D45ABC ActivityBasedCosting

D45ABC Activity Based Costing
AC420
R/3 System Release 46C 04/25/2001
D45ABC Activity Based Costing...................................................................................................................................0-1

Copyright....................................................................................................................................................................0-2
The R/3 Integration Model.....................................................................................................................................0-3
Course Prerequisites...............................................................................................................................................0-4
Target Group...........................................................................................................................................................0-5
Course Overview........................................................................................................................................................1-1
Course Goals..........................................................................................................................................................1-2
Course Objectives...................................................................................................................................................1-3
Course Objectives (2).............................................................................................................................................1-4
Contents..................................................................................................................................................................1-5
Course Overview Diagram.....................................................................................................................................1-6
Main Business Scenario.........................................................................................................................................1-7
ABC in SAP R/3.........................................................................................................................................................2-1
ABC in SAP R/3: Unit Objectives.........................................................................................................................2-2
ABC in SAP R/3 : Business Scenario....................................................................................................................2-4
ABC in SAP R/3: Unit Business Scenario (2)........................................................................................................2-5
SAP's Competitive Edge........................................................................................................................................2-6
SAP's Comprehensive Approach to ABC...............................................................................................................2-7
Activity-based Management...................................................................................................................................2-8
Processes................................................................................................................................................................2-9
Process Structures.................................................................................................................................................2-10
Methods of ABC in R/3........................................................................................................................................2-11
Parallel ABC.........................................................................................................................................................2-12
Analytic ABC with Delta versions.......................................................................................................................2-13
Operational ABC..................................................................................................................................................2-14
ABC Supports Different Industries......................................................................................................................2-15
Overview of Allocation Techniques.....................................................................................................................2-16
Resource Consumption by Business Processes....................................................................................................2-17
Resource Allocation with Structured Processes...................................................................................................2-18
Assignment of Statistical Key Figures to LIS......................................................................................................2-19
Cost Drivers..........................................................................................................................................................2-20
Origin of Process Driver Quantities.....................................................................................................................2-21
Product Costing with Process Templates..............................................................................................................2-22
Product Costing: Processes in Routings...............................................................................................................2-23
Process Assignment to Profitability Segments (CO-PA)......................................................................................2-24
Process Template..................................................................................................................................................2-25
Reusing Process Templates..................................................................................................................................2-26
Integrated Corporate Planning in a Manufacturing Environment........................................................................2-27

Integrated Corporate Planning in a Service Environment....................................................................................2-28
ABC Reporting.....................................................................................................................................................2-29
Summary..............................................................................................................................................................2-30
Summary..............................................................................................................................................................2-31
Basic data and structures............................................................................................................................................3-1
Basic Data and Structures: Unit Objectives...........................................................................................................3-2
Basic data and structures: Business Scenario.........................................................................................................3-4
Business Processes.................................................................................................................................................3-5
Standard Hierarchy and Process Groups................................................................................................................3-6
Structured Process For Resource Cost Assignment...............................................................................................3-7
Template for Cost Object: Example......................................................................................................................3-8
Origin of Cost Driver Quantities............................................................................................................................3-9
Processes in Routings...........................................................................................................................................3-10
Identiyfing Process Templates for Costing...........................................................................................................3-11
Template Determination for Profitability Segments.............................................................................................3-12
Summary..............................................................................................................................................................3-13
Basic Data and Structures Exercises................................................................................................................3-14
Basic Data and Structures Solutions.................................................................................................................3-18
Planning: Contents.....................................................................................................................................................4-1
Planning..................................................................................................................................................................4-2
Planning: Unit Objectives......................................................................................................................................4-3
Unit Objectives (2).................................................................................................................................................4-4
Planning: Unit Business Scenario..........................................................................................................................4-6
Integrated Corporate Planning in a Manufacturing Environment..........................................................................4-7
Transfer of planned process consumption..............................................................................................................4-8
Integrated Corporate Planning in a Service Environment......................................................................................4-9
Planning of Process Quantity Inputs....................................................................................................................4-10
Planning with Structured Processes......................................................................................................................4-11
Planning Statistical Key Figures..........................................................................................................................4-12
Planning of Process Outputs.................................................................................................................................4-13
Plan Process Output Reconciliation.....................................................................................................................4-14
Price Calculation..................................................................................................................................................4-15
Product Costing with Templates...........................................................................................................................4-16
Identifying Templates for Product Cost Planning................................................................................................4-17
Template for Cost Object Controlling (1)............................................................................................................4-18

Product Costing with process consumption through processes in routings.........................................................4-21
Process Consumption by Profitability Segments.................................................................................................4-22
Identifying Process Templates for Profitability Segments...................................................................................4-23
Relevant Dimensions for Process Assignments...................................................................................................4-24
Plan-Assessment of Business Processes to CO-PA..............................................................................................4-25
Planning: Unit Summary......................................................................................................................................4-26
Summary (2).........................................................................................................................................................4-27
Planning Exercises...........................................................................................................................................4-28
Planning Solutions............................................................................................................................................4-33
Actual postings...........................................................................................................................................................5-1
Actual Postings: Unit Objectives...........................................................................................................................5-2
Unit Objectives (2).................................................................................................................................................5-3
Actual postings: Unit Business Scenario................................................................................................................5-5
Resource Quantity Allocation Techniques (1)........................................................................................................5-6
Resource Quantity Allocation Techniques (2)........................................................................................................5-7
Resource Allocation with Structured Processes.....................................................................................................5-8
Transfer of Statistical Key Figures from LIS.........................................................................................................5-9
Cost Object Controlling with Templates..............................................................................................................5-10
Identifying Templates for Cost Object Controlling..............................................................................................5-11
Cost Object Controlling -Processes in Routings..................................................................................................5-16
Tracing Business Process Quantities to Profitability Segments...........................................................................5-17
Characteristic Relevance for Template Selection.................................................................................................5-18
Relevant Dimensions for Process Assignments...................................................................................................5-19
Allocation of Processes to CO-PA.......................................................................................................................5-20
Variance Calculation.............................................................................................................................................5-21
Actual Postings: Unit Summary...........................................................................................................................5-22
Summary (2).........................................................................................................................................................5-23
Actual Postings Exercises................................................................................................................................5-24
Actual Postings Solutions.................................................................................................................................5-26
Functions and Environments......................................................................................................................................6-1
Functions and Environments: Unit Objectives.......................................................................................................6-2
Environment of the process template: Unit Business Scenario..............................................................................6-4
Templates Ask Questions.......................................................................................................................................6-5

Functions are assigned to Sub-Environments.........................................................................................................6-6
Sub-Environments are Assigned To Environments................................................................................................6-7
Functions................................................................................................................................................................6-8
Three Layer Concept for Functions........................................................................................................................6-9
Flexible Functions................................................................................................................................................6-10
Function Tree and Environment Maintenance.....................................................................................................6-13
Functions and Environments: Unit Summary......................................................................................................6-14
Conclusion..................................................................................................................................................................7-1
Course Goals..........................................................................................................................................................7-2
Course Objectives...................................................................................................................................................7-3
Course Objectives (2).............................................................................................................................................7-4
Main Business Scenario.........................................................................................................................................7-6
Recommended Follow-Up Courses (1)..................................................................................................................7-7
Recommended Follow Up Courses (AC605).......................................................................................................7-10
Recommended Follow-Up Courses (5)................................................................................................................7-11
Finish . . ...............................................................................................................................................................7-12
Appendix....................................................................................................................................................................8-1
ABC - Competitive Advantage 2000......................................................................................................................8-2
Cost Management in the Past.................................................................................................................................8-3
Cost Management in the Future.............................................................................................................................8-4
The Dynamic Market Dilemma..............................................................................................................................8-5
Activity-Based Costing Activity-Based Management...........................................................................................8-6
Traditional Costing vs. ABC (I).............................................................................................................................8-7
Traditional Costing vs. ABC (II)............................................................................................................................8-8
Implications of Product Cost Distortion.................................................................................................................8-9
The Whale Curve - Profitability Including Process Cost.....................................................................................8-10
Tasks and Goals of ABC.......................................................................................................................................8-11
Key Success Factors for ABC Initiatives.............................................................................................................8-12
SAP's Competitive Edge......................................................................................................................................8-13
Cost of Accounting Systems.................................................................................................................................8-14
ABC in R/3 Fulfills the CAM-I Cross..................................................................................................................8-15
Stages of Integration forCost Accounting Systems*............................................................................................8-16
0
D45ABC Activity Based Costing
D45ABC
Activity Based Costing
R
SAP AG
R/3 System
Release 4.5
Date: December 1998
Material number 5002 9151
0.2
Copyright
Copyright 1999 SAP AG. All rights reserved.

Neither this training manual nor any part thereof may
be copied or reproduced in any form or by any means,
or translated into another language, without the prior
consent of SAP AG. The information contained in this
document is subject to change and supplement without
prior notice.
All rights reserved.
SAP AG 1999
Trademarks
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INFORMIX-OnLine and INFORMIX-ESQL/C are registered trademarks of the INFORMIX
Corporation.
0.3
The R/3 Integration Model
FI
SD
Financial
Accounting
Sales &
Distribution
MM
CO
Materials
Mgmt.
PP
QM
PM
Asset
Accounting
PS
Client / Server Project
System
ABAP
WF
Plant
Maintenance
HR
Human
Resources
AA
R/3
Production
Planning
Quality
Mgmt.
Controlling
Workflow
IS
Industry
Solutions
SAP AG 1999
SAPs R/3 System has set new norms for standard software that can be universally implemented. R/3
uses advanced development techniques to achieve comprehensive integration of business administration
and data processing.
R/3 combines state-of-the-art technology with comprehensive business administration functions to
provide a fully-integrated business solution for your company.
0.4
Course Prerequisites
AC410 Cost Center Accounting
AC505 Product Cost Planning
Recommend :
AC040 Cost Accounting
AC605 Profitability Analysis
SAP AG
0.5
Target Group
Audience:
Project team members of an ABC implementation team
Duration: 2 days
SAP AG
Notes to the user

The training materials are not teach-yourself programs. They complement the course
instructor's explanations. On the sheets, there is space for you to write down additional
information.
1
Course Overview
Contents:
Course Goals
Course Objectives
Course Content
Course Overview Diagram
Main Business Scenario
SAP AG 1999
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AC420 1
1.2
Course Goals
This course will prepare you to:

Describe the concept of Activity Based Costing
and its implementation within R/3.

Use Templates for planning and actual postings.
Use Templates for Cost Objects and Profitability
Segments.
Accomplish basic configuration for
Activity Based Costing.
SAP AG 1999
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AC420 2
1.3
Course Objectives
At the conclusion of this course, you will be able to:

Explain the functions of Activity Based Costing.
Apply the knowledge necessary to configure and
implement Activity Based Costing in R/3.
SAP AG 1999
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AC420 3
1.4
Course Objectives (2)
Create process templates
Execute process related business transactions
Execute reports for business processes and cost

objects
SAP AG
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AC420 4
1.5
Contents
Preface
Unit 1
Course Overview
Unit 5
Actual Postings
Unit 2
ABC in R/3
Unit 6
Unit 3
Basic Data and

Structures
Functions and
Environments
Unit 7
Conclusion
Unit 4
Planning
Appendices
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AC420 5
1.6
ABC in R/3
Functions and
Environments
Basic Data and

Structures
B
C
Actual Postings
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AC420 6
Planning
1.7
Your company's management would like to
investigate implementing the ABC application in

the R/3 System.
As a member of your company's project team, you
are supposed to help determine how ABC would

integrate with the other CO components.
You then will be responsible for testing ABC in
planning and actual postings.
SAP AG 1999
(C) SAP AG
AC420 7
2
ABC in SAP R/3
Contents:
Review of Controlling Objects
SAPs Comprehensive Approach to ABC
Overview of the Template Concept
Process Drivers
Planning Overview
Reporting Overview
Methods of ABC: Analytic and Integrated ABC
SAP AG 1999
(C) SAP AG
AC420 1
2.2
ABC in SAP R/3: Unit Objectives
At the end of this unit you will be able to:
At the conclusion of this unit, you will be able to:

List Controlling Objects in R/3
Describe SAPs approach to ABC in R/3
Explain how R/3 fulfills the CAM-I Cross
Recognize templates as an additional costing tool
Define the concept of process driver
List sources of process driver quantities
Describe ABC plan integration points
Explain how Analytic ABC differs from Integrated ABC
SAP AG 1999
At the end of this unit, the course participant should be able to accomplish these tasks.
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AC420 2
2.3
ABC in R/3
Functions and
Environments
Basic Data and

Structures
B
C
Actual Postings
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AC420 3
Planning
2.4
ABC in SAP R/3 : Business Scenario
You are on the project team for an SAP R/3 release

4.6 implementation.
You have a very good understanding of cost center
accounting and product costing or profitability
analysis.
You must be able to get a basic understanding of
ABC in R/3 in the next 3 hours, in order to discuss
the subject intelligently at a meeting.
The purpose of the meeting is to discuss whether
ABC should be in the project or considered
out of scope.
SAP AG 1999
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AC420 4
2.5
ABC in SAP R/3: Unit Business Scenario (2)

The business purposes of resource drivers
and cost drivers have to be understood
The business purposes of the process template
have to be understood
The assignment of business processes to
profitability segments is required
SAP AG
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AC420 5
2.6
SAP's Competitive Edge
CO-OM-ABC
ABC fully integrated in
the R/3 environment
No need for a separate

cost accounting system
Cost driver quantities

available in operational
data
No need for complex

interface & upload
processes
SAP AG 1999
Even if the management-driven success factors are in place, ABC projects may fail due to softwaredriven factors.
By implementing ABC, you can overcome software-related problems because of the R/3s high degree
of integration and scalability.
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AC420 6
2.7
SAP's Comprehensive Approach to ABC
Processes
Processes
Processes
CO-OMABC
Products
ABC
Product groups
Customers
Distribution Channels
...
SAP AG 1999
SAP's comprehensive approach to Activity Based Costing comprises the functionality of the CO
components CO-OM-ABC, CO-PC and CO-PA.
In CO-OM-ABC processes can be defined to pull overhead resources from different parts in the
organization. Using appropriate drivers the corresponding costs are allocated to products (CO-PC) or
directly to profitability segments (CO-PA).
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AC420 7
2.8
Activity-based Management
Push Approach
Pull Approach
Financials
Financials
Cost
Assignment
Cost
Assignment
Cost
Assignment
Pull quantity
Process
Process
Cost
Assignment
Products,
Customers
Channels, etc.
Pull quantity
Products,
Customers
Channels, etc.
Charge Quantity * Price
Cost Center
(Resources)
Cost Center
(Resources)
SAP AG 1999
Expenses in FI are first assigned as costs in CCA, which are then allocated either by a value flow or
quantity flow to processes.
The advantage of dealing with quantity flows in the context of ABC is that costs are not just distributed
by using tracing factors from the cost center resources to the processes, products, or profitability
segments. Instead, resource quantities are pulled automatically by the corresponding objects as they are
consumed.
This methodology is the basis for Activity Based Management, or ABM. ABM allows you to identify
idle capacity of overhead resources at the cost center level. It also simulates changes in capacity usage
when the sales quantity plans are modified in the CO-PA component. As a result, overhead resources
can be leveraged more effectively.
By multiplying the process quantities by the process price you can not only identify the cost of the
consumed quantities but the cost of unused capacities as well.
(C) SAP AG
AC420 8
2.9
Processes
Business Processes
Cost
Driver
Cost Centers
Cost
Driver
non-value added
SAP AG
A process in R/3 is not "tied" to only one specific cost center rather being defined as a cross-functional
object with a unique cost driver.
Indirect costs utilized by a process may be acquired from the responsible cost centers that they originate
in.
The process also can carry all different sorts of attributes such as value added/non-value added, which
add a further dimension to managing the processes within an Activity Based Management framework.
(C) SAP AG
AC420 9
2.10
Process Structures
Process Groups
Structured Processes
Process
Group
Main
Process
ActT
Process 1
CC1
ActT
Process 2
Grouping of processes in a
Standard Hierarchy or
alternative hierarchies
Useful for planning and
reporting purposes
SubProcess 1
SubProcess 2
CC2
Relationship between
processes, sub-processes and
cost center activities regarding
their consumption
Useful for resource and cost
driver modeling
R
SAP AG
You must organize processes into a standard hierarchy, where the hierarchy nodes represent different
process groups. Note that you can use groups (alternate hierarchies) for planning and reporting.
Structured Processes describe the internal structure of a process consisting of sub-processes or tasks at
the cost center level . Multilevel hierarchies can be modeled. Using structured processes, the
consumption of a main process can be backflushed (pulled) from the Cost center/Activity types which
describes the quantity consumption of a given resource by the process.
(C) SAP AG
AC420 10
2.11
Methods of ABC in R/3
Analytic ABC
Integrated ABC
Alternative calculations
Linked to product costing
What-if analysis
Relevant to stock valuation

if desired
Supplement to
operational costing
Multiple versions of
actual data
Linked to profitability analysis

One version of actual data
You may use:

Analytic ABC only
Integrated ABC only
Analytic and integrated ABC
SAP AG 1999
There are two different ABC scenarios supported by the R/3 system: Analytic ABC and Integrated ABC.
Analytic ABC provides a statistical result, suitable for strategic cost views and high level what - if
analysis. Integrated ABC results in actual cost postings throughout the CO application and cost objects,
including CO-PA postings.
Both methods of ABC are available when Integrated ABC is activated in R/3 customizing. Analytic ABC
can also be used without activating Integrated ABC.
In Integrated ABC, processes are full controlling objects (cost collectors) and are not statistical.
Integrated ABC can be used for some overhead costs, while other indirect costs use the traditional
surcharge method provided by costing sheets.
The template is the new tool which traces process quantities to cost objects and to profitability segments
(CO-PA).
(C) SAP AG
AC420 11
2.12
Parallel ABC
Cost
Centers
Parallel ABC
Operational Costing
ActT4
ActT1
ActT2
BOM
Routing
Process 1
Process 2
Production
Order
Costing
Sheet
General
Cost
Object
80
Processes
35
Surcharge
20
Warehouse
Reports
SAP AG 1999
Parallel ABC is an overhead cost simulation methodology which is not linked to product cost planning
(not valuation relevant).
Parallel ABC, being statistical, cannot utilize anything but the general cost object for the cost allocations.
The process model, which is defined in a delta version, is designed to get transparency for the overhead
resources being allocated through surcharges in the operative controlling.
The results enable you to compare the surcharges applied to the product in your operational costing with
the parallel model of process overhead costs in the delta version.
(C) SAP AG
AC420 12
2.13
Analytic ABC with Delta versions
Version 0: CO-CCA
Primary costs
Allocations
Cost centers
Cost centers
Activity type 1
Process 21
Activity type 2
Process 22
Delta version 2: Parallel ABC

