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Product Costing - Overheads without material

zunaid_hingora2
Active Contributor
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Hi Experts,

We have process in which we do not have material. only Labour hours and Machine Hours. So we posted KP26 data to get the Labour and Machine hour cost.

Now today client want overheads like Repairs and Maintenance, Depriciation and Employee cost also for this process  to be captured. As we do not have any material it is not possible for us to capture the above overheads.

Is it any other way to capture this overheads. Please give your expert inputs.

Regards

Zunaid.

Accepted Solutions (1)

Accepted Solutions (1)

former_member198650
Active Contributor
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Hi Zunaid,

You have to create costing sheet. Here you have to maintain the repairs and maintenance expenses as Base and assign the cost elements for the same. After define percentage on the base in the overhead and define credit for which cost centre you have to credit these overheads. Later you have to assign this costing sheet in the costing variant.

Regards,

Mukthar

zunaid_hingora2
Active Contributor
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Hi Mukthar,

Brilliant. I will check this and will get back to you.

Regards

Zunaid

zunaid_hingora2
Active Contributor
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Hi Mukhtar,

i have a doubt. If i maintain R&M GL as base and calculate some percentage of overhead, then i have to give creadit to cost centre and secondary cost element. but here i can give only one cost centre. My plant have multiples cost centres. how do we achieve this.

Please guide.

Regards

Zunaid.

former_member198650
Active Contributor
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Hi,

Either you can credit to single cost centre or define percentage for each cost centre in it.

Regards,

Mukthar

zunaid_hingora2
Active Contributor
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Hi Mukhtar,

Understood. i can create as many credits as i want. But one more doubt. We do mfbf for material. In material we have internal order. So all posting goes to internal order. than variance calculation and settlement of internal order.

Now above credit goes to Cost centre + cost element combination. Than how will this reflect in material. what is the use of Cost centre then if everything is going to internal order. Credits will be not displayed in material as it is in cost centre.

Please guide.

Regards

Zunaid

former_member198650
Active Contributor
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Hi Zunaid,

Initially we book expenses to cost centre. Here cost centre will get debited with combination of cost element. When you charge over heads from this cost centre to order, then the part of expenses get debited to order and same time it credits to cost centre.

Regards,

Mukthar

zunaid_hingora2
Active Contributor
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Hi Mukthar,

but how to charge this cost centre amount to order. from which tcode. is there any automated process or we haveto do manually. like assessment etc.

Please guide.

Regards

Zunaid

former_member198650
Active Contributor
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Hi,

When you run overhead calculation, system will automatically debit the over heads to order and same will be credit to cost centre. No need to do any assessment...

Regards,

Mukthar

zunaid_hingora2
Active Contributor
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Hi Mukhtar,

Excellent. Understood. CO43 is tcode.

Thanksssssssssssssssssssssssssss

Regards

Zunaid

zunaid_hingora2
Active Contributor
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Hi Mukthar,

One last doubt. we have received below rates from client.

Auxiliary Power (qty in mus)              0.03

Direct Employees cost                        0.02

Repairs and Maintenance                  0.01

My question is if we maintain this rates in KP26, is  that fine. as we do not have GLs for overhead calculation. Please guide.

Regards

Zunaid

former_member198650
Active Contributor
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Hi Zunaid,

If you are using activity types for overhead calculation then these rates should maintain in respective activity types in KP26. If you are directly assigning expenses GL accounts as base in the costing sheet, then you could define above percentages as overhead rates in the sheet. But for power you have received qty. For that you have to create activity type in KL01 and maintain price for the activity/cost centre in KP26. Then after define routing for the order and here you have to maintain operating time and when you do confirmation these would charge to order.

Regards,

Mukthar

zunaid_hingora2
Active Contributor
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Hi Mukthar,

I understood. i will maintain KP26. But if i do not maintain entry in routing will it have any impact? as i maintain KP26 it will reflect in target cost. than variance will be calculated and all cost will be reflected.

Please guide.

Zunaid

former_member198650
Active Contributor
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Hi Zunaid,

If have not maintained routing, then it won't impact on your order.  You have to maintain in it.

Regards,

Mukthar

zunaid_hingora2
Active Contributor
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Hi Mukhtar,

I have checked by not maintaining routing and its not reflecting in order.

Great thanks.

Regards

Zunaid

Answers (2)

Answers (2)

rajneesh_saxena
Active Contributor
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Hi

Right way of doing is what already has been suggested by fellows.

You can also define them as activity. Give the rates in kp 26. While confining the orders these will also be confirmed.

Rajneesh

zunaid_hingora2
Active Contributor
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Hi Rajneesh,

you mean to day for R&M, Depreciation and Employee cost i create Activity type. Then maintain rate in KP26. after that in mfbf that rates are posted and are captured in order. after settlement it will have FI entry. Correct? .

because they do not have percentage of above overheads. so even if i maintain them in costing sheet, calculation is not possible in absence of overhead rates.

Please guide.

Regards

Zunaid.

kamalkumar_biswas2
Active Contributor
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Hi

  Generally these type of cost as OH absorbed through Costing sheet if you find some logical base but in absence of that Indirect activity allocation can be applied to flow the cost where Sec CE for Indirect allocation will help to identify the type of OH cost.

kamal