“Work like an ABAPer - Play with Function Modules”

I am sure some of you feel that you could’ve been a better SAP functional consultant; only if you knew more technical aspects of SAP, right!

I would like to present my fellow functional consultants, with one of the tools that ABAPers use in their daily work life.

Summary:

I hope you are aware of the concept of function modules (FM’s) within SAP. A function module is a “self-contained piece of code (program) with defined input and output parameters”. Example, In SAP by providing “Company Code” as an input. The FM returns the “Controlling area” the company code is assigned to, as an output.

SAP provides standard FM’s for virtually every type of processing required. Almost every custom development uses one or the other standard FM’s available. I used to wonder, how the developers know which FM is the right one. Does it provide the right output/processing we need?

The document attached with the post, will take you through an example showing how they do it!

Regards

Sumeet

Hey Guys,

Check out my blog on identifying the follow on documents from a given document number

Let me know your thoughts/opinions/comments/suggestions

Happy Reading!!

BR// Ajay M

Identify the follow on documents from a given document

How a material is Determined as Valuated Stock or Non Valuated Stock for Sale Order?

In context to make to Order scenario. The valuation and Non valuation of stock is determined  from Requirement class. The following options are available .

• Stock not valuated
• Stock valuation with reference to Sale order
• Stock valuated with reference to price available in material master data.

How does non valuation of sale order stock makes the difference?

• When we use non valuated stock, the goods movement will not make an Financial posting.
• A sale order stock is specifically used by the sale order and cannot be used by other orders, be it a sales order, production order or process order.
• With Non valuated stock, inventory changes will not reflect financial accounting.
• Where sale order item is determined as non valuated, then the item should always be flagged as carrying cost and revenue. The item becomes cost and revenue carrying, when the sale order item carries item category marked with "E" in consumption posting.

• To valuated the material at the end of the period, we have to perform result analysis and settle the calculated result analysis data to Finance for capitalization.

Error KD529 occurs when actual settlement: product cost collector (KK87) is executed.

The long text is like below:

NA KD529

____________________________________________________

Text

Correct your material distribution rules

Diagnosis

You have defined more than one material rule, which is not allowed.

You need to differentiate between two different cases.

Product cost collectors cannot have extra rules to other receivers as

well as a material rule (strategy 005).

All other production orders may have exactly one material rule as well

as other rules to other receivers.

Procedure

Reduce the number of valid material rules to 1. For a product cost

collector, delete the rules that do not go to receiver material, or set

the material rule to 0%.

If any rule has not yet been used, you can delete it.  If the rule was

used in an earlier settlement, you must limit the period for which it is

valid.

____________________________________________________

The reason is: In the settlement rule, you have another rule (like G/L with percentage 100%) in addition to the existing MAT rule.

In this situaiton, the current error KD529 is correct system behavior. It is not possible to change the settlement rule of a product cost collector. Using KKD2 to make changes to the settlement rule is not supported any longer in 4.6* or higher. It will lead to data inconsistencies.

The settlement rule of a product cost collector must not be changed (anymore) which is enforced since note 932683. The documentation of the message long text still refers to the situation before the note. Nevertheless this is not possible. Settlement receiver must be MAT (material).

Symptom

You would like to use Crystal Report Functionality as per steps provided below (see Steps to reproduce the issue), However, there is no change in view and this functionality could not be executed.

Steps to reproduce the issue

1. Enter transaction KE24

2. Input the following input parameters

    For example: Record type, Period/year, Company Code

3. Execute (F8)

4. Go to Menu -> Views -> Crystal Views

Cause

This functionality is obsoleted and SAP will remove the path from SAP standard system.

Resolution

You can switch into Crystal Report view via button 'Change Layout'( Ctrl+F8), then go to tabstrip view and switch 'Preferred View' to 'Crystal Reports',

confirm your settings (Enter key or confirm button)

See also SAP note 1366785

Symptom

1. You perform the billing (via transaction VF01),  partner information (for example Sales Employee, Ship-to Party) is incorrect populated in the PA segment.

