgetary Control

HERO MOTO CORP requires automated budget availability check & system to generate anerror message in case of budget overrun at the time of postings for the following

- At cost element level in combination of cost center

- Specific event either it is revenue and capital

• Product costing

The functionality of ‘Product Costing’ is offered by CO sub module ‘Cost Object controlling’.This sub module has been designed to answer the question ‘What costs have been incurredon what objects?’ An object could be a product, a Process order or a sales order.

Variance analysis:

Variance analysis is carried out for actual cost Vs. cost estimated at the time Order release toproduction.

In the new system Client requires the following in this respect

- Automation of line wise (BU, CF, Sheeting & Accessories, buyouts) mix and rawmaterial cost & conversion cost calculations for job cost estimates

- Calculation of cost of goods manufactured.

- Costs broken down for each product, and calculate the value added for each step of the production process.

• Profitability Analysis

Profitability Analysis (CO-PA) enables us to evaluate the profitability of market segments,which can be classified according to products, customers, regions, orders or any combinationof these.

Costing-based Profitability Analysis is the form of profitability analysis that groups costs andrevenues according to value fields and costing-based valuation

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4. Explanations of Functions and Events

Explain what events and processes trigger this process

• Planning will be performed once in a year for cost centers.

• Activity price planning will be done once in a month.

• Posting errors involving assignment to a controlling object, calls for transaction-based

reposting in Controlling.

• Posting errors involving assignment to a wrong internal order, calls for transaction-based

reposting in CO

• Monthly Planning will be done once in a year

• Allocations will be done once in a month.

• Settlement will be done once in a month for Cost Objects

5. Organizational Considerations

Address any issues agreed in the workshop concerning the SAP organizational structure and thisprocess.

• Need to identify the allocation basis for overheads. This has to be identified according to the

nature of the expenses and loaded on to the product. This allocation basis need to be decide

based on expenses

• Cost Center needs to be identified according to the production process and should be

followed with the assignment to the work center

• Activity types need to identify and plan according to the cost centers which offer activities.

• Need to identify the activities for which Internal Order functionality is to be used

• For all the reports mentioned as required the comparative values with last year needs the

compilation offline the system.

• To identify Business segments whether customer, region, application, industry, job etc

• If the identified segments can be captured as fields in Sales Order, then automatically the

same will be assigned to profit centers and hence can be brought in Profitability Analysis.

• If the identified segment cannot be captured as a separate filed in Sales Order, then we need

to assign the same to cost centers and profit centers so that the same data flows intoProfitability Analysis.

• Basis for allocating unallocated cost, assets and liabilities from common profit centre to be

identified.

• Each Co Object, example Cost Centres, Internal Orders, Production orders, maintenance

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Orders has to be assigned to a appropriate profit centre. Whether an CO Object cannot beidentified with a product it has to be assigned to a common profit centre has to be identified.

6. Process Diagrams

Provide all related process maps or diagrams

Product Cost Flow

Profitability Analysis

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Profitability Segments

are created in theOperating Concern

Revenues are flown

from SD module toProfitability Segments

Costs are flown from

Production orders and

Cost centers

Customer wise, segment

wise Profitability reportscan be generated

Revenueflow from

SD

module

Costs flow

from other modules

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7. Changes to Existing Organization processes

Change management issues as appropriate.

• Existing cost centers may be changed in line with organizational units designed for PP

• Period end closing in controlling may be change.

8. Description of Improvements

Describe improvements which will result from implementation of the SAP System. Be sure to includeany impact on business drivers.

• The relevant cost centers costs are updated automatically whenever there is corresponding

postings in FI and upon implementation of cost centre accounting, actual data relating to acost center is available on online real time basis

• Through activity types, the cost of production (cost of goods manufactured) is computedonline real time basis for each of the production order / each of the semi-finished / finishedgoods

• Cost Center Planning enables automatic determination of planned ‘Activity prices’ that are

required for activity allocation. Besides, online comparison of actual and plan costs andidentify the variance will enhance the control over the costs at cost centre level

• Cost center reposting functionality facilitates rectification of errors and to reflect accurate

information processing

• Cost center Distribution and Assessment enables automatic apportionment of costs of one

cost center to different cost centers based on predefined apportionment rule.

• Internal orders are used to plan, collect, and settle the costs of specific/special activities. The

SAP system enables to monitor internal orders throughout their entire life-cycle; from initialcreation, through the planning and posting of all the actual costs, to the final settlement andarchiving

9. Solution in SAP

Describe how this process will be addressed in the product.

Organization Structure

Operating Concern

Represents a part of an organization for which the sales market is structured in a uniform manner. Bysetting off the costs against the revenues, We can calculate an operating profit for the individualmarket segments, which are defined by a combination of classifying characteristics (such as productgroup, customer group, country, or distribution channel). The market segments are called profitabilitysegments

Controlling area assigned to Operating Concern.

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Proposed name for that Operating Concern is HOC– HOC Operating Concern

Operating Concern Settings

Operating Concern HOC

Description HERO OPERATING CONCERN

Currency INR

Fiscal Year Variant V3 (Financial Year + 4 Special Periods)

Along with operating concern currency we will activate company code currency also.Then we can able to see the reports in company code currency and operating concern currency.

Controlling Area

Controlling Area represents a closed system used for cost accounting purposes within an

organization. Controlling Area is representative of a contained cost accounting environment wherecosts and revenues can be managed.

Internal business transactions are portrayed in the controlling area. Primary costs are transferredfrom external accounting and classified according to managerial accounting perspectives. If theprimary costs are direct costs, then they are assigned to cost objects. If they are overhead costs,then they are assigned to cost centers. The system then allocates them using internal allocationtechniques, according to their source.

