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Technical Object Cost Center and Work Center Cost Center


The main objective of this blog to explain SAP PM beginners to understand the difference between Technical Object Cost Center and Work Center Cost Center with a live example.

Pl. Note : This document is based on particular configuration where the settlement of the work order goes to Equipment Cost Center.

Technical Object Cost Center:

Technical Object cost center are referred as cost receivers and Work Order Cost will be settled to this cost center.

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Work Center Cost Center:

Work Center Cost Centers are used to calculate the cost of the work done (Labor Work). This is the responsible cost center for the work order. This also requires assignment of cost center in the work center and maintaining the Activity Pricing.


Maintenance Order:

Maintenance Order is created and planning is done for labor hours with a requirement of 8 Hrs.

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Operation Line Item Should contain all the Fields highlighted in yellow.

Activity Price (KP26):

Activity price is maintained in combination with Cost Center and Activity type.


Plan Cost:

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Planned Cost = Total Work (Hrs) * Activity Price (KP26) / unit

                     = 8 * 10 = 80 USD

Actual Cost:

On confirming the Operation, Actual cost is generated.


Actual Cost = Actual hours Confirmed * Activity Price (KP26) / unit

                  = 6 * 10 = 60 USD

The cost of the labor utilized in the work order is calculated based on the Cost Center assigned to the work center.

Settlement rule generation:

With respect to the configuration, settlement rule is generated automatically once the work order is Technically Complete.

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Settlement receiver is picked from Equipment Cost Center.

On performing the settlement, Work Order cost is settled to Equipment Cost Center. Below Screenshot is taken soon after executing KO88 transaction, which will display the cost flow is from the Maintenance order (Sender) to the cost center (Receiver).


Also you can see both the cost centers in the work order

     1.     Equipment Cost Center in Location Tab under Account Assignment

     2.     Work Center Cost Center in Additional tab.

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