Process 1
Process 2
Delta version 1: Parallel ABC
SAP AG 1999
Multiple ABC delta versions may be used in analytic ABC. All delta versions are statistical.
This allows the simulation of different process scenarios to co-exist while using the same cost center
data.
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AC420 13
2.14
Operational ABC
BOM
Cost
Cost
Cost
Center 1 Center 2 Center 3
COCOCCA
AT X
AT 1
COCOABC
AT 2
Process 1
Process 3
Routing
Production
Costing
Sheet
Order
Process 2
Process
Template
Process
Template
Product costing
with process
costs
COCOPA
COCOPC
Warehouse
SAP AG
In operational ABC, processes are full controlling objects (cost collectors) and are not statistical.
Operational ABC can be used for some overhead costs, while other indirect costs use the traditional
surcharge method provided by costing sheets.
The process template is the tool which traces process quantities to cost objects and to Profitability
Segments (CO-PA).
(C) SAP AG
AC420 14
2.15
ABC Supports Different Industries
Services
service industry such

as banks, insurances,
etc.
Process manuf.
chemical industry,
pharamceutical industry,
breweries, etc.
Repetitive manuf.
Processes
Cost Centers /
Resources
Order-rel. manuf.
Make-to-order
automotive industry,
consumer electronics, etc.
component supply
industry
mechanical engineering
industry
Engineer-to-order plant engineering and

construction industry,
ship building industry, etc.
SAP AG 1999
Operational ABC is conceptually valid in all industries as only the cost objects change.
Process quantities can be traced to the corresponding industry specific cost objects.
SAP offers also specific ABC solution integrated within the SAP Banking.
(C) SAP AG
AC420 15
2.16
Overview of Allocation Techniques

Cost Centers
Cost
allocation
Processes
Process 1
Distribution
Assessment
CO-PA
Assessment
Process 2
Direct process
allocation
Quantity
tracing
ActT
Quantity
* Price
ActT
Cost Objects
Process 3
Process 4
R
Activity allocation techniques
Process consumption
SAP AG
Allocations between cost centers and processes may be done using distribution, assessment, and activity
allocation. These techniques have long been available in R/3 and are not new to ABC.
The "value flows" resulting from assessments and distributions and the "quantity flows" from activity
allocations may be used. Quantity allocation results in significant advantages, such as enabling the
backflushing (pulling) of indirect costs from cost centers.
In addition to these methods, the process template is a tool for tracing processes to cost objects and to
profitability segments. The use of process templates results in a quantity and value flow.
The process template is new functionality created for ABC.
(C) SAP AG
AC420 16
2.17
Resource Consumption by Business Processes
cost
center2
AT 1
Indirect
activity
allocation
cost
cost
cost
center 1 center2 center 2
AT 2
Direct
activity
allocation
Process
AT 3
Structured Process
Process 1
Template 1
Process 21
Target=
Actual
allocation
Process 22
Template 2
AT 1
CC1
AT 2
CC2
SAP AG
Resources can be consumed by business processes using direct and indirect activity allocation methods
or structured business processes.
Structured business processes can be multi-level (indented), and allow you to illustrate the allocaton
relationships graphically.
(C) SAP AG
AC420 17
2.18
Resource Allocation with Structured Processes
Template 1 for Process 1
Process 1
Plan
Actual
Quantity
Quantity
Process 21 # or formula # or formula
Object
Template 1
Process 21
Process 22
Process 22
Template 2
AT 1
CC1
AT 2
CC2
# or formula # or formula

Object
Plan
Quantity
CC1 / AT 1
CC2 / AT 2
Actual
Quantity
SAP AG 1999
The structured process is a more formal type of process grouping as it contains all the data necessary for
automatic allocations of resources from the lower level cost center/activity types and/or processes to the
highest level business process in the structure.
The structured business process is described by a template created in environment SBP which means
Structured Business Process. This template is assigned in the process master data record.
Each template can contain sub-templates where the lowest level in the hierarchy is on the task level
represented by a cost center/activity type. This can be effectively used to model multi-level business
process hierarchies.
There is a graphical display in process master data.
(C) SAP AG
AC420 18
2.19
Assignment of Statistical Key Figures to LIS
Process
Order / Domestic
4000 orders
LIS - Database
6000 orders
Process
Order / Foreign
R
SAP AG
The LIS is a flexible tool for collecting, aggregating, and analyzing data from operative applications.
The level of detail in which information is used or displayed is freely defineable.
LIS key figures can be transferred to business processes where they can serve as resource drivers.
In this example the resource consumption by the process is driven by Number of orders, which is tied
to the process as a statistical key figure. The values of these statistical key figures are found in the LIS
database.
The master data for the statistical key figures is tied to the LIS key figure Number of orders.
(C) SAP AG
AC420 19
2.20
Cost Drivers
Cost Object
process usage quantity
fix/proportional
quantity * price
Manual Entry/
External systems
Process
Cost
Driver
cost allocation
CO-PA
LIS
R
SAP AG
A cost driver is an appropriate measure for the process consumption of any receiving object.
Because a cost driver is a measure it is the process quantities rather than the process cost that is being
allocated (consumed) by cost objects.
For processes being allocated to CO-PA the assessment methodology can be used which results in a cost
flow to the appropriate profitability segments. The cost flow from an assessment may be the result of
using a statistical key figure from LIS as a quantity tracing factor to determine the process cost
allocation to the profitability segments and in this case the statistical key figure would be acting as a cost
driver.
A direct activity allocation may also be used to allocate processes to profitability segments, which
results in a true process quantity allocation to CO-PA.
(C) SAP AG
AC420 20
2.21
Origin of Process Driver Quantities
Routing
# Work Centers
# BOM Items
Bill of Materials
External
Systems
Measurement Data
Template
Weight
Material Master Data

# Value fields
CO-PA
wewrerretrtrtrwrt
dsfasad
fdsafdas
fgd
fggadgf
# Purchase
orders
LIS
Lot-size
Product Costing
SAP AG 1999
A process driver is the quantity measures of the process that is being assigned to (consumed by) cost
objects and profitability segments.
Process driver quantities may be found from almost anywhere within R/3 or in external systems.
Often the cost object itself contains process driver relevant information. Such structures as the BOM,
Material Master record, and router provides a wealth of potential process driver information.
For process drivers based on transactions, information on quantities can be retrieved from the Logistics
Information System (LIS).
The template is the tool which can dynamically calculate the quantities consumed by cost objects and by
profitability segments .
Processes may also be manually allocated to cost objects and to profitability segments.
(C) SAP AG
AC420 21
2.22
Product Costing with Process Templates

Production order
Materials
Order Header
Material Lotsize
Routing BOM
CO - Values
LIS
Functions
Process
Template
Statistical
Key Figures
Material
Operations
Surcharges
Processes
Processes
R
External Sources
Other
SAP Sources
SAP AG
SAP provides numerous standard "functions for use in process templates. These can be used to
calculate cost driver quantity requirements. You can also create custom functions.
The template interfaces with the Product Costing application and applies the proper value of the indirect
resources consumed.
This is a more precise method of assigning indirect costs than the surcharge method. (the surcharge
method can still be used where appropriate).
(C) SAP AG
AC420 22
2.23
Product Costing: Processes in Routings

Cost
Cost
Cost
Routing
AT 1
AT 2
ROUTING
Operation
Quality Check
Driver: min
0010
0020
0030
Work Center
PC-1
PC-2
PC-3
P reparat ion
A ssembly
Qualit y Check
Std. Value
Activity Type
Unit
2 min.
3 min.
5 min.
LA1
LA1
Production
W ork Center Data

B usines s Process
W ork Center
Quality Check
PC-3
Order
SAP AG
Consumption of processes by a product can be determined by a process template. In addition, it is

possible to specify process consumption directly in the routing.
To do this, you make the following assignments: 1) process to work center , 2) work center to a routing
operation.
This allows you to post resources from different cost centers to cost objects through a process using one
single operation of the routing. The standard values of the routing are used to calculate the process
quantity based on PP formulas.
The PP confirmation triggers the posting of the process real time. The posting of processes through the
process template occurs at period end.
(C) SAP AG
AC420 23
2.24
Process Assignment to Profitability Segments

(CO-PA)
LIS
Ext.
Systems
CO-PA
Customer
Functions
Process
Template
Product
R
SAP AG
For assigning processes that do not relate to product, but relate to profitability segments, it is possible
to link the Process Template to CO-PA..
Cost driver information might be available already in CO-PA or the LIS. In many service industries cost
driver data is held in external systems.
(C) SAP AG
AC420 24
2.25
Process Template
Process Template
Object
Quantity
What
process
applies?
Activation
Actual Valuation Event
How much of the

process applies?
When does the

process apply?
Under which conditions

does the process apply?
SAP AG
The process template consists of four different columns that are all related.
The object will always point to a process or another process template.
The quantity is either hard coded in the template or the result of the formula calculations of the process
consumption by the appropriate cost object.
The activation determines whether a particular process is applicable to a particular cost object.
The valuation event determines when a resultant process quantity value is to be allocated to a cost object.
(C) SAP AG
AC420 25
2.26
Reusing Process Templates

Material: Light-Beer Bottle
Material: Light-Beer-Barrel
Overhead Group:
...
Volume: 0.5 l
Overhead Group:
...
Volume: 50 l
LotLot-size:
100.000
Volume:
0.5 l
TankTank-Capacity:
1.000 l
'Light'
Process template - Light

Process
Quantity
Valuation Event
Cleaning
Formula-2
Transport
20
'Order-end'
'Delivery'
'Light'
LotLot-Size:
20.000
Volume:
50 l
TankTank-Capacity:
1.000 l
Lot-size * Volume / Tank-Capacity

Process Consumption - LightLight-Beer Bottle
Process Consumption - LightLight-Beer Barrel
Process
Process
Quantity
Valuation event
Quantity
Cleaning
50
'Order-end'
Cleaning
1000
Transport
20
'Delivery'
Transport
20
Valuation event
'Order-end'
'Delivery'
R
SAP AG
The "reusability" of a defined process template row refers to the ability of many cost objects being able
to use this row. The flexibility of both the "activation" and "quantity" columns will determine the extent
of the reusability of the process template row.
For instance, if a substantial number of "beer products" all utilize the resources of the same process in
their manufacture, then the only change is to construct the "quantity" calculation to be able to calculate
the right quantity for the right beer product. If a particular set of "beer products" did not use this
process, then the "activation" cell would need to be able to exclude only those products.
The desired result is to greatly simplify the template maintenance.
(C) SAP AG
AC420 26
2.27
Integrated Corporate Planning in a Manufacturing
Environment
Strategic
Procedure
Target Requirements
Sales Planning
Profit Planning
Sales Volume
Template
SOP
MRP
Long Term
Activity Input Quantity

Process Input Quantity
Cost of goods
manufactured
/ sold
SAP AG 1999
Routing
Bill of
material
Cost Center/
Center/
Activity Type
Business Process
Product
Costing
Activity Price
Process Price
Operational Activity Based Costing is fully integrated into the corporate planning cycle.
When quantity planning methods are used in integrated planning the results of SOP / Long Term
Planning will "backflush (pull) a properly calculated amount of process quantities and finally of
indirect resources (cost center/activity types) required to support the sales plan.
The backflushing of sales plan requirements results in the sales plan process quantity requirements being
transferred to business process planning as scheduled quantities, where they may be compared to the
original planned quantities.
Once the plan and scheduled quantities have been reconciled the plan reconciliation program may be run
which will replace the original plan quantities with the scheduled quantities. Alternatively, the scheduled
quantities may selectively replace the original plan quantities through manual adjustments.
The result is a completely integrated product cost and profitability planning environment.
(C) SAP AG
AC420 27
2.28
Integrated Corporate Planning in a Service
Environment
Strategic
Procedure
Target Requirements
Sales Planning
Profit Planning
Process Costs
Sales Volume
Template
SAP AG 1999
Template
Business Process
Cost Center/
Center/
Activity Type
Process Price
Operational Activity Based Costing is also fully integrated into the corporate planning cycle if the
business processes are service oriented.
The Sales Plan in CO-PA will also "backflush (pull) a properly calculated amount of process quantities
and finally of indirect resources (cost center/activity types) required to support the sales plan if the
business processes are assigned through the process template directly to the profitability segments
(customers, divisions, distribution channels...).
Executing the process price calculation values the CO-PA plan. This means that the process costs will be
transferred to Profitability Analysis (CO-PA).
(C) SAP AG
AC420 28
2.29
ABC Reporting
Cost Center Analysis

For which process and at
what costs does a cost
center perform?
COCO-CCA
Cost Object and Market

Segment Analysis
Which processes are necessary?
What are the costs of a cost
object?
What is the profitability of
a certain market segment?
COCO-PC
COCO-PA
Process Analysis
What are the process costs?
Who consumes the process?
COCO-ABC
SAP AG 1999
A complete set of reports for process results as well as cost center and cost object reports are delivered
with the system.
Users can use both the report painter and report writer tools to supplement the delivered reports.
In addition, the full functionality of the CO-PA reporting tool to write user reports will enable the
process value fields to be included where desired.
(C) SAP AG
AC420 29
2.30
Summary
You are now able to:

List Controlling Objects in R/3
Describe SAPs approach to ABC in R/3
Explain how R/3 fulfills the CAM-I Cross
Recognize templates as an additional costing tool
Define the concept of process driver
List sources of process driver quantities
Describe ABC plan integration points
Explain how Analytic ABC differs from Integrated ABC
SAP AG 1999
(C) SAP AG
AC420 30
2.31
Summary
The process template calculates dynamically the cost
driver quantities being consumed by all sorts of cost
objects based on any system information that relates to
these cost objects.
Business processes can be assigned directly to
profitability segments using the assessment or the direct
process allocation. Key figures, which can be transferred
from LIS, are available within CO-PA to use them as
tracing factors for the assessment of business processes.
SAP AG
(C) SAP AG
AC420 31
3
Basic data and structures
Contents:
Business Process Master Data
Business Processes Compared to Cost centers
Assigning Templates to Processes
Assigning Templates to Cost Objects
Assigning Templates to Profitability Segments
Business Processes in Routings
SAP AG 1999
(C) SAP AG
AC420 1
3.2
Basic Data and Structures: Unit Objectives

Create business processes in R/3
Explain how templates are identified for
resource assignment
process assignment to cost objects
process assignment to profitability segments
Conclude that the incremental training needed
for ABC in R/3 is small compared to cost
object controlling and profitability analysis
SAP AG 1999
(C) SAP AG
AC420 2
3.3
ABC in R/3
Functions and
Environments
Basic Data and

Structures
B
C
Actual Postings
SAP AG 1999
(C) SAP AG
AC420 3
Planning
3.4
Basic data and structures: Business Scenario
Your project team has decided that ABC in R/3

should probably be implemented.
One concern is the amount of training needed. The
team needs to understand how ABC relates to COPA and Cost Object Controlling, since there is no
time to re-learn those modules.
In addition, the PP sub-team wants to know if ABC
has any impact on routings.
SAP AG 1999
(C) SAP AG
AC420 4
3.5
Business Processes
Business Processes
Cost
Driver
Cost Centers
Cost
Driver
non-value added
SAP AG
A process in R/3 is not "tied" to only one cost center but is a cross-functional controlling object with a
single cost driver.
The basic data in the process master record requires a process name, assignment to the standard
hierarchy, and a business process category assignment..
The organizational units area of the process master record is optional. These are informational fields that
may also be used to control the process activation from within the process template. You may also
create user-defined information fields here.
The process attributes are are also optional. The possible values are user-defined in customizing. One
additional attribute may be user-defined.
The allocation screen is defaulted from your choice of the process category assignment in the basic data.
You may change the default settings (for example the allocation cost element) to make them process
specific.
(C) SAP AG
AC420 5
3.6
Standard Hierarchy and Process Groups
BP_40
grouping of similar processes
BP_41
groups can be used for reporting and

planning
standard hierarchy required
contains every process exactly once
BP_43
alternative hierarchies (groups) possible
300000 / Paint
300100 / Dry
SAP AG 1999
Process groups can be used to achieve different purposes.

