2.1 Cost center
As discussed in the previous chapter, the definition of the cost centers represents the organization from a cost control perspective. Once the master data is defined, the cost centers are arranged in a hierarchy to represent the structure of the enterprise from a cost control responsibility perspective. During the design of the system, the nature of that responsibility structure should be determined. On what parameters or criteria are the costs managed? Is it on a geographical basis, a functional basis, a product line basis, some other method, or a combination of some of the above? Usually a cost center should have an owner or manager to ensure that someone owns the responsibility for the plan and the costs.
As you will see, multiple views or hierarchies can be created using cost center groups to represent different ways of arranging the cost center structure. This concept will be discussed later in this chapter. At a minimum, you need to have a Standard Hierarchy, which needs to contain all the cost centers within the controlling area. Technically, the name of this hierarchy is defined first in the configuration settings and assigned to the controlling area before the cost center masters can be created.
The cost centers can be created either through the individual creation transaction code KS01 (see Figure 2.1) or directly within the standard hierarchy (this option will be shown later).
Figure 2.1: Create cost center initial screen
Set the controlling area
Often, when entering transactions in the controlling module in SAP, you are presented with a preliminary screen asking you to enter the controlling area. Having to enter the controlling area constantly can become aggravating, especially when you may only be working with one area. The solution to this is to set your controlling area using transaction OKKS. Enter the controlling area that you work with and press the save button. The value is now stored in your user parameters and remains until you set it to a different value.
It is important to understand how you will name or number pieces of master data such as cost centers before you create them. Unlike some master data objects in SAP, a number range object does not drive cost center numbering. In fact, it is free form. You are limited by the field size of up to 10 characters, and there are a few special characters such as * that will be rejected; otherwise, you can use any alphanumeric combination you choose.
You should also know the cost center is specific to the controlling area and not to the company code. This means it is not possible to have a duplicate cost center identifier value within the same controlling area. For example, you might have several company codes assigned to the same controlling area, and you may have the same departmental function in each of those company codes. As an example, in a legacy application, you may have an HR department in two different companies, and this legacy application will allow you to use the same department identifier in each company. For instance, Human Resources might be department 100 in each of the company codes. In SAP, this will not work since we cannot duplicate the identifier 100 in the same controlling area. In SAP, you will need to work in another way. Perhaps by adding the prefix of the company code or some other logic, you can build your cost center hierarchy without having duplicate numbers. You might have the logic that the identifier 100 remains to mean Human Resources, but you add a prefix to represent the company code so you would have cost centers 6000100 and 6100100. These kinds of thought processes need to occur with cost center numbering in SAP.
When you have decided on your cost center number, go ahead with transaction KS01. You will need to enter Valid From and To dates. It is important to understand that the cost center is considered a time-based object in controlling, which means it is created with a validity period, and you can create different data values for different periods.
In configuration, certain fields on the master data can be flagged as time dependent, resulting in SAP storing a new master record whenever a time-dependent field is changed on a cost center. The ability to create time-based objects is a very important aspect of controlling since it allows you to view master data values at different periods. For example, the person responsible for the cost center may change next year. If person responsible is a time-dependent field, then you will have a view of the cost center master when Miles was the person responsible, and then a new view starting when person responsible is reassigned.
Defining time dependent fields
Since every change to a time-dependent field causes SAP to write a new master record for the data object being changed, you should be very careful in defining fields as time dependent in the system configuration. By defining many time-dependent fields, the data volumes can become large, and match-code searches can become confusing for the user, as a piece of master data with more than one-time range will appear multiple times in a match-code search. The SAP-delivered configuration should be sufficient for most situations.
The time dependency of other master data is checked when you assign a cost center to it, such as a profit center. For example, if you created a profit center to be valid from 01/01/2015 onwards, you cannot create a cost center assigned to that profit center with a valid-from date earlier than 01/01/2015.
Valid-from dates and other master data
It is best to be aware of other master data requirements when you are setting up validity dates for cost centers, profit centers, and other CO objects. There may be requirements from other modules, such as HR or fixed assets, that the cost centers should exist for a certain time in the past to allow historical data to be loaded. It is good to know that before you create your cost centers and profit centers to avoid extra rework to extend the validity periods.
The final section on the initial screen allows you to use an existing cost center from the same or different controlling area as a template from which to copy your new cost center.
Copying master data
Many master data objects will have a copy from or create with reference option to allow you to use an existing piece of master data as a template for your new entry. This can significantly speed up the creation of new pieces of master data.
The most important information about the cost center is contained on the BASIC DATA tab. (see Figure 2.2).
Figure 2.2: Create cost center basic data
On this tab, you will define the Name and Description of the cost center. These are essentially a short text value and a longer text value to define the cost center name. You should maintain both values since some reports and evaluations will use the Name and others will use the Description, depending on the available space.
