In previous article, how crucial cost allocation is in Controlling accounting.

How can SAP help us about this point? This is the function of assessment and distribution. Assessment is cost allocation with same accounting code, on the other hand distribution is with different special accounting code.

Let’s take same example as before. First assessment allocates payroll of Accounting and HR to Division A and B with payroll accounting code in 2 to 1. Now each division all the cost including indirect divisions. These cost is divided into merchandizes sold by each division.

In this, Division A sells only Product A. So does Division B. Thus allocation is 1 to 1. It is quite easy but in the real world Divisions sell more items so that each item bears allocated cost. This calculation is distribution.

Now we can have profit and loss of each products.