Secondary Cost Element Configuration for Plant Maintenance Order

[former_member214904]

Dear Expats

We want to configure the Secondary cost element properly for PM order.

Required process

1) Secondary cost element is created

2) Activity type and rate maintained and link with Secondary cost element

3) Secondary Cost Element is link with Primary cost element Salary ???

4) When they confirm the activity in PM

in Cost Center impact will be during PM order confirmation

Primary cost element Salary Credit and ( Cost Center - 9000080)

Secondary Cost element debit (against PM order - 8000888)

Means Cost is transfer from Cost Center to PM order through secondary cost element.

When PM order is settle than

Secondary Cost element Credit (against PM order - 8000888)

Primary cost element Salary Credit and ( Cost Center - 9000070 - which is link with PM order through functional location)

Is my under standing is ok. if not pls give proper way.

[Former Member · Accepted solution]

Hi Tarek,

Primary cost element values (Salaries in your case) will be posted to cost center debit side from direct FI postings. When you confirm activity (Labour) against an order, Salaries from debit side of cost center will be converted into secondary cost element – Labour.

Here, entry would be, Dr. Order

Cr. Cost Center

Later, when you settle the PM order, based on settlement profile, either it will settle through the same cost element or a settlement cost elment.

Entry would be:

Dr. Cost Center

Cr. Order

BR, Srinivas Salpala

[ajaycwa1981 · Accepted solution]

Thats perfect answer Srini!!

Salary posting (Primary Cost ele) - is posted either from SAP HR Payroll or through interfaces or FI postings... This GL wont be touched during Acivity confirmation

Note that activity confirmation amounts to overhead absorption i.e. absorbing the incurred costs (FI postings) into the PM Order in this case... Hence, the CC will be credited and PM Order debited, using the Secondary cost element in act type master

When you settle the PM order, you can choose a settlement cost element (Catg 21)

br. Ajay M

[former_member214904 · Accepted solution]

Dear Srinivas

Thanks

Yes we need this process.

Now current setting is we have secondary cost element of LABOUR and this is used for Production order and also for activity of Production order.

Process is going ok.

Now in case of PM order configuration my question

1) Need to create new Secondary Cost element (Like - LABOUR-PM)

2) New Activity for Labour-PM and Rate fixed through KP26 (Cost Center - Automobile)

3) Link secondary cost element with primary cost element.

4) is One Primary cost element is link with TWO or More Secondary Cost element???

5) If yes than we will assign GL 401001 Basic Salary to secondary cost element LABOUR-PM

6) Is any other issue to look after.

Regards

Tarek H Chy

[ajaycwa1981 · Accepted solution]

Hi Tarek

1. You can create a new act type and new Sec cost ele for act type if you wish

2. There is no linkage of Primary cost element to Sec Cost ele in this case

3. When you post salary to Cost center, post through Primary cost element

4. When you confirm activity, system uses the Sec Cost element assigned in Act type... No linkage is needed

Br. Ajay M

[Former Member · Accepted solution]

Hi,

1) Need to create new Secondary Cost element (Like - LABOUR-PM)

In my opinion, no need to create separate secondary CE for PM, because, relevant cost against order can be shown in the report. So, you can use the same Sec CE. Create new one if client asks specifically.

2) New Activity for Labour-PM and Rate fixed through KP26 (Cost Center - Automobile)

Same as above, no need of new Activity. Because, you can get the details of your activity against cost center in the report.

3) Link secondary cost element with primary cost element.

4) is One Primary cost element is link with TWO or More Secondary Cost element???

5) If yes than we will assign GL 401001 Basic Salary to secondary cost element LABOUR-PM

You need to understand the difference between prim and sec CEs. Primary CEs are values flow from FI to CO and Sec CEs are only purely for internal CO purpose. So, dont bother about relationship between these two.

BR, Srinivas Salpala

[nru_house · Accepted solution]

Hello,

I have similar situation.

Created Activity type

Created secondary cost element for those activity types

also, create KP26 line items for 0,00 value.

Now when SD does billing document there is message no KI222 Cost center XXX/XXX doesn't exist on date.

Please advice.

[jose_reddy]

Hi Tarek,

The explanation provided by Srinivas is very good.

Coming to your queries (that you called as process), we no where link secondary cost element to primary cost element.

So, when we see cost center report, we find the salaries debited as the result of the FI posting, but where as for credit we see the secondary cost element as the result of the confirmation of activities against the maintenance order (no credit happens with the primary cost element i.e. salaries). The entry will be .....

Dr Maintenance order with secondary CE

Cr Cost center with secondary CE

Same way at the time of settlement also, there won't be any postings carried with primary CE. Entry will be..

Dr Cost center with secondary CE (that may be the same secondary CE used for confirmation or settlement CE used)

Cr Maintenance order with secondary CE

Regards...

Jose

[Former Member]

Hi Tarek

I think you should go through following links to understand the process of Cost Center planning and Activity Rate Calculation. Hope many of your doubts are cleared there

5 Steps to Understanding Product Costing- Part 2 Activity Rate Calculation

Hope it helps

To reply on your query, yes your process looks fine except that I dont understand why you again want to settle the costs to salary cost element.

Regards

Mustafa Sakerwala