Archit_BBP_CO-PA_V1_30112010

Project: ARCHITProject: ARCHIT

ARCH Pharmalabs Limited

Business BlueprintBusiness Blueprint

Profitability AnalysisProfitability Analysis

BBP_CO-PA_V1.0BBP_CO-PA_V1.0

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DOCUMENT NUMBER:BBP_CO_V.1 PAGE: 2 of 33

TITLE: Controlling CO-PA Business Blue Print

ADDENDUM/AMENDMENT #: New Document SUPERSEDES: N/A

Document Control

Document ID : ZTL/2010/PRJ-252/CO/03

Compliance Status : Mandatory

Security Classification : Company Restricted

Issue Date : 10th December, 2010

Document Status : Draft, Revised, Final

Prepared by : J B Babu

Quality Review : J N R ao

Authorized by : Srinivasan A

Distribution : Bhushan P – Arch Pharmalabs Limited

Document History : V1.0

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APPROVAL

ACTIVITYNAME TITLE

SIGNATURE / DATE

PREPARED BY: Mr. J. B. Babu.

Zensar Consultant

REVIEWED BY:

Ms. Himanshi Parekh CO CTM- Arch

REVIEWED BY:

Mr. Govind Joshi

Mr. Sreenivasan A.

Project – Manager Arch

Zensar

APPROVED BY:

Mr. Bhushan Punekar CO BPO

AUTHORISED BY:

Mr. Paresh Jain( Project Leader)

VP- IA & IT Controls

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Table of Content

1 Introduction...............................................................................................................6

2 Operating Concern....................................................................................................7

3 Data Structure...........................................................................................................73.1 Characteristics:................................................................................................................83.2 Value Fields:....................................................................................................................93.3 Characteristic Derivation...............................................................................................12

4 Master Data............................................................................................................124.1 Valuation using material costing...................................................................................124.2 COGS from Valuation Type..........................................................................................13

5 CO-PA Planning:.....................................................................................................155.1 Planning Layout............................................................................................................155.2 Planning Framework.....................................................................................................17

5.2.1 Planning Level.......................................................................................................175.2.2 Planning Packaging...............................................................................................175.2.3 Parameter set ....................................................................................................185.2.4 Overhead Planning ............................................................................................18

6 Flow of Actual Data to CO-PA.................................................................................206.1 PA Transfer Structure...................................................................................................206.2 Transfer of Billing Documents:......................................................................................226.3 Production Variances:...................................................................................................276.4 Settling Projects / Orders:.............................................................................................276.5 Direct Posting from Financial Accounting:....................................................................276.6 Periodic Overhead Allocations:.....................................................................................286.7 CO-PA Manual Document entry:...................................................................................29

7 Information System in CO-PA.................................................................................29

8 Enhancement/GAPS...............................................................................................308.1 Derivation of SCE at Depot Plant..................................................................................308.2 Derivation of Manufactured plant :................................................................................31

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in case of sales happened from the depot, system does not have the manufacturing plant for that materials directly. This need to be derived through the batch. Since the batch numbering is plant specific, the manufacturing plant will be derived with the enhancement....................318.3 Exclusion of Standard Cost Estimate:...........................................................................31Other than Valuation Type MFG, normally system pass the standard cost estimate to all the valuation types, based on the Costing assignment to the Material Type. The COGS Value need to be passed on to “Key Material Value field” in case of Valuation Type other then MFG..................................................................................................................................................318.4 : Project/Sales order Settlement:..................................................................................31

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1 Introduction

CO-PA is a tool to analyze the sales results of an organization. It is enable to evaluate the

market segments structured according to products, customers, orders or any combination of

these with respect to contribution margin.

The aim of this is to provide your sales, marketing, planning, and management organizations

with information to internal accounting and decision-support from a market-oriented viewpoint.

It collects data such as revenues from sales order/billing document and costs from process

order, cost center or internal order.

Profitability Analysis can be defined in two ways:

Costing-based Profitability Analysis

Account-based Profitability Analysis

In Costing-based Profitability Analysis it groups costs and revenues according to value fields

with costing based valuation approach.

In Account-based Profitability Analysis it groups costs and revenue elements with account-

based valuation approach which means always reconciled with Financial Accounting.

The major difference between Account –based and Costing-based Profitability Analysis is when

post goods issue is happened values will be transferred to COPA in Account-based Profitability

Analysis, where as in case of Costing-based Profitability Analysis sales data will be transferred

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only after billing documents posted. Thus it recognizes the revenue only after billing process is

completed to form contribution margin.

When it collects costs and revenues it also collects the associated characteristics and value

fields which help in framing the relevant reports.

Using CO-PA module, various levels of reports can be generated in the following combinations;

Profit of certain product

Profit of certain product in a certain region

Profit of certain product in a certain region by a certain customer

Profit of certain product in a certain region by a certain sales person etc.,

Plan vs actual profitability analysis

Reports Can be drawn based on the WBS Elements

2 Operating Concern

An Operating Concern represents an organizational unit in the company for which the sales

market has a uniform structure. It is the valuation level for Profitability Analysis (CO-PA).

