SAP Controlling

Cost Center Splitting Concept

Version: 1.0

Cost Center Splitting Concepts

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Last modified by: Malati Bhatt

SAP Controlling

Cost Center Splitting Concept Table of Contents

Version: 1.0

1.Purpose / Use...........................................................................................................................8 2.Features...................................................................................................................................8 3.Pre-requisites.........................................................................................................................10

3.1.Master Data Requirements......................................................................................................10 3.2.Configuration Requirements....................................................................................................10

4.Overview of Scenario and Pre-requisite Settings................................................................12

4.1.Scenario.....................................................................................................................................12 4.2.Master Data Setup....................................................................................................................12 4.3.Configuration Requirements....................................................................................................14
4.3.1.Configuration of Splitting Structure......................................................................................................14 4.3.2.Assigment of Splitting Structure to the Cost Center.............................................................................18

5.Planning Activity Costs on Cost Center...............................................................................22

5.1.Checking Plan costs on Cost Center Reports (S_ALR_87013611)........................................22 5.2.Plan Activity Quantity..............................................................................................................24 5.3.Plan - Splitting..........................................................................................................................26 5.4.Plan - Price Calculation...........................................................................................................28 5.5.Testing Results..........................................................................................................................30
5.5.1.Checking Plan Price per Activity Unit (KP27)......................................................................................30 5.5.2.Checking Plan Activity Costs on Cost Center reports (S_ALR_87013611).........................................32

6.Posting Actual Costs.............................................................................................................34

6.1.Posting Cost Center via monthly Payroll cycle and checking its impact..............................34 6.2.Case1 : 180 hours (plan hours) AllocATED............................................................................36
6.2.1.Cost Center Report Comparison Actual v/s Plan (S_ALR_87013611)..............................................36 6.2.2.Cost Center Report Comparison Actual v/s Target (S_ALR_87013625)..........................................38 6.2.3.Period End Closing Actual Splitting...................................................................................................40 6.2.4.Period End Closing Price Calculation................................................................................................44 6.2.5.Testing Results Actual Price (KBK6).................................................................................................46 6.2.6.Testing Results Actual Cost Document (KSB5)................................................................................48 6.2.7.Testing Results Cost Center Report Actual v/s Plan (S_ALR_87013611).....................................48 6.2.8.Testing Results - Cost Center Report Actual v/s Target (S_ALR_87013625)...................................50 6.2.9.Important Notes.....................................................................................................................................50

6.3.Case2 : 130 hours (LESS than plan hours) ALLOCATED...................................................52

6.3.1.Cost Center Report Comparison Actual v/s Plan (S_ALR_87013611)..............................................52 6.3.2.Cost Center Report Comparison Actual v/s Target (S_ALR_87013625)..........................................54 6.3.3.Period End Closing Actual Splitting...................................................................................................56 6.3.4.Period End Closing Price Calculation................................................................................................56 6.3.5.Testing Results Actual Price (KBK6).................................................................................................58 6.3.6.Testing Results Actual Cost Document (KSB5)................................................................................58 6.3.7.Testing Results Cost Center Report Actual v/s Plan (S_ALR_87013611).....................................60 6.3.8.Testing Results - Cost Center Report Actual v/s Target (S_ALR_87013625)...................................62 6.3.9.Important Notes.....................................................................................................................................62 Modified: 3/1/2013 7:55 PM . 2 Last modified by: Malati Bhatt

SAP Controlling

Cost Center Splitting Concept

Version: 1.0

Modified: 3/1/2013 7:55 PM .

Last modified by: Malati Bhatt

SAP Controlling

Cost Center Splitting Concept

Version: 1.0

Revision History
Date 31.01.2013 Version 1.0 Description Original Document Author Malati Bhatt

Modified: 3/1/2013 7:55 PM .

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SAP Controlling

Cost Center Splitting Concept

Version: 1.0

1.

Purpose / Use

Costs are of 2 types - Activity Dependant or Activity Independent Activity Dependant costs - These are the costs that are tagged to a specific activity type. It can happen in 2 ways By way of FI postings - You can specify Cost Center / Activity Type while doing postings from FI By way of Cost Center Splitting

Activity Dependant costs are not split any further. They are simply divided by the activity quantity to which they are attached to. Activity Independent costs - These are the costs not attached to any activity type. These are split between all other activities as per commonly used methods as shown below Activity Qty. This means such costs to be divided between all activity types based on plan / actual quantity of those activity types. Equivalence nos. In KP26, by default the equivalence no is 1. If no other method is found, it would use Equivalence number for the purpose of splitting.