2. You used billing type IV.

3. The billing process is intercompany billing for example, you use plant A (belong company code A) and Sales Org B which belongs to company code B.

4. You have maintained the Partner Function in Sales Order Header/Billing Header.

Cause

Since the plant and sales org belong to different company codes it's considered as intercompany billing and a new PA segment gets generated on the billing document.

Step to reproduce the error

1. Go to transaction VF03

2. Enter the billing document created

3. Click on 'Accounting' -> Select 'Profit. Segment Document'

4. You will see the Partner Function information is incorrect.

Resolution

1. Please go to transaction SE16 ->  TVFK -> Enter the billing type of your billing document.

2. Check for the field 'Header partners' and 'Item partners'

    (note down the information)

3. Go to transaction VOPAN  -> Choose 'Billing Header' -> Select the information you have noted in Step 2

4. Maintain the correct partner functions

5. This information will be populated in the billing header and CO-PA document.

Reference

See also SAP note 36557

Dear All,

The attached document provides step by step configuration of COPA Planning values upload through Excel. Here, in a single document unable to post complete process. So, I split into two documents. Please go through the second document under name "COPA Planning Upload through Excel Part - 2".

BR, Srinivas Salpala

Dear All,

The attached document is continuation with previous document "COPA Planning Upload through Excel Part-1.

BR,Srinivas Salpala

Dear All,

The attached document provides detailed process of LSMW. I am posting the entire process in more two documents due to data storage in a single post.

Please follow continued documents by searching "LSMW Part-2" and "LSMW Part-3".

BR, Srinivas Salpala

Hi,

This attached document is continuation with the earlier posted document "LSMW Part-1".

Also, find the final document on LSMW-3 in next posting.

BR, Srinivas Salpala

Hi,

The attached file is the final document on LSMW. For previous documents please search with "LSMW Part-1" and "LSMW Part-2".

BR, Srinivas Salpala

Hi ML Friends. Thank for be interested in this post.

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Why this Document?

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I post this document because PPL find difficult and tricky to understand the costing and ML flow. Few companies run and analize standard cost with deep detail. Few user (and also few consultants)  understand the details in the flow of releasing a standard cost. Some months ago i face a problem with BF COGM (working with this BF in order to handle IFRS requirements) elated with the Standard Cost Release, that encourage me to write this post.

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What you will find here?

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This document is intended to explain (in a funny, relax and naive way i mean i write this just for fun, im not working) the release of a new standard cost  with ML Active and Production Order GR done in previous month after MMPV done (LOL, this is in order to complicate a bit more the scenario). This is not a BASIC explanation about ML. I asume you know what is PRD PRY PRV, Standard Cost, Controlling Level, ML Kardex just for mention some topics.

During the creation of the document lots of ideas blow, and I just write it. Dont expect perfect english cos english is not my 1st language im doing my best without spending lot of time.

******************************

Warning: Forbiden read this document without a calc in your hands and lot of cofee! Just Kidding, Indeed i encourage you to do the calcs, this is the only way to learn! You will see the word WHY lot of times, because i want you  question yourself about the way system work. I assume you knowtha basics of ML.

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Ok lets begin:

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Imagine you dont know the company, nor the production process. The customer want you explain what happened in the standard cost release.

In my example we are going to analyze periods 04 and 05 of our Unknown Material (I dont post the name of the material )

This is the CKM3n of the Unknown Material on period 04 after we do ML CLose.

This is the screen of CKM3N in period 05:

Standard cost in per04 is 318,976, keep note of this value.

************************************************************

In may  we release a new standard cost of 273,606

************************************************************

System post doc “change in material price” = opening stock * (new standard – old standard)

= (318,976 - 273,606) * (6977) = 316546488

Why? Because during the month stocks are valuated at Standard cost and the system store the difference between standard and actual in price difference account.  In my example, at the time of Standard Cost release (00:01 of may 1^st) don’t have actual cost, so the post is between old and new standard.