The standard hierarchy assignment is mandatory for all business processes.
Alternative process groups are optional but very useful. They help to maximize the efficiency of process
planning, organize the actual allocation function and provide for convenient user-defined reporting levels
in the information system.
(C) SAP AG
AC420 6
3.7
Structured Process For Resource Cost Assignment
Process 1
Template 1
Process 21
Process 22
Template 2
Quantity
Process 21
# or formula
Process 22
# or formula

Object
Quantity
CC1
CC1 / AT 1
# or formula
AT 2
CC2
CC2 / AT 2
# or formula
AT 1
Object
SAP AG 1999
automatic allocations of resources from the lower level cost center/activity types and /or processes to the
highest level business process in the structure .
(C) SAP AG
AC420 7
3.8
Template for Cost Object: Example
Material: R-4000
Color: Red
Number of Coats: 3
COPC-10
Process
Quantity
Paint
Get value
Pallet Moves
Get value
Activation
Check activation rule
Always
Quantitiy
Total Coats = Coats * order lot-size
Pallet Moves = formula (using BOM)
Activation rule for painting

Color is Non-Standard
300000 / Paint
PALMOVE / Pallet Movement

SAP AG 1999
The first cell identifies a process or another process template which is supplying the indirect resources to
a cost object. The template above has two rows. One row is for process 300000 / Paint and one row is
for process PALMOVE /pallet movement.
The Activation cell determines when a process is to supply resources to a cost object. The example
above requires a rule or method for the template to determine the applicability. In this example, the
material being produced contains a value for the characteristic color in the material master
classification view. If the color of the material being produced is anything but the standard color, the
paint process will be active. Pallet Movement is always required.
The Quantity cell may be a fixed value or a formula using functions to determine both the cost driver
quantity and how this quantity is to be used for this cost object. In the example above, a function
retrieves the cost driver quantity found for the R-4000 product in the material master as the value for the
characteristic Number of coats and then multiplies the cost driver quantity by the order lot size to
calculate the proper quantity of process 300000 to apply to the cost object.
This above row in the process template is reusable over any cost object requiring painting. The material
master would simply reflect the proper color for activation and the proper number of coats for the correct
cost driver quantity for that product.
The number of pallet movements is calculated using a function type called flexible function which
reads the bill of material and determines the number of pallets required to move the material.
(C) SAP AG
AC420 8
3.9
Origin of Cost Driver Quantities
Routing
# Work Centers
# BOM Items
Bill of Materials
External
Systems
Measurement Data
Template
Weight
Material Master Data

# Value fields
CO-PA
wewrerretrtrtrwrt
dsfasad
fdsafdas
fgd
fggadgf
# Purchase
orders
LIS
Lot-size
Product Costing
SAP AG 1999
Cost drivers can originate from many diverse parts of the integrated R/3 system.
As examples; bills of material can provide the number of components in a cost object, the router can
provide the number of work centers through which the cost object must move.
Product costing can provide the lot size of the material being produced.
You may also create your own LIS library and structures to maintain the necessary transactional statistics
if the delivered structures do not capture them.
(C) SAP AG
AC420 9
3.10
Processes in Routings
Cost
Cost
Cost
Routing
AT 1
AT 2
ROUTING
Operation
Quality Check
Driver: min
0010
0020
0030
Work Center
PC-1
PC-2
PC-3
P reparat ion
A ssembly
Qualit y Check
Std. Value
Activity Type
Unit
2 min.
3 min.
5 min.
LA1
LA1
Production
W ork Center Data

B usines s Process
W ork Center
Quality Check
PC-3
Order
SAP AG

operation.
The PP confirmation triggers the posting of the process real time. The posting of processes through the
process template occurs at period end.
(C) SAP AG
AC420 10
3.11
Identiyfing Process Templates for Costing
Costing
sheet
Process Template Prod_1

Process Template Main
Process Template Prod_2
Process template Prod_3
Process
Cleaning
Q-Check
10
Quantity
10
30 20
20
20
Valuation time
Order-start
Delivery
Overhead
key
SAP AG
The link connecting the template to the cost object is created through a template assignment function.
The process templates are assigned to a combination of overhead key and costing sheet.
The assigned template is used for product cost planning and cost object controlling.
The material being produced on the cost object must have an overhead group assigned on the material
master. An overhead key is then assigned to the overhead group in customizing.
(C) SAP AG
AC420 11
3.12
Template Determination for Profitability Segments
CO-PA
Characteristics
Sales Organization
Customer Group
Product
Division
....
Templates
Derivation Strategy for Templates

sellmfg
Derivation Rule 1
Sales Org
Division
Template
1000
01 Pumps
sellmfg
2000
08 Service
sellserv
sellserv
SAP AG 1999
The derivation strategy to find the appropriate Process Template for a specific Profitability Segment is
defined by derivation rules in CO-PA. A specific set of characteristic values points to a specific Process
Template.
You can define several rules for identifying a Process Template. The first derivation rule that finds a
Process Template is used. No other rules will be evaluated. This ensures that no double-postings of
processes to CO-PA can occur.
The Process Templates can be tied to just a few main characteristics making full use of the dynamics of
the Process Template. Such a Process Template will contain generic methods and formulas that are able
to deal with many of your company's processes in one single Process Template.
The Process Template can also be tied to a more detailed level of characteristics (more characteristics are
used in the derivation rule). In this case the Process Template contains methods and formulas for
processes that are specific for the profitability segments specified in the derivation rule and not relevant
to other profitability segments.
(C) SAP AG
AC420 12
3.13
Summary

Create business processes in R/3
resource assignment
process assignment to cost objects
process assignment to profitability segments
Conclude that the incremental training needed
for ABC in R/3 is small compared to cost object
controlling and profitability analysis
SAP AG 1999
(C) SAP AG
AC420 13
3.13.2Basic Data and Structures Exercises

Unit: Basic Data and Structures
At the conclusion of this exercise, you will be able to:

View the master data for any business process and determine
the allocation parameters.
Determine the cost element and price for any cost center /
activity type combination.
Create and assign a template to pull resources from cost
centers into a business process.
Modify a template to assign costs from a business process to a
profitability segment.
To decide how much training will be needed to implement ABC,
you will maintain the basic data and structures and review the
cost assignment techniques to determine how similar they are to
other CO module techniques.
1-1
A business process is defined as a:

"business procedure within an enterprise that uses resources and can involve activities
from a number of different cost centers in a controlling area."
You have a business process for processing sales orders. Several cost centers perform
this work. Ultimately, you want to charge this process to profitability analysis.
Your process has already been created: it is 40090-## where ## is your two digit group
number.
View the master data for your process, verifying the following master data:
basic data tab
allocation tab
name = sales order proc ## process driver = number of sales order items
area (hierarchy) = BP04
category = 1, (manual entry manual alloc)
company code = 1000
cost element = 629000
business area = 9900
price indicator = 3, determined manually.
Profit center = 9999
(C) SAP AG
AC420 14
1-2
Processes are easy to understand when you compare them with cost centers. Cost
Centers and Processes are very similar, with a few key differences.
Each sales order process execution involves work from 3 different cost centers. View
these cost centers and verify the basic settings. These cost centers belong to cost center
group HAC420.
Cost center:
420SHIP
420SOP
420TELCOM
name:
shipping admin
sales order admin
communications
description:
paperwork prep
receive and enter

orders
telephone and
networks
category:
G - logistics
3 - sales
2 - service
hierarchy area:
HAC420
HAC420
HAC420
company code:
1000
1000
1000
business area:
5000
5000
5000
profit center:
1500
1500
1500
1-3
In the master data for the three cost centers (420SHIP, 420SOP and 420TELCOM),
determine what cost element will be used when allocations are done from the cost
center.
1-4
When executing a business process, activities can be utilized from several cost centers
of a controlling area.
There are 4 activity types from three different cost centers required to process sales
orders. Verify the following master data for the activity types: (use activity type group
AC420)
(C) SAP AG
activity type
4201
4202
4203
4204
name
sales order entry
document prep
incoming phone
network time
activity unit
H hours
H hours
MIN minutes
H hours
Cctr
categories
Atyp Category
1 manual
1 manual
1 manual
1 manual
Cost Element
622500
614000
634000
638500
Price
Indicator
3-manual
3-manual
3-manual
3-manual
AC420 15
1-5
A cost center may perform many tasks. The quantity of each task is measured by an
activity type. A cost center must be linked to activity types in planning.
The activity types we are using for sales order processing have PPI (planning price
indicator) of 3, which means determined manually. Ideally, activity type and process
prices are calculated based on plan spending and planned quantity. However, for this
exercise the primary focus is on understanding the quantity flow, so the prices have
been preset. Setting the price for a cost center/activity type combination links them
together so that combination may be used for allocation.
Verify that the following prices have been established in version 0 and in version 42I :
4201
4202 doc prep
4203
4204 network
time
10.00 per hour
sls ord entry
1-6
420TELCOM
none
none
25 per minute
420SHIP
none
30.00 per hour
none
420SOP
25.00 per hour
none
none
In order to "pull" resources to your process 40090-## from each of the cost
center/activity types, you will use a template. Your template will be named SORES##
(sales order lines group ##).
The template will contain each cost center/activity type combination required to
process sales orders, and the quantity of each.
Create your template SORES## and assign it process 40090-##, for planning only,
using the following data:
object type
object (cost
center/act ty)
plan quantity
each sales order line

item requires:
c center/acty typ
420SOP / 4201
0.2
12 minutes of sales order

entry time
c center/acty typ
420SHIP / 4202
0.1
6 minutes of logistics
document preparation
c center/acty typ
c center/acty typ
1-7
420TELCOM /
4203
420TELCOM /
4204
0.2
6 minutes of incoming
telephone time
12 minutes of computer
network time
In order to "pull" resources to your profitability segments, you need two things:
1. A template,
2. A way to identify or link the template to the appropriate profitability segments. (we
will do this in the next exercise)
(C) SAP AG
AC420 16
Your template already exists, but it has no lines. It is SALESPRO##. Modify the
template to charge one unit of your process 40090-## to profitability analysis for each
sales order line item processed. Initially, do this only for planning.
The number of sales order items processed is a statistical key figure in profitability
analysis.
1-8
Each student group ## has two customers and a customer group.

customers: T-Co05a## and T-Co05a##a
customer group = 20 + ##
(group 01 has customer group 21, group 02 has customer group 22,
and so on)
Verify that the system is already properly configured to use your template
SALESPRO## for your customer group.
Verify that statistical key figures can be used as cost drivers in template allocation to
COPA.
(C) SAP AG
AC420 17
3.13.3Basic Data and Structures Solutions

Unit: Basic Data and Structures

View the master data for any business process and determine
the allocation parameters.
Determine the cost element and price for any cost center /
activity type combination.
Create and assign a template to pull resources from cost
centers into a business process.
Modify a template to assign costs from a business process to a
profitability segment.
To decide how much training will be needed to implement ABC,
you will maintain the basic data and structures and review the
cost assignment techniques to determine how similar they are to
other CO module techniques.
1-1
A business process is defined as a:

"business procedure within an enterprise that uses resources and can involve activities
from a number of different cost centers in a controlling area."
You have a business process for processing sales orders. Several cost centers perform
this work. Ultimately, you want to charge this process to profitability analysis.
Your process has already been created: it is 40090-## where ## is your two digit group
number.
View the master data for your process, verifying the following master data:
basic data tab
allocation tab
name = sales order proc ##

area (hierarchy) = BP04
category = 1, (manual entry manual alloc)
company code = 1000
cost element = 629000
business area = 9900
price indicator = 3, determined manually.
Profit center = 9999

SOLUTION to 1-1:
(C) SAP AG
process driver = number of sales order items
AC420 18
accounting > controlling > activity-based costing > master data > business process >
indivdual processing > display
(CP03)
1-2
Processes are easy to understand when you compare them with cost centers. Cost
Centers and Processes are very similar, with a few key differences.
Each sales order process execution involves work from 3 different cost centers. View
these cost centers and verify the basic settings. These cost centers belong to cost center
group HAC420.
Cost center:
420SHIP
420SOP
420TELCOM
name:
shipping admin
sales order admin
communications
description:
paperwork prep
receive and enter

orders
telephone and
networks
category:
G - logistics
3 - sales
2 - service
hierarchy area:
HAC420
HAC420
HAC420
company code:
1000
1000
1000
business area:
5000
5000
5000
profit center:
1500
1500
1500
SOLUTION to 1-2:
accounting > controlling > cost center accounting > master data > cost center group
> display
(KSH3)
Enter HAC420
Select one cost center and click the display icon. Repeat for each cost center.
1-3
In the master data for the three cost centers (420SHIP, 420SOP and 420TELCOM),
determine what cost element will be used when allocations are done from the cost
center.
No Solution!
Unlike business processes, cost centers do not have an allocation cost element assigned
in master data. There is also no assignment for price indicator or allocation category.
This is because each cost center may be linked to many different activity types. Each
activity type is linked to an allocation cost element.
1-4
When executing a business process, activities can be utilized from several cost centers
of a controlling area.
There are 4 activity types from three different cost centers required to process sales
orders. Verify the following master data for the activity types: (use activity type group
AC420)
(C) SAP AG
AC420 19
activity type
4201
4202
4203
4204
name
sales order
entry
document
prep
incoming
phone
network
time
activity unit
H hours
H hours
MIN minutes
H hours
Cctr
categories
Atyp Category
1 manual
1 manual
1 manual
1 manual
Cost Element
622500
614000
634000
638500
Price
Indicator
3-manual
3-manual
3-manual
3-manual
SOLUTION to 1-4:
accounting > controlling > cost center accounting > master data > activity type
group > display
(KLH3)
Enter AC420
Select one activity type and click the display icon. Repeat for each activity type.
1-5
A cost center may perform many tasks. The quantity of each task is measured by an
activity type. A cost center must be linked to activity types in planning.
The activity types we are using for sales order processing have PPI (planning price
indicator) of 3, which means determined manually. Ideally, activity type and process
prices are calculated based on plan spending and planned quantity. However, for this
exercise the primary focus is on understanding the quantity flow, so the prices have
been preset. Setting the price for a cost center/activity type combination links them
together so that combination may be used for allocation.
Verify that the following prices have been established in version 0 and in version 42I:
4201
4202 doc prep
4203
4204 network
time
10.00 per hour
sls ord entry

420TELCOM
none
none
25 per minute
420SHIP
none
30.00 per hour
none
420SOP
25.00 per hour
none
none
SOLUTION to 1-5:
accounting > controlling>cost center accounting > planning > activity output/prices
> display
(KP27)
Enter version 0, period 1 through period 12, current year
Enter cost center group HAC420
(C) SAP AG
AC420 20
Enter activity type group ac420

Use the next combination down arrow to view each combination.
Repeat for version 42i
1-6
In order to "pull" resources to your process 40090-## from each of the cost
center/activity types, you will use a template. Your template will be named SORES##
(sales order lines group ##).
The template will contain each cost center/activity type combination required to
process sales orders, and the quantity of each.
Create your template SORES## and assign it process 40090-##, for planning only,
using the following data:
object type
object (cost
center/act ty)
plan
quantity
each sales order line

item requires:
c center/acty typ
420SOP / 4201
0.2
12 minutes of sales
order entry time
c center/acty typ
420SHIP / 4202
0.1
6 minutes of logistics
document preparation
c center/acty typ
c center/acty typ
420TELCOM /
4203
420TELCOM /
4204
0.2
6 minutes of incoming
telephone time
12 minutes of computer
network time
SOLUTION to 1-6:
accounting > controlling > activity-based costing > master data > business process >
indivdual processing > change
(CP02)
Enter 40090-##, Click the "master data" icon, then click the "templates" tab.
Enter SORES## in the "activity and business process allocation" section (section
2!), then click the create icon on the right.
Enter description "group ## sls ord line template"
In the first cell, click the down arrow and select 3, "cost center/activity type."
In the object column, enter 420SOP / 4201
In the plan variable quantity column, enter .2
repeat this procedure for the next 3 rows using the data above
Click the check icon at the top.
Save - left green arrow
Save again!
Note as you are entering data, you can drag the column lines to enhance your view.
(C) SAP AG
AC420 21
1-7
In order to "pull" resources to your profitability segments, you need two things:
3. A template,
4. A way to identify or link the template to the appropriate profitability segments. (we
will do this in the next exercise)
Your template already exists, but it has no lines. It is SALESPRO##. Modify the
template to charge one unit of your process 40090-## to profitability analysis for each
sales order line item processed. Initially, do this only for planning.
The number of sales order items processed is a statistical key figure in profitability
analysis.
SOLUTION to 1-7:
IMG> controlling > activity-based costing > Templates > maintain templates
>change template
(CPT2)
Enter "PAC" in the environment field. Then click the down arrow in the template field,
and select the template SALESPRO##. Click the overview icon.
In the first column, click the down arrow and select business process .In the object
column, enter your process 40090-##.
In the plan quantity column, double click, and you will get a blank area to create a
formula. Click the "functions" button at the top of your screen.
In the function list displayed, double click the function
PROF_SEG_NUM_SALES_ORD_ITEMS. Click the "check" icon in the upper part
of your screen.
Left green arrow - save
Now insert transaction code CPT2 to your favorites (favorites>insert transaction)
1-8
Each student group ## has two customers and a customer group.

customers: T-Co05a## and T-Co05a##a
customer group = 20 + ##
(group 01 has customer group 21, group 02 has customer group 22,
and so on)
Verify that the system is already properly configured to use your template
SALESPRO## for your customer group.
Verify that statistical key figures can be used as cost drivers in template allocation to
COPA.
SOLUTION to 1-8:
favorites > customizing-edit project
(SPRO)
This brings you to the IMG. Click SAP Reference IMG.
(C) SAP AG
AC420 22
controlling > profitability analysis > planning > integrated planning > transfer cost
center planning/process planning > set up template allocation > maintain template
determination and other update characteristics
(KEKW)
Enter controlling area 1000
Select "ac420 template determination"
Click the magnifying glass (the choose icon)
The template determination rule says that the template will be identified by customer
group in CO-PA. (KDGRP). Click the "maintain rule values" icon.
Here you will see that your customer group (20 + ##) is mapped to your template
(SALESPRO##).
Exit - stay in the IMG for COPA
Verify that statistical key figures can be used as cost drivers
controlling > profitability analysis > planning > integrated planning > transfer cost
center planning/process planning > set up template allocation > define record types
for selecting cost drivers
(KEVG)
Note that record type H, "stat key figures" is selected.
(C) SAP AG
AC420 23
4
Planning: Contents
Contents:
Integrated Planning, Manufacturing and Service
Planning of Inputs to Processes
Transfer of Statistical Key Figures from LIS in Plan
Planning of Process Outputs
Plan Reconciliation
Process Price Calculation
Product Cost Planning with Templates
Tracing Process Quantities to Profitability Segments
Template Assignment
SAP AG 1999
(C) SAP AG
AC420 1
4.2
Planning
Contents:
Maintenance of the process template for
planning purposes
Product costing with process templates
Tracing process quantities to profitability
segments
Identifying process templates
SAP AG
(C) SAP AG
AC420 2
4.3
Planning: Unit Objectives

Describe the integration of ABC in corporate
planning
Plan input to processes
Plan output from processes
Describe plan reconciliation in ABC
Run price calculation for business processes
Create and use a template for Product costing
Create and use a template in Profitability
Analysis
SAP AG 1999
(C) SAP AG
AC420 3
4.4
Unit Objectives (2)

Describe the meaning of the price calculation for
business processes
Maintain the finding strategy for process templates for
planning
Maintain the process template for product cost planning
Create a cost estimate including process quantities
Describe the plan-assessment to CO-PA
SAP AG
(C) SAP AG
AC420 4
4.5
ABC in R/3
Functions and
Environments
Basic Data and

Structures
B
C
Actual Postings
SAP AG 1999
(C) SAP AG
AC420 5
Planning
4.6
Planning: Unit Business Scenario
You have convinced your project team that ABC in

R/3 should be included in the project!
The team agreed to start using ABC as an aid to
the planning process.
You want to plan process inputs from cost centers,
Plan process outputs,
Plan Product Costs, and
Plan sales order processing costs in CO-PA.
SAP AG 1999
First you have to plan the process input. There are several allocation techniques to plan the process
input.
After the input planning you plan the process output.
Then you start with planning of structured processes.
After the planning of input and output you can start the price calculation. Before you start the price
calculation you can decide wether you want to reconciliate the planned date. This could be supported by
the reconciliation program.
The template now has to be prepared for product costing.
(C) SAP AG
AC420 6
4.7
Integrated Corporate Planning in a Manufacturing
Environment
Strategic
Procedure
Target Requirements
Sales Planning
Profit Planning
Sales Volume
Template
SOP
MRP
Long Term
Activity Input Quantity

