SAP Cost Center CCA
Technical Interview Questions Answers
SAP Cost Center Accounting (CCA) is used to perform Controlling activities in an Organization. In any organization, cost incurred to perform certain activities should be transparent. Using Cost Center Accounting, you can perform a profitability analysis of each functional area and helps all cost to be assigned to source.
Profit Center Accounting in SAP
Profit Center Accounting is used to determine profit for internal areas of responsibility. It lets you determine profits and losses using either period accounting or the cost-of-sales approach. It allows you to analyze fixed assets by profit center, thus using them as investment centers.
What do you understand by SAP Cost Center? Explain with the example?
A Cost center is defined as a component in an organization that adds to the cost and indirectly adds to the profit of the organization. Examples include Marketing and Customer Service. A company can classify business units as profit centers, cost centers, or investment centers. The simple and straightforward division in an organization can be classified as a cost center as the cost is easy to measure.
How do you create Cost Center in the system? What are the requirements?
To create a cost center in the system, you need to define a cost center hierarchical structure. The structure of the Cost center and its characteristics depend on the accounting objective and on the system you want to use to maintain accounting.
What are the benefits of using Cost Center Accounting?
Following are the key uses to create cost centers and perform cost center accounting in an organization − Cost center is used to align overhead costs to activities performed in an organization. It is possible to assign different activity types to a cost center. You perform cost center accounting to manage costs in the organization and to check the profitability of each functional area and decision-making data. You can manage and analyze the overhead cost in an organization and verify if they are incurred in the organization's activities. When you plan costs at the cost center, this allows you to check the cost efficiency at the point when costs are incurred in the organization. You can directly assign the cost to cost centers for products, services, and market segments that are involved in performing these activities.
What is Cost Center Hierarchy?
In the cost center hierarchy, at the top, you have an organization that is further divided as per the functional areas. Each Functional area is further divided into sub-areas and can be further divided as per activities performed.
What are the different types of data in the SAP system?
In the SAP system, you generally have two types of data −
Transaction data keeps on changing in the system and is stored in line item tables.
Master data You can use the following functions to create, and
change master data − Cost Center Cost Elements Activity Types Key Figures Resources
What is the Cost element?
The cost element is known as cost relevant item in the Chart of Accounts.
What are the different types of Cost elements?
Primary Cost Elements A Primary cost element is defined as elements for which General Ledger Account G/L exists in Finance Accounting FI. Common primary cost element includes − Personnel Costs & Material Costs
Secondary Cost Elements These elements are maintained in Cost Accounting. To create a secondary cost element, the system checks an account already exists in Financial Accounting and if an account exists, a secondary cost element can’t be created. Common examples of secondary cost elements − Cost element for Order settlement
What are direct and Indirect posting?
The cost element category is used to define if you can post to the cost element directly or not. When you post a fixed amount to a cost element by mentioning the account number, it is called direct posting. In the direct posting, you can post directly to all primary cost elements by specifying the account number. When you can’t enter the account number with the posting transaction and the system determines the account at the time of posting automatically, this is known as indirect posting.
What is an Activity Type? For each Work Center, what are different activity types that can be performed?
Activity type is defined as an activity performed in the cost center within the controlling area. For each cost center, you perform the following activities − Activities performed by the cost center. Cost is debited to products when they use the activities of the cost center.
In Cost Center accounting, to plan and allocate the activities, the system records quantities that are measured in activity units. Each activity in a cost center contains activity types and if the cost can be allocated to these activity types. When you create the activity types, prices of these can be entered manually or this can be calculated in the system as per the cost allocated. The cost planning, allocation, and control can be performed while defining activity or can also be performed at the cost center.
What is a Key figure?
Key figures can be defined as fixed values and total values. All the key figures that you define as fixed values are available for positing in the full fiscal year. Key figures defined as total values are available only for posting in the defined period.
How do you define Key figures in the SAP system?
Key figures can be defined manually or you can also transfer them automatically from the information system of the SAP system application.
What do you understand by Resources? What is the different resource type?
