Classified: INTERNAL USE ONLY Not to be quoted or reproduced without written permission The Associated Cement Companies Limited Thane, 25 Jul 2006 CO00 - CO Overview

2 The Associated Cement Companies Classified: INTERNAL USE ONLY /IYS Not to be quoted or reproduced without written permission CO Module Course Objective  Explain the purpose of Controlling Module (CO)  Explain the difference between FI and CO  Understand the components of CO  Understand the integration within CO  Understand the integration between CO and other Modules

3 The Associated Cement Companies Classified: INTERNAL USE ONLY /IYS Not to be quoted or reproduced without written permission CO Module Course Objective  Understand the usage of CO master data  Understand the planning processes that are related to the SAP system  Understand concept of cost allocation and its methods  Understand Internal Order Concept

4 The Associated Cement Companies Classified: INTERNAL USE ONLY /IYS Not to be quoted or reproduced without written permission CO Module SAP R/3 R/3 Client / Server ABAP/4 CO AM PS WF IS MM HR SD PM PP QM FI

5 The Associated Cement Companies Classified: INTERNAL USE ONLY /IYS Not to be quoted or reproduced without written permission CO Module Application Module : Controlling (CO) The CO Application Module provides a variety of tools that can be used to provide operational information to the management of a company to support business analysis and decision-making. CO Controlling

6 The Associated Cement Companies Classified: INTERNAL USE ONLY /IYS Not to be quoted or reproduced without written permission CO Module Why do we need CO?  Also called managerial accounting  CO is an internal management tool  Main task of controlling is planning  Facilitates coordination, monitoring and optimization of all processes in an organization  CO is a subset of Accounting that deals with production and non-production (marketing and administrative expenses), expenses related to operating profit (production related issues).

7 The Associated Cement Companies Classified: INTERNAL USE ONLY /IYS Not to be quoted or reproduced without written permission CO Module Contrast between FI and CO  Every type of financial information  Company as a whole  External  Operational  How you run your business  Production and all other revenues and expenses  Sub-sets of divisions  Internal  Decision making support system (pricing, planning, etc.)  Analytical tool  How you manage your business FI CO

8 The Associated Cement Companies Classified: INTERNAL USE ONLY /IYS Not to be quoted or reproduced without written permission CO Module CO Components  Cost and Revenue Element Accounting  Overhead Cost Controlling  Cost Center Accounting  Internal Orders  Activity-Based Costing  Product Cost Controlling  Product Cost Planning  Cost Object Controlling  Actual Costing/Material Ledger  Profitability Management  Profitability Analysis  Profit Center Accounting

9 The Associated Cement Companies Classified: INTERNAL USE ONLY /IYS Not to be quoted or reproduced without written permission CO Module CO Components Profit Center Accounting Product Cost Controlling Overhead Cost Controlling CO OM CO PA Profitability Analysis Are the responsibility areas working efficiently? How high are the costs of organizational activities? Do they keep to their budgets? How can we optimize the internal processes? How can we rein in our overhead? EC- PCA CO PC CO CEL What costs occur within our organization? Cost Element Accounting What are the manufacturing costs of a product? How profitable are individual market segments? How profitable are individual enterprise areas?

10 The Associated Cement Companies Classified: INTERNAL USE ONLY /IYS Not to be quoted or reproduced without written permission CO Module Cost & Revenue Element Accounting ( CO-CEL)  Part of accounting where you enter and organize costs incurred during a settlement period  Collects and summarizes postings that arise within CO in a reconciliation ledger  Provides the structure for assignment of CO data through the classification of transaction line items according to the nature of the cost and revenue being posted to a given controlling object

11 The Associated Cement Companies Classified: INTERNAL USE ONLY /IYS Not to be quoted or reproduced without written permission CO Module Cost Center Accounting (CO-CCA)  Used for controlling purposes within the organization  Cost Center Structure  Cost Planning  Cost Allocation

12 The Associated Cement Companies Classified: INTERNAL USE ONLY /IYS Not to be quoted or reproduced without written permission CO Module Internal Orders (CO-OPA)  Extremely flexible CO tool  Provides capabilities for planning, monitoring and allocation of costs  Used for variety of purposes:  Investment orders (CAPEX)  Overhead orders  Marketing expenses  Maintenance  Company cars  Accrual orders  Orders with revenue Cost Collector

13 The Associated Cement Companies Classified: INTERNAL USE ONLY /IYS Not to be quoted or reproduced without written permission CO Module Product Costing ( CO-PC)  Track actual costs of production  Provides extensive tools for cost analysis  Cost objects:  Production orders  Sales orders  Process orders  Product cost collector

14 The Associated Cement Companies Classified: INTERNAL USE ONLY /IYS Not to be quoted or reproduced without written permission CO Module Profit Center Accounting (EC-PCA)  Profit and loss analysis

15 The Associated Cement Companies Classified: INTERNAL USE ONLY /IYS Not to be quoted or reproduced without written permission CO Module Profitability Analysis (CO-PA)  Multidimensional profit and loss reporting across elements of the distribution channel, sales Representative, product, customers.  Profit and loss analysis.

16 The Associated Cement Companies Classified: INTERNAL USE ONLY /IYS Not to be quoted or reproduced without written permission CO Module Profitability Analysis (CO-PA)  Sales details, cost-of-sales details, contribution margins, period cost details and required.  Actual period costs (S,G,A) are to be allocated across organizational entities at month-end.

17 The Associated Cement Companies Classified: INTERNAL USE ONLY /IYS Not to be quoted or reproduced without written permission CO Module Controlling Modules Cost Center Accounting (CO-CCA) Internal Orders (CO-OPA) Profit Center Accounting (CO-PCA) Profitability Analysis (CO-PA) Product Cost Accounting (CO-PC) Processes: Activity Based Costing (CO-ABC)

18 The Associated Cement Companies Classified: INTERNAL USE ONLY /IYS Not to be quoted or reproduced without written permission CO Module CO-Architecture: Quantities and Values Procure Produce Move Stock Sell, Bill HR CO PC Production Order Process Overhead Order Material Valuation Cost Center Profitability Analysis Profit Center Accounting Product Cost Controlling Overhead Cost Controlling Human Resources Cost Element Accounting CO OM CO PA Profitability segment Financial Accounting Asset WIP RevenueFI Stock Material Labor OHProcess EC- PCA

19 The Associated Cement Companies Classified: INTERNAL USE ONLY /IYS Not to be quoted or reproduced without written permission CO Module We … Know the way, show the way, go the way