Cost of goods
manufactured
/ sold
Routing
Bill of
material
Cost Center/
Center/
Activity Type
Business Process
Product
Costing
Activity Price
Process Price
SAP AG 1999
To fully integrate ABC into the corporate planning cycle, several new customizing activities should be
performed.
In order to identify ABC costs in the cost component view of product cost, new cost components for
processes may be needed..
New value fields may be needed for processes in CO-PA based on the new cost components.
New value fields may be needed for processes in CO-PA which are not product related.
(C) SAP AG
AC420 7
4.8
Transfer of planned process consumption
Overview of
purchased components
SOP
BOM
Routing
LTP
Simulated
Planning
Orders
Template
Overview of
scheduled resources
Overview of
scheduled processes
SAP AG 1999
The planning concept has been expanded to include process requirements. This achieves the same
precision for indirect resources as has been available previously for direct resources.
SOP supports both the high-level planning of complex planning hierarchies and the detailed planning of
finished products.
LTP is used to simulate the future stock and requirements for materials. It uses operative bills of
material, routings, and work centers.
Each of these two sales planning methods can transfer scheduled quantities to integrated ABC.
The template is the tool that will transfer quantity requirements from either SOP or LTP to ABC.
Scheduled quantities can also be transferred from business processes which are assigned to work centers
used in routings.
If this work center is assigned to a routing operation, the corresponding process is pulled. The standard
values of the routing are used to calculate the process quantity based on PP formulas.
(C) SAP AG
AC420 8
4.9
Integrated Corporate Planning in a Service
Environment
Strategic
Procedure
Target Requirements
Sales Planning
Profit Planning
Process Costs
Sales Volume
Template
SAP AG 1999
Template
Business Process
Cost Center/
Center/
Activity Type
Process Price
Activity Based Costing is also fully integrated into the corporate planning cycle when business processes
are service oriented.
The results of Sales Planning in CO-PA will also "backflush (pull) a properly calculated amount of
process quantities and finally of indirect resources (cost center/activity types) required to support the
sales plan. To do this, business processes are assigned through the template directly to profitability
segments (customers, divisions, distribution channels...).
Executing the process price calculation values the CO-PA plan. This means that the process costs will be
transferred to Profitability Analysis (CO-PA).
(C) SAP AG
AC420 9
4.10
Planning of Process Quantity Inputs
cost
center2
AT 1
cost
center 1
AT 2
cost
center 2
AT 3
Direct
activity
allocation
Indirect
activity
allocation
Structured Process
Process 1
Template 1
Process 21
Process 22
Template 2
AT 1
Process
CC1
AT 2
CC2
SAP AG 1999
There are two approaches that may be used to plan process input quantities: activity allocation and
template allocation.
There are several activity allocation methods in R/3: direct, indirect and target = actual.
The structured business process is a method of automating quantity allocations from both cost
center/activity types and from other processes to a higher level process.
Assessment or distribution methods may also be used to allocate costs from cost centers to processes but
we then lose any ability to know the quantity of the indirect resources consumed by the processes.
(C) SAP AG
AC420 10
4.11
Planning with Structured Processes
Process 1
Template 1
Process 21
Process 22
Template 2
Object
Fixed Qty. var. Qty. factor
Process 21
Formula-1
Process 22
20
CC1
Formula-2

Object
AT 1
0.5
Fixed Qty. var. Qty. factor
CC1 / AT 1
CC2 / AT 2
10
Formula-3
AT 2
CC2
SAP AG 1999
A structured process is described by a Template created in environment SBP.

Planning starts with the output from the process, then calculates the required inputs to achieve the
output. You can think of this as ARP - activity requirements planning, which is analogous to MRP material requirements planning.
In the structured template above, Process 1 is the top process in the resource allocation chain. For every
output from Process 1, the template will automatically plan outputs from Process 21 and 22, based on the
quantities found in Template 1. Then, resources will be allocated to Process 22 from the two cost
center/activity types.
Process 1 will pull a variable quantity of Process 22 based on Formula-2 and pull 20 fixed quantities of
Process 22.
For every Process 22 output planned, Process 22 will pull 2 variable quantities from CC2/AT2, a fixed
quantity from CC2/AT2 determined by Formula-3 and 10 variable quantities of CC1/AT1.
Note that cost center/activity types must be linked before they can be used in the structured process
template. Linking is done whenever the combination of cost center/activity type is planned.
The quantities which result from the structured process allocation are considered scheduled quantities.
(C) SAP AG
AC420 11
4.12
Planning Statistical Key Figures
Process:
Process
Stat.
Key Figure:
Stat.
.
Key
Stat
Quantity:Figure
Quantity
Business Process
SAP AG 1999
Statistical key figures can be planned on a business process in the same way as they can be planned on
cost centers.
Planned statistical key figures can serve as a tracing factor for an indirect activity allocation.
They can also be used as the basis for resource allocation in the formula of a structured business process
template.
(C) SAP AG
AC420 12
4.13
Planning of Process Outputs
Process:
1
Process
Quantity:
10 000
Process 1
Stat.
Stat. Key Figure
Quantity
Process:
2
Process
Quantity:
5 000
Process 2
Stat.
Stat. Key Figure
Quantity
SAP AG 1999
Output quantities of a process may be planned manually without identifying a specific cost object.
Output quantities may also be planned in SOP / Long Range Planning which will integrate the process
output with the sales and production plan.
SOP/LTP will create scheduled quantities for the process. The plan reconciliation program will show
you any discrepancies between the planned quantity and the scheduled quantity. It may also be used to
automatically adjust the planned quantity to the scheduled quantity to eliminate any inconsistencies
occurring from the planning effort.
Process outputs may also be planned with cost centers as receivers. An example might be the allocation
of centralized administrative processes back to cost centers.
When a Template is used for cost objects, the process type must be set to manual entry manual
allocation (type 1).
The planned process output is the basis for price determination of the process.
(C) SAP AG
AC420 13
4.14
Plan Process Output Reconciliation
Simulation of
production orders
Resource
consumption
Routing
SOP or LTP
COCOOM
BOM
Planning
Reconciliation
Template
Process
Quantities
Process
consumption
CO-PA
Template
Process
Quantities
SAP AG 1999
Before the plan is finalized, the planned relationships should be reconciled. This will show if any
planned output quantities are unequal to scheduled input quantities.
Any discrepancies in planned quantity may either be ignored, manually adjusted, or automatically
adjusted through the reconciliation program.
(C) SAP AG
AC420 14
4.15
Price Calculation
Process 1
10 000 EA
cost
object:
R-4000
$ 52 989
Costs: $ 52 989
Quantities: 10 000
$ 5.29 / EA
Process 2
5 000 EA
Customer driven
Costs: $ 292 598
Costs: $ 292 598

Quantities: 5 000
$ 58.51 / EA
CO-PA
SAP AG 1999
Each process carries its own unique price with fixed and variable components.
The process price calculation is executed after planning the resource input to the process and the quantity
output from the process.
Only if one of the quantity planning methods have been used in providing indirect resources to the
process will the system calculate a variable process price component.
The value of the variable quantity of resource inputs divided by the total quantity of the process output
results in the variable process price. If fixed resource quantities have also been planned as process
inputs, the value is divided by the total quantity of the process outputs to calculate the fixed process
price.
(C) SAP AG
AC420 15
4.16
Product Costing with Templates
cost
object:
R-4000
Material:
R-4000
Material Lot-size
Routing
BOM
LIS
Functions
Template
Prod_1
Prod_1
Statistical
Key Figures
CO - Values
Material
Operations
Surcharges
Processes:
Processes:
300000
300100
Processes
Other
SAP Sources
SAP AG 1999
Product cost planning includes the quantities and prices from the planned consumption of process
quantities.
The cost component view can be maintained in customizing to include processes in an aggregated view
of process costs and quantities.
In cost component customization, each component may be assigned as valuation relevant if the process
costs should be included in inventory.
The itemization view of the product cost estimate identifies process values with a code of "X."
Overhead values calculated using a costing sheet are identified with a code of G.
(C) SAP AG
AC420 16
4.17
Identifying Templates for Product Cost Planning
Unit Costing /
Product Costing
Costing variant: PPC1
Valuation variant: 001
Costing
sheet
Overhead group:
SAPABC
Overhead
key
Template Prod_1
Template Main
Template Prod_2
Template Prod_3
Process
Cleaning
Q-Check
10
Quantity
10
30 20
20
20
Valuation time
Order-start
Delivery
Material:
R-4000
SAP AG 1999
The link connecting the template to the cost object is created through a template assignment function in
customizing.
The template is assigned to a combination of overhead key and costing sheet.
The costing sheet is linked to a valuation variant, which is linked to a costing variant, which is linked to
the order type.
The overhead group is material master data. The overhead group is assigned to an overhead key in
customizing.
For overhead that will not be modeled using processes the costing sheet method of overhead application
is still available.
(C) SAP AG
AC420 17
4.18
Template for Cost Object Controlling (1)
Material: R-4000
Overhead group:
SAPABC
----------
Template: Prod_1
Object
Quantity
Activation
300000
Formula
Method
300100
Formula
Method
Process:
300000 / Paint $ 4.17 / EA
Process:
300100 / Dry
$ 8.73 / EA
SAP AG 1999
The Object cell on a process template determines the process to be consumed by a cost object.
The process carries the price (fixed and variable) which will be used to value the quantity of the process
consumed by the cost object.
The price may be calculated at the end of the period, after the quantity allocation. In this case the price
is applied retroactively to the allocation.
There are two possible ways for the template to identify the correct business process:
Entering the process directly into the Object cell on the template row as shown above.
Using template functions to determine the process dynamically as a function of relevant criteria
such as plant, profit center, etc. This has the advantage of being able to use the same template row
over multiple processes.
(C) SAP AG
AC420 18
4.19
Material: R-4000
Overhead group:
SAPABC
---------Number of coats: 3
Colors: Red
Template: Prod_1
Object
Quantity
300000
Formula
Method
300100
Formula
Method
Method
Class type: 001
Color <> Stand
Activation
Process:
300100 / Dry
cost
object:
R-4000
Process:
300000 / Paint
SAP AG 1999
Whether a process is active for a given cost object will be determined by the Activation column using
one of three possible different criteria:
The cell is set by default to always active (by blank).
The cell may be set to never active.
The cell may use the template functions and let the template determine whether it is active for a
certain cost object (with Boolean logic).
In the above example, a function call in the activation routine accesses the material classification view of
the material master of the material being produced and compares the color found there to the fixed value
of "stand", meaning standard color. If the material being produced has a color other than "stand (the
result of the Boolean logic is "true) then the material will need to be painted and subsequently dried,
utilizing process resources.
Methods for activation of a process are pre-defined and many functions are available for each companys
unique needs. You can also define own customer functions.
(C) SAP AG
AC420 19
4.20
Material: R-4000
Overhead group:
SAPABC
Template: Prod_1
Object
Quantity
300000
Formula
Method
300100
Formula
Method
Process consumption - R-4000

Process
Activation
Paint
30
Method
Dry
30
Method
Quantity
Activation
MATERIAL_CHARACTERISTIC_
VALUE * ORDER_QUANTITY
CONFIRMED
-> 3 * 10 =
30
SAP AG 1999
If the process is "active" for the specific cost object, the template next determines what the cost driver
parameters are, where they are found, and how to calculate the quantity of the process that will be
consumed by the cost object .
There will probably be a different quantity formula for actual quantities from the plan quantity
calculation. This example multiplies the process driver quantity by the order quantity confirmed. In
plan the same process driver quantity was multiplied by the plan lot size.
To simplify process template construction, a set of pre-defined functions are available, and user defined
functions may be added.
Note that for the "Activation" example, the colors were compared, while the cost driver amount in the
"Quantity" column requires that the value be included in the calculation.
Note also that order quantity confirmed will result in a period specific quantity calculation discussed
in the previous slide for the actual valuation event of blank.
(C) SAP AG
AC420 20
4.21
Product Costing with process consumption

through processes in routings
Cost
Cost
Cost
Routing
AT 1
AT 2
ROUTING
Operation
Quality Check
Driver: min
0010
0020
0030
Work Center
PC-1
PC-2
PC-3
Preparation
Assembly
Quality Check
Std. Value Activity Type

Unit
2 min.
3 min.
5 min.
LA1
LA1
Production
Work Center Data

Business Process
Work Center
Quality Check
PC-3
Order
R
SAP AG

operation.
(C) SAP AG
AC420 21
4.22
Process Consumption by Profitability Segments
LIS
Ext.
Systems
CO-PA
Customer
Functions
Process
Template
Product
SAP AG 1999
For assigning processes that do not relate to product, but relate to profitability segments, the template is
linked to CO-PA characteristics.
Cost driver information may come from CO-PA or the LIS. In many service industries cost driver data is
held in external systems.
(C) SAP AG
AC420 22
4.23
Identifying Process Templates for Profitability

Segments
CO-PA Characteristics
(Dimensions)
Branch
Customer
Group
usable
Region
Derivation Strategy for

Process Templates
Derivation Rule 1
Customer Product
Group
Group
Business Loan
Business Loan
Process
Templates
BLMA
Product Process
Variant Template
Major
Minor
BLMA
BLMI
BLMI
Product Group
Product Variant
R
....
SAP AG
The derivation strategy to find the appropriate Process Template for a specific Profitability Segment is
defined by derivation rules in CO-PA. A specific set of characteristic values points to a specific Process
Template.
You can define several rules for identifying a Process Template. The first derivation rule that finds a
Process Template is used. No other rules will be evaluated. This ensures that no double-postings of
processes to CO-PA can occur.
The Process Templates can be tied to just a few main characteristics making full use of the dynamics of
the Process Template. Such a Process Template will contain generic methods and formulas that are able
to deal with many of your company's processes in one single Process Template.
The Process Template can also be tied to a more detailed level of characteristics (more characteristics are
used in the derivation rule). In this case the Process Template contains methods and formulas for
processes that are specific for the profitability segments specified in the derivation rule and not relevant
to other profitability segments.
(C) SAP AG
AC420 23
4.24
Relevant Dimensions for Process Assignments

Derivation Rule for
Process Template
Customer Product Process
Group
Group Template
Business Loan
BL
Residential Loan
RL
Customer
Group
Business
Business
Residential
Residential
Business
Product
Group
Loan
Loan
Loan
Loan
Loan
Product
Variant
Major
Minor
Minor
Minor
Major
Branch
A
A
A
B
B
Total
loans
30
12
5
23
60
New
loans
5
2
1
3
14
Product
Variant
Customer
Group
Business
Business
Residential
BL
Product
Group
Loan
Loan
Loan
Product
Variant
Major
Minor
Minor
Branch
Total
loans
90
12
28
New
loans
19
2
4
RL
R
SAP AG
You might be interested in assigning your processes to market segments on a more detailed level than
specified in the characteristics from the derivation rule.
Therefore you can add an unlimited number of additional dimensions of CO-PA as relevant
characteristics for posting your processes. Dependent on the characteristics of the derivation rule plus the
additional fixed characteristics relevant for posting, the R/3 system can dynamically derive up to 5
additional characteristics for the posting of processes.
All single items of your operating concern complying with the characteristics that you select as relevant
for posting are aggregated and the processes will be posted to this aggregate data set (profitability
object).
(C) SAP AG
AC420 24
4.25
Plan-Assessment of Business Processes to CO-PA
BOM
Cost
Cost
Cost
COCOCCA
AT X
AT 1
Routing
AT 2
Costing
Sheet
COCOABC
Process 1
Process 2
COCOPC
Production
Order
Template
Plan-Assessment
Warehouse
COCOPA
LIS
SAP AG 1999
For assigning processes that do not relate to product, but relate to profitability segments, it is also
possible to use assessments as well as templates.
LIS key figures can be transferred to CO-PA and can serve as tracing factors for the plan-assessment of
business processes.
The CO-PA record type of H has been created for the transfer of LIS key figures to CO-PA. New value
fields are needed in CO-PA for the key figures.
(C) SAP AG
AC420 25
4.26
Planning: Unit Summary

Describe the integration of ABC in corporate
planning
Plan input to processes
Plan output from processes
Describe plan reconciliation in ABC
Run price calculation for business processes
Create and use a template for product costing
Create and use a template in profitability
analysis
SAP AG 1999
(C) SAP AG
AC420 26
4.27
Summary (2)
The process template is a tool which traces process
quantities to cost objects and profitability segments.
For product cost planning the process template must be
linked to a costing sheet and overhead key.
Process quantities can also be traced to products if
business processes are assigned to a work center which
is assigned to an operation within a routing.
For the costing of process consumption of profitability
segments the process template has to be assigned to the
profitability segments.
SAP AG
(C) SAP AG
AC420 27
4.27.2Planning Exercises
Unit: Planning
At the conclusion of these exercises, you will be able to:

Enter planned statistical key figure quantities to profitability
analysis, and use that data to plan the proper amount of the
applicable business processes.
Run a structured process allocation to plan the correct
quantities of cost center / activity types for the process.
Explain the difference between planned quantities and
scheduled quantities.
Create a business process and run price calculation for the
business process.
Create a template for cost object controlling which uses data
from the classification view of the material master.
Assign the template to a costing sheet and overhead key.
You are intending to use ABC for profitability planning and cost
object planning. To test this, you need to plan the number of
sales order items by customer group, then have R/3 ABC
calculate the process quantity requirements and the cost center /
activity type requirements to support the number of sales order
items.
For cost object planning, you want to create a cost estimate using
data from the classification view of the material master.
Cost Object Controlling, Exercises 1-1 Through 1-8:
You want to test the use of a template for cost object controlling, using product costing. For this
test, we will use direct activity allocation in plan for resource cost assignment, and template
allocation for process cost assignment. In addition, we will calculate a process price in plan.
You've just been asked to come up with a way to quickly provide cost estimates for custom
colored PC's. Each colored PC has it's own material number. The color of the material number and
the number of coats required is information stored in the material master classification view.
You could create a bom and routing for each material and create a cost estimate with quantity
structure. But since you are only planning at this point, you decide instead to use a template to
(C) SAP AG
AC420 28
calculate the cost of painting using information from the material master. Templates can be
thought of as "overhead cost routings" or "financial routings."
Templates provide a method of costing products or other objects with specific kinds of work
(processes), which are not included in the quantity structures of bills-of-materials or routings.
The other method of applying overhead is to use an overhead costing sheet. This does
not provide for identification of work actually required.
1-1
Create a business process 3000## for painting, valid from the beginning of the current
year to the end of any following year.
Name:
Hierarchy area:
Company code:
Business area:
Profit center:
Process driver:
Unit of measurement:
Allocation category:
Allocation cost elem:
Price indicator:
Average price:
painting
BP03
1000
7000
1500
number of coats of paint
PC
1
629100
1
select
Save
1-2
Using Version 0:
Plan output of 10000 coats of paint for the current year, spread evenly over the months.
(You don't know what products, but you do know the approximate total.)
Plan Process input to your process using manual entry manual allocation in plan
version 0, per 1-12, for the current year.
Receiving process
3000##
Sender cost center
4500
Send acty type
1421
Quantity
3600 (you estimate 10000 coats of paint requires3600 hours)
Have the system calculate the planned price for your process 3000## ONLY. In
TEST MODE.
If the result of the price calculation looks right, post the result. No need to rerun with
test mode off.
Verify that when using a calculated planned price (PPI=1), the plan for the business
process has unabsorbed cost of zero.
1-3
(C) SAP AG
The material numbers which may need painting are T-F44##. To first test whether you
can get a template to work, create a simple template to apply a fixed number of coats of
paint whenever it is used.
AC420 29
Your template should be named PROD##, "painting group ##"

