Are you considering attending an interview for the SAP Product Costing Developer role but unsure how to prepare for it? What are the most likely SAP Product Costing Interview Questions the interviewer will ask? You’ve arrived at the right place. Our experts have compiled a list of the most frequently requested SAP Product Costing Interview Questions, frequently asked across multiple interviews.
Explain ‘controlling (co)’ in Sap?
SAP refers to managerial accounting as ‘Controlling,’ and the module is commonly referred to as ‘CO.’ Therefore, the CO module is primarily focused on managing and reporting cost/revenue. It is mainly used in ‘internal’ decision-making. This module, like any other, includes configuration and application functionality. The controlling module is designed for internal users and assists management by providing reports on cost centers, profit centers, contribution margins, and profitability, among other things.
What is a ‘year shift’ in the sap calendar?
The SAP system does not understand fiscal years, such as April 2012 to March 2013, and only understands calendar years. If the fiscal year for any business is not a calendar year but a combination of different months from two different calendar years, then one of the calendar years must be mentioned as a fiscal year for SAP, whereas the month falling in another year can be changed into the fiscal year by adjusting the year by using the sign -1 or +1. The term “year shift” refers to this change in the calendar year.
Why do you need ‘cost element accounting’?
Cost Element Accounting (CO-OM-CEL) assists you in categorizing costs/revenues posted to CO. It also allows you to reconcile the expenses between FI and CO. CO-OM-CEL defines the structure for storing CO data as cost/revenue carriers known as cost elements or revenue elements.
What are the essential organizational elements of co’?
Controlling has an important organizational structure that includes:
- Concern for Operations (the topmost reporting level for profitability analysis and sales and marketing controlling).
- Controlling Area (controlling a central organization, structuring internal accounting operations).
- Centers of Cost (lower-most organizational units where costs are incurred and transferred).
What is a field status group?
‘Field status groups’ manage the fields that appear when a user performs a transaction. The field status group is in the FIGL (Financial General Ledger) master.
Explain Cost Center Accounting?
The hard task of managing ‘overheads’ within your organization is addressed by ‘Cost Center Accounting.’ Because overhead costs are difficult to control because they are not directly associated with a product or service, cost center accounting provides you with the tools to do so.
What are the ‘components of controlling’?
CO is divided into eight major submodules, each of which has numerous components, as detailed below:
- Cost Element Accounting
- Cost Controlling
- Cost Center Accounting
- Internal Orders
- Activity-Based Costing
- Product Cost Controlling
- Profitability Analysis
- Profit Center Accounting
What does financial- general ledger accounting do?
G L (General Ledger) Accounting is used to get an overview of external Accounting and accounts. It records all business transactions and integrates them with all other operational areas in a software system, ensuring that the Accounting data is always complete and accurate.
What is ‘Activity-Based Costing’?
ABC, or ‘Activity-Based Costing,’ allows you to view overhead costs from the perspective of business processes. As a result, you can reduce costs throughout the entire business process. As a single business process, activity-based costing will cut across several cost centers and provide you with a complete picture of the costs incurred.
Explain ‘cost Center Accounting.’?
‘Cost Center Accounting’ addresses the challenging task of managing ‘overheads’ within your organization. Because overhead costs are difficult to control because they are not directly associated with a product or service, cost center accounting provides you with the tools to do so.
What are the prerequisites for document clearing?
The customizing requirement for document clearing is to check the items cleared and uncleared, which is accomplished through open item management. Open item management is in charge of your outstanding accounts, such as accounts payable and receivable. For example, an unpaid invoice item is recorded as an open account until it is paid.
What is ‘Profitability Analysis’ (CO-PA)?
‘Profitability Analysis’ (CO-PA) assists you in determining how profitable your market segments are (as indicated by the ‘contribution margin’). The analysis focuses on the market’s outer side. You will be able to define which market segments are required for analyzing ‘operating results/profits,’ such as customer, product, geography, sales organization, etc. You have all the reporting flexibility you need with multi-dimensional drill-down capability.