Also check that this line don’t have price diff, (PrelinVal = ActualVal).

Well, in FI the post is

, so standard cost release hit BSX Stock Account! Keep this in mind. Also keep in mind UMB is the difference between Previos and New standard, at this moment actual cost dont play.

WHY system post UMB? Because stock is valuated at standard cost during the month, and need to create a revaluation line. In theory, UMB is P&L account if you dont work with ML (in order to compensate Balance), but in the next steps will be cleared.

Ok, now analyze the next step:

In In ML Close of per 04, system calculate an actual cost of 405219. The End stock is valuated at actual cost 

Check the beginning stock of p05 valuated at actual cost is 7539.4 * 405219 = 3055107944 (problem due to rounding, because price unit is 1, but don’t worry this is another history)

Other detail, 7539.4 is the initial stock of per 05 at the time of ML Close, not at the time of MMPV. OK, bear in mind that you often do ML Close day 04, 05... 10 of the "next month", and during this days companies do GM in the previous month. This is real world!

Because ML always valuate stocks and GM during the period at standard cost, the column Price dif store the difference of the Beginning stock at actual cost and the new standard cost, exactly than it works with GM

(405219 - 273606) * 7539.4 = 992282868.

Why? Because this is the system design. This price difference is way the system know what is the actual cost, also of the beginning stock, and will use it in ML close of May in order to calculate the actual cost and revaluate COGS and Stock.

OK, what happen in FI?

Gosh,  Complicated? Indeed not!

• - UMB in Standard Cost Release + UMB created with PP Gr of per 04 posted in month 05 is cleared with UMB ML Close.

This are the 3 PP GR

316546488 + 9250943 + 7726511 + 8538634 = 342062576 Done! Everything fit!

• - Price difference PRY + PRV =  129,307,185 +         862,975,683        =  992,282,868
• - BSX 650220292 return the stock cost to the standard of the previous month. WHY?

OK, this operation is tricky.  This is the way the system match the stock value of previous and  next month without much effort, because always have refference to the previos standard cost.

At this step, UMB is clear, and all the money is in Price Difference Account (PRY/PRV). So, in the initial stock line of CKM3N you can see the stock at Standard Cost and Actual Cost, and the Price difference. Also remember, if you check Balance Account, its valuated at standard because ML CLose post BSX.

Well, that is! So, the formula

actual cost (actual value) = Preliminary valuation + Price difference

is also valid for the initial stock, of course after ML close of the previous period.

Next step is easy (i mean, this is the behavior of ML), we are only going to validate the end stock is valuated based in the beginning actual stock.  The idea here is not explain the full ML cycle, i supouse you already know about it.

In order to evaluate the actual cost of the end inventory of MAY, the formula is

END STOCK (ACTUAL COST) = BEGIN STOCK (ACTUAL COST) + RECEPIPTS (ACTUAL COST) – CONSUMPTION (ACTUAL COST)

3,055,107,944 + 628,843,374 - 652,932,875 = 3,031,018,443

Unit cost of end inventory = 3,031,018,443 / 10,121.300 = 299,469

You can verify this calc in the screen ok ckm3n.

Doc created by Arturo Senosain on June 2013. Feel free to share, don’t forget give credits.

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About Me

*****************

Product Costing is my favorite topic in SAP. I work mainly as PP and CO-PC Consultant.  The 1st time i listened about ML was in 2001 when I worked in a company that produce Cosmetics in Peru.  At this times, ML was other stuff i mean customer have to create their own Z in order to revaluate COGS. WIP Revaluation dont exist. CKMVFM dont exist. In spite i dont study computer sciences in this company i learn to write and debug abap code, and without fear modify standard SAP code. Nice days!

Hi ML Friends!

