Process: Product Costing

Responsibility area: Internal Control Monitor 

Risk

Wrong fixed cost absorption in inventory, plant costing model do not comply with group rules  

Objective

Service Unit Management accounting control plant costing model yearly update

Process description

Costing model is the document which explains the way fixed costs and depreciations are allocated to product costing in order to determine the cost of sales and inventory valuation. FRA are in charge of preparing the costing model based on the budget using the respective template of WP2 or provided by SU MAC (e.g. extract of the cycle structure for PF2).

The instruction notes to complete the template of WP2, under FRA responsibility, are below:

Costing Model - FRA preparation

FRA asks for the validation of the GCCO.

Control description

Service Unit Management Accounting reviews through a checklist, costing models prepared by each Finance responsible assigned (FRA) of his/her zone and the respective update in SAP done by Service Unit Management accounting. SU MAC is making sure that costing model has been reviewed and validated by the GCCO for each plant in the scope of internal control

Scope
WP2 / PF2
Frequency

Due date : January

Control owner

Service Unit Management accounting - Costing user by region

References


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Control evidences

IAC 01.01 Validation of costing model by SU MAC.xlsx

  • Checklist
  • Costing model - Provided by FRA
  • Validation from GCCO - Provided by FRA

Costing Model - FRA preparation  << IAC 01.01. Costing model validation >> OP.013 & OP.028



  Guideline  

 

Download the file IAC 01.01 Costing Model

The check list refers to the template that must be completed by the FRA of each production site - IAC 01.01. Costing model


There is a link between Costing Model file  & IAC 01.01

 

Costing Model file IAC 01.01
Tab 1-Cost centersColumn B
Tab 2a-Activity BudgetColumn C
Tab 2a-Activity HoursColumn D
Tab 2a-Activity CyclesColumn E

 

 



Make sure all production sites (2) in your scope (1) are listed with its contact (3)



Make sure you received all Costing Model file templates in your scope by November D10

Do not hesitate to send reminders in advance or/and plan meetings and calls with each FRA when you feel it is necessary

  
 

Once you receive the file IAC 01.01. Costing model sent by a FRA, you must perform several controls 



READ ME FIRST

  1. Check that all fields highlighted in yellow are completed
  2. Check that you have the approval of the the plant manager & the GCCO to get their approval (3)


 


1-COST CENTERS 

  1. Check that all fields are completed



2A-ACTIVITY BUDGET 

  1. Check that all fields are completed




2B-ACTIVITY HOURS

  1. Check that all fields are completed
  2. Control the calculation of the normal capacity 
    1. Other constraints must be explained : it can only be technical constraints (usually bottlenecks)
    2. Number of hours for planned maintenance should be reasonable
    3. Compare with the previous year 




In case of doubt, do not hesitate to ask the FRA for more details. If the calculation of the normal capacity doesn't follow the standard, you can ask the FRA to change the calculation. If you need help you can contact a process expert.

2C-ACTIVITY CYCLES

  1. Check that all fields are completed
  2. Make sure that it is simple (= significant & rounded figures)


  
 

STEP 1

Once a file is completed you send it to group email for each region  : GBS_Finance_Management_Acc_Bangkok@syensqo.com

                                                                                                                           GBS_Finance_Management_Acc_Curitiba@syensqo.com

                                                                                                                           GBS_Finance_Management_Acc_Lisbon@syensqo.com

They will : 

  • Upload the budget in the system
  • Create the assessment cycle
  • Calculate the standard rates



STEP 2

You can also update the check list for the IAC 01.01

Just update the columns with "Y" if the information is correctly completed or "N" if it is not.



When there are changes in the cost centers structure, you must inform the person in charge

Request the modification of a cost center

  
 I am informed once the standard rates are calculated in the system  
 

You must compare the activity rates calculated in the system with what is in the file sent by the FRA 

In SAP, you must use the transaction KSBT

In the file IAC 01.01, use the tab : 2b-Activity TOTAL 

When the model is too complex, the simulation made in the excel file doesn't work then you have to make further investigation

STEP 1

Open the transaction KSBT 

Enter :

  1. The group of cost centers (usually the plant code)
  2. Version = 0
  3. Enter the fiscal year
  4. From Period 1 to 12

Execute 

 

 

STEP 2

Activity Type Price Report

  1. List of cost centers
  2. Activity types 
  3. Price per hour 

Make sure you selected the activity price in object currency otherwise you must change the layout

 

You can export the file in excel 

 

 

STEP 3

Compare the activity rates with the tab : 2b-Activity TOTAL 

If there are discrepancies, you must make further investigations

 

 