The operating concern is the highest reporting level within CO-PA, it defines the limit of sales

and marketing information, which can be reported together from this module. One or more

controlling areas are assigned to an operating concern when organizational structures are

defined.

1000 - Arch Operating Concern

Fiscal year - V3 – April – March with 4 Special Period

Currency - INR – Indian Rupees

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3 Data StructureIn Profitability Analysis master data such as Characteristics and Value Fields are directly linked

to structures. The combination of particular characteristics values forms the actual analysis of

object called Profitability Segment.

The data structure will organize the costs and revenues onto how it will be displayed or

analysed.1000- ARCH operating concern will be used in order to determine the structure of

profitability segments. The data structure is defined by Characteristics and Value Fields as

described in the subsequent narratives.

3.1 Characteristics:Characteristics are nothing but those aspects we want to break down the profit logically such as

a customer, a region, a sales office etc can be defined as a characteristic on which profitability

analysis is to be performed.

Characteristics are SAP Delivered and Customer specific.

In Arch Pharmalabs Limited some of the individual characteristics will be grouped as below and

derived from the Sales Document and its dependent master data:

The following are the Characteristics used for Arch. Characteristic starting with “WW” are

created specific to Arch:

Field Description Table Field

AUART Sales Doc. Type VBAK AUARTAUGRU Order reason VBAK AUGRUBONUS Vol. rebate grp MVKE BONUS

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BRSCH Industry KNA1 BRSCHBWTAR Valuation Type VBAP BWTARBZIRK Sales district KNVV BZIRKCHARG Batch VBAP CHARGCOPA_KOSTL Cost center EFORM Form of manufacture GEBIE Area KDGRP Customer group KNVV KDGRPKMBRND Brand KMVTNR Sales employee PAPARTNER VRTNRKMWNHG Main material group KMZONE Zone KTGRD AcctAssgGr KNVV KTGRDKTGRM Acct asgnmt grp VBAP KTGRMLAND1 Country KNA1 LAND1MAABC ABC Indicator MARC MAABCMATKL Material Group MARA MATKLMTART Material Type MARA MTARTMVGR1 MaterialGroup 1 MVKE MVGR1MVGR2 MaterialGroup 2 MVKE MVGR2MVGR3 MaterialGroup 3 MVKE MVGR3PAPH1 ProdHier01-1 MVKE PAPH1PAPH2 ProdHier01-2 MVKE PAPH2PAPH3 ProdHier01-3 MVKE PAPH3PARTNER Partner PRART Proj.type PRPS PRARTPRODH Prod.hierarchy MVKE PRODHPSPHI Current proj no PRPS PSPHISORHIST Sales ord.hist. VKBUR Sales Office KNVV VKBURVKGRP Sales Group KNVV VKGRP

3.2 Value Fields:

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Value Fields are the detailed elements that form part of the analysis report. For example sales

revenue, costs, overheads can be defined as value fields that form part of the profitability

analysis report for a particular segment. Value Fields starting “VV” are created specific to Arch.

Value Field DescriptionABSMG Sales quantity

ERLOS Revenue

MRABA Qty discount

PRABA Price reduction

RABAT Other Discounts

AUSFR Outgoing Freight

VSVP Dispatch Packag.

UMSLZ Licensing Fees

PROVV Ext. Commission

VWGK Admin. Overhead

VTRGK Sales Overhead

VRPRS COGS

VV100 Sales Qty-SKU

VV101 Job Wrok(Con)-Extern

VV102 Job Wrok(Con)-Intern

VV103 Services – Income

VV104 Other Income

VV111 Insurance -collected

VV112 Freight – Collected

VV119 Excise Duty on Sales

VV200 Discount

VV201 Incentive

VV205 Commission

ROHST Raw materials

VV210 Other Deductions

VV300 CC Material – Key

VV305 CC Matetial- Solvent

VV310 CC Material- Other

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VV315 CC Material- Packing

VV320 CC Overhead- Labour

VV325 CC Overhead- Power

VV330 CC Overhead- Water

VV335 CC Overhead- Fuel

VV340 CC Overhead-OtherMfg

VV350 Variance - Material

VV355 Variance - Overhead

VV360 Variance - Remaining

VV500 R & D Expenses

VV505 Admin Expenses

VV510 Corporate Overheads

VV550 Selling Expenses

VV560 Price variance

VV565 Unabsorbed Product CVV570 Unabsorbed OverheadsVV575 Inventory RevaluationVV580 Inventory written ofVV585 Job-work-out-ChargesVV600 Depreciation OtherVV605 Financial CostVV349 Cost Of Purchas z100VV348 Job-work-in-OH CostVV120 Excise Exp On SalesVV336 Overhead-Liq Nitroze

In Sales pricing procedures, certain condition types are defined as statistical in some pricing

procedures and the same condition types are real conditions in other pricing procedures.