Resources are used to perform quantity-based cost planning for cost centers, orders, and WBS elements. In the SAP system as per the available data, you can select from the following resource type − Type R for overhead cost controlling Type M represents Material type Type B refers to base planning objects.
What is the structure of the Resource master data type?
The structure of resource master data contains the following fields − Resource key Purchasing organization Resource type Validity period of the resource Plant Resource units Cost element Resource name Material Base object costing.
What is the Transaction Code to create a Cost Center?
To create a Cost center, you can use T-code: KS01
What is Cost Center Group?
You can divide the cost center into cost center groups. In the system, it should have at least one group that contains all cost centers and represents the entire business organization. This cost center group is described as the standard hierarchy. You can assign more cost center groups to the standard hierarchy.
Is it possible to assign a Cost Center to a multiple cost Center groups?
No, in the standard hierarchy, you can only assign each cost center to one group.
Why do we create an Internal Order?
You can create an internal order to monitor the costs of a time-restricted job or the costs for the production of activities. Internal orders can also be used for the long-term monitoring of costs.
What is the difference between Investment orders, Internal orders, and Accrual Orders?
You can create an internal order to monitor the costs of a time-restricted job or the costs for the production of activities. Internal orders can also be used for the long-term monitoring of costs. Investment costs related to fixed assets is monitored using Investment orders. Period-related accrual calculations between expenses in FI and the costing-based costs debited in Cost Accounting are monitored using Accrual orders.
What do you understand by Profit Center?
SAP CO-Profit center is used for managing internal controls. When you divide your company into profit centers, it allows you to delegate responsibility to decentralized units and allows you to treat them as separate companies in a company. It also allows you to calculate key figures in cost accounting like- ROI, Cash flow, etc.
Why do we create Profit Centers? What are the key components of Profit Center?
The main aim of creating a Profit Center in Controlling is to analyze the cost of a product line or a business unit. You can also generate profit and loss accounts according to Profit Center and also generate balance sheets however Profit center should only be used for internal reporting purposes. The key components of a profit center include- the name of the profit center, the controlling area under which it is assigned, the time period, the person responsible for the profit center, the standard hierarchy, etc.
What are the key differences between Cost Center, Profit Center, and Internal Order?
Cost Center
A Cost center is defined as a component in an organization that adds to the cost and indirectly adds to the profit of the organization. Examples include Marketing and Customer Service. A company can classify a business unit as a profit center, cost center, or investment center. The simple and straightforward division in an organization can be classified as a cost center as the cost is easy to measure. To create a cost center in the system, you need to define a cost center hierarchical structure. The structure of the Cost center and its characteristics depend on the accounting objective and on the system you want to use to maintain accounting.A cost center is used to align overhead costs to activities performed in an organization. It is possible to assign different activity types to a cost center. You perform cost center accounting to manage costs in the organization and to check the profitability of each functional area and decision-making data. You can manage and analyze the overhead cost in an organization and verify if they are incurred in the organization's activities. When you plan costs at the cost center, this allows you to check the cost efficiency at the point when costs are incurred in the organization. You can directly assign the cost to cost centers for products, services, and market segments that are involved in performing these activities.
Profit Center
SAP CO-Profit center is used for managing internal controls. When you divide your company into profit centers, it allows you to delegate responsibility to decentralized units and allows you to treat them as separate companies in a company. It also allows you to calculate key figures in cost accounting like- ROI, Cash flow, etc. Profit Center is part of the Enterprise Controlling module and is integrated with the new General Ledger Accounting. Profit Center Accounting is used to determine profit for internal areas of responsibility. It lets you determine profits and losses using either period accounting or the cost-of-sales approach It allows you to analyze fixed assets by profit center, thus using them as investment centers. This makes it possible to expand profit centers to investment centers.