Its OK to run MR21 with Material Ledger? What is the system behavior of MR21? its difficult to understand it and also to explain with words, thats why i create this post! Read it and decide by yourself

Imagine this is the 1st day of August (indeed today is 2nd, but who cares).

The period end closing of July still dont begin.. maybe next monday that our friend of MM and FI recive all the invoices, our PP friends adjust their stocks, report their activities or whatever...

Our company only run CK40 1 time per year in Dicember. Becase unknown reasons, our user want to change the standard cost of a specific material.

Lest Begin:

1. The initial stock 950KG valuated at 200MXN, at MMPV. In CKM3N this is the Opening Period.

The value of the initial stock is 190000, at standard, this value is a refference for the clearing procec in the ML close of JUNE, remember that. When we close July, sistem post in augost in order to valuate inventorios at this value.

2. Then we do MR21, and set the new Standard Cost at 250MXN. System create "Change Price Dif" in ckm3n:

    950 * (250 - 200 ) = 47500MXN

in FI, you see this post. The post HIT directly to BSX stock account. But remember something, at this moment BSX is valuated at Standard!!! So, the post at this moment dont alter actual cost of the month, its only a trick in order to valuate "provisional" GM at new standard cost.

The counterpart of BSX is UMB, exactly the behavios when you release a new standard cost. OK, this is other history, you can read the details in this other blog

http://scn.sap.com/docs/DOC-43091

3, In resume, the initial stock is now valuated at standard cost of 250mxn.

At this moment, we still dont have actual cost of begining stock because july is dont closed.

4. OK, imagine now its Augost 3 or 4... well, its time to close July! The Actual cost of July is 300

5. Also the Initial Stock Actual Cost is updated!

6. OK, but more things happen at this time. The begining inventory is valuated at 300, the the system must create a post in order to reverse the actual cost and set the stock account at Standard cost of 250. We have to understand the FI post:

Initial stock at Actual Cost is 300 * 950 = 285,000

Initial Stock at NEW Standard Cost is 250 * 950 =   237500

Difference between Actual and Standard = 285000 - 237500 = 47500

This is the exact system behavior when you release a new standard cost!!!

UMB created with MR21 is cleared with UMB of ML CLose. And the difference of the Standard and Actual cost is left in Price Difference Account PRY.

As you can see, Initial Stock Actual Cost is correct! PRY price difference will travel to the Endng Stock  (check the next screenshot) or to the next level in multilevel costing....

What do you think... this is correct? Its 100% correct indeed!!!!

Wish this help you understand the concept of MR21 with Material Ledger active.

Arturo.

Feel free to share, but please give credits!

Hi.This is the 2nd post abut MR21 and Material Ledger. This time, im going to try break some "rules" and "best practices" of the standard SAP.

CAUTION: Some of the steps in the sequence must not be run in PRD system or doit by your own risk. Im not related with SAP so dont accept my words as a Rule. First test and evaluate if this help you. This is an example for educational porpouses

0. Current month is 2013/08 MMPV was done!

1. Create a new product. ZPP_MR21_01.

2. Post GR in the previous month or 07/2013, and charge PriceDifference account, So we can do ML Close of July later.

Because MMPV was done, receipt of 07 is show as initial inventory of 08 (more complex, more fun)

3. Calculate and release a new Standard Cost for August.  Because status " quantities and values entered" you cant release a new standard cost... But we break the rules

System change price difference UMB  500mxn. This must be cleared when we close ML in month 07.

4. OK, its time to do MR21, but because status "price change compleated" system dont allow mr21

5.there are some ways to face this problem, im not going to explain this in the blog, again , we break the rules

6 Just set a new standard of 350, you can see the MR21 now allow a new value.

7, system create another document with price difference UMB, now the standar is 350. Again, UMB must be cleared... the total sun mow is 1000 in UMB.

