Category: SAP CO

SAP CO Tutorial – Learn SAP Controlling Module

SAP CO Tutorials – Learn SAP Controlling

SAP CO Tutorial – Free SAP CO (Controlling) module training tutorial for all beginners and professional learners. Here you can get SAP controlling module course material for free of cost with scenarios and examples that helps you to configure SAP system.

SAP CO (controlling) is an important module of SAP system used for organization internal reporting. SAP controlling module provides supporting information to management for effective planning, reporting and monitors the business operations of organization. With the help of information that provided by SAP CO module, that organization can make effective management decision making process.

SAP Controlling components provides a variety of tools that can be used to provide operational information to the management to support business analysis and decision making. The important components of co module are as follows

  • Cost Element Accounting (CO – CEL)
  • Cost Center Accounting (CO – CCA)
  • Internal Orders
  • Product cost accounting
  • Profit Center Accounting
  • Profitability Analysis

Cost Element Accounting : – Cost elements are used to update the SAP CO module records. Different types of cost elements are primary cost elements and secondary cost elements.

Cost Center Accounting : –  It is used to define where the costs are incurred with in the organization as per department wise. For e.g. Product departments, service departments, etc.

Profit Center Accounting : – It is used to calculate the profit of an area of responsibility of an organization.

Product Cost Accounting : – It is used to calculate and evaluate the cost of goods manufactured for a product. For e.g. work in process and finished goods.

Internal Orders : – It is used to view cost for specific tasks, for e.g. vehicle expenses, production order costs, etc. Orders are two types i.e. Real orders and statistical orders.

Profitability Analysis (CO – PA) : – It is used to view analysis profitability of an organization, for e.g. by customer wise, sales organization wise, by plant wise, etc.

Our SAP CO training tutorials guides you how to implement controlling module step by step for an business organization with real time scenarios. Learn SAP Controlling module for free of cost with out any investment.

Define Standard Cost Center Hierarchy for Controlling Area in SAP

Define Cost Center Hierarchy

In this SAP tutorials, you will learn how to create standard cost center hierarchy for controlling area in SAP CO step by step using transaction code OKEON.

Recommend Configuration : – 

Before you define standard hierarchy using transaction code OKEON, maintain CCtr Standard hierarchy in controlling area using OKKP.

cost center standard hierarchy in SAP

A window opens for checking the standard hierarchy in SAP, click on yes button and save the data.

check standard hierarchy SAP

You can define standard cost center hierarchy in SAP using one of the following navigation method.

Transaction code : – OKEON

IMG Path : – SPRO > IMG > Controlling > Cost Center Accounting > Master Data > Cost Center > Define Standard Hierarchy.

Step 1 : – Enter SAP Tcode “OKEON” in the SAP commend field and press enter key from keyboard.

SAP Transaction code OKEON

Step 2 : – If you not maintain standard hierarchy in controlling area, you will get an error message as “no standard hierarchy is created for TK01”. On standard hierarchy for cost center changes screen, update the name of standard hierarchy key.

standard hierarchy for cost center changes SAP

You can add new hierarchy nodes either by lower level group, group at same level or cost center by choosing the standard hierarchy key.

Define Standard Cost Center Hierarchy for Controlling Area SAP

Based on the requirements, you should develop standard cost center hierarchy for controlling area in SAP.

What is a Cost Center in SAP | How to Create Cost Centers in SAP

SAP tutorials guide you what is cost center in SAP controlling and how to create cost centers in SAP CO using transaction code KS01.

What is a cost center in SAP

Cost center in SAP is a location where the costs are occurred inside the organization. In SAP cost center is the lowest organizational unit in controlling enterprise structure.

Cost centers are responsibility areas for costs within organization and used to capture actual costs of an organization. Costs can can be captured as per department wise, product wise, area wise, responsibility person wise, etc. Assigning the costs to cost centers determines where the costs are incurred within the organization. Each cost center in SAP can belong to one or more cost center groups.

Here we are going to configure the following costs centers in SAP.

