Operation Level Costing – Part 1
Hey there…!!! This is Anumandla Harikrishna. Am working as an SAP EAM Consultant. I want to share my recent experience on Operation Level Costing for the community. Purpose of this blog is to leverage operation level costing insights to drive innovative new business models.
This Functionality is primarily used to track the costs at Operation Level. Earlier to this, there used to be a single Accounting Structure for the whole Order which would result in exponential growth of Maintenance Orders. Most of the times, we may create a separate order for maintenance work just due to the fact that work order need to be settled to a single costing object.
Therefore, by activating OLC Business Function(LOG_EAM_OLC) you can assign more than one Technical Objects for every operation. Each Operation can possibly have different Account Assignments, Settlement Rules which could eliminate creating multiple work orders.Further Total costs of the work order can breakdown to granular level.
This Functionality is available from SAP ECC 6.0 EHP 5. Operation Level Costing can be activated per Order Type and Plant. However, this functionality cannot be supported for Refurbishment and Investment orders.
IMG Path :
Plant Maintenance and Customer Service – Maintenance and Service Orders – Functions and Setting for Order Types – Costs at Operation Level
Once you activate OLC to any order type, and create a new order then System Status “ACAS” Activity Account assignment is defaulted. With the Order Operation Account Assignment function, following account assignment information is available at each operation.
- Costing Sheet
- Overhead key
- Profit Center
- Maintenance Activity Type &
- WBS Elements.
- Functional Area (This field is used when Funds Management is Active)
For Order Confirmations, system updates the actual costs to the cost objects of the order operations.
There can be a possibility of integrating PM with PS by tying operation to a WBS Element. .System can consider order operations as the account assignment objects for the posting of Finance, Controlling and Material Management. While posting orders as account assignments in MM, FI & CO, the order number & operation number in the coding block become Active.
With OLC Activation, Settlement Rule is no more active on Order Header Level. So, you have Settlement Rule for each operation. We have two options for the Settlement Rules.
- With Default
- Without Default
With Default, Settlement Rules are Copied from the Master Data & Without Default we can manually change the Settlement Rules as per our requirement.
Once you activate this OLC Business Function, Settlement can be either at Order Header Level or Operation Level but both conditions cannot be met.
Header v/s Operational Costs
System determines the Plan costs and Actual Costs at the header level from the total costs for all operations.
In order to view the cost reports by operation follow the path
Extras-Cost Reports-Operation Costs Overview
IW40N Report –
You can use this report to display a cost summary for each operation for one or more maintenance order(s). Beside displaying costs for Operation Level Costed orders, the report can also display costs of Header Costed orders.
Please share your comments or thoughts for further improvement.
Thanks for passing through my blog.
My other blog Operational Level Costing – Part 2