Other key fields on the basic data tab are person responsible; this is the person responsible for the results of the cost center, presumably the cost center manager. There is also user responsible, which links to the user master in the SAP system. This field is not mandatory since it is possible that the person responsible for the cost center does not exist as a user in the SAP system. The department field is a free text field that can be used to store an external department number. There is no validation on the entry in this field, so the user creating the cost center can enter any value they choose. This may be used to store a department identifier from pre-SAP systems which can be used as a cross reference.
The cost center category contains codes that have been created in the SAP configuration settings (see Figure 2.3). These can be used for a variety of control purposes, which we will explore later, and also populate default values into the cost center as it is being created. The category should relate to the function or purpose of the cost center. Ideally, each cost center should serve one primary function for example production or administration. If you are having trouble assigning categories to your cost centers because you think the cost center performs more than one function, then you may need to rethink your cost center design.
Figure 2.3: Cost center categories configuration
The field Hierarchy node makes the link between the cost center and its place in the standard hierarchy. The hierarchy node selected here is a node in the standard cost center hierarchy. The company code is the FI company code that the cost center is assigned to. This is a mandatory assignment, and a cost center can only be assigned to one company code at a time. This assignment is always time-dependent and can only be changed at the end of a fiscal year. The business area is an optional assignment in this case, as we are not using business areas in this system. The business area is another FI organizational object that can define separate areas of operations or responsibilities within an organization. The functionality and use of business area has been largely superseded by profit center and segment, although you might see business areas being used in industry-specific SAP solutions. Like the company code, the business area assignment is always time-based and also can only be changed at a fiscal year end.
During the creation of the cost center, the fields for functional area and currency will not be open for input. The functional area will default into the cost center based on the value assigned to the cost center category (see Figure 2.3) that you select. The currency will default into the cost center based on the configured local currency of the company code that you have selected. The functional area will become open during the creation of the cost center and can be changed from the default value. The currency on the cost center, which is known as the object currency in CO, cannot be changed to a value different from that of the assigned company code.
The final field on the basic data tab is the profit center. If you are using profit center accounting, either in the classic mode or as a scenario in the new general ledger, you will need to assign the cost center to a profit center. The purpose of assigning cost objects such as cost centers or orders to profit centers is to ensure that profit centers receive postings when the assigned objects receive postings and that users do not need to intervene manually. One assignment we do not see on the cost center is the segment. The segment is an organizational element that was introduced to SAP as part of the new GL. If you have not migrated to the new GL, you will not see the segment as a field in accounting postings, and you will not have to worry about it. If you have either migrated to the new GL or have always used new GL, then you may have the segment, and you will have considered how the segment is used in your organization. In a new general ledger system, the segment is assigned directly to the profit center, so it is unnecessary to also assign it on the cost center as the segment will be derived through the profit center assignment.
Additional parameter information is found on the control tab (see Figure 2.4).
Figure 2.4: Cost center control tab
All the values on this tab will default into the cost center based on the cost center category selected on the basic data tab. If you look back at Figure 2.3, you will see that the settings for cost center category H have been adopted as defaults. These defaults can be changed, but it is recommended to define the relevant categories and values so you don’t need to manipulate these settings manually when creating cost centers.
The Record Quantity indicator on the cost center works in conjunction with the Record Qty indicator in the cost element (see Figure 2.5)
Figure 2.5 Qty indicator on the cost element
If both these indicators are checked, then in a posting involving the cost element and the cost center SAP will check whether you have entered a quantity and unit of measure in the posting. If the quantity is missing, there will be a warning message. In planning, using this combination of cost element and cost center, the system will enforce the unit of measure assigned to the cost element during the entry of the plan data.
Below the Record Quantity indicator in Figure 2.4 are the lock indicators. These indicate that the cost center is locked against the type of posting for which the indicator is checked. It is possible to lock the cost center against actual postings for primary costs, for secondary costs, and for revenues. It is important to note that even if the lock is inactive for actual revenues, the revenue posting will only be statistical to the cost center. In planning, it is also possible to lock against the same types of transactions. The last lock indicator is the commitments update.
The term commitment in SAP generally means a contractual obligation for costs that will be incurred. It is possible to track commitments against many cost objects in SAP, including cost centers, internal orders, maintenance orders, production orders, and elements of projects such as work breakdown structures. Commitment management should be activated at the general controlling organization level in the system configuration (see Figure 2.6) before it can be activated for individual cost objects. Sometimes the activation of commitment tracking is activated on the master data for cost centers; other times, some additional configuration may be required.
Figure 2.6: Commitment activation at controlling area
In most standard SAP systems, the types of obligations we see generating commitments in CO are cost object-assigned purchase requisitions and purchase orders from the materials management (MM) module. We will see examples of this later on when we discuss actual cost center posting.
