Table of Contents
SAP Cost Center Tutorial
- SAP Cost centers are responsibility areas for costs within organization and used to capture actual costs of an organization. Costs can be captured as per department wise, area wise, responsibility person wise, etc. Assigning the costs to cost centers determines where the costs are incurred within the organization
- SAP Cost center collects overhead expenditure from Finance/Asset Accounting/Manufacturing/Sales & Distribution/ Human Resources
- Cost center helps to compare actual expenditure against plan expenditure
- A cost center represents where cost occurs like location, department, responsibility center
- Each cost can be linked to a work center from where cost comes to cost center
- Activities like machine activity, cleaning activity etc. are performed in cost center
Overhead
- Overhead cost refers to cost that cannot be directly assigned to production of goods and services of a company. Overhead cost can be Direct or Indirect overhead cost
- Direct OH: This is allocated to the product based on activity
- Indirect OH: Non activity related overhead cost. This is allocated to product in costing sheet. For e.g. 20% of material cost
SAP Cost Center include below topic
- Cost Center standard hierarchy in SAP
- Cost Center category
- Master data
- Cost Center
- Statistical Key Figures (SKF)
- Activity Type
- Planning
- Price Calculation
- Allocation Methods
- Cost Center budget
- Actual Posting
- Reports
SAP Cost Center Hierarchy
Cost center hierarchy consists of groups of cost centers in a tree structure within a controlling area. Cost centers can be grouped together to provide summary cost information. Cost center hierarchy consists of nodes and sub-nodes that cost centers are attached to. Cost center hierarchy comprises all cost centers for a given period and therefore, represents the entire enterprise. This hierarchy is known as the standard hierarchy.
Cost center at the top of the Hierarchy is defined in transaction code OKKP
Other cost centers and Cost center group can be defined in transaction code #OKEON
Define Standard cost center hierarchy: OKEON
Cost Center Category in SAP
The Cost Center category is an indicator in the cost center master data, which specifies the category for the cost center. Examples include administration, production, sales & distribution cost center category. Cost Center categories provide the ability to safeguard your postings to cost centers as they will prevent non-category costs being posted to the wrong cost center. Cost Center category is also used for reporting purpose
IMG Path: SPRO- CONTROLIING – Cost Center Accounting- Master data -Cost Center -Define Cost center category
- Quantity: If selected, quantity can be entered in the cost center
- Actual Revenue: Indicator define whether a cost center is locked for posting with revenues. If selected, actual revenue cannot be posted to cost center. If not selected the revenues are written to the cost center as statistics only.
- Plan Revenue: Indicator controlling whether a cost center is locked for planning with revenues. If selected, plan revenue cannot be posted to cost center. If not selected the revenues are written to the cost center as statistics only.
Create Cost Center Group
- A Cost center group is a group of cost center. Used for reporting purpose
- Cost center standard hierarchy highest node (highest cost center group) is created in transaction code #OKKP
- Cost Center Groups created in Transaction code OKEON
- Cost center group can also be created in transaction codes# KSH1/KSH2/KSH3
Transaction Code : OKEON
Transaction Code: KSH1/KSH2
Create Cost Centers in SAP
Transaction Code: OKEON or KS01
Transaction to change / display Cost Center: KS02 / KS03
For detailed, step-by-step instructions on SAP Cost Center Accounting, Product Costing, Profit Center Accounting, Internal Orders, FI-MM Integration follow along with my video tutorial below
SKF (Statistical Key Figure)
The ‘Statistical Key Figure (SKF)’ is used as the basis (tracing factor) for making allocations (assessments/distributions). They are the statistical data such as number of employees, area in square meters, etc.
Suppose that you are incurring a monthly expense of USD 5,000 in the cost center cafeteria, the cost of which needs to be allocated to other cost centers. You can achieve this by the SKF. Imagine that you want this to be allocated based on the ‘number of employees’ working in each of the other cost centers such as administrative office (100 employees) and the factory (300 employees). You will now use the number of employees as the SKF for allocating the costs.
