ERPCorp SAP FICO Blog

Our journey through activity type postings begins with activity type category 1 (manual entry, manual allocation).  I think of category 1 as the vanilla ice cream of posting activity.  This is the most common and straightforward method to use and understand.  Activity types defined with this category must post directly to a cost center and at the same time have a receiver cost object for the allocation assigned.  Look at the definition of activity type CATEG1 below.  In this case, the actual allocation category is left blank, which means that it will be the same as the plan activity type category.  For CATEG1, that means the actual category will be 1.

Tip 14 from 100 Things You Should Know About Controlling with SAP (2nd Edition) by John Jordan:

You can use internal order budgeting to control actual expenditures by activating availability control. 

An internal order budget represents funds approved by management. A budget is maintained at either an overall or annual level. You can activate availability control, which can issue warning or error messages based on defined tolerances. Let's look at how to create an internal order budget and how to activate availability control.

You can maintain a budget profile with Transaction OKOB or via the following IMG menu path: Controlling • Internal Orders • Budgeting and Availability Control.

Double-click a budget profile to display the the internal order budget profile. Activation type 1 indicates automatic activation of availablity control during budget allocaiton. If the Overall checkbox is selected, availability control checks against the overall budget. If it isn't selected, availaiblity control checks against the annual budget. Availability control works with controlling area currency, unless you select the Object Currency checkbox. You can assign the budget profile to an order type with Transaction KOAB or via the first menu path.

You can maintain availability control tolerances via the following IMG menu path: Controlling • Internal Orders • Budgeting and Availability Control • Define Tolerance Limits for Availibility Control

Left-click then right-click in an action field and selct posible entries to display the avabilty control and tolerance limits screen.

The action field defines the messages and emails the system will send at specific degress of budget overrun. In this example, when the budget is nearly consumed at 95%, a warning is issued with an automatic email to the persons responsible. Specify a budget manager with Transaction OK14, or the system will issue an error message. With a budget overrun at 105%, an error message is issued. 

You can enter an order budget with Transaction KO22 or via the following menu path: Accounting • Controlling • Internal Orders • Budgeting • Original Budget.

Keep reading in Things You Should Know About Controlling with SAP (2nd Edition). Use coupon code CTLSP10 for 10% off on www.sap-press.com.

This is the first of a series of 7 blogs on SAP activity types.

My company began its journey with SAP in 2007. I was a charter member of the FICO team because of my work with product costing in our legacy world. I quickly discovered the way SAP handles product costing and Controlling is different. The concepts were familiar, but the structures and processes were not. One of the first items I encountered was the activity type. Ah, a familiar concept I thought! 

Finance professionals and Controllers traditionally face increased workloads at the end of every period, and especially at year-end. Batch jobs need to be started and results monitored and analyzed. Reliable information showing the complete picture is only available after the period close process is completed. For companies with high work in process, this can mean that there are thousands of dollars sitting on projects awaiting settlement.

Tip 50 from 100 Things You Should Know About Controlling with SAP (2nd Edition) by John Jordan:

Process orders provide you with extra functionality, such as phases and process instructions for process industries. 

If you use production orders, the system transfers a routing and a bill of material (BOM) into the master data of the order header. If you’re manufacturing on the basis of process orders, the system uses the master recipe and associated materials list. The difference occurs because process industries manufacture in phases, converting initial liquid batches into consumable batches, which are then bottled and packaged.

Except from Practical Guide to SAP Material Ledger by Rosana Fonseca.

The material price determination indicates how the valuation of a material should occur after each business transaction for a material relevant for valuation. If SAP Material Ledger is active, this field has to be set up in the material master using an appropriate combination of price control and material price determination. If SAP Material Ledger is activated for a valuation area, the accounting 1 view looks slightly different than the regular screen without a material ledger. Additional fields become available when using SAP Material Ledger or split valuation.

The following two price indicator options are available in the material master (accounting 1 view) for price determination. Accounting 1 view contains current valuation data of a material.

Transaction-based (2)
If you select this option, you can keep your inventory price control indicator as V (moving average) or S (standard price). If the material has price control S, the moving average is calculated for information purposes only, it is not used for valuation as the price control is standard. Materials with the transaction-based indicator option are not considered later in a multilevel actual costing.

Single/Multilevel (3)
If you choose this option, the price control has to be S (standard price). A moving average (period unit price) is calculated at month end. Single/Multilevel price determination allows you to calculate single and multi-level price differences and carry them over through a multiple level manufactured production structure.

An appropriate combination of price control and price determination for a multilevel actual costing is shown in Table 2.1.

Table 2.1: Material price determination

Keep reading in Practical Guide to SAP Material Ledger by Rosana Fonseca. 

Rosana Fonseca is an independent SAP Financials consultant who has been working in SAP since 1999. She is SAP certified in FI and CO modules and has extensive experience in SAP global projects in the USA, Canada, Europe, UK, Asia, and South America, which includes different industry segments such as Mining, Oil & Gas, Chemicals, Electronics, Energy, Consumer Goods, Telecom, and Aerospace. She is originally from Brazil, but is also a Canadian citizen. She currently lives in Toronto in her adopted country Canada.

email: This email address is being protected from spambots. You need JavaScript enabled to view it. 

SAP templates are often perceved to be overly complex. We would like to dispel that myth. Let's dive into some frequently asked questions when it comes to templates. 

FAQ 1: Do templates work for repetitive manufacturing?

Material Ledger is SAP’s solution to performing actual costing. It is supposed to contain the benefits (without inheriting the disadvantages) of the two traditional methods of inventory valuation - Standard Costing and Moving Average Costing. Before you can understand the functionality of Material Ledger, it is always good to start with some of the characteristics of these two traditional approaches.

Standard costing is an effective method of obtaining stable prices for your materials which can be benchmarked against any price fluctuations.

Here's a tip for settling manufacturing variances to cost based CO-PA.

When a customer exceeds their credit limit due to new orders that are greater than their limit, or due to unpaid balances, or combination of both, we have two main options, depending on our decision on each customer: