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Mar 9, 2016
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Master data for profit centers, cost centers, primary and secondary
cost elements and activity types.
In transaction KP06, cost center dollars are scheduled by Activity type and
cost element. Fixed and variable dollars can be entered. A user can plan
costs in production cost centers which wind up through allocations. In
transaction KP26, the cost center quantities are planned by Activity type.
Based on the earlier years actual values, activity rate can be manually
entered. Planning activity quantities based on useful installed capacity
accounts for interruption is the best practice.
Step #2: Activity Rate Calculation
The main aim of this phase is to estimate the rates of each activity plan in
each cost center in a plant.
Pre-requisites:
Cost Center Plans are entered: Plan costs in KP06 and Plan activity
units in KP26
Once we plan our cost center dollars and quantities, its time to calculate
the activity rates which are implemented to value internal activities to
produce products. We can also use a blended approach and plan rates for
few cost centers and activities and to calculate other rates based on the
last activities.
Once we plan costs for all cost centers, we can avoid the next step of plan
allocations. Use plan assessments and distributions to allocate costs when
the planned costs acquired in overhead cost centers.
The key dissimilarity between assessments and distributions is that
distribution keeps the primary cost element (Identity) of the cost.
Assessments are secondary cost elements which act as a cost shipper to
move costs. We can use assessments, distributions or blended approach
of both. The plan assessments and distributions are created in
Transactions KSV7 and KSU7 and executed in KSUB and KSVB
transactions.
Once the costs are assigned, we must review the Cost center
Actual/Plan/Variance report.
Now, execute the cost center plan which rips cost when we have more
than one activity type. The cost has to be ripped based on the activity
quantity and other sources. Using Transaction KSPI, activity type rates are
calculated. If the cost is adverse, you can revise the cost plans and
recalculate the rates.
Step #3: Quantity Structure
This step helps you to estimate the components of manufactured goods,
the cost of sold goods based on the BOM and Routing.
Pre-requisites:
Production Versions
Configuration
CO Master Data
Materials are costed for the duration of the annual or monthly costing
process. To execute costing runs, analyze results, mark and release costs
transaction CK40N is used. This can be formed using controlling area,
costing version, costing variant, company code and transfer control.
Therefore, costing run can only be made for one company at a time. It has
also created for a specific range of date.
The costing run as 6 steps namely:
Selection
Structure Explosion
Costing
Analysis
Marking
Release
After executing each step, error log has to be reviewed and resolved.
Execute each and every step after resolving the errors. If in case the
results do not update after execution, press the refresh button.
Step #5: Actual Cost
This is determined by actual expenses, purchase price and conformed
production quantities. These costs are matched to the standard costs
through variance analysis to identify profitability and make decisions on
management.
Pre-requisites