Create the template in environment 003, "cost estimate without quantity structure"
The template should consist of one row - business process 3000##. The quantity is 10 +
## (coats of paint). Group 1 applies 11 coats, group 2 applies 12 coats, and so on.
1-4
In order to ensure your template gets applied to your material, you need to assign it to
its costing sheet and overhead key. Verify that the overhead key for your material in
plant 1200 is T-K##. Verify that the costing sheet used for cost estimates without
quantity structure is COGS.
1-5
assign your template PROD## so that it will be used when:

Controlling area:
Costing sheet:
Overhead key:
Environment:
1-6
1000
COGS
T-K##
003
To test your template and template assignment, create a cost estimate without quantity
structure for your material. The component that is to be painted is R-4050, which is a
standard unpainted PC.
However, the cost of the painting can be seen without entering the component items.
View the cost estimate without saving. What template was used? How many coats of
paint were applied?
1-7
Using the material master classification view for your material T-F44##, determine it's
color and the number of coats of paint.
What is the technical name for the characteristic number of coats?
What is the technical name for the characteristic color?
1-8
Change your template PROD## to use a formula which multiples the lot size times the
number of coats.
Test your template by creating a cost estimate exactly as you did before.
No need to save your cost estimate.
PROFITABILITY ANALYSIS, EXERCISES 1-9 THROUGH 1-13

You are now ready to do your planning for Profitability analysis. Planning in PA
consists of two broad categories:
Revenue planning (sales, deductions, product costs)
Indirect cost planning. (support, admin, selling costs, and so on.)
Indirect costs are generally support costs or administration costs that occur in CO-OM
(cost center, orders and processes). In this exercise, the indirect costs are the costs
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incurred to receive and enter sales orders, and prepare the necessary logistics
documents.
To do this, the quantity of the processes required will be calculated, then the quantity
will be "pulled" from the process. Subsequently, the process will "pull" the resource
usage (cost centers / activity types) from the cost centers. Since that is the way it will
happen in actual costs, it makes sense to "simulate" the actual flow in planning, using
the identical pull method.
1-9
The process quantity will be determined by your template SALEPRO##. Review that
template now. The cost center/activity type usage will be determined by your template
SORES##. Review that template now. The price of the process 40090-## has been
preset to 10.00, verify that price now.
1-10
We want to plan the usage of your process 40090-## by planning the number of sales
order items we expect to process for your customer group. Then based on the process
usage planned to support that number of sales order items, we will plan the quantities
of resources (cost center/activity types) needed to provide that service.
The next step therefore is to plan the number of sales order items in PA. We will do
this only for the current month since it makes it easier to see the flow. Normally, this
type of data is planned for an entire quarter or year.
Using PA planning transaction KE11 with layout soi420, enter the following planning
data for your customer group 20 + ##.
Use operating concern IDEA, costing based.
customer
T-co05a##
T-co05a##
T-co05a##
T-co05a##A
T-co05a##A
T-co05a##A
division
01
02
04
01
02
04
quantity (# sls ord items)

100
200
300
400
400
600
total = 2000
After entering your data, verify the entry by running a PA line item list using layout
soil420.
1-11
Now that you have planned the number of sales order items, you want to plan the
number of process executions using integrated planning.
Run dynamic process allocation in COPA
Co code:
1000
Division:
01 to 04
Sale org.:
1000
Customer group: ## + 20
Version:
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42I
Verify that the cost of the appropriate number of processes has been charged to PA
from your process 40090-##.
Use line item layout soil420.
1-12
Now that you have run template allocation to PA, you have SCHEDULED your
process quantity. Scheduled means you have actually identified receivers, in this case
3 profitability segments. You might have planned the output previously, without
specifying the receiver. This is frequently done at the beginning of planning. It is
similar to planning revenue without initially planning the customers.
Verify that you have scheduled quantities but no planned quantities for your process
40090-##. Create a business process group G40090-## consisting of just your one
process. Execute the function which will replace your planned quantity of zero with
your scheduled quantity.
1-13
Now that you have planned the number of units of your process 40090-##, you want to
use that plan to pull the necessary quantity of resources from the 3 cost centers
involved.
Run template allocation for your business process 40090-## ONLY. Verify that the
template allocation pulled the proper quantity of each cost center/activity type.
Run a planning overview report for your process to see the integrated result.
Why is there an amount in the under/over-absorbed? How could we have avoided this?
You have now seen the complete pull process in plan, using a template in COPA and a
template for your process. (ex 1-9 to 1-13)
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4.27.3Planning Solutions
Unit: Planning
At the conclusion of these exercises, you will be able to:

Enter planned statistical key figure quantities to profitability
analysis, and use that data to plan the proper amount of the
applicable business processes.
Run a structured process allocation to plan the correct
quantities of cost center / activity types for the process.
Explain the difference between planned quantities and
scheduled quantities.
Create a business process and run price calculation for the
business process.
Create a template for cost object controlling which uses data
from the classification view of the material master.
Assign the template to a costing sheet and overhead key.
You are intending to use ABC for profitability planning and cost
object planning. To test this, you need to plan the number of
sales order items by customer group, then have R/3 ABC
calculate the process quantity requirements and the cost center /
activity type requirements to support the number of sales order
items.
For cost object planning, you want to create a cost estimate using
data from the classification view of the material master.
Cost Object Controlling, Exercises 1-1 Through 1-8:
You want to test the use of a template for cost object controlling, using product
costing. For this test, we will use direct activity allocation in plan for resource cost
assignment, and template allocation for process cost assignment. In addition, we will
calculate a process price in plan.
You've just been asked to come up with a way to quickly provide cost estimates for custom
colored PC's. Each colored PC has it's own material number. The color of the material number and
the number of coats required is information stored in the material master classification view.
You could create a bom and routing for each material and create a cost estimate with
quantity structure. But since you are only planning at this point, you decide instead to
use a template to calculate the cost of painting using information from the material
master. Templates can be thought of as "overhead cost routings" or "financial routings."
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Templates provide a method of costing products or other objects with specific kinds of
work (processes), which are not included in the quantity structures of bills-of-materials
or routings.
The other method of applying overhead is to use an overhead costing sheet. This does
not provide for identification of work actually required.
1-1
Create a business process 3000## for painting, valid from the beginning of the current
year to the end of any following year.
Name:
painting
Hierarchy area: BP03
Ccompany code: 1000
Business area:
7000
Profit center:
1500
Process driver: number of coats of paint
Unit of measurement:
PC
Allocation category:
1
Allocation cost elem:
629100
Price indicator: 1
Average price:
select
SOLUTION to 1-1:
Accounting > controlling > activity-based costing > master data > business process >
individual processing > create
(CP01)
Business process: 3000##
Valid from:beginning of current year
Valid to: 12/31/9999
Click "master data"
Enter the data as above through the profit center line, then click the allocation tab and
enter the rest of the data.
Save
1-2
Using Version 0:
Plan output of 10000 coats of paint for the current year, spread evenly over the months.
(You don't know what products, but you do know the approximate total.)
Plan Process input to your process using manual entry manual allocation in plan
version 0, per 1-12, for the current year.
Receiving process 3000##
Sender cost center 4500
Send acty type
1421
Quantity 3600 (you estimate 10000 coats of paint
requires 3600 hours)
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Have the system calculate the planned price for your process 3000## ONLY. In
TEST MODE.
If the result of the price calculation looks right, post the result. No need to rerun with
test mode off.
Verify that when using a calculated planned price (PPI=1), the plan for the business
process has unabsorbed cost of zero.
SOLUTION to 1-2:
Accounting > controlling > activity-based costing > planning > process
quantities/prices > change
(CP26)
Enter version 0, period 1 through period 12, current year
process: 3000##
in the planned activity column, enter 10000 SAVE
Accounting > controlling > activity-based costing > planning > cost/activity/process
inputs > change
(CP06)
Using the next layout icon , go to layout 1-D02
Version: 0
From period:
1
To period: 12
Year:
current year
Process: 3000##
Sender cost center:
4500
Send acty type: 1421 click overview
Plan vbl consump:
3600 (this is the number of hours needed to
apply 10000 coats of paint)
Save
You can't run price calculation for a single process. Therefore, create process group
PRODPROC## (consists of one process, 3000##).
Accounting > controlling > activity-based costing > master data > business process
group > create
(CPH1)
Click the business process icon, enter your process 3000##, save
Accounting > controlling > activity-based costing > planning > allocations > price
calculation
(CPPI)
no cost centers
Process group: PRODPROC##
Version: 0
Periods: 1 through 12
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Year:
current year
TEST RUN ON ALWAYS!

Detailed lists
review results on the screen.
If you see a price for just your process,
click the save icon (ignore warning about iteration)
Accounting > controlling > activity-based costing > information system > reports
for ..ABC > planning reports > planning overview for business processes (CPBL)
Business process: 3000##
Year:
current year
Periods: 1 to 12
Version: 0
Note that the plan for the business process shows under/over-absorbed of zero. This is
the benefit of using price calculation (price indicator 1) , compared to manual prices
(price indicator 3).
1-3
The material numbers which may need painting are T-F44##. To first test whether you
can get a template to work, create a simple template to apply a fixed number of coats of
paint whenever it is used.
Your template should be named PROD##, "painting group ##"
Create the template in environment 003, "cost estimate without quantity structure"
The template should consist of one row - business process 3000##. The quantity is 10 +
## (coats of paint). Group 1 applies 11 coats, group 2 applies 12 coats, and so on.
SOLUTION to 1-3:
Favorites>change template (CPT2)
template>create (CPT1) add CPT1 to your favorites
Template: PROD##
Environment:
003
cost estimate w/o quantity structure
Click overview
In the first column, choose "business process"
In the object column, enter 3000##
In the plan quantity column, enter 10 + ## (group 1 enters 11, group 2 enters 12, and
so on)
Save your template.
1-4
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In order to ensure your template gets applied to your material, you need to assign it to
its costing sheet and overhead key. Verify that the overhead key for your material in
AC420 36
plant 1200 is T-K##. Verify that the costing sheet used for cost estimates without
quantity structure is COGS.
SOLUTION to 1-4:
Logistics>materials management>material master>material>display>display current
(MM03)
Enter your material
T-F44##
click "select views"
choose the costing 1 view
enter plant 1200
The overhead group for your material is T-G##
Favorites>customizing - edit project, select SAP reference IMG
controlling>product cost controlling>product cost planning>basic settings for
material costing>overhead>define overhead groups (OKZ2)
The overhead group T-G## is assigned to the overhead key T-K##
In product cost planning, the settings for cost estimate without qty structure point to
costing sheet COGS (note that the costing sheet is not on the material master- it is
configured in product costing.)
controlling>product cost controlling>product cost planning>material cost estimate
without quantity structure>define costing variants (OKKN)
Select PPC1
click the details icon
click the valuation variant button. Click the overhead tab.
1-5
assign your template PROD## so that it will be used when:

Controlling area:
Costing sheet:
Overhead key:
Environment:
1000
COGS
T-K##
003
SOLUTION to 1-5:
Controlling>activity-based costing>templates>assign templates for cost object and
costing
(KTPF)
Click new entries, make your entry, save
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1-6
To test your template and template assignment, create a cost estimate without quantity
structure for your material. The component that is to be painted is R-4050, which is a
standard unpainted PC.
However, the cost of the painting can be seen without entering the component items.
View the cost estimate without saving. What template was used? How many coats of
paint were applied?
SOLUTION to 1-6:
Accounting>controlling>product cost controlling>product cost planning>material
costing>cost estimate without quantity structure>create
(KKPAN)
select create, then at the top of window, favorites>add
Execute the transaction from your favorites menu.
Material: T-F44##
Plant:
1200
Costing variant: PPC1
Costing version: 1
Costing lot size: 10
Click enter twice, accepting the dates. This brings you to the "create unit cost estimate"
screen. Here you can enter the quantity structure manually.
However, click the "revaluate all items" icon first.
You should see your business process 3000## and the quantity of 10 + ##, at the price
you calculated previously.
Note that the quantity is not multiplied by the lot size. This would be fine for lot-size
independent processes, like setup, or like "back-office setup." However, we want to
multiply it by the lot size and the number of coats of paint required for one of the
material T-F44##.
We will do that in the next exercise.
To see how it determined the template to use, goto>technical information.
In the additional information section, you should see:
Costing sheet:
COGS
Overhead key:
T-K##
Template: PROD##
So far, the costing sheet has done nothing for you EXCEPT help determine the
template! To see the costing sheet calculate costs, you need something to apply it to,
which is the material you will paint.
Enter "M" in the category field, then enter material R-4050 which is an unpainted PC.
Enter plant 1200 and quantity 1.
Click the "revaluate all items" icon, ignore warnings about cost component split. You
should now see a category G (overhead), calculated as a percent of the material cost.
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You can see indirect costs on cost objects as category X - process (ABC) costs, and
also as G - overhead costs. In otherwords, you can still use percent or quantity
overhead where it makes sense, it is not an either/or situation.
Exit your cost estimate without saving.
Add the transaction for cost estimate without quantity structure to your favorites.
(KKPAN)
1-7
Using the material master classification view for your material T-F44##, determine it's
color and the number of coats of paint.
What is the technical name for the characteristic number of coats?
What is the technical name for the characteristic color?
SOLUTION to 1-7
Logistics>materials management>material master>material>display>display current
(MM03)
Enter your material
T-F44##
click "select views"
choose the classification view
choose material class type (001)
In the bottom section, "values for class PC01", select "Number of Coats.".
Click the choose icon at the bottom
Click the "I" explanation icon
Characteristic is T-COATS, value = 3 (number of coats)
back up twice and select "Color"
click the choose icon at the bottom
click the "I" explanation icon
Characteristic is T-COLOR, value = 3 (red)
1-8
Change your template PROD## to use a formula which multiples the lot size times the
number of coats.
Test your template by creating a cost estimate exactly as you did before.
No need to save your cost estimate.
SOLUTION to 1-8:
Favorites>change template
(CPT2)
Controlling area: 1000

Template: PROD##
Environment:
003
In the plan cell where you entered the fixed quantity, delete the quantity then double
click. The working space you see is where formulas are entered. Formulas are built
using functions.
Click the "functions" button at the top of the screen.
Scroll down the display until you find UnitCostingLotSize, then double click.
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Insert a space, then " * " (multiplication) then space ,

Click the "functions" button at the top of the screen.
In the materials section, look for the function MaterialCharacteristicValue then double
click.
The characteristic for number of coats is T-COATS. Enter that in the first space. The
class type is 001, enter that in the second space.
The material number is yours, but you want to create a formula that will work on more
than one material.
Click the down arrow next to the blank space for material number.
Choose "functions/variables".
Under material, choose Material by double clicking.
Green check (enter)
Your formula should look like this:
UnitCostingLotSize
* MaterialCharacteristicValue( Characteristic = 't-coats,
ClassType= '001',
Material= Material)
Click the check icon in the upper left
If no errors, left green arrow, save., left green arrow.
Now repeat the prior exercises to create a cost estimate without quantity structure.
You should see 30 coats of paint. (lot size 10 times 3 coats per unit)
PROFITABILITY ANALYSIS, EXERCISES 1-9 THROUGH 1-13
You are now ready to do your planning for Profitability analysis. Planning in PA
consists of two broad categories:
Revenue planning (sales, deductions, product costs)
Indirect cost planning. (support, admin, selling costs, and so on.)
Indirect costs are generally support costs or administration costs that occur in CO-OM
(cost center, orders and processes). In this exercise, the indirect costs are the costs
incurred to receive and enter sales orders, and prepare the necessary logistics
documents.
To do this, the quantity of the processes required will be calculated, then the quantity
will be "pulled" from the process. Subsequently, the process will "pull" the resource
usage (cost centers / activity types) from the cost centers. Since that is the way it will
happen in actual costs, it makes sense to "simulate" the actual flow in planning, using
the identical pull method.
1-9
(C) SAP AG
The process quantity will be determined by your template SALEPRO##. Review that
template now. The cost center/activity type usage will be determined by your template
AC420 40
SORES##. Review that template now. The price of the process 40090-## has been
preset to 10.00, verify that price now.
SOLUTION to 1-9:
Favorites > change template
(CPT2)
Enter "PAC" in the environment field.
Then click the down arrow in the template field, and select the template
SALESPRO##. Click the overview icon.
This is the template you entered in a prior exercise. It should have 1 row.
Accounting > controlling > activity-based costing > master data > business process >
individual processing > display
(CP03)
Enter 40090-##, click master data, then click the "templates" tab.
SORES## appears in the "activity and business process allocation" section, since you
put it there in a prior exercise.
Click the display icon on the right.
This is the template you entered in a prior exercise. It should have 4 rows.
Accounting > controlling > activity-based costing > planning > process
quantities/prices > display
(CP27)
Enter your process 40090-##, plan version 42i, period 1 to 12, current year. Repeat for
plan version 0. The price is 10.00
1-10
We want to plan the usage of your process 40090-## by planning the number of sales
order items we expect to process for your customer group. Then based on the process
usage planned to support that number of sales order items, we will plan the quantities
of resources (cost center/activity types) needed to provide that service.
The next step therefore is to plan the number of sales order items in PA. We will do
this only for the current month since it makes it easier to see the flow. Normally, this
type of data is planned for an entire quarter or year.
Using PA planning transaction KE11 with layout soi420, enter the following planning
data for your customer group 20 + ##.
Use operating concern IDEA, costing based.
customer division
T-co05a## 01
100
T-co05a## 02
200
T-co05a## 04
300
T-co05a##A
01
T-co05a##A
02
T-co05a##A
04
total = 2000
quantity (# sls ord items)
400
400
600
soil420.
SOLUTION to 1-10:
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AC420 41
At the top of your SAP window, click favorites, then insert transaction ke11
Favorites > change plan data
(KE11)
(Operating Concern: IDEA)