In SKF allocation, you have the flexibility of using two different SKF Categories; namely, Total value or Fixed value. You will use fixed values in situations where the SKF does not change very often, as in the case of the number of employees etc. You will use Total values in situations where the value is expected to change every now and then, as in the case of power use or water consumption in the cost center
Transaction code to create SKF: KK01 / KK02
| SKF | Description | Category | Unit |
| EMP | No of employees | FIX | EA |
| SYSTEM | No of Computer units | FIX | EA |
| POWER | Power charge per month | TOTAL | KW |
| AREA | Area per cost center | FIX | FT2 |
SKF Categories
- Fixed: This does not change every month. E.g. no. of employees, SQFT area
-
Total: This is variable and changes every month. E.g. power bill
SKF Group
This is group of SKF. It is used for reporting purpose
Create SKF group: KBH1 / KBH2
Activity Type
-
Activity type classifies the activities that are performed within a company by one or several cost centers. E.g. of these activities are labor activity, machine activity, cleaning activity etc.
- Activity type is the basis for allocating cost center overhead cost to Product costing
- Activity type are assigned to work centers. Maximum of 6 activity types can be assigned to a work center. A Work center is an organization unit where manufacturing activities are performed. Thus, Work Centers are the master data which represent real machines, Production Lines, etc.
Activity Type categories
The activity type category lets you determine whether, and how, an activity type is allocated
- Direct Activity Type Category
- Manual entry, manual allocation: activity recorded manually. Activity allocated manually
- Manual entry, No allocation: Idle time
- Indirect Activity Type Category
- Indirect determination, Indirect allocation
- Indirect determination, manual entry
Create Activity Type
- Transaction code: KL01 / KL02 /KL03
- For each activity type Secondary cost element of category 43 is required
- Create secondary Cost Element: KA06
| Sec Cost Element | Name | CE Category |
| 943001 | Labor activity cost | 43: Internal activity allocation |
| 943002 | Machine activity cost | 43: Internal activity allocation |
| 943000 | Set Up activity cost | 43: Internal activity allocation |
| Description | Activity Type | Activity Type | Activity Type |
| Activity Type | 330101 | 330102 | 330103 |
| Description | Set Up activity cost | Machine activity cost | Labor activity cost |
| Activity Unit | HR: Hours | HR: Hours | HR: Hours |
| Cost center category | * | * | * |
| Activity type category | 1: Manual entry, manual allocation | 1: Manual entry, manual allocation | 1: Manual entry, manual allocation |
| Allocation Cost Element | 943000: Set Up activity cost | 943002: Machine activity cost | 943001: Labor activity cost |
| Price Indicator-Plan | 1: Plan price, automatically based on activity | 1: Plan price, automatically based on activity | 1: Plan price, automatically based on activity |
| Actl Activity Type category | 1: Manual entry, manual allocation | 1: Manual entry, manual allocation | 1: Manual entry, manual allocation |
| Act Price Indicator | 5: Actual price, automatically based on activity | 5: Actual price, automatically based on activity | 5: Actual price, automatically based on activity |
Activity Type Group
Activity type group is a group of activities types. SAP activity types with similar activities can be grouped into activity type groups for internal reporting purposes. SAP activity type groups are used for assessment and planning.
Transaction code: KLH1 / KLH2 /KLH3
SAP Cost Center reports
Post a rent invoice: FB50
Display Controlling Document: KSB5
Display Expense Posted to Cost Center
Transaction code : KSB1
Display Cost Center Report: S_ALR_87013611
SAP Cost Center
- SAP Cost centers are responsibility areas for costs within organization and used to capture actual costs of an organization. Costs can be captured as per department wise, area wise, responsibility person wise, etc. Assigning the costs to cost centers determines where the costs are incurred within the organization
- SAP Cost center collects overhead expenditure from Finance/Asset Accounting/Manufacturing/Sales & Distribution/ Human Resources
- Cost center helps to compare actual expenditure against plan expenditure
- A cost center represent where cost occurs like location, department, responsibility center
- Each cost can be linked to a work center from where cost comes to cost center
- Activities like machine activity, cleaning activity etc. are performed in cost center
Overhead
- Overhead cost refers to cost that cannot be directly assigned to production of goods and services of a company. Overhead cost can be Direct or Indirect overhead cost
- Direct OH: This is allocated to the product based on activity
- Indirect OH
- Non activity related overhead cost is allocated to product in costing sheet. For e.g. 20% of material cost
SAP Cost Center topics
- Cost Center standard hierarchy in sap
- Cost Center category
- Master data
- Cost Center
- SKF
- Activity Type
- Planning
- Price Calculation
- Allocation Methods
- Cost Center budget
- Actual Posting
- Reports
Cost Center Standard hierarchy in sap
Cost center hierarchy consists of groups of cost centers in a tree structure within a controlling area. Cost centers can be grouped together to provide summary cost information. A cost center hierarchy consists of nodes and sub-nodes that cost centers are attached to. A cost center hierarchy comprises all cost centers for a given period and therefore, represents the entire enterprise. This hierarchy is known as the standard hierarchy.
