The 123s of ABC in SAP: Using SAP R 3 to Support Activity-Based Costing

408 Pages·2001·2.19 MB·English

by  Dawn J. Sedgley

B u s i n e s s C u l i n a r y A r c h i t e c t u r e
C o m p u t e r G e n e r a l I n t e r e s t
C h i l d r e n L i f e S c i e n c e s B i o g r a p h y
A c c o u n t i n g F i n a n c e M a t h e m a t i c s
H i s t o r y S e l f - I m p r o v e m e n t H e a l t h
E n g i n e e r i n g G r a p h i c D e s i g n
A p p l i e d S c i e n c e s P s y c h o l o g y
I n t e r i o r D e s i g n B i o l o g y C h e m i s t r y
e
WILEY
B O O K
WILEY
JOSSEY-BASS
PFEIFFER
J.K.LASSER
CAPSTONE
WILEY-LISS
WILEY-VCH
WILEY-INTERSCIENCE
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The 123s of ABC in SAP
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WILEY COST MANAGEMENT SERIES
Activity Accounting:An Activity-Based Costing Approach,James A. Brimson
Activity-Based Costing: Making It Work for Small and Mid-Sized Companies,
Second Edition, Douglas T. Hicks
Activity-Based Information Systems: An Executive’s Guide to Implementation,
Mohan Nair
Activity-Based Management: Arthur Andersen’s Lessons from the ABM Battle-
field,Second Edition, Steve Player and David Keys, editors
Activity-Based Management for Service Industries, Government Entities, and
Nonprofit Organizations,James A. Brimson and John Antos
Activity-Based Management in Daily Operations,John Miller
Driving Value Using Activity-Based Budgeting, James A. Brimson and John
Antos with contribution by Jay Collins
Guide to Cost Management,Barry J. Brinker, editor
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The 123s of ABC in SAP
Using SAP R/3 to
Support Activity-Based Costing
DAWN J. SEDGLEY
CHRISTOPHER F. JACKIW
John Wiley & Sons, Inc.
New York • Chichester • Weinheim • Brisbane • Singapore • Toronto
fcopybk.qxd 7/17/01 11:34 AM Page iv
We dedicate this book to our mentor,Anton van der Merwe,without
whom we would never have learned as much as we have,nor
recognized the most important lesson in life.
Additionally,we dedicate this book to our families for their love,
patience,support,and encouragement.
Copyright ©2001 by Dawn J. Sedgley and Christopher F. Jackiw. All rights reserved.
No part of this publication may be reproduced, stored in a retrieval system or transmitted in
any form or by any means, electronic, mechanical, photocopying, recording, scanning or oth-
erwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act,
without either the prior written permission of the Publisher, or authorization through payment
of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Dan-
vers, MA01923, [phone], fax [phone]. Requests to the Publisher for permis-
sion should be addressed to the Permissions Department, John Wiley & Sons Inc., 605 Third
Avenue, New York, NY 10158-0012, (212) 850-6011, fax (212) 850-6008, E-Mail:
[email protected].
This publication is designed to provide accurate and authoritative information in regard to the
subject matter covered. It is sold with the understanding that the publisher is not engaged in
rendering legal, accounting, or other professional services. If legal advice or other expert as-
sistance is required, the services of a competent professional person should be sought.
This title is also available in print as ISBN 0-471-39700-8
For more information about Wiley products, visit our web site at www.Wiley.com
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CONTENTS
Preface viii
Acknowledgments x
Part One: Laying the Foundation 1
1 Cost Management: A Brief History and the Convergence of
Philosophies 3
Need for Change 3
Methods of Expressing Causal Relationships 8
Resource Consumption Accounting 16
Tandem Solution: Resource Consumption Accounting and Activity-
Based Costing 23
Summary 34
2 Systems Support of the Activity-Based Costing Philosophy:
Stand-alone Analytical ABC versus Integrated ABC 37
Defining Definitions 38
Detailed Differences 40
Summary 55
3 Overview of SAP and Integrated Activity-Based Costing 59
Highlights of the Core Modules 59
Highlights of the Controlling Module 72
Summary 87
4 Evolution of SAP’s Integrated Activity-Based Costing 91
Pre–SAPR/3 2.2 91
SAPR/3 2.2 95
SAPR/3 3.0Athrough 3.1I 98
SAPR/3 4.0A 99
SAPR/3 4.5A 104
SAPR/3 Enjoy (4.6A/B) 107
mySAP.com (Using R/3 Release 4.6C) 108
Future Functionality 111
Evolution of Activity-Based Costing Summary 113
