Quantity based overhead

[Former Member]

Dear All,

Can we calculate overheads on the basis of quantity produced.

Standard SAP functionality of quantity based overheads is to take input qty of materials and calculate the said overheads by taking the rate maintained in the costing sheet.

My clients requirement is to calculate it on the basis of quantity produced.

Is there any work around for this.

Thanks & Regards,

Chetty

[ajaycwa1981 · Accepted solution]

Hi Praveen

Its possible... There are 2 options, one is standard and the other one is work around

1. Standard Option - is to use Template allocation.... I find this a bit complex and not user friendly... But dont go by my opinion, you shoulld try it for yourself

2. Work around - This is what I used....

a. Create one activity type and attach it to your work center...

b. The activity qty of the this act type to be same as the Base Qty in Routing... i.e. if base qty in routing is 1000, the activity qty should also be 1000

c. Set up the work center formula in such a way that the act qty is completely variable.... i.e. If you confirm 500 qty in Prod order for the header material, same 500 qty would be proposed for this act type... Dont change this activity qty during confirmations

Once the act qty is confirmed, you can just calculate activity price for this act type, which will be based on Qty Produced....This means, you dont even need to calculate and maintain the overhead rates in the system

Br, Ajay M

[Former Member · Accepted solution]

Hi Ajay,

Thanks for your reply.

I have few clarification on the above points sent.

1. The activity qty of the this act type to be same as the Base Qty in Routing... i.e. if base qty in routing is 1000, the activity qty should also be 1000

when u say activity qty of the activity type, does it mean that the plan activity which is maintained in KP26? Generally in routing we maintain the base qty as 1, if thats the case then in KP26 shall we maintain same 1 qty for the overhead calculation.

2.Set up the work center formula in such a way that the act qty is completely variable.... i.e. If you confirm 500 qty in Prod order for the header material, same 500 qty would be proposed for this act type... Dont change this activity qty during confirmations

can u pls clarify me on this: "Dont change this activity quty during confirmations"? is it in KP26 or during confirmation in CO11n

Pls provide clarifications

Thanks & Regards,

Chetty

[ajaycwa1981 · Accepted solution]

Hi

1. when u say activity qty of the activity type, does it mean that the plan activity which is maintained in KP26? Generally in routing we maintain the base qty as 1, if thats the case then in KP26 shall we maintain same 1 qty for the overhead calculation.

No, its not in KP26.. I meant the Plan act qty in routing... If you maintain Base as 1 in routing, then maintain 1 as the activity qty for this Act Type in routing

However, having 1 as the Base Qty in Routing is not a good practice, especially if you have Fixed Machine Set up time involved in your case

2. can u pls clarify me on this: "Dont change this activity quty during confirmations"? is it in KP26 or during confirmation in CO11n

Yes, during confirmations in CO11N

I have myself used this approach... It works as expected

Br, Ajay M

[Former Member · Accepted solution]

Hi Ajay,

Thanks for your reply,

Rate per output produced should be maintained in KP26, hence when activity is confirmed, system will debit the order with the amount.

Thanks Ajay,

Regards,

Chetty

[ajaycwa1981 · Accepted solution]

Hi

Yes, thats right

You may close the thread if resolved

Br, Ajay M

[Former Member]

When overhead needs to be calculated based on output (quantity produced) than you have to use activity based costing in order to calculate the overhead. In situations where overhead needs to be calculated based on input than costing sheets are used.