Unit 1 Overview of Management Management Accounting Unit Overview
This unit discusses the general tasks of Management Accounting and gives an overview of its components. It shows how the Management Accounting components are interrelat ed and how they interact with other SAP applications.
Lesson: General Tasks of Management Accounting Lesson Overview
This lesson describes the differences between management accounting and financial accounting in SAP solutions. It describes the different major components of Management Accounting and shows how they interact and how financial data flows between them and other components of the SAP system. Business Example
Your initial focus is to gain an understanding of the purpose of Management Accounting and how it works with Financial Accounting to provide financial and controlling information. Financial versus Management Management Accounting Accounting includes many different functions and business processes. The SAP system
architecture consists of specialized accounting components that serve various accounting functions. Financial Supply Chain Management (previously referred to as Treasury) concentrates on
functions such as cash management, treasury management (for instance, funds, foreign exchange, derivatives, and securities), loans, and market risk management. Financial Accounting mainly involves the general ledger (G/L), processing receivables and payables,
and asset accounting.
Investment Management supports planning, investment, and finance processes for capital
investment measures.
Management Accounting (previously referred to as Controlling) offers many tools that can
be used to prepare operating data for business analysis and management decisions.
The main components of Management Accounting are used for different tasks and types of analysis: 1.
Classify costs and reconcile data
2.
Control overhead costs and allocate costs
3.
Evaluate the cost of goods or services
4.
Analyze profit
5.
Analyze success of individual profit centers
Lesson: Overview of Management Accounting Components Lesson Overview
This lesson briefly introduces the Management Accounting components and the elements, such as cost elements, cost centers and internal orders, that are used in management accounting. You will also learn how activity-based costing is used in Management Accounting. Business Example
Management of an enterprise requires different tools for different situations. You want to review the Management Accounting components to see which tool is suited for a particular analysis purpose. Main Components of Management Accounting
The following Management Accounting components can be grouped according to their purpose as shown in the previous lesson: 1.
Classify costs and reconcile data
2.
Control and allocate overhead costs
3.
Evaluate the cost of goods or services
4.
Analyze profit and success
Classifying Costs and Reconciling Data
Cost and Revenue Element Accounting (CO-OM-CEL) is part of Overhead Cost Controlling. It provides a structure for assigning Management Accounting data by classifying transaction
items, which are posted to a corresponding controlling object (for example, a cost center or an internal order) depending on their cost or revenue element.
Controlling and Allocating Costs
Overhead Cost Controlling has two components, Cost Center Accounting and Cost and Revenue Element Accounting. Each addresses certain aspects of analyzing and controlling overhead costs. Overhead costs are costs that cannot be assigned directly to cost objects (for example, production orders).
Evaluating the Cost of Goods or Services
Product Cost Accounting is concerned with all aspects of planning the cost of producing products or services, as well as tracking and analyzing the actual costs. Product Cost Accounting consists of the following components:
Product Cost Planning
Cost Object Controlling
Actual Costing and Material Ledger
A profit center is a management-oriented organizational unit used for internal controlling purposes. If you divide your enterprise into profit centers, you can analyze the areas of responsibility and delegate responsibility to distributed units, which then become companies within the company. Profit Center Accounting enables you to set up your profit centers according to products (product lines, divisions), geographical factors (regions, offices, or production sites), or functions (production, sales). Lesson: Integration Within Management Accounting and with Other SAP Applications Lesson Overview
This lesson uses cost allocations to show the interaction among the Management Accounting components and describes how Management Accounting interacts with other SAP applications in the mySAP ERP solution, such as Procurement and Logistics Execution, Production, and Sales and Service. You will see how Management Accounting draws its strength from an integrated view of all relevant data from objects such as sale s orders that bear revenues or costs.
Business Example
Before you can implement Management Accounting successfully, you need to understand the flow of costs that have a direct impact on Management Accounting.
Flow of Values Within Management Accounting
Costs incurred in one part of the enterprise are often passed on to a different part of the enterprise. For example, you can pass on overhead costs from administrative cost centers to production cost centers. Overhead costs are then passed on to production processes. These direct services and processes are assigned together with the direct material consumption to specific orders for specific products and services that are then made available to the customer.
If you purchase non-stock material, an expense is posted to the Financial Accounting general ledger via the G/L account. At the same time, the expense is posted as costs to the appropriate cost center using a primary cost element. The cost s from this cost center can then be passed on to a production cost center later as overhead costs using a secondary cost element. It is not appropriate to represent this secondary cost flow for the overhead costs in Financial Accounting.
Flow of Values with Other SAP Applications
Data created in other SAP applications can have a direct inf luence on Management Accounting. For example, if a non- stock item is purchased, an expense is posted to the general ledger. This expense is also posted as costs to a cost center or other Management Accounting object for which the item was purchased. That cost center's costs can be passed on later as overhead to a production cost center, or elsewhere in Management Accounting.