Cost at the top of the Hierarchy is defined in transaction code OKKP
Other cost centers and Cost center group can be defined in transaction code #OKEON
Define standard hierarchy: OKEON
Cost Center Category in sap
The Cost Center category is an indicator in the cost center master data, which specifies the category for the cost center. Examples include administration, production, or sales & distribution cost center category. Cost Center categories provide the ability to safe guard your postings to cost centers as they will prevent non-category costs being posted to the wrong cost center. Cost Center category is also used for reporting purpose
IMG Path: SPRO- CONTROLIING – Cost Center Accounting- Master data -Define Cost center category
- Quantity: If selected, quantity can be entered in the cost center
- Actual Revenue: If selected, actual revenue cannot be posted to cost center. If not selected the revenues are written to the cost center as statistics only.
- Plan Revenue: If selected, plan revenue cannot be posted to cost center. If not selected the revenues are written to the cost center as statistics only.
Create Cost Center Group
- Cost center group is a group of cost center. Used for reporting purpose
- Cost center standard hierarchy highest node is created in transaction code #OKKP
- Create Cost Center Groups in Transaction code OKEON
- Cost center group can also be created in transaction codes# KSH1/KSH2/KSH3
Create Cost Centers in sap
Transaction: OKEON or KS01
Transaction to change / display Cost Center: KS02 / KS03
SKF (Statistical Key Figure)
The ‘Statistical Key Figure (SKF)’ is used as the basis (tracing factor) for making allocations (assessments/distributions). They are the statistical data such as number of employees, area in square meters, etc.
Suppose that you are incurring a monthly expense of USD 5,000 in the cost center cafeteria, the cost of which needs to be allocated to other cost centers. You can achieve this by the SKF. Imagine that you want this to be allocated based on the ‘number of employees’ working in each of the other cost centers such as administrative office (100 employees) and the factory (300 employees). You will now use the number of employees as the SKF for allocating the costs.
In SKF allocation, you have the flexibility of using two different SKF Categories; namely, Total value or Fixed value. You will use fixed values in situations where the SKF does not change very often, as in the case of the number of employees etc. You will use Total values in situations where the value is expected to change every now and then, as in the case of power use or water consumption in the cost center
Transaction code to create SKF: KK01 / KK02
| SKF | Description | Category | Unit |
| EMP | No of employees | FIX | EA |
| SYSTEM | No of Computer units | FIX | EA |
| POWER | Power charge per month | TOTAL | KW |
| AREA | Area per cost center | FIX | FT2 |
SKF Categories
- Fixed: This does not change every month. E.g. no. of employees, SQFT area
- Total: This is variable and changes every month. E.g. power bill
SKF Group
Group of SKF. Used for reporting purpose
Create SKF group: KBH1 / KBH2
Activity Type
- Various activities are performed in cost center. E.g. of these activities are labor activity, machine activity, cleaning activity etc.
