What is Controlling Area and Cost Center?

What Controlling is all about?

Controlling precedes CCA

The controlling area is the highest organizational level within CO. It must exist before Cost Center Accounting (CCA) can be used. A controlling area will be created on a one-to-one basis with the company code created in FI. This does not facilitate cross-company code accounting in CO. In order to facilitate cross-company code accounting, more than one company code is usually assigned to the controlling area.

Note the difference between cross-company code accounting and intercompany accounting.

Cross-company code accounting involves the allocation of costs across cost centers (or responsibility centers) existing in different company codes within CO. Intercompany accounting involves the recording of intercompany receivables and
payables in FI.

There are several factors considered when determining whether one or more controlling areas will be used. The major factors considered are whether cross-company code accounting is desired, and whether more than one chart of accounts is needed at the controlling area level. In addition, currency issues may also be considered.

Step 1 : Create Controlling Area:

Menu Path
IMG:Controlling > General Controlling > Organization >
Maintain Controlling Area T-Code : OKKP

On the "Choose Activity" pop-up window select the activity "Maintain Controlling Area" by double clicking on the corresponding line.

On the Change View Basic data: Overview screen: Click on the button.

On the "New Entries: Details of Added Entries" screen: Click on the button

On the resulting Pop-up, enter your Company Code
Hit to return to the main screen.

Note that the selection of this option has brought in a large number of Company default values to the input screen.
·CoCd -> CO area choose "Controlling area same as company code" from the pull-downmenu (click on the little icon at the very end of the row).

·CCtr std. Hierarchy STD_01 (say)
Hit to have SAP check the entry.
A pop-up box will come up with Standard Hierarchy STD_01 does not exist. Should system STD_01 be created as a standard hierarchy

Click to have the hierarchy created.

Click on the button to complete the transaction and return to the previous screen

On the Change View Basic data: Overview screen:

Select the line containing the newly create CO area

Double click on the "Activate components/control indicators" line (in the window on your right)

On the Change View Activate components/ control indicators

Details screen, enter:
Click on the button
· Fiscal year from Current year
· Cost Centers Component active (choose from the pull-down menu)
Other components will be activated in later exercises
· Select "Cost objects" by clicking on the check box
· Select "All currencies" by clicking on the check box (it may already be checked by default).
[Enables Controlling for all currencies]
· Select "Variances" by clicking on the check box

Click on the icon to complete the transaction

Click on the button to return to the previous screen

Note: You are also able to set Cost Center Accounting active and specify the respective settings through the following menu path: IMG > Controlling > Cost Center Accounting > Activate Cost

Center Accounting in Controlling Area.

On the Change View Basic data Overview screen:
Double click on the "Assignment of company code(s)" line (in the window on your right)
Click on icon.
Enter your company code or select it from the pull-down menu and hit . The system adds the

company name
Verify that the correct company code is pulled into the table.
Click to complete the transaction.
Go back to the IMG.

Step : 2 : Maintain Number Ranges

In CO, number ranges can be assigned to groups. This makes the process of creating number ranges more efficient by allowing several types of transactions to use the same number range.

IMG:Controlling > General Controlling > Organization > Maintain Number Ranges for Controlling

Documents T-Code : KANK

Now you need to define the Number Ranges for transaction group Useg values should for the FOUR groups for which number ranges will be assigned:

Text for Group Name From To Current
Number Number Number
Planning Transaction
Actual Transactions
Periodic Postings
Interface

On the Number Ranges for CO Document screen, enter:
·Controlling Area your controlling area
Click on the button

On the Maintain Number Range Groups screen:
Scroll down and ensure that all available CO transactions are listed as Not assigned

Use the Menu Path: Group > Insert
On the Insert Group Pop-up window:
Enter the data for a Group from the Data parameters table above
Hit after filling the data fields in the Pop-Up
Repeat this block of instructions until all FOUR groups have numbers assigned

Now Assign transaction types to each Group

To complete this , the following values should be used for the FOUR groups for which transactions types are to be assigned:

Planning Actual Transaction Periodic Interface
Transaction Transaction Posting
On the Maintain Number Range Groups screen:
Move to the area of Not assigned transactions
Double click on a targeted transaction to be selected. It will change color once selected.
Select all of the transactions to be assigned to a given group.
Move to the area listing the Groups.
Click on the box for the group to which the transactions are to be assigned.
Click on the icon on the toolbar to make the assignment.

Repeat this block of instructions until all FOUR groups have had their transactions assigned.
Click on the icon to complete the transaction and exit.

After the above go to Cost center Accounting

What's a Cost Center ?
They are buckets where costs can be captured ie an organizational unit wherein it defines the location of cost incurrence.

Now you go to Master Data and create the following :

1. Cost Center Hierarchies:
>Standard Hierarchy
Menu Path:Accounting > Controlling > Cost Center Accounting > Master Data > Standard Hierarchy >

Change
>Functional Cost Center Group

2.Cost Centers
>For Production, Process, and Non-Production etc
Menu Path:Accounting > Controlling > Cost Center Accounting > Master Data > Cost Center >

Individual Processing > Create
Menu Path:Accounting > Controlling > Cost Center Accounting > Master Data > Cost Center Group > Create

3.Primary Cost Elements:
>By definition, must correspond to previously established G/L expense accounts.
Primary cost elements in CO mirror P&L accounts set up in the FI module (general ledger). They are used as the vehicle to transfer costs from the FI module into CO. If there is no primary cost element set up for a specific P&L account on the general ledger, the costs will not flow to CO.

For this reason, in practice, all P&L accounts on the general ledger are usually set up as primary cost elements in CO.

IMG:Controlling > Cost Element Accounting > Master Data > Cost Elements > Automatic Creation of Primary and Secondary Cost Elements > Make Default Settings

4.Secondary Cost Elements:
>Primary for allocation
Secondary cost elements do not necessarily mirror G/L accounts created in FI. They are created and used solely in the CO module to facilitate the movement of costs within CO (allocation, settement, etc.).
Menu Path:Accounting > Controlling > Cost Center Accounting > Master Data > Cost Element > Individual Processing > Create Secondary

5.Activity Types:
Activity types represent cost drivers in CO. They can be used as a basis for cost allocations within the CO module.

Menu Path:Accounting > Controlling > Cost Center Accounting > Master Data > Activity Type > Individual Processing > Create

See Activity groups also

6.Statistical Key Figures:
> say Number of employees
> Square meters if you want to allocate say floor space

Statistical key figures represent static data in the CO module. They can be used as a basis for moving costs in CO (allocations, etc.) when actual data or activity type data is not available or too difficult to obtain.

Menu Path:Accounting > Controlling > Cost Centers > Master Data > Stat. Key Figures > Individual Processing > Create
see Statistical Key figure groups also.