A Practical
Introduction to
Resource
Consumption
Accounting
SAP University Alliance
A PRACTICAL INTRODUCTI ON THAT IS INTENDED
TO BE USED AS A LECTURER’S FRAMEWORK AND
GUIDEBOOK
FOR
THE
PURPOSES
OF
RESOURCE CONSUMPTION
A C C O U N T I N G (RC A ) M O D E L – A N A D V A N C E D
DEMONSTRATING A
MANAGERIAL COSTING A PPROACH WITHIN THE
Alta Via Consulting, LLC
Corpor
127 Co
Lenoir
United
ate Office
nkinnon Drive
City, TN 37772
States
1-877-258-2842
www.altavia.com
[Type text]
S AP ER P F I N A N C I A L S C O N T R O L L I N G (C O)
MODULE ENVIRONMENT.
TABLE OF CONTENTS
Unit 1 – Introduction __________________________________________________________ 1
Requirements _____________________________________________________________________ 1
Resource Consumption Accounting (RCA) _______________________________________________ 1
A Resource Consumption Accounting Model ____________________________________________ 2
RCA Model Lessons _________________________________________________________________ 3
Unit 2 – RCA Model Design Elements _____________________________________________ 4
Cost Objects in a RCA Model _________________________________________________________ 4
Cost Centers ______________________________________________________________________________ 4
Resource Pools ____________________________________________________________________________ 4
Primary and Secondary Costs: ________________________________________________________________ 7
Fixed and Proportional Consumption and Costs: _________________________________________________ 7
Business Processes _________________________________________________________________________ 9
Product/Service/Project Objects _____________________________________________________________ 10
Planning a Cost Object’s Output and Primary Costs ______________________________________ 11
Relationships in a RCA Model _______________________________________________________ 12
Storyboard of a Manufacturing Model ________________________________________________ 13
Unit 3 – Lesson Modules ______________________________________________________ 16
Undergraduate Series ______________________________________________________________ 17
Lesson 1: RCA Module U101_________________________________________________________ 17
Cost Center Accounting – Resource Pool Planning _______________________________________________ 17
Lesson 2: RCA Module U102 _________________________________________________________ 22
Product Cost Controlling – Calculate Product Costs ______________________________________________ 22
Lesson 3: RCA Module U103 _________________________________________________________ 25
Profitability Analysis – Report on Profitability ___________________________________________________ 25
Graduate Series __________________________________________________________________ 29
Lesson 4: RCA Module G201 _________________________________________________________ 29
Cost Center Accounting – Resource Pool Planning _______________________________________________ 29
Lesson 5: RCA Module G202 _________________________________________________________ 32
Product Cost Controlling – Calculate Product Costs ______________________________________________ 32
Lesson 6: RCA Module G203 _________________________________________________________ 34
Profitability Analysis – Report on Profitability ___________________________________________________ 34
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A PRACTICAL INTRODUCTION TO RCA
UNIT 1 – INTRODUCTION
AFTER COMPLETING UNIT 1 YOU SHOULD BE ABLE TO:


DEFINE THE OBJECTIVES FOR DEVELOPING THIS MATERIAL.
UNDERSTAND THE PURPOSE BEHIND WHAT THIS MANUAL AND MODEL IS DESIGNED TO ACCOMPLISH.
This document is a practical introduction intended to be used as a framework and
guidebook for the purposes of demonstrating a Resource Consumption Accounting
(RCA) Model. RCA is an advanced managerial costing approach configurable within the
SAP ERP Financials Controlling (CO) module environment.
Alta Via Consulting, LLC, a trusted SAP Service Partner has developed an interactive
working model to help users gain a better understanding of RCA, its principles,
modeling characteristics, and SAP application interface through a practical hands-on
introductory experience.
The objective of the RCA SAP model is:



To introduce Resource Consumption Accounting conceptual design concepts.
To demonstrate how these concepts are applied and configured in SAP.
To guide you through the transaction steps and reports for better decision
making capabilities.
R EQUIREMENTS


Access to the SAP ECC system.
Access to the server “kosovo.cob.csuchico.edu”.
R ESOURCE C ONSUMPTION A CCOUNTING (RCA)
Resource Consumption Accounting (RCA) is formally defined as a dynamic, fully
integrated, principle-based, and comprehensive management accounting approach that
provides managers with decision support information for enterprise optimization. RCA is
based largely on the German management accounting approach
Grenzplankostenrechnung (GPK) and uses activity-based drivers to provide additional
costing insight when required.
With RCA, the information (numbers and values) are not sourced from the General
Ledger as with other accounting approaches. The information is sourced quantitatively
and directly as the materials or services are acquired. For example, in the SAP ERP
environment, quantities and costs can be sourced from the Materials Management
(MM) module and then configured to post automatically in the Controlling (CO) module,
at the same time. Thus the data is posted (dual entry) in the MM and CO modules
simultaneously capturing the quantity and purchase price directly. Compare this direct
posting approach to the way other approaches derive the value of the goods or services
from the G/L, and one begins to recognize the strengths and benefits of using RCA for
managerial costing.
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A PRACTICAL INTRODUCTION TO RCA
In the past, often the General Ledger was the only place to locate managerial costing
information, but since the birth of ERP systems that is no longer the case. For external
financial reporting purposes, G/L dollar values are used but they are also significantly
altered by the very nature of accrual accounting. 'Adjusting entries' such as
depreciation, R&D allocations, inventory valuations used (i.e., LIFO, FIFO) ‘lower than
market’ write-downs, discounts, and other attributable costs must adhere to the
matching principle and are essential for GAAP reporting. RCA was conceived because it
recognized that G/L dollar values were skewed and provided misleading cost
information to those who were trying to make effective production decisions.
Objectives for strategic planning, and analytical evaluations of product and/or service
costs, controllers and managers desired unaltered or pure numbers to reach the
absolute best conclusion about whether to outsource, increase or decrease output, and
pinpoint any excess/idle capacity issues. RCA accomplishes this with SAP. Accountants,
controllers, operations and project managers are no longer restricted to the same G/L
information used for external reporting and can now have access to unparalleled
managerial costing information.
In an International Good Practice Guidance publication ‘Evaluating and Improving
Costing in an Organization written by the Professional Accountants in Business
Committee for the International Federation of Accountants (IFAC), “… in the resource
consumption accounting approach, resources and their costs are considered as
foundational to robust cost modeling and managerial decision support, because an
organization’s costs and revenues are all a function of the resources and the individual
1
capacities that produce them.”
For up-to-date news, events, webinars and publications about Resource Consumption
Accounting please visit the RCA Institute at www.rcainstitute.org. RCA Institute is the
official site with the mission to Inform, educate, certify, and sustain professionals /
individuals and organizations in the consistent and disciplined use of RCA.
The following wiki links are intended to provide professors, lectures, and students with a
starting point to learn more about this topic. Feel free to use these resources as
background information for classroom activities.
http://en.wikipedia.org/wiki/Management_accounting
http://en.wikipedia.org/wiki/Resource_Consumption_Accounting
http://en.wikipedia.org/wiki/Grenzplankostenrechnung_(GPK)
A R ESOURCE C ONSUMPTION A CCOUNTING M ODEL
Unit 2 describes key aspects of a RCA model along with a visual representation of the
model called a Storyboard. The RCA model was set up to represent a fictitious
manufacturing entity forming the basis for the operational data that is to be achieved,
as stated in the objectives at the beginning of each unit.
The manufacturing entity ‘Spick & Span’ produces a variety of cleaning solvents with a
total of six products being sold. The products are grouped into two categories:
1
Professional Accountants in Business Committee. “Evaluating and Improving Costing in
Organizations” p 24. International Federation of Accountants. July 2009
<http://web.ifac.org/publications/professional-accountants-in-businesscommittee/international-good-practice#evaluating-and-improving-co>
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1) Household cleaners
2) Industrial Commercial cleaners
These six products are distributed through two channels and shipped to four retail
outlets.
The production area consists of a labor pool and two machine assembly lines. For this
particular model there are five support areas in addition to production namely; Sales &
Marketing, Human Resources, Plant Maintenance, Utilities, and Facilities to complete
the entity’s operations. All areas mentioned will be clearly shown on the model’s
Storyboard illustrated in Unit 2.
The RCA modeling framework has already been replicated in the SAP ERP system with
the Planning of quantities and related costs done for the 2011 fiscal year. Actual costs
have been captured for month six (6) only within the same fiscal period (2011) for report
comparability between Planned and Actual amounts.
RCA M ODEL L ESSONS
Unit 3 introduces a total of six lessons. These lessons are intended to serve as a
guideline for lecturers with the option to expand or select the most appropriate lessons
according to the lecturer’s stated academic requirements. Three of the six lessons are
introductory lessons that cater to the undergraduate level of study, where the emphasis
is on planning and reporting for resource pools, product costs and profitability. Three
advanced lessons in greater detail are directed towards graduate level of study with an
emphasis placed on analytical abilities that is needed to develop sound operational
decisions based on the criteria or information supplied.
All six lessons outlined in this manual are not intended to take the place of certified SAP
course training. Furthermore, this manual will not explain SAP functionality or
transaction parameters but instead introduce and demonstrate how an elementary RCA
model can be built in a SAP ERP system. The lessons are intended to provide
instructions on how to construct a RCA model, display standard cost center hierarchy,
plan consumption relationships, and analyze reports, alongside business case scenarios
allowing users to become more familiarized and competent with a Resource
Consumption Accounting model within a SAP ERP environment.
IMPORTANT NOTE: TERMINOLOGY GAP
There is a terminology gap between RCA theory and how SAP developers have labeled certain fields with the SAP
environment. In the SAP environment the terms “Activity Type” and “Variable” can be found; however, these two
SAP terms are misleading and often confuse RCA users.
RCA uses the term Resource Pool instead of Activity Type because it represents the resources and not the activity
performed by the resource. Likewise, the RCA term Proportional, accurately describes the behavioral nature and
responsiveness of each [proportional] cost, whereas Variable represents an aggregate view of the [variable] costs.
Conceptually these terms differ greatly; however in application one term must be substituted for the other.
IN SUMMARY:
‘R E S O U R C E P O O L ’ ( RC A C O N C E P T ) T R A N S L A T E S T O ‘ A C T I V I T Y T Y P E ’ ( I N S A P)
‘ P R O P O R T I O N A L ’ (R CA C O N C E P T ) T R A N S L A T E S T O ‘ V A R I A B L E ’ ( I N S AP )
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UNIT 2 – RCA MODEL DESIGN
ELEMENTS
AFTER COMPLETING UNIT 2 YOU SHOULD BE ABLE TO:





IDENTIFY COST OBJECTS IN AN RCA MODEL
DESCRIBE THE FLOW OF COSTS FROM PROVIDING OBJECT TO CONSUMING OBJECT
IDENTIFY CONSUMPTION RELATIONSHIPS AND THEIR RECIPROCAL NATURE (WHEN APPLICABLE)
EXPLAIN A QUANTITY-BASED COST MODEL STRUCTURE
UNDERSTAND STORYBOARD.
This unit is divided into four main sections that will describe and illustrate how an RCA
model is structured. The four categories are:
COST OBJECTS IN A RCA MODEL
PLANNING A COST OBJECT’S OUTPUT & PRIMARY COSTS
RELATIONSHIPS IN A RCA MODEL
STORYBOARD OF THE MANUFACTURING ENTITY
C OST O BJECTS IN A RCA M ODEL
C O S T C EN T E R S
In an RCA model, a Cost Center delineates a single department and typically represents
a single manager’s area of responsibility. An entire organization will have many Cost
Centers and in some circumstances a manager may be responsible for more than one
Cost Center; however it is more the norm to have only one Cost Center (department)
per manager. Each Cost Center can have more than one Resource Pool depending on
the diversity of that Cost Center’s resources and outputs. Cost Centers are grouped in a
hierarchy that makes SAP reporting possible on several different levels.
R E SO UR C E P O O LS
A Resource Pool measures the output of a homogenous set of resources and collects
information on the inputs (and their costs) required to produce the resources’ particular
output. In an RCA model, Resource Pools are used to assign costs based on the
consumption of resource quantities by other cost objects or receivers.
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Resource Pool:
Labor Hours (LH)
Cap = 12 000
Outp = 11 280
F IGURE 1 – R ESOURCE P OOL (‘A CTIVITY T YPE ’ IN SAP)
The following consumption relationships can be modeled. A particular Resource Pool’s
output quantity can be consumed by other Resource Pools in a Resource Pool-toResource Pool relationship, consumed by a Business Process cost object, or consumed
directly by a final product or services cost object.
Resource Pool rates are calculated and used for cost assignments. Rates are divided into
Fixed and Proportional rates. In SAP the Fixed rate is equal to the total Fixed cost for a
Resource Pool divided by the Resource Pool’s total capacity. The Proportional cost rate
is obtained by dividing the Resource Pool’s total Proportional cost by its planned output
quantity.
As illustrated in Figure 2, Resource Pool 6101: Utilities- with its output measure in
Kilowatt Hours - is consumed by two different Resource Pools: Resource Pool 7002:
Production 1 and Resource Pool 8002: Production 2. In other words, Utilities provides
internal support services to keep Production 1 and Production 2 machines operating at
their respective production levels. The Utilities Resource Pool can provide services to
several other Resource Pools as well (not just the two illustrated in this example shown
in Figure 2). Therefore, any Resource Pool’s output becomes Secondary costs for any
number of consuming Resource Pools. Costs that result from such internal consumption
of resources are called Secondary costs.
Resource Pool:6101Utilities
Electricity (Kwh)
Cap = 250 000
Outp = 233 000
Resource Pool:7002Production 1
Machine Hours (MH)
Cap = 2 200
Outp = 2 160
Resource Pool:8002Production 2
Machine hours (MH)
Cap = 2 000
Outp = 1 675
F IGURE 2 - R ESOURCE P OOL R ELATIONSHIPS
Direct output consumption in a Resource Pool-to-Resource Pool assignment is the most
common approach to building an RCA model. Excess capacity is always identified to
avoid arbitrary and therefore, distorting allocations, which can lead to incorrect decision
making.
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EXCESS/IDLE CAPACITY EXAMPLE:
In FIGURE 3, Resource Pool 7002: Production 1 has a Binding Machine with Machine Hour output cost rates
of $50 Fixed and $100 Proportional. The Binding Machine has total planned output of 11,280 machine
hours, but can actually produce 12,000 machine hours at full capacity. Resource Pool 8002: Production 2
uses 5,000 hours of 7002's Binding machine hours that reflects Secondary costs as follows, (1) $250,000
Fixed dollars (5,000 hours x $50 Fixed rate)and (2) $500,000 Proportional dollars (5,000 hours x $100
prop. rate). The remaining 6,280 output hours for Resource Pool 7002 Binding Machine is consumed by
other Resource Pools, as shown below (6,280hrs x $50 Fixed rate = $314,000 Fixed costs and 6,280
hours x $100 prop.= $628,000 of Proportional costs). The difference between the Resource Pool’s total
productive output of 11,280 hours and its capacity of 12,000 hours is 720 hours of unused capacity, also
referred to as Excess/Idle capacity. This amounts to $36,000 (720 hours x $50 Fixed rate) of excess/idle
capacity cost. Note: With Excess/Idle capacity only Fixed Costs (in this case $36,000) are considered in
the calculation.
Resource Pool:7002Production 1
Binding Machine
Machine Hours (MH)
Cap = 12 000
Outp = 11 280
5,000 hrs
consumed by
Cost Center 8002
6,280 hrs
consumed by
other cost centers
Output Rate is:
$50. Fixed rate
$100. Proportional rate
Resource Pool:
8002
Production 2
Resource Pool 8002 Production 2:
$250,000 = (5,000 hrs x $50. Fixed rate)
$500,000 = (5,000 hrs x $100. Prop. rate)
Resource Pool:
5000
Other
Resource Pool:
5001
Other
Other resource pools:
(6,280 hrs x $50. Fixed rate)
(6,280 hrs x $100. Prop. rate)
Resource Pool:
5002
Other
720 hrs NOT consumed by a resource pool, referred to as Excess/Idle capacity
(720 hrs x $50. Fixed rate) = $36,000 Excess/Idle capacity cost
F IGURE 3 - E XCESS /I DLE C APACITY E XAMPLE
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P R I MA R Y
AN D
S E CO N D AR Y C O ST S :
The Primary costs of a Resource Pool are the costs of the resources within the Resource
Pool or the cost of inputs procured externally and consumed directly in producing the
particular output. An example of a Primary cost would be Resource Pool 6101: Utilities,
where the electricity (Kilowatt hours) would be purchased from an outside energy
supplier, see Figure 4, is consumed directly by Utilities. Other Primary costs could be for
staff that’s assigned to manage the power distribution.
Secondary costs of a Resource Pool result from consuming an output from another
Resource Pool or Business Process. An example of a Secondary cost using Resource Pool
6101: Utilities with the Electricity Resource Pool is when the electricity kilowatt hours
are consumed by various Production and Distribution departments within the
organization. In effect, the Production and Distribution Resource Pools are purchasing
their kilowatt hours from their internal electricity provider (Resource Pool 6101:
Utilities).
External Energy
Provider
Resource Pool:6101Utilities
Electricity (Kwh)
Cap = 250 000
Outp = 233 000
Resource Pool:7002Production 1
Machine Hours (MH)
Cap = 2 200
Outp = 2 160
Electricity acquired
externally = Primary Cost
(Direct from provider)
Electricity consumed
internally = Secondary Cost
(From Internal provider
6101 Utilities)
Resource Pool:8002Production 2
Machine hours (MH)
Cap = 2 000
Outp = 1 675
F IGURE 4 - P RIMARY AND S ECONDARY C OST E XAMPLE
F I XE D
AN D
P R O P O RT I O N A L C O N S UM P T I O N
AN D
C O ST S :
In addition to the Primary and Secondary classification of costs, Resource Consumption
Accounting will model all resources consumed along with all its associated costs termed
as Fixed and/or Proportional (‘Variable’ in SAP). A Fixed consumption relationship exists
when the quantity of the input consumed does not vary with the output level of the
consuming cost object; therefore, the cost of that input is fixed. A Proportional
consumption relationship exists when the quantity of the input consumed changes with
the level of output of the consuming cost object. For clarification, please refer to the
following two examples.
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FIXED COST EXAMPLE:
An example of a fixed cost is Depreciation on a machine in a Resource Pool, since it does not fluctuate
with the machine’s level of output. Refer to Table 1 below for a tabular view of Fixed and Proportional
costs showing a Depreciation cost of $833.33 Fixed.
T ABLE 1 - B UDGET /P LAN FOR R ESOURCE P OOL 6101 [J ANUARY 2009]
PROPORTIONAL COST EXAMPLE:
An example of a Proportional cost is the cost of electricity for a machine. Any kilowatt hours (kWh)
consumed by the machine will be directly proportional to machine usage. Assume that a machine in
Resource Pool 7002: Production 1 (see FIGURE 4) consumes 50,000 kWh in electricity proportionally from
the Utilities Resource Pool 6101. That means the 50,000 kWh quantity consumed by the machine will
fluctuate if production levels either increase or decrease.
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B U SI N ES S P R O C E SS E S
Business Processes provides analytical insight into resource outputs, such as a particular
task within the organization. They are reflective of activities in Activity-based Costing.
Activities or Business Processes are used with circumspection in an RCA model. This is
because they add another layer of complexity to the cost model when compared to the
traditional practice of directly charging the output where it is consumed.
Business Process
10020
Procure Prod. Resources
Outp = 40ea
F IGURE 5 - B USINESS P ROCESS
Business Processes are used when it is a cost effective way to capture a Resource Pool’s
output compared to tracking discrete resource quantities. This may be the case when
dealing with many salaried support areas (e.g. Human Resources, Procurement, or IT
departments). Use of a Business Process with a production Resource Pool should be
limited to where their use provides the required analytical insight into the resources’
output.
Business Processes are only used between a providing Resource Pool and a consuming
Resource Pool or a providing Resource Pool and a product/service/final cost object. In
RCA, Business Processes are not modeled as supporting other Business Processes. The
ability to trace resource quantities and capacities would be lost violating the
fundamental principle of maintaining clearly traceable and responsive quantity-based
cause and effect relationships.
Resource Pool:7002Production 1
Binding Machine
Machine Hours (MH)
Cap = 12 000
Outp = 11 280
Business Process
Labor Hrs & Machine Hrs
Production Time / Product A
Output = # of Hours
Business Process
Labor Hrs & Machine Hrs
Set-Up Time / Product A
Output = # of Set-Up Hrs
F IGURE 6 - P RODUCTION WITH B USINESS P ROCESS E XAMPLE
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BUSINESS PROCESS EXAMPLES:
A support example – the HR department may have 2 Primary Business Processes which a small staff
provides: Process 1) Payroll & Benefit transactions and Process 2) Recruit & Hire personnel. If a 2 or 3
person HR department is engaged in both these activities then it may not make sense to break the HR
department into separate Resource Pools, but rather to assign HR SERVICES (and their costs) to the
consuming Resource Pools based on the type and number of transactions for each Business Process.
A production example –in the production area (i.e., Resource Pool 7002) might produce two types of
products that require different settings – a narrow setting and a wide setting – on the Binding machine.
As the manager begins to implement a pull-based production approach and smaller batches for the two
products, the amount of set-up time becomes more critical. The manager can use Business Process
functionality to track the associated costs pertaining to: (1) Labor hours and machine time spent
producing the product and, (2) Labor hours and machine time engaged in machine set-up (see Figure 6)
when set-up time improves and becomes a standard metric or insignificant, this department could then
stop tracking Business Process information.
P R O D U CT /S E R V I C E /P R O J EC T O BJ E CT S
Cost objects such as Product Objects, Service Objects or Project Objects collect Primary
(e.g., raw material for a product) and Secondary (e.g., conversion labor) costs for an
organization’s products and services.
Product
No-Pane Tablets
Qty = 40 000 000
(4000 lots of 10 000)
F IGURE 7 - P RODUCT O BJECT
SAP reports will show how costs are recovered or charged out to the consumers for the
cost object’s services. Costs are recovered to Resource Pools, Business Processes and to
products. The net result, of cost and recovery equals excess capacity in the Resource
Pool.
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P LANNING A C OST O BJECT ’ S O UTPUT AND P RIMARY
C OSTS
Every Resource Pool and Business Process in an RCA model will have a Budget/Plan
similar to the example shown in Table 2 below. For every Resource Pool an output
quantity and theoretical capacity is specified by the user. It is important to note that
Resource Pools must have both an output quantity and a capacity quantity to enable the
rate calculations described earlier to function.
Output Quantity Planning: A Resource Pool’s output quantity equals the demand for its
services (i.e., the total consumption required by the consuming Resource Pools and final
cost objects). The output is therefore not entered manually by the user but calculated
by the SAP application, based on the consumption relationships established and the
Budgeted/Planned demand from final cost objects.
Calculated output quantities must be reviewed to ensure they do not exceed Resource
Pool capacities. The output for Resource Pools can be less than but not greater than
capacity. Capacity and Output for Business Processes will always be the same (equal) as
only Resource Pools have capacity, where Business Processes which describes the
activity the resource is performing do not possess capacity.
With Primary Cost Budgeting/Planning, Primary costs are entered as dollars, not
quantities, and must be split into their Fixed and/or Proportional components—an
example of this is visible in Table 2 for cost element number 60011-Supplies. This cost
element 60011 is also the G/L element in the financial system.
Secondary Cost Budgeting/Planning is discussed in the next section Relationships in an
RCA Model.
T ABLE 2 - B UDGET /P LAN FOR R ESOURCE P OOL 6101 [J ANUARY 2009]
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R ELATIONSHIPS IN A RCA M ODEL
Secondary costs are entered in quantities with a unit of measure for the provider
Resource Pool or Business Process. Secondary input quantities are also divided into
Fixed and/or Proportional components. Secondary inputs as discussed in Table 2 above
shows all the consumption values for Resource Pool 6101: Utilities with a consumption
quantity from two Secondary sources. These are Resource Pool 6401: Maintenance with
49.18 Labor hours Proportional) and Resource Pool 6102: Floor Area with a quantity
value of 166.67 SqFt. Fixed consumption.
All the Secondary consumption relationships are initially valued in ‘quantities’ as
illustrated in Figure 8. Once the internal rates are calculated, the Secondary quantities
will be valued in dollars so that total cost on each cost object is obtained. The
connecting lines in Figure 8 below represent the relationships/consumption flows
between cost objects.
These consumption relationships are captured in the system in a Provider-Consumer
manner to accurately trace consumption. Once the quantities have been valued, the
costs are reflected as Secondary costs on the consumer and as recovery on the supplier.
Resource Pool:6401Maintenance
Labor Hours (LH)
Cap = 12 000
Outp = 11 280
Business Process
10010
Service Machines
Outp = 24ea
Qty
Qty
Product:
Resource Pool:7001Production 1
Labor Hours (LH)
Cap = 15 000
Outp = 14 050
No-Pane Tablets
Qty
Qty = 40 000 000
(4000 lots of 10000)
F IGURE 8 - R ELATIONSHIPS B ETWEEN C OST O BJECTS E XAMPLE
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S TORYBOARD OF A M ANUFACTURING M ODEL
The Storyboard will help the student view all of the cost objects and their associated
relationships more easily. There are four modeled highlighted areas represented by
four different colors. The green area represents Support Services Cost Centers; the
yellow area represents the Production Cost Centers; the blue area represents the six
product objects that are manufactured; and the purple area represents the Result
Segment area that shows all the company’s reporting levels and many profitability
reports that are available in SAP.
Figure 9 below represents the Support Services Cost Centers with lines drawn to show
all of their reciprocal relationships. Note: The Human Resource Cost Center has a
Resource Pool called Admin Hours and also Business Process called “Process Payroll” are
shown in Figure 10 due to flow chart space limitations. Recall that Business Processes
allow for further drill down analysis into how many hours out of the total 8,000 hour
capacity are spent performing payroll duties.
F IGURE 9 - S UPPORT S ERVICES C OST C ENTERS A REA
Figure 10 below represents the Production Cost Centers with a Labor Resource Pool and
two Machine Resource Pools. For each one of the Machine Resource Pool there is a
Setup Business Process that allows the user to cost out each production machine
separately. Note: The second Business Process – Setup B is shown on in Figure 11 the
Product Objects area due to flow chart space limitations.
F IGURE 10 - P RODUCTION C OST C ENTER A REA
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Figure 11 below represents the Product Object area showing all six products that this
manufacturer produces.
F IGURE 11 - P RODUCT O BJECTS A REA
And last, Figure 12 below represents the Result Segment for Spick & Span
manufacturing entity with how the various segments can be analyzed and reported on.
For example the user could analyze costs at the Product Level, Product Group Level or
Sales Channel Level. It is important to distinguish that the lines entering from the left
hand side (three arrows) are separate and do not flow from the Product (blue) area but
come from either the Production Level or Support Services Level. The reason being that
Non-Product related costs that were incurred elsewhere should NOT be fully absorbed
by the product but by the designated area responsible or most closely associated for
incurring those costs.
F IGURE 12 - R ESULT S EGMENT A REA
See complete Storyboard flow chart on next page.
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UNIT 3 – LESSON MODULES
AFTER COMPLETING UNIT 3 YOU SHOULD BE ABLE TO:



COMPARE HOW THE DATA FROM THE STORYBOARD IS APPLIED AND CONFIGURED IN THE MODEL
LEARN HOW TO DISPLAY, CHANGE AND MAINTAIN DATA IN THE MODEL
UTILIZE THE DATA TO DEMONSTRATE HOW BETTER DECISIONS ARE MADE THROUGH THE USE OF THE RCA MODEL
This unit is comprised of six lessons that require access to the SAP ERP system to
complete. For system access information also see Technical Requirements (Unit 1). The
lessons are presented as two paths; Undergraduate Series and Graduate Series as
outlined below:
(UNDERGRADUATE SERIES)
LESSON 1: RCA MODULE U101
COST CENTER ACCOUNTING – RESOURCE POOL PLANNING
LESSON 2: RCA MODULE U102
PRODUCT COST CONTROLLING – CALCULATE PRODUCT COSTS
LESSON 3: RCA MODULE U103
PROFITABILITY ANALYSIS – REPORT ON PROFITABILITY
(GRADUATE SERIES)
LESSON 4: RCA MODULE G201
COST CENTER ACCOUNTING – RESOURCE POOL PLANNING
LESSON 5: RCA MODULE G202
PRODUCT COST CONTROLLING – CALCULATE PRODUCT COSTS
LESSON 6: RCA MODULE G203
PROFITABILITY ANALYSIS – REPORT ON PROFITABILITY
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A PRACTICAL INTRODUCTION TO RCA
U NDERGRADUATE S ERIES
L ESSON 1: RCA M ODULE U101
C O S T C EN T E R A C CO U N T I N G – R E SO UR C E P O O L P LAN N I N G
LEARNING OBJECTIVES:




TO FAMILIARIZE STUDENTS WITH A COSTING APPLICATION THAT UTILIZES RESOURCE
CONSUMPTION ACCOUNTING (RCA).
INTRODUCE A COST CENTER STRUCTURE, ITS RESOURCE POOLS (SAP-ACTIVITY TYPES) AND
FIXED AND PROPORTIONAL (‘VARIABLE’ IN SAP) PRICES.
UNDERSTAND CAUSAL RELATIONSHIPS AND QUANTITY ASSIGNMENTS BETWEEN COST OBJECTS
MAKE DECISIONS AROUND PLANNED DATA.
REFERENCE:



STORYBOARD OF THE MANUFACTURING ENTITY “SPICK AND SPAN CORPORATION”.
SAP CO ON THE SERVER “KOSOVO.COB.CSUCHICO.EDU”, CLIENT 950, CONTROLLING AREA
“SPSP”.
RECALL A RESOURCE POOL IS CALLED AN ‘ACTIVITY TYPE’ IN SAP.
CAUTION:
IN ALL MODULES, THE PLAN VERSION “0” SHOULD ONLY BE USED FOR DISPLAY PURPOSES. CHANGES
SHOULD BE DONE AND VIEWED IN A “COPIED” VERSION. ASK YOUR ADMINISTRATOR TO CREATE A VERSION
FOR YOU AND THEN COPY VERSION”0” TO THE NEWLY CREATED VERSION WITH TRANSACTION KP97.
TASKS TO BE EXECUTED:
1.
2.
3.
4.
5.
DISPLAY
DISPLAY
DISPLAY
CHANGE
DISCUSS
COST CENTER HIERARCHY.
COST CENTER/PLANNING REPORT AND DISCUSS.
PRICE REPORT AND DISCUSS.
RESOURCE CAPACITY OR OUTPUT AND INPUT. RECALCULATE RATE.
PLANNED RESULTS.
STANDARD
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TASK EXECUTION:
1. DISPLAY STANDARD COST CENTER HIERARCHY:
Menu path: Accounting  Controlling  Cost Center Accounting  Master Data  Standard Hierarchy
 Display
Or by transaction code: OKENN



