Activity allocation:
In SAP, standard cost estimate considers 3 parameters while calculating the cost of the material. Those are1. Material 2. Operation ( Activity) and 3. Over head.
Activity allocation is deals with operation hours requied to produce the product. Through Cost center and Routing, we need to allocate the activity to the product.
Over head key:
Overhead key is being used in Costing sheet for over head calculation. Find below the business example for clarification about OH key.
I have a material and it is being used in 2 plants. In the 1st plant, my OH % is 20 and in my sencond plant OH % is 25. The requirement is, while performing Std Cost Estimate, system should explore the OH cost according to above mentioned % for the plants A and B. To achieve the same, we need to use Over head key. Create the over head keys with the values of 20% and 25% and create 2 OVERHEAD GROUPs and assign the over head keys to them.Assign the overhead keys or groups to costing sheet. Then assign the costing sheet to Costing varient. Then, go to Material master (MM02) and costing view and assign the 20% OVER HEAD GROUP in plant1 and assign the over head group 2 to plant 2. Now, if you run the std cost estimate, system will do over head calculation according to over head groups assigned to material master.
I hope, this answer helps.
Vijayanand Sankaran
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