8. Close the Previos Period 07

You can see the end stock of 07 is the beguining stock of 08

The ML Close in this period clear the 500 (release of new standard) + 500 (mr21)  of UMB. U = 1000

PRY is the difference between the Actual cost of the begin stock and the new standard cost (500 - 350)*10 = 1500. This 1500 must roll up in the period end closing of august.

PRY is the difference from the new standard and the actual price, and is created in the ML Close of the previous month, so it must roll up to the end stock or to the next level.  PRY is the value that Roll up, not the UMB created in MR21! this is the key point.

UMB created with MR21 and ML is a temporary account (i use the same account that standard cost release have)  and is cleared when you close the previos month in ML. The net value is 0 if your OBYC is correct, exactly as the release of a new standard cost in ck24. CHeck that  i use 2 accounts, one of UMB MR21  and other for PRY, because PRY is a real ML account that rollup.

If you close ML of the previous month and then do MR21 (with some tricks) UMB is not cleared and i think this is where the problem begin.

The behavior of MR22 is different!. UMB of MR22 is "always" P&L account, the recomendation is use a different account, because this is not cleared, you are creating "actual value in the balance" from nowhere so you have to hit the P&L. MR22 change the actual cost and is intended to roll up and also is correct that roll up!

Now check the final stock, the cost is 500 and is the same as the beguining stock and the same as the end stock of month 07.

Arturo.

Introduction:

Some times users assign different company code cost centres to settle Orders by mistake. So, There will be requirement to restrict cross company code settlement to controlling.  This can be achieved by using Co. validation.

Transaction:

GGB0

Here create validation rule and step under the application area cost accounting.

Prerequisite:

In prerequisite leave the blank.

Check:

Here mention the sender company code and receiver company code should not be different. That means mention that if the sender company code equal to receiver company code then Ok or else error.

COBL_SENDER-BUKRS = COBL_RECEIVER-BUKRS

Message:

Create message in transaction SE91 and assign here.

Ex:

Message Number: ZA 038

Cross Company Code Postings not allowed. Please correct Co. assignments.

Activate Validation rule:

Transaction:

OKC7

Here activate the validation rule created above.

Thanks & Regards,

Prasad

Introduction

In SAP Cost center work as a cost responsibility center, where all the expenses and cost are stored and analyzed for the purpose of management decision making. The cost could be fixed or variable in nature. The difference between variable and fixed costs can be made in various ways in product costing in CO module. Fixed costs represent the static costs incurred by the organization, which doesn’t change on the basis on manufacturing activities, which remain constant irrespective of production activities like rent for the premises, salaries of office staff etc. On the other hand, variable cost varies based on the level of production activities; if production activities increase then variable cost also increased like electricity consumes raw material charges etc. However all the variable cost doesn’t vary in direct proportion by quantity of goods produced.

In this document will try to define; how the Expenses analysis and splitting of cost done in manufacturing cost centers.

From controlling prospective, fixed cost remain constant regardless of operating activities, but if these factor changes, variable cost will fluctuate. Basically raw material costs represent variable cost, but in this document main focused will be given to distinguish fixed and variable activity cost.

The segregation between fixed and variable cost is optional and is derived from the configuration and master data configured in cost center accounting and overhead accounting.

Activity Price:

There are different methods that could be used in cost center accounting to determine the activity price. The simple way is the manually enter “Fixed” and “Variable” Activity cost (KP26). However there are other methods used in Cost center Planning and Budgeting that automatically calculate the fixed and variable activity price. Here the focused will be given on Planning and Budgeting activity and automatic calculation of plan activity rate in cost center. This method aggregate planned costs by cost element and capacity by plan unit to calculate the activity price. Activity independent costs are segregated among different activities based on Splitting Structure, while activity dependent cost directly used for the purpose of variable activity rate calculation.    

Fixed Activity Cost:

In product costing all those cost, which doesn’t vary based on the activities in manufacturing cost will represent fixed cost. In a manufacturing cost centers there may be two or more activities performed. To calculate the activities rate, the fixed costs are distributed to various activities on the basis of Splitting Structure defined for cost center.   