If the default hierarchy is not “SPSP”, find it with the Object Manager.
Expand all nodes and compare the hierarchy to the Storyboard.
Note how Cost Centers are grouped and explore the functions available on this screen.
The object of this step, together with the Storyboard, is to help the user grasp a SAP visualization of the
organization under review.
2. DISPLAY COST CENTER/PLANNING REPORT AND DISCUSS:
O P T I O N 1: ( M O R E O F A N O V E R V I E W )
Menu path: Accounting  Controlling  Cost Center Accounting  Information System  Reports for
Cost Center Accounting  Plan/Actual Comparisons  Cost Centers: Actual/Plan/Variance
Or by transaction code: S_ALR_87013611







Controlling Area = SPSP
Fiscal Year = 2011
From Period = 1
To Period = 12
Plan Version = 0
Cost Center Group = SPSP
Cost Element Group = SPSP
Execute






In the navigation area on the left, reports can be selected on various levels i.e. Cost Centers or
Cost Center groups.
With the selected cost element group, costs (Debit) are divided into Primary and Secondary
costs. Note how the cost element distinguishes Primary and Secondary costs i.e. 7 and 8 series
numbers.
Primary costs are direct expenses attributable to the Cost Center and originates from the general
ledger.
Secondary costs are quantity assignments (Inputs) from other Cost Centers. To display the
assigned quantities, use the “page right” button (black arrow). Note the quantity unit of
measure.
The Credit line (Output) constitutes quantities assigned to other cost objects e.g. Cost Centers or
Business Processes and/or the Profitability Analysis (PA) module.
Activity Type and quantity output for the Cost Center under review is given at the end of the
report.
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O P T I O N 2: ( P L A N N I N G S P E C I F I C )
Menu path: Accounting  Controlling  Cost Center Accounting  Information System  Reports for
Cost Center Accounting  Planning Reports  Cost Centers: Planning Overview
Or by transaction code: KSBL





Cost Center = select any one where the Controlling area and Company code = SPSP
Fiscal year = 2011
Period = 1 to 12
Version = 0
Deselect Output in ALV grid
Execute

Select “Fixed, Variable in CO Area Currency” with the button “Column Variant”.
Note:






Both the Cost and Quantity columns are divided into Fixed and Variable (see Table 2).
Budgeting/Planning is done activity-dependent, meaning costs are budgeted/planned against the
output activity of the Cost Center.
Primary costs are entered as dollar values and Secondary values as quantities (the system will
automatically calculate the dollar value of the quantity value entered), with both split into Fixed
and Variable.
Under Secondary, the sender object e.g. Cost Center and its unit of measure is identified. See
Partner column.
Costs (debit) and assignment of costs (credit) are shown separately.
Activity quantity (output) and capacity as well as the activity scheduled quantity are shown at the
end of the report. For Cost Centers that do activity output assignments, the activity scheduled
quantity and the activity quantity must be the same.
3. DISPLAY PRICE REPORT AND DISCUSS:
Menu path: Accounting  Controlling  Cost Center Accounting  Information System  Reports
for Cost Center Accounting  Prices  Cost Centers: Activity Prices
Or by transaction code: KSBT






Cost Center Group = SPSP
Version = 0
Fiscal year = 2011
Period from 1 to 12
Price Indicator = 2
Price unit = 1
Execute



Report displays the system calculated activity prices used for activity assignments.
Formula for the Fixed price = Fixed cost / capacity.
Formula for Variable price = Variable cost / output.
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4. CHANGE RESOURCE CAPACITY OR OUTPUT AND INPUT. RECALCULATE RATE:
If there is a need to change the original plan, continue as follows: (See Caution note above).
Set Planner Profile:
Menu path: Accounting  Controlling  Cost Center Accounting  Planning  Set Planner Profile
Or by transaction code: KP04

Select SAPALL and Enter.
Plan Activity (Output) or Capacity:
Menu path: Accounting  Controlling  Cost Center Accounting  Planning  Activity
Output/Prices  Change
Or by transaction code: KP26





In Layout 1-201, select the correct version, period from and to, and the fiscal year.
Enter the Cost Center number under review and the corresponding Activity Type.
“Enter” and click on “Overview Screen”.
“Plan Activity” or “Capacity” can now be changed.
Do not change any other field. Save changes and exit the transaction.
Plan Activity = the total output that the Cost Center wants to assign or recover from another cost object
e.g. Cost Center, Business Process or product. It follows that whenever you change the output quantity,
you should also change the inputs on the receiving cost objects. See last bullet point under 2 above. Also,
if you change output, the input costs must change accordingly.
Capacity = the theoretical available productive quantity of the resource. It follows that the difference
between output and capacity = excess/idle capacity.
Cost and Activity Inputs:
Menu path: Accounting  Controlling  Cost Center Accounting  Planning  Cost and Activity
Inputs  Change
Or by transaction code: KP06







In Layout 1-101 (for Primary costs), select the correct version, period from and to, and the fiscal
year.
Enter the Cost Center number under review and the corresponding Activity Type. Enter a cost
element range or group.
“Enter” and click on “Overview Screen”.
Plan Fixed or Variable costs can now be entered or changed.
Do not change any other field. Save changes and exit the transaction.
Proceed to the next layout 1-102 (for activity input), select the correct version, period from and
to, and the fiscal year.
Enter the Cost Center number under review and the corresponding Activity Type. Enter a Sender
Cost Center range or group and the Sender Activity Type range or group.
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


“Enter” and click on “Overview Screen”.
Plan Fixed or Variable consumption quantities can now be entered or changed.
Do not change any other field. Save changes and exit the transaction.
Price Calculation:
Menu path: Accounting  Controlling  Cost Center Accounting  Planning  Allocations  Price
Calculation
Or by transaction code: KSPI



Select All Cost Centers and All Business Processes. Enter the parameters.
Execute a Test Run first and post if you are satisfied with the result.
It is advisable to check your changes by displaying the reports discussed above.
Note: You will notice from the Storyboard that the entity also costs Business Processes. The transactions
are grouped under Controlling  Activity-Based Costing in a similar way as Cost Center Accounting
discussed above.
5. DISCUSS PLANNED RESULTS:






Calculate excess/idle capacity quantity. From report KSBL subtract output (activity quantity) from
capacity. What does it tell you? Multiply by the Fixed rate from the rate report to get the value.
See also the Assessment line on report KSBL.
Discuss Fixed and Variable costs with reference to the quantity on report KSBL.
Discuss the Credit line. How can it help the Cost Center manager to manage his contribution?
From the price report, is there anything to deduce from the Fixed/Variable ratio?
Are the prices comparable to one another or benchmarks?
Does the plan represent overhaul objectives?
E N D O F L E S S O N 1: RC A M O D U L E U1 01
COST CENTER ACCOUNTING – RESOURCE POOL PLANNING
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A PRACTICAL INTRODUCTION TO RCA
L ESSON 2: RCA M ODULE U102
P R O D U CT C O ST C O N T R O L LI N G – C A LC U L AT E P RO D U CT C O ST S
LEARNING OBJECTIVE:




TO FAMILIARIZE STUDENTS WITH A COSTING APPLICATION THAT UTILIZES RESOURCE
CONSUMPTION ACCOUNTING (RCA).
INTRODUCE BILLS OF MATERIAL (BOM) AND ROUTINGS (PRODUCT RECIPES) AND PROCESS
TEMPLATES.
TO CALCULATE A STANDARD (PLANNED) PRODUCT COST ESTIMATE.
TO INTERPRET THE RESULTS.
REFERENCE:



STORYBOARD OF THE MANUFACTURING ENTITY “SPICK AND SPAN CORPORATION”.
SAP CO ON THE SERVER “KOSOVO.COB.CSUCHICO.EDU”, CLIENT 950, CONTROLLING AREA
“SPSP”, PLANT “SPSP”.
MODULE ON CCA – RESOURCE POOL PLANNING.
CAUTION:
IN ALL MODULES, THE PLAN VERSION “0” SHOULD ONLY BE USED FOR DISPLAY PURPOSES. CHANGES
SHOULD BE DONE AND VIEWED IN A “COPIED” VERSION. SEE FIRST LESSON FOR HOW TO COPY A VERSION.
TASKS TO BE EXECUTED:
1. DISPLAY MATERIAL MASTER FOR DIFFERENT MATERIAL EMPHASIZING ACCOUNTING
AND COSTING TABS.
2. DISPLAY BILL OF MATERIAL.
3. DISPLAY COST CENTERS AND SHOW HOW RESOURCE POOLS ARE TIED IN.
4. DISPLAY ROUTINGS.
5. DISPLAY SAVED STANDARD PRODUCT COST ESTIMATE AND DISCUSS.
6. CHANGE INPUT QUANTITIES IN BOTH THE BILL OF MATERIAL AND THE ROUTING AND
RUN COST ESTIMATE CALCULATION.
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TASK EXECUTION:
1. DISPLAY MATERIAL MASTER FOR DIFFERENT MATERIAL EMPHASIZING ACCOUNTING
AND COSTING TABS.
Menu path: Logistics  Materials Management Material Master  Material  Display Display
Current
Or by transaction code: MM03


Select a material e.g. “Green Choice”, Continue (Enter), Continue (Enter) again,
Plant = SPSP, Continue (Enter),
On Costing 1 tab, under “Quantity Structure Data”, is where the link to the bill of material and routing is
defined.
2. DISPLAY BILL OF MATERIAL.
Menu path: Logistics  Production  Master Data  Bills of Material  Bill of Material  Material
BOM  Display
Or by transaction code: CS03




Material = Green Choice
Plant = SPSP
BOM Usage = 6
Enter
The system returns a list of the raw material that will make up the selected product. It also displays the
quantities and unit of measure.
3. DISPLAY WORK CENTERS AND SHOW HOW RESOURCE POOLS ARE TIED IN.
Menu path: Logistics  Production  Master Data  Work Centers  Work Center  Display
Or by transaction code: CR03



Plant = SPSP
Work center = P012
Enter
On the Costing tab, the connection to the Cost Center and Activity Type is defined. The formula that
calculates the cost of the activity is also defined here.
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4. DISPLAY ROUTINGS.
Menu path: Logistics  Production  Master Data Routings  Routings  Standard Routings 
Display
Or by transaction code: CA03




Material = Green Choice
Plant = SPSP
Group = Blank
Enter
In the Operation Overview, the steps to produce the product are listed. Note the reference to the work
center which is the link to the Cost Center. Note also the Activity Types and quantities.
5. DISPLAY SAVED STANDARD PRODUCT COST ESTIMATE AND DISCUSS.
Menu path: Accounting  Controlling  Product Cost Controlling  Product Cost Planning 
Material Costing  Cost Estimate with Quantity Structure  Display
Or by transaction code: CK13N






Material = Green Choice
Plant = SPSP
Costing Variant = PPC1
Costing Version = 1
Valid on = today’s date
Enter
Note: The Costing Lot Size and the itemization for the material in the lower area of the report. See how the
raw materials and activities as defined in the BOM and routing are added. There is also a machine setup cost
added by a template (see Valuation tab). On the Quantity Structure tab, the BOM and routing is referenced.
6. CHANGE INPUT QUANTITIES IN BOTH THE BILL OF MATERIAL AND THE ROUTING AND
RUN COST ESTIMATE CALCULATION.
If there is a need to change the composition of the product, return to the BOM and routing “Change”
transactions and change as required. (See Caution note above). Following any changes, “Create” a new
standard cost estimate for the applicable product.
If you have made any change in Cost Center Accounting as per lesson 1, new cost estimates should also be
created.
E N D O F L E S S O N 2: RC A M O D U L E U1 02
PRODUCT COST CONTROLLING – CALCULATE PRODUCT COSTS
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L ESSON 3: RCA M ODULE U103
P R O FI T A BI LI T Y A N A LY SI S – R E P O R T
ON
P RO F I T A BI LI T Y
LEARNING OBJECTIVE:




TO FAMILIARIZE STUDENTS WITH A COSTING APPLICATION THAT UTILIZES RESOURCE
CONSUMPTION ACCOUNTING (RCA).
TO UNDERSTAND THE PROFITABILITY REPORTING STRUCTURE.
REPORT INTEGRATION WITH COST CENTER ACCOUNTING (CCA) AND PRODUCT COSTING (PC).
ANALYZE RESULTS.
REFERENCE:



STORYBOARD OF THE MANUFACTURING ENTITY “SPICK AND SPAN CORPORATION”.
SAP CO ON THE SERVER “KOSOVO.COB.CSUCHICO.EDU”, CLIENT 950, OPERATING CONCERN
“SPSP”.
MODULE ON CCA – RESOURCE POOL PLANNING AND THE MODULE ON PC – CALCULATE
PRODUCT COST.
CAUTION:
IN ALL MODULES, THE PLAN VERSION “0” SHOULD ONLY BE USED FOR DISPLAY PURPOSES. CHANGES
SHOULD BE DONE AND VIEWED IN A “COPIED” VERSION. SEE FIRST LESSON FOR HOW TO COPY A VERSION.
TASKS TO BE EXECUTED:
1.
2.
3.
4.
DISPLAY CUSTOMERS.
DISPLAY AND DISCUSS THE PLANNING FRAMEWORK.
SHOW AND DISCUSS THE COST CENTER COST ASSESSMENT CYCLE.
DISPLAY AND DISCUSS THE COMPONENTS OF THE FORM BASED PA REPORT AND ITS
FORM.
5. REBALANCE THE PA REPORT. REQUIRED ONLY IF CHANGES HAVE BEEN MADE
DURING THE PREVIOUS LESSONS.
6. DISCUSS RESULTS.
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TASK EXECUTION:
1. DISPLAY CUSTOMERS.
Menu path: Logistics  Sales and Distribution Master Data Business Partner  Customer
Display  Sales and Distribution
Or by transaction code: VD03





Customer = Open the selection screen with the button to the right of the field. On selection
screen, clear all fields and hit “Start Search”. The model customers are in the range 606 to 613.
Select any one.
Select the button “Customer’s sales areas…”
Select field “SPSP”
Enter
Enter
Note: The sales area data is displayed on this screen. Exit the transaction.
2. DISPLAY AND DISCUSS THE PLANNING FRAMEWORK.
Menu path: Accounting  Controlling  Profitability Analysis  Planning  Edit Planning Data
Or by transaction code: KEPM



Open the Planning level “FOR 2011”
The next level, under the planning level is called the planning package. Double click on the
planning package “FOR 2011”
Under Planning methods (lower box), open “Display planning data” and double click on “2011”
The screen on the right changes to display what has been planned. Revenues and Sales quantities are
planned manually. Other columns are calculated i.e. costs are retrieved from Product Cost Controlling.
Once viewed, you can exit the transaction.
Conversion Costs (Product cost excluding material) on the PA report represent costs on the credit line in
Cost Center Controlling. The unrecovered Cost Center costs are to be assessed to PA so that all costs are
accounted for in PA. See the next step for the assessment transaction.
3. SHOW AND DISCUSS THE COST CENTER COST ASSESSMENT CYCLE.
Note: At this stage you are only displaying screens. Next step is only required after changes to sales or
production data. Do not execute.
Menu path: Accounting  Controlling  Profitability Analysis  Planning  Integrated Planning 
Transfer Cost Center Planning/Process Planning  Assessment
Or by transaction code: KEUB

