The Associated Cement Companies Limited CO01- Cost Center & Profit Center Accounting Thane, 26 JUL 2006 Partha.bhar@acccement.com

Agenda Purpose of Cost Center and Profit Center Accounting Master Data in CO module and its purpose Cost Planning Actual-Postings CO Module

Purpose Cost Center Accounting Profit Center Accounting Used for Controlling purposes within an organization Tracks where costs occur in an organization Useful in the analysis of the overhead costs Profit Center Accounting Allows to calculate internal measurements of profitability Provide an organization the opportunity to analyze and report internal profitability for its organization CO Module

The Associated Cement Companies Limited Master Data Thane, 26 JUL 2006 Partha.bhar@acccement.com

Master Data Cost Center Standard Hierarchy Cost Center and Cost Center Group Profit Center Standard Hierarchy Profit Center and Profit Center Group Cost Element and Cost Element Group Account Group Statistical Key Figure CO Module

Master Data Internal Order Activity Type Account Group Cost Center Profit Center Group Cost Center Group Profit Center Cost Element Cost Element Group Statistical Key Figure CO Module

What is a Standard Hierarchy? Tree structure representing all cost centers belonging to a controlling area from a Controlling perspective. CO Module

Cost Center Standard Hierarchy Coding Structure Level 0 Level 1 Level 2 Level 3 Level 4 Level 5 Highest Level Segment Level Sub-segment Level Function Sub-function Group of Cost center IN01 1a 2ab 3abc 4abcd HAC code CO Module

Cost Center Standard Hierarchy CO Module

What is a Cost Center? Organizational unit within a controlling area that represents a clearly delimited location where costs occur Cost centers are grouped together into decision, control, and responsibility units - organizational divisions on the basis of functional, settlement-related, activity-related, spatial, and/or responsibility-related standpoints. CO Module

Cost Center Coding Structure Alpha numeric seven-digit code First five digit should be based on HAC 3 5 1 2 4 6 7 X X X X X Function for Cost center Group Plant/ Business Area Sequential # HAC Code CO Module

Cost Center Coding Structure … Production Main Cost Center 1xxxxxx : Raw material Extraction 2xxxxxx : Raw material Preparation 3xxxxxx : Raw meal Preparation 4xxxxxx : Clinker Production 5xxxxxx : Cement Grinding ดู sheet Cost center description ตาม ซึ่งในด้านของส่วน Production แบ่งกลุ่มของ cost center เป็น 3 ประเภท ดังนี้ 1. Main cost center เป็น cost center ในส่วนที่เกี่ยวข้องกับการผลิตโดยตรง โดยที่ค่าใช้จ่าย/ต้นทุน (Cost) ที่เกิดขึ้น จากขั้นตอนการจากกระบวนการผลิตจากจุดเริ่มต้นจนถึงจุดสิ้นสุดที่ให้ Product ในแต่ละขั้นตอนมา โดยที่อุปกรณ์และเครื่องจักรที่ใช้ในการลำเลียงและ feeding เข้าสู่ Storage ของตัวเองเป็นของ Cost center นั้นๆ ในส่วนที่เกี่ยวข้องกับการ reclaiming and extracting จาก storage เป็นของ cost center ถัดไป ซึ่งเราแบ่ง Main cost center ออกเป็น 5 Cost center CO Module

Cost Center Coding Structure … Production Auxiliary Cost Center Bxxxxxx : Plant infrastructure Cxxxxxx : Plant management Dxxxxxx : General plant service Gxxxxxx : Plant maintenance & workshop Hxxxxxx : Quality control & laboratory CO Module

Cost Center Coding Structure… Production Pre-Process Cost Center Lxxxxxx : Fuel preparation Kxxxxxx : Additive material preparation & handling Exxxxxx : Power generation CO Module

Cost Center Coding Structure… Non-Production 6xxxxxx : Shipping station &Warehouse 7xxxxxx : Distribution 8xxxxxx : Marketing & Sales 9xxxxxx: Administration CO Module

Cost Center Group To produce reports for several cost centers You can create any amount of cost center groups independent from the standard hierarchy. Standard cost center groups were automatic created from cost center standard hierarchy. Creation standard cost center group by reference to HAC (Holcim Asset Code) A cost center group can be used for many purpose; for example: To produce reports for several cost centers To process several cost centers in one business transaction To allocate cost from one group to another group CO Module