Variable Activity Cost: 

Variable activity cost, which directly depend upon the activity type and fluctuate based on increase or decrease in manufacturing activities. In SAP variable activity cost are directly linked to the respective activity.

Activity Prices: Fixed and Variable Split

In Cost Center Accounting dividing the cost between Fixed and Variable requires appropriate split to be made in the cost entered for the activity. The process is described below:

i.                     Variable cost would be planned at activity level and expenses should be maintained at cost element in the manufacturing cost center by assigning activity and cost element combination. In other word, the expenses should be planned on Activity type at the time of primary cost planning (KP06). Then the variable activity rates are calculated on Total cost planned at Activity divided by Total number of activity planned at that cost center (i.e. capacity in KP26)

ii.                   Fixed cost would be planned at independent of activity type. These costs are maintained in KP06 at cost element level on manufacturing cost center. Then the fixed costs are distributed on various activity types on the basis of Splitting structure defined at OKEW. In Splitting Structure we define the rules, how the fixed cost will be distributed to Activities. For the purpose of this document, considering split of fixed cost on the basis of Capacity maintained in KP26.

To illustrate the scenario in more details, I have taken a hypothetical example.

Supposed there is a manufacturing cost center “Engine Plant”, in an Automobile industry, having two activities “Cutting” and “Maintenance” for the purpose of creating engine parts. Before starting any batch of material to process, the machine need to be “Maintain” to be ready for the process, for which it required to use cleaning oil to clean the machine and then the next process start i.e. “cutting” the iron piece into the desired engine part.

Assuming Cleaning oil cost as variable cost for the purpose of “Maintenance” activity, which is a manual process, and Electricity cost as variable cost for the purpose of “Cutting” activity, which is automatic process. Other costs are assumed to be fixed for the purpose of activity price calculation.

Details of data use for the purpose of testing, there are three Plan fixed expenses in Engine plant, Depreciation on Machine & Equipment, Depreciation on Building and Salary.  The variable cost for activity “Cutting activity” (let “RRRR” in SAP) is Electricity charges and for “Maintenance activity” (let “SSSS” in SAP) is Oil cost.    

Maintain the Plan Activity and Capacity for the different activity on cost center “Engine Plant”

Configuration of Splitting Structure

For the purpose of splitting of fixed cost to the different activities assigned to cost center, need to define Splitting structure. It includes the rules which should be followed to distribute the fixed cost to different activities. For the purpose of Planning and Budgeting this is an important configuration.

Transaction: OKEW (Assign the new cost center to the splitting structure)

Specify Cost center and Fiscal year

Click <Enter>

Double click on splitting structure for Manufacturing cost center (FF).

Here the splitting is defined that all the cost elements on manufacturing cost center will be distributed to activities on the basis on Plan Capacity.

Mater data requirement Activity type (Transaction KL01)

Here we can define the manufacturing activity cutting and maintenance in SAP.

Here activity type “RRRR” represents Cutting activity. The activity unit is defining as Hour. For the purpose of assigning an activity to a manufacturing center so that that can be used in recipe, the cost center categories should be “F” i.e. manufacturing and production cost center.

Price indicator “2” indicate that to calculate Activity Plan price, system will use capacity.  

Define Plan Activity (transaction KP26):

Assumed the total Capacity of Cutting (RRRR) & Maintenance (SSSS) are 700 and 300 hours respectively. For the purpose of Splitting Fixed cost on different activity, maintained the rules as “Capacity”, so the splitting rule will follow plan capacity ratio of (7:3) to distribute fixed costs to Cutting and Maintenance activity.  

In KP26 maintained the capacity as 700 Hours and 300 Hours for Cutting (RRRR) and Maintenance (SSSS) activity.

Define Plan Expenses in KP06 as fixed and variable depending upon activity.