Both 1000 and 2000 company codes are rolled up to one controlling area since 2000 companycode is subsidiary to 1000 company code. Proposed name for that controlling Area –

HCA controlling area

Controlling Area HCA

Name HERO CO Area

Currency INR


Standard Hierarchy for Cost Centers HC01CCSH

Company CodeA Company Code represents an independent balancing / legal accounting entity for which a

separate Balance sheet and Profit & Loss statement required by law can be drawn.

In financial accounting, business transactions are always entered on the company code level andprocessed further. The costs are also managed on the company code level. By using internalorganizational structures, it is possible to divide this up even further. All company-specificspecifications are made on the company code level.

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Cost Centers(Utilities)

Production Cost Centers

Process Order

Raw MaterialInventory

WIP

Finished goodsInventory

COPA

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Company Code 1000

Name HERO MOTO CORP.

Currency INR


Company Code 2000

Name HERO Marketing

Currency INR


Cost center Hierarchy

Tree Structure contains all the cost centers in a controlling area from controlling standpoint.

The cost center hierarchy will be designed around the internal cost structure. The standard hierarchyattempts to break the company down into the smallest units where costs can be identified/analyzed.

Along the way there can be several nodes in the hierarchy, which are merely groups of other nodesor of cost centers themselves. These nodes allow for built-in reporting at any level. Dividing anorganization into cost centers can accomplish several internal goals:

• Assigning costs to cost centers allows the user to determine where costs are incurred within

the organization.

• If cost planning is done at the cost center level the cost efficiency can be analyzed at the

point where costs are incurred.

We assign a cost center to an end node of the standard hierarchy in the master data maintenance of the cost center, or in the enterprise organization. This ensures that the standard hierarchy containsall the cost centers in that controlling area.

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Operating Concern

HOC

Controlling Area

HCA

Company Codes

1000 & 2000

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Standard Hierarchy Description Standard Hierarchy

HC01 CC Standard Hierarchy HC01CCSH

Versions

Versions are required for collection of plan and actual data for one Controlling Area. Versions enableto carry parallel sets of planning data for the same object. The planning data should be updated inthe version for the revenue element at the Profit Center level in the format of Profit Center/ RevenueElement.

Actual data is always compared against the plan values set in version 0. Typically, version 0corresponds to approve Budget figures for meaningful comparison.

Version Purpose Version Name

Actual Version – 0

Master Data

Cost Elements

Cost Elements is the area of cost accounting where you track and structure the costs incurred duringa 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. There are two types of Cost element 1. Primary and 2.Secondary Cost element are explained below

Primary cost elementsThe primary cost elements are the reflection in Controlling of a financial account, used to assure theinstant reconciliation of the postings. Each primary cost element corresponds to a cost-relevant itemin the chart of accounts. All expense related G/L accounts in FI will get updated in Primary CostElements in CO.

01 Primary costs/cost-reducing revenues11 Revenues12 Sales deduction22 External settlement

Secondary cost elementsSecondary cost elements are accounts created in Controlling only, without any effect in Financial,used to measure the internal flow of values between different cost objects.

Secondary cost elements are used for activity planning, allocations and settlements. These are notrepresented by GL accounts in FI. Based on the type of activity allocations, the secondary costelements are set up.

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31 Order/project results analysis41 Overhead Rates

42 Assessment43 Internal activity allocation.

Cost center

An organizational unit within a controlling area that represents a defined location of cost incurrence.The definition can be based on:

• Functional requirements

• Allocation criteria

• Physical location

• Responsibility for costs

A typical approach could be for an enterprise to define a cost centre for each low-level organizationalunit that has responsibility for controlling costs.

Mainly the cost centers are divided in to five types:

1. Production Cost Centers: These are the work stations in present system. This cost centers will belinked with Activity Types (Machine Hrs, Labors Hrs)

2. Service Cost Centers: These cost centers are service providers for the production (In presentscenario the functional deportments)

3. General Cost centers: These cost centers are the service cost centers but they provide theservices to all the products/product groups/Divisions.

4. Material Cost Centers: These cost centers provide the raw material for production.

5. Administration Cost Center: These cost centers are services for stationeries and other administration expenses.

The divisions can be identified with a cost center category which is a parameter in cost center master

Activity Types

Activity types describe the activity produced by a cost center and are measured in units of time or quantity. It is used to allocate, both directly and indirectly, expenses based upon an amount of outputfor a given cost center.

Typical example of activity types are.

1. Machine Hours2. Labor Hours3. Setup Hours

A cost center can be assigned one, multiple, or no activity types. One particular activity type can beassigned to one or more cost centers.

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Statistical Key Figure

The statistical key figures (SKF) help the user track activity in another manner. Key figures aredesigned to use in reporting analysis and assist in the assessment or distribution of costs in CostCenter Accounting. Key figures are statistical in nature and thus are invisible to the FI environment.

Typical example of Statistical key figures.1. Number Employees2. Occupied Area

Profit Centre

Organization unit in accounting that reflects a management oriented structure of theorganization for the purpose of internal control.

A profit center is a management-oriented organizational unit used for internal controlling purposes.Dividing company into profit centers, allows us to analyze areas of responsibility and to delegateresponsibility to decentralized units, thus treating them as “companies within the company”.

The profit center differs from a cost center in that cost centers merely represent the units in whichcapacity costs arise, whereas the person in charge of the profit center is responsible for its balance of costs and revenues

Integration between Cost Centers and Profit Centers

Cost Centers are assigned to Profit Centers so that all the primary costs from Financial Accountingand all secondary allocations from Cost Center Accounting can be reflected in Profit Center

Accounting. The assignment of a Cost Center also implicitly assigns all the Fixed Assets which

belong to that Cost Center to the Profit Center Internal Order

Internal orders are normally used to plan, collect, and settle the costs of internal jobs and tasks. An internal order is used to monitor parts of the costs, and under certain circumstances, the revenuesof the organization. It works like temporary cost center finally it settle cost to cost objects.