STEP 4


2A-ACTIVITY BUDGET

Compare the budget loaded in the system (you can use the t-code S_ALR_87013611) with the budget sent by the FRA

 

 

 

2B-ACTIVITY HOURS

Compare the hours loaded in the system (you can use the t-code S_ALR_87013611) with the hours sent by the FRA

 

 

2C-ACTIVITY CYCLES

Compare the cycle created in the system (code = PPPPBU => PPPP = plant code) with the t-code KSU9

 

 

 

 

 

STEP 5

Inform the person who calculated the standard in the system if there is a mistake in the system 

 

  
 I inform the requester that the standard rates are in the system  
 

STEP 1

Once the standard rates of a plant are loaded in WP2 and approved you must update the check list 




STEP 2

Once the check list is fully completed for your scope, you must uploaded in the dedicated folder in the IAC controls repository


  

Use transaction ZWFAR600 to extract the cycles for the year that is ending.

Choose the following variant "COSTING MODEL"

Updating the cycles and start date


Cycle should be completed like this:

  • FO01CCCC*: for COPA cycles
  • CHEFCCCC*: for Assessment cycles

Start date, to be completed with the full year that is just ending

And now, transaction can be executed to get the following view


 

Below see the details of this report:

The report is designed in PF2 & WP2 to extract CO cycle master data with standard ALV layout, which is compatible for kinds of cycles, including:

    • COPA Actual assessment cycle

    • COPA Plan assessment cycle (not used in RCS)

    • Cost center Actual Assessment cycle

    • Cost center Plan Assessment cycle

    • Cost center Actual Distribution cycle

    • Cost center Plan Distribution cycle



Column label in report output

As a cycle consists of kinds of information at header / segment level, and in each segment, there are fields for sender / receiver respectively, and even for receiver side, the percentage split can be applied for multi-receiver objects.

So, to facilitate identifying the column nature and improve the report understandability, a prefix is assigned for each column label:

  • ‘[H]’ stands for header level data, for example ‘[H]Cycle’.
  • ‘[S]’ stands for segment general data, for example ‘[S]Segment Name’.
  • ‘[S-S]’ stands for segment sender data, for example ‘[S-S]Sender Cost Center / grp’
  • ‘[S-R]’ stands for segment receiver data, for example ‘[S-R]IECRA’
  • ‘[S-T]’ stands for segment receiver (or sender) multi objects split data, for example ‘[S-T] Factor Value’.

Two options available in output

As a cycle allows for the percentage split in the case of multi receiver objects, it makes difficult to show all information in a single output with good understandability.

With this consideration, 2 output options are designed:

 

  • Standard output

    • Each row represents a unique segment in a cycle, showing cycle header data / segment general data / sender data / receiver data.

    • But multi-object split info is excluded here.

    • Column with ‘[S-T]’ prefix in label is not available in the option.

  • Extended output with multi-object split

    • This layout is recommended ONLY when user needs to check the multi-object split percentage.

    • Column with ‘[S-T]’ prefix in label is feed in the option.

    • All multi-object split info is showed as extra rows, means, all rows showed in Standard layout will be showed here as well exactly, but append some extra rows which are dedicated to show the multi-object split info. In other words, Extended output = Standard output + extra entries for multi-object split info.



Coloring the entries for multi-object split info

  • In Extended output with multi-object split, the extra entries for split info is highlighted in light green color. See below picture for example.
  • PS: Another way to differentiate the extra entries is to use one of below 2 columns:
  • [S-T] Sender / Receiver Indicator. When it is not Null, it’s the extra entries.
  • [S-T] Item Number. When it is not Null, it’s the extra entries.




Tips to know the cycle category

 Below 3 columns can be used to understand the feature of certain cycle.

  • [H]Table, to know it’s cost center or COPA cycle 
    • CCSS -- Cost center cycle
    • CE7Z0xx -- COPA cycle (Z0xx is the operation concern code)
  • [H]Actual/plan indicator, to know it’s Actual or Plan cycle.
    • I --  Actual
    • P --  Plan
  • [H]Type of allocation, to know it’s Assessment or Distribution cycle.
    • U -- Assessment
    • V -- Distribution
    • L -- Indirect activity allocation
    • … etc.



Receiver / Sender multi-objects split

  • In WP1, the percentage split is widely used at receiver side for multi-object case. But in some limited case, a specific amount is given to individual cost elements to restrict the allocation at sender side. For the both cases, in the report output, the information will be showed in the same columns with prefix ‘[S-T]’.  

