SAP Controlling Interview Questions – Key Subjects

Why are these SAP Controlling Interview Questions?

These SAP Controlling interview questions are majorly based on topics like Cost Center, Cost Elements, Profit Center, Product Costing, Month-End activities & more.Since Controlling is a vital part of the SAP Financial Accounting module. Thus, reading these questions would help you to prepare for your upcoming SAP FICO interview questions.

SAP Controlling Interview Questions on Cost Elements

Q. Explain the organizational assignment in the Controlling module.

• We assign Company codes to the controlling area and a controlling area to the operating concern.
• Further, the Controlling Area is the umbrella under which we can store all controlling activities of the Cost center Accounting, product costing, Profitability Analysis and Profit center.
• Operating Concern is the highest node in Profitability Analysis.

Q. What are the Primary Cost Elements and secondary cost elements?

A. Every Profit and Loss GL account that we need to control is defined as a cost element in SAP. Just as FI General Ledger Accounts exist in Controlling we have a Cost Element. In S4 HANA Finance, now we are creating a GL account with a cost element category.Also, each FI General Ledger Account which is a profit and Loss account, we create as Cost Element in SAP ERP and S4 HANA GL Master and Cost Element merger.Primary Cost Elements are those which we create from FI general ledger Accounts and impact the financial accounts eg. Wages, Electricity, Consumption account etc.While the Secondary Cost Elements are those that we create only in Controlling and do not affect the finances of the company. We use it for internal reporting only. The postings to these accounts do not affect the Profit or Loss of the company

The following categories exist for secondary cost elements

• 21- Internal Settlement – We use Cost Elements of this category to settle order costs to objects in Controlling such as Cost Centers, PA segments etc.
• 31- Order/Result Analysis – Used to calculate WIP on the order/project
• 41- Overhead – Used to calculate indirect costs from cost centers to orders
• 42- Assessment- Used to calculate costs during assessment (month-end calculation)
• 43- Internal Activity allocation- Used to allocate costs during internal activity allocation such as Machine, Labor etc.

Q. What are cost objects?

A. A cost object means a cost or revenue collector wherein we have a collection of all the costs or revenues for a particular cost object. Such as cost center, production order, internal order, projects, and sales order.So whenever you look at any controlling function the basic thing you need to ask yourself is what is the cost element, I want to control and what is the cost object (either the production order, sales order, or internal order) I am using to control this cost element.At the end of the period, all costs or revenues in the cost object are settled to their respective receivers which could be a GL account a cost center profitability analysis or an asset.

SAP Controlling Interview Questions on Profit Center

Q. How is cost center accounting related to a profit center?

A. In the master data of the Cost Center there is a provision to enter the profit center. This way the system also captures all costs which flow to the cost center in the profit center.We create Cost centers to capture costs – For example admin cost center, canteen cost center etc.While we create the Profit Centers to capture cost and revenue for a particular plant, business unit or product line.

Q. What is the basic purpose of creating a Profit Center?

A. The basic purpose of creating a Profit Center is to analyse the revenues and costs for a particular product line or a plant or business unit. Though you can generate balance sheets and profit and loss accounts per Profit Center still we should use a profit center basically as a tool only for international reporting purposes.If legally one has to produce the Balance sheets and Profit and Loss Accounts for Profit Center then it is advisable to create it as a company code instead of a profit center.

Q. How do the cost and revenue flow to the Profit center?

A. The Material Master also, stores the Profit center. This way all sales orders that we create for the finished product, automatically pick up the Profit center from the material master and all the revenues and costs coming from this Sales Order. So that the finished product can pass on to this profit center.We create a profit center document in addition to the Finance document whenever revenues or consumption takes place. This document contains the details of the profit center.Once both the costs and revenues flow to the profit center you can write reports using the Report painter to get intelligence analysis. You can also use SAP standard reports.Statistical Key figures are created in the cost center accounting module. Now the same statistical key figure is required in the profit center accounting module.

Q. Is it required to maintain the statistical key figure in the PCA module? 

A. No, since the statistical key figures are created in a controlling area. While the profit center is a sub-module within the controlling area. Thus, the statistical key figure is created for the controlling area and as such is available in the profit center accounting module.

SAP Controlling Interview Questions on Cost Elements

Q. What is a Cost element group?

A. Cost Element group is nothing but a group of cost elements that help one track and control cost more effectively. You can make as many cost element groups as you feel necessary by combining various logical cost elements.

Q. How can the default settings be maintained for cost elements per company code?

The default settings can be maintained in transaction OKB9. Here we can specify for a company code, the cost element which is the cost center to default or whether the profitability segment is to be automatically derived. Further, we can also maintain whether the business area is mandatory or a profit center is mandatory and can maintain the default business areas and profit centers.

Q. What is a cost center group?

A. In a similar line the cost center group is also a group of cost centers which help one to track and control the cost of a department more effectively. You can make as many cost centers as you feel necessary by combining various logical cost centers.You can use various combinations of the cost center group with the cost element group to track and control your costs per department or across departments.

Q. What is the difference between Distribution and Assessment?

The distribution uses the original cost elements for allocating costs to the sender cost center. Thus, in receiving cost center we can see the original cost element from the sender cost center. However, the Distribution only allocates the primary cost.The Assessment uses assessment cost element category 42 defined above to allocate cost. These various costs are summarized under a single assessment cost element. On the receiver cost center, the original cost breakup from the sender is not available. Assessment allocates both primary as well as secondary costs.

Q. What are the other activities in Cost Center?

If you have a manufacturing set up entering Activity prices per cost center /activity type is an important exercise undertaken in Cost Center accounting.

