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Allocation of Overheads based upon higher of actual and plan Capacity

Dear All ,

In our system Overhead allocation is currently made on the basis of Actual production; which needs to be modified.we need the allocation based on higher of actual or standard production

We have performed below activities to achieve above requirement but results are not up to our satisfaction

Step 1: KL02: Activity Type “LABOUR: Actual Allocation Price” indicator is changed is changed from

“5 (Actual price, automatically based on activity) to “6” (Actual price, automatically based on capacity)

Step 2:KP26: Defined Plan Capacity for Activity type “Labor” on cost center 11101.

Plan activity is 900 units

Step 3: CO11N: Production Order Confirmation

Actual Quantity Confirmed =300 units

Step 4: Actual Expense on Cost center 11101

STEP 5:KSSII – PRICE Calculation Result


Overheads = 6,000,000

Plan Activity / Standard production = 900

Actual Activity = 300

Requirement =Overheads / max (Plan activity, Actual activity)

=6,000,000/Max (900,300)

= 6,000,000/900

= 6,667 =Result = OK


Scenario 2: In case actual Production Capacity is higher than standard production capacity

Expected System Behavior: Overheads should be divided on the on Actual Production capacity rather than standard Capacity as it is higher than the latter

:KP26: Defined Plan Capacity for Activity type “Labor” on cost center 11105.

Plan activity is 900 units

Step 3: CO11N: Production Order Confirmation

Actual Quantity Confirmed is 1200 units

Current System behavior:

Overheads = 6,000,000

Plan Activity / Standard production = 900

Actual Activity = 1200

Formula =Overheads / max (Plan activity , Actual activity)

= 6,000,000/Max (900,1200)

= 6,000,000/900

= 6,667

= 6,000,000/900

Result = 6,667 =not ok

Expected Result = 6,000,000/1200= 5,000

Please suggest appropriate solution for above requirement .

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