Cost CenterDescription
TK01TRNSTransportation
TK01PACKPacking
TK01FACAFactory Admin
TK01SDSTSelling & Distribution
TK01PGENPlant general
TK01HRMHuman Resource

Recommended configuration : – Before you create cost centers, you need to assign standard hierarchy in controlling area using transaction code OKKP or you will get an error as Controlling area TK01 does not have a standard hierarchy (please assign one).

cost center standard hierarchy in SAP

How to create cost centers in SAP

You can create cost centers in SAP by using one of the following navigation method.

Transaction code : – KS01

SAP path : – Accounting > Controlling > Cost center accounting >> Master data > Cost center > Individual processing > Create.

Step 1 : –  Enter SAP Tcode “KS01” in the SAP command field and enter.

Step 2 : – Now the system asking for entering the controlling area for which you like to create cost centers in SAP.

creation of cost center set controlling area sap

Step 3 : – On create cost center initial screen, update the following details

  • Cost Center : – Enter the new key in the field cost center that you like to create in SAP.
  • Valid From : – Update the valid period of cost center in SAP
  • After entering the new cost center key, press enter to continue.

create cost center in SAP initial screen

Step 4 : – On create cost center basic screen, update the following details.

  • Name : – Enter the name of cost center that identifies in SAP
  • Description : – Update the descriptive text of cost center
  • Person Responsible : – User id that responsible for cost center.
  • Cost center category : – Choose the cost center category from the list that applicable for cost center.
  • Business Area : – Choose the business area key for cost center.
  • Currency : – Update the currency of cost center.

Create cost cost center in SAP

Click on save button and save the configuration details. Similarly create other cost center in SAP as per organizational requirements.

Define Cost Center Categories in SAP

In SAP cost center categories are defined to specify the nature of cost centers and helps in activity planning of a cost center. SAP delivers the standard categories and you use this defaulted categories or you can define new cost center categories as per organization requirements. After data was posted to cost center, you are not allowed to change the categories.

Here we are going to use the following cost center categories as per our requirements.

CCNameQtyActRevPlnRevCmmt
AFinance & Costing ??
FProduction ? ?? ?
GLogistics (Purchase) ?? ?
LManagement (HR) ??
MMaterial (Stores) ??
QQuality ? ?
TTransportation ? ?
VSales ? ? ?
WAdministration ? ?

How to create cost center categories in SAP

New cost center categories can be created in SAP controlling by using one of the navigation method menu path or tcode. You are allowed to create a cost center category with a single digit character only.

SAP transaction code : – OKA2

SAP IMG path : – Controlling > Cost Center Accounting > Master Data > Cost centers > Define cost center categories.

Cost Center Categories SAP path

Step 1 : –  Enter tcode “OKA2” in the SAP command field and press enter to continue.

SAP transaction code OKA2

Step 2 : – On change view cost center category overview screen, list of cost center categories displays with detailed information. You can use this category as per your requirements or if you want to create new cost center category as per business requirements, click on new entries button as shown below.

change view cost center categories screen SAP

Step 3 : – On new entries screen, update the following details.

  • CCtC : – Enter a key that identifies the name of cost center category in SAP.
  • Check the required parameters as per client requirements.

Define Cost Center Categories in SAP

Click on save button and than choose the customizing request and save the configured details.

Successfully we have created new cost center categories in SAP system.

Activate Cost Center Accounting in Controlling Area

SAP tutorials guides you how to activate cost center accounting in controlling area step by step using transaction code OKKP and SAP IMG path.

How to activate cost center accounting in controlling area

Transaction code : – OKKP.

IMG path : – SPRO >> IMG >> Controlling >> Cost center accounting >> Activate cost center accounting in controlling area.

Step 1 : – Enter SAP transaction code “SPRO” in the SAP command field and enter.

SPRO SAP Transaction code

Step 2 : – On customizing execute screen, select “SAP Reference IMG

SAP Reference IMG Screen

Step 3 : – On display IMG screen, follow the navigation path as controlling – cost center accounting and click on IMG activity “Activate cost center accounting in controlling area

Activate cost center accounting in controlling area menu path

Step 4 : – On change view basic data overview screen, click on position button and enter controlling area key “TKO1” so that our SAP controlling key displays on top of the window.

SAP controlling area basic date

Step 5 : – Choose control area “TKO1” and double click on activate components/ control indicators for activation of cost center accounting.

