Profitability Analysis
Explain the organizational assignment in the PA module?
The operating Concern is the highest node in Profitability Analysis.
The operating concern is assigned to the Controlling Area.
Within the operating concern all the transactions of Profitability Analysis are stored.
The operating concern is nothing but a nomenclature for defining the highest node in PA.
What is the functionality of the PA module?
PA module is the most important module when it comes to analyzing the results of the organization.
In this module you basically collect the revenues from the sale order , the costs from the production order, cost center or internal order and analyze their results.
The interesting part about this module is that when it collects the costs and revenues it also collects the characteristics associated with the costs and revenues and this is what makes it stand out
So for eg.using PA module you can find out the following:
Profit of a certain product
Profit of a certain product in a certain region
Profit of a certain product in a certain region by a certain customer
Profit of a certain product in a certain region by a certain sales person
And the list can go on in depth
It is one of the most wonderful modules in the SAP
How do you get all those characteristics defined above and how do you analyse them?
To do so while defining Operating concern one has to define Characteristics and Value fields.
What are characteristics and Value Fields?
In the operating concern two things are basically defined
a) Characteristics
b) Value Fields
Characteristics are nothing but those aspects on which we want to break down the profit logically such as customer, region product, product hierarchy, sales person etc
Value Fields are nothing but the values associated with these characteristics
Eg Sales, Raw Material Cost, Labour Cost, Overheads etc
Once you define the characteristics and value fields the values are updated in the table
From where does the characteristics come from?
The characteristics which are defined above basically comes from either the Customer Master or the Material Master.
From where does the values come from into PA?
The Sales Revenue comes from the Condition Type in SD
So for this we need to map the Condition Type in SD to the respective value fields in customizing
The Cost comes from Cost estimates which are transferred using the PA transfer structure which we covered in the Product costing section. The PA transfer structure works on the same lines
The various cost components of the cost component structure is assigned to the value field of PA module and this is how the costs come into PA.
Once the actual revenue and the std cost defined above are captured in PA the variances are also transferred into PA. This way the std cost+variances equal the actual cost.
So actual revenue- actual cost helps us determine the profit.
How do you configure the assignment of variances from product costing to COPA module ?
The variance categories from product costing along with cost element is to be assigned to the value fields in COPA
Once you have captured all the costs and revenues how do you analyze them?
The costs and revenues which we have captured in the above manner are then analysed by writing reports using the Report Painter Functionality in SAP.
What is characteristic Derivation in Profitability Analysis Module ?
Characteristic Derivation is usually used when you want to derive the characteristics . An example of this could be say you want to derive the first two characteristics of product hierarchy.
When this is the case you define characteristic derivation where you maintain the rules which contain the table names of the product hierarchy fields and the number of characters to be extracted and it also specifies the target characteristic field in PA.
What is the basic difference in customizing done in Profitability analysis as compared to other modules?
In COPA when we configure the system i.e. creating operating concern, maintain structures no customizing request is generated. The configuration needs to be transported through a different transaction called as KE3I.
Profit Center
What is the basic purpose of creating a Profit Center?
The basic purpose of creating a Profit Center is to analyse the revenues and costs for a particular product line, or a plant or a business unit. Though you can generate balance sheets and profit and loss accounts per Profit Center still a profit center should basically be used as a tool only for internal reporting purposes.
If legally one has to produce the Balance sheets and Profit and Loss Accounts for a profit center then it is advisable to create it as a company code instead of a profit center
How does the cost and revenue flow to the Profit Center?
The profit center is stored in the cost center this way the costs flow to the profit center.
The profit center is also stored in material master. This way all sales orders created for the finished product automatically picks up the profit center from the material master and all the revenues and costs coming from this sales order for that finished product is passed on to this profit center.
A profit center document is created in addition to the Finance document whenever revenue or consumption takes place. This document contains the details of the profit center.
Once both the costs and revenues flow to the profit center you can write reports using the Report Painter to get intelligent analysis. You can also use SAP standard reports
Statistical key figures are created in the cost center accounting module. Now the same statistical key figures are required in the profit center accounting module. Is it required to maintain the statistical key figure in PCA module?
No. Since the statistical key figures are created in a controlling area. Profit center is a sub module within controlling area. The statistical key figure is created for the controlling area and as such is available in profit center accounting module.
What are the precautions to be taken while maintaining the 3KEH table for profit center accounting?
You should not maintain the customer and vendor reconciliation accounts in the 3KEH table. Further you should also not maintain the special GL accounts in this table. Since we are transferring the customer and vendor balances to profit center module through separate month end programs. If the reconciliation’s accounts are maintained here it will result in double posting in the profit center module.
Should secondary cost elements be maintained in the 3KEH table?
No. Since here we maintain only those accounts for which the value should flow from FI to PCA. Secondary cost elements are already defined in the controlling module which will reflect posting in PCA also
How can the default settings be maintained for cost elements per company code?
The default settings can be maintained in transaction OKB9. Here we can specify for a company code, cost element which is the cost center to be defaulted or whether profitability segment is to be automatically derived. Further we can also maintain whether business area is mandatory or profit center is mandatory and can maintain the default business areas and profit centers.
What are the other important activities in Profit Center?
The assignments of profit center to the cost center and also assignment of profit center to the material master is what will determine the success of the Profit center posting. If these assignments are wrongly done then the profit center postings will not come in properly.
