Accounting for Management Decisions Assessment

Business Scenario:

Your company (GBI) offers application development services through cloud. It purchases internet cloud space from Megatron (###Magatron), a cloud services company using an annual contract. For the current month, management received an invoice from Megatron (###Magatron) for an amount of $600,000. This amount is initially charged to Finance (F###) department. At the end of the period, your management wants this cost to be allocated to other applications divisions based on the actual cloud space used by each of the divisions. For the current month, the Finance, Assurance and Technology services divisions - all of them in the Global Consulting group (GC###), used 1000, 2000 and 3000 units of the cloud space respectively. Budgeted space for these divisions, however, is 1100, 1800, 2900 units for Finance, Assurance and Technology services respectively. Your firm allocates actual cloud space costs to all the cost centres in its Global Consulting group (GC###) but wants the identity of the costs to be clearly shown in the receiver cost centre reports.

Budgeted/planned costs towards salaries are $1300,000, 700,000 and 600,000 while actual salaries costs are $1200,000, $600,000 and $500,000 for Finance, Assurance & Technology services respectively. While planned costs are recorded in the system for each cost centre, actual costs are posted directly in the general ledger every month and charged to the individual departments (cost centres).

Its Technology services division (T###) provides information technology servicesto other departments in the Global Consulting group (GC###). As a controlling measure, management would like to measure these IT service activity (TS###) delivered to other departments in their cost centre group (GC###) in hours and allocate those internal costs to them. In the current month, it has provided 400 and 700 hours of information technology services (TS###) to Finance (F###) and Assurance (A###) divisions respectively at a rate of $300 per hour. Total planned activity for the information Technology services is 1000 hours per month.

You are required to map the entire business scenario as explained above in the SAP accounting system by first determining the master data, transactions, allocations, and reports required, and then by creating the master data in the system, executing the transactions and allocations, and producing the reports in SAP.

You must submit appropriate screen shots of: i) Actual distribution/assessment basic list that shows document number or assessment/distribution line items display for the allocation along with the document number details in the screen ii) direct activity allocation document display screen with details including the document number, cost centres and allocated values (both quantities and costs) clearly shown, and iii) actual/plan/variance cost centre reports for your cost centre group GC### and for each of your cost centres in the group (including values for activity types and statistical key figures if any) for the current year.