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author's profile photo Ahsan Shahnawaz
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Ahsan Shahnawaz

Overhead calculation of Utilities? Process in Pharma industry.

Posted on Aug 03, 2019 at 03:54 AM 217 Views

Hello everyone,

I am beginner , currently doing internship in pharma industry at controlling module. Our department got a task to do a pre costing of a product. We can find the cost of material through BOM, but i don't know how to precisely allocate cost of utilities in making that product .like Gas bill ,electricity bill, steam (to run some of the machine) , compressed air and water( to make steam). Although i know the theoretical aspect of the process but i don't know how to practically apply it and is there any way SAP Controlling module can help me gathering the data and doing this activity?

Thank you.

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2 Answers

  • author's profile photo PRASOON AK
    PRASOON AK
    Posted on Aug 03, 2019 at 06:19 AM
    1

    Hi,

    Please go through the blog: Basics of Standard Costing – Understanding overhead cost flow-Part 4

    which beautifully explains the concept.

    Regards,

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    • Ahsan Shahnawaz
      Oct 28, 2019 at 06:49 AM

      Thanks for the reply. But i am more concerned on data gathering aspect to identify or determine per unit cost of overhead item. For example, in utilities , we have steam to run machine. Now the steam is produced from water heated in boiler and the boiler is run on electricity. So how can i found per unit cost of the steam so that i can better allocate the cost by creating SKF.

      Thank you.

  • author's profile photo RAJA SEKHARA REDDY BANNURU
    RAJA SEKHARA REDDY BANNURU
    Posted on Oct 28, 2019 at 08:29 AM
    1

    Hi Ahsan,

    You need not to invent anything. Discuss with the Business, along with your FICO Consultant & understand, how they are arriving at per unit cost of Overhead items. Business might already considering in the current Business process. If they don't have any such, guide them, to arrive at the best possible process, to get the Overhead per unit cost.
    Hope, this helps. Thanks & Regards : Raja

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