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vi CONTENTS
Part Two: SAP R/3 Integrated Activity-Based Costing 117
5 Integrated Activity-Based Costing with Responsibility
Accounting 119
Cost Center Accounting Capabilities 120
Information Flows 141
Sample Key Business Decisions 157
Implementation Guidelines 162
Summary 166
6 Integrated Activity-Based Costing with Overhead Order
Accounting 171
Overhead Order Capabilities 171
Information Flows 178
Sample Key Business Decisions 192
Implementation Guidelines 195
Summary 197
7 Integrated Activity-Based Costing with Product Costing and
Production Control 201
Product Costing Analysis Capabilities 202
Information Flows 207
Sample Key Business Decisions 217
Implementation Guidelines 222
Summary 223
8 Integrated Activity-Based Costing with Market Segment
Analysis 227
Multidimensional Analysis Capabilities 227
Information Flows 234
Sample Key Business Decisions 249
Implementation Guidelines 256
Summary 258
9 Integrated Activity-Based Costing 261
Integrated Activity-Based Costing Capabilities 261
Information Flows 267
Sample Key Business Decisions 275
Implementation Guidelines 293
Summary 297
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CONTENTS vii
Part Three: Beyond SAP R/3 Integrated Activity-Based Costing 301
10 SAP Integrated Activity-Based Costing Combined with Oros
Modeling Capabilities 303
Bridge Product and Functionality 304
Information Flows 304
Sample Key Business Decisions 323
Implementation Guidelines 331
Summary 337
11 Activity-Based Costing/Management with Strategic Enterprise
Management 343
Strategic Enterprise Management 343
Information Flows 349
Sample Key Business Decisions 359
Implementation Guidelines 362
Summary 366
Glossary 369
Index 383
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PREFACE
Given SAP’s dominance in the enterprise resource planning (ERP) market, many
companies and their managers encounter SAPAG applications in some form or
another. Of those organizations, some utilize Activity-Based Costing/Manage-
ment concepts to perform more accurate cost assignments or drive performance
initiatives. Managers are then faced with trying to determine how Activity-Based
Costing can be incorporated into the SAP environment. We have written this
book to help business managers understand the capabilities of the SAPR/3 busi-
ness application to support Activity-Based Costing, Management, and Budget-
ing. This book is not intended as a primer in Activity-Based Costing (ABC):
many such conceptual introductions have already been written. In order to bring
the focus on the application of ABC concepts to an SAPR/3 environment, it is
assumed that the reader has knowledge of the ABC framework.
This book is divided into three parts: the conceptual foundation, the capabil-
ities of SAPABC, and integration with other tools. Part One consists of Chapters
1 through 4 and covers the basic conceptual fundamentals to lay the foundation
for detailed discussions.
The conceptual foundation begins with Chapter 1, addressing the shortfalls
of ABC and introduces the Resource Consumption Accounting philosophy
(RCA). This philosophy is heavily incorporated into the design of the SAPCon-
trolling (CO) module, which contains SAP’s ABC functionality. The chapter also
establishes the differences between ABC and RCAand provides support for the
use of both approaches to support management costing needs. Chapter 2 expands
the foundation to include analysis of the differences between the two main types
of tools that support ABC concepts. Addressed are the core conceptual and tech-
nical differences between stand-alone ABC modeling tools utilized to support
ABC and an “integrated” ABC tool.
Although it is assumed that the reader understands the basic concepts of ABC
principles, we do not assume the reader has any familiarity with the SAPR/3 ap-
plication. Therefore, Chapter 3 provides the reader with a basic understanding of
SAP R/3, specifically the Controlling module, including the CO-ABC compo-
nent.
Since there is relatively little information available on the subject of ABC
within SAP, many misconceptions abound as to its capabilities and maturity.
Chapter 4 chronicles the evolution of ABC within SAPR/3. This chapter is use-
ful for managers to determine what overall capabilities are available within the