These are created to have detailed information over & above GL code & Cost object can give. Bycreating statistical OR real internal orders through various order types this can be achieved

Real/True internal orders

Real internal orders are created to monitor the costs or revenue and classified by contents. They areused to collect costs and revenues for transferring them to Receivers like Cost Centers, productionorders, projects, assets, GL or any other cost object through settlement

Statistical Internal Orders

Statistical Internal Orders are used for internal purpose only. They are used to record statisticalinformation pertaining to a certain activity, for example number of visitors for a Trade fair.

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Business Processes

Cost Element Accounting

This process takes care of integrating FI GL accounts with CO. Through cost element accounting, anenterprise can get complete information on what costs are incurred within the enterprise.Maintenance of Cost Element accounting of the enterprise for preparation of information relevant tointernal reporting.

1000 and 2000 expects cost accounting records should be updated automatically when thecorresponding financial documents are posted in Financial Accounting to know what costs incurredwithin organization.

Cost and revenue elements (Accounts) describe the origin of costs, revenues. Cost elements aredefined as either primary cost elements or secondary cost elements.

Primary cost and revenue elements in Controlling are created with reference to correspondingexpense or revenue accounts in Financial Accounting. It is a prerequisite to create relevant generalledger 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 andthey do not have any corresponding general ledger accounts in FI.

Cost Element Groups are created to group together the cost elements of similar kind of nature toprocess the cost elements collectively in cost centre planning, assessment etc. These groups also

useful in information system to see the totals group wise.

Cost Centre Accounting

This functionality enables an enterprise to get information on where costs are incurred. It providessupporting data for management decision making to check/control the costs of individual functionalareas (cost centers) and. This requires that all costs be assigned according to their source. However,source-related assignment is especially difficult for overhead costs. Cost Center Accounting lets usanalyze the overhead costs according to where they were incurred within the organization.

1000 and 2000 expects to compare actual operating results (cost / revenue) with the planned cost /revenue and identify the variance that serve as signals to take corrective measures at cost centrelevel, by updating cost centre records automatically on online real time basis when ever

corresponding business transaction takes place.

Cost centers are locations at which costs are incurred or revenues are generated. Cost centers aredesigned based on functional requirements, activities provided and areas of responsibility

In 1000 and 2000, cost centers are created according to the cost centre categories. Some of them

• General

• Quality

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• Maintenance

• Stores

• Procurement

• Maintenance & cleaning

• IT Operations and Admin.

• Financial Planning & Analysis

• Controlling

• Internal Audit

For over head cost controlling, cost centers are of similar type are grouped in to Cost Centre Groups,for instance, Inventory Management, Information Systems, Accounting etc., to process the group of cost centers together in cost centre planning, assessment, information system to generate reports.

Cost Centre Planning

The Planning/Budgeting Module within SAP is used to set organizational goals within the company.

The comparison of actual events with planning can identify variances that serve as navigation signalsto be used in taking corrective measures in the processes. Cost planning is part of overallorganizational planning and the requirement for corporate budgeting, which is distinguished by theplanning of values in specific timeframes independently of the actual values from past periods.

In order to determine the overhead absorption / recovery rate it is imperative to prepare the budgetestimate of expenses that would be part of costs. 1000 and 2000 desires a facility to prepare thebudgets / overhead estimates as planned costs.

The basic goals of cost center’s cost planning are:

• Plan and structure of company’s future operations for specific period in monetary terms

• Monitor efficiency by means of plan/actual comparisons

• Assigning costs to cost centers lets us determine where costs are incurred within the

organization.

• If we plan costs at cost center level, we can check cost efficiency at the point where costs are

incurred

• If we want to assign overhead costs accurately to individual products, services, or market

segments, we need to further allocate the costs to those cost centers directly involved in thecreation of the products or services. From these cost centers we can then use differentmethods to assign the activities and costs to the relevant products, services, and marketsegments. This enables us to valuate semi-finished and finished products in Product CostControlling

Cost Center Planning assists in planning of which cost centers provide which activity at what price.

These planned prices are used to calculate the actual activities value by considering actual quantitiesof activities, carried out at production cost centers.

Cost Centre Budget is used to budget all 1000 and 2000 costs an annual basis, which in turn brokendown in to period wise, to compare budget and actual to control the costs at cost centre level.

At present in 1000 and 2000 there is no planning at the cost center level.

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Cost center planning is divided into the following planning areas:

• Cost elements/activity input

• Primary costs

• Secondary costs

• Revenues

• Activity type planning/price planning

• Statistical key figure planning

Primary and Secondary Cost Planning

The input side of the cost center is affected when the primary and secondary cost values areplanned. The primary and secondary plan costs refer to the costs incurred in producing the planoutput on the cost center.

Activity input enables extra planning detail: We can plan primary and secondary costs bothindependently and dependently of activity.

Activity Type Planning

In activity type planning, we plan the activity produced by a cost center. This represents the quantity-based output of a cost center. During planning We can manually set the price with which the SAPsystem valuates the activity during allocations. We can choose to retain this price or have the systemoverwrite it during plan price calculation. We can also plan the capacity required for providing theactivity type.

Activity Independent and Activity Dependent Cost Planning

Activity-independent cost planning covers both primary and secondary costs, but does not refer to aspecific activity type. The opposite to this is activity-dependent planning.

Activity-dependent planning of primary and secondary costs enables us to plan both fixed andvariable costs. We may require this functionality

Standard costing based on full costs means that the fixed costs are distributed in proportion to theoperating level. This could mean that portions of fixed costs are included in the prices. We can assignplan activity-independent costs to activity types using various rules, for example, using equivalence

numbers or our own splitting rules

Cost Centre Accounting-Actual Postings-Reposting

Errors are unavoidable and may result particularly during initial days of SAP live operations. Thus,there will be occasions 1) where postings are assigned to the wrong controlling object. 2) 1000 and2000 should be able to rectify posting errors related to erroneous assignment to controlling objects.1000 and 2000 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

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posting errors. Posting errors should preferably be corrected in the application component wherethey originate, so that external and internal accounting (FI and CO) is always reconciled.

