Integrating Value Flows to PCA

Objectives

After completing this lesson, you will be able to:

Analyze the integration of materials management with profit center accounting
Analyze the integration of cost object controlling with profit center accounting
Analyze the integration of sales and distribution with profit center accounting

Materials Management

Image illustrating purchase order scenarios. The top shows an order without account assignment, the bottom shows an order with account assignment. A worker at a desk and a packed box are centered between these scenarios.

The profit center to which data should be posted depends on which materials and Controlling (CO) objects are involved. In a purchase order to the warehouse, the profit center is taken from the material master per purchase order item. The profit center is forwarded to the goods receipt for the purchase order.

Goods Receipt for Purchase Order

Purchase order and goods receipts show material M-109, amount 10,000, and quantity 10 pc for profit center 2222. Expenses and GR/IR entries update financials. Profit center reflects changes.

When you post a purchase order, the system posts the goods usage immediately upon goods receipt if the purchase order has an account assignment. The goods receipt/invoice receipt (GR/IR) account is the clearing account for the goods and invoices received. This gives you the costs of the material consumption in the corresponding profit centers.

The segments are derived from the profit center in the material master for logistics processes also. The profit center characteristic is saved in the material master on the Costing 1 and (General) Plant Data or Storage 2 tabs. To achieve a zero balance setting, the system creates various clearing lines because of document splitting. These clearing lines also contain the partner objects of the accounting characteristics. When a financial accounting (FI) document that originated in materials management is split, the partner information is also included in the expense and material stocks line.

A process flow for a purchase order and invoice receipt. It shows links between MM to FI modules with specified profit center 2222, involving calculations of vendor and GR/IR amounts.

When a goods receipt posting is made, the profit center is always determined indirectly through the preceding document.

If the amount on the invoice is different to the standard price of the material purchased, price differences arise when you post the invoice receipt. These price differences are assigned to the profit center of the material purchased, provided it is a non-assigned purchase order.

If your price difference account is defined as a cost element, the amount is posted to the profit center of the corresponding CO object.

Post a Material Movement to PCA

ExerciseStart Exercise

Cost Object Controlling

Diagram illustrating the flow of machine costs between profit centers through cost centers and production orders, emphasizing internal activity allocation in a business process.

The profit center of the sender account assignment object is credited, and the corresponding profit center of the receiver account assignment object is specified as the partner profit center.

In addition, the receiver’s profit center is charged and the sender’s profit center is recorded as the partner profit center.

All secondary allocations between CO objects are mapped to the assigned profit centers (for example, utilization of cost center activities for a production order).

Cost Object Controlling – Goods Issue

Image showing the value flow process with profit center, material expenses, raw materials, business processes such as consumption and production order, and finance (FI) and cost of production (CO-PC) elements represented.

This example shows the withdrawal of a material from the warehouse for a production order. The profit center of the production order is determined by the materials produced.

In this example, the material master record for the raw materials belongs to the same profit center as the production order from the perspective of PCA.

The raw material account stores the withdrawal of the production order, and maps the stock and consumption postings to the same profit center. The profit center and partner profit center are identical in this case.

Settle a Production Order and Verify the Resulting Postings in PCA

ExerciseStart Exercise

Sales and Distribution

Chart illustrating value flow for Profit Center 1, including finished products (700), cost of goods sold (700), receivables from customers (1000), and revenue (1000), along with business process steps: goods issue and SD/billing document.

The assignment of a profit center for a sales order is passed from the sales order to the delivery note, and then on to the billing document. The change in stock is posted to the profit center upon goods issue.

If account-based profitability analysis (CO-PA) is active in your system, the general ledger account for changes in stock must be defined as a cost element. If CO-PA is not active, you must define this account as a profit and loss (P&L) account.

The profit center is assigned at the item level of the sales order.

The following data is transferred from billing documents and debit and credit memos to PCA:

Revenues
Sales deductions (shipping, rebates, and so on)
Accruals (for example, from rebate agreements)

Note

The figure shows a simplified example of a logistical SD process with the generated profit center postings.

Process a Profit Center Allocation

ExerciseStart Exercise

Summary

Integration with Materials Management (MM) involves profit center assignment from material master and CO objects in purchase orders.
Goods receipt and invoice receipt postings affect profit centers, with price differences assigned to the profit center of the material purchased.
Secondary allocations between CO objects are mapped to assigned profit centers.

Continue to quiz