What Is ‘activity-based Costing’?
ABC, or activity-based costing, allows you to view overhead costs from the perspective of business processes. As a result, you can reduce costs throughout the entire business process. As a single business process, activity-based costing will cut across several cost centers and give you a complete picture of the costs incurred.
What is the importance of a GR/IR ( Good Received/ Invoice Received) clearing account?
The GR/IR (Good Received/Invoice Received) account is a temporary account. In a legacy system, if the goods are received but the invoice is not received, a provision is made; in SAP, the provision is made when the goods are received. It creates an accounting entry that debits the Inventory and credits the GR/IR account.
How is ‘Profit Center Accounting’ (EC-PCA) Different from CO-PA?
Unlike CO-PA, which focuses on the profitability of external market segments, ‘Profit Center Accounting’ (EC-PCA) focuses on the enterprise’s internal areas (profit centers). The Internal balance sheets and profit-loss statements are created using profit center accounting. You can substitute EC-PCA for business area accounting. CO-PA and EC-PCA serve distinct functions and are not mutually exclusive. Both may be required in your organization.
What is a ‘cost object’?
In SAP, a ‘Cost Object,’ also known as a CO Account Assignment Object, is a unit to which objects can be assigned. It functions similarly to a repository in that costs are collected and, if necessary, transferred from one object to another. CO’s components each have cost objects, such as cost centers, internal orders, etc. The nature of postings is determined by the cost objects, which decide whether they are real or statistical postings. All objects designated as statistical postings are not considered cost objects.
What is the parallel and local currency in SAP?
In addition to the company code, each can have two additional currencies entered into the company code data. The currency mentioned during the company code creation process is referred to as local currency, and the other two different currencies are referred to as parallel currencies. In foreign business transactions, similar currencies can be used. GROUP CURRENCY and HARD CURRENCY would be the two parallel currencies.
What is ‘Primary Cost Element’?
The consumption of production factors, including raw materials, human resources, utilities, and so on, is represented by Primary Cost Elements. In FI, primary cost elements have corresponding GL accounts. All FI expense/revenue accounts correspond to CO’s primary cost elements. You must first create the primary cost elements in FI as GL accounts before you can make them in CO. In CO processing, SAP also treats revenue elements as primary cost elements. The only difference is that when posting in CO, all revenue elements are identified with a negative sign.
How do you define ‘number ranges’ in co?
You will be required to define the ‘Number Ranges’ for all transactions that generate CO documents for each controlling Area. When you’ve completed a controlling area, you can copy it to other controlling areas if you have more than one. SAP always recommends grouping multiple but similar transactions and then assigning number ranges to this group to avoid having too many documents. You can also define different number ranges for plan and actual data. Number ranges can be internal or external, as in FI. CO document number ranges are not affected by fiscal years.
What do you understand about organizational assignments in asset accounting?
The highest node in Asset Accounting is the depreciation chart, assigned to the company node. All the depreciation calculations are saved in the depreciation chart.
What is the ‘Cost Element Category’?
To determine which transactions can use the cost elements, each element must be assigned to a ‘Cost Element Category.’
How do you automatically create ‘cost elements’?
You can automatically generate ‘cost elements’ by specifying the cost element, cost element interval, and cost element category for the cost elements. All of this is accomplished by creating default settings. The cost elements are made in the background. The primary cost elements can be made only if the corresponding GL accounts are in the Company Code’s chart of accounts. Even though the GL account names are utilized as the names of the primary cost elements created by the system, you can change these names in CO.
What is the importance of asset classes? What asset classes are there?
The asset class is the primary class used to categorize assets. Each asset must be assigned to a single asset class. The asset class also includes the G1 account, which is debited when an asset is purchased. When creating an asset master, you must specify the asset class for creating the required assets. As a result, whenever an asset transaction occurs, the G1 account associated with that asset class is automatically selected, and the entry is passed. You can also mention the default values for calculating depreciation and other master data in each asset class.
