# Using the Solutions for Profitability and Sales Accounting

Objectives

After completing this lesson, you will be able to:

• Summarize margin analysis
• Define profit center accounting

## Margin Analysis

### Lesson Overview

In this lesson we will go over the core functions and processes in Profitability and Sales Accounting. The core modules in management accounting that support these business processes are Margin Analysis, which provides insights in the performance of the company per market segment and Profit Center Accounting which gives a more internal view of the profitability per department.

### Business Scenario

The main business your company is involved in is the production and sale of forklifts. Your company just started selling direct through your own web shop in addition to your standard network of distribution partners. As this is a new venture you want to pay extra attention to many key performance indicators related to your web shop, including the effect on the sales of each forklift model on your partner network. The best tool to track and analyze these types of metrics is Margin Analysis.

### Margin Analysis

It‘s important to know what you earn by selling your products. As you already know, Margin Analysis collects all incurring costs and revenues. It analyzes the operating result of a company with an external focus to the market. In this chapter you learn more about how data is processed and analyzed in Margin Analysis.

The interactive figure below shows an example of a contribution margin scheme. In the current period, 100 fork lifts have been sold to customers.​ The report contains the sales revenue less the variable costs.

The resulting contribution can be used to cover fixed costs (such as rent).​ Once the fixed costs are covered, any excess is considered as earnings (operating profit).​

## Profit Center Accounting

### Business Scenario

At the beginning of the year you set performance targets for departments where revenue can be directly attributed. Targets are also set for expenditures. Hitting performance targets is important for department managers and employees as bonus compensation is correlated to achieving them, and of course essential also to management to ensure the business is on track. Cost and revenues per department in SAP S/4HANA are analyzed with profit centers.

### Profit Center Accounting

In SAP S/4HANA, you can use Profit Center Accounting as an additional reporting tool that focuses on certain areas within the company.

## Further Reading

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