Period-End Closing (CO-OM-CCA)

Purpose

Period-end closing in Overhead Cost Controlling is part of the work carried out at period-end throughout the entire organization.

The tasks required at period-end, and the sequence in which they must be carried out, depend on what system functions you use and which cost accounting method. This topic describes the basic elements of period-end closing. The explanations assume that you are using all the features available.

Implementation Considerations

Before you can close a period in Overhead Cost Controlling, the data transferred to this component from other application SAP System components must be complete. In particular, all postings in Financial Accounting (FI) that are relevant to Cost Accounting must have been carried out.

This means, for example, that:

• Payroll accounting must have taken place in Personnel Management (PA).
• In Sales and Distribution (SD), all the invoices have been created and passed on to Financial Accounting.
• The vendor and customer accounts have been locked against postings in the period to be closed.

You are not allowed to lock all accounts, as period-end closing in Overhead Cost Controlling sometimes requires postings to be made Financial Accounting.

Features

Transferring of Statistical Key Figures from the LIS

To ensure that all primary costs and revenues from other components have been posted to Overhead Cost Controlling, it is advisable to start by updating the statistical key figures. Statistical key figures are used as the basis for allocations. This update can occur, for example, through a transfer of the key figures from the Logistics Information System (LIS).

Periodic Repostings/Accrual Calculation

After this, you use repostings to adjust any values that are incorrect or had been posted to allocation cost centers for reasons of simplification. Then the primary costs are distributed according to their source. The primary costs can now be used as the basis for the accrual calculation of valuation differences and additional costs.

Periodic Allocations

Secondary allocations then occur. Using the appropriate allocation or settlement method, the costs are allocated between the business objects of Overhead Cost Accounting and to the cost objects of Product Cost Controlling (CO-PC).

Splitting

When all the costs have finally been assigned to the cost centers, you use splitting to assign the activity types to the cost centers. This is the basis for calculating the prices of the activity types based on actual costs. Using the actual prices, you can perform an actual price valuation of the activity produced by the cost centers.

Variances

After splitting you can analyze the variances of the actual costs from the target costs. These variances lead to cost center under- or over-absorption. The variances of the production cost centers and the costs of the sales and distribution and the administration cost centers are transferred to Profitability Analysis (CO-PA). In CO-PA, the overhead costs can be assigned to any level of the contribution margin scheme. This is the final step in actual cost accounting. You should now lock the period against all postings.

Reconciliation with Financial Accounting

If there is a need for reconciliation between Controlling and Financial Accounting, the relevant allocations are made in FI using the reconciliation posting.

The system then lists the period-end closing tasks in a logical sequence:

1. Transfer of statistical key figures from the Logistics Information System (LIS)
2. Periodic reposting of costs from allocation cost centers
3. 
   
Distribution of primary costs
4. Accrual calculation of accrued costs
5. Indirect
internal activity allocation
6. Allocation of process costs.
7. 
   
Overhead Calculation
8. Settlement of overhead orders and projects
9. 
   
Assessment of primary and secondary costs
10. Balance-effective settlement of orders to fixed assets, material stock or the balance sheet account
11. Assignment of actual costs to the activity types by means of splitting
12. Calculating prices of cost centers activities or business processes, based on the actual costs
13. Calculation and analysis of the variances between target and actual costs
14. Assessment to Profitability Analysis of the under or over-absorption for the cost centers or business processes
15. Locking the period for all cost accounting business transactions
16. Generating reconciliation postings in Financial Accounting

Follow-up costs can be dealt with by repeating the processing for the given period.