Introduction
SECTION 1 Construction of the P&L
TO BE UPDATED WITH AFTER SPS PROJECT
Business Financial Consolidation (BFC)
P&L statements and BFC interfaces are produced through
- CO-PA for sales data (by country, partner, etc.)
- CO-PCA for other P/L reporting items
- Material ledger for COGS (split VC / NVC / DEP)
Rule 1
It is not allowed to create a cost center for less than two employees
Rule 2
An employee is assigned to one cost center only
Recommendation: minimize the number of CC allocation
- For Production costs: allocation between organizational CC and another organizational CC
- For non Production costs: allocation from organizational CC to reporting CC
Exception
- Utilities
- Insurance (IAS 19)
- R&I: allocation from CC to WBS
- Intercos: from organizational CC to organizational CC other company
General rule:
- All type of expenses - different than Manufacturing Costs (Indirect/Direct) and R&I - go directly to BFC (at different reporting cost center) and to only 1 BFC heading.
General rule:
- “No pricing” rule: allocations between organizational cost center, within the same legal entity (same GBU normally, but could be also between 2 GBUs) should be done at cost.
General rule:
- Payroll expenses shouldn’t be posted to technical cost center if HR/Payroll system is integrated.
- An employee is assigned to only one cost center
General rule: A minimum level of detail is required for assessment to reporting cost center:
- For gross margin => Cost center reporting at “PIF” Level (see codification below)
- Below gross margin => Cost center reporting at “Division” level (see codification below)
- Below EBIT => Cost center reporting at “Company” level (see codification below)
General rules:
1. For GBU cross charge
- Change the cycle usage: evolution from actual amounts to planned amount
- Objective: anticipate the launch of cycles (from D2 to D-1) and reduce problems in D4
- Create and standard cost center for Cross charge (in order to align to method of CBS)
2. For CBS
- Create a specific Cost Section (160) for SBS invoicing
Technical Cost Center can be used for the following cases:
- Use case 1: to centralize primary costs for corporate needs (e.g.: Insurance, IAS 19…)
- Use case 2: to post costs not directly linked to the organizational structure (e.g.: other non recurring expenses)
- Use case 3: to collect the result of income miscellaneous (e.g.: sales of scrap…)
- Use case 4: if the organization cost is not defined in the Cost Section narrative
Reminder: in all cases, the request has to be approved by the Central Costing Expert after approved the request by GBU.
Statistical key figures usage
Definition: “Statistical key figures” provide information on non-monetary data such as the number of employees, number of machines, capacity usage, market information…and can be used for internal cost allocations.
Recommendation: minimize the usage of SKF or avoid it (if possible)
2 conditions are identified to use the “Statistical key figures”
- Volumes of target CC
- High frequency (e.g.: every month) of update
Working File 3
Overview of Working file 3
All the companies harmonized in Sympa Model after a period of 2-3 months where some adjustment are done;
Controllers should have access to their WF3. If you do not have; please request it
- Each year by the end of October you will be requested to review your allocation keys by RCOM. And this will be part of an Internal Control.
- Request Cycles changes with Costing forms
- Review of the roles and transactions access by the users has been done in January-16.
Expand to see the last version of the cycle model in Gdrive:
Definition
Cost object in Product Cost by Period that collects the periodic actual costs incurred in the production of a material. When a cost collector is used, the product is the main cost object.
Use
Product cost collectors are independent of the production type. This means that costs can be collected on product cost collectors in the following production environments:
- In order-related production (using production orders) to analyze the costs by period rather than by lot;
- In process manufacturing (using process orders) to analyze the costs by period rather than by lot;
- Repetitive manufacturing: product cost collectors are used as cost objects.
Cost collectors are independent of the production type. This means that costs can be collected
CO-Product Costing Object - Structure
KKPHIE - Insert a new Cost Object
KKF8 - Display Product Cost Collector
CS03 - Display Material BOM
CA23 - Display Rate Routing
CO-Product Costing Object - Basic Schema
CO-Product Costing Object – Example – 2/3
CO-Product Costing Object – Example – 3/3
- Splitting structure is used in cost center planning to define which cost elements are considered for calculating which prices of activity types, when a cost center has more than one activity associated to it, and the price is not manually determined (most of the cases in production cost center). Splitting structure links Cost elements (and its amounts) with activities types of a given production cost center.
- During the costing process, actual price calculation of the activity types is run. In other word, activity types are reevaluated with actual prices of the month. The splitting structures provide the reference (actual price) for the reevaluation of activity types. This reference has to be defined for each cost center to do so a splitting structure has to be associated to each cost center.
For example, costs posted in the cost center D232410900 are considered as Variable or fixed and then allocated to the corresponding activity with the splitting structure that is based on the hierarchy XCS-ALL
- It is done at CC level.
- The level of complexity is determined by the different types of activity types used in production CC.
- The right design of the splitting Structure/Activity Types is a preliminary step to have the Cost Component structure as detailed or as simple as we want.
The most common splitting structures are Z1 and Z2. They are based on the Rules - Cost element Group XCS-ALL
The splitting structure can be displayed with OKES - Display splitting structure
- When a production CC is not included in a splitting structure… then the amount is split by the number of Activity types and it is allocated to each of them. Eg: 1000 with 3 act types >> 1000/3
You can check if the cost center is included in a splitting structure with KS03 - Display cost center
In the example the cost center D232410900 is included in the splitting structure Z1
- If there is a posting in a CC in a given cost element linked to a activity type; but there is no posting of that activity type: the system will generate an error in the Product Costing step (activity type revaluation) and the balance of the cost element will remain in the cost center
- If there is posting of an activity type without any posting in the cost elements associated to it: actual price revaluation will bring its price to zero.