What are the configuration settings added in the costing variant?
Because all cost estimates are carried out and saved concerning the accosting variant, the costing variant links the application and Customizing. The costing variant includes all of the costing control parameters. We determine which field in the material master should be updated in the costing type.
What Is ‘Iterative Processing’ Of Cycles?
The term ‘Iterative Processing’ refers to the repetitive processing of sender/receiver relationships until the entire cost of the sender is transferred to the receiver. You can not use the ‘fixed amounts’ as’ sender rules’ during iterative processing, nor will you be able to define a percentage to remain on the sender. While using the iteration, you can use both plan and actual data.
How are capital WIP (Work In Process) and Assets accounted for in SAP?
In SAP, ‘Capital WIP’ is known as Assets under construction and is represented by a specific asset class. Depreciation is typically not charged under ‘Capital WIP.’ The cost of constructing a capital asset can be booked to an ‘internal order’ and posted to an ‘Asset Under Construction’ via the settlement procedures.
How does SAP go about costing a Product with multiple Bill of materials?
SAP calculates the cost of the lowest level product first, then the cost of the next highest level, and finally the cost of the final product.
What Is ‘Splitting’? Explain ‘The Splitting Structure.’?
‘Splitting’ is a process that assigns a cost center’s ‘activity-independent’ plans/actual costs, both primary and secondary, to the individual activity types within that cost center. The important requirement is that you use this when no account is assigned to the activity types. You can use either the Splitting rules or the Equivalence number to accomplish this. When costs from a cost center are split, the cost center temporarily becomes more than one cost center for allocation, but it returns to a single cost center when posting occurs in the subsequent period.
What do you understand about the credit-control area in SAP?
To protect your company from bad debts and multiple outstanding receivables, you can set a credit limit for your customer in SAP’s credit control area. You can use SAP to block deliveries to your customers based on their credit limit and the account receivable balance in their account, which you keep track of.
What do you mean by the concept of cost roll-up in the product costing context?
The cost roll-purpose up includes the cost of goods manufactured from all materials in a multilevel production structure with the topmost level of the Bill of Material. The prices are rolled up automatically using costing levels. The system first computes and assigns the costs for the materials with the lowest costing level to cost components. The material costs are rolled up first and become part of the material costs of the next highest level.
What Is An ‘Activity Price Calculation’?
You have completed the planning process when you perform the ‘Activity Price Calculation,’ based on planned activities and costs. You are evaluating the planned secondary costs at receiving cost centers. If you do not prefer to use the calculated activity price, you can use the political price for the activity type.
What are posting period variants?
In a fiscal year, the posting period is when the transaction figures are updated. SAP posting period variants are responsible for controlling which Accounting period is open for posting and ensuring that the closed periods are balanced.
What is the ‘political price’ for an activity type?
The ‘Political Price’ is the price determined outside of the SAP system and used in manual input in planning using the required planning layout.
What do you understand by field status, and what does it control?
A field status group is an FSV (Field Status Variant) group configured to maintain field status for G/L (General Ledger) accounts. It specifies which fields should be suppressed, displayed, optional, or required.
What is ‘Allocation Price Variance ‘?
The ‘Allocation Price Variance’ is the difference between an activity type’s ‘political price’ and its system calculated activity price.’
What is the short-end fiscal year?
A short-end fiscal year occurs when a normal fiscal year is converted to a non-calendar fiscal year or vice versa. This type of change emerges when an enterprise joins a new co-corporate group.
What Is ‘budgeting’?
Budgeting’ is used to supplement the cost-center planning process. While planning is considered the ‘bottom-up’ approach, budgeting is regarded as the ‘top-down’ approach to cost control. Budgeting is typical ‘down’ from the ‘top (management)’ and is used to guide the cost-center planning process. Budgeting is not integrated with postings; you will receive an error if the system encounters a posting that results in actual values exceeding the budget for that cost center.