Enter layout soi420 (sales order items, ac420)
Enter current period and fiscal year, customer group 20 + ##.
Enter the data (6 lines) and click the save (post) icon.
To verify the data is entered correctly, run PA line item report soil420.
Accounting > controlling > profitability analysis > information system > display line
item list > plan
(KE25)
At the bottom of the screen, enter soil420.
For selections, enter record type H, version 42i, current period/year, then click "additional
selections "
Look for customer group and enter your customer group number which is 20 + ##
Check, then click the execute icon. Click through the warning message
1-11
Now that you have planned the number of sales order items, you want to plan the
number of process executions using integrated planning.
Run dynamic process allocation in COPA
Co code: 1000
Division: 01 to 04
Sale org.: 1000
Version:
42I
SOLUTION to 1-11:
Accounting > controlling > profitability analysis > planning > integrated planning >
transfer cost center planning/process planning > template allocation
(CPPE)
Enter the following selection criteria, execute with a test run, detailed lists
Co code: 1000
Division: 01 to 04
Sale org.: 1000
Version: 42i
Current period
Current fiscal year
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AC420 42
If you see 3 receiving profitability segments and no error messages, execute again
with the test button off.
To verify results, run PA line item report soil420
Accounting > controlling > profitability analysis > information system > display line
items > plan
(KE25)
At the bottom of the screen, enter soil420
For selections, enter version 42i , current period/year, (do not enter record type!) then
click "additional selections ".
Look for customer group and enter your customer group number 20 + ##.
Check, then click the execute icon. Click through the warning message.
You should see the charges in record type D, from your business process.
1-12
Now that you have run template allocation to PA, you have SCHEDULED your
process quantity. Scheduled means you have actually identified receivers, in this case
3 profitability segments. You might have planned the output previously, without
specifying the receiver. This is frequently done at the beginning of planning. It is
similar to planning revenue without initially planning the customers.
Verify that you have scheduled quantities but no planned quantities for your process
40090-##. Create a business process group G40090-## consisting of just your one
process. Execute the function which will replace your planned quantity of zero with
your scheduled quantity.
SOLUTION to 1-12:
Accounting > controlling > activity-based costing > information system > reports for
ABC > planning reports> comparison of planned/scheduled process qtys
(S_ALR_87011767)
Controlling area:
1000
Fiscal year: current year
Plan version:
42i
From period:current period
To period: blank
Selection group-value 40090-##
Accounting > controlling > activity-based costing > master data > business process
group > create
(CPH1)
Enter G40090-##
Click the business process button. Enter 40090-##
Save
Accounting > controlling > activity-based costing > planning > planning aids > plan
reconciliation
(CPMB)
Select "no cost centers"
select " business process group"
Version:
42i
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AC420 43
G40090-##
Period:
current period
Fiscal year current year
test run !
Review the results, if it shows the right plan quantity, post the result.
Now rerun the comparison of scheduled/planned process quantities.
1-13
Now that you have planned the number of units of your process 40090-##, you want to
use that plan to pull the necessary quantity of resources from the 3 cost centers
involved.
Run template allocation for your business process 40090-## ONLY. Verify that the
template allocation pulled the proper quantity of each cost center/activity type.
Run a planning overview report for your process to see the integrated result.
Why is there an amount in the under/over-absorbed? How could we have avoided this?
You have now seen the complete pull process in plan, using a template in COPA and a
template for your process. (ex 1-9 to 1-13)
SOLUTION to 1-13:
Accounting > controlling > activity-based costing > planning > allocations >
template allocation
(CPPS)
Click the business process selection
Enter your business process 40090-##
Version: 42i
Current period
Current fiscal year
Select test run, detailed lists
Click the execute icon
If the result shows 4 sender objects for your process, rerun the allocation with the test
button off.
Accounting > controlling > activity-based costing > information system > reports for
ABC > planning reports > business process planning overview for business processes
(CPBL)
Business process: 40090-##
Year:
current
Period: current
Version: 42i
The reason there is an over/under-absorbed amount is that the prices used for the
activities and processes were created using manual planning.
If we had used planning price indicator 1, then the system would compute the prices
necessary to make the unabsorbed = zero in plan.
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AC420 44
5
Actual postings
Contents:
Actual Postings Compared to Plan Postings
Template Assignment Comparison: Plan and Actual
Resource Cost Assignment for Actual Postings
Cost Object Controlling with Templates
Cost Object Controlling Using Processes in Routings
Tracing Process Quantities to Profitability Segments
Using Templates
Allocations of Processes to Profitability Segments
Variance Calculation for Business Processes
SAP AG 1999
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AC420 1
5.2
Actual Postings: Unit Objectives

Describe the similarities and differences
between planning and actual postings in ABC.
Explain the integration of the LIS system
with ABC
Use a Structured Process allocation to pull
resources from cost centers.
Use template allocation to transfer process
costs to profitability analysis.
SAP AG 1999
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AC420 2
5.3
Unit Objectives (2)

Assign the actually consumed process quantity to a PP
production order and to profitability segments

Describe the allocation techniques which are available
for tracing business processes to profitability segments

Describe the functionality of the variance calculation for
business processes
SAP AG
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AC420 3
5.4
ABC in R/3
Functions and
Environments
Basic Data and

Structures
B
Actual Postings
SAP AG 1999
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AC420 4
C
Planning
5.5
Actual postings: Unit Business Scenario
You have successfully tested ABC in planning.

Now you want to learn how to use ABC for actual
postings.
In particular, you want to test the concepts of
push cost flow and pull cost flow from cost
centers to processes and then to cost objects.
SAP AG 1999
(C) SAP AG
AC420 5
5.6
Resource Quantity Allocation Techniques (1)
Cost Centers
Processes
Cost Object:
PP production
order
AcT 1
Direct activity
allocation
Quantity
allocation
Cost =
Quantity
* Price
Template
cost center 1
Business
process
Indirect
activity
allocation
cost center 2
AcT 2
target = actual allocation
R-4000
LIS
Process consumption
SAP AG 1999
For actual quantity resource assignment from cost centers to processes or from one process to another
the following activity allocation methods are available:
direct activity allocation
indirect activity allocation
target = actual activity allocation
The target = actual method would be a viable option to use only when the planned allocations are known
to be correct with a high degree of certainty.
Resource allocations based on a cost flow only, no quantity flows, can be done using assessment or
distribution.
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AC420 6
5.7
Resource Quantity Allocation Techniques (2)
Cost Centers
Processes
Cost Object:
PP production
order
R-4000
Quantity
allocation
Cost =
Quantity
* Price
Template
Cost Center
Structured
Business
process
Template
AcT 1
Structured
process
allocation
Cost Center
AcT 2
CO-PA
LIS
Process consumption
SAP AG 1999
Compared to activity allocations, Template allocation is a much more flexible method of quantity based
resource cost assignment.
A structured business process template may include cost center/activity types, other processes and other
structured business process templates.
There are two different types of templates used with processes and each has its own specific and unique
purpose.
1-The structured business process template defines the resource assignment from cost centers or
processes to an ultimate consuming process, based on the actual output quantities of the top
process. This template is created in environment SBP (Process nput template).
2-The Template is used to allocate process quantities to a cost object that is consuming that process or
process group (Cost object input template).
(C) SAP AG
AC420 7
5.8
Resource Allocation with Structured Processes
Process 1
Plan
Actual
Quantity
Quantity
Process 21 # or formula # or formula
Object
Template 1
Process 21
Process 22
Process 22
Template 2
AT 1
CC1
AT 2
CC2

Object
Plan
Quantity
CC1 / AT 1
CC2 / AT 2
Actual
Quantity
SAP AG 1999
automatic allocations of resources from the lower level cost center/activity types and/or processes to the
highest level business process in the structure.
There is a graphical display in process master data.
(C) SAP AG
AC420 8
5.9
Transfer of Statistical Key Figures from LIS
4000 orders
LIS - Database
Process
Order / Domestic
... Ship. No...... No. of Orders...

0005
0100
0200
0500
1000
2000
0500
0500
1000
1500
2000
2000
2500
1500
"Domestic" variant
(0 - 1000)
"Foreign" variant
(1000-2000)
Process
Order / Foreign
6000 orders
SAP AG 1999
Quantities maintained automatically by other business transactions integrated with LIS may be
transfered to statistical key figures and subsequently used in the actual allocation of resources to
processes.
The processes in the example use as a statistical key figure "Number of orders". The values of these
statistical key figures are to be found in an LIS database called an "Infostructure".
The master data for the statistical key figures in CO is tied to the LIS key figure "Number of orders"
differentiated by an assigned shipment number range as to foreign or domestic orders.
In order for the automatic transfer of values from the LIS database to the processes to take place, the
specific portion of the LIS database records that really belong to the specific process must be
determined. This is done by a variant which is defined to supply only the relevent data from the LIS
database required by the specific process.
The key figures then serve as a basis for the resource allocation in CO.
The template can also pull process driver information directly from LIS without a statistical key figure
linked to it.
(C) SAP AG
AC420 9
5.10
Cost Object Controlling with Templates
cost
object:
PP production order
R-4000
Material:
R-4000
Order Quantity
Routing
BOM
LIS
Functions
Template
Prod_1
Prod_1
Statistical
Key Figures
CO - Values
Material
Operations
Surcharges
Processes:
Processes:
300000
300100
SAP AG 1999
Processes
Other
SAP Sources
The cost object which uses process resources receives the actual postings from the template allocation.
The process consumption quantities may be adjusted manually.
Plan template formulas must be reviewed carefully and not simply duplicated and used as the actual
template formulas because actual formulas must address actual values. Where lot size was appropriate
to include in the consumption formula in plan it will probably be replaced with order quantity to
calculate the actual consumption.
Similar to the transaction that applies surcharges to cost objects, processes consumed by a cost object are
actually allocated to the specific cost objects by a periodic transaction located in the menu path under
period end processing. You find this menu path always in the menu of the receiving objects (application
and implementation guide). It is important to perform this processing before period end closing of cost
object controlling (wip, variances and settlement).
(C) SAP AG
AC420 10
5.11
Identifying Templates for Cost Object Controlling
Unit Costing /
Product Costing
Costing variant: PPP2
Valuation variant: 007
Costing
sheet
Overhead group:
SAPABC
Overhead
key
Template Prod_1
Template Main
Template Prod_2
Template Prod_3
Process
Cleaning
Q-Check
10
Quantity
10
30 20
20
20
Valuation time
Order-start
Delivery
Material:
R-4000
SAP AG 1999
The technique used by the system to identify the template to use for actual process consumption is
exactly the same as in plan process consumption:
The link connecting the template to the cost object is created through a template assignment function in
customizing.
The templates are assigned to a combination of overhead key and costing sheet.
The costing sheet is linked to a valuation variant, which is linked to a costing variant, which is linked to
the order type.
The overhead group is material master data. The overhead group is assigned to an overhead key in
customizing.
The costing variant is defaulted by the order type. Since different cost objects have different order types,
different templates can be used if the material can be manufactured under different types of cost objects
which consume resources in different proportion.
By using different costing sheets and valuation variant/costing variant assignments, different templates
may be used for actual process consumption using the Standard Cost Estimate, Modified Standard Cost
Estimate, Current Cost Estimate, etc.
For overhead that will not be modeled using business processes , the surcharge method of overhead
application is still available.
(C) SAP AG
AC420 11
5.12
Material: R-4000
Overhead group:
SAPABC
----------
Template: Prod_1
Object
Quantity
Activation
300000
Formula
Method
300100
Formula
Method
Process:
300000 / Paint $ 4.17 / EA
Process:
300100 / Dry
$ 8.73 / EA
SAP AG 1999
The Object cell on a process template determines the process to be consumed by a cost object.
The process carries the price (fixed and variable) which will be used to value the quantity of the process
consumed by the cost object.
The price may be calculated at the end of the period, after the quantity allocation. In this case the price
is applied retroactively to the allocation.
There are two possible ways for the template to identify the correct business process:
Entering the process directly into the Object cell on the template row as shown above.
Using template functions to determine the process dynamically as a function of relevant criteria
such as plant, profit center, etc. This has the advantage of being able to use the same template row
over multiple processes.
(C) SAP AG
AC420 12
5.13
Material: R-4000
Overhead group:
SAPABC
Colors: Red
Template: Prod_1
Object
Quantity
300000
Formula
Method
300100
Formula
Method
Method
Class type: 001
Color <> Stand
Activation
Process:
300100 / Dry
cost
object:
R-4000
Process:
300000 / Paint
SAP AG 1999
Whether a process is active for a given cost object will be determined by the Activation column using
one of three possible different criteria:
The cell is set by default to always active (by blank).
The cell may be set to never active.
The cell may use the template functions and let the template determine whether it is active for a
certain cost object (with Boolean logic).
In the above example, a function call in the activation routine accesses the material classification view of
the material master of the material being produced and compares the color found there to the fixed value
of "stand", meaning standard color. If the material being produced has a color other than "stand (the
result of the Boolean logic is "true) then the material will need to be painted and subsequently dried,
utilizing process resources.
Methods for activation of a process are pre-defined and many functions are available for each companys
unique needs. You can also define own customer functions.
(C) SAP AG
AC420 13
5.14
Material: R-4000
Overhead group:
SAPABC
Template: Prod_1
Object
Quantity
300000
Formula
Method
300100
Formula
Method

Process
Activation
Paint
30
Method
Dry
30
Method
Quantity
Activation
CONFIRMED
-> 3 * 10 =
30
SAP AG 1999
(C) SAP AG
AC420 14
5.15
Material: R-4000
Overhead group:
SAPABC
Template: Prod_1
Object
Quantity
300000
Formula
Method
300100
Formula
Method

Process
Activation
Paint
30
Method
Dry
30
Method
Quantity
Activation
CONFIRMED
-> 3 * 10 =
30
SAP AG 1999
(C) SAP AG
AC420 15
5.16
Cost Object Controlling -Processes in Routings
Work center assigned to cost center (work center linked to ONE cost center)
ROUTING
Operation
Work Center
Qty
0010
PC-1 Preparation
2 min.
1421
0020
PC-2 Assembly
3 min.
1422
0030
PC-3 Quality Check
1 unit
Process is assigned to work center
Activity-Type
(work center can pull from SEVERAL

cost centers through one process)
SAP AG 1999
Consumption of processes by a product can be determined by a Template. In addition, it is possible to

specify process consumption directly in the routing.
operation.
The PP confirmation triggers the posting of the processes in the routing real time. Posting of processes
not in the routing but in the process template occurs at period end.
(C) SAP AG
AC420 16
5.17
Tracing Business Process Quantities to
Profitability Segments
LIS
Ext.
Systems
CO-PA
Functions
Customer
Template
Product
SAP AG 1999
For assigning processes that do not relate to product, but relate to profitability segments, the template is
linked to CO-PA characteristics.
Process driver information might be available already e.g. in CO-PA or the LIS. In many service
industries process driver data is held in external systems. Functions can be custom-made to calculate
with them.
(C) SAP AG
AC420 17
5.18
Characteristic Relevance for Template Selection
Characteristic
Name
Relevant for Selection
VKORG
Sales Organization
SPART
Division
v
vv
....
Template Assignment to Characteristic Combinations

Template determination rule
Maintain Value
Sales Organization
1000 Germany Frankfurt
Division
07 High Tech
Template
T-SALESPRO
Template
Description
Sales Process
SAP AG 1999
The derivation strategy to identify the appropriate Template for a specific Profitability Segment is
defined by derivation rules in CO-PA. A combination of characteristic values points to a Template.
You can define several rules for identifying a Template. The first derivation rule that finds a Process
Template is used. No other rules will be evaluated. This ensures that no double-postings of processes to
CO-PA can occur.
The Templates can be tied to just a few main characteristics making full use of the dynamics of the
Template functions. Such a Template will contain generic methods and formulas that are able to deal
with many of your companys processes in one Template.
The Template can also be tied to a more detailed level of characteristics (more characteristics are used in
the derivation rule). In this case the Template contains methods and formulas for processes that are
specific for the profitability segments specified in the derivation rule and not relevant to other
profitability segments.
(C) SAP AG
AC420 18
5.19
Relevant Dimensions for Process Assignments

Derivation Rule for
Process Template
Customer
Group
Product
Group
Business
Loan
Residential Loan
Process
Template
BL
RL
Customer
Group
Business
Business
Residential
Residential
Business
Product
Group
Loan
Loan
Loan
Loan
Loan
Product
Variant
Major
Minor
Minor
Minor
Major
Branch
A
A
A
B
B
Total
loans
30
12
5
23
60
New
loans
5
2
1
3
14
Product
Variant
Customer
Group
Business
Business
Residential
BL
Product
Group
Loan
Loan
Loan
Product
Variant
Major
Minor
Minor
Branch
Total
loans
90
12
28
New
loans
19
2
4
RL
R
SAP AG
You might be interested in assigning your processes to market segments on a more detailed level than
specified in the characteristics from the derivation rule.
Therefore you can add an unlimited number of additional dimensions of CO-PA as relevant
characteristics for posting your processes. Dependent on the characteristics of the derivation rule plus the
additional fixed characteristics relevant for posting, the R/3 system can dynamically derive up to 5
additional characteristics for the posting of processes.
All single items of your operating concern complying with the characteristics that you select as relevant
for posting are aggregated and the processes will be posted to this aggregate data set (profitability
object).
(C) SAP AG
AC420 19
5.20
Allocation of Processes to CO-PA
BOM
Cost
Cost
Cost
COCOCCA
AT X
AT 1
COCOABC
Routing
Process
AT 2
Costing
Sheet
Process 1
Allocation,
Direct Charging
Process 2
Production
Order
Process
Template
Allocation of
Variances
Warehouse
Product costing
with process
costs
COCOPA
COCOPC
LIS
SAP AG 1999
For assigning processes that do not relate to product, but relate to profitability segments, it is also
possible to use allocations as well as process templates
There are two methods that can be used to allocate processes to CO-PA.
The first method is a direct internal activity allocation, This method is available for actual
allocations only and can not be used for plan allocations.
The second method of allocating processes to profitability segments is assessment.
LIS key figures can be transferred to CO-PA to serve as tracing factors for the actual assessment.
The CO-PA record type of H has been created for the transfer of LIS key figures to CO-PA. New value
fields are needed in CO-PA for the key figures.
(C) SAP AG
AC420 20
5.21
Variance Calculation
Where does the

over/under-absorption
come from?
Process:
300100 / Dry
cost center:
4277
R&D
Sample Shop
Process:
300000 / Paint
SAP AG 1999
Because a process is a controlling object in Inegrated ABC and will contain both planned and actual
costs, variances will naturally occur on a process as they do on cost centers.
Complete variance analysis, consistent with the variance analysis traditionally available for cost centers,
is available to use on processes to answer the inevitable questions on process management and the
differences in actual resource utilization from planned utilization.
The same variance categories are used for process variance analysis as are used for cost center variance
analysis.
(C) SAP AG
AC420 21
5.22
Actual Postings: Unit Summary