What are Accounts and Cost Elements? Cost element classifies an organization’s valuated consumption of production factors within a controlling area A cost element corresponds to a cost-relevant item in the chart of accounts Account Structure which records value transactions within an accounting unit as regards an element from a value grouping CO Module

Cost Elements Primary Secondary Company Company The expenses that come from outside of the company and are visible in the financial books (e.g., Salary, electricity, etc.). Secondary Company Company The expenses that determined using inside the company and they can be assigned to cost center (e.g. Admin.expenses, etc.). They aren’t visible in FI in the financial books. CO Module

Account Code VS.Cost element Balance Sheet Account Primary cost element Profit and loss Account Secondary cost element CO Module

Primary VS. Secondary Cost element Create G/L account in FI Create C.E. in CO Create C.E. in CO Post to G/L account in FI Update C.E. in CO Post to C.E. in CO CO Module

Primary Cost Element Categories In APAC we use 3 types (Categories) of Primary cost element Number range Cost element categories 10000000 – 10099999 11 for Revenue 20240000 – 20241000 1 for COGS 20000000 – 20199999 1 for Expense 30000000 – 30099999 90 for AUC acquisition cost CO Module

Secondary Cost Element Categories In APAC we use 3 types (Categories) of Secondary cost element Number range Cost element categories 81000000 – 81099999 42 for Assessment 82000000 – 82099999 43 for Internal Activity Allocation 83000000 – 83099999 21 for Internal settlement 84000000 – 84099999 42 for Assessment to CO-PA CO Module

Secondary Cost Element Structure Number range Usage 81000000 – 81009999 (42) Allocate pre-process/auxiliary cost to main cost centers 82000000 – 82009999 (43) Allocate cost from cost center to Process order or PM order using activity type 83000000 – 83009999 (21)Settlement cost from PM order to cost center 84000000 – 84009999 (42) Allocate cost from cost center to CO-PA CO Module

Cost Element Groups NA0001 Raw Material 20010100-20018900 20019100-20019900 Cost Element Groups are used in allocations planning and formatting reports. CO Module

Cost accounting manufacturing cement Inventories Infrastructure and mainte- nance Plant management General plant services Power and control network Parts and supplies management Plant maintenance and workshops Quality control and laboratory Mobile equipment maintenance garage Water supply/ treatment/ distribution Sewage treatment (plant) Solid waste Railway traffic infra-structure (at plant) Products Auxiliary cost centres Bag Alternative raw material preparation Power generation Preparation of correctives Traditional fuels preparation Alternative fuels preparation Preparation of additives (including e.g. slag grinding) Volume reference tons Pre-process cost centres Allocation to all receiving cost centres 70 % to clinker production 30% to cement grinding Bulk purchased Raw material extraction Raw material preparation Raw meal preparation Clinker production Cement grinding Cement Main cost centres Raw material produced Volume reference kWh/t Clinker produced Volume reference tons Volume reference tons Raw material purchased Clinker purchased Clinker CO Module

What is a Statistical Key Figure? Statistical key figures define some measurable value applicable to cost centers, profit centers, internal orders, or processes Use as an allocation base Such as Power Consumption Factor (such as clinker factor, etc.) CO Module

Statistical Key Figure Structure SKF Name SKF UoM NSK0001 Electricity Produce KWH NSK0002 Drilling bit EA NSK0003 Operation time H NSK0004 Number of trips TRP NSK0005 Power consumption NSK0006 Tonnage TO NSK0007 Monthly factor FAC NSK0008 Yearly factor CO Module

Exercise 1: CC Std Hier./Cost Center Display Cost center standard hierarchy by menu path. Display Cost center standard hierarchy by use T-code. Display Cost center code by menu path. Display Cost center code by use T-code. Refer to BPP ….. CO Module

Exercise 1: Cost Center/Cost Center Group Change Cost center code by menu path. Change Cost center code by use T-code. Change Cost center group by menu path. Change Cost center group by use T-code. Refer to BPP ….. CO Module

Exercise 1: Cost Element/Cost Element Group Display Cost element by menu path. Display Cost element by use T-code. Display Cost element group by menu path. Display Cost element group by use T-code. Refer to BPP ….. CO Module