What is an account group, and where is it used?
An account group controls the data that must be entered when creating a master record. Account groups define GL accounts, Customer Master, and Vendors.
Explain ‘co Automatic Account Assignment.’?
To transfer primary costs to CO in real-time, you must have ‘Automatic Account Assignments’ defined in the system. You will always be able to post a specific cost to a particular cost center if you do this. This assignment can also automatically post exchange rate differences (gain or loss), discounts, and so on to CO.
In SAP, Customer and Vendor codes are stored at what level?
At the client level, the vendor and customer codes are saved. By broadening the company code view, any company code can use the customer and vendor codes.
How does ‘validation’ differ from ‘substitution’?
Before posting a document, SAP checks the integrity of the data with validations and substitutions. When both substitutions and validations are defined, the system first completes the substitution before validating the entries. It should be noted that only one validation and one substitution can be activated for a controlling area per ‘call-up point.’ A ‘Validation’ uses Boolean logic to validate any combination of specified criteria (such as account type/cost center combination) before allowing you to post a document.
What is an app in sap fico?
APP stands for ‘Automatic Payment Program,’ and it is a tool SAP provides businesses to pay vendors and customers. APP tools assist in avoiding errors that may occur when posting manually. Also, as the number of employees in the company grows, payment via APP becomes more feasible.
What is a ‘call-up point’?
A ‘Call-up Point’ is a specific point in transaction processing that causes an action such as substitution or validation to be performed.
In SAP FICO, what are the payment terms, and where are they stored?
Payment terms are defined in the configuration and determine the due date for vendor/customer invoice payments. They are managed on the customer or vendor master record and are reflected in the customer/vendor invoice postings. If necessary, the due date on each invoice can be changed.
What is ‘Boolean Logic’?
Boolean logic uses simple logic to determine whether a statement is true or false. The logic operates on the fundamental principle that a statement can be true or false. In a complex statement (created using the operators’ and’/’or’/’nor,’ etc.) with many parts, the logic goes from part to detail, assigning true or false and then determining whether the combination is true or false at the end.
What are one-time vendors?
It is impractical in some businesses, particularly those dealing with large amounts of cash, to create new master records for each vendor trading partner. One-time vendors permit the use of a dummy vendor code on invoice entry and the information normally stored in the vendor master.
Is ‘Periodic Reposting’ Different From ‘reposting’?
‘Periodic Reposting,’ a method under indirect allocation,is used to correct multiple postings to cost centers made during a specific period. As a result, this is comparable to various reposting under ‘transaction-based postings.’ Periodic reposting is similar to distribution in that it is used at the end of the period to transfer all costs from a ‘pooled cost center’ to other receivers.
What is the major difference between the Residual Payment and Part Payment methods of allocating cash In Accounts Receivable?
The two ways of allocating partial methods from customers are residual payment’ and ‘part payment.’ For example, a $100 invoice is generated, and the customer has paid $70. This $70 will now be deducted, leaving the remaining balance at $30. With residual payment, the invoice is cleared with the full amount of $100, and a new invoice for the remaining balance of $30 is generated.
Explain ‘manual Cost Allocation.’?
‘Manually Allocated Costs’ One of the ‘transaction-based postings’ is used to post both primary and secondary actual costs (rather than planned costs) and external data. You can also use this to correct previously incorrectly posted secondary prices. Remember that you can use any cost element except 43 in the manual cost allocation process, as this is only for activity allocation.
What is “dunning” in SAP?
The process of sending the payment chasing letters to customers is known as ‘dunning.’ SAP can decide which customers should receive the letters and which overdue items should be addressed. Different letters with a simple reminder can be printed in SAP depending on the due payment date. We can decide which letter has been issued to the customer using the dunning level on the customer master.
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