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Cost Center and Work Center Assignment
Cost Center and Work Center Assignment
Cost Center and Work Center Assignment
(Integration)
What is a Cost center in SAP?
· Production
· Sales
· Administration
We can assign a work center to only one cost center. But we can assign
several work centers to one cost center.
Example
1. Machine hours
2. Labor hours
3. Setup hours
In this case, we can define 3 activity types in the work center MILL-1
(Ball Mill - A) and assign them to work center MILL-1. The work center
is assigned to the cost center EX1_PQ_Production.
Activity rate for each activity (Machine hours, Setup hours and labor
hours) are maintained against the cost center. Planned Machine hours,
Setup hours and labor hours are maintained for the base quantity of 120
T (ball mill capacity) in a routing. Formula for each activity (Machine
hours, Setup hours and labor hours) are maintained in a work center.
When a production order is created in the SAP system, it uses the above
information to calculate the activity cost.
Example of SAP Work Center and SAP Cost Center
Integration
Activity price will be defined for each activity type and cost center
manually. In this example, even though we have similar activity types
for the cost center, activity price will be different for the cost center. The
activity price is defined in the transaction KP26.
2. Activity cost
3. Overhead cost
Here, activity cost is calculated based on work centers, cost centers and
activity prices. The SAP system calculates the activity cost by
multiplying the activity price to quantity of operations.
1. Setup
2. Machine
3. Labor
SAP Cost Center Assignment to SAP Work Center
The work center is assigned to the cost center (3010255001) and each
activity (setup, machine and labor) is assigned with an activity type
(MSUSFG, MACSFG and LABSFG).
Now, let’s look at activity price calculation. Activity prices are
maintained for the cost center (3010255001) and activity types
(MACSFG, MSUSFG and LABSFG) in the transaction KP26 by a
controlling person.
Next, let’s check routing details of the material. It will specify how
many units of each activity are required for manufacturing a base
quantity of this material.
SAP Routing for a Material (Transaction CA01)