Posting errors involving assignment to a controlling object (cost centre or internal order) can,however, is corrected using a transaction-based reposting in CO. Two kinds of reposting transactionsare available for 1000 and 2000 to rectify posting errors related to assignment to a controlling object:reposting costs (or revenues), and reposting line items.

The reposting costs (or revenues) transaction is simple transfer of cost (or revenue) from onecontrolling object to another. The reposting does not preserve a direct link between the amounttransferred and the transaction that originally posted the costs (or revenues) to CO.

Alternatively, 1000 and 2000 can repost line items from CO documents. To do this, the COreposting document must reference the original FI document that posted the costs to CO. Thisenables 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 itemreposting, but the full amount of original line item must be reposted.

In 1000 and 2000 does not have such process in their present system.

Cost Centre Accounting-Period-End Closing-Distribution and Assessment

1000 and 2000 anticipate automating the process of allocating primary and secondary costs of somenon-production cost centers to the production cost centers based on predefined apportionment basiswith statistical key figure, periodically (say monthly).

Distribution

Distribution is a method of internal cost allocation that allocates primary costs. The allocation is done

using Distribution Cycles by specifying rules for the settlement of primary costs on a cost center Main features of this process are as below:

• The original cost element is retained in the receiver cost center, &

• Information about the sender and the receiver is documented in the Controlling document.

Assessment

Assessment is a method of internal cost allocation by which the costs of a sender cost center isallocated (transferred) to receiver CO objects (orders, other cost centers, and so on) under anassessment cost element (category 42). The method works according to the keys defined by theuser. It is used when it is unimportant or not possible for the user to know the breakdown of costs thata cost center will receive in an allocation. E.g. allocating general & administrative costs. Further

analysis is available through CCA reporting. Actual Assessment can be done using executiontransaction.

1000 and 2000 should consider sender and receiver relations before allocating the costs: from whichobjects the costs are allocated, which objects costs are allocated to, which costs should be allocated,how the costs are distributed among the receivers.

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Internal Order

Internal Orders - Order Type

An order type has a large amount of control information important to order management. Thisinformation includes a range of default values that are used when you create a new order with thisorder type. You need to assign each order to an order type that transfers certain parameters to theorder.

The order depends on the client, meaning that each order type can be used in all controlling areas.Order types define the purpose of the order and the way it is processed in the system. The order type

may also be used to group together orders with similar characteristics. The order type is valid for anentire client, so one can use an order type in any controlling area

Following order types and No ranges are identified for HERO MOTO CORP.

Order Type Description

HPOT Promotional expenditure

Creation of Internal Orders

Internal orders are normally used to plan, collect, and settle the costs of internal jobs and tasks. Thesystem enables to monitor throughout their entire life-cycle; from initial creation, through the planningand posting of all the actual costs, to the final settlement and archiving.

Internal orders are created with reference to an order type. Each order must be assigned to an order type, which then transfers certain parameters to the order. Order types define the purpose of theorder and the way it is processed in the system. The order type may also be used to group together orders with similar characteristics. The order master data includes organizational assignments suchas company code, business area, and profit center

Internal Order will be created for a Building Project. The Organizational Assignments like theCompany code, Plant, Responsible Cost Center, Controlling Area, Profit Center, etc can be attachedto the Internal Order at the time of its creation itself. As soon as an Order is created, the systemmaintains the status to it. The status determines the nature of business transactions that can beprocessed on the Internal Order. The nature of an Internal Order can also be decided as real or statistical at the time of its creation. A Statistical Order will only get the postings as information and

the order is not eligible for settlement process.

Determine the Plan Costs on the Internal Order

Costs can be planned on the Internal Order cost element wise/GL account wise. To plan these costson the internal order, a plan profile has to be attached to the Order Type of the Internal Order, whichdetermines the planning area and the plan layout.

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The Planned cost data on the internal order can be accessed from the path: Internal Order Change /Display -> Order Number -> Extras -> Cost Analysis. R/3 System displays the report for the internalorder with the break-up of planned costs by cost element. Simultaneously, the information systems

of Internal Order can also be accessed to view the plan data.

Set up Budgets and the Availability Check on the Internal Orders

Budget Profile defined for the order type under which the order was

1. Created2. Release of Order Unlike Cost centers, a Budget can be set up for Internal Orders along with Availability Check. Beforeestablishing the budgets on the order, a budget profile has to be created and assigned to an Order type. The Budget Profile specifies up to what period a budget can be set for an order and alsodetermines whether a budget can be defined on overall values extending to more than one year or annual values. A budget defined on overall values for an order indicates that the budgeted value is

applicable for more than one year.

As per availability control 1000 and 2000 is expecting the warning message issue once budgetconsumption reaches 80%.Once the budget consumed fully ( 100%) system issues error message.these controls assigned to the XXXX budget profile as per this assignment system will give warningmessage once budget consumption reaches 80% and gives error message and stop posting to order once budget consumption reaches 100%. After the we want to process the order, we need to givemore budgets to the order.

This budget profile assign to order type.

Post Actual Costs on the Internal Orders

An Internal Order will get the actual cost and postings whenever an accounting document is having itas an account assignment. In the case of Building Projects, all the costs can be booked to therespective WIP A/c having Internal Order as an assignment for cost collection purposes.

DOCUMENT ENTRY:

R/3 System generates the following documents when any expenditure gets posted.

a. Financial Accounting Documentb. Cost Accounting Documentc. Profit Center Document (since each internal order will have a Profit Center assignment)

Building Projects Costs:

Buildings WIP Account DR 50

Vendor / Cash / Bank Account CR 50The values from the above accounting documents flows into Internal Order and the Profit Center thusupdating the CO with FI.

