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Unit 5: ERP Modules

The system also offers special functions for leased assets, and assets under construction. The notes
system enables you to manage values in parallel currencies using different types of valuation.
These features simplify the process of preparing for the consolidation of multinational group
concerns.
5.3 controlling

This module consists of:
1. Overhead cost controlling
2. Product cost controlling

Overhead Cost Controlling

Overhead costs are indirect costs that cannot be directly assigned to cost objects. Overhead Cost
Controlling component enables you to plan, allocate, control, and monitor overhead costs.
Planning in the overhead area lets you specify standards which enable you to control costs and
evaluate internal activities.

All overhead costs are assigned to the cost centers where they were incurred, or to the jobs
which led to their being incurred. The ERP system provides you with many methods for the
further allocation of overhead. Using these methods you can allocate the overhead costs true to
their origins. Some of the overheads can be assigned to cost objects with minimum effort and
converted to direct costs.
At the end of a posting period, when all allocations have been made, the plan (target) costs are
compared with the corresponding actual costs on the basis of the operating rate. You can analyze
the resulting target/actual variances by cause and use the analyses for further managerial
accounting measures within controlling.

Product Cost Controlling

Product Cost Planning is an area within Product Cost Controlling in which you can plan the
non-order related costs of, and determine the prices for, materials and other cost accounting
objects. Product Cost Planning comprises the following:
1. Cost Estimate with Quantity Structure

2. Cost Estimate without Quantity Structure
3. Reference and Simulation Costing
4. Price Update

Enterprise Controlling

The ERP System’s EC (Enterprise Controlling) application has been designed with four
subcomponents to account for these various aspects and organizational options.
Profit Center Accounting

Profit center accounting creates a company organization which is distinct from all other organizational
concepts. Profit centers are master data from a management perspective. To avoid additional entries,
the corresponding allocations can be effected in the operational systems (for example, material,
project, cost center). Profits and losses are determined for these profit centers (valuation with transfer
prices) as well as the key figures for responsibility accounting (ROI, cash flow, and so forth). For the
latter, some balance sheet items must be available for each profit center.

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