To eliminate the statistical condition type flow to the billing document, we have use the condition

type elimination configuration. It is possible where ever separate billing type is available for

statistical conditions.

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GAP : Where ever the billing type clarity is not available, CO-PA exit need to be written to

eliminate the statistical condition type flow to the CO-PA.

For example Excise Revenue is real condition in domestic revenue. But the same condition type

is statistical in deemed exports pricing procedure. For both the cases one billing document type

“zf10” is being used.

3.3 Characteristic Derivation

The following fields data will not be followed by the system automatically. These need to be derived or enhanced through user exits.

Derivation:

Valuation Type - BWTARBatch - CHARGManufacturing Plant - WW100

These values need to be derived through enhancements or derivation rules.

4 Master Data

4.1 Valuation using material costing

Material Cost Estimate will be transferred from Product Cost Controlling to determine the cost of

goods manufactured in Profitability Analysis, against billing document. The breakdown of these

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costs in CO-PC is usually more detailed than that required in CO-PA. The cost component

structure can be transferred to CO-PA, to identify the cost of goods Manufactured. The following

will be the value field assignment against the Cost Component Structure.

Operating Point ofCost Compt Cost Name of Cost Comp. Fixed & Value

Concern Valuation Structure Component Variable Field1000 01 10 10 Material - Key 3 VV3001000 01 10 20 Material - Solvent 3 VV3051000 01 10 30 Material - Other 3 VV3101000 01 10 40 Material - Packing 3 VV3151000 01 10 50 Overhead – Labour 3 VV3201000 01 10 60 Overhead – Power 3 VV3251000 01 10 64 Overhead – Water 3 VV3301000 01 10 68 Overhead – Fuel 3 VV3351000 01 10 69 Overhead – liquid

nitrogen3 VV335

1000 01 10 70 Overhead - Other Mfg 3 VV3401000 03 10 10 Material - Key 3 VV3001000 03 10 20 Material - Solvent 3 VV3051000 03 10 30 Material - Other 3 VV3101000 03 10 40 Material - Packing 3 VV3151000 03 10 50 Overhead – Labour 3 VV3201000 03 10 60 Overhead – Power 3 VV3251000 03 10 64 Overhead – Water 3 VV3301000 03 10 68 Overhead – Fuel 3 VV3351000 03 10 69 Overhead – liquid

nitrogen3 VV335

1000 03 10 70 Overhead - Other Mfg 3 VV340

Point of Valuation 01- Actual data and 03- Planned data

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If the Standard cost estimate is not available, system will give error at the time of creating the

billing document. To avoid the same user has to maintain the elimination rule through

transaction code KE4H.

When sale is being made from Depot plant to customer, system has to identify the

corresponding manufacturing plant based on the Batch number and need to assign the

manufacturing plant in one of Characteristic field.

4.2 COGS from Valuation Type

Using the condition type technique, values can be flown to CO-PA. It is possible to make

provisions in CO-PA along with Revenues. The finished goods are having the split valuation.

Based on the material delivery to customer, it is required to identify the corresponding material

value from the valuation type.

Condition Table - 900 - CO Area/CoCode/Val. Type – Consist of the following fields:

Controlling Area

Company Code

Valuation Type

Access sequence – “0010 - Arch Valuation Type” has been defined and assigned the Condition

Type “900- CO Area/CoCode/Val. Type”.

Condition Type – Z100 - Arch Val-COGS as Pricing condition and will be assigned the Access

Sequence 0010.

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Costing Sheet – “Z00001- Arch COPA Costing Sheet COGS” – will be assigned the condition

Type Z100.

Valuation field VRPRS will be assigned to the Condition Type Z100.

A condition Record will be created to transfer the value based on the valuation type (Tcode

KE41) in the following combination:

Condition Type Z100

Controlling Area 1000

Company Code 1000

Valid From Date

Valuation Type DOM, IMP, JOB,DOMEP,IMPEP

Valuation Type MFG is not being considered as Standard cost estimate need to be

transferred.

5 CO-PA Planning:

Planning in Profitability Analysis allows planning sales, revenue and profitability data for any

selected profitability segments. Display the entire planning process of the company in different

ways, depending on the business demands.

Sales and profit planning is generally perceived as an integrated process involving different

roles within profitability and sales accounting. Distinctions are often made between the different

approaches used, such as central top-down planning and local bottom-up planning.

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The planning tool in Profitability Analysis offers all those involved in the planning process a

uniform, graphical planning interface that is straightforward and modern.

An iterative sales and profit planning process consisting of a number of individual planning

steps, in which existing planning data is copied, projected into the future, revaluated, adjusted

manually, and distributed top-down until they obtain a sales and profit plan that fulfills the

enterprise's requirements. To support the individual steps of a planning process, the planning

tool for Profitability Analysis offers a wide range of planning methods and planning aids that can

be used to create planning data and to modify it to suit the company needs. These include

automatic methods that allow you to produce data automatically for an entire plan or to carry out

changes on that data, and functions that allow you to enter planning data manually.

