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Fixed vs Variable Absorption

Former Member
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I am having trying to break out fixed vs variable absorption.  Right now, we have activity types set up to absorb overhead based on machine hours and within those activity types, the rates are entered between fixed and variable.  The problem is that when the absorption comes through on the G/L, it's all in one entry.  There is no break out of the absorption entry between variable and fixed.  I feel like if we're putting in the fixed and variable rates, SAP has to be storing that information somewhere right? I'm trying to avoid setting up a variable activity to point to one G/L and fixed to point to another.  So, in other words, when I confirm a machine hour on a production order, I want to push the fixed piece to one G/L and the variable to another if that's possible (without creating another activity).

Thanks in advance!!!

Accepted Solutions (0)

Answers (7)

Answers (7)

Former Member
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I'm going to give the KSS2 a shot.  Thanks for all of the feedback!

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Hi Donald,

As Szymon explained already, in standard SAP you will need 2 activity types to achieve your goal.

However just in case you don't want to use pre-distribution of fixed costs or direct posting to activity type, there is a BAdI available that can be used to influence how the cost are split between fixed and variables: BADI_KSS_SPLIT_FIX_VAR.

Regards

Ali

sean_xiao
Participant
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Hi Donald,

The fixed and variable actual costs are usually determined in cost splitting by KSS2.

KSS2 splits activity independent costs into activity types according to certain logic.

The first step is to split according to target costs - the fixed and variable costs are only determined in this step during the process. The target costs are generally calculated by plan costs.

So, you can plan fixed and variable costs in KP06. If you have postings against the cost center, run KSS2 during period end closing. Then you should get the costs splited into fixed and variable.

Regards,

Sean

Former Member
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I can plan fixed and variable costs in KP06, but I can't split fixed and variable actual costs.

sean_xiao
Participant
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To split fixed and variable actual costs, you need to run KSS2. What the result of KSS2?

Former Member
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Hi Sean,

After I run KSS2, all of the cost allocated into fixed actual cost.

Regards,

Raphael

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Hi Raphael,

In KSS2 you can analyse what the splitting program did. in the upper screen click on cost element. This give you a list of cost element in a screen below. Here you can select a specific line and click on splitting.

That will give you a new screen showing you what the splitting program did. Usually when cost are all defined as fixed it is because you got no target cost defined as variable. Meaning that you need to plan your cost as fixed and variable for the splitting program to be able to split the actuals between fixed and variable in the same proportion as they are split in planning.

Regards

Ali

sean_xiao
Participant
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Hi Raphael,

If there are target fixed and variable costs, the actual costs should be splitted correctly. Maybe you can upload some screenshots on KP06 as well as KSS2 result screen as Ali mentioned above.

Regards,

Sean

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Donald, is an interesting issue indeed.

I assume you dealed with possibility of a splitting structure , so I will not write about it (have you?).

Like Szymon explained, the plan is perfect, divided into variable and fixed portions....

So,

other possibility is the one to assign GL expenses directly to an activity type [1] in this way you could differentiate independent activity costs (e.g  fixed) vs. dependent activity costs (e.g variable). Of course this means that every transaction has to be recorded, taking in consideration if it's directly related to an activity type or not; foresee the aggregated complexity this could represent into your daily operations.

It would be interesting to read some folks that had tried this method, or share their own experiences regarding the issue at hand.

Br, Humberto

[1] Account Assignment: Activity Type Active

Former Member
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Hi Humberto,

Good point with activity type as CO object!

Unfortunately I have no practical experience with it.

Regards,

Szymon

Former Member
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Thanks for responding guys.  I'm still not sure I understand.  When I go into KP26 to enter my activity rates, there are fields for fixed and variable prices.  What does SAP do with those two fields?  The way they populate the G/L is basically to add those two together, multiply X the activity (in this case - Hours), and that's the absorption number that hits the GL.  What I'd really like for it to do is multiply hours X fixed price and hit the GL, and same hours X var price and hit a different GL (or at least make a separate entry to the same GL).  Is that possible?

Thanks again!

Former Member
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Hi Donald,

Fixed and variable cost concept is only available in Controlling module not in GL.

In CO planning you can plan your costs as fixed and variable and the system will calculate activity price in KSPI with fixed and variable portion of the activity price.
Alternatively you can also plan activity prices manually in KP26. Here you can specify fixed and variable portion as well.

But that's only in planning!
In actual you have no option of specifying fixed and variable costs. You just enter the total value.
Predistribution  of fixed costs (mentioned in my previous post) gives you some functionality in apportioning total actual values to fixed and variable based on planned values. But again it's only available in Controlling module.

If your requirement is to see fixed and variable costs in separate secondary cost elements you have to define separate activities for fixed and variable costs.

Regards,

Szymon

Former Member
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If define separate activities, the fixed and variable costs should be two lines

Former Member
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Hi Donald,

Predistribution of Fixed Costs (transaction KSFX) might be useful in your case.

Please have a look at SAP Help: Cost Center Accounting (CO-OM-CCA) - SAP Library.

Regards,

Szymon

kamalkumar_biswas2
Active Contributor
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Hi Donald

   Interesting question you have put here...

   It's all about identification of activity price linked with GL> Sec CE(activity) assigned to CCtr & Activity combination. You want to post your Variable rate and Fixed rate in separate GL a/c..so by this logic you must have separate GL> Sec CE (Activity) for variable and fixed to assign in CCtr and activity type combination...accordingly you have to do planning and put the link in routing also for activity confirmation.

   Kamal