Q. What is an Activity Type?

A. Examples of Activity Types could be machines, Labor etc.

SAP Controlling Interview Questions on Product Costing

Q. Some Important Terminologies in Product Costing.

• Result Analysis Key – This key determines how the Work in Progress is calculated.
• Cost Components – The breakup of the costs which get reflected in the product costing eg. Material Cost, Labor Cost, Overhead etc.
• Costing sheet – This is used to calculate the overhead in Controlling.
• Costing Variant – For all manufactured products the price control recommended is Standard Price. To come up with this standard price for the finished good material this material has to be costed. So, this is done using Costing Variant.

Q. What are the configuration settings maintained in the costing Variant?

A. Costing variant forms the link between the application and customizing, since all cost estimates are carried out and saved concerning a costing variant. The costing variant contains all the control parameters for costing.The configuration parameters are maintained for costing type, valuation variant, date control and quantity structure control In costing type we specify which field in the material master must the price be updated.In the valuation variant, we specify in what order the system should go about accessing prices for the material master (planned price, standard price, moving average price etc). Further which is the price should be considered for the activity price. How the system should select BOM and routing.

Q. How does SAP go about Costing a Product having multiple Bills of materials within it?

A. For multiple Bills of Materials SAP first costs the lowest level product, arrives at the cost and then goes and costs the next highest level and finally arrives at the cost of the final product.

Q. What is the concept of cost roll-up mean in the product costing context?

A. The purpose of the cost roll-up is to include the cost of goods manufactured of all materials in a multilevel production structure within the cost of the material located at the top of the structure.

The costs are rolled up automatically using the costing level.

1. The system first calculates the costs for the materials with the lowest costing level and assigns them to cost components
2. The materials in the next highest costing level (semi-finished material) are then costed. The costs for the materials cost first are rolled up and become part of the material costs of the next highest level.  

Q. What is a settlement profile and why is it needed?

A. We settle all the costs or revenues collected in the production order or Sales order to a receiver at the period end. This receiver could be a GL account, a cost center, a profitability analysis or an asset.To settle the costs of the production order or sales order, we need a settlement profile.Now further, in a settlement profile, we define a range of control parameters for settlement. This also helps us to enter a settlement rule for the sender.Subsequently, the settlement Profile is maintained in the Order Type and defaults during the creation of the order.

What is all included in the Settlement profile?

It includes the following:-

1. The retention period for the settlement documents
2. Valid receivers GL account, cost center, order, WBS element, Fixed asset, material, profitability segment, sales order, cost objects, order it s  etc.
3. Document Type should be there.
4. Whether 100% validation, % settlement, equivalence numbers, variance to costing based COPA
5. Allocation structure and PA transfer structure are attached to the settlement profile.

The settlement profile created is attached to the order type.

SAP Controlling Interview Questions on Cost Component

Q. What is the Primary Cost component split?

A. Primary cost split is defined when you create a cost component structure. When you switch on this setting, the primary cost from the cost center is picked up and assigned to the various cost components.

Q. How do primary costs get picked up from the cost center into the cost component structure?

A. This is possible when you do a planned activity price calculation from SAP. This primary cost component structure is assigned to plan version 0 in Controlling.

Q. Is it possible to configure 2 cost component structures for the same product in order to have 2 different views?

A. Yes, it is possible. We create another cost component structure and assign it to the main cost component structure. This cost component structure is called the Auxiliary cost component structure which provides another view of the cost component structure.

SAP Controlling Interview Questions related to Closing Activities

Q. What are the Period End Closing Activities in Controlling?

The following are the period-end closing activities in Controlling:-

• Repost CO documents that were incorrectly posted
• Run Distribution or Assessment Cycles
• Run the Overhead Calculation in product costing
• Run the WIP Calculation in Product costing
• Run the Variance Calculation in Product Costing
• Run the Settlement Calculation in product Costing which will post all the WIP and variance to Finance and PA
• Calculate FI Data for Transfer to Profit Center
• Transfer Balance sheet Items like Receivables, Payables, Asset and Stock
• Run Results Analysis for Sales Order if applicable
• Run Settlement of Sales Order to PA

Q. Define the Month End Closing Activities in Finance.

• Recurring Documents
  • Create Recurring documents
  • Create Batch Input for posting Recurring Documents
  • Run the Batch Input Session
• Posting Accruals or Provisions entries at month end
• Managing the GR/IR Account-Run the GR/IR Automatic Clearing
• Foreign Currency Open Item Revaluation- Revaluate Open Items in AR & AP
• Maintain Exchange Rates
• Run Balance sheets- run Financial Statement Version
• Reclassify Payables and Receivables if necessary
• Run the Depreciation Calculation
• Fiscal Year Change of Asset Accounting if it is Year End
• Run the Bank Reconciliation
• Open Next Accounting period

How these SAP Controlling Interview Questions are helpful to you?

When an SAP Finance consultant implements Financial accounting in a business project, Management accounting plays a crucial role as this decides how a company is going to calculate the cost and do the profitability analysis.Almost all companies are most concerned about their cost management. Thus, they expect a well-defined and configured Costing in their ERP system. So while hiring any Financial consultant, a person must possess all relevant skills to do all those jobs efficiently as SAP S/4HANA Finance Consultant.That is why the topics that I discussed above are most common among interviewers.So read them thoroughly and do implement them into your system for real practical exposure. So that you can perform confidently while answering SAP Controlling interview questions.

(AASHIT SRIVASTAVA)