The following are the basic data required to carry out the CO-PA planning, in SAP system:

5.1 Planning Layout

The entry screens for sales and profit planning are defined. These definitions are referred to as

"planning layouts" and represent structures of rows and columns.

Planning layout is created via automatic generation from the parameter set for the planning

method Enter Planning Data. The only planning layouts that you need to create manually are

those with complex lead columns containing several characteristics that are specified by row.

To meet the Arch’s CO-PA planning the following layout will be defined:

“ PLANYEAR – Arch Sales Plan Yearly”, which will consist of the following structure:Characteristic 1 - CustomerCharacteristic 2 - ProductCharacteristic 3 - PlantCharacteristic 4 - Sales OrganisationCharacteristic 5 – DivisionCharacteristic 5 – Company Code

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Value Field 1 - Quantity-Base UOM - Unit of MeasureValue Field 2 - Quantity-Base UOM Value Field 4 - Sales RevenueValue Field 5 - Other RevenueValue Field 6 - Excise Duty RecoveredValue Field 7 - Outgoing FreightValue Field 8 - Sales CommissionValue Field 9 - DiscountValue Field 10 - InsuranceValue Field 11 - Clearing ChargesValue Field 12 – CC Material -KeyValue Field 13 - CC Material - SolventsValue Field 14 - CC Material - OtherValue Field 15 – CC Material- PackingValue Field 16 – CC Overhead - LabourValue Field 17 – CC Overhead - PowerValue Field 18 – CC Overhead - WaterValue Field 19 – CC Overhead - FuelValue Field 20 - CC Overhead – Other Mfg

Value fields assigned with Characteristic values are as follows:Plan/Act. Indicator - 1 Planning dataVersion - 0 Plan/actual version

General Data Selection 1 - Record Type General Data Selection 2 - From Period/year General Data Selection 2 - To Period/yearGeneral Data Selection 3 - CO Area

5.2 Planning Framework

In COPA Planning Frame work allows, to structure planning according to the planning

requirements. The following are the planning elements:

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5.2.1 Planning Level

The planning level to determine the level at which planning is to occur. In the planning level will

be specified the characteristics for planning. Planning level needs to be synchronized with

planning layout, lead column and general data selection:

ZARCH - Arch Pharmalabs COPA Planning: Consist of the following Characteristics:

Controlling AreaCompany CodeSales OrganizationDivisionPeriod / YearPlantCustomerProductRecord TypeVersion

5.2.2 Planning Packaging

Characteristic values will be specified in a planning package. In this way, you determine the

market segment for which planning is to take place for a particular period. A planning package

can thereby be seen as a work package that determines which planning objects are relevant to

a specific planner.

ZP001 - Planning Package

5.2.3 Parameter set

A parameter set contains all the settings necessary for executing a planning method. The

Layout for planning method execution is configured in Parameter Set. To enter or display your

planning data Microsoft Excel can be used as interface in Parameter set.

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ZPS001 - Arch Parameter Set

Parameter Set Consist of the following parameters:

Planning layout – ZARCHYEARCurrency - INRValuation - Automatic ValuationExcel Interface - Based on need basis it can be activated in parameter set

5.2.4 Overhead Planning

In Financial accounting Arch will get the broader view for Revenues & Expenses. In Controlling,

the same is analysed in detail with the help of various cost objects like Cost Center, Process

orders, Profitability Segments, etc.

These expenses are then allocated further in Controlling. For example, If one department is

providing services to another department, the cost from the service provider cost center (Sender

cost center) should be allocated to receiver cost center. The cost of Production department

should be charged to a product based on the Machine hours or Labour hours etc. The transfer

of cost from One cost object like Cost center, Process order to another is called “Allocation”

Allocation of Cost from Cost Center to CO-PA

This document explains the process for Assessment of Planned costs from Cost center to

Profitability Analysis. This is a method of internal cost allocation by which costs of a sender

Cost center are allocated to receiver PA Segments. This is done by defining Assessment

cycles. In cycles we have several segments (Sub-cycles). In each segment, we have to define

sender Cost center , receiver PA Segment(s) & a basis of allocation. The basis of allocation can

be of following types

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TYPE BASISFixed basis Fixed percentage Fixed basis Fixed portions (Ratio)Fixed basis Fixed amountVariable basis Actual cost of receiverVariable basis Planned cost of receiverVariable basis Actual SKF of receiverVariable basis Planned SKF of receiverVariable basis Actual Activities of receiverVariable basis Planned Activities of receiver

Source of Cost

Before the start of the year, Cost expenses plan will be prepared for each cost center. This

expense plan then will be maintained in the system, part of the Cost Center Planning process.

Basis of allocation & Receiver

The following cost centers will allocate the cost to CO-PA.

