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Author's profile photo Maria Terence

Technical Object Cost Center and Work Center Cost Center

Objective:

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.

Ter2.jpg

Maintenance Order:

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

Ter 3.jpg

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.

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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.

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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.

ter 6.png

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).


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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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      25 Comments
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      Author's profile photo Siva kumar
      Siva kumar

      Hi Maria,

      Very useful document. expecting more like this in future ......

      Have a nice day.

      Siva-v

      Author's profile photo Maria Terence
      Maria Terence
      Blog Post Author

      Thank you Siva

      Author's profile photo Former Member
      Former Member

      Very useful for all PM consultants. It explains clearly - settlement of order cost on cost center maintained under equipment master data.

      Author's profile photo Maria Terence
      Maria Terence
      Blog Post Author

      Thank you Mukesh

      Author's profile photo Surendra Sowdanoor
      Surendra Sowdanoor

      Very useful document thanks for putting it down, It helps to understand well. 🙂

      Author's profile photo Maria Terence
      Maria Terence
      Blog Post Author

      Thanks Surendra

      Author's profile photo Kiran Ambi
      Kiran Ambi

      Hi Maria,

      Good document. Very Neat explanation.

      Author's profile photo Maria Terence
      Maria Terence
      Blog Post Author

      Thanks Kiran... 🙂

      Author's profile photo Former Member
      Former Member

      you shattered my doubts into pieces, thank you Maria, thank you very much.

      Author's profile photo Maria Terence
      Maria Terence
      Blog Post Author

      Thanks Harsh, Happy it has helped you.

      Also pls Like and rate this document.

      Author's profile photo PS R
      PS R

      Hi maria,

      It's well defined.

      Regards,

      PS R

      Author's profile photo Maria Terence
      Maria Terence
      Blog Post Author

      Thank you PS R 🙂

      Author's profile photo Former Member
      Former Member

      Hi Maria,

      Thanks for your document. Its very useful.

      BR

      Sam..

      Author's profile photo Maria Terence
      Maria Terence
      Blog Post Author

      Thank you Duraisamy 🙂

      Author's profile photo Shubham Gupta
      Shubham Gupta

      Hi Maria,

      Nice Document.. Thanks

      Author's profile photo Maria Terence
      Maria Terence
      Blog Post Author

      Thank you Shubham 🙂

      Author's profile photo Ravi Prakash
      Ravi Prakash

      Good job Terence keep it up

      Author's profile photo Maria Terence
      Maria Terence
      Blog Post Author

      Thank you Ravi 🙂

      Author's profile photo Former Member
      Former Member

      hi ,

      can you send spro setting for assigning cost element under spro--setting for display cost.

      Regards,

      Ganesh

      Author's profile photo Abhishek Singh
      Abhishek Singh

      Thanks Maria,

       

      Nice Document

      Author's profile photo Shrinivas y
      Shrinivas y

      Hi Maria,

       

      Thanks Very helpful document easy to understand as i am beginner too

      One query if we use any component for work order so that material cost will settle on which cost center.? whether it will be on Equipment cost center or PM Work center cost center.? need some clarity on this.

      Thanks in advance

      Author's profile photo Maria Terence
      Maria Terence
      Blog Post Author

      Hi Shrinivas,

      It will settle to your Cost Centre in the Settlement rule.

      In Standard Equipment Cost Centre will be transferred to Settlement, unless there is no custom enhanccement.

      Regards

      Terence

      Author's profile photo Pierre Jodoin
      Pierre Jodoin

      Hi Terence,

      Thanks for your good example.

      Would like to know at the end, if the ctr 1213 is the receiver, the ctr 1214 from the work center will not receive any charge. Is that right?

       

      Bets Regards

      PIerre

      Author's profile photo Maria Terence
      Maria Terence
      Blog Post Author

      Hi Pierre,

      Yes, right. CTR1214 in work center will be used to calculate the Cost of the Labor only. But the settlement will happen to the cost center in the settlement rule

      Regards

      Terence

      Author's profile photo Maria Terence
      Maria Terence
      Blog Post Author

      Yes