Activity Type Costing in SAP: Variable Cost vs. Fixed Cost

Are we struggling to get variable cost & fixed cost breakup from the total conversion cost for SAP Product Costing.

How to get the actual variable cost and fixed cost for the purpose of absorption of the actual conversion cost for the product costing:

In SAP costing module the option of the variable cost and fixed cost available with appropriate production volume vs. capacity volume. we just need to utilize these features to optimize our cost of production with SAP Costing.

Steps to perform the activity type pricing with variable and fixed costing:
1. Enter the activity hours (MHR) for Production cost centers (CC) with same hours in Plan & Capacity field in T.Code KP26
2. Upload the budgeted cost in all the cost centers (Overheads, Services, Productions etc.) as per the GL accounts with agreed budget amounts.
3. Run plan distribution cycle to allocate the cost from all the cost centers to the production cost centers.
4. Run plan price calculation in production cost center to get the activity type prices with variable and fixed prices separately.
5. This plan prices would be used for actual activity cost booking during the production declarations.
6. At the month end with actual price calculations system consider the actual hours confirmed for variable cost working and total capacity hours for the fixed cost working.
7. The variable actual cost would be derived by using the operating rate logic (Actual hours / Capacity hours)
8. Based on the calculated actual rate the revaluations at the production order takes place and absorption of cost carried out.

For more details please find the PDF Document for the activity type working with an example for your study and reference purpose.

If you are looking for implementation of the concept of variable cost and fixed cost for your organizations then please contact us.