Sending CC Remark Value Field Material Adjustments Total cost VV580Marketing / Sales -Logistics Cost

Total cost VV550

Admin Cost Total cost VV505Corporate Cost centers Total cost VV510

Based on the above nature of expenses, the rules need to be defined in the CO-PA assessment

cycle, the same will be executed in planning. The rules used for Actual data allocation would be

applied for Planned data allocation.

While defining the rules, Profit center (field) is mandatory & must be updated in CO-PA.

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After allocating the Planned costs from these cost centers, the balance in the senders would be

zero.

6 Flow of Actual Data to CO-PA

Profitability Analysis can receive actual data from the following R/3 applications:

SD (customer agreements, sales orders, goods issues, billing documents)

CO-OM (assessment of cost center and process costs, activity and process allocation,

order settlement)

CO-PC (valuation using material cost estimates, settlement of cost objects, production

variances)

FI (general ledger postings)

Each CO-PA-relevant transaction in SAP (such as invoicing) triggers the creation of line items in

COPA. The data posted in CO-PA is determined through automatic and manual mappings, and

through derivation and valuation configuration.

6.1 PA Transfer Structure

In SAP System, the following data can be settled to Profitability Segments:

Internal orders - Component CO Sales orders - Component SD Projects - Component PS Process order - Component PP-PI

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To settle the order or project to a profitability segment, a settlement rule must be assigned in the respective sender objects. Maintain the master data for the order or project, necessary settlement profile.

The settlement profile of the order, must allow settling to profitability segments.

PI01 - Process order

PA Transfer Structure – Z0- Arch Process Order -COPA

Z0 - Arch Process Order -COPA

Line ID Line Description

Sender CE Group

Variance Type Variance Description

Value Field

110 Mat-Input price variance MATCOST PRIV Input Price Variance VV350120

Mat-Input quantity variance MATCOST QTYVInput Quantity Variance VV350

130 Mat-Resource-usage variance MATCOST RSUV

Resource-Usage Variance VV350

140 Mat-Remaining input variance MATCOST INPV

Remaining Input Variance VV350

150 Mat-Mixed-price variance MATCOST MXPV Mixed-Price Variance VV350160 Mat-Output price variance MATCOST OPPV Output Price Variance VV350170 Mat-Lot size-/fixed-cost

varia MATCOST LSFVLot SizeVar/Fixed-CostVar VV350

180 Mat-Remaining variance MATCOST REMV Remaining Variance VV350190 Mat-Scrap MATCOST SCRP Scrap VV350210 OH-Input price variance SECCOST PRIV Input Price Variance VV355220

OH-Input quantity variance SECCOST QTYVInput Quantity Variance VV355

230 OH-Resource-usage variance SECCOST RSUV

Resource-Usage Variance VV355

240 OH-Remaining input variance SECCOST INPV

Remaining Input Variance VV355

250 OH-Mixed-price variance SECCOST MXPV Mixed-Price Variance VV355260 OH-Output price variance SECCOST OPPV Output Price Variance VV355270 OH-Lot size-/fixed-cost

varian SECCOST LSFVLot SizeVar/Fixed-CostVar VV355

280 OH-Remaining variance SECCOST REMV Remaining Variance VV355290 OH-Scrap SECCOST SCRP Scrap VV355

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ZPS1 - Project Settlement – PSG

PA Transfer Structure – Z1- PA Transfer Structure PS

Line ID Line Description

Sender Cost Elements Value Field

10 Production Costs 90031150 to90031160

VRPRS

50 Revenues 90050100 ERLOS

6.2 Transfer of Billing Documents:

When billing document data is posted, the online transfer function transfers the values directly

into Profitability Analysis. In the process, it uses the record type F to generate a line item

automatically in Profitability Analysis for each item on the billing document. For each line item a

CO-PA document will be created.

The Sales and Distribution Module (SD) calculates revenues during billing with the help of a

pricing mechanism, and then enters it in the billing document. If sales deductions are known

(granted discounts, planned cash discount), these are also recorded in the billing document. In

addition, the stock value of the product (delivered price for wholesale or retail goods, or cost of

goods manufactured for in-house products) can also be determined. The system transfers all

the characteristics defined in Profitability Analysis contained in the billing document, along with

the customer and product numbers, from the document to the CO-PA line item. It also performs

Characteristic derivation for those fields for which derivation logic has been defined. Based on

the assignment of Condition type to Value field, the Revenue elements will be transferred to

corresponding value fields.