Total Costs posted with break-up of cost elements on an order can be viewed from Order --> Extras--> Cost Analysis

Internal Orders-Actual Postings-Reposting:

In 1000 and 2000, there will be occasions where postings are assigned to the internal orders. 1000

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and 2000 should also rectify posting errors related to erroneous assignment to incorrect internalorders.

1000 and 2000 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 correctposting errors. Posting errors should preferably be corrected in the application component wherethey occurred, so that external and internal accounting (FI and CO) is always reconciled. Postingerrors involving assignment to a controlling object (cost centre or internal order) can, however, iscorrected using a transaction-based reposting in CO.

Two kinds of reposting transactions are available for 1000 and 2000 to rectify posting errors relatedto assignment to a controlling object: reposting costs (or revenues), and reposting line items.

The reposting costs (or revenues) transaction is simple transfer of cost (or revenue) from onecontrolling object to another. The reposting does not preserve a direct link between the amounttransferred and the transaction that originally posted the costs (or revenues) to CO.

Alternatively, 1000 and 2000 can repost line items from CO documents. To do this, the COreposting document must reference the original FI document that posted the costs to CO. Thisenables to track the movement of cost with in CO, and still preserve the link with the originating FIdocument. In repost line items, facility is provide to enter multiple receiver objects for a line itemreposting, but the full amount of original line item must be reposted.

Settlement of Internal Orders

Internal orders of real nature are the actual cost collectors in Controlling. Therefore, only those orderscan be settled.

Order has to be settled if it has to be closed for business completion. Until the order reaches thisstage, the costs can be booked, revenues and expenses can be posted for the order.

Settlement is a process of allocating the costs of an Order to a set of receivers. During settlement,some or all of the plan or actual costs incurred on the Order are allocated to one or more receivers.The system automatically generates offsetting entries to credit the sender object – Internal Order.The debit postings assigned once to an Internal Order remain in place, even after settlement to areceiver (and can therefore be displayed). The costs settled are updated on the correspondingreceiver object and displayed in reporting.

Settlement of costs booked on the Internal Order can be made to other cost objects like costcenter, G/L account, asset, or another internal order using one settlement cost element.

For this we need to have settlement profile. Settlement Profile is used for to settle the cost from

inter order to receivers. We need to create the settlement profile also.This settlement profileassigned to order type.

Product Cost Controlling

Standard Costing

Deriving Standard Cost Estimate

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• Standard cost estimate is created at the beginning of a fiscal year or a period. It is used to

determine a standard price for materials for the Year / Period.

• The released standard cost estimate is used in FI and is used for valuation of the material

until the next time a standard cost estimate is released.

• All transactions involving products produced in-house in the Logistics module are valuatedusing the results of the standard cost estimate.

• Standard Cost estimate is also used to valuate variances, scrap and work in process.

Standard Cost Components:

Standard Cost of a product includes the following components:

• Material Cost

• Conversion Cost through Activity Price

• Conversion Cost through Overhead Rate (Percentage based / Value based) based on input

materials

• Sub Contracting Cost

•

External Service Cost

As per present scenario only Material Cost and Conversion cost is applicable for valuation of finishedgoods (Standard and Actual).

Standard Material Cost:Standard Material Cost is estimated price of a material for a given period. It can be

• Planned price based on market condition

• Moving Average Price of the date of costing

• Purchase Price based on Material Info Record.

In standard SAP it is recommended that Planned Price should be updated periodically to calculatestandard cost of a material.

Standard Conversion Cost:

Conversion Cost can be captured in two ways:

• Based on actual activity such as actual time utilized, actual man hours worked, actual machine

hours worked, actual power consumed etc.

• Based on Overhead Rate such as Overhead rate for Salary, Spares and Consumables, Other

Cost, Depreciation.

Master Data for Standard Costing estimation

To calculate the material, production, and overhead costs for a material, costing with quantitystructure can access the following master data in other R/3 components:

Component Data accessible for costing purposes

MM Material master records and purchasing info records

PP Bills of material, routings and work centers

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PP-PI Master recipes and resources

CO Cost centers and activity types , business processes

Integration

The material costs for a material are calculated using the BOM and the master records of thematerials in the BOM. The production costs are calculated using the routing, the work centers wherethe respective operations are carried out, the cost centers, and the activity types. We can calculateoverhead using the material costs and the production costs as a base.

In the Production Planning (PP) module, the work center is the organizational entity in which anoperation is carried out. Every work center is linked to a cost center. The cost center is theorganizational entity in the Controlling (CO) component where costs are incurred.

A routing contains the default values for the production of a product. The work center contains suchthings as

• Formulas that access the default values in the routing

• Activity types for which activity prices are planned or determined in Cost Center Accounting

On the basis of the formula in the work center and the default values in the operation, the systemcalculates the anticipated activity. This activity is valuated using the prices in Cost Center Accountingto calculate the planned costs for the operation.

In the routing, We can also assign the material components contained in the bill of material to theindividual operations. This enables us to plan:

• Which material components are provided and at which date

• Which material costs are expected at which date

Activity Rates are calculated for each Product Cost Center after Cost Element Planning and ActivityPlanning

Activity Rate is calculated by dividing total Activity dependent and Activity independent manufacturingcost planned at Cost Center, with Planned Activity Type.

Such total cost for each production cost center is allocated over the number of machine shifts workedtherein during the aforesaid period and thus the cost of operating each machine shift in each cost

center is arrived at. The cost per machine shift is thereafter charged to the quantity of the outputmade per machine shift at the respective cost center.

Every cost estimate We create is based on a costing variant:

Cost Estimate for a Material Requires:

a) Costing Variant : Eg: PPC1

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b) Material

c) Plant

d) Costing Lot Size

In the costing variant, We combine various control parameters and settings for costing. Thesesettings contain information such as the prices that the system will use to cost materials, activitiesand business processes.

