Have you ever wished that the CO-PA module had an "if ... then" way to say when you want or don’t want certain kinds of revenues and costs calculated and posted (i.e., SAP’s condition technique)? Guess what? It does, but in CO-PA, it is called "valuation with costing sheet."

The condition technique has the flexibility to meet specific requirements from basic addition to more complex calculations. FI and CO-PA analysts can use the condition technique to supplement information in the CO-PA ledger with estimated, calculated, and additional values. This leads to more accurate profitability analysis, and thus, to a more accurate decisionmaking process. It is not as easy to achieve the same goal with any other accounting tool, as other tools are based on actual transactions.

This functionality is especially suited for recording accruals into your CO-PA ledger that you might not want recorded yet in your G/L, PCA ledger, or Special Purpose Ledger (FI-SL). They include:

• Commission payable to sales force
• Freight costs for shipments
• Cash discounts payable to customers for early payments
• Outgoing packaging based on number of parts sold
• Custom duty payable for cross- border shipments
• Reserves or administration overheads in insurance companies

A commonly misunderstood notion about condition technique is that it is used primarily in the Sales and Distribution (SD) module. The misleading term for condition technique in CO-PA, "valuation with costing sheet," adds to the confusion. As a result, it has remained underused in many R/3 installations. (Refer to Table 1 for commonly used terms within the SD and CO-PA modules.)

I will clarify those issues and demonstrate how to implement the condition technique in the CO-PA module. With a screenprint and table, I’ll also clarify how the condition type is assigned to the value field, a point of confusion if you don’t understand the underlying relationship.

Estimating a Sales Commission

Here’s a quick example of how to use the condition technique to determine the commission payable to sales employees based on revenues generated by an incoming sales order. (Normally this would be calculated when the order is invoiced.) You almost certainly would not want to record a forecasted revenue (like a sales order) or expense into your G/L, PCA ledger, or FI-SL. Your sales manager might want to view sales orders somewhere, however. That "somewhere" can be CO-PA. Look at Table 2. You calculate sales commissions based on a percentage of the profit margin and store them in CO-PA value fields as supplemental information.

These instructions assume a basic understanding of how the condition technique works and how the R/3 system finds condition records to calculate condition values. (See Figure 1.) What follows is a review of how to develop the condition technique in CO-PA to estimate a sales commission.

1. Configure a valuation strategy based on the costing sheet and assigned to the point of valuation with a record type.

2. In CO-PA, amounts are stored in value fields. However, the costing sheet works on condition types. Therefore, you need to have condition types within CO-PA, which in turn have values assigned from these value fields. Determine the sales commission based on the profit margin, which is derived from value fields VV010, VV020, and VV030. In simple terms:

sales commission = percentage of profit margin, where profit margin = (VV010 - VV020 - VV030)

To do this, create three condition types representing these three value fields; these are called "base condition types." Since the values of these conditions are assigned directly from value fields, you do not need access sequences. Create an additional condition type to determine the sales commission amount; this is called a "calculation condition type." Since the value of the commission depends upon various factors, you need an access sequence, which in turn has accesses and condition records.

3. Once the value of the sales commission is calculated in the costing sheet, store it in a separate value field by assigning a condition type to a separate value field (VV100). Note that the assignment is bidirectional—value fields are assigned to condition types, and condition types are assigned to value fields. That is unlike SD, where conditions are mapped to CO-PA value fields. You cannot assign CO-PA value fields to SD condition types.

I have explained this solution in a "top-down" manner. However, while configuring, you follow "bottom-up" steps, which are explained in detail in the following six steps. For example, you need to include condition types in a costing sheet, so first you must create condition types. You may need to create access sequence before condition types, as you might need to assign it in condition types.

Figure 1

The basics of condition technique. Typically, access sequences are assigned to condition types. The access sequence is a search strategy that defines how to search for specific records, and it consists of accesses and condition tables.

Configuration Steps

The configuration steps in CO-PA related to the valuation with costing sheet are shown in Figure 2. The screenprints in this article are from Release 4.5B.

The configuration steps in CO-PA related to condition types differ from those in SD pricing. For example, the Create Condition Types step is available in SD pricing also. In SD, the transaction code is V/06, and in CO-PA it is KE47.¹ This is a possible source of confusion.