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Incoming sales orders, as expected revenues can be transferred them from SD to CO-PA in

order to obtain an early estimate of anticipated profits. By analyzing this data characteristic, and

value fields, organization will get early profitability results for individual segments of the

business. The Sales Order data can be viewed with Record Type A

SD Condition Type and Value Field Mapping

Condition Type Condition Text Value FieldsZC02 Inland Comm Amt Item VV205ZC06 Oversea Com Amt Item VV205ZCON Conversion Charges VV101ZD02 Discount Amount Item VV200ZECD Imp Duty- Unload Pt ERLOSZFR1 Freight Amount Item VV112ZI02 Insurance Amt Item VV111ZOIC Other Incidental Chg VV104ZP01 Basic Price-Dom ERLOSZP03 Job Work Rate VV101ZP05 Depot Base Price ERLOSZP06 CIF Price ERLOSZPPS Project Service Cost VV103ZTPP Third Party Price ERLOSJEXP IN: A/R BED % VV119JECS IN A/R E-Cess VV119JA1X A/R Sec & Hr ECS VV119VPRS Internal price VRPRS

Assignment of SD Quantity Field

SD Condition Type Quantity Value FieldFKIMG Billed Quantity ABSMG Quantity-Sales UOM

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FKLMG Billing qty in SKU VV100 Quantity-Base UOM

The following values fields have been reset (to zero) for the billing types:

Bill Doc Type Description

Value field Description

ZF56 Deemed Export VV119 Excise Duty on SalesZF57 Merchant Export VV119 Excise Duty on SalesZG2D Dom Credit Memo ABSMG Sales quantityZG2D Dom Credit Memo VRPRS COGSZG2D Dom Credit Memo VV100 Sales Qty-SKUZG2D Dom Credit Memo VV300 CC Material - KeyZG2D Dom Credit Memo VV305 CC Matetial- SolventZG2D Dom Credit Memo VV310 CC Material- OtherZG2D Dom Credit Memo VV315 CC Material- PackingZG2D Dom Credit Memo VV320 CC Overhead- LabourZG2D Dom Credit Memo VV325 CC Overhead- PowerZG2D Dom Credit Memo VV330 CC Overhead- WaterZG2D Dom Credit Memo VV335 CC Overhead- FuelZG2D Dom Credit Memo VV340 CC Overhead-OtherMfgZG2D Dom Credit Memo VV348 Job-work-in-OH CostZG2D Dom Credit Memo VV349 Cost Of Purchas z100ZG2E Exp Credit Memo ABSMG Sales quantityZG2E Exp Credit Memo VRPRS COGSZG2E Exp Credit Memo VV100 Sales Qty-SKUZG2E Exp Credit Memo VV119 Excise Duty on SalesZG2E Exp Credit Memo VV300 CC Material - KeyZG2E Exp Credit Memo VV305 CC Matetial- SolventZG2E Exp Credit Memo VV310 CC Material- OtherZG2E Exp Credit Memo VV315 CC Material- PackingZG2E Exp Credit Memo VV320 CC Overhead- LabourZG2E Exp Credit Memo VV325 CC Overhead- PowerZG2E Exp Credit Memo VV330 CC Overhead- WaterZG2E Exp Credit Memo VV335 CC Overhead- FuelZG2E Exp Credit Memo VV340 CC Overhead-OtherMfgZG2E Exp Credit Memo VV348 Job-work-in-OH CostZG2E Exp Credit Memo VV349 Cost Of Purchas z100

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ZL2D Dom Debit Memo ABSMG Sales quantityZL2D Dom Debit Memo VRPRS COGSZL2D Dom Debit Memo VV100 Sales Qty-SKUZL2D Dom Credit Memo VV300 CC Material - KeyZL2D Dom Credit Memo VV305 CC Matetial- SolventZL2D Dom Credit Memo VV310 CC Material- OtherZL2D Dom Credit Memo VV315 CC Material- PackingZL2D Dom Credit Memo VV320 CC Overhead- LabourZL2D Dom Credit Memo VV325 CC Overhead- PowerZL2D Dom Credit Memo VV330 CC Overhead- WaterZL2D Dom Credit Memo VV335 CC Overhead- FuelZL2D Dom Credit Memo VV340 CC Overhead-OtherMfgZL2D Dom Credit Memo VV348 Job-work-in-OH CostZL2D Dom Credit Memo VV349 Cost Of Purchas z100ZL2E Exp Debit Memo ABSMG Sales quantityZL2E Exp Debit Memo VRPRS COGSZL2E Exp Debit Memo VV100 Sales Qty-SKUZL2E Exp Debit Memo VV119 Excise Duty on SalesZL2E Exp Debit Memo VV300 CC Material - KeyZL2E Exp Debit Memo VV305 CC Matetial- SolventZL2E Exp Debit Memo VV310 CC Material- OtherZL2E Exp Debit Memo VV315 CC Material- PackingZL2E Exp Debit Memo VV320 CC Overhead- LabourZL2E Exp Debit Memo VV325 CC Overhead- PowerZL2E Exp Debit Memo VV330 CC Overhead- WaterZL2E Exp Debit Memo VV335 CC Overhead- FuelZL2E Exp Debit Memo VV340 CC Overhead-OtherMfgZL2E Exp Debit Memo VV348 Job-work-in-OH CostZL2E Exp Debit Memo VV349 Cost Of Purchas z100ZPG2 Exp PS Credit Memo ABSMG Sales quantityZPG2 Exp PS Credit Memo VRPRS COGSZPG2 Exp PS Credit Memo VV100 Sales Qty-SKUZPG2 Exp PS Credit Memo VV300 CC Material - KeyZPG2 Exp PS Credit Memo VV305 CC Matetial- SolventZPG2 Exp PS Credit Memo VV310 CC Material- OtherZPG2 Exp PS Credit Memo VV315 CC Material- PackingZPG2 Exp PS Credit Memo VV320 CC Overhead- LabourZPG2 Exp PS Credit Memo VV325 CC Overhead- PowerZPG2 Exp PS Credit Memo VV330 CC Overhead- WaterZPG2 Exp PS Credit Memo VV335 CC Overhead- Fuel

