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Former Member

over/under absorption of overheads

Hi SAP Gurus,

Request for your help to resolve my following queries.

We calculate plan activity rates & execute a costing run. Also we calculate the overhead in costing sheet with plan rates. I would like to know, what happens for the actual costs booked? How the under/over absorption is handeled in SAP?How this is settled? How this is charged to production? Is there any accounting entry passed at the time of adjusting under/over absorption?

(Points will be assigned )

Regards,

makrand

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2 Answers

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    Former Member
    Feb 28, 2008 at 07:29 AM

    Hi,

    In my knowlege, in cost center all debits comes from posting (all expenses related to cost center) and all credits comes form Activity confirmation through production order. the difference between debit and credit comes over/under obsertion. generally that amount distrudute to particual wbs or cost object at the month end. but we cann't identify where the veriance occur in one month. so generaly that amount distrubute the cost every quarterly.

    is their any wrong let me know.

    Please assign the points,

    regards,

    Gopi.

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    • Hi Gur,

      1. actual money spent in a month is only the debit part of cost center. Is that right?

      Agree. Actual costs spent will be debits to the cost centre.

      2. with credit part, we can see if those costs were under/absorbed.

      Agree. The difference between Debits and Credits will show  if you have Over/Under absorbed costs. As mentioned above, this Cost or Spending Variance may be assessed to PA at month end leaving a zero balance. This posting (CO only, not FI) will be shown in the credit section.

      3. actual cost of the plant for the month would be only DEBIT part.

      Actual costs are typical debits. You may also have Debits from other Cost centres if you use Assessments (to move costs between cost centres)

      rgds

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    Former Member
    Feb 28, 2008 at 08:51 AM

    HI,

    All the expenses you book in FI will be debited to Cost center.All your Activity confirmations and Overheads will be credited to the costcenter.The diff between debits and credits will be over /under absorption.These activy confirmations and overheads will reflect in your financial accounting as cost of production.Over/Under absorption will taken care at Pl level.there wont be any entry in financial accounting.

    Regards,

    Kris

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