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Cost Center Accounting

by on February 2, 2013

You use Cost Center Accounting for controlling purposes within your organization. The costs incurred by your organization should be transparent. This enables you to check the profitability of individual functional areas and provide decision-making data for management. This requires that all costs be assigned according to their source. However, source-related assignment is especially difficult for overhead costs. Cost Center Accounting lets you analyze the overhead costs according to where they were incurred within the organization.

Features:

Entering actual costs

Primary costs can be transferred to Cost Accounting from other components, for example, Materials Management (MM), Asset Accounting (AA), Payroll Accounting (PY).

Additional costs and outlay costs are recorded using the accrual method.

Allocating actual costs

You can use various methods to further allocate the actual costs you have recorded, according to their source. The R/3 System distinguishes between transaction-based allocations, which occur within one period, and period-based allocations, which occur at period end.

Planning activities and costs

You can use planning to define organizational targets and carry out regular cost-effectiveness checks. Variances can be calculated by comparing the actual costs and activities with the plan values. These variances serve as a control signal, which helps you to correct business processes, when required.

You can plan costs and activities to determine allocation (activity) prices.

Allocating plan costs

All actual allocations that occur for cost centers can also be planned (for example, distribution, assessment, indirect activity allocation).

Entering plan and actual statistical key figures

Statistical key figures are used as the basis for the indirect allocation methods, as well as for evaluations in the information system (for example, employees, telephones).

Activity Accounting

Activity Accounting uses the activity produced by a cost center as the tracing factor for the costs. You can use activities to measure the operating rate or the rate of capacity utilization for a cost center. The target costs of the cost center refer to the activity output.

Depending on the source of the costs, the activities of a cost center are divided into various activity types (for example, for the Work center cost center: Repair hours or Assembly hours.

Information system

The information system provides tools with which you can analyze the cost flows that have occurred in your organization. You can carry out standard recurring evaluations; and create special reports for unique tasks or situations.

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