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In previous blogs, we examined how to automate activity type postings with the indirect activity allocation cycle and category 2 activity types. We posted a statistical key figure to receiver cost centers to calculate the sender activity type quantities. This required some manual postings for the statistical key figure, but the calculation of the activity type quantity and the actual postings were automatic.
Next Blog: SAP Activity Postings 5: Category 3 Activity Types and Posting
Prev Blog: SAP Activity Postings 3: Category 2 Activity Types and Posting
Let’s follow an example of a manufacturing company which uses MACHHR activity type category 1 as shown in Figure 1, to allocate overhead conversion costs from production cost centers to production orders. The activity quantity posted is calculated with formulas assigned to work centers in the routing. The activities are posted based on confirmations with transaction CO11N.
Figure 1 Activity Type Machine Hour Category 1
MACHHR is planned in three cost centers RCV2D, RCV2E, and RCV2F, and the activity type price is made up of costs that are both directly assigned in the manufacturing cost center, as well as indirect support costs that are allocated from other support cost centers. The indirect plan support costs are allocated from cost center SND2, activity type CATEG2. Figure 2 displays the plan for cost center RCV2D and activity type MACHHR.
Plan MACHHR hours are 8,000.0 as shown in Figure 2.
Figure 2 Activity Type Planning With Transaction KP246
In transaction KP06 with planning layout 1-101, the direct costs are planned with the MACHHR activity type as shown in Figure 3.
Figure 3 Plan Direct Costs With Transaction KP06
KP06 layout 1-102 is used for the manual activity allocation plan as shown in Figure 4.
Figure 4 Manual Activity Allocation Plan With Transaction KP06
Plan MACHHR activity and CATEG2 activity are allocated for the three cost centers as follows:
RCV2D: MACHHR – 8,000 HR and 50,000 units of CATEG2 allocated
RCV2E: MACHHR – 16,000 HR and 30,000 units of CATEG2 allocated
RCV2F: MACHHR – 24,000 HR and 40,000 units of CATEG2 allocated
120,000 units of CATEG2 are allocated from cost center SND2 to these three cost centers. This corresponds with the activity plan for CATEG2 in cost center SND2. This means CATEG2 activity is fully absorbed.
Now, let's create the indirect activity allocation cycle with transaction KSC5. The cycle has one segment as shown in Figure 5, to indirectly calculate the actual sender activity based on MACHHR activity posted in the receiver cost centers.
Figure 5 Segment Header Tab
The sender/receiver relationship is defined in the Senders/Receivers tab as shown in Figure 6.
Figure 6 Segment Sender/Receivers Tab
The activity type in the inverse calculation is shown on the Receiving Tracing Factor tab as shown in Figure 7.
Figure 7 Segment Receiver Tracing Factor Tab
The factors represent the quantity of CATEG2 activity for each HR of MACHHR activity for each cost center. This makes sure the proper proportion of CATEG2 is allocated to each cost center based on its own MACHHR postings. You take the allocated quantity of CATEG2 and divide by the plan quantity of MACHHR for each cost center. This generates the planned rate of consumption of CATEG2. The three receiver cost centers values are:
RCV2D: 50,000 CATEG2 / 8,000 MACHHR = 6.25
RCV2E: 30,000 CATEG2 / 16,000 MACHHR = 1.875
RCV2F: 40,000 CATEG2 / 24,000 MACHHR = 1.666667
These are the weighting factors used in the cycle. Note that the weighting factors need to be whole numbers when you create the cycle. You need to use a divisor (Factor per) large enough to avoid any rounding errors in the calculation. In our example 1,000,000 we use as the divisor as shown in Figure 8.
Figure 8 Segment Receiver Weighting Factors Tab
During period 4 (April), 500 hours of MACHHR posted in RCV2D, 700 in RCV2E, and 1,200 in RCV2F. The Cost Center Actual/Target/Variance report shown in Figure 9 looks similar for each of the four cost centers including SND2. SND2 shows no activity and no targets.
Figure 9 Cost Center SND2 Report Before Cycle Run
Cost center RCV2D report as shown in Figure 10 displays targets for both direct costs and allocated plan costs for CATEG2 with assigned cost element 943902.
Figure 10 Cost Center RCV2D Report Before Cycle Run
We see similar results for RCV2E as shown in Figure 11.
Figure 11 Cost Center RCV2E Report Before Cycle Run
We see similar results for RCV2F as shown in Figure 12.
Figure 12 Cost Center RCV2F Report Before Cycle Run
We now run indirect activity allocation cycle ACT1, selecting period 4 as shown in Figure 13.
Figure 13 Indirect Activity Allocation Cycle ACT1 Selection Parameters
The generated report shows a total of 6,437.5 units of CATEG2 allocated to three receiving cost centers as shown in Figure 14.
Figure 14 Cycle Report
Let’s look at the results in the SND2 Actual/Target/Variance report as shown in Figure 15.
Figure 15 Cost Center SND2 Report After Cycle Run
For cost centers RCV2D, RCV2E, and RCV2F, target costs were generated for cost element 943902, the allocation cost element for activity type CATEG2.You can see the actual postings match the targets in each of the three cost centers.This is because we engineered the weighting factors to reflect the planned allocation quantity of CATEG2 in each cost center.Let's look at RCV2D shown in Figure 16.
Figure 16 Cost Center RCV2D Report After Cycle Run
Next, RCV2E as shown in Figure 17.
Figure 17 Cost Center RCV2E Report After Cycle Run
And finally, RCV2F as shown in Figure 18.
Figure 18 Cost Center RCV2F Report After Cycle Run
After running the cycle, we have pushed the plan costs from the support cost center to other cost centers.The variances from actual postings still show in the SND2 cost center. When we defined CATEG2, the Actual Price Indicator was set to 5 as shown in Figure 19. This means we can still recalculate the actual price with transaction KSII.
Figure 19 Activity Type CATEG2 Actual Price Indicator
A posting is made in cost center SND1 of $56,123 for cost element 550000.
Figure 20 Cost Center SND2 Report
After running KSII, the activity type CATEG2 is revalued at actual cost posted as shown in Figure 21.
Figure 21 Cost Center SND2 Report
The new rate is reflected in the receiver cost centers. RCV2F shown in Figure 22 is an example.
Figure 22 Cost Center RCV2F Report
This allows the variance associated with CATEG2 in cost center SND2 to be shown in receiver cost centers.
We discuss more methods of indirect activity allocation with categories 3 and 5, in following blogs.
Next Blog: SAP Activity Postings 5: Category 3 Activity Types and Posting
Prev Blog: SAP Activity Postings 3: Category 2 Activity Types and Posting
Tom King recently retired from Milliken, a leading global manufacturer of specialty textiles, floor covering, and chemicals based in Spartanburg, South Carolina. He was lead SAP CO analyst and has more than 30 years of experience in manufacturing and product costing. Tom has published three SAP books with Espresso Tutorials:
- Practical Guide to SAP CO Templates
- SAP S/4HANA Product Cost Planning Configuration and Master Data
- SAP S/4HANA Product Cost Planning Costing with Quantity Structure
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