During plan cost splitting, the system splits the activity-independent plan costs of a cost center among the activity types of this cost center. You must split plan costs before executing: Price calculation: Plan costs are split automatically during price calculation. The SAP System determines the plan prices from the ratio of plan costs and plan activity. Splitting activity-independent plan costs on the cost center activity types helps to calculate the fixed price portion of the overall price. Plan cost splitting therefore ensures that all planned costs are considered during price calculation. Plan/Target/Actual Comparison To view all costs at the cost center/activity type level and make plan/target/actual comparisons, you must split activity-independent actual and plan costs among the activity types. You use the same methods for actual and plan costs. In the actual there is an additional splitting step in which the actual data is adjusted to the plan data. Actual data is distributed to the activity types on the basis of target costs or target quantities and by cost element.

2.

Features
The activity-independent costs planned on a cost center are split on the activity types according to the splitting structure that you defined during Customizing and assigned to this cost center. A splitting structure contains one or more assignments in which you store splitting rules for the corresponding cost element(s) or cost element groups. You can restrict the selection of cost elements or cost element groups, as well the activity types on which the costs are split.

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SAP Controlling

Cost Center Splitting Concept

Version: 1.0

Splitting methods are assigned to the splitting rules. These methods specify how the costs are split. Based on the splitting methods, which are fixed in the R/3 System, you can split plan costs according to the following criteria: Activity quantity Equivalence number Capacity Output Scheduled activity Statistical key figure (quantity) Statistical key figure (maximum quantity) No splitting is executed

You can also use weighting indicators to control whether tracing factors are to be weighted for the cost splitting. Set the indicator if the individual tracing factor values use different units of measure. If the Conversion indicator is active, the values are multiplied with the equivalence numbers of the activity types. This enables you to compare the different units of measure of the tracing factor values.

3.

Pre-requisites

3.1. Master Data Requirements

Cost Elements (Cost Element Category - 43) Cost Centers Activity Types (Activity Type Category 1, Price Indicator 1, Act. Price indicator

5)

3.2. Configuration Requirements

Splitting Structure Setup Assignment of Splitting Structure to applicable Cost Centers

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Cost Center Splitting Concept

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4.

Overview of Scenario and Pre-requisite Settings

4.1. Scenario
For the purpose of easy understanding, we will take a simple scenario to understand and be clear on the concept of Cost Center Splitting. In our Example, Two individuals of Level Senior Executive and Senior Software Engineer are on Project MUS01. All emoluments paid to these individuals are been posted to only one Cost Center Proj-Mus01. During September 2010, they both work on Job Jar Activity for which now costs has to be allocated to Cost Center Jobjar01

4.2. Master Data Setup

ITP Cost Center Job Jar Cost Center Activity Types Cost Elements (Cat 43) : : : : Proj-Mus01 Jobjar01 SSE SE 943003 Pay SSE (Linked to AT SSE) 943004 Pay SE (Linked to AT SE)

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SAP Controlling

Cost Center Splitting Concept

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4.3. Configuration Requirements

4.3.1. Configuration of Splitting Structure

Access Splitting Structure through

Transaction Code OKES Navigation Path SPRO -> Controlling -> Cost Center Accounting -> Planning -> Allocations -> Activity Allocations -> Splitting -> Define Splitting Structure

Before Creating Splitting Strcuture, we would be required to Create Splitting Rule. Click on Splitting Rules and then Click on New Entries. Maintain Values as shown below

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Cost Center Splitting Concept

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Select CS1 and click on Selection of Rules and maintain values as shown below

below

Repeat above step for CS2 Click on Splitting Structure. Click on New Entries and maintain values as shown

Select CS line and Click on Assignments and maintain values as shown below

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SAP Controlling

Cost Center Splitting Concept

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Select CS1 and Click on Selection for assignment. Maintain Values as shown below

Go one step back and Select CS2 and Click on Selection for assignment. Maintain Values as shown below

