Management Accounting provides information that management can use to make decisions. It facilitates the coordination, supervision and optimization of all processes within a company. This involves recording both the consumption of production factors and the services provided by an organization.
In S/4HANA Finance, all relevant cost information from Financial Accounting and Management Accounting is available in real-time on line item level in the central table ACDOCA. Costs and revenues are assigned to different CO account assignment objects such as cost centers, projects, or orders. These Financial Accounting accounts are managed in Management Accounting as cost or revenue elements.
You use Cost Center Accounting for controlling purposes in your organization. Cost center accounting takes the costs incurred in a company and allocates them to the actual subareas that caused them.
Product Cost Controlling calculates the costs incurred when a service is provided or a product is manufactured. It enables you to calculate the minimum price at which a product can be profitably marketed.
Profitability Analysis analyzes the profit or loss of an organization according to individual market segments. In Profitability Analysis, costs are assigned to the revenues of each market segment. This gives you a basis for calculating prices, targeting customers, determining conditions, and choosing sales channels, for example.
Overhead costs are costs that cannot be directly assigned to the manufacture of a product, or the provision of a particular service. The purpose of overhead cost controlling is the planning, allocation, control, and monitoring of overhead costs. You assign all overhead costs to the locations at which they were incurred, or to the activities from which they arose.
Cost centers are separate areas within a controlling area at which costs are incurred. You can create cost centers according to various criteria including functional considerations, allocation criteria, activities provided, or according to their physical location and/or management area.
An activity type defines the type of activity that can be provided by a cost center. Activity outputs supplied by one cost center (the sending cost center) to other cost centers, orders, or processes, represent the utilization of resources for this sending cost center. You valuate activities using a price calculated on the basis of certain business or management information.
Internal orders are used to plan, collect, and analyze the costs arising from internal activities.
There are different methods for allocating values and quantities, depending on the type of Management Accounting object. In an enterprise scenario in which only costs are allocated, at period end you can use plan/actual comparisons to analyze costs. When allocating quantities, you can use extended analysis tools at period end, which take operating rate into account.
