Performing Processes in Management Accounting

In this lesson we will look at how values are posted on cost centers and WBS elements as well as how posted costs can be allocated at period end.

During normal business activity, you incur various costs that are charged on your cost centers. These costs are usually indicated in an invoice that a supplier sends for a product or service provided. The invoice for common expenses such as utility bills are posted in FI directly. Below, we'll analyze such a posting.

Let’s have a look at how costs are posted to cost centers. This figure shows a scenario of posting an invoice. Expenses of €100 are posted in Finance using cost center 101## as the controlling account assignment object.

The posting creates an FI document and data is derived in CO: Cost center 101## is charged with costs of €100. Additionally, the corresponding profit center YB702 (derived from the master data assignment on the cost center) is charged.

In this scenario the cost center is debited with a real posting. This means that these costs can be allocated or settled with other CO objects. The profit center is debited with a statistical posting. These values are used only for information purposes and you can't transact on them.

When posting costs in SAP S/4HANA, only one account assignment object is debited with the real posting. The posting can have any number of statistical objects.

After all postings are complete for the fiscal period, management should have a realistic view of where costs are incurred in order to compare against what was planned. To achieve this in the SAP S/4HANA system you use allocation cycles that transfer values you indicate based on rules you configure from sender cost centers to receiver cost centers. This allocation can be done using the original primary cost G/L accounts (which is called a distribution) or you can define secondary cost accounts with which to perform the allocation (which is called an assessment) in order to maintain the integrity of the values from the original posting.

You are already familiar with the example of the canteen cost center: Canteen costs are regularly collected by a canteen cost center and allocated to the detailed cost centers Sales and FI Consulting.

The following graphics show some more examples of an assessment.

An energy cost center collects energy costs incurred. These costs are assessed periodically on a monthly basis to the cost centers FI and Sales Consulting. Both cost centers are being charged with costs in proportion to their office spaces. That means the amount of office space serves as a basis for the allocation. It is maintained for each cost center using a statistical key figure value, which is a master record you can define for such use cases.

A fleet cost center collects vehicle costs incurred. These are also allocated periodically.

The three cost centers that receive the costs are charged based on the amount of cars used in each cost center. In this simplified example, the assessment is based on fixed percentages, which correspond to the number of cars.

Let‘s stick with the second example of assessing vehicle costs. In order to perform an assessment, you need to first create an allocation cycle. An allocation cycle consists of one or more segments, each defining the sender and receiver objects and the rules with which the values flow between them.

In addition to analyzing costs on a departmental level through the use of cost centers, it is often useful to be able to track the costs for projects. Projects are business undertakings that have a specific goal and finite time-lines. In SAP S/4HANA you manage projects using WBS Elements. Though an integral part of the complete project system functionality with a lot of possibilities and complexity, in their simplest form the WBS Element can act as a "bucket" that you fill with costs and revenues though assigning it in the journal entries when posting purchasing, sales, and financial documents.

We will use a trade fair as an example of a project:

A trade fair project is displayed as a work breakdown structure. A WBS shows the required project activities in a hierarchical form. All activities are maintained as WBS elements which can be subdivided.

Example: The activity Rough Planning in the figure above includes Choose Location, Set up structure and Set up project team. All of these WBS elements can carry different data like costs, revenues or a budget (depending on their settings).

• Cost Center Accounting (CO-OM-CCA)

• Master Data in Cost Center Accounting

• Manual Actual Postings
• What is a Work Breakdown Structure?