7/19/2016

WorkCenterFormulaandOverheadCalculation|SCN

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SAPERPManufacturingProductionPlanning(SAPPP)

WorkCenterFormulaandOverheadCalculation
PostedbyJeewanaPremarathneinSAPERPManufacturingProductionPlanning(SAPPP)onMay12,
201511:51:47AM
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This post will mainly describe how activity based overhead calculation is done in SAP from PP point of view very
briefly.ThisisaverybroadareainSAP.
To produce some product you need resources such as Labor, Electricity and Machine etc. Each of this has a cost
whichshouldbetakenintoproductcostcalculation.ThisiscalledActivityBasedCosting(ABC).
Letstakeasimpleexampleofknittingafabric.Forthisweareusingaknittingmachine.Letsassumetheonlycost
relevanthereismachinecostotherthanRMcost.Thereforemachineoverheadshouldbeabsorbedintotheproduct
cost.
Firstly knitting machine should be created in SAP as a work center. In the work center we have to maintain some
importantdatarelevanttoactivitybasedcosting.
KnowledgeinsomeconceptsusedinSAPwouldbeimportantwhencreatingworkcentermasterdata.
DefiningformulasandStandardValueKey
YouwillfindbelowthreeconfigurationunderSPRO>Production>ShopFloorControl>Operations>Scheduling

DefineFormulaParameters
Formulaparametersareneededtodefineformula.SAPhasastandardlistofparameters.
I.I.e.:SAP_08Thisparameterreferstothebasequantityofrouting.

You may note the field name BMSCH which refers to the base quantity. Similarly SAP_09 has the reference to
operationquantity.
NotetheoriginoftheparameterGeneralOperationValue.

Formula
Inthismenuoption,youcansetupformuladefinitionswhichcanbeusedinthefollowingareas:
Capacityplanning
Scheduling
Costing
Inthispostweareconsideringcostingformulas.

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Here you can create a formula using parameters defined above. We can then link the formula parameters
mathematicallybyusing,forexample,thefollowingoperators:
SAPhasastandardsetofformulas.Wecancreatenewformulasalso.
IE:
StandardformulaforProductionSetUpisSAP002.Ithasbelowcalculation.

Thismeans,
SAP_02MachineTime
SAP_09OperationQuantity
SAP_08BaseQuantity
SAP_11NumberofSplits(thisapplieswhenanoperationiscarriedoutindifferentmachinesatthesametime)Read
More.

StandardValueKey
WhatistheuseofStandardValueKey?
Wecansaybelowresourcesareneededtoproduce1000MofafabricF.
Labor2Hours
Machine10hours
Wehavetomaintainingabovestandardvaluesinroutings.1000Misthebasequantityofrouting.Onlyafteryouset
therelevantSVKinworkcenteryouwillbeabletomaintainstandardvaluesforthoseactivitiesinrouting.

Standardvaluesfortheactivitiesaremaintainedinroutingasbelow.

StandardValuekeyconsiststhecostparameters(i.e.:labor,machineetc.)relevanttotheworkcenter.
IE:
SAP1isastandardvaluekeydefinedinstandardSAP.Belowparametersareassignedtothisstandardvaluekey
(SVK).

SAP_01Setup
SAP_02Machine
SAP_03productiontime
SVKisassignedtoworkcenterinBasicDatatab.Thenwecanmaintainstandardvaluesforaboveparameters(i.e.:
SetupTime)inrouting.

WorkCenterFormula:

Incostingtabwecanmaintainaworkcenterformulaforeachactivity.Forexampleifwearemaintainingformula
SAP002fortheactivityMachineTimeandroutinginformationasbelow.

ActivitiesOverviewinCostingTab
Example:

ActivitytypesarecreatedfromFICOside.CostforeachactivityismaintainedinKP26transaction.

RoutingData
BaseQuantity1000M
MachineTime2H
LetsassumeforMACHINEactivityUSD30/Histhestandardcost.

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HowTargetCostcalculationdoneforaproductionorderof5000M
SAP02*SAP09/SAP08/SAP11
ParameterValues
SAP_02

MachineTime

2H

SAP_09

OperationQuantity

5000M

SAP_08

BaseQuantity

1000M

SAP_11

NumberofSplits

2H*5000M/1000M/1=10H
10hoursneededfordotheproductionof10000M.
Cost:
10H*30USD/H=USD300

Thisishowtargetcostiscalculatedforaproductionorder.Thismaynotbetheactualcost.Actualcostiscalculated
usingsameformulausingactualvaluessubmittedbyuserinproductionorderconfirmation.

Onecananalyzethetargetcostvs.actualcostintheproductionordercostanalysis.Actualcostisbasedonthe
valuesenteredbytheuserduringproductionorderconfirmation.
ProductionOrderDisplay>Goto>CostAnalysis
Varianceanalysisgenerallydonebythemanagementaccountantofthecompany.

Seebelowexample.

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Tags:cost,formula,work_center,productionorder

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5Comments
SharvariJoshiMay13,201511:27AM

HelloJeewana,

Nicedocumentandeasywellexplanation.Youhaveexplainedoneoftheimportantpartofproduct
costinginwellmanner.

Regards,

Sharvari.
Like(1)

JeewanaPremarathneMay13,201511:46AM(inresponsetoSharvariJoshi)

ThanksJoshi.
Like(0)

AMITDASMay13,20156:44PM

Nicedocument.
Like(0)

pravinpatelAug6,20156:09PM

HiJeevan,
I'mlookingtounderstandtherelationshipbetweentheSetuphours,MachinehoursandLaborhours.
HowdoievaluateeachoneofthistoinputinmymasterrecipeunderSTDvalue1,STDvalue2,STD
value3respectively?IthinkIunderstandtheMachinetime,whichisonceamixtureisturnedonto
mixsolutionfor2hours.iwouldcallthisas2Hmachinetime.PleasecorrectmeifI'mwrong.Ineed
moreunderstandingaroundwhatvalue'sarecriticaltoinputinMasterRecipe.
ThankYouinadvance,hopetohearfromyousoon.
Like(0)

AbuNiluMostofaJamalJul19,20167:48AM

nicedocumenttounderstand
thnx
Like(0)

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