KP06 is used for the purpose of Primary expenses planning in cost center accounting. Here we can define both activity dependent and activity independent cost. For the purpose of Activity dependent (i.e. activity variable cost), need to define expenses on Activity at cost element level. In the below screen variable cost are:

·         Expenses on Activity (RRRR i.e. Cutting) at Cost element (600004 i.e. Electricity charges)

·         Expense on Activity (SSSS i.e. Maintenance) at Cost element (600005 i.e. Oil Cost)

Plan Cost Split KSS4

For the purpose of Splitting Fixed cost to different activities on manufacturing cost center, need to run Plan Cost Split, which will distribute the fixed cost to different activities assigned to the same cost center as KP26 transaction based on the rule defined in splitting structure. Here for the purpose of simplicity defined the splitting run based on “capacity” to distribute all fixed cost. The splitting rule is defined in OKEW transaction.

Run transaction KSS4, then the below screen will appear, select the below details:

·         Cost center/ Cost center group  (for which we want to use Plan cost splitting)

·         Version

·         Period/ Financial Year (generally full Budget year is selected)

First execute the Plan Cost splitting on test run, if No errors comes then execute on “Without test run”. 

Total Plan fixed cost of 45000 has been distributed to two activities “Cutting (RRRR)” and “Maintenance (SSSS)” based on 7:3 ratio, i.e. on the basis of Capacity maintained in KP26. Plan cost split only distribute Fixed Cost to activities.

Plan Activity Price calculation KSPI

After Plan cost split, the next step if Plan price calculation. Plan price calculation basically helps to calculate “Plan Activity Rate”. The activity rate could be in two parts, i.e. Fixed Activity rate and Variable Activity rate.

·         Fixed Activity rates are calculated based on Plan Cost (Fixed) Split, during KSS4, divided by Capacity.

·         Variable Activity rate are calculated based on Variable Cost, assigned to activity at the time of Primary cost planning (KP06), divided by Capacity.  

·         Total Activity rate include both Fixed and Variable activity rate. It’s calculated by dividing total cost by capacity.

Run transaction KSPI, then select the below details:

·         Cost center/ Cost center group  (for which we want to calculate Plan activity rate)

·         Version

·         Period/ Financial Year (generally full Budget year is selected)

First execute the Plan Price calculation on test run, if No errors comes then execute on “Without test run”

Report for Activity rate (KSBT): Through transaction KSBT, we can see the Plan and Actual Activity rate for the cost center. In the below screen variable, fixed and total activity rate have been displayed for activity “Cutting” and “Maintenance” for cost center “Engine Plant”.

How the system is calculating the cost is explained in details in the below table. Activity rate can be cross reconciled with the Activity type Price Report in the above screen.

Cost Center Report

There are different cost center reports that can be used for the purpose of analyzing the plan and actual expense in SAP. In the below Cost center report, we can see the entire Plan cost details. Here details of expense can be analyzed at cost element (GL account) level.

At cost center “Engine Plant” total debit is amount 74,000 /-, which include both Fixed and variable cost. Total cost transferred to activities “Cutting” and “Maintenance” is 45,500 USD and 28,500 USD respectively. 

Actual expenses splitting for manufacturing cost centers

Till now this document explain, the process of difference between Plan Fixed Cost and Plan Variable cost. How the SAP can be used to differentiate Plan fixed and Plan variable cost in any manufacturing activities. 

Now will look the Actual expenses splitting between Fixed and variable cost.

For actual expense analysis, need to understand two different concepts, first the posting of documents at GL accounts to represent actual expense, and second transfer of actual cost from cost center to production or process order.

1.       Posting of Actual Expenses at GL accounts: Accounting documents are posted only when there are events happened with financial impact. So to record the financial impact of event, need to create journal entries in accounting. These documents in SAP could be stored through FB50 or FB01 etc. In the same way, the actual expenses in manufacturing cost centers are also recorder through accounting documents. Actual expenses are recorded at GL account level, at actual expenses we don’t define, whether the expenses are activity dependent or activity independent in nature. At the time of actual cost split to differentiate between actual fixed and actual variable cost, system check the same rule defined at the time of Plan splitting. It consider the GL account expense as variable expense if it has been assigned as variable/ activity dependent  expense at Primary cost planning in KP06.         