Internal Order
SAP CO's internal order monitor the parts of the costs and in a few cases, the revenues of the organization. You can create an internal order to monitor the costs of a time-restricted job or the costs for the production of activities. Internal orders can also be used for the long-term monitoring of costs. Investment costs related to fixed assets are monitored using Investment orders. Period-related accrual calculations between expenses in FI and the costing-based costs debited in Cost Accounting are monitored using Accrual orders. Costs and revenues incurred for activities for external partners or for internal activities that do not form part of the core business for your organization are monitored using order with revenues.
Why do we perform Cost Center Planning?
You perform Cost Center planning to achieve the following functions − To Plan the structure To control and monitor business growth To perform target comparison-plan/actual or target/actual
Cost center planning covers the following planning areas − Cost Element Primary Cost Secondary Cost Revenue Activity Type Statistical Key Figures
What is the use of period End Closing? What activities are performed as part of Period End Closing?
Period end closing is work carried out at the period end as part of cost control. To perform period end closing, it is required to transfer the data from other SAP components. You should perform all the posting in Finance Accounting. As part of period closing, the following activities are performed − Periodic reposting Accrual cost calculation Pre-distribution of fixed costs Transfer of statistical key figures from the LIS Overhead calculation Periodic allocations Variance calculation Actual price calculation.
What is the meaning of Accrual Calculation?
You allocate operating expenses differently in cost accounting as compared to Finance accounting. You can distribute irregular occurring expenses as per cost origin, on the months in which they are incurred. And hence you can avoid all irregularities within cost accounting. Cost allocated in this way is known as Accrual cost.
How Accrual Calculation can be performed in the system?
Accrual calculation can be performed in the following way − Accruals in the Controlling component based on the costs posted. Accruals in the Financial Accounting component (FI) using recurring entries.
What do you understand by Variance calculation in Period end closing?
When the actual cost on the cost center is different from the target cost or planning was over/under, you can see a variance in the controlling component.
How do perform variance calculation in Period End closing?
Using Variance calculation, you can analyze the actual balance and to find the variance of actual cost from target cost with different activity types. To perform variance calculation, navigate to Accounting → Controlling → Product Cost Controlling → Cost Object Controlling → Product Cost by Period or Product Cost by Order →Period-End Closing → Single Functions: Product Cost Collector → Single Functions: Cost Object Hierarchy → Variances →Individual Processing or Collective Processing
What is Year End Closing? How do you perform a carry forward commitment?
In year-end closing, you can transfer carry forward to the first period of the next fiscal year and this is performed for each Controlling under the SAP system.
What is the use of Value Field in the CO-PA module?
Value fields are number or value-related fields in profitability analysis such as quantity, sales revenue, discount value, etc.
What is the use of the account group of the vendor/customer master records?
The number range of the customer/vendor masters The status of the fields in the only the company code segment
What do you understand by Product costing in SAP Controlling?
SAP CO-Product Costing module is used to find the value of the internal cost of products. It is also used for profitability and management accounting for production. While configuring Product Costing, it involves two areas for setting − Product Cost Planning Cost Object Controlling The basics of Product Costing is Cost Center Planning. The goal of cost center planning is to plan total dollars and quantities in each Cost Center in a Plant.
What do you understand by cost center, and profit center in Controlling?
A Cost center is defined as a component in an organization that adds to the cost and indirectly adds to the profit of the organization. Examples include Marketing and Customer Service. A company can classify a business unit as a profit center, cost center, or investment center. The simple and straightforward division in an organization can be classified as a cost center as the cost is easy to measure. SAP CO-Profit center is used for managing internal controls. When you divide your company into profit centers, it allows you to delegate responsibility to decentralized units and allows you to treat as separate companies in a company.
What are the segments of the customer master record?
General data segment Sales organization data segment
What is the Maximum Number of Posting Periods in SAP?
Under GL accounting, you can have a maximum of 16 posting periods (12 regular plus 4 Special Periods).
How do you 'Carry-Forward' Account Balances?
If you have already posted into the new fiscal year, you do not need to carry forward the balances manually. But you can use the various ‘carry-forward’ programs supplied by SAP for this task.
How Currencies are maintained in the SAP system?
Using 3 character Currency Code
How do you maintain exchange rates in SAP?