Exercise 1: Statistical Key Figures Display Statistical Key Figures by menu path. Display Statistical Key Figures by use T-code. Refer to BPP ….. CO Module

Profit Center Standard Hierarchy CO Module

Dependencies New Product Profit Center Standard Hierarchy Material Master Profit Center Profit Center Group CO Module

Dependencies Cost center Group New Cost center Cost Center Profit Center Standard Hierarchy Cost Center Standard Hierarchy Profit Center Cost center Cost center Group CO Module

Dependencies New Account GL Account Primary Cost Element Cost Element Group CO Module

Dependencies PC Standard Hierarchy CC Standard Hierarchy GL Account Primary Cost Element Secondary Cost Element Material Master Profit Center Cost center Profit Center Group Cost center Group Cost Element Group Allocation Default Cost center Validation CO Module

Profit Centers Integration Cost Center GL, AP, AM, MM, AR Post cost/expense Record Profit Center SD Post revenue The smallest area of responsibility within a company’s overall organizational structure CO Module

Exercise 2: Profit Center Std Hier./Profit Center Display Profit center standard hierarchy by menu path. Display Profit center standard hierarchy by use T-code. Display Profit center code by menu path. Display Profit center code by use T-code. Refer to BPP ….. CO Module

Exercise 2: Profit Center Group/Account Group Display Profit center group by menu path. Display Profit center group by use T-code. Display Account group by menu path. Display Account group by use T-code. Refer to BPP ….. CO Module

The Associated Cement Companies Limited Planning Thane, 26 JUL 2006 Partha.bhar@acccement.com

Cost Planning Objectives To plan the structure of the organization’s future operations for a clearly defined time period. To control the business methods within the current settlement period To monitor efficiency after completion of the settlement period using plan/actual or target/actual comparisons To provide a basis for the valuation of organizational activities, independent of random fluctuations CO Module

Cost Center Planning Cost center planning consists of the following areas: Planning of costs expected to be incurred Cost Element Planning Planning of activity quantities and/or prices Activity Price Planning Planning statistical key figures, which are used as the basis for the allocation of costs Statistical Key Figure planning CO Module

Organization of Planning Planning Areas Planning Layouts Planning Profiles Planning Versions CO Module

Planning Version Plan version Version 0 Version1-12 Plan Data CO Module

Planning... Accounts Planning in Profit Center Accounting 1xxxxxxx Revenue 2xxxxxxx Expense 3xxxxxxx Asset 4xxxxxxx Liabilities 5xxxxxxx Shareholders Planning in Profit Center Accounting Cost Center Accounting General Ledger CO Module

CCA Planning PCA Planning Planning in SAP CCA Planning Other Cost elements PCA Planning Revenue and Related accounts CO Module

GL PCA CCA Asset Liabilities Revenue Revenue Expense Expense Expense Planning Integration GL Asset Liabilities Revenue PCA Revenue Expense CCA Expense Expense CO Module

Planning Function in CCA Enter Planning Data Copy Actual Data to Plan version Copy Plan Data from plan version to another plan version Reporting CO Module

The Associated Cement Companies Limited Actual Postings Thane, 26 JUL 2006 Partha.bhar@acccement.com

Actual Postings Reposting line item Reposting cost Enter Statistical key figures CO Module

Reposting Reposting is the feature of CO to correct the FI posting (incl. AR/AP/GL documents) Reposting is not a reverse-type transaction. Allow to change Cost object assigned Allow to change the portion b/w CCs (split) Repost Line item (not recommended): Used to transfer the cost from a cost object which is wrongly made at primary system to another cost object in CO The change only effects CO report, not change in original FI document Require a specific FI document for this function Reference is Costing document CO Module

Reposting Repost Cost To make correction by posting the cost from one cost center to other cost center(s) or order(s) No requirement for document Free amount to cut/ paste CO Module

Exercise 3: Reposting/Enter actual SKF Reposting cost by menu path. Reposting cost by use T-code. Posting actual SKF by menu path. Posting actual SKF by use T-code. Refer to BPP ….. CO Module

Know the way, show the way, go the way We… Know the way, show the way, go the way CO Module