  • For users, to know the split information is for receiver or sender, column ‘[S-F]Sender / Receiver Indicator’ can answer,

    • when the value is ‘R’, the entry is for receiver factor,

    • when the value is ‘S’, the entry is for sender factor. 



Combine ‘from’ ‘to’ ‘group’ into one field

  • When creating a cycle, to specify sender / receiver, user can input ‘from’ only to show a single object, or input ‘from’ and ‘to’ to show a range, or even use ‘group’ to show a collection list.
  • In order to reduce the column quantity in the report output, the information in ’from’ ‘to’ ‘group’ is combined into one single column.   

‘[H]Cycle’ code start with operation concern

  • When put cycle code as selection criteria, please start with the operation concern code then follow by cycle code, as this is the way SAP store the cycle master data in tables.   
  • As a tip, all below options work


 

When transction ZWFAR600 is executed and you have the list of all cycles, it is time to extract to excel.

1) Go to List → Export → Spreadsheet

This excel document will be the COSTING MODEL of your company.

1) Send through Solvay One the COSTING MODEL extracted in previous step to the FRA/Controller to be used in the review of the cycles for the new year

After the review, I receive from FRA the cycle changes for the new year.

  • With the changes highlighted in the COSTING MODEL
  • Or, changes detailed in the freshdesk

Depending on the type of cycle, I use KSU2, KEU2, KSV2 

STEP 1

Start the transaction using transaction code KSU2

 

Change Actual Assessment Cycle: Initial Screen

 

 

STEP 2

 Enter the cycle code and the starting date

and 


 

If you don't know the Starting Date, do not insert the date, and choose the most recent one.

 

 

STEP 3

 Open the Segment Overview dialog box

Click 

 

 

 

STEP 4

Select the segment to be updated and choose 

Or create a new segment by clicking 

 

 

 

 

 

 

 

 

 

STEP 5

Make the appropriate changes to the segment as required

Please see KSU1 - Create Actual Assessment Cycle to better understand the changes that can be performed.

You can lock a segment, by checking the lock indicator box 


 

 

 

STEP 6

After  the appropriate changes to the segment,  click on , to do a Formal Check.

 

 

If there is any errors , you need to analyse and correct.

Disregard Warnings

STEP 7

After the appropriate changes and the formal check Save .

 

STEP 8

It is also possible to perform mass changes on cycles in terms of dates.

To do so, please contact IS Team by the appropriate tool, requesting the creation of a LSWM and providing the respective list of the cycles to be changed.

Afterwards, IS Team will request to process the batches sessions created for this purpose.

Before starting, make sure you are in the right operating concern with KEBC - Setting Operating concern. List of operating concern : Rules - CO structure

STEP 1

Start the transaction using transaction code KEU2

 

CO-PA Change Actual Assessment: Initial Screen

 

 

STEP 2

 Enter the cycle code and the starting date

and 

 

 

STEP 3

 Open the Segment Overview dialog box

Click 

 

 

 

STEP 4

Select the segment to be updated and choose 


 

 

 

 

 

 

 

Or create a new segment by clicking 

 

STEP 5
Make the appropriate changes to the segment as required and save 

STEP 6

It is also possible to perform mass changes on cycles in terms of dates. 

To do so, please contact IS Team by the appropriate tool, requesting the creation of a LSWM and providing the respective list of the cycles to be changed. 

Afterwards, IS Team will request to process the batches sessions created for this purpose. 

STEP 1

Start the transaction using transaction code KSV2

 

Change Actual Distribution Cycle: Initial Screen

Budget Distribution

For budget distribution allocations insert KSV8.

 

 

STEP 2

  Enter the cycle code and the starting date

and 

If you don't know the Starting Date, do not insert the date, and choose the most recent one.

 

 

STEP 3

 Open the Segment Overview dialog box

Click  

 

 

 

STEP 4

Select the segment to be updated and choose 

Or create a new segment by clicking 

 

 

 

 

 

 

 

 

 

STEP 5

Make the appropriate changes to the segment as required


 

 

 

Please see KSV1 - Create Actual Distribution Cycle  to better understand the changes that can be performed.

 

 

 

 

 

STEP 6


After  the appropriate changes to the segment,  click on  , to do a Formal Check.


 

If there is any errors , you need to analyse and correct.

Disregard Warnings

 

STEP 7

After the appropriate changes and the formal check Save .

 

STEP 8

It is also possible to perform mass changes on cycles in terms of dates. 

To do so, please contact IS Team by the appropriate tool, requesting the creation of a LSWM and providing the respective list of the cycles to be changed. 

Afterwards, IS Team will request to process the batches sessions created for this purpose


 

 I inform FRA/Controller that the cycles are updated in SAP