SAP offers a variety of tools to maintain exchange rates on an ongoing basis. The tools include − Exchange Rate Spreads Base Currency Inversion
What do you understand by a Line Item?
Line Items contain information relating to account number, amount, debit/ credit, tax code, amount, etc. SAP allows a maximum of 999 line items in a single document.
What is Cost based Profitability Analysis?
It is used to group the costs and revenues as per the value fields. It is used to ensure that you access at all times a complete, short-term profitability report.
What is Account-based Profitability Analysis?
It is used to provide you with a profitability report that is permanently reconciled with financial accounting. It is mainly used for getting information related to sales, marketing, product management, and corporate planning departments to support internal accounting and decision-making.
What do you understand by Posting Key?
A Posting Key in SAP is a 2-digit alphanumeric key that controls the entry of line items. SAP comes with many posting keys for meeting the different business transaction requirements.
What is the use of document reversal in the SAP system?
To change some of the accounting information relating to an already posted document, you can only achieve this by Reversing the option of the original document and posting a new one with the correct information.
What is the Number Range interval?
Number Range is defined as a number interval defined in the system so that when documents are posted, the system assigns a number from this range.
What are the different Standard reports in the SAP CO system?
SAP CO: Standard Reports There are various standard reports that exist in the system for Cost Center Accounting.
1VK Library − This contains a report related to cost accounting and is based on full costs.
1GK Library − This contains reports for cost accounting systems based on marginal costs.
1AB library − This is used to maintain the reports for variance analyses.
1 RU library − This is used to maintain summary reports related to the overall cost center accounting process.
What are Price Reports? Where do you find them in the SAP system?
Price reports in Cost Center accounting are available for activity types and for activity-based costing. Under Activity-Based Costing, price reports are used to provide an overview of the process prices for each business process. To execute price report online, navigate to Information Systems → Accounting → Controlling → Reports for Cost Center Accounting → Prices
What are the different line Item reports?
You can use the following line item reports − Actual line item report You can display line item reports for archived actual costs. Plan line item report
What is the use of the Cost Elements report? How do you access Cost Element reports in SAP system?
This report is used to perform a comparison of the figures in internal and external accounting, display the costs incurred for each object class, and see the cost flows between company codes. Navigate to Information Systems → Accounting → Controlling → Reports for Cost and Element Accounting
What are the common tables in SAP CO? Could you name a few?
| AUSP | Characteristic Values | MANDT / OBJEK / ATINN / ATZHL / MAFID / KLART / ADZHL |
| CO-KBAS | Overhead Cost Controlling | |
| A132 | Price per Cost Center | MANDT / KAPPL / KSCHL / KOKRS / VERSN / RESRC / KOSTL / DATBI |
| A136 | Price per Controlling Area | MANDT / KAPPL / KSCHL / KOKRS / VERSN / RESRC / DATBI |
| A137 | Price per Country / Region | MANDT / KAPPL / KSCHL / KOKRS / VERSN / RESRC / LAND1 / REGIO / DATBI |
| COSC | CO Objects: Assignment of Original Costing Sheets | MANDT / OBJNR / SCTYP / VERSN / GJAHR |
| CSSK | Cost Center / Cost Element | MANDT / VERSN / KOKRS / GJAHR / KOSTL / KSTAR |
| CSSL | Cost Center / Activity Type | MANDT / KOKRS / KOSTL / LSTAR / GJAHR |
| KAPS | CO Period Locks | MANDT / KOKRS / GJAHR / VERSN / VRGNG / PERBL |
What are the components in the Financial Statement version?
A Financial Statement Version helps to define the Financial Statements both the Balance Sheet and Profit & Loss statements.
Explain the process of Profitability analysis in SAP CO system CO-PA? What is the use of CO-PA?
SAP CO-PA is used to analyze the market segments classified as products, customers, sales area, business area, etc. SAP CO Profitability Analysis (CO-PA) is used for the evaluation of market segments, which is classified according to products, customers, and orders or any combination of these or Strategic business units such as sales organizations or business areas, with reference to the company's profit or contribution margin.