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ZPG2 Exp PS Credit Memo VV340 CC Overhead-OtherMfgZPG2 Exp PS Credit Memo VV348 Job-work-in-OH CostZPG2 Exp PS Credit Memo VV349 Cost Of Purchas z100ZPL2 Exp PS Debit Memo ABSMG Sales quantityZPL2 Exp PS Debit Memo VRPRS COGSZPL2 Exp PS Debit Memo VV100 Sales Qty-SKUZPL2 Exp PS Debit Memo VV300 CC Material - KeyZPL2 Exp PS Debit Memo VV305 CC Matetial- SolventZPL2 Exp PS Debit Memo VV310 CC Material- OtherZPL2 Exp PS Debit Memo VV315 CC Material- PackingZPL2 Exp PS Debit Memo VV320 CC Overhead- LabourZPL2 Exp PS Debit Memo VV325 CC Overhead- PowerZPL2 Exp PS Debit Memo VV330 CC Overhead- WaterZPL2 Exp PS Debit Memo VV335 CC Overhead- FuelZPL2 Exp PS Debit Memo VV340 CC Overhead-OtherMfgZPL2 Exp PS Debit Memo VV348 Job-work-in-OH CostZPL2 Exp PS Debit Memo VV349 Cost Of Purchas z100ZREX Exp Cr for Returns VV119 Excise Duty on SalesZS2D Dom Cr Memo Cancel ABSMG Sales quantityZS2D Dom Cr Memo Cancel VRPRS COGSZS2D Dom Cr Memo Cancel VV100 Sales Qty-SKUZS2D Dom Cr Memo Cancel VV300 CC Material - KeyZS2D Dom Cr Memo Cancel VV305 CC Matetial- SolventZS2D Dom Cr Memo Cancel VV310 CC Material- OtherZS2D Dom Cr Memo Cancel VV315 CC Material- PackingZS2D Dom Cr Memo Cancel VV320 CC Overhead- LabourZS2D Dom Cr Memo Cancel VV325 CC Overhead- PowerZS2D Dom Cr Memo Cancel VV330 CC Overhead- WaterZS2D Dom Cr Memo Cancel VV335 CC Overhead- FuelZS2D Dom Cr Memo Cancel VV340 CC Overhead-OtherMfgZS2D Dom Cr Memo Cancel VV348 Job-work-in-OH CostZS2D Dom Cr Memo Cancel VV349 Cost Of Purchas z100ZS2E Exp Cr Memo Cancel ABSMG Sales quantityZS2E Exp Cr Memo Cancel VRPRS COGSZS2E Exp Cr Memo Cancel VV100 Sales Qty-SKUZS2E Exp Cr Memo Cancel VV300 CC Material - KeyZS2E Exp Cr Memo Cancel VV305 CC Matetial- SolventZS2E Exp Cr Memo Cancel VV310 CC Material- OtherZS2E Exp Cr Memo Cancel VV315 CC Material- PackingZS2E Exp Cr Memo Cancel VV320 CC Overhead- Labour

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ZS2E Exp Cr Memo Cancel VV325 CC Overhead- PowerZS2E Exp Cr Memo Cancel VV330 CC Overhead- WaterZS2E Exp Cr Memo Cancel VV335 CC Overhead- FuelZS2E Exp Cr Memo Cancel VV340 CC Overhead-OtherMfgZS2E Exp Cr Memo Cancel VV348 Job-work-in-OH CostZS2E Exp Cr Memo Cancel VV349 Cost Of Purchas z100

6.3 Production Variances:

Variances typically occur, when you valuate your materials with standard prices. At the end of

the period, these standard costs are then compared with the actual costs incurred, and this

comparison forms the basis for a detailed variance analysis. The variances are finally

transferred to CO-PA at the end of the period to produce a factually correct representation of the

results.

The variances will be transferred to CO-PA, through transfer structure maintained Z0.

6.4 Settling Projects / Orders:

As period end activity Sales orders, projects as well as process orders will be settled to

profitability segments. These objects are used for various purposes relevant to Profitability

Analysis.

Internal orders and projects can be used to control the costs of an internal activity, such

as the costs of an advertising campaign. The costs of the activity are posted to the order

and collected there. At the end of the activity, they are settled to the appropriate

profitability segments, such as the product range and sales area.

