I want that overhead should be calculated on basis of the following formula
(Material Cost x Rate + Labor Activity x Rate) = Overhead
However in SAP the system is calculating overhead on the basis of the following formula
(Labor Activity x Rate) = Overhead
The system is calculating correct overhead amount in target cost as origin group and overhead group are maintained in material master record but when I go for actual overhead calculation the overhead is calculated on labor activity only which is not correct.
Can any one suggest an appropriate solution for correct calculation of actual overheads.
In that case it is suggested that you should follow an overhead allocation using the costing sheets. You can create costing sheets using the following menu in SPRO
Controlling > Product Cost Planning > Basic Settings for Material Costing > Overhead
You would need to create OH Cost elements (category 41) and use the same for allocation. The following activities are required
Define Calculation Bases
Define Percentage Overhead Rates or Define Quantity-Based Overhead Rates
You would also need to assign the costing sheet to material so that the overheads are posted.
Kind Regards // Shaubhik
Check what costing sheet have you assigned in the Valuation variant of your production order type...
You can also see the costing sheet in the CONTROL DATA tab of your production order... See if it is the same costing sheet as in the costing variant you used to release the cost estimate from Ck11N/Ck40N
Check if your overhead is based on labor cost alone..
Thanks every one for quick responses
@ Shaubhikg : I think you are talking about the cost element to be entered in the credit area of costing sheet. I have checked the configuration and an overhead cost element is already entered there. Similarly all the relevant activities i.e. Define Calculation Bases, Define Percentage Overhead Rates or Define Quantity-Based Overhead Rates and Define Credits have already been performed.
@ Ajay Maheshwari & Umapathi Naidu G : Everything is correct but still no success and actual overhead is calculated on labor only
looking forward to your solutions
most of the major checking parts have already been mentioned by the above experts , just want to make sure about some little ones like
1. what is the validity of your Overhead rate , could be the validity is over
2. If your overhead rates are maintained on origin groups defined , den inside the base check if you have mentioned the origin in the fields FROM & TO
3. ANd Also check the Material Master for the plant in whic they are consumed have origin groups mentioned in them or not.
HOpe this helps
Check your BASE in the costing sheet.. Does it have all the relevant cost elements (Both Material & Labor) specified in it along with the origin group...
Also, if you have specified Origin group against the material cost elements, then check your material master if it has the Orgin group in it