Save the configurations for Splitting Structure

4.3.2. Assigment of Splitting Structure to the Cost Center Access Assignment through Transaction Code OKEW Navigation Path SPRO -> Controlling -> Cost Center Accounting -> Planning -> Allocations -> Activity Allocations -> Splitting -> Assign Splitting Structure to Cost Centers

Maintain Values as shown above and click Change (Pencil icon) Modified: 3/1/2013 7:55 PM . 18 Last modified by: Malati Bhatt

SAP Controlling

Cost Center Splitting Concept

Version: 1.0

Assign Cost Center Proj-Mus01 to Splitting Structure CS1 as shown below. Save on exit

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Cost Center Splitting Concept

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5.

Planning Activity Costs on Cost Center

5.1. Checking Plan costs on Cost Center Reports (S_ALR_87013611)

Their Emoluments are as follows: Particulars Basic Others Conveyance LTA Total GL # 490001 490002 490003 490004 SSE 10000 29000 800 25000 64800 SE 25000 72500 800 25000 123300 Total Relationship 35000 1.0:2.5 101500 1.0:2.5 1600 1.0:1.0 50000 1.0:1.0 188100

These Individuals work for 20 days a month. Considering 9 hours per day, the hour rate is as follows: Particulars Total Hours work Hourly Rate SSE SE 64800 123300 180 180 360 685

These Hourly rates calculated above are done manually. Lets now derive these values using SAP Configurations.

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SAP Controlling

Cost Center Splitting Concept

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5.2. Plan Activity Quantity

Transaction Code KP26 Navigation Path SAP Easy Access Menu -> Accounting -> Controlling -> Cost Center Accounting -> Planning -> Activity Output/Prices -> Change Maintain Values as shown below and Save

Save on Exit

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Cost Center Splitting Concept

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5.3. Plan - Splitting

Transaction Code KSS4 Navigation Path SAP Easy Access Menu -> Accounting -> Controlling -> Cost Center Accounting -> Planning -> Allocations -> Splitting Maintain Values as shown below and Save

Cost Element wise Breakup

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SAP Controlling Basis for Calculation

Cost Center Splitting Concept

Version: 1.0

After verifying the results in Test run, Go back to initial screen and remove tick on Test Run

5.4. Plan - Price Calculation

Transaction Code KSPI Navigation Path SAP Easy Access Menu -> Accounting -> Controlling -> Cost Center Accounting -> Planning -> Allocations -> Price Calculation Maintain Values as shown below and Save

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Cost Center Splitting Concept

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After verifying the results in Test run, Go back to initial screen and remove tick on Test Run

5.5. Testing Results

5.5.1. Checking Plan Price per Activity Unit (KP27)

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SAP Controlling 5.5.2.

Cost Center Splitting Concept

Version: 1.0

Checking Plan Activity Costs on Cost Center reports (S_ALR_87013611)

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Cost Center Splitting Concept

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6.

Posting Actual Costs

6.1. Posting Cost Center via monthly Payroll cycle and checking its impact
Particulars Basic Others Conveyance LTA Total SSE (P) 10000 29000 800 25000 64800 SSE (A) 10000 26000 800 13600 50400 SE (P) 25000 72500 800 25000 123300 SE (A) 25000 69500 800 12700 108000 Total (P) 35000 101500 1600 50000 188100 Total (A) 35000 95500 1600 26300 158400

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Cost Center Splitting Concept

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6.2. CASE1 : 180 HOURS (PLAN HOURS) ALLOCATED

Overview : Both SE & SSE work for full month on Jobjar Activity i.e. book 180 hours on Jobjar for each level. Before Actual Price Calculation 6.2.1. Cost Center Report Comparison Actual v/s Plan (S_ALR_87013611)

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SAP Controlling 6.2.2.

Cost Center Splitting Concept

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Cost Center Report Comparison Actual v/s Target (S_ALR_87013625)

As you can see from above, as 180 hours were utilised during the period, Actual costs are derived based on Actual hours worked multiplied with the Plan Rate. Further since 100% operation has been completed, Target and Actual values would be the same. Hence at period end it becomes critical where values are significant to bring the Over/Under absorption to minimal. This is done as detailed below

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Cost Center Splitting Concept

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6.2.3.

