Yes, You Can Use Top-Down Distribution with Account-Based CO-PA

  • by Paul Ovigele, ERP Financials Consultant
  • May 27, 2015
Discover how to use the top-down distribution functionality in account-based profitability analysis (CO-PA) so that you can review reports on a more granular level — for example by customer, product, sales region, and so on. This is particularly useful where the original posting cannot be made at that level of detail. With this functionality, you can view a complete income statement (or at least contribution margin) by any reporting attribute that you require, without losing the connection to the account postings in the general ledger.
Learning Objectives

After reading this article, you will know how to:

  • Use top-down distribution functionality in account-based CO-PA to view complete CO-PA reports by any dimension you want
  • Use an allocation basis in top-down distribution, which is based on the Cost Element field
Key Concept
Top-down distribution is a functionality that allows you to allocate values from higher-level profitability analysis (CO-PA) characteristics (for example, Division) to lower-level characteristics (for example, Products) based on a specified reference base (for example, Total Quantity).

Top-down distribution is typically thought to be a functionality that is available only with costing-based CO-PA. This is actually a misconception, as top-down distribution has been available for both types of CO-PA since release 4.7. In account-based CO-PA, top-down distribution works a little differently from costing-based CO-PA because it does not use value fields as a reference base. Instead, it uses cost elements. For more information about account-based CO-PA, refer to my article Things to Consider Before Activating Account-Based CO-PA.”

I always like to describe top-down distribution as the profitability analysis (CO-PA) answer to an assessment cycle. For those (and there shouldn’t be many) people who do not know what an assessment cycle is, it is the method of allocating costs from one cost center (or group) to another, based on some method of apportionment (for example, fixed percentages, fixed portions, variable portions, or fixed amounts). There are assessment cycles in CO-PA that are defined using transaction KEU1 and executed using transaction KEU5. However, these can only allocate costs from cost centers to CO-PA profitability segments, and not from one profitability segment to another.

With top-down distribution, you can allocate costs from one profitability segment (higher-level characteristics) to another (lower-level characteristics). The purpose of this is to ensure that a CO-PA report can be viewed on a granular level (for example, by product) even though the original posting was not made at that level of detail.

This quick guide helps show you how to set up top-down distribution in account-based CO-PA so that it works exactly the same way as in costing-based CO-PA.

Note
The Financials Expert article “Use Top-Down Distribution in CO-PA to Report Overhead Costs at Lower-Level Characteristics” describes top-down functionality. That article focuses on top-down distribution for costing-based CO-PA, whereas this article is more focused on top-down distribution for account-based CO-PA.

Paul Ovigele

Paul Ovigele is the founder of ERPfixers, an online micro-consulting platform (http://www.erpfixers.com). He has worked as an ERP financials consultant since 1997 in both North America and Europe, specializing in implementing the FI and CO modules along with their integrated areas for companies in industries such as consumer goods, chemicals, logistics, pharmaceuticals, apparel and entertainment. Paul has delivered numerous training sessions to finance professionals at both the functional and managerial levels, and he has presented at various SAP financials conferences around the world.

 

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