Describe the similarities and differences
between planning and actual postings in ABC.
Explain the integration of the LIS system
with ABC
Use a Structured Process allocation to pull
resources from cost centers.
Use template allocation to transfer process
costs to profitability analysis.
SAP AG 1999
(C) SAP AG
AC420 22
5.23
Summary (2)
For the allocation of business processes to CO-PA, direct
process allocation and assessment is also available.
For business processes the same variance calculation is
available as for cost centers.
SAP AG
(C) SAP AG
AC420 23
5.23.2Actual Postings Exercises

Unit: Actual Postings

Update existing templates to process actual data in addition to
plan data.
Post actual quantities of a statistical key figure to profitability
analysis.
Based on the actual statistical key figure quantities in PA, run
dynamic process allocation to pull process quantities into PA
and then run structured process allocation to pull the required
quantities of resources into the process.
You are intending to use ABC to post overhead costs to
profitability analysis. To test this, you need to post the actual
number of sales order items by customer group, then have R/3
ABC calculate the process quantity requirements and the cost
center / activity type requirements to support the number of sales
order items.
1-1
You are now ready to post actual data to Profitability Analysis. To do this, the quantity
of the processes required will be calculated, then the quantity will be "pulled" from the
process. Subsequently, the process will "pull" the resource usage (cost centers /
activity types) from the cost centers. The flow is identical to what you did in planning.
The process quantity will be determined by your template SALEPRO##, which is the
same as in planning. However, you need to update that template for actual postings.
The cost center/activity type usage will be determined by your template SORES##,
which is the same as in planning. However, you need to update that template for actual
postings.
The price of the process has been preset to 10.00, as in planning.
Update your templates SALESPRO## and SORES##.
1-2
We want to post the number of sales order items we actually processed this month for
your customer group. There are two ways this can be done:
Transfer the quantities from the LIS system, if we have an active LIS structure with the data.
We don't.
Manually post the data as an actual to a value field in costing based PA, operating concern
IDEA. (controlling area 1000 is in operating concern IDEA).
(C) SAP AG
AC420 24
Using the create line item function in costing-based PA, post the following actual
quantities using record type H, company code 1000, sales organization 1000, and
distribution channel 01.
customer
T-co05a##
T-co05a##
T-co05a##
T-co05a##A
T-co05a##A
T-co05a##A
division
01
02
04
01
02
04
value field (# sls ord items)

100
200
300
400
400
600
total = 2000
soil420.
1-3
Now that you have posted the actual number of sales order items, you want to use your
template to charge the actual quantity of process 40090-## to profitability analysis.
Run actual dynamic process
allocation in COPA
co code 1000
division 01 to 04
sale org 1000
customer group ## + 20
1-4
Now that you have posted the number of units of process 40090-## to PA, the cost
centers want to get paid for their work. Run actual template allocation for your
business process 40090-## ONLY.
Verify that the template allocation pulled the proper quantity of each cost
center/activity type and that the cost centers got paid.
(C) SAP AG
AC420 25
5.23.3Actual Postings Solutions

Unit: Actual Postings

Update existing templates to process actual data in addition to
plan data.
Post actual quantities of a statistical key figure to profitability
analysis.
Based on the actual statistical key figure quantities in PA, run
dynamic process allocation to pull process quantities into PA
and then run structured process allocation to pull the required
quantities of resources into the process.
You are intending to use ABC to post overhead costs to
profitability analysis. To test this, you need to post the actual
number of sales order items by customer group, then have R/3
ABC calculate the process quantity requirements and the cost
center / activity type requirements to support the number of sales
order items.
1-1
You are now ready to post actual data to Profitability Analysis. To do this, the quantity
of the processes required will be calculated, then the quantity will be "pulled" from the
process. Subsequently, the process will "pull" the resource usage (cost centers /
activity types) from the cost centers. The flow is identical to what you did in planning.
The process quantity will be determined by your template SALEPRO##, which is the
same as in planning. However, you need to update that template for actual postings.
The cost center/activity type usage will be determined by your template SORES##,
which is the same as in planning. However, you need to update that template for actual
postings.
The price of the process has been preset to 10.00, as in planning.
Update your templates SALESPRO## and SORES##.
SOLUTION to 1-1:
favorites > change template
(CPT2)
Enter "PAC" in the environment field. Then click the down arrow in the template field, and select
the template SALESPRO##.
Click the overview icon.
This is the template you entered in a prior exercise. It should have 1 row with a formula in the
first plan column.
(C) SAP AG
AC420 26
Position your cursor in the plan quantity cell. Move your pointer to the "copy row/cell" icon at the
top and single click.
Position your cursor in the actual quantity cell. Move your cursor to the "insert row/cell" icon and
single click to paste the formula.
Click the check icon.
Save your template.
Left green arrow
Change the environment to SBP.
Click the down arrow and select the template SORES##
We want the actual: variable quantity column to be the same as the plan: variable quantity column,
you may type in the numbers or use copy and paste.
Save your template.
Left green arrow
1-2
We want to post the number of sales order items we actually processed this month for
your customer group. There are two ways this can be done:
Transfer the quantities from the LIS system, if we have an active LIS structure with the data.
We don't.
Manually post the data as an actual to a value field in costing based PA, operating concern
IDEA. (controlling area 1000 is in operating concern IDEA).
Using the create line item function in costing-based PA, post the following actual
quantities using record type H, company code 1000, sales organization 1000, and
distribution channel 01.
customer division
value field (# sls ord items)
T-co05a## 01
100
T-co05a## 02
200
T-co05a## 04
300
T-co05a##A
01
400
T-co05a##A
02
400
T-co05a##A
04
600
total = 2000
soil420.
SOLUTION to 1-2:
accounting > controlling > profitability analysis > actual postings > create line items
(KE21N)
Enter record type H, click enter
Enter the 6 transactons, posting after each one.
(C) SAP AG
AC420 27
On each transaction, enter the characteristics, then click the value field tab and enter
the sales order line items.
accounting > controlling > profitability analysis > information system > display line
item list > actual
(KE24)
At the bottom of the screen, enter line item layout soil420.
IF there is a currency type field enter currency type B0, (operating concern
currency). (there may be no field if the operating concern is using only one
currency)
Enter record type H
Period/year: current period/year
Entered by you: ac420-##
Click "additional selections", choose customer group, enter Custormer group 20 + ##
Continue, execute.
Ignore warning message
1-3
Now that you have posted the actual number of sales order items, you want to use your
template to charge the actual quantity of process 40090-## to profitability analysis.
Run actual dynamic process
allocation in COPA
co code 1000
division 01 to 04
sale org 1000
customer group ## + 20
SOLUTION to 1-3:
accounting > controlling > profitability analysis > actual postings >period end
closing> transfer cost center costs/process costs > template allocation
(CPAE)
Enter controlling area 1000 if prompted
Enter the following selection criteria, execute with a test run, Detailed lists
Co code: 1000
Division: 01 to 04
Sale org.: 1000
(C) SAP AG
AC420 28
Version: 0
Current period
Current fiscal year
If you see 3 receiving profitability segments and no error messages, execute again with
the test button off.
To verify results, run a PA line item list using layout soil420
accounting > controlling > profitability analysis > information system > display line
items > actual
(KE24)
At the bottom of the screen, enter line item layout soil420.
IF there is a currency type field enter currency type B0, (operating concern
currency). (there may be no field if the operating concern is using only one
currency)
Click the multiple selection icon to the right of record type, enter D and H, then click
copy.
Period/year: current period/year
Entered by you: ac420-##
Click "additional selections", choose customer group, enter custormer group 20 + ##
Continue, execute.
Ignore warning message
You should see the charges in record type D, from your business process.
1-4
Now that you have posted the number of units of process 40090-## to PA, the cost
centers want to get paid for their work. Run actual template allocation for your
business process 40090-## ONLY.
Verify that the template allocation pulled the proper quantity of each cost
center/activity type and that the cost centers got paid.
SOLUTION to 1-4:
accounting > controlling > activity-based costing > period end closing > single
functions > allocations > template allocation
(CPAS)
Click the business process selection
Enter your business process 40090-##
Version 0
Current period
Current fiscal year
(C) SAP AG
AC420 29
Select test run, detailed lists

Click the execute icon
If the result shows 4 sender objects for your process, rerun the allocation with the test
button off.
accounting > controlling > cost center accounting > information system > reports for
cost center accounting > plan/actual comparisons > cost centers:
actual/plan/variance
(S_ALR_87013611)
Fiscal year:
current
From period:
current
To period: current
Plan version:
42i
Cost center group:
HAC420
The report will show you all the credit that these cost centers have earned by
processing sales order lines for all customer groups (not just yours).
Select a single cost element, click the "call up report" icon, then choose the
breakdown by partner
accounting > controlling > activity-based costing > information system > reports for
ABC > plan/actual comparisons > business processes with allocation partners (by
cost elements)
(S_ALR_87011762)
Fiscal year:
current
Actual version: 0
what?, why an actual version? Huh?
Plan version:
42i
From period:
current
To period: current
Bus proc values: 40090-##
Answer: you can have actual delta versions if you are using parallel (analytic) ABC
(C) SAP AG
AC420 30
6
Functions and Environments
Contents:
Template and Functions
Environments and Sub-environments
Functions
Flexible Functions
Function Trees
SAP AG 1999
(C) SAP AG
AC420 1
6.2
Functions and Environments: Unit Objectives

Explain the purpose of functions.
Explain the purpose of environments and subenvironments.
List the three different classes of functions.
Use a flexible function in a template.
View and change a function tree.
Navigate to the help area which provides more
detail on functions and environments.
SAP AG 1999
(C) SAP AG
AC420 2
6.3
ABC in R/3
Functions and
Environments
Basic Data and

Structures
B
C
Actual Postings
SAP AG 1999
(C) SAP AG
AC420 3
Planning
6.4
Environment of the process template: Unit
Business Scenario
You have now successfully tested ABC for both

planning and actual postings.
When creating your templates, you noted some
functions that you will not need. To simplify the
working environment, you would like to hide
these functions.
You also want to know how new functions can be
added.
Finally, you want to learn how to capture
information from certain multi-item structures in
R/3 such as bills of materials and routings.
SAP AG 1999
(C) SAP AG
AC420 4
6.5
Templates Ask Questions
Template for cost objects

Object
Pl. Qty.
What
process
applies?
Pl. Activ.
Act. Qty
Act. Val. Ev.
Does the process apply?
How much of the process

applies?
Act. Activ.
When does the

process apply?
SAP AG 1999
A template is created within a certain environment, which is determined by the cost object that will
consume the process quantities. For instance, a process that will be consumed by a PP production order
will be controlled by a template created in environment 001, while a process (and it may be the same
process) that will be consumed by a sales order will be controlled by a process template created in
environment 008.
A template consists of pre-defined columns. Each of these columns is looking for information - that is
asking a question. The answer may be hard coded by the user, or found dynamically by the system.
The real power of ABC in R/3 is realized when the system answers these questions dynamically.
(C) SAP AG
AC420 5
6.6
Functions are assigned to Sub-Environments
PP production
order
Sub-environment 101: Processes

Functions: ......
......
Does the
process
apply? What
process
applies?
When does
the process
apply?
How much
of the
process
applies?
Sub-environment 103: Material

Functions:Material_Characteristic_Value
......
Sub-environment 107: General Data

Functions: ......
......
SAP AG 1999
Each cost object in the system has its own environment pre-assigned to it in the delivered system. These
assignments cannot be changed.
Each environment contains pre-assigned sub-environments. This assignment is also fixed and cannot be
changed.
Each sub-environment contains a collection of specific functions which is designed to work with the data
in that particular sub-environment. For instance, a function designed to read the material characteristics
assigned to a material in the material master will be found in the material sub-environment in the
environment defined by the consuming cost object.
The template, which is assigned to a specific environment when it is created, has access to all of the
functions and the corresponding data that they can resolve, found in the different sub-environments.
(C) SAP AG
AC420 6
6.7
Sub-Environments are Assigned To Environments
optional
Environment 001: Material

Costing/Production orders
Environment 003: Material

Costing without quantity
structure
New Functions
normal
Sub-environment 105:
Routing
Material
Sender Process
Environment PAC: Costing
based Profitability Analysis
General Data
SAP AG 1999
A sub-environment may be assigned to more than one environment, making the functions within the subenvironment available to more than one type of cost object. For instance, the sub-environment
containing the functions involving routers is available to the sales order and the production order but is
not available when using cost estimates without a quantity structure.
New user defined functions may be created and assigned either to a sub-environment or directly to an
environment. Assignment to a sub-environment provides for more flexibility because more than one
type of cost object can use the function.
In customizing, you can restrict the use of each new function to a single template cell. Inside each cell,
the specific purposes of each function may be further defined for such things as parameters, whether a
value is entered or defaulted, what the default value will be, etc. The purpose of these restrictions is to
assure that the function hierarchy only allows the template to use a function where and how it makes
sense. For instance, when a function requires a material number as a parameter, only material number
functions are made available.
(C) SAP AG
AC420 7
6.8
Functions
Functions
Table-Field
Material Master
ABAP-Functions
View:
View: MRP 2
K_ABC_ORDER_MAT_CONFIRMATION
Procurement
Storage location:
0001
Table name: MARC

Field name: LGPRO
SAP AG 1999
There are two different kinds of functions, table-field and ABAP functions.
A table-field function allows for a function to use fields from tables that have been allowed in the
specific, delivered environments.
An ABAP function is required if you need access to a field in a table which has not been included in the
specific, delivered environments.
If new functions are created they must be maintained within the template environment area in
customizing.
If new functions are created the 3 level naming convention must be followed which provides for an
external name, internal name and a logical function name.
Functions can be copied, changed, and/or re-named.
(C) SAP AG
AC420 8
6.9
Three Layer Concept for Functions
External
names
Logical
names
ENG
ABAP
GER
STLOC
Table
field
ENG
GER
ENG
PLSKBP
GER
ACSKBP
ABAP
SAP AG 1999
The external name refers to the language or translation version of a function. Each language version will
have its own external name but will point to a single logical name assigned to each function.
The logical name will then have a field within a table that is already visible to a function assigned to it
(table-field function) or point to an ABAP program which can access data from anywhere in the system.
(C) SAP AG
AC420 9
6.10
Flexible Functions
SAP
TOTAL_OF_BOM_ITEMS
Material
Component 1 / Stock
Quantity = 2 item
Component 2 / Non-stock
Quantity = 3
item
Component 3 / Stock
Quantity = 5 item
SAP AG 1999
A flexible function is a special ABAP function which is included in the delivered system.
This type of function contains two parts, a general part in ABAP and a user-defined part.
The general part of Total_Of_BOM_Items in the example above is delivered with the system. Its only
purpose is to loop over the components of a BOM and add whatever values are found by the userdefined part of the function. The values to be accumulated are not specified in the general part of the
flexible function.
(C) SAP AG
AC420 10
6.11
Flexible Functions
SAP
TOTAL_OF_BOM_ITEMS
User-defined
Condition:
Stock items
only
Formula:
Quantity
Material
Component 1 / Stock
Quantity = 2 item
Quantity = 3
item
Component 3 / Stock
Quantity = 5 item
SAP AG 1999
The user-defined part of the flexible function must identify the conditions the general part will use
(example: only components identified as stock items) and what to do when the conditions are satisfied
(example: accumulate the quantity of each component, or apply a formula).
Components 1 and 3 qualify, so the BOM quantity of 2+5 is returned for this specific material. This
quantity can now be used in the template cell which used this flexible function.
(C) SAP AG
AC420 11
6.12
Flexible Functions
SAP
TOTAL_OF_BOM_ITEMS
User-defined
Condition:
Stock items
only
Formula:
Quantity
Material
Component 1 / Stock
Quantity = 2 item
Quantity = 3
item
Component 3 / Stock
Quantity = 5 item
SAP AG 1999
A flexible function is a special ABAP function which is included in the delivered system.
This type of function contains two parts, a general part in ABAP and a user-defined part.
The general part of Total_Of_BOM_Items in the example above is delivered with the system. Its only
purpose is to loop over the components of a BOM and add whatever values are found by the userdefined part of the function. The values to be accumulated are not specified in the general part of the
flexible function.
The user-defined part of the flexible function must identify the conditions the general part will use
(example: only components identified as stock items) and what to do when the conditions are satisfied
(example: accumulate the quantity of each component, or apply a formula). Components 1 and 3
qualify, so the BOM quantity of 2+5 is returned for this specific material. This quantity can now be used
in the template cell which used this flexible function.
Together both of these parts form a single flexible function. Note that the same general part could be
used in a different flexible function with a different user-defined condition which might be based on a
different BOM characteristic than stock/non-stock.
(C) SAP AG
AC420 12
6.13
Function Tree and Environment Maintenance
Product
Product Costing
Costing
BOM
BOM
BOM_ITEM_COMPONENTS
BOM_ITEM_COMPONENTS
MULTIPLE_OF_BOM_ITEMS
MULTIPLE_OF_BOM_ITEMS
Basic Data
Implementation
Parameters
Function Hierarchy
Language
Use
NUMBER_OF_BOM_ITEMS
NUMBER_OF_BOM_ITEMS
...
Processes
Processes
Row Type
Process
Calc. Row
Order
Order Data
Data
Obj.
Qty. Act.
x
x
VEv.
Flex. Func.
General
General Data
Data
Math.
Math. Functions
Functions
...
SAP AG 1999
A function tree is a directly definable structure used to organize functions.

