Profitability Analysis
Profitability Analysis
Profitability Analysis
Costing based in copa is to generate reports with in controlling area which has no effect on FI
but collects /receives data from FI and SD/MM
Accounting based in copa is to generate reports or information regarding finance.
2. Is the top reporting level for P&L accounting and sales management, at which
analysis of market segment profitability is performed
Characteristics Definition
1. Criteria to which operating results can be analyzed and differentiated sales and profit
planning can be performed
Can be differentiated in :
3. Fixed characteristics:
Pre-defined automatically for every operating concern (e.g., sales organization, customer
and product).
4. Non-fixed characteristics:
Can be added to an operating concern.
Must be added in the field catalogue
Frequently-used value fields are already predefined (e.g., sales quantity, revenue).
Values are defined and defined independently of any operating concern.
Aggregation methods need to be specified.
For Costing-based Profitability Analysis:
SAP pre-delivered value fields can be used. If required, a custom value field can be included.
Two value field types: Amount and quantity.
Example: Invoiced quantity is a value field of Quantity type.
TO BE NOTED:
The operating concern is the highest reporting level within CO-PA.
It defines the limit of the sales and marketing information that can be reported together from this
module.
One or more controlling areas are assigned to an operating concern
WHY COPA ?
1. Provides more options to look at profitability than can be obtained from the FI module.
2. Captures more detailed information than the FI module. For example, the user can
analyze fixed cost, variable cost, cost component split costs, etc.
3. Is an analysis tool to aid in management decisions like make vs. buy, produce vs.
outsource, where to spend the advertisement dollars etc.
Every billing document item generated in SD immediately results in a corresponding line item in
PA
The output characteristic values for a given transaction determines the relevant profitability
segment.
Standard reports are not available for CO-PA reporting as the data structure itself is
flexible.
Profitability reports have to be custom-designed, although it does not require any advanced
programming knowledge.
In addition to using value fields, key figure schemes can be defined for reporting requirements.
Example for a key figure scheme: Contribution is derived based on the formula (Revenue –
Variable costs). Revenue and variable costs would be a collection of one or more value fields.
PRODUCT COST CONTROLLING
1. Determine standard costs
2. Evaluates the inventory and inventory movements
3. Sets up a basis for transfer pricing and inventory valuation
4. Determines the actual costs of the manufacturing process
5. Focuses on production order as a cost collector
6. Compare actual and target costs -> production variances
The validity of Product Cost Controlling is dependent on the quality and the structure of the Cost
Element and Cost Center Accounting.
An inaccurate split of direct and overhead costs, as well as improper selection of internal cost
allocation methods, lead to random settlement of costs.
The “Lifecycle“ of a production order illustrates both typical activities within Cost Object
Controlling and interfaces (integration aspects) with Logistics.