The next tab on the cost center master contains links to templates that can be used to allocate planned or actual costs in SAP. Templates are sophisticated calculation tools primarily used in the activity-based costing component in SAP but can also be used in other modules such as cost center accounting and product costing to allocate planned or actual costs. You will notice on the template tab in Figure 2.7 that several templates can be assigned to the cost center for various purposes, such as formula planning. This functionality allows you to generate planned values in the cost center based on formulas defined in the template. In the cost center, you can assign formula planning templates for activity-independent planning and for activity-dependent planning.
Figure 2.7: Cost center templates tab
Templates also can be assigned for actual activity and business process allocation. These templates would be used to allocate actual activity-independent or activity-dependent costs to the cost center periodically. It is also possible to assign two templates for actual statistical key figure calculation. Although the two fields have the same description, the first one is used for posting to a cost center, and the second one is for posting to a combination cost center and activity type.
The final possible assignment on the templates tab is a costing sheet. The costing sheet is another allocation tool that is used primarily in product costing but can also be used as another method to move costs from a sending cost center to some other receiving cost object using percentage- or quantity-based overhead rates. By assigning a costing sheet on the cost center master, we are identifying the cost center as a receiving object for the overhead costs calculated by the costing sheet. If we were using actual overhead allocation and/or actual template allocation, then these would usually be periodic steps that would be run as part of the fiscal period closing process.
The template allocation process is simply another way of moving costs around within SAP controlling. Although the tool is somewhat complex, the concept does not differ from other methods of cost allocation such as activity allocation, assessment, distribution, or settlement. Similar to the other forms of allocation, there will be cost objects that will send the costs, and there will be other cost objects that receive the costs. There also will be rules defining how much will be allocated from the senders to the receivers. The sender(s) and the rules are defined in the template. Then, the template is assigned to the receiving cost objects. If you keep this overall concept in mind, it will help when trying to design and use templates.
The next two tabs, address and communication, allow you to enter the address, tax jurisdiction, language, telephone, fax, etc. for the profit center. If you are required to store this information at the cost center level, then the fields are available but not mandatory. The final tab, history, may become useful if you want to see who created the master data object or to see if any changes have been made to it.
Figure 2.8: Cost center history tab
The change document button (see Figure 2.8) will display all field changes to the master data (see Figure 2.9), and by clicking on the field, it will show the old and new values, who made the change, and when it was made (see Figure 2.10).
Figure 2.9: Changed fields in the cost center
Figure 2.10: Changed field detail
After you have created the cost center master using the transaction KS01, you can use transaction code KS02 to go back and make changes or transaction KS03 to display the master data. It is also possible to perform all these functions through the standard hierarchy, as you will see in the next section.
Once you have created your cost centers and started to use them, you may be interested in finding where your cost centers are used in allocations or in other master data elements. In the KS02 transaction, you can use the where-used list function that is accessed from the environment menu. (See Figure 2.11.) As an example, you can see what activity types are linked to this cost center through activity planning. Select the where-used list menu option, and then select the activity types option to get a report (see Figure 2.12). The overall values option gives a report on every area in one display.
Figure 2.11: Cost center where-used
Figure 2.12: Activity types used with cost center
If you are using the SAP business client with the cost center manager role provided in the FIN_CO_CCMGMT business function, or the FIORI app for manage cost centers to access the cost center master data, then the view will be slightly different and there will be some additional functionality. The approach using the business client will be shown; however, other than a few largely cosmetic differences in the search options and the screen layout, the FIORI app view is much the same. You will see the initial search screen for the Web Dynpro application in Figure 2.13
Figure 2.13: Web Dynpro cost center search
The main thing to note is that the search is entirely flexible. There are three columns in the search: the field, the matching criteria, and the value being matched. Then to the right there are buttons that will allow you to add or remove search rows. Within both the field column and the matching criteria column, you can select values to build the search (see Figure 2.14).
Figure 2.14: Flexible search selections
Once you run the search based on your inputted criteria, the results will be shown in a lower section of the screen (see Figure 2.15).
Figure 2.15: Results list for search
From the results list, you can select a cost center and click on the edit button to open the cost center in edit mode or double click on the cost center name to open in display mode.
Figure 2.16: Web Dynpro view of cost center master
The first thing you will notice on the master data screen shown in Figure 2.16 is that the tabs are no longer present. Instead, we have stackable sections that can be opened and closed by a toggle button. These mostly correspond to the tabs that you see in the standard SAP GUI transaction. The major differences are:
- The original basic data tab has been split into two sections, General Data and Organizational Units.
- The History tab is now called Compliance.
- There is a new section for translation and long text.
The addition of the translation section (see Figure 2.17) is a welcome feature since it was previously more difficult to maintain multiple language texts on the cost center master.
Figure 2.17: Cost center translation and long text
The where-used list is still available in the Web Dynpro application through a button, rather than through a menu. In addition, a hierarchy area button will take you directly to the standard hierarchy node where the cost center is assigned (see Figure 2.18).
Figure 2.18: Hierarchy area
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