- Activity type measure these activities
- Activity type is the basis for allocating cost center overhead cost to Product costing
- Activity type are assigned to work centers. Maximum of 6 activity types can be assigned to a work center
- A Work Center can be a place or a machine where production operations/activities are performed. Work Center is used in routing operations and production orders
Activity Type categories
- Direct
- Manual entry, manual allocation: activity recorded manually. Activity allocated manually
- Manual entry, No allocation: Idle time
- Indirect
- Indirect determination, Indirect allocation:
- Indirect determination, manual entry:
Price Indicator
- Manual
- System calculated
- It could be based on capacity
- Price can also be calculated based on activity units
Create Activity Type
- Transaction code: KL01 / KL02 /KL03
- For each activity type secondary cost element of category 43 is required
- Create secondary CE: KA06
| Sec CE | Name | CE Category |
| 943001 | Labor activity cost | 43: Internal activity allocation |
| 943002 | Machine activity cost | 43: Internal activity allocation |
| 943000 | Set Up activity cost | 43: Internal activity allocation |
| Description | Activity Type | Activity Type | Activity Type |
| Activity Type | 330101 | 330102 | 330103 |
| Description | Set Up activity cost | Machine activity cost | Labor activity cost |
| Activity Unit | HR: Hours | HR: Hours | HR: Hours |
| Cost center category | * | * | * |
| Activity type category | 1: Manual entry, manual allocation | 1: Manual entry, manual allocation | 1: Manual entry, manual allocation |
| Allocation Cost Element | 943000: Set Up activity cost | 943002: Machine activity cost | 943001: Labor activity cost |
| Price Indicator-Plan | 1: Plan price, automatically based on activity | 1: Plan price, automatically based on activity | 1: Plan price, automatically based on activity |
| Act Activity Type category | 1: Manual entry, manual allocation | 1: Manual entry, manual allocation | 1: Manual entry, manual allocation |
| Act Price Indicator | 5: Actual price, automatically based on activity | 5: Actual price, automatically based on activity | 5: Actual price, automatically based on activity |
Activity Type Group
Used for reporting
Transaction code: KLH1 / KLH2 /KLH3
SAP Cost Center reports
Post a rent invoice: FB50
Display CO Document: KSB5
Display Cost Center Report: S_ALR_87013611
SAP Cost Center Planning
Cost center planning involves entering plan figures for costs, activity types, or statistical key figures for a particular cost center and a particular planning period. You can then determine the variances from these figures when you come to compare these plan values with the costs actually incurred.
Set controlling Area
Transaction OKKS
Input Planning
Activity independent Cost Element Planning for Cost Center
These are cost which are incurred independent of the activity performed in the cost center. These costs are generally incurred in Cost center where no manufacturing activities are performed. For E.g. Administration Department (CCTR#3301002), Canteen Department (CCTR#3301001). E.g. of such cost are Rent (CE#400300), Salaries (CE#400100), Telephone Rental (CCTR#400305).
Transaction: KP06
Planner Profile: 1-101 (Activity Independent, CE planning for the Cost Center)
Cost Center
| Admin department | 3301002 |
| Canteen Department | 3301001 |
Cost Element
| 400100 | Salaries |
| 400300 | Rent |
| 400304 | Telephone rental |
| 400305 | Travel expenses |
| 400306 | Office supplies |
Select Form based
Cost Center Report
Transaction code: S_ALR_87013611
Reporting Options:
Activity Dependent Planning
Cost Element values are planned for cost centers based on activity in the cost centers. So first we need to plan Activity hours per cost center. Then Plan CE / Expenses for each Activity type in the cost center
KP26 is used to plan Activity type values for cost center
KP06 is used to plan CE / Expenses for each Activity type in the cost center
Planned Activity Type / Cost Center
Transaction code: KP26
Layout: 1-201
Cost Center 3301004
Activity Type: 330101 to 330103
Plan CE / Expenses for each Activity type in the cost center
Tcode: KP06
Same Cost Center # 3301004
Layout: 1-101
Enter planned fixed cost for combination of planned Activity type and Cost element
Cost for Activity dependent Cost Element
Cost Center Report
Transaction code: S_ALR_87013611
SKF Planning
SKF Planning for Cost Center
Transaction Code: KP46
Planner Profile: SAPALL
Cost Center wise SKF Planning
Planning Layout: 1-301 (Statistical key figures: standard)
Report: S_ALR_87013611
Plan Cost Splitting
Transaction code: KSS4
If no specific splitting rule is defined system split plan fixed cost (CE400200) 100,000 equally among all activities in the cost center 3301004
Here the Cost Center cost is split equally between it’s three activities. In KSPI this cost is divided by planned activity hours for that activity. This planned cost per hours for the activity
Execute Plan Price Calculation
Transaction code: KSPI
Activity 330101 (Setup activity)
CE 400200 cost for period 4: 33,333
CE 400000 cost for period 4: 150000
Total 183,333n / 1200 = 152.7 => for 10 units 1527.7
Report to Check Activity Price per hour
Transaction code: KSBT
Define Splitting Rule
This is an optional step. It is used to split Activity independent cost (Defined in KP06 earlier) to various activities in the cost center.