Figure 2

Configuration steps for valuation in CO-PA

Step 1. Define Condition Table (KE4A)

Create a condition table and specify a number between 501 and 999 (give only the number). Skip this step if you have already created the required condition tables. Choose the required fields by double-clicking fields from the Field catalog. The selected fields are listed under the Selected Fields column. Now generate the table. This prompts R/3 to create a transparent table that is activated. I created two condition tables, Table 991 with Sales org./Material and Sales org. fields, and Table 992 with only the Sales Org. field.

Step 2. Define Access Sequences (KE48)

Create access sequence ZCOM (Access Seq for Commission). Choose this access sequence and click on Accesses. Click on New Entries and enter two lines with the details on Sales Org./Material and Sales Org. shown in Figure 3.

Note the Exclusive indicator on the first line of Figure 3. If you set it, the system stops searching if it finds the record in the condition table. Otherwise, if the system finds one more set of records, it adds twice. It makes sense to arrange accesses from a more-specific to less-specific order.

Figure 3

Accesses for Access Sequence ZCOM

Step 3. Create Condition Types (KE47)

In this example, you create four condition types for storing value fields from CO-PA. Although information is already available in CO-PA in terms of value fields VV010, VV020, and VV030, you assign these to condition types ZREV, ZDIS, and ZCOS so that costing sheet calculations take place.

Since values for ZREV, ZDIS, and ZCOS are already calculated, you don’t assign access sequences to them. The amount of discounts or costs is stored as positive² in value fields. However, in costing sheet calculations, you subtract them by setting the Plus/minus indicator as X, which indicates minus sign only. See Figure 4.

Table 3 shows four condition types and the relevant control settings. Only the ZCOM condition has an access sequence. The remaining three, known as base conditions, do not, because their values are assigned directly by the value fields.

Figure 4

Access sequence for cost of goods, with Plus/minus box checked

Step 4. Maintain Costing Sheets (KE46)

Create a costing sheet (Figure 5). Step 40 is a subtotal for steps 10 through 30. Although it looks like addition, Step 40 is actually ZREV minus ZDIS minus ZCOS, because you designated condition types ZDIS and ZCOS as "minus." ZCOM should be based on the subtotal; therefore, set From as 40.

Figure 5

Costing sheet

Step 5. Assign Value Fields (KE45)

Note that the assignment of the condition type to the value field works both ways. This is one of the most commonly misunderstood relationships. Looking at the configuration screen (transaction code KE45), which is shown in Figure 6, you might think condition types are assigned to value fields. In reality, the assignment is bidirectional. To make this point clearer, I have depicted the bidirectional mapping in Figure 7. CO-PA value fields are assigned to base condition types (ZREV, ZDIS, ZCOS) in the costing sheet, and the calculation condition type (ZCOM) from the costing sheet is assigned back to the CO-PA value field.

Figure 6

Assign conditions to CO-PA value fields

Figure 7

Bidirectional assignment of condition types

Step 6. Define and Assign Valuation Strategy (KE4U)

After the building blocks are configured, create a valuation strategy: Z01 – Invoice Valuation for Commission (Figure 8). Click on Details and set ZCOMMS as the costing sheet with application KE and Qty Field for the Operating concern. Assign Val. Strat. as Z01 for real-time for invoices. Set the PV (point of valuation) to 01, which indicates real-time valuation of actual data, with Rec. (record type) F (for billing data).

Figure 8

Creating a valuation strategy

Test Scenario

Once these configuration steps are completed, test how valuation with costing sheet calculates sales commission in CO-PA. Create a few Create Condition Records for condition ZCOM (menu path Accounting>Controlling> Profitability Analysis>Master Data> Conditions>Create) or transaction code KE41. See Figure 9.

Create one record each for Sales org./Material and Sales org.

When you post an invoice to CO-PA, observe that the corresponding value field VV100 is populated. This value field is populated in the CO-PA ledger as additional information.

This exercise demonstrates how the condition technique works in CO-PA. By now, you are probably thinking of many more useful possibilities, such as calculating potential early payment discounts, calculating sales promotion discounts, or calculating estimated freight values.

Figure 9

Create Condition Records for Key Combination

² If you checked the transfer +/- indicator in SD condition type assignment to CO-PA value fields (transaction code KE4I), amounts may be stored with negative/positive values. In that case, you do not need to set the condition type in PA with minus signs.