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What is the Purpose of activity consumption in Activate Actual Costing?

What is the Purpose of activity consumption in Activate Actual Costing (Change Activity update settings)

There are three options in screen,

0= Update is not active

1= Update is active but not relevant to price determination - Revaluation of Production Order at Actual prices is required - Please explain it with some examples?

2= Update is active and relevant to price determination - Plan - Actual Variance of cost center are debited to material when calculating actual prices of activities. Revaluation of Production order at actual prices is not required. - Please explain it with some examples?

Can any body explain it with some examples.?

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2 Answers

  • Best Answer
    Nov 03, 2017 at 06:01 AM

    Hi,

    1= Update is active but not relevant to price determination - Revaluation of Production Order at Actual prices is required

    • It means you need to run KSS2, KSII and CON2 in order to get the actual activity cost to the production order if you select this option.
    • Your CO88 production variance is actual production cost (include the actual activity price) vs standard cost

    2= Update is active and relevant to price determination - Plan - Actual Variance of cost center are debited to material when calculating actual prices of activities. Revaluation of Production order at actual prices is not required.

    • If you choose this option, you still need to run KSS2 and KSII but you cannot run CON2 otherwise you post the actual price adjustment twice.
    • System will post the actual price adjustment during CKMLCP run. You can view the actual activity price vs plan price via CKMLLASHOW
    • Your CO88 production variance is actual production cost (without the actual activity price) vs standard cost

    Thanks

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  • Nov 03, 2017 at 08:34 PM

    Dear Mr. Muzammil Please note that:-

    1= Update is active but not relevant to price determination

    if you chose this option that system will update activity type and process in to the quantity structure but will not update it into actual costing. in such case you can use t code like MFN1 KSII or CON2. this option 1 is used especially when you want to receive information about the actual quantity structure.

    2= Update is active and relevant to price determination

    this option is used when you want to add activity variance and other variances like price variances in calculation of actual price at periodic end. with this option you are unable to use revaluation of actual price function at month end because if you are using option#2 then system will post the variance from cost center to directly on material and if you are also using revaluation function then it will post twice variance on the material and credit the cost center twice.

    for actual costing we normally used option 2

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