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Fixed vs Variable Absorption

I am having trying to break out fixed vs variable absorption. Right now, we have activity types set up to absorb overhead based on machine hours and within those activity types, the rates are entered between fixed and variable. The problem is that when the absorption comes through on the G/L, it's all in one entry. There is no break out of the absorption entry between variable and fixed. I feel like if we're putting in the fixed and variable rates, SAP has to be storing that information somewhere right? I'm trying to avoid setting up a variable activity to point to one G/L and fixed to point to another. So, in other words, when I confirm a machine hour on a production order, I want to push the fixed piece to one G/L and the variable to another if that's possible (without creating another activity).

Thanks in advance!!!

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  • author's profile photo Former Member
    Former Member
    Posted on Aug 17, 2015 at 10:14 PM

    Thanks for responding guys. I'm still not sure I understand. When I go into KP26 to enter my activity rates, there are fields for fixed and variable prices. What does SAP do with those two fields? The way they populate the G/L is basically to add those two together, multiply X the activity (in this case - Hours), and that's the absorption number that hits the GL. What I'd really like for it to do is multiply hours X fixed price and hit the GL, and same hours X var price and hit a different GL (or at least make a separate entry to the same GL). Is that possible?

    Thanks again!

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  • author's profile photo Former Member
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    Posted on Aug 18, 2015 at 12:51 AM

    Donald, is an interesting issue indeed.

    I assume you dealed with possibility of a splitting structure , so I will not write about it (have you?).

    Like Szymon explained, the plan is perfect, divided into variable and fixed portions....

    So,

    other possibility is the one to assign GL expenses directly to an activity type [1] in this way you could differentiate independent activity costs (e.g fixed) vs. dependent activity costs (e.g variable). Of course this means that every transaction has to be recorded, taking in consideration if it's directly related to an activity type or not; foresee the aggregated complexity this could represent into your daily operations.

    It would be interesting to read some folks that had tried this method, or share their own experiences regarding the issue at hand.

    Br, Humberto

    [1] Account Assignment: Activity Type Active

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  • Posted on Aug 18, 2015 at 07:51 AM

    Hi Donald,

    As Szymon explained already, in standard SAP you will need 2 activity types to achieve your goal.

    However just in case you don't want to use pre-distribution of fixed costs or direct posting to activity type, there is a BAdI available that can be used to influence how the cost are split between fixed and variables: BADI_KSS_SPLIT_FIX_VAR.

    Regards

    Ali

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  • Posted on Aug 16, 2015 at 11:52 AM

    Hi Donald

    Interesting question you have put here...

    It's all about identification of activity price linked with GL> Sec CE(activity) assigned to CCtr & Activity combination. You want to post your Variable rate and Fixed rate in separate GL a/c..so by this logic you must have separate GL> Sec CE (Activity) for variable and fixed to assign in CCtr and activity type combination...accordingly you have to do planning and put the link in routing also for activity confirmation.

    Kamal

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  • author's profile photo Former Member
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    Posted on Aug 16, 2015 at 11:39 PM

    Hi Donald,

    Predistribution of Fixed Costs (transaction KSFX) might be useful in your case.

    Please have a look at SAP Help: Cost Center Accounting (CO-OM-CCA) - SAP Library.

    Regards,

    Szymon

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  • Posted on Aug 18, 2015 at 07:49 AM

    Hi Donald,

    The fixed and variable actual costs are usually determined in cost splitting by KSS2.

    KSS2 splits activity independent costs into activity types according to certain logic.

    The first step is to split according to target costs - the fixed and variable costs are only determined in this step during the process. The target costs are generally calculated by plan costs.

    So, you can plan fixed and variable costs in KP06. If you have postings against the cost center, run KSS2 during period end closing. Then you should get the costs splited into fixed and variable.

    Regards,

    Sean

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  • author's profile photo Former Member
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    Posted on Aug 25, 2015 at 02:26 PM

    I'm going to give the KSS2 a shot. Thanks for all of the feedback!

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