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If we do not specify any origins for a cost element interval, the SAP System considers all the origins in the
relevant interval.
-Overhead rate here we can define Quantity or percent base overhead rate
Percent based Overhead rate T CODE KZZ2
Cost allocation is part of the process of determining overhead rates. If this leads to an object being debited with
actual costs, another object in Cost Accounting must be credited at the same time. This can be either a cost
center, order or a business process. This type of posting is recorded under a secondary cost element of cost
element category 41 (overhead rates) in the SAP System.
When you define credits, you also specify which credit object is to be credited under which cost element when
overhead is to be applied to an object in the actual.
You can also define what percentage of the overhead is to be allocated as fixed costs.
Screenshot 6
Screenshot 7
If an origin group is entered in the costing view of the material master record, the combination of origin group
and cost element is updated in the Controlling module.
If the Material origin indicator in the costing view of the material master record is specified in addition to
the origin group, the costs are updated under the combination of material number and cost element in the
Controlling component.
You can do the following for each cost element and origin group:
Calculate overhead
If you have maintained origin groups for the raw materials, you can define a calculation base in the costing
sheet for each group of raw materials. This enables you to define different overhead surcharges for each group
of raw materials.
Screenshot 8
Make assignments to cost components
If you have maintained origin groups for the raw materials, you can create separate cost components for
important materials or groups of materials.
Screenshot 9
Calculate variances
Variances are calculated for each cost element. If you have maintained origin groups for the materials used,
the variances (such as input price variances and input quantity variances) will be calculated not only for the
relevant material cost element but also for each origin group assigned to that cost element.
Calculate work in process or results analysis data
For each cost element, you can specify whether the work in process for those costs can be capitalized in the
balance sheet. If you have maintained origin groups for the materials used, you can specify this separately for
each origin group.
There is other way around to calculate and overhead cost which is not part of this explaination
Template allocation
Here, cost drivers are used to assign overhead to the reference object on a source-related basis according to
usage. The overhead is applied by means of templates. Sender objects can be business processes or cost
centers/activity types.
Integration of business processes into the routing
Assigning process costs to routing operations is particularly suitable for direct production processes. On the
other hand, indirect processes should be assigned using templates.
I will continue to edit this document for enhancing the quality of document.In my Next document i will explain
about Costing Run and different other aspect of material setting that affect costing.
Document Level- Beginners
Refer to previous Document hereBasics of Standard Costing - Understanding the Cost Component Structure-Part 3
Basics of SAP Standard Cost estimate- understanding costing variant-Part 2
Basics of SAP Standard Cost estimate- Understanding the flow of cost settings-Part 1
Thank You
Hrusikesh Dalai