2. SAP Controlling (CO) Module Overview
SAP CO is designed for internal management purposes, providing information to support coordination, monitoring, planning, and optimization of all business processes.
2.1. Core Purpose and Submodules
The main purpose of the SAP CO module is planning and performing variance analysis by comparing actual data with plan data. This enables effective control over business operations.
The key submodules of SAP CO include:
- Cost Element Accounting: Provides an overview of costs and revenues. Cost elements are the link between FI’s G/L accounts and CO.
- Cost Center Accounting: Manages costs associated with internal divisions or departments (cost centers).
- Internal Orders: Used to collect and monitor costs for specific, time-restricted jobs, activities, or projects.
- Profit Center Accounting: Evaluates the profit or loss of independent areas within an organization.
- Product Cost Controlling: Calculates the cost to manufacture a product or provide a service.
- Profitability Analysis (CO-PA): Analyzes the profit or loss of an organization by market segments (e.g., products, customers, sales regions).
2.2. Cost Management Objects
CO uses various objects to collect and manage costs and revenues for internal analysis.
| Object | Description |
| Cost Center | An organizational unit that incurs costs but does not directly generate revenue (e.g., Marketing, HR). Cost Centers are created (KS01) within a controlling area and are organized into a standard hierarchy. Costs are posted to cost centers (FB50). |
| Internal Order | A flexible CO object used as a temporary collector of costs for a specific purpose (e.g., a trade fair, a short-term project). Once the job is complete, the collected costs are settled (KO88) to one or more receivers, such as a cost center or fixed asset. |
| Profit Center | An organizational unit treated as a “company within the company” for internal profitability analysis. It is responsible for its own costs and revenues. Profit Centers are created (KE51) and organized in a standard hierarchy. They allow for the creation of internal balance sheets and P&L statements. |
2.3. Key Controlling Processes
- Product Costing: Aims to determine the internal cost of products. It begins with Cost Center Planning, where total planned costs (dollars) and quantities (activity output) are defined for each cost center (KP06, KP26). The system then calculates activity rates, which are used to value the activities required to produce goods.
- Profitability Analysis (CO-PA): Analyzes market segment profitability. It supports two main types:
- Costing-based CO-PA: Groups costs and revenues into user-defined “value fields.” It provides a real-time, short-term profitability report.
- Account-based CO-PA: Uses G/L accounts and is permanently reconciled with Financial Accounting.
- CO Planning: Allows for the creation of a sales and profit plan. Planning can be performed manually or automatically (e.g., copying actuals, top-down distribution) for various profitability segments.