- [Instructor] Let's look at the SAP controlling module,
called SAP CO.
SAP controlling deals with planning
and monitoring business operation costs.
It has powerful reporting functions and can show exactly
where money is being spent at a company.
Ideally, this can be used to increase profitability.
The five primary sub modules of the SAP CO module
are profit center accounting, cost center accounting,
internal orders, product costing and profitability analysis.
Profit center accounting is used to evaluate profit
or loss of independent areas within a company.
Instead of looking at a company's profitability as a whole.
Let's take a look at a profit center in SAP.
In our test system, we're now looking at profit center 1011.
This profit center is called widget sales.
We can also see this profit centers controlling area,
which is controlling area 1000.
In the validity date, we can see this profit center
became valid on January one, 2017
and there is no end date for this profit center.
Next, we'll look at cost centers.
They deal with the costs associated
with a company's internal departments,
like sales or human resources.
Cost centers deal only with expenses, not revenues.
They show exactly how much departments are spending.
Let's take a look at a cost center.
Back in our test system, we're looking
at a cost center 100105.
And this cost center is called accounting.
We can see that the cost of their category is marked as W.
This means it's an administration cost center.
Internal orders are used to manage the costs
for small internal projects within a controlling area.
Internal orders are used for in-depth analysis
of short-term projects or a one-time expense,
such as a trade show.
Internal orders are different from cost centers.
As they're able to collect both costs and revenue.
In our SAP test system,
we're viewing master data for an internal order
for a Las Vegas trade show.
We can see the order number at the top.
We can also see the order type is Y400.
This is the code for internal order marketing.
Product costing looks at the costs required
to produce goods and services.
It gives clarity to manufacturing costs
and it helps with decisions
on whether it's worth buying a product to resell
or better to manufacture it in-house.
Let's take a look at an example.
In our test system, we're looking at material cost estimate
for material called blue widgets size two.
We can see the value of $187.50 for each one piece
of blue widget size two manufactured.
Finally, profitability analysis measures the profitability
of the products or services offered.
And it helps us make pricing decisions.
A key feature is the ability to determine profitability
by geographic region or country, distribution channels
or how profitable sales to a single customer R.