SAP BLOG Cost Center and Cost Element wise Variable and Fixed Planning

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22 Ara 2017
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Background:

The blog is prepared for clarifying how system provides Fixed and Variable costs breakup from report. There are a lot of times client asks to define additional activities to distribute Variable and Fixed nature costs.

This breakup is available from SAP standard functionality and does not necessitate additional activity.

In below example a single activity of Setup Cost is taken for example where both Plan Fixed/ Variable and Actual Fixed/Variable rate calculation is explained. Kindly ignore GLs description as these description might not be realistic.

System breaks down Fixed and Variable based on Plan entered GL and Cost Center wise as shown below. This blog is divided into two portions Plan Fixed and Variable Price Calculation and Actual Fixed and Variable Price Calculation



Plan Fixed and Variable Price Calculation:

Entered%20Plan%20in%20Variable%20and%20Fixed%20Portions


Entered Plan in Variable and Fixed Portions​

Referring%20Entered%20Plan


Referring Entered Plan​



We have also mentioned Plan Activity and Capacity against the same Activity.

Plan%20Activity%20and%20Capacity%20Maintained


Plan Activity and Capacity Maintained​

Now both the above costs will be segregated based on formula where Fixed Costs are divided with Plan Capacity and Variable Costs are divided by Plan Activity in order to calculate Plan Fixed and Plan Variable Prices. Breakup is prepared below for reference:

GL HeadsPlan FixedPlan VariablePlan CapacityPlan Activity
Entertainment Expense
250,000​
10000​
Setup Fixed Cost
100,000​
10000​
Setup Variable Cost
50,000​
10000​
Total
350,000​
50,000​



Fixed Price Rate = (250000+100000)/10000

= 35



Variable Price Rate = (50000)/10000

= 5



Total Plan Price = 40



**In the above manner, we can obtain both Variable and Fixed Plan Rate as calculated by system shown below.

Plan%20Price%20Calculated


Plan Price Calculated​

Until now we have Plan Prices calculated, moving forward system will calculate Actual Prices based on below basis.



Actual Fixed and Variable Price Calculation:

There are some actual postings made in system in order to allow the system to calculate actual prices.

Actual%20Postings


Actual Postings​

Firstly, system will deduct all the Actual Fixed Costs posted in GLs which were planned to remain fixed. This cost equals to 400,000/=

Accordingly, Fixed rate will be calculated by dividing the 400,000 total with Actual Activity.

GL HeadsActual FixedActual VariableActual Activity
Entertainment Expense
250,000​
Setup Fixed Cost
150,000​
Setup Variable Cost
60,000​
2,457.437​
Total
400,000​
60,000​



Fixed Cost = (250000 + 150000) / 2,457.437

= 162.771



**Variable cost will be calculated as Total Cost minus Fixed Cost divided by Actual Activity



Variable Cost
= (460000 – 400000) / 2,457.437

= 24.415



Total Cost = 187.186



**System taken Price Unit as 10, therefore multiplying above amount with 10 will match the above rates with system calculations.

Actual%20Price%20Calculated


Actual Price Calculated​



Conclusion:

Concluding the blog it can be said that segregating the costs into Variable and Fixed nature will no longer require any additional activity. It can be covered with SAP Standard Feature of Fixed and Variable Price Calculation using KSPI and KSII.

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