Thanks for your question. In the circumstances you describe, I think a relatively new CO-CCA functionality called dependency planning can assist your company in developing its cost center plan. You’ll find it especially useful in preparing your budgets for the upcoming fiscal year. Dependency planning allows plan costs to be derived from, or to be dependent upon, other costs or quantities. It can be either value-based or quantity-based in its design. Value-based dependency planning uses a price-per-unit schema. Quantity-based dependency derives planned amounts from input quantities. R/3’s module provides numerous functions for planning. Many managers responsible for their cost center budgets enter the plan information for cost centers by using traditional cost center/ cost element planning. Amounts are entered by cost element for a particular cost center. This is a straightforward process and is probably the most popular form of planning. However, situations may exist where some gymnastics, if you will, are required to arrive at the planned amount. For example, in traditional cost element planning sometimes the amount to enter as a budget is really a factor of some other quantity. Many manufacturing costs are a factor of production volume, or the number of employees in a particular cost center could be used to compute the amount of electricity or telephone expense using a price-per-unit basis.

Master Data Utilized

Cost elements and cost centers are the master data elements planned upon in basic primary cost planning. Making a portion of the planned costs dependent on a value or quantity involves the use of other master data from which to derive the plan cost— statistical key figures, activity types, and even resources.¹ You may already be familiar with statistical key figures and activity types, but here’s a refresher. Statistical key figures represent items that can be tracked at a cost center level, such as headcount or production volume. Activity types are the output that a cost center produces that is consumed by various CO objects, such as other cost centers, production orders, internal orders, or projects. They represent the work done within a given cost center. Resources consist of goods and services used to produce activities. They are similar in function to activity types in that they are given a price and are planned using a quantity. Dependency planning can use the planned quantities or amounts entered on these elements as a basis for the calculation of planned costs.

Entering Value-Based Dependency Plan Data

Do you foresee uses for dependency planning within your organization? If you are curious as to how you could utilize dependency planning functionality, perhaps a simple illustration of dependency planning will enable you to better understand its functions and identify areas in your enterprise where it may be useful. I have developed a basic example for this purpose. In my scenario, the cost of labor personnel is a function of a set price multiplied by the production volume. The cost center in which this planning function is occurring is the technology cost center. I’ve devised a statistical key figure, named PRODVOL, to track production volume at that particular cost center. What I’m showing is how you can calculate the planned cost of the labor for those employees in the technology cost center as a price per unit of the produced quantity. You’ll see how the system automatically calculates the planned amount after you enter a production volume into CCA² and then enter a price. In my example, I’m entering the planned production volume using a statistical key figure PRDVOL defined at the cost center TECHNOLOGY. Access the statistical key figure planning transaction code KP46 (menu path Accounting>Controlling>Cost Center Accounting>Planning>Statistical Key Figures>Change). Enter the version, date parameters, statistical key figure(s) being planned, and cost center(s) for which the plan data is being entered. Access the period screen to enter the planned production volumes by period (or for the overall year using the distribution key to distribute the quantities to the fiscal periods), as shown in Figure 1. With the production volume entered, you can enter dependency planning by specifying a planning profile that contains a layout for dependency planning. R/3 provides planning profile SAPR&R for this purpose, but you can also use a custom planning profile. To specify the planning profile, use transaction KP04 or follow menu path Accounting> Controlling>Cost Center Account-ing>Planning>Set Planner Profile. Enter dependency plan information using the traditional cost element/cost center transaction, but with specifying a planning profile with a layout that allows for dependency planning. To access this step, use transaction code KP06 or follow menu path Accounting> Controlling>Cost Center Accounting> Planning>Cost and Activity Inputs>Change. Once you access the main screen, change the planning layout to use a dependency planning layout. Do this by clicking the next layout button at the top of the screen, as shown in Figure 2. Once you select the value-based dependency planning layout (the R/3 standard layout is 1-1R2), click the overview icon to proceed to the planning overview screen. It is in this screen that you enter the dependent plan data (Figure 3). Here you enter three key pieces of information relevant for dependency-planning:

• Dependency type – indicate the dependency type to which the planned amounts should be linked. For this example, I’ve chosen activity-independent statistical key figures.

• Dependency – specify the dependent statistical key figure (or activity type) from which the plan should be calculated. Note that I specified the PRDVOL statistical key figure.

• Fixed price – enter the fixed dependency price per unit. I priced labor (the 610100 account) at $19.50 per hour.

Once the dependency price is established, the planned amounts for labor are calculated, as shown in the Planned fixed costs column.

Activity-Dependent and Quantity-Based Dependency Planning

The activity-independent value-based dependency planning example I used is basic. Greater complexity may be needed in order to use this functionality. See Figure 4 for two examples. Dependency planning can be done in a quantity-based (either activity- independent or activity-dependent) scenario where planned consumption of resources per unit of a statistical key figure or activity type are entered. You then calculate the plan cost by multiplying the planned quantity by the quantity of the reference statistical key figure or activity type and by the resource price set in resource planning. In addition, you can do dependency planning in an activity-dependent (either quantity-based or value-based) scenario whereby the price and source are linked to the planned quantity entered for an activity type. Dependency planning can serve as a useful supplement to developing your cost center plan. As my basic example shows, it works in conjunction with traditional primary cost planning functionality in cases where you want to link planned amounts to a quantity, such as number of employees or production volume, and assign a price.

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¹ Resource planning is a new quantity-based planning functionality offered within Cost Center Accounting. See Tony Rogan’s article, "CO’s Resource Planning Brings More Detail to Cost and Consumption Projections," in the January 2003 issue of FI/CO Expert.

² It is possible to post planned production volumes into statistical key figures within cost centers using the delivered interface with Logistics Information Systems, but for this example, the quantity is input manually.