In SAP, what is the effect of setting up an assessment cycle?

Setting up an assessment cycle in SAP is a crucial process within the Controlling module that focuses on cost management. The primary effect of establishing an assessment cycle is to aggregate costs from various cost centers and then allocate them to appropriate cost objects, such as other cost centers, internal orders, or profit centers. This process helps in providing a detailed view of where costs are incurred and ensures that expenses are appropriately charged to the respective units that benefit from those costs, offering more transparency in financial reporting.

The assessment cycle allows for the redistribution of costs based on predefined criteria, which can include statistical key figures or various allocation bases that correspond to the actual use of resources. This setup supports better decision-making by providing insights into cost behavior across different areas of the business.

While limiting expense accounts to specific departments, analyzing profit margins per product, and defining a budget for future expenses are all important aspects of financial management, they do not capture the specific function and purpose of an assessment cycle within the SAP system. The assessment cycle is primarily concerned with cost distribution and management rather than budgeting or direct analysis of profitability on a per-product basis.