Activate components control indicators SAP

Step 6 : – On change view “Activate components/control indicators”: overview screen, click on new entries button.

Activate components and control indicators in SAP controlling

Step 7 : – On new entries screen, update the following details.

  • Fiscal Year : – Enter the fiscal year.
  • Choose cost centers as component active.
  • Check the option AA : Activity type

Activate Cost Center Accounting in Controlling Area SAP

After maintaining all the required details, click on save button and choose the customizing request and save the data.

Successfully we have activated cost center accounting in SAP controlling area.

How to Create Secondary Cost Elements in SAP

SAP tutorial explains what is secondary cost element, category and how to create secondary cost elements step by step using transaction code KA06.

What are SAP secondary cost elements

Secondary cost elements are used to transfer costs and revenues within the SAP controlling module, used for mostly allocations and settlements. While creating secondary cost elements in SAP, we need to specify the secondary cost element category. According to the category, cost elements are used for the specific purpose for which it is created. Cost elements are two types i.e. primary cost elements and secondary cost elements.

The following are the important secondary cost element categories are used

21 Internal Settlement : – This category will be used to allocate the costs from one co object to another co object or multiple co objects to multiple co objects. For e.g.

  • Internal order —-> Cost Center
  • Internal Order —> Production Order

31 : Order/ Project results analysis : – This category will be used to calculate the costs in work in progress for semi finished goods and finished goods. For example

  • Work in progress for material cost
  • Work in progress for Overhead cost.

41 : Overhead : – This category is used to calculate the overhead costs that are incurred for the semi finished goods and finished goods. For example

  • Labor overhead costs (Medical expenses, transport expenses, Accommodation, etc)
  • Production overhead (Repairs & maintenance costs, etc)

42 : Assessment : – This cost element category will be used in cost center accounting for allocation of costs from one cost object to another cost object or between multiple cost objects.

  • Enterprise cost center –> Human resource, Finance

43 : Internal Activity Allocation : – This secondary cost element category will be used to capture direct activity costs related to product. For e.g.

  • Labor hour cost, Machine hour cost, etc

Secondary Cost Elements Configuration steps

We are going to create the following secondary cost elements for controlling area TK01.

Cost ElementNameCost Element Category
TKDRILLINGDrilling43
TKBLASTINGBlasting43
TKTRANSPRTTransportation43
TKMCHNRSMachine Hours43
TKPOWERPower43
TKFOHFactory Overhead43
TKADOHDAdministration Overhead43

How to create secondary cost elements in SAP CO

You can create secondary costs elements in SAP controlling by using one of the following navigation method.

Path : – Accounting > Controlling > Cost element accounting > Master data > Cost element > Individual processing > Create Secondary.

Transaction code : KA06.

Step 1 : – Enter SAP transaction code “KA06” in the SAP command field and enter.

SAP transaction code KA06

Step 2 : – Now update the controlling area key for which you like to create secondary cost elements in SAP.

set controlling area for cost elements SAP

Step 3 : – On create cost element initial screen, update the following details.

  • Cost Element : – Enter the key that identifies the secondary cost element in SAP.
  • Valid date : – Update from and to validity date of cost element.
  • After entering the required details of cost elements, press enter to continue.

create secondary cost element initial screen SAP

Step 4 : – In the next screen create cost element, update the following details.

Name : – Update the name of secondary cost element TKTRANSPRT as Transportation.

Description : – Update the descriptive text of cost element

Item category : – Select the item category for secondary cost element as 43 (Internal activity allocation).

Create secondary cost elements in SAP CO

After maintaining all the required details, click on save button and save the details. A message displays as cost element has been created.

cost element has been created SAP

Now try to create other secondary cost elements in SAP by referring above configuration steps.

How to Create Cost Element Group in SAP

How to create cost element group in SAP

You can create cost element group in SAP controlling by using sap menu path or transaction code (tcode) KAH1 navigation method. Refer below procedure steps how to define cost element groups in SAP system step by step.

Transaction code : – KAH1

SAP Menu Path: – Accounting >> Controlling > Cost center accounting > Master data > Cost element group > create.