A function tree is assigned to an environment and consists of nodes and function nodes.
Delivered as part of the software, function tree SAP1 is standard to all environments (for example, for
Environment 001 - Function Tree SAP-001, for Environment PAC - Function Tree SAP1-PAC).
Furthermore, this includes all standard-delivery nodes (sub-environments) and function nodes (with
links to the respective functions).
You can copy the standard-delivery function trees SAP1 and their nodes and function nodes. Further
maintenance (changes, deletions, and so on) is only possible with the copied function trees.
The function tree allows you to create new functions or to change existing functions under any node of
the tree. There can be multiple trees for each environment.
(C) SAP AG
AC420 13
6.14
Functions and Environments: Unit Summary

Explain the purpose of functions.
Explain the purpose of environment and subenvironments.
List the three different classes of functions.
Use a flexible function in a template.
View and change a function tree.
Navigate to the help area which provides more
detail on functions and environments.
SAP AG 1999
(C) SAP AG
AC420 14
7
Conclusion
ABC in R/3
Functions and
Environments
Basic Data and

Structures
B
C
Actual Postings
SAP AG 1999
(C) SAP AG
AC420 1
Planning
7.2
Course Goals
This course will enable you to:
Configure and operate Activity Based Costing
Acquire knowledge to plan, assign, and analyze
costs
SAP AG
(C) SAP AG
AC420 2
7.3
Course Objectives

Explain the functions of Activity Based Costing.
Apply the knowledge necessary to configure and
implement Activity Based Costing in R/3.
SAP AG 1999
(C) SAP AG
AC420 3
7.4
Course Objectives (2)

Create structured processes in the R/3 system
Describe the integration of ABC within the integrated
corporate planning
Describe the business purposes of the process
template for cost objects and the structured

business process template and maintain the
templates
Describe the relationship of the environment, sub-
environment and functions for the process template

for cost objects and the structured business process
template
Analyze business process information using reports
SAP AG
(C) SAP AG
AC420 4
7.5
ABC in R/3
Functions and
Environments
Basic Data and

Structures
B
C
Actual Postings
SAP AG 1999
(C) SAP AG
AC420 5
Planning
7.6

IDES management has decided to
implement SAPs Activity Based Costing as

a further enhancement to the accounting
system.
You are temporarily assigned to the project
team to participate the implementation and

assist in any required changes.
Once the system is live, you will be one of
the primary users of Activity Based

Costing.
SAP AG
(C) SAP AG
AC420 6
7.7
Recommended Follow-Up Courses (1)

AC415 - Overhead Orders covers:
Master Data
Budgeting and Availability Control
Event-Based Postings
Period-End Closing
Planning
Information System
Special Subjects
SAP AG
(C) SAP AG
AC420 7
7.8

AC510 - Cost Object Controlling for products covers:
Introduction to Cost Object Controlling Scenarios
Goals and Basic Settings of Cost Object Controlling
Cost Object Controlling by Lot
Cost Object Controlling by Period
Cost Object Controlling with external processing and

subcontracting
Information system
SAP AG
(C) SAP AG
AC420 8
7.9

AC515 - Cost Object Controlling for Sales Orders
covers:
Introduction to Cost Object Controlling Scenarios for Sales

Orders
Basic Settings of Cost Object Controlling by Sales Order
Scenario Make-to-Order with Production but w/o sales order

controlling
Scenario Make-to-Order with Production Cost Collector but w/o

sales order controlling
Complex Make-to-Order Scenario with Production and with

sales order controlling
Scenario Service Process with Resource-related Billing
Information system
SAP AG
(C) SAP AG
AC420 9
7.10
Recommended Follow Up Courses (AC605)
AC605 - Profitability Analysis covers:

Overview of Profitability Accounting
Basic Data Structures
Characteristics Derivation and Valuation
Flow of Actual Data
Sales & Profit Planning
Information System
Technical Topics
SAP AG 1999
(C) SAP AG
AC420 10
7.11

LO930 - Logistics Information System (LIS): Reporting
Data Warehouse Concepts
Standard Analysis in LIS
Advanced Standard Analyses
Early Warning System
Flexible Analysis in LIS
LIS Environment
SAP AG
(C) SAP AG
AC420 11
7.12
Finish . . .
FINISH
SAP AG
(C) SAP AG
AC420 12
Appendix
This section contains supplementary material
to be used as reference
This material is not part of the standard
course
Therefore, the instructor might not cover this
during the course presentation
SAP AG
(C) SAP AG
AC420 1
8.2
ABC - Competitive Advantage 2000
Strategic Planning Assumption

By 2000 companies that have not
incorporated ABC into a formal ongoing
business transformation program will be
operating at a severe competitive
disadvantage. (70%) *
* GartnerGroup AAS Research Note Strategic Planning, V. Frick
SAP AG 1999
ABC stands for Activity Based Costing, which is a costing method that allows you to find out where
costs are really consumed in your company. A distorted product cost analysis can result in poor business
decisions in terms of pricing and product strategy.
Although such decisions can increase revenue, they often have no impact or even a negative impact on
profitability.
By using ABC, you can make better business decisions by focusing on the right products and the right
markets.
(C) SAP AG
AC420 2
8.3
Cost Management in the Past
1400
How are you going

to improve in April?
1200
1000
800
# shots
plan
actual
600
400
200
0
Jan
Feb
Mar
Apr
Day # Shots Planned Actual

Score Score
1
6
60
54
2
7
70
50
3
5
50
60
...
...
...
...
SAP AG 1999
In the past, the Controller could be compared to a referee in a bowling game and the line managers to the
bowlers.
At the end of a particular period, the referee could give feedback only on the average result of all plays
rather than specific feedback during each game. As a result, the players had no chance to adjust their
game from one game to the next.
In a business context, this lack of feedback corresponds to the lack of meaningful activity-based
information that could be used to improve performance.
Of course, you'll never get top players by using this method.
(C) SAP AG
AC420 3
8.4
Cost Management in the Future
More to the left and

a little bit harder!
harder!
Day
# Shots
1
2
3
...
6
7
5
...
Planned
Score
60
70
50
...
Actual
Score
54
50
60
...
Daily Business
SAP AG 1999
Today, the Controller acts more like a coach.

By using R/3, the Controller can provide immediate activity-based feedback to managers within the
organization. The managers can use this feedback to continually adjust and improve their performance,
based on accurate figures of financial processes, non-financial processes, and key activities.
(C) SAP AG
AC420 4
8.5
The Dynamic Market Dilemma
GLOBAL RESEARCH
quicker obsoleteness
of technology
CUSTOMERS
demand for
better service
GLOBAL COMPETITION
decreasing market prices
shorter product life cycles
external
forces
higher investments
through automation &
more indirect activities
SHAREHOLDERS
Quick ROI
more & more short
term oriented
less time to recover investments
in an increasingly dynamic
environment
internal
dilemma
need for a better understanding of the overhead cost structure to
control the business in terms of process performance and
product/customer profitability
ABC: Cost Transparency on Activity Level
SAP AG 1999
Because of globalization, market forces require that companies recover investments in overhead
resources more quickly than in the past. Therefore, a comprehensive understanding of your company's
overhead cost structure is a prerequisite for properly responding to these market forces.
ABC provides on an activity level the transparency that's needed to clearly see the activities and
associated costs in your company. This, in turn, provides a process-oriented view of the organization.
The result: Effective measurements of how overhead resources in your organization are utilized.
(C) SAP AG
AC420 5
8.6
Activity-Based Costing
Activity-Based Management
Business Processes
Cost
Driver
Fair cost
assignment
Eliminate non-value
added activities
Customer
C u m u la te d P r o fit
ROI
Optimized Processes
Enable Growth
Reduce Total Overhead
Realistic Product Costing
Improved Profitability
Profitable Loss
Market Segments
SAP AG 1999
ABC's primary goal is to gain more cost transparency for overhead resources.
With ABC's Fair Cost Calculation method in place, products are assigned only that amount of indirect
costs that properly correlates to the activities they consumed. Once realistic costs are visible,
management can focus on making business processes more efficient.
By increasing the process efficiency with ABC you can create spare capacity of your resources. This
spare capacity can either be used to enable further growth of your business or it can be eliminated to
reduce long-term total overhead costs in your company.
Because ABC identifies non-profitable products and customers, you can take the appropriate actions
related to those products and customers to improve long-term profitability.
(C) SAP AG
AC420 6
8.7
Traditional Costing vs. ABC (I)
contribution
contributionto
toremaining
remainingoverheads
overheadsand
andprofit
profit
price (cost) / piece
standard
margin: 32 %
overhead
surcharges
standard
margin: 4 %
overhead
surcharges
dir. labour
dir. labour
material
material
product A
product B
SAP AG 1999
In traditional Costing systems, overhead costs are allocated on a percentage basis based on direct labor
costs.
The standard margin is the difference between the market price and the product cost. This margin
contributes to both overhead costs and to profits.
This example shows the traditional costing view where two similar products that are sold at different
prices. Obviously product A looks much more profitable than product B.
(C) SAP AG
AC420 7
8.8
Traditional Costing vs. ABC (II)
OFP:
Order Fulfillment Process
NPDP: New Product Development Process
price (cost) / piece
ABC margin: 2,5 %
Support
standard
margin: 32 %
OFP
NPDP
standard
margin: 4 %
ABC margin: 10 %
OFP
NPDP
dir. labour
dir. labour
material
material
low volume product A
high volume product B
SAP AG 1999
ABC, on the other hand, tries to assign process-related overhead costs to products as they are actually
consumed.
For example, assume that product A is a low-volume product, whereas product B is a high-volume
product. As a result, development cost are spread over a lower life-cycle volume for product A, which
results in a higher new product Development Process Cost per piece compared to product B.
Because of the lower volumes, the average lot size for product A is probably smaller than for product B.
This means that all batch-related activities in the Order Fulfillment Process, such as production planning,
will contribute to the higher cost-per-piece for product A.
As you can see, Product B now looks more profitable than product A.
(C) SAP AG
AC420 8
8.9
Implications of Product Cost Distortion
(The Vicious Circle of Competitive Decay)

increased product
variety and complexity
increases
product cost
distortion
leads to
implies
many low volume

product lines
encourages
cross subsidization
of products
SAP AG 1999
As demand for revenue growth increases, many companies expand product-line offerings into "niche"
products. Such expansions often increase a product's complexity due to the need to maintain product
differentiation. Because niche products often use many of the same indirect resources as the "main"
products, overhead costs are traditionally allocated in the same proportions.
Because this allocation method results in a "peanut-butter" spread of overhead to all similar products, the
profit contribution of these niche products encourages development of additional niche products.
When ABC shows the actual utilization of indirect costs, a common discovery is that, because of
product differentiation, the main products receive a larger share of indirect costs than they actually
require. For the niche products, on the other hand, the share of indirect costs is understated.
Unless you are aware of this issue, you can make poor product strategy and pricing decisions.
(C) SAP AG
AC420 9
8.10
The Whale Curve Profitability Including Process Cost
Cumulated Profit
Potential Profit
profitable
loss
products,
customers
etc.
products,
customers
etc.
Market Segments
Actual Profit
Products,
Customers,
Channels etc.
SAP AG 1999
An ABC view typically shows a different picture of Cumulative Profit, where many by different market
segments contribute, than a traditional Costing View. For example, the ABC view shows how total
overhead costs cut into the profitability of many products, or how customers can look more profitable
than they actually are when viewed with traditional period costing.
The Cumulative Profit curve generally has the shape of a whale's back, where products are listed in
descending order based on their contribution to total profit. The declining slope shows all products that
make a negative contribution to income. These are the products that cut into the potential profitability of
the entire product line.
Simply discontinuing these products usually isn't the solution because the resources they consume add to
unused capacity. Additional analysis is required to determine how the selling price, redesign, positioning,
and other factors can increase profitability.
(C) SAP AG
AC420 10
8.11
Tasks and Goals of ABC
Overhead Cost Transparency
resource consumption through processes

parallel quantity and value flow
Increasing Effeciency
resource leverage in overhead areas
continous effeciency control of
internal processes
interface management through
process oriented thinking
Fair Cost Calculation

source appropriate cost allocation
of internal activities
cost of complexity
cost of product and process change
Information for Strategic Decision Making

reduce overhead cost
through process optimisation
increase profitability through

identification of non profitable
products and customers
SAP AG 1999
ABC's primary goal is to gain more cost transparency for overhead resources.
With ABC's Fair Cost Calculation method in place, products are assigned only that amount of indirect
costs that properly correlates to the activities they consumed. Once realistic costs are visible,
management can focus on making business processes more efficient.
By increasing the process efficiency with ABC, you can reduce the long-term total overhead costs. And,
because ABC identifies non-profitable products and customers, you can take the appropriate actions
related to those products and customers to improve long-term profitability.
(C) SAP AG
AC420 11
8.12
Key Success Factors for ABC Initiatives
Management enabled
Strategic, action oriented approach to
process improvement
Overcoming resistance to change
Established decision making process
with quantitative performance measures
No double-maintenance of parallel cost
accounting systems
Full scalable tool support
Software enabled
SAP AG 1999
The key factors for a successful ABC implementation fall into two categories: management-driven and
software-driven.
The management-driven issues, shown in the top of the slide, must be addressed first. This requires that
management understands indirect cost utilization and establishes and enforces policies based on that
knowledge.
As we move down the slide, the issues become more and more software-driven. For example, if there is
no need for double-maintenance of parallel Cost Accounting Systems, you can eliminate redundant data
input and reduce the potential for database inconsistency.
(C) SAP AG
AC420 12
8.13
SAP's Competitive Edge
CO-OM-ABC
ABC fully integrated in
the R/3 environment
No need for a separate

cost accounting system
Cost driver quantities

available in operational
data
No need for complex

interface & upload
processes
SAP AG 1999
Even if the management-driven success factors are in place, ABC projects may fail due to softwaredriven factors.
By implementing ABC, you can overcome software-related problems because of the R/3s high degree
of integration and scalability.
(C) SAP AG
AC420 13
8.14
Cost of Accounting Systems
Cost of Accounting Systems
Total Cost
Cost of Detail
Non-Integrated
System Integrated
System
Total Cost
Cost of Detail
Cost of Errors
Low Level
Level of Detail
High Level
SAP AG 1999
The total cost of an accounting system is based primarily on two factors: the Cost of Error, which is due
to a lack of detailed information, and from the Cost of Detail, which depends on the level of information
needed for decision making.
In non-integrated systems, the Cost of Detail usually grows rapidly when complex sets of information
need to be combined manually to create a consistent foundation for management decisions.
In an integrated system, all relevant information is always available and can be collected automatically
by the system.
Because the Cost of Error is the same for both systems, an integrated system usually provides a higher
level of detail at a lower cost than a non-integrated system, even when implementation costs are
taken into consideration.
Evaluating cost driver quantities is an important factor for a successful ABC implementation. This
evaluation usually requires lots of detailed information from the operational systems.
(C) SAP AG
AC420 14
8.15
ABC in R/3 Fulfills the CAM-I Cross
CAM-I Expanded ABC Model
Cost Assignment View
Resources
Process View
Cost
Drivers
Activity
Trigger
Activities
Activity
Cost
Assigenment
MEVATEC
www.rpm-abm.com
Resource
Cost
Assigenment
Cost
Object
cost center 1AT 1

AT 2
Resource
Drivers
Performance
Measures
Activity
Drivers
Process
Cost
Objects
Profitability
Segments
SAP AG 1999
The SAP approach to ABC fully covers the requirements of the CAM-I Cross.
However, R/3 uses several terms from the CAM-I Glossary in a different context. These differences were
incorporated to make the terms consistent with those in other integrated R/3 applications.
For example, the CAM-I term Resources correspond to the R/3 term Cost Center and AT, which
stands for Activity Types.
The CAM-I term Activities corresponds to the R/3 term Processes.
Finally, the CAM-I term Cost Objects maps to the R/3 terms Cost Objects and Profitability
Segments
(C) SAP AG
AC420 15
8.16
Stages of Integration for
Cost Accounting Systems*
* Kaplan (1991)
System focus
Advantages/
Advantages/Disadvantages
Systems
STAGE 1
No systematic financial
controlling
STAGE 2
Focus on external
requirements to the
financial accounting
Accounting
Poor knowledge of 'real'

product cost;
poor support to company
controlling.
Contribution
Margin
STAGE 3
Focus on relevance
as a company control
tool
Improvement of the quality of

future oriented predictions.
Often inconsistent, nonintegrated stand alone
systems.
ABC, Target
Costing
STAGE 4
Focus on synthesis
of cost management,
cost planning and cost
control
'Fair' product costing;

analysis of detailed questions
of relevance in terms of
leading the company.
Operative ABC,
integrated
Target Costing
SAP AG 1999
Several stages characterize a company's integration of Cost Accounting systems.

Most companies find themselves at Stage 2 for their manufacturing or core business areas.
The standard R/3 CO component already provides some of the Management Accounting functionality
required for moving to Stage 3. However, some functionality still needs to be provided by standalone PC
tools.
The integration of operational ABC into the R/3 system is the first step in the transition to a real Stage
4 system, where inconsistencies caused by non-integrated systems no longer exist.
(C) SAP AG
AC420 16

D45ABC ActivityBasedCosting

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D45ABC Activity Based Costing

R/3 System Release 46C 04/25/2001

D45ABC Activity Based Costing...................................................................................................................................0-1

Integrated Corporate Planning in a Manufacturing Environment........................................................................2-27

Template for Cost Object Controlling (3)............................................................................................................4-20

Templates Ask Questions.......................................................................................................................................6-5

Copyright 1999 SAP AG. All rights reserved.

Project team members of an ABC implementation team

Notes to the user

This course will prepare you to:

and its implementation within R/3.

Activity Based Costing.

At the conclusion of this course, you will be able to:

implement Activity Based Costing in R/3.

Course Objectives (2)

Create process templates

Execute process related business transactions

Execute reports for business processes and cost

Basic Data and

Basic Data and

Your company's management would like to

investigate implementing the ABC application in

are supposed to help determine how ABC would

planning and actual postings.

At the end of this unit you will be able to:

At the conclusion of this unit, you will be able to:

Basic Data and

You are on the project team for an SAP R/3 release

ABC in SAP R/3: Unit Business Scenario (2)

No need for a separate

Cost driver quantities

No need for complex

Charge Quantity * Price

Linked to product costing

Relevant to stock valuation

Linked to profitability analysis

You may use:

Delta version 2: Parallel ABC

Delta version 1: Parallel ABC

service industry such

Engineer-to-order plant engineering and

Overview of Allocation Techniques

Activity allocation techniques

Resource Consumption by Business Processes

Template 1 for Process 1

Template 2 for Process 22

Assignment of Statistical Key Figures to LIS

Material Master Data

Product Costing with Process Templates

Product Costing: Processes in Routings

W ork Center Data

Consumption of processes by a product can be determined by a process template. In addition, it is

Process Assignment to Profitability Segments

Actual Valuation Event

How much of the

When does the

Under which conditions

Reusing Process Templates

Process template - Light

Lot-size * Volume / Tank-Capacity

Process Consumption - LightLight-Beer Barrel

Activity Input Quantity

Process Input Quantity