Technical Articles
Cost Center and Cost Element wise Variable and Fixed Planning
Background:
The blog is prepared for clarifying how system provides Fixed and Variable costs breakup from report. There are a lot of times client asks to define additional activities to distribute Variable and Fixed nature costs.
This breakup is available from SAP standard functionality and does not necessitate additional activity.
In below example a single activity of Setup Cost is taken for example where both Plan Fixed/ Variable and Actual Fixed/Variable rate calculation is explained. Kindly ignore GLs description as these description might not be realistic.
System breaks down Fixed and Variable based on Plan entered GL and Cost Center wise as shown below. This blog is divided into two portions Plan Fixed and Variable Price Calculation and Actual Fixed and Variable Price Calculation
Plan Fixed and Variable Price Calculation:
Entered Plan in Variable and Fixed Portions
Referring Entered Plan
We have also mentioned Plan Activity and Capacity against the same Activity.
Plan Activity and Capacity Maintained
Now both the above costs will be segregated based on formula where Fixed Costs are divided with Plan Capacity and Variable Costs are divided by Plan Activity in order to calculate Plan Fixed and Plan Variable Prices. Breakup is prepared below for reference:
| GL Heads | Plan Fixed | Plan Variable | Plan Capacity | Plan Activity |
| Entertainment Expense | 250,000 | 10000 | ||
| Setup Fixed Cost | 100,000 | 10000 | ||
| Setup Variable Cost | 50,000 | 10000 | ||
| Total | 350,000 | 50,000 |
Fixed Price Rate = (250000+100000)/10000
= 35
Variable Price Rate = (50000)/10000
= 5
Total Plan Price = 40
**In the above manner, we can obtain both Variable and Fixed Plan Rate as calculated by system shown below.
Plan Price Calculated
Until now we have Plan Prices calculated, moving forward system will calculate Actual Prices based on below basis.
Actual Fixed and Variable Price Calculation:
There are some actual postings made in system in order to allow the system to calculate actual prices.
Actual Postