Entrepreneurial thinking is important in any workplace. With comprehensive cost accounting, your team can quantify the cost efficiency of products and activities, improve decision-making and drive the success of your company. abas ERP not only monitors the cost of your goods and services, it also provides you with tools which you can use to compare costs under different conditions. Controllers can quickly analyze the benefits of an activity or process and recommend the most appropriate course of action to management.
Cost accounting includes an automatic offsetting function, Internal Account Activity Allocation (IAAA), for mapping internal exchanges of services within the company. In addition to IAAA, the exact overheads can be posted against the cost object on a monthly basis. This allows for a more accurate income statement than possible under conventional order costing. The cost and service calculation in abas ERP supports flexible planned cost accounting as part of internal accounting. It allows planned costs to be adjusted in all actual conditions that have changed for planning. Unacceptable differences from the target/actual comparison can be corrected. Data from various areas such as financial accounting and fixed asset accounting are integrated with cost accounting. Cost accounting in abas ERP also integrates data from the material valuation and valuation of production activity.
Cost accounting structure
Cost accounting in the ERP system is structured so that sub areas, cost type accounting, cost center accounting and cost object accounting, can be used alone or in combination. It is structured according to the principle of an integrated accounting system (the data is entered and processed in a closed allocation group). In the case of actual data, cost accounting accesses the financial accounting data. In an additional statistical journal, only cost accounting postings can be posted. With cost accounting, you can flexibly map a wide range of different solutions from simple cost accounting through to flexible planned cost accounting.
Actual cost type accounting and actual cost center accounting limited to the primary costs (cost accounting for beginners)
- Actual cost center accounting with internal account activity allocation
- Actual/planned cost center accounting with planned/actual comparison and internal account activity allocation cost center accounting according to flexible standard costing with target/actual comparison
Cost accounting generally uses actual and planned values. However, it can also be operated as actual/planned accounting or purely actual.
Integration in financial accounting
The actual values of cost accounting are taken from financial accounting. The imputed actual values, which are created in cost accounting by statistical entries, are an exception. Financial accounting and cost accounting are linked via the cost types.
Cost type accounting groups presents costs according to cost types. In order to use costs that are posted in financial accounting and in cost accounting, the cost types are allocated to P&L accounts. When posting to accounts in financial accounting, abas ERP automatically forms values on the cost types.
Options for internal account activity allocation:
- Preview or entry mode
- Actual, planned or actual/planned data types
- Monthly or annual entry period
After IAAA has been performed, different cost rates are available to the cost centers. The primary cost centers will then have the current overhead surcharge rates.
IAAA calculates the following values for each cost center:
- Full, marginal and fixed cost rate
- Fixed cost variance rate
- Usage variance rate
- Utilization variance rate
- Primary costs
- Total costs
- Overhead surcharge rate for primary cost centers
Cost object accounting (contribution margin calculation)
A contribution margin calculation can be mapped for each cost object in the expense distribution sheet (EDS). For example, the revenue of a cost object can be compared to the direct material and production costs, resulting in contribution margin 1. These direct costs are automatically posted using material costs posting and production costs posting. Contribution margin 2 is calculated by mapping the material overhead surcharge rate from the material primary cost center and the production overhead rate from the production primary cost center in the EDS. Then it subtracts these from contribution margin 1. This allows a contribution margin calculation to be mapped in the EDS at the cost object level with the overhead surcharge rates from cost center accounting.
Multi-dimensional contribution margin calculation
abas ERP supports a differentiated contribution margin calculation according to different dimensions. A multi-dimensional analysis, as a tool for decision-based cost accounting, is necessary in order to add to one-dimensional profit and loss statements. This leads to identifying the sources of losses.
The production costs posting function enables the valuation of personnel and machine times from the completion confirmations. It then uses these to determine the production costs differentiated according to individual cost objects. Wage groups are available for the valuation of personnel times and machine times are valuated using hourly rates. The following can be edited as long as the completion confirmations have not yet posted: Fixed and variable machine hourly rates, personnel hourly rates, overhead rates and special costs. The production costs resulting from the valuation will be posted by means of statistical entries. abas ERP automatically performs both the valuation and posting of the production activity.
Cost accounting provides many evaluations which are used, for example, to present master data. They can also show the connections between the P&L accounts from financial accounting and the cost types of cost accounting or the cost types of the consolidation structures for cost centers and cost objects.
Evaluations for data analysis:
- The expense distribution sheet (EDS) displays the amount of the costs of specific cost types that are incurred in cost centers and cost objects. It is possible to make a comparison with the previous year. Furthermore, different transaction figure types (actual costs, fixed planned costs, proportional planned costs, target costs, absolute and relative target/actual variance) can also be displayed
- In addition to the EDS, there are also info systems (such as a cost center/cost object sheet) available for the evaluation of individual or multiple cost centers and cost objects
- The overheads report info system is used for the clearing of primary cost centers and cost objects. This will show, for example, the posted overheads and underlying direct costs
- The account report info system can be used to list and group all accounts in which entries are made from a certain cost type in connection with a certain cost element in a period
- A secondary cost report displays the specific exchanges of services between the cost centers within a specific time period.