SAP CO refers to the "Controlling" module which allows the company to conduct the management accounting. The controlling module provides information to management which is used for making future plans, for monitoring the various business operations and to make reports. The feature enables the management to make quick and timely decision.
The components of the module are - Cost Elements Accounting, Cost Centre Based Accounting, Activity-based Costing, Product Cost Controlling, Internal Orders, Profitability Analysis and Accounting based on Profit Centers.
The features of Product Cost Planning are used to get the total planned cost of a particular product. Its features are integrated to the MM module, PP, SD and FI. The MM module is needed to see the status of raw material and semi finished goods. The Material Master keeps the records of the cost of the semi finished goods and raw material which is used to derive the cost of operations which is needed for a production plan in case of finished product. The cost can be derived on the basis of cost centre accounting.
The SD module (Sales and distribution) provides information related to COGS to COPA which is dependent on the value fields. Product based costing is relevant in manufacturing industries following repetitive manufacturing methodologies and discrete manufacturing.
Controlling provides the data which is used for decisions making and the financial accounting are managed as per the cost elements such as cost centers, projects, processes and orders.
Features of Controlling Module
1. The activities recorded by the CO module include the consumption of goods, production factors and services provided by the company.
2. The documents are available for each and every event related to controlling and planning.
3. The management can make decision by comparing the actual data to the proposed data and the variation in calculations eases the process of decision making, and the management can even define the business flow before starting the production.
4. Income statements can be designed to calculate the contribution margins and to assess the cost efficiency of a particular cost centre or business area or for the whole company.
How to Configure Controlling Module
To configure CO, the standard methodologies used by SAP module should be followed. There are number of standards which are fixed and therefore, one can copy the standards and later update the fields as per the requirements. The fields such as Company Code are a four digit alphanumeric number and one can select the code depending on requirement and ease of management.
Difference Between Business Area and Company Code
Company codes are important codes because it is required when the users designs the Chart of Accounts, the financial year variants, currency type etc. The company code and business areas are two ways in which two different units can be identified but the company code is a necessary field whereas business area is optional. Business area is a provision used to define a different chart of account. The company code is a legal entity and it is the organization's unit which records all activities related to accounting. It is used for maintaining books of accounts and it is used throughout the system.