Creation of cost element groups in SAP

CELMT_PRIMTK Primary Cost Elements
CELMT_SCNDTK Secondary Cost Elements
TKRIM_COSTTK Cost Elements
CCOST_PRDSTK Product Cost
CCOST_RMCSTK Raw Material Consumption cost
CCOST_PRSNTK Personal Cost
TKRIM_REVNTK Revenue Elements
CCOST_MFGNTK Manufacturing Cost
CCOST_FNCHTK Financial Charges
CCOST_SLDTTK Sales & Distribution cost
CCOST_OTCSTK Other Indirect Cost

Step 1 : – Enter SAP Tcode “KAH1” on sap easy access command field and press enter.

SAP transaction code KAH1

Step 2 : – Now a screen open for entering the controlling area key, enter controlling area “TK01” that you like to create cost element group in SAP.

controlling area for cost element group

Step 3 : – On create cost element groups: initial screen, enter the key that identifies the cost element group in SAP CO. After you update the element group key, press enter to continue

Create cost element group in SAP CO

Step 4 : – On create cost element group structure screen, update the descriptive name of group in the given field.

Step 5 : – Place the cursor on TKCEGROUP key and click on lower level button.

Cost element group lower level

Update as CELMT_PRIM : TK Primary Cost Elements and press enter.

primary cost elements group key

Now place the cursor on CELMT_PRIM and click on same level button and update as

CELMT_SECOND : TK Secondary Cost Elements

Similarly assign cost elements group under primary cost elements as shown below.
Create Cost Element Group in SAP

Now assign cost element to the groups by putting cursor on group and click on cost element.

cost element group SAP structure

In Same procedure created cost elements can be assigned to a particular cost element group in SAP.

How to Create Primary Cost Elements in SAP

What is Primary cost element in SAP?

In SAP, Primary cost elements are cost elements whose costs originate outside of controlling area. primary cost element is other way called a general ledger (G/L) in SAP finance accounting module. The creation of G/L account is mandatory for creation primary cost elements in SAP.

Before you define primary cost element or revenue cost elements in SAP, you need to create G/L accounting in the chart of accounts. The General ledger accounts are converted to primary cost elements by assigning primary cost element category.

Cost element category determines the nature of cost element in SAP controlling. The important cost element category are

  1. Primary Cost Element/ Cost reducing revenues : – This category will be used for maintaining all the expenses accounts related to product.
  2. Revenue: – This cost element category will be used for maintaining direct or indirect revenue accounts. For e.g. Sales revenue.
  3. Sales Deduction: – This cost element category will be used for maintaining all the sales related expenditure accounts. For e.g. sales deduction, sales discounts, etc.
  4. Settlement: –  This category will be used for the settlement of costs from SAP CO object to SAP FI object. CO – CO = Internal settlement, CO – FI = External settlement.

Once the transaction data was posted into cost elements, these primary cost elements category can not be changed in controlling area.

Create the following G/L accounts for cost elements

400101Salaries account
400300Rent account

How to create primary cost elements in SAP Controlling

The cost elements can be created in two ways i.e.

  1. Manual Creation of Cost Elements
  2. Automatic creation of cost elements

Manual Creation of Cost Elements

Creation of primary cost elements includes the following steps

Creation of primary cost elements at FI area – GL Master creation

Enter SAP transaction code FS00 in the SAP command field and enter.

SAP transaction code FS00

On next screen, enter general ledger account as “400101”, company code as “TK01” and click on create button for creation of new G/L account for primary customer element.

create cost elements at SAP FI

Update the following details.

  • Choose Account group and account type.
  • Update short text and long text as “salaries account.
  • Click on create/bank/interest and updated field status group field as G004 (cost accounts).
  • Then click edit cost element button for creation of cost element.

SAP Edit cost elements

Creation of primary cost element at CO area

On create cost element: initial screen update the following details.

  • Valid from date: – 01.06.2017
  • Valid to date : – 31.12.9999 (date update automatically)
  • Press enter to continue.

Create cost element SAP initial screen

On create cost element : basic screen, select cost element category as 1 (Primary cost/ cost reducing revenues).

Creation of primary cost elements at FI area

Click on save button and save the configured details. You get a message as “Cost element has been created”.

Similarly create rent 400300 G/L account and cost element account for Rent account.