2.       Transfer of Actual cost from Cost center to Process order: this process is called as secondary allocation, i.e. movement of costs within controlling module only. Here No Finance documents are created. Transfer of Actual cost from Cost center to Process or production order happened when the plant controllers confirm the completion of Activity at order. The cost which get transferred from cost center to process order, basically represent Plant cost calculated at Actual Activity (i.e. plan activity rate calculated at KSPI multiplied by Actual activities at process order) because at this time we don’t have actual activities rates calculated. The Actual activity rates are calculated at the time of monthly period end closing activities, when all the actual expenses are posted on manufacturing cost center directly or get transferred form support cost centers. 

For the purposed of this document and to explain actual expense analysis I have passed few FB50 entries and Activity confirmation at Process order level. For the purpose of testing, I have passed accounting documents for amount of 18,548.75 /- and confirmed 150 Hours of Cutting activities and 100 hours of Maintenance activities at manufacturing cost center “Engine Plant”. The cost center reports are below:

After Activity confirmation the Activity cost are calculated at (Actual Activity* Plan Cost)

The cost of 150 Hours of “RRRR Cutting” activity is 9750 CHF (150 Hour *65 CHF/Hour)

Same the case for 100 Hours of “SSSS Maintenance” activity cost is 9500 CHF (100 hours *95 CHF/Hour)

So it can be say that at the time of activity confirmation on process order, system calculate the cost of actual activity at Plan activity rate.

Actual Cost Splitting (KSS2) and Actual Activity Price calculation (KSII)

Enter transaction KSS2 and specified the below details before executing the transaction:

·         Cost center/ Cost center group

·         Period and Fiscal year (generally the month should be selected for which period end closing activities should be closed)

Execute the transaction on test run first, if no error comes then execute without test run. 

Actual price calculation KSII

Now the Actual Activity Price

At the time of actual cost split to differentiate between actual fixed and actual variable cost, system check the same rule defined at the time of Plan splitting. It consider the GL account expense as variable expense if it has been assigned as variable/ activity dependent  expense at Primary cost planning in KP06.

Finding of Actual Expenses Analysis and Splitting:

a.       Actual expenses splitting work on the basis on Plane cost splitting.

b.      Actual expenses are divided into two parts, i.e. Fixed and Variable.

c.       All those GL accounts, which are planned as variable at the time of Primary cost planning are consider as variable at actual expenses also. If any accounting documents are posted on these accounts by assigning same manufacturing cost center, then system consider this as activity dependent cost and used to calculate actual variable activity rate.

d.      Actual activity variable rate are calculated by dividing variable cost by actual activities confirm at process or production orders. 

e.      On the other hand expenses posted on other GL accounts are consider as Fixed in nature. Fixed expenses are distributed to different activities assigned to cost center on the basis on Plan Capacity, for this case total fixed cost of 18016.25 has been distributed to “Cutting RRRR” and “Maintenance SSSS” activities on the basis of capacity ratio (7:3) maintained in KP26.

f.        Actual activity fixed rate are calculated by dividing fixed cost on activity by actual activities confirm at process or production orders. 

Conclusion

With the help of this document, I have tried to explain how we can manage the plan and actual expenses in fixed and variable part. Deciding whether expenses will be dependent on activity or independent of activity will depend upon management decision making, which can vary from industry to industry and company to company. Once we decide the nature of expanses then we can use the above concept to distribute the expense on fixed and variable activity rate. Further on which could be used in Product costing as part of product cost.

Here the example has been given for one manufacturing cost center to illustrate the concept. This can be applied on multiple manufacturing and support cost center and can be used for the purpose of overhead management.