The control parameters contained in the costing variant and the settings We have to make aredependent on whether We are creating a material cost estimate or a base object cost estimate.

Each costing variant contains a valuation variant and a costing type.

A costing variant for material cost estimates contains important control parameters for the automatic

determination of the quantity structure and for the update of the prices in the material master.

Costing Type:

Costing Type is the parameter that establishes the technical attributes of a cost estimate.

For a material cost estimate, the costing type controls the following:

• How the cost estimate is used, and which field in the material master is updated with the cost

calculated in the cost estimate (such as the standard price, Moving Average Price)

• Which costs are used as the basis for allocating overhead

• Which valuation view (legal, group, or profit center) is costedwe are using 3 standard SAP Costing types:

01. Standard cost est. (mat.)

06. Order Plan

07. Order Actual

• Valuation variant

a) Determination of prices with which the materials, activity types, processes, subcontracting andexternal activities are valuated

b) Costing sheet ( overhead, overhead key, template)

c) Price factors for inventory costing

Material Costs:

Which Price is taken from the material master record, or which values are taken from the costestimate, in order to calculate the material costs.

To valuate the materials, We can access various prices in the material master record and in thepurchasing data, such as the following:

• Future, current or previous standard price

• Moving average price

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• Tax-based or commercial prices 1, 2 and 3

• Planned prices 1, 2, 3

• Quotation and purchase order prices

Internal Activity Costs

Which price, and which plan/actual version, are taken from Cost Center Accounting to calculate thecosts for internal activities.

• Set the price for each activity type according to policy

• Calculate iteratively the activity price for each activity type

• Calculate the actual costs for each activity type using the actual costs incurred for the cost

center

External Activities

Which price is taken from the purchasing info record, purchase order, or operation to calculate thecosts of external activities

The control key in the routing specifies whether an operation can be processed externally. We cancalculate the costs for externally-processed operations using the following entries:

• The price in the operation of the routing

• The price in the purchasing info record (quotation) or in the purchase order

Overheads

Which costing sheet is used to calculate overhead or to determine a process template to calculateprocess costs

We define valuation variants in Customizing and enter them in the costing variant. We assign thevaluation variant to the costing variant.

Costing Sheet

The costing sheet is used to calculate overhead rates (like Production Supplies, MOH, AOH, andSOH) and it integrates all elements of overhead costing. The calculation of overhead rates either percentage or quantity base. In 1000 and 2000 the method of overhead rate calculation is quantitybase. It consists of the following rows that are processed during the calculation:

Our Cost Sheet name ZPP-PC Baseline Costing Sheet

Date control

The quantity structure date determines how the system selects a valid quantity structure for the costestimate. Based on this date, a BOM and a routing are selected, exploded and costed. The quantitystructure date also determines which additive cost estimate is selected.

The valuation date determines how the system searches for valid data to calculate the followingprices:

• Prices for stock materials from the material master record

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• Activity prices for activity types from cost center planning

• Prices for externally-procured materials from purchasing

• Prices for externally-processed operations from purchasing

Quantity structure control

The quantity structure is created automatically using the following data:

• BOM and routing (production by lot size)

Determination of master data from Logistics (BOM and routing)

Transfer control

Control of transfer of existing cost estimates. A BOM may contain the following types of materials:

• Materials that have already been costed

• Materials already produced or stored in another plant, and costed in that plant

We can use this existing data in costing, and transfer it to other cost estimates. When We create astandard cost estimate, any cost estimate that has already been released is automaticallytransferred, irrespective of whether We use transfer control

Cost component structure

Cost Components are Grouping of cost elements with or without origin groups

Through the cost components that We list in the cost component structure, We specify the following:

• Which costs are included

• Whether the variable costs or the total costs are included

• Whether the cost of goods manufactured or the sales and administration costs are included.

We are using cost component structure Name ZC – cost component structure

Costing Run

We can use the costing run to process mass data. It enables us to cost, mark, and release more thanone material at the same time.

Every processing step involved in costing with quantity structure is performed by the costing run, fromthe same screen.

Process Flow

1. Creating a Cost Estimate

2. Costing Run

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Cost Object Controlling - Make to Stock with Production/Process Order

Cost Object Controlling calculates the costs that incur during a concrete manufacturing situation. Itconsists of preliminary costing, simultaneous costing and period-end closing. Preliminary Costingcalculates the target costs of the order. Simultaneous costing provides an overview over the actual

costs incurred on the order so far and compares them to the target costs. Period-end closing dealswith allocation of overhead costs, reconciliation between Controlling and Financial Accounting,variance calculation and settlement.

The following graphic is an overview of the process

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Processing Throughout a Period

Product costing is closely tied to production. The financial and costing entries automatically resultfrom the daily production transactions entered into the system. The month-end processes arenecessary to complete the financial picture for product costing.

In each period, the following process is followed:

1. Costs are posted to the cost centers.2. Material is issued to the process order.3. Resources (activities) are provided from the production cost center to the order.4. The month-end process is executed for process orders and cost centers.

Posting to Cost Centers

During the period, actual costs are posted to cost centers. The following is a list of activities duringthis process:

• Posting directly identifiable costs to production cost centers

• Posting of indirect costs to service or administrative cost centers

• Allocating from service and administrative cost centers to production cost centers

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Raw Material Is Issued from Inventory to Process/Production Order

From inventory, raw material is issued to the process Order. The system bases the standard quantityof raw materials to be issued on the quantity of finished goods produced by the run schedule and its

bill of material. The raw materials may be manually updated to reflect actual usage.

The raw materials may be issued to the process order in one of the following ways:

• As a manual goods issue

• With back flushing

• Automatically when the first operation is confirmed, if materials are allocated to the operation

Raw material issues to production order will happen once order create and release.Once Order created system will caculate the prelimary cost estimate and on the basis od the confirmationssystem will calculate the actual cost. To make system to calculates prelimary cost and actual cost weneed assign costing variant to order type. For this we need to have below costing variants andvalution variants cretaed in the system as per the requirements.