Project is made in make-to-order and is settled to Profitability Segments. Sales orders

will be settled to CO-PA to settle the job work in costs to the profitability analysis. The

Project balances will be transferred to CO-PA through transfer structure – Z1.

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6.5 Direct Posting from Financial Accounting:

Directly post primary postings to profitability segments, if required and is directly identifiable.

This allows to post like sales deductions or actual costs that are first accrued at the end of the

period for the purposes of estimating profits - such as annual rebates or freight costs - to the

appropriate Profitability segments at a later point in time. Post the actual costs to the original

profitability segment (sales order or combination of product and customer), or - if a detailed

assignment is not necessary or no longer possible - to any higher level in Profitability Analysis

(actual freight posted to the division).

If the process requires the dual postings to both a profitability segment and a cost center or

statistical order, the real posting always goes to the profitability segment. The other object is

posted only for statistical purposes.

Double postings can make sense if, for example, to post expenses for a marketing campaign to

a profitability segment that represents a certain product group and sales region, and at the

same time need to see the data in the relevant sales cost center for statistical purposes.

GAP : While making direct posting to the CO-PA, System does not validate for the characters to

be entered in the document. User has to key in the characters properly.

6.6 Periodic Overhead Allocations:

To reflect all the actual costs from Overhead Cost Controlling in Profitability Analysis, transfer

the cost center costs, which are not directly attributable to the production process. Transfer

these costs to any profitability segments and thus assign them to any level of contribution

margin hierarchies.

Transferring Cost Center Costs

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It is possible to transfer the overhead costs to Profitability Analysis such as the variances of

process order (as a single whole, not according to variance categories) and the costs for sales

and administrative cost centers. Cost center costs are always transferred to one profitability

segment (value field) in one segment.

It is also possible to transfer postings that are made in Financial Accounting to cost centers and

profitability segments at the same time. In this case, the postings are statistical in Cost Center

Accounting, while the true costs are stored in Profitability Analysis. The system ignores these

statistical costs in Cost Center Accounting when assessing costs to Profitability Analysis

Overhead Allocation

Assessment cycles allocate planned or actual costs for cost centers to profitability segments in

CO-PA on the basis of reference values, percentages, or fixed amounts.

6.7 CO-PA Manual Document entry:

Data is usually transferred to Profitability Analysis automatically. However, in some cases it may

be necessary to enter line items manually (for example, in order to correct postings). By creating

characteristics groups and value field groups and assigning them to record types, can reduce

the number of the characteristics or value fields need to enter and achieve the desired amount.

7 Information System in CO-PA

The CO-PA information system uses an online reporting tool - called "drilldown reporting" –,

which allows to evaluate the data collected in Profitability Analysis. With this tool we can select

the desired dataset according to any of the characteristics in our CO-PA system.

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It is possible to display several profitability segments for any key figure, or several key figures

for any profitability segment.

The CO-PA information system provides a number of different ways to analyze profitability data.

We can define and display profitability reports to analyze the characteristics that are contained

in the segment level for an operating concern.

When defining the profitability report, it is possible to specify the different analysis criteria mainly

by selecting characteristics and value fields.

Some of the MIS reports for Sales and Profitability Analysis of ARCH would be generated

through CO-PA.

The following is the report expected from the system and need to be generated through report tools:

Gross Sales

Less: Excise Duty

Net Sales – Level ILess: Discount/CommissionLess: Freight Outward / Octroi

Net Sales – Level IILess: Cost of Goods Sold (R.M. Cost, Direst Cost, Power/Fuel, Manufacturing Ohds)

Net Contribution

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8 Enhancement/GAPS

8.1 Derivation of SCE at Depot Plant

When the billing document is posted to FI, the cost component structure of product is to be

transferred to arrive at the cost break up for further contribution analysis. As the standard cost

estimate for the finished goods are generally released to Valuation Type MFG at manufacturing

plants, the cost break up is not available at the depot plants. These products are stock

transferred to Depot Plants and delivered and billed to the customer. System can not derive the

cost break up in CO-PA document as no cost estimate exists at Depot Plant valuation area

level.

An enhancement in CO-PA valuation segment is required to derive the cost break up in the

billing document based on the standard cost estimate of the origin plant in which it is

manufactured

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8.2 Derivation of Manufactured plant :

in case of sales happened from the depot, system does not have the manufacturing plant for

that materials directly. This need to be derived through the batch. Since the batch numbering is

plant specific, the manufacturing plant will be derived with the enhancement.

8.3 Exclusion of Standard Cost Estimate:

Other than Valuation Type MFG, normally system pass the standard cost estimate to all the

valuation types, based on the Costing assignment to the Material Type. The COGS Value need

to be passed on to “Key Material Value field” in case of Valuation Type other then MFG.

8.4 : Project/Sales order Settlement:

While settling the order / project – System is not posing the Valuation Type /Material Code. The same need to be derived and passed into the line item. In the same manner system is not updating the Sales document type, distribution channel and division in PS settlements.

Archit_BBP_CO-PA_V1_30112010

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