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Dive into distributions vs. assessment in this excerpt from Expert Tips to Unleash the Full Potential of SAP Controlling by Ashish Sampat.
Distribution versus assessment
Here is an example of a facilities department (one sending cost center) responsible for a building. This cost center incurs three primary costs: building rent, telephone expenses, and beverage expenses (such as tea and coffee) for staff working in that building. This building houses four departments: marketing, finance and accounting, purchasing, and human resources (four receiving cost centers). Costs should be allocated in predefined percentages for each department. If the distribution method of allocation was used, then the same primary cost element was used to allocate costs. The sender cost center gets a credit using three original primary cost elements. Four receiving cost centers will each see three original primary cost elements as debits to their cost centers. This means each department is able to identify how much money was allocated on each of the three expense categories of rent, telephone, and beverages. If the assessment method of allocation was used, then a secondary cost element for assessment, such as facilities expense, was used to allocate costs. The sender cost center gets a credit via the assessment cost element. Four receiving cost centers will each see one secondary cost element as a debit to their cost centers. This means each department only knows how much money was allocated to them under facilities expense. The receivers do not know how much of the facilities expense consists of rent, telephone, and beverages. One
would need to look up a report for the sending cost center to identify the breakdown of these costs.
This book is written for SAP Controlling (CO) professionals who want to learn expert tips to optimize their system performance for configuration, reconciliation, and reporting. Using a fictional chocolate manufacturing case study, each tip provides detailed information on aspects of the functionality, how it can help you, why you should use it, and how to use it including SAP configuration steps. Obtain best practices for optimizing cost allocation methods, expediting material ledger close, and utilizing cost center overhead charges. Troubleshoot product costing messages and find out how to prevent GL account overrides during inventory posting transactions. Walk through best practices for effectively maintaining master data and standard costing methods. By using an integrated practical example and screenshots, the author informs readers on how to get the most out of their SAP ERP system.
Author Ashish Sampat is a qualified finance and costing professional with nearly two decades of industry experience in the SAP Finance and Controlling space. Ashish has been an SAP consultant for most of his career with various consulting organizations and now works as an independent SAP FI/CO consultant. He has provided solutions in several areas of SAP Controlling including product costing, material ledger, and cost center accounting to global clients in consumer packaged goods, life sciences, and industrial sectors. Born and educated in India, Ashish now lives in suburban Chicago with his wife and two kids. Ashish is also the author of First Steps in SAP Controlling.