Period = 1 to 12
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


Fiscal Year = 2011
Select Test Run and Detail Lists.
Cycle = SP01 (General)
To view the cycle, go to “Extras”, “Cycle”, “Display”

Cycle = SP01, Enter
The cycle segments enable the system to select costs and post it appropriately in PA.
4. DISPLAY AND DISCUSS THE COMPONENTS OF THE FORM BASED PA REPORT AND ITS
FORM.
Menu path: Accounting  Controlling  Profitability Analysis  Information System  Execute Report
Or by transaction code: KE30





Select report “CUSTOM01”, Execute,
Period/year FROM = 1/2011
Period/year TO = 12/2011
Version = 0, Enter, Execute,
“Yes”
The system returns a report that displays company contribution levels.
In the Navigation box (above the lead column), use the report segment choices available and the buttons
to navigate to “broken down” reports.
To view report settings, select “Report” (in top menu line) and then “Display”, select “Yes” and double
click on the report number (CUSTOM01).
Note: Browse all of the four tabs and the information contained in them.
This is a form based report. To view the form, select “Display” in the line above the tab selectors.
View the form and exit the transaction.
5. REBALANCE THE PA REPORT. REQUIRED ONLY IF CHANGES HAVE BEEN MADE
DURING THE PREVIOUS LESSONS.
If changes have been made to any planning data during previous lessons in a version other than 0 – see
Caution note. PA must be revaluated.
Return to Step 2 (transaction KEP).


rd
Under the 3 bullet point (step 2), open “Valuation” and double click on “2011”
Select “Continue” and “Save” if the valuation was successful.
Redo Plan assessment as per step 3 above. It would require an assessment reversal first.
Return to the PA and Cost Center report to confirm that changes made are reflected correctly.
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6. DISCUSS RESULTS.
Results discussion - to be tailored by the lecturer e.g.:





Contribution lines
Proportional conversion cost
Fixed conversion cost
Excess/idle capacity
Profitability segments
E N D O F L E S S O N 3: RC A M O D U L E U1 03
PROFITABILITY ANALYSIS – REPORT ON PROFITABILITY
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G RADUATE S ERIES
L ESSON 4: RCA M ODULE G201
C O S T C EN T E R A C CO U N T I N G – R E SO UR C E P O O L P LAN N I N G
LEARNING OBJECTIVE:




TO FAMILIARIZE STUDENTS WITH A COSTING APPLICATION THAT UTILIZES RESOURCE
CONSUMPTION ACCOUNTING (RCA).
INTRODUCE A COST CENTER RESOURCE POOL (ACTIVITY TYPE) AND RESOURCE FIXED AND
PROPORTIONAL (‘VARIABLE’ IN SAP) PRICES.
UNDERSTAND CAUSAL RELATIONSHIPS AND QUANTITY ASSIGNMENTS BETWEEN COST OBJECTS
E.G. RESOURCE POOLS.
MAKE DECISIONS AROUND PLANNED DATA.
REFERENCE:


STORYBOARD OF THE MANUFACTURING ENTITY “SPICK AND SPAN CORPORATION”.
SAP CO ON THE SERVER “KOSOVO.COB.CSUCHICO.EDU”, CLIENT 950, CONTROLLING AREA
“SPSP”.
TASKS TO BE EXECUTED:
1. DISPLAY COST CENTER PLANNING REPORT.
2. DISPLAY PRICE REPORT.
3. MAKE AN OUTSOURCING DECISION.
TASK EXECUTION:
1. DISPLAY COST CENTER PLANNING REPORT:
Menu path: Accounting  Controlling  Cost Center Accounting  Information System  Reports for
Cost Center Accounting  Planning Reports  Cost Centers: Planning Overview
Or by transaction code: KSBL
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




Cost center = S030
Fiscal year = 2011
Period = 1 to 12
Version = 0
Deselect Output in ALV grid
Execute

Select “Fixed, Variable in CO Area Currency” with the button “Column Variant”.
Note:






Value and quantity columns are divided into Fixed and Variable.
Planning is done activity dependent meaning costs are planned against the output activity of the
Cost Center.
Primary costs are planned in value and Secondary costs in quantity (the system calculates the
value), split by Fixed and Variable.
Under Secondary, the sender object e.g. Cost Center and its unit of measure is identified. See
Partner column.
Costs (debit) and assignment of costs (credit) are shown separately.
Activity quantity (output) and capacity as well as the activity scheduled quantity are shown at the
end of the report. For Cost Centers that do activity output assignments, the activity scheduled
quantity and the activity quantity must be the same.
2. DISPLAY PRICE REPORT:
Menu path: Accounting  Controlling  Cost Center Accounting  Information System  Reports for
Cost Center Accounting  Prices  Cost Centers: Activity Prices
Or by transaction code: KSBT






Cost Center = S030
Version = 0
Fiscal year = 2011
Period from 1 to 12
Price Indicator = 2
Price unit = 1
Execute


Report displays the system calculated activity prices used for activity assignments.
Formula for the Fixed price = Fixed cost / capacity.
Formula for Variable price = Variable cost / output.
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3. MAKE AN OUTSOURCING DECISION:
NOTE: LECTURER HAS THE OPTION OF USING THE ANALYSIS CASE PROBLEM
PRESENTED BELOW , OR MAY SUBSTITUTE IT (IN PART OR IN WHOLE ) TO CREATE
THEIR OWN ANALYSIS CASE PROBLEM THAT WOULD BE MOST RELEVANT TO
ACHIEVE THEIR DESIRE D STUDENT LEARNING OBJECTIVES.
Instructions:
The CEO approaches you with a question about an outsourcing option. The OEM of the
machines has proposed taking over the maintenance of all the machines at a price of
$54 per hour to Spick & Span. Your RCA model tells you that this equates to 1400 hours
total and that current total costs are around $64 per hour. The fact sheet below
provides additional data you need to help you understand the numbers for
maintenance. Assume supplies are proportionately avoidable with the decision to
outsource. The CEO thinks this is a good deal but wants to hear your input. Also
assume that part-time technician labor is unavailable.
What should the CEO do? Provide an analysis to support your answer.
Notes:
1.
2.
3.
4.
5.
6.
7.
The plant maintenance Resource Pool comprises 3 technicians.
Technicians are paid $20 per hour.
Technicians each work 2,400 hours per year.
1200 hours account for total paid time off, training and other non-productive
time.
Annual productive hours per technician are 2000.
The OEM will use electricity on site.
Depreciation is for maintenance shop floor equipment like grinders.
E N D O F L E S S O N 4: RC A M O D U L E G 2 01
COST CENTER ACCOUNTING – RESOURCE POOL PLANNING
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© 2011 ALTA VIA CONSULTING LLC
A PRACTICAL INTRODUCTION TO RCA
L ESSON 5: RCA M ODULE G202
P R O D U CT C O ST C O N T R O L LI N G – C A LC U L AT E P RO D U CT C O ST S
LEARNING OBJECTIVE:



TO FAMILIARIZE STUDENTS WITH A COSTING APPLICATION THAT UTILIZES RESOURCE
CONSUMPTION ACCOUNTING (RCA).
TO CALCULATE A STANDARD (PLANNED) PRODUCT COST ESTIMATE.
TO INTERPRET THE RESULTS.
REFERENCE:




STORYBOARD OF THE MANUFACTURING ENTITY “SPICK AND SPAN CORPORATION”.
SAP CO ON THE SERVER “KOSOVO.COB.CSUCHICO.EDU”, CLIENT 950, CONTROLLING AREA
“SPSP”, PLANT “SPSP”.
MODULE ON CCA – RESOURCE POOL PLANNING.
MODULE RCA02
TASKS TO BE EXECUTED:
1. DISPLAY SAVED STANDARD PRODUCT COST ESTIMATE AND DISCUSS.
2. DISCUSS “MAKE OR BUY” DECISION.
TASK EXECUTION:
1. DISPLAY SAVED STANDARD PRODUCT COST ESTIMATE AND DISCUSS.
Menu path: Accounting  Controlling  Product Cost Controlling  Product Cost Planning  Material
Costing Cost Estimate with Quantity Structure  Display
Or by transaction code: CK13N



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
Material = Biopure
Plant = SPSP
Costing Variant = PPC1
Costing Version = 1
Valid On = Current date
Click on “Find Cost Estimate” and “Execute” on the next screen.
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A PRACTICAL INTRODUCTION TO RCA
2. DISCUSS “MAKE OR BUY” DECISION.
NOTE: LECTURER HAS THE OPTION OF USING THE ANALYSIS CASE PROBLEM
PRESENTED BELOW , OR MAY SUBSTITUTE IT (IN PART OR IN WHOLE ) TO CREATE
THEIR OWN ANALYSIS CASE PROBLEM THAT WOULD BE MOST RELEVANT TO
ACHIEVE THEIR DESIRE D STUDENT LEARNING OBJECTIVES.
Instructions:
Part I: Based on the RCA product costs you provided above, the CEO asks for the pros
and cons to buying the product from an outside vendor versus manufacturing it. The
vendor has agreed to charge $100 per lot less than the current cost to make it. The CEO
likes the idea of making a Fixed cost Variable and moving the cost curve above the
breakeven line. The CEO is confident that he will be able to avoid all the product’s
current costs by selling the machine it is manufactured on. He admits he is a little
nervous since a number of customers like the product and buy complimentary products
from Spick & Span. The company (Spick & Span) knows the vendor well and there are
currently no issues with quality or on-time delivery.
Should they make it or buy it? Provide an analysis and rationale.
Part II: Regardless of your first decision, assume that you decided to buy the product
from the vendor. Two months after signing the deal with the vendor, Spick & Span’s
biggest competitor (upon hearing about the deal) lowers the price of their
corresponding product to $100 below the bought-in price.
Provide a discussion and analysis regarding what just transpired. Be sure to mention
the issue as it relates to Fixed and Proportional costs.
What are the implications for the decision to make or buy in this context? What
should they do at this point (i.e. what options do they have)?
E N D O F L E S S O N 5: RC A M O D U L E G 2 02
PRODUCT COST CONTROLLING – CALCULATE PRODUCT COSTS
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© 2011 ALTA VIA CONSULTING LLC
A PRACTICAL INTRODUCTION TO RCA
L ESSON 6: RCA M ODULE G203
P R O FI T A BI LI T Y A N A LY SI S – R E P O R T
ON
P RO F I T A BI LI T Y
LEARNING OBJECTIVE:



TO FAMILIARIZE STUDENTS WITH A COSTING APPLICATION THAT UTILIZES RESOURCE
CONSUMPTION ACCOUNTING (RCA).
TO UNDERSTAND THE PROFITABILITY REPORTING STRUCTURE.
ANALYZE RESULTS.
REFERENCE:




STORYBOARD OF THE MANUFACTURING ENTITY “SPICK AND SPAN CORPORATION”.
SAP CO ON THE SERVER “KOSOVO.COB.CSUCHICO.EDU”, CLIENT 950, OPERATING CONCERN
“SPSP”.
MODULE ON CCA – RESOURCE POOL PLANNING AND THE MODULE ON PC – CALCULATE
PRODUCT COST.
MODULE RCA03
TASKS TO BE EXECUTED:
1. DISPLAY PLANNED PRODUCT PROFITABILITY.
2. MAKE A BUSINESS DECISION -MUTUALLY EXCLUSIVE RESOURCES.
TASK EXECUTION:
1. DISPLAY PLANNED PRODUCT PROFITABILITY.
Menu path: Accounting  Controlling Profitability Analysis  Information System  Execute Report
Or by transaction code: KE30







Select report “CUSTOM01” (double click)
Period/year FROM = 1/2011
Period/year TO = 12/2011
Version = 0
Execute
On the Warning select Yes
System returns “Company” level Contribution Margin report
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© 2011 ALTA VIA CONSULTING LLC
A PRACTICAL INTRODUCTION TO RCA


Select “Drilldown List” in bottom left corner of the navigation box to highlight the report
segments
Select “Product”
2. MAKE A BUSINESS DECISION -MUTUALLY EXCLUSIVE RESOURCES.
NOTE: LECTURER HAS THE OPTION OF USING THE ANALYSIS CASE PROBLEM
PRESENTED BELOW , OR MAY SUBSTITUTE IT (IN PART OR IN WHOLE ) TO CREATE
THEIR OWN ANALYSIS CASE PROBLEM THAT WOULD BE MOST RELEVANT TO
ACHIEVE THEIR DESIRE D STUDENT LEARNING OBJECTIVES.
Instructions:
Part I: The CEO asks you to bring the marginal income statement (P&L) to his office; he
wants to discuss the continuation/discontinuance of the product “Heavy Duty”
degreaser. His contention is that the product is obviously losing money and that it is a
candidate for elimination. He just came back from an international conference in Rio
where in a session someone mentioned a thing called the “fixed cost death spiral” and
he wants you to explain to him exactly what it is and whether it has any bearing on
continuation/discontinuance of the product. Consider the P&L when informing your
decision as to what action to recommend.
Required: Provide the rationale to make the CEO understand what information is
relevant to determining what to do with the product and make a recommendation.
Use the P&L to evaluate under what conditions the product should be eliminated or
retained.
E N D O F L E S S O N 6: RC A M O D U L E G 2 03
PROFITABILITY ANALYSIS – REPORT ON PROFITABILITY
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© 2011 ALTA VIA CONSULTING LLC
A BOUT A LTA V IA C ONSULTING , LLC
ALTA VIA CONSULTING, LLC IS A TRUSTED SAP PARTNER AND AMERICAS’ SAP USERS’ GROUP ASSOCIATE
AFFILIATE SERVING AS SUBJECT MATTER EXPERTS IN THE SAP ERP CONTROLLING MODULE ENVIRONMENT.
SINCE 1998, OUR CONSULTING SERVICES OFFER COSTING INSIGHTS AND COST TRANSPARENCY THAT IS
OFTEN THOUGHT TO BE UNATTAINABLE.
AS COSTING SOLUTION ARCHITECTS, WE ACHIEVE OUR CLIENT'S GOALS BY FOCUSING ON MANAGEMENT
PROCESSES THAT INCLUDE BLUEPRINTING, PLANNING, ANALYSIS, CONTROL, AND DECISION SUPPORT TOOLS.
WE THRIVE ON ADDRESSING SPECIFIC CHALLENGES RELATED TO ADVANCED COST MANAGEMENT,
HIGHLIGHTING SOLUTIONS AND BEST PRACTICES TO HELP MANAGERS ACHIEVE THEIR OPTIMIZATION
OBJECTIVES.
ALTA VIA’S MISSION IS TO SERVE AS GLOBAL COSTING SOLUTION ARCHITECTS — PROVING THERE'S
“A BETTER USE OF INFORMATION”.
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ALTA VIA IS A SAP PARTNER & AMERICAS’ SAP USERS’ GROUP (ASUG) ASSOCIATE AFFILIATE.
© 2011 ALTA VIA CONSULTING LLC
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© 2011 ALTA VIA CONSULTING LLC