Activities Are Allocated from the Production Cost Center to Order

The production cost center supplies value-added resources, such as labor and machine time to theorder. These resources are represented by system activities, such as labor hours and machinehours, and each activity has a planned rate. The resources (activities) used to produce the finishedgoods are posted to the process order .The quantity of each activity is multiplied by its plannedactivity rate. Any activities can be added for tracking on a process order like man hours worked,machine hours worked, setup time during batch change, and any other utility related statistics. At thetime of confirmation of production on the order, the actual data for the above parameters must beentered.

Finished/Semi Finished Goods Are Received into Inventory from Order

The produced finished goods are entered as a goods receipt from the process order into inventory.The inventory value is updated with the actual quantity produced, multiplied by its standard cost. Thisgoods receipt automatically posts the financial and material documents.

To make system muliplay with stanadrd cost we need to assign required valution variant to valutionarea that is plant or company code.

Deliver Product to the Customer

Once production of a finished/ semi finished product has been completed and the product has beenreceived into inventory, it can be delivered to a customer or use for internal purpose also. At this time,the cost of sales is posted to the G/L. Since the finished product is valued at standard, the entry tocost of sales is for its standard value. There is no posting to cost-based CO-PA at this time.

Invoice the Customer

In most cases, invoicing only occurs after the finished product has been shipped to the customer. Atthis time, the revenue is posted to the G/L and to CO-PA. The cost of sales has already been postedto the financial module (FI) at the time of delivery, and it is posted to cost-based CO-PA with theinvoice data so that the cost of the product is matched with the revenue.

Month-End Processing

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Apply Overhead from the Manufacturing Overhead Cost Centers to the Order

Overhead is applied to the order,, thereby posting additional costs to the order,. This cost is a

percentage of the direct costs that have already been posted to the order during the period. If thisstep is run many times during the same period, only the overhead difference from the previous run isapplied to the order

Work in Process for the Order

At the time of issue of materials to a process order, the entire amount is expensed out in P & L Account as Material Consumption. At month-end, for closing the books of accounts, we need torealize any Work-in-process out of the material consumption posted, which can be shown asinventory. 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. Separate cost elements,called results analysis (RA) cost elements, track the WIP amounts so that these amounts are notdirectly posted to the process order. The WIP cost elements are then used to make the entry to the

G/L, not directly to the process order. This impact is purely a financial transaction and does not affectthe normal production process or the order balances in a process order.

To make system calculates and posts work in progress we need to have results analysis key definedand assigned to controlling area in the system.

The RA key is a key field in most customizing tables for results analysis. It is used to differentiatedifferent types of results analysis / WIP calculation and to assign them to the orders.

RA Key Text

YG0001 KS WIP Calculation at Actual Costs

Assess Cost Center Variances

Variances result from the over / under absorption of the manufacturing overhead cost centers andover / under utilization of the production cost center’s resources. These variances are assessed toCO-PA at the end of the month, where they can be allocated to products, product lines, customers,geography, or other combinations of dimensions (characteristics) tracked in CO-PA. The assessmenttakes place only in CO, so no posting is made to the G/L.

Calculate Process order Variances (Posted at Settlement)

Variances are calculated on process orders, so that the difference between the standard cost of thefinished product and the actual costs incurred on the process order can be classified and analyzed.The variances calculated determine the reason for the variances, such as a difference in the actualversus planned quantity of materials or resource hours, or a substitution of component materials.Variances are only calculated and stored on a process order when the order’s status indicates that itis DLV or TECO. Variances are posted to the G/L during order settlement. The process order iscredited if the variance is unfavorable (positive balance) and debited if the variance is favorable(negative balance). The posting to the P&L statement is based on the product’s valuation class in thematerial master, which determines the G/L accounts that will be used in the journal entry.

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During settlement, variances are posted to CO-PA at the same time that they are posted to the G/L.We assign variance keys to plants to make system calucaltes variance.

Plant Variance Key

1010 0000012010 000001

2011 000001

Run Settlement of Process Orders

The WIP and variance processes previously described update secondary cost elements, but thesevalues remain in CO. When process order settlement is run at the end of each period, the WIP andvariance values are posted to FI, and the appropriate G/L accounts are updated.

To run the settlement in the month end we need to assign settlement profile to order types.Settingrequired to define settlemnet profile are below.

Profile Text

YGPI00 HC Process Order with CO-PA

Sample Entries

Issue of Material to Production

Material Consumption A/c (P&L) Dr.To Material Inventory A/c

Realization of Work-in-process at period-end

Work-in-process Stock (B/S) A/c Dr.

To Work-in-process stock change A/c (P&L)

Receipt of Finished Goods in Finished Goods Stores

Finished Goods Stock A/c Dr.To Cost of Goods Manufactured A/c

Finished Goods Dispatched to Customer

Cost of Goods Sold A/c Dr.To Finished Goods Stock A/c

Sale of Finished Goods to Customer

Customer A/c Dr.To Sales A/c

Month-end entry for Variance calculation

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Price Variance A/c Dr/Cr Cost of Goods Manufactured A/c Dr./Cr.

Profitability Analysis

The profitability analysis (PA) module within CO provides the means for assigning planned and actualrevenues and costs to a variety of profitability segments, including customers, sales territories, andsales employee. This module provides great flexibility in defining, both the market characteristics thatare of interest to managers, and the related performance measures (e.g., gross margin, contributionmargin, segment margin) that managers use to evaluate market segments.

Identifying the characteristics that determine how profitability should be analyzed, such as customers,customer groups, products, product hierarchies, geographic regions, and so on, is used to configureCO-PA. Additionally, the values that are captured, such as the quantity of a product that is invoiced,the revenue and discounts applied when the product is sold, variances that are captured in theproduction order, and other cost allocations must be identified and created in CO-PA.

