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Common cost allocation from cost center to internal order

Posted on Aug 21, 2016 at 05:10 PM 695 Views

Hello Experts,

Could you please explain the business purpose for cost allocation from cost center (common costs) to internal order. I have searched forums but could not find an answer for my doubt.

Regards

Senthilkumar

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  • Best Answer
    author's profile photo Former Member
    Former Member
    Posted on Aug 22, 2016 at 03:35 AM
    2

    Senthil,

    I will give one example like, power is one activity, which will use in manufacturing process, other departments for the general use and for plant employee quarters use, now for plant employee quarters you can consider as an internal orders and in the same assessment/Distribution cycles, you can use receivers as production cost centers, internal orders and you need to post respective SKF quantities accordingly for the receiver cost centers and internal orders for cost allocation.

    I hope it is clear now.

    Regards,

    Ravi

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  • author's profile photo Owen Liu
    Owen Liu
    Posted on Aug 22, 2016 at 08:28 AM
    1

    Hi Senthilkumar,

    Internal orders are typically used for only a temporary time and for a specific purpose, such as the duration of a defined activity or project.

    With internal order, you can collect the costs relevant to the activity or project. And when the activity or project is over, the costs can be settled to the final cost centers.

    Best Regards,

    Owen

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  • author's profile photo Ravi Kumar
    Ravi Kumar
    Posted on Aug 22, 2016 at 09:58 AM
    0

    Hi Senthil,

    For what purpose you are allocation from common cost center to IO ??.

    My contribution :

    An internal order is used to accumulate cost for a specific project or task for a specific time period, it is used for a short term period purpose with a specific deadline.

    For specific job. e.g If you have open Trade-fair , exhibition, one time customer or vendor cost recovery or specific job of machinery cost recovery purpose etc that time only we can use IO

    Normally cost centre is responsible centre in SAP. It cannot be defined as statistical but in transactions it may become as per other co objects.

    In your case allocation of cost from cost canter to IO yes and please go head for MR Ravi chirivella’s wording.

    Regards,

    KRK

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