Define Splitting Rule
Transaction code: OKES
Create Splitting Structure
Transaction code: OKES
Assignment
Transaction code: OKES
Selection for Assignment
Select assignment 1. Click selection for assignment and below entries
Similarly, for assignment 2
Selection for assignment 3. No need of Activity as CE is not split
Activity independent Cost Elements not assigned in Transaction OKES will be split equally
Assign Cost Center to splitting structure
Transaction code: OKEW
Select the cost center (3301004) – Now place cursor on splitting structure to which it has to be assigned – Right click – click assign
Steps in Cost Center Plan Price calculation
- Plan Activity hours for the cost center: KP26
- Plan Cost Element cost independent of activity for the cost center: KP06
- Plan CE cost dependent on activity for the cost center: KP06
- Define splitting structure for activity independent cost: OKES
- Assign splitting structure to Cost Center: OKEW
- Plan Cost splitting for the cost center: KSS4
- Execute Plan Price calculation: KSPI
- Verify Activity Price per hour: KSBT
Plan Activity Hours per Cost Center: KP26
Plan CE activity dependent cost per Cost Center (Activity dependent): KP06
Plan CE activity Independent cost per Cost Center (Activity Independent): KP06
Plan Cost splitting for the cost center: KSS4
Execute Plan Price calculation: KSPI
Verify Activity Price per hour: KSBT
Create Own Layout using SAP Report Painter
Create Planning Layout in sap
SAP Transaction code : KP65
Click Create – Click Lead Column-Select Cost Center- Click Lead column – Select Characteristic Value and Name
Second Lead column – Click New Lead column- Select Cost Element
Total Plan Cost Column: Values are not entered in Lead column. Click the row with Column 1 to create column for entering total plan values
Distribution Key Column
Double click on empty dots- Select attribute – Select Distribution key – Key figure (PWOG) – Update
General Data Selection Column
Edit – Gen Data Selection – Gen data selection – Select version, period, fiscal year
Fix the Decimal place
Place the cursor on Total Plan cost – Click number format
Create Planner Profile in sap
Create Planner profile and assign layout created earlier to it
Transaction: KP34
Select and click General controlling- In Planning area select Cost element and activity input – In currency and Quantity select 1 (Equal distribution)
Select Planning area and click Layout for controlling – Select layout created in earlier step
Create Layout for Activity Output planning in sap
Transaction Code: KP75
Click lead column – Select cost center – select both Group and Individual – click lead column – Select both characteristic and Name
Second Lead column – New lead – Select activity type – remaining steps same as cost center above
Plan Activity Value
Click on Column 1 – Key figure (PLST)
Distribution Key column
Double click on dots next to column 1- Select attribute – Distribution key – Key for distribution as PLST
Unit Column
Double click on dots after distribution key – Attribute – Select Unit
Total Plan Price column
Double click on dots after units – Select key figure with characteristic – Key figure is PTOG (Plan Total Price in object currency)
General Data selection
Edit – Gen Data Selection – Gen data selection – Select Version, Period, Fiscal year– Save
Create Planner Profile
Tcode: KP34
Assign Activity Type planning layout to Planner profile
Use the Planner profile MK11 created earlier and assign layout ACTYPLANMK11 to it
Create Activity Type planned values for cost center
Tcode: KP26
Settings – Set Planner Profile- MK11
Explanation
- Lead Column: These could be Cost Center / Activity Type / Cost Element.
- Column 1 / Column 2 / Column 3 : These are values for lead column. Like Plan activity value, Plan activity Units (HR), Plan activity Distribution type (1- Equal, 2- Monthly etc.), Plan total Price
- General Data Selection: Here you specify the header values- Version, Period, Fiscal Year
For detailed, step-by-step instructions on SAP Cost Center Accounting, follow along with my video tutorial below
Please refer to SAP Cost Center Allocation tutorial for details on SAP Cost Center Reporting, Distribution and Assessment
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