CO-PA document is created for each line item in a sales order, for each production order settlement,and for each sender-receiver combination in cost center assessments. The receiver is a profitabilitysegment, which is a unique combination of the values of the characteristics used to measureprofitability

CO-PA integrates with several SAP modules thorough internal interfaces. The most importantintegration points include all primary, profit-related postings and activities from the FI (G/L accountpostings), MM (invoice receipts, purchase orders) and SD (sales orders) application components toprofitability segments.

The following diagram depicts the most important sources of data for CO-PA

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Data Structure

The data structure will organise the costs and revenues onto how it will be displayed or analysed.HOC operating concern will be used in order to determine the structure of profitability segments. Thedata structure is defined by Characteristics and Value Fields as described in the subsequent

narratives.

Characteristics:

The characteristics of the Operating Concern represent objects or market segments that can be usedas a basis for performing evaluations. The characteristics also represent reference objects for allocating costs in Profitability Analysis. This enables source-related cost allocation at the levelresponsible, according to direct costs and contribution margin accounting. The table below displaysthe name and meaning of the characteristic, as well as how it is used in a different application and ineach company code.

Additional to the below mentioned characteristics, there are fixed characteristics existing in everyoperating concern. They are used to transfer organizational structures to the profitability analysis (for

example,. company code, controlling area, plant, sales organization).

Charact. Description

HCA Controlling area

1000 & 2000 Company Code

1010,2010 & 2011 Plant

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HCO1 & HM01 Sales Organization

Division

IS & D Distribution Channel

IND Country

R1 , S1 & A1 Product

Material group

Sales office

Sales group

Customer

Business Area

1010, 2010 Profit Center

Segment

Functional Area

Value Fields:

Value fields are key figures that represent the lines in a report in CO-PA drilldown reporting. Thevalues contained in the fields can be aggregated with reference to the characteristics available or displayed at a lower level.The Value fields can be differentiated according to the following logic:

• By assigning elements from the interface modules (CO-OM, CO-PC, FI, SD) the

corresponding values can be allocated to the value fields.

• With FI and SD, this transfer takes place synchronously when the values are posted to these

modules for the first time, e.g. with a G/L account posting with direct assignment to CO-PA(FI) or a billing document (SD).

• Values from Overhead Cost Controlling (CO-OM) are transferred periodically when the costs

are transferred to cost centers or orders/projects.

The sales costs are transferred from Product Costing CO-PC as material and production costs. Thistakes place automatically when sold products are valuated with their product costs or movingaverage prices.

Value Field Description

ABSMG Sales quantity

AUSFR Outgoing Freight

ERLOS Revenue

Ext. commissionOther discounts

Price variance

Quantity Variance

Usage variance

Other Variance

Stock value

Admin. overhead

Sales overhead

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Raw Material Cost

Packing Material Cost

Machine Setup Cost

Machine Running cost

Labor costProduction Overheads

Material Overheads

Cost of goods Sold

Once we have the required characteristics and value fields then we need to assign them to operatingconcern.

First we need to maintain operating concern

Field name Description User action andvalues

Operating Concern HERO Operating Concern HOC

Operating concern currency Choice of Currency INR

Fiscal year variant Apr.-March, 4 special periods V3

Type of Profit. Analysis costing-based

Once operating concern maintain we need to assign the controlling area to operating concern.

Field Value

Controlling Area HCA

Operating concern HOC

CO-PA captures transaction from the

• Sales and distribution module when invoice is posted

• FI with direct journal entries

• CO from cost center assessments and product cost planning

• PP with settlement of process orders

Product Cost Planning is used to determine the planned cost of goods manufactured for a product. InProfitability Analysis (CO-PA), you can access these material cost estimates to valuate the data inCO-PA. This includes cost estimates both with and without quantity structures.

With this function, we determine which cost estimates from Product Cost Planning should be used tovaluate actual or planning data in CO-PA. You do this by defining costing keys. A costing key is a setof access parameters that are used in valuation to determine which data in Product Cost Planningshould be read

We need to configure costing key to get standard cost of the product into COPA

Field name Description User action and values

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Costing key Current standard cost estimate YG1

10. Description of Functional Deficits

Where appropriate, identify any gaps. This section is important when assessing risk, as well asestimating the need for ABAP (or similar) resources.

None

11. Approaches to Covering Functional Deficits

Documentation of any work-arounds or assumptions that have been made when outlining functionaldeficits.

None

12. Integration considerations

Specify what integration you need with other modules / sub modules

Financial Accounting

• Ensure that GL Account should be created in FI, before creating the primary cost

elements in Controlling

• Need to activate profit center is characteristic in document splitting functionality in New

GL to get online postings in profit center.

• Ensure Asset master contain correct cost center.

Production Planning

• Ensure that PP work centers assigned with correct cost center to get activity cost.

• PP order Types assigned with settlement profile, PA transfer structure and allocation

structure.

Material Management

• Integration with MM and PP is required to successful implement product costing system

• Ensure that costing views in the material master filled with correct profit center and

valuation class

Sales and Distribution

• SD condition types map with COPA value fields to fetch the data into COPA for reporting.

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13. Reporting Requirements

Document the various reports that you would require.

SAP Standard Reports suffice the requirement

14. Authorization Requirements

Document the level of authorizations that you need for each process in the system

• End user

• Core user

• Power user

• Corporate user

15. File Conversion / Interface ConsidérationsDocument file conversion / interface requirements. Where the information is to come from, what datais to be converted manually/automatically and at what point in time. This is critical information that isused later.

None

16. Workflow Requirement

Document workflow requirement in this process including the levels of approval required. Mentionwho will initiate the workflow and who all will be the recipients of the work item.

None

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