Last Updated on December 19, 2022 by Pradeep
This article presents the top 14 SAP CO Interview Questions with practical-oriented answers. Controlling is an important part of SAP FICO configuration in any industry.
Not only, does it needs in-depth knowledge of the subject, but also the practical know-how of its core areas. Needless to say, interviewers specifically choose these subjects to put before interviewees, to check the depth of their knowledge.
SAP CO Interview Questions –Organizational Assignment | Cost Elements | Cost Objects
Q1. – Explain the Organizational Assignment in the SAP Controlling module.
Ans. – We assign Company Codes to the Controlling area and controlling area to the operating concern.
The Controlling Area is the umbrella under which we store all controlling activities of the cost center Accounting, Product Costing, Profitability Analysis, and Profit Center.
Q2. – What are the Primary Cost Element and Secondary Cost Element?
Mark: Important SAP CO Interview Question
Ans. – We need to define every Profit and Loss GL account as a cost element in SAP that we need to control. Just as in FI General Ledger Account exists; in Controlling we have a Cost Element.
We create each FI General Ledger Account as a cost element in SAP which is a Profit and Loss Account.
Primary Cost Elements are those which we create only in Controlling. This means they do not affect the Financials of the company. We use them for internal reporting only.
Further, the postings to these accounts do not affect the Profit or Loss of the company.
Internal Settlement– We use Cost Elements of this category to settle order cost to objects in the Controlling such as cost centers, PA segment, etc.
Order/Result Analysis– We use it to calculate WIP on the order/project.
Overhead– These we use to calculate indirect costs from cost centers to orders.
Assessment– We use assessment to calculate costs during an assessment.
Internal Activity Allocation We allocate costs during internal activity allocation such as Machine Labour etc.
Q3. – What are the Cost Objects in SAP CO?
Ans. – A cost object means a cost or a revenue collector wherein we collect all the costs or revenues for a particular cost object. Examples are cost center, production order, Internal Order, projects, and Sales Order.
Thus, whenever we look at any controlling function, the basic thing we need to assess is the cost element (expense) that we want to control.
Likewise, what is the cost object ( i.e. either the production order, sales order, or internal order) we are using to control this cost element?
To be precise, Controlling is all about knowing the cost element and what is the cost object.
(Learn the concept of Cost Object Controlling).
At the end of the period, we settle all costs or revenues in the cost object to their respective receivers as a GL Account, Cost Center, Profitability Analysis or Asset.
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SAP CO Interview Questions – Cost Center Accounting
Q4. – How do you relate the cost center accounting to the Profit Center?
Ans. – In the master data of the cost center, there is a provision to enter the profit center. Here, all costs which flow to the cost center are also captured in the profit center. This is to say, we create Cost centers to capture costs e.g. admin cost center, canteen cost center, etc.
Further, we create Profit Centers to capture cost and revenue for a particular plant, business unit or product line.
Q5. – What is the Cost Element Group?
Ans. – The cost Element group is nothing but a group of cost elements that help track and control costs more effectively. You can make as many cost element groups as you feel necessary by combining various logical cost elements.
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Q6. – What is a Cost Center Group?
Ans. – In a similar line, a cost center group is also a group of cost centers that help one to track and control the cost of a department more effectively. Noteworthy, we can make as many numbers of cost centers as we feel necessary by combining various logical cost centers.
Certainly, we can use various combinations of the cost center groups with the cost element group to track. Hence we can control our costs per department or across departments.
Q7. – What is the difference between Distribution and Assessment?
Ans. – Distribution:- It uses the original cost element for allocating cost to the sender’s cost center. Thus, we can see the original cost element from the sender cost centre in receiving cost center. Distribution only allocates the primary cost.
Assessment:- It uses assessment cost element No 43 defined above to allocate cost. Thus various costs are summarised under the single assessment cost element. Further, in the receiver cost center the original cost breakup from the sender is not available. Assessment allocates both primary as well as secondary costs.
Q8. – What are the other activities in the Cost Center?
Ans. – If we have a manufacturing set up entering Activity prices per cost center/Activity type is an important exercise undertaken in cost center accounting.
Q9. – What is an Activity Type?
Ans. – SAP activity type is the classification of activities that we produce in cost centers in a controlling area. Examples of Activity Types are Machine Hours, Labour Charges, Units Produced, Power, etc.
Q10. – What are the important terms in SAP Product Costing?
(Mark Important SAP CO Interview Question)
Ans. – Important Terminologies to remember in SAP Product Costing are:
Result Analysis Key- This key determines how the work in Progress is calculated.
Cost Components– The breakup of the costs which we see in the Product costing e.g.-Material Cost, Labor Cost, Overhead, etc.
Costing Sheet– We use a costing sheet to calculate the overhead in Controlling.
Costing Variant– For all manufactured products the price control recommended is the standard price. Hence, to come up with this standard price for the final goods material we need to cost this material. We can do this using the costing variant.
Related: SAP Product Costing – All that you need to know
Q11. – What configuration settings do you maintain in the costing variant?
Ans. – Since we carry out and save all cost estimates concerning a costing variant, hence the costing variant contains all the control parameters for costing.
Further, we maintain the configuration parameters for costing type, valuation variants, date control, and quantity structure control.
Noteworthy, in the costing type we specify the field where we update the price in the material master. Similarly, in the valuation variant, we specify the order in which the system should access prices for the material master (planned price, standard price, moving average price, etc).
Further, we decide which price we should consider for the activity price. And finally, how the system should select BOM and routing.
Q12. – How does SAP go about costing a product having multiple Bill of Materials within it?
Ans. – Firstly, SAP first cost the lowest level product. Then it arrives at the cost and it takes and costs the next highest level and finally arrives at the cost of the final product.
Q13. – What does the concept of cost roll-up mean in the product costing context?
Ans. – The purpose of the cost roll-up is to include the cost of goods manufactured of all materials in a multilevel production structure. It lies within the cost of the material located at the top of the structure.
The costs are rolled up automatically using the costing levels.
- Firstly, the system calculates the costs for the materials with the lowest costing level and then it assigns them to cost components.
- Lastly, the system costs the materials in the next highest costing level (such as semi-finished materials).
This is to say, that the costs for the materials cost first are rolled up and then they become part of the material costs of the next highest level.
Q14. – What is a settlement profile and why do you need it?
Ans. – All the costs or revenues that the system collects in the production order or Sales Order, have to settle to a receiver at the end of the period. This receiver could be a GL account, cost center, profitability analysis or asset.
Subsequently, to settle the costs of the production order or sales order, we need a settlement profile.
In a settlement profile, we define a range of control parameters for settlement. We must define the settlement profile before we can enter a settlement rule for a sender.
noteworthy, the system maintains the settlement profile in the Order Type and defaults during the creation of an order.
Settlement Profile includes:
- The retention period for settlement documents
- Valid receivers GL account, sales order, cost objects, order items, business process
- The document type is attached here
- Whether 100% validation, % settlement, equivalence numbers, variances to costing based CO-PA
- The system attaches the Allocation structure and PA transfer structure to the settlement profile E.g. A1.
Read More:- Interview Questions on SAP S/4HANA Finance
Why learn these SAP CO Interview Questions?
For those wish to build career in SAP FICO, can’t ignore the Controlling module. You must prepare well for SAP CO, if you wish to crack interview for SAP FICO consultant job.
In the SAP FICO Training course, provided by Pradeep Hota at Skillstek, CO is included in detail.
For more blog articles on SAP Controlling and SAP FICO, visit Blog section.
