Machine hours

[Former Member]

Hello dear experts,

I was able to set up the activity rates based on planned labor hours and planned CE cost. And was able to set it up in KP26 and/or KP06. But the client requested that the overhead costs be allocated based on machine hours. I am at a loss on how to do this. Please advise the configuration. We are on ECC 6.0.

Thank you and regards,

Thess

[Former Member · Accepted solution]

Hi Thess,

Overhead application can be done through Costing Sheet or Activities. There is no special configuration required if you want to capture through activity types.

Pls try to clearly explain with some numberical example how you client requires the OH to be calculated and captued so that I wil be able to explain the methodology.

Srikanth Munnaluri

[Former Member · Accepted solution]

Hi Srikanth

I have created separate activity types for labor, overhead and depreciation. The planned activity prices have been set up manually via KP26. For example, labor activity price is 3sgd, overhead activity price is 36sgd and depreciation activity price is 1sgd. However, I know that these prices can be calculated automatically by the system as long as I supply the planned costs and est. labor hours. The activity prices are then multiplied by the actual labor hours during confirmation in order to get the actual costs.

But the reqt now is for overhead and depreciation to be calculated using the activity price multiplied by the machine hours. Should I create another activity type for the machine hours?

Appreciate your advice.

Best regards,

Thess

[Former Member · Accepted solution]

Hi Thess,

Just to make a point, I suggest you to do planning KP26 and KP06 and run KSPI to get the activity prices. If you do this, it not only serves your purpose of maintaing activity prices, but also, helps you in getting the variance reports and cost center level.

Now, if the activity prices of depreciation and other overheads need to get multiplied by the no. of machine hours, (obviously there must have been one activity "machine hours" to capture the production cost), you can create seperate operations (dummy operations with dummy work centers and dummy activities assigned to them) for these overheads. (even you can use all the activity types in the same work center in the same operation).

Once the user confirms the activity "machine hrs" (with 5 hrs for example) for operation in CO11N, the same number of hours can be defaulted for other operations also...(like depreciation etc in your case).

Pls talk to your PP Consultant to do this.

Srikanth Munnaluri

Edited by: Srikanth Munnaluri on Mar 8, 2009 11:57 PM

[Former Member · Accepted solution]

Thanks Srikanth and I will follow your advice. The PP consultant has just confirmed that the user can confirm the machine and labor hours separately.

Just one more question, for the cost element planning, is there a way that the system can calculate the estimated costs based on the planned activity quantity?

Best regards,

Thess

[Former Member · Accepted solution]

Hi Thess,

I hope what you are asking is If you give the activity quantitiy as 100hr and Rate per Hr is Rs.100/-, then the system should calculate the estimated costs to be Rs.10,000/-.

Actually in SAP, the procedure is in reverse direction. When you are ready to give the activity rate per hr, that means you are calculating that outside SAP. You do it in SAP only which will serve other purposes also.

Srikanth Munnaluri

[Former Member · Accepted solution]

Thanks again Srikanth,

The reason I raised this question is because the client ask for a recommendation on what figures to put for fiscal year 2009 or what should be the basis of the labor and other expenses. Is it OK to use the historical figures as basis?

Regards,

[Former Member · Accepted solution]

Hi Thess,

Yes, for any business, if we talk about what is the Plan for next year, it would be obviously a +/- of the present year. And indirectly depends on Production targets also for those cost centers which are directly related to Production (Production Cost Centers). Let us say, the current year Production Target was set as 100MTonnes at the beginning of this year and the Cost planned for certain cost center is 10Crores, obviously if the production targets for the year 2009 is set as 60MT (keeping in view of recession), the cost planning may come down proportionately (i.e., 6 Crores) or even lower keeping in view of the Cost cutting / cost reduction programes of the company.

Planning data for cost centers is of business information/decision rather than a consulting decsion.

I hope you got it.

Srikanth Munnaluri

[Former Member · Accepted solution]

Thanks, Srikanth