Period End Closing Actual Splitting

Transaction Code KSS2 Navigation Path SAP Easy Access Menu -> Accounting -> Controlling -> Cost Center Accounting -> Period-End Closing -> Single Functions -> Splitting Maintain Values as shown below

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Cost Center Splitting Concept

Version: 1.0

After verifying the results in Test run, Go back to initial screen and remove tick on Test Run

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SAP Controlling 6.2.4.

Cost Center Splitting Concept Period End Closing Price Calculation

Version: 1.0

Transaction Code KSII Navigation Path SAP Easy Access Menu -> Accounting -> Controlling -> Cost Center Accounting -> Period-End Closing -> Single Functions -> Price Calculation Maintain Values as shown below

After verifying the results in Test run, Go back to initial screen and remove tick on Test Run

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Cost Center Splitting Concept

Version: 1.0

After Actual Price Calculation 6.2.5. Testing Results Actual Price (KBK6)

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SAP Controlling 6.2.6.

Cost Center Splitting Concept Testing Results Actual Cost Document (KSB5)

Version: 1.0

6.2.7.

Testing Results Cost Center Report Actual v/s Plan (S_ALR_87013611) Cost Center PROJ-MUS01

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SAP Controlling

Cost Center Splitting Concept Cost Center JOBJAR01

Version: 1.0

6.2.8.

Testing Results - Cost Center Report Actual v/s Target (S_ALR_87013625)

6.2.9.

Important Notes

The moment the price is calculated and adjusted using above processes, any further activity allocation will be done at the Actual Rate that is fixed using this process. It will not use the Plan rate per activity. In this case, you will have to run Actual Splitting and Actual Price calculation again to recalculate the actual price (rate) for the period.

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Cost Center Splitting Concept

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6.3. CASE2 : 130 HOURS (LESS THAN PLAN HOURS) ALLOCATED

Overview : Both SE & SSE work for most hours but not all on Jobjar Activity i.e. book 130 hours on Jobjar for SSE & 100 hours for SE level. Before Actual Price Calculation 6.3.1. Cost Center Report Comparison Actual v/s Plan (S_ALR_87013611)

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SAP Controlling 6.3.2.

Cost Center Splitting Concept

Version: 1.0

Cost Center Report Comparison Actual v/s Target (S_ALR_87013625)

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SAP Controlling 6.3.3.

Cost Center Splitting Concept Period End Closing Actual Splitting

Version: 1.0

Transaction Code KSS2 Navigation Path SAP Easy Access Menu -> Accounting -> Controlling -> Cost Center Accounting -> Period-End Closing -> Single Functions -> Splitting Results

6.3.4.

Period End Closing Price Calculation

Transaction Code KSII Navigation Path SAP Easy Access Menu -> Accounting -> Controlling -> Cost Center Accounting -> Period-End Closing -> Single Functions -> Price Calculation Results

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SAP Controlling After Actual Price Calculation 6.3.5.

Cost Center Splitting Concept

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Testing Results Actual Price (KBK6)

6.3.6.

Testing Results Actual Cost Document (KSB5)

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SAP Controlling 6.3.7.

Cost Center Splitting Concept

Version: 1.0

Testing Results Cost Center Report Actual v/s Plan (S_ALR_87013611) Cost Center PROJ-MUS01

Cost Center JOBJAR01

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SAP Controlling 6.3.8.

Cost Center Splitting Concept

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Testing Results - Cost Center Report Actual v/s Target (S_ALR_87013625)

6.3.9.

Important Notes

As you can observe from above, the over-under absorption is brought to minimal using actual splitting processes. It splits the Cost Center costs to the two activity types regardless of whether it has completed 100% activity against plan activity or not. In this Case Scenario, we analysed system behaviour in case of Lesser hours booked compared to Plan Hours. Similar would be the behaviour in case Excess hours are booked compared to Plan hours. In this case, Actual Activity Rate would be lower as compared to Plan Activity Rate. The moment the price is calculated and adjusted using above processes, any further activity allocation will be done at the Actual Rate that is fixed using this process. It will not use the Plan rate per activity. In this case, you will have to run Actual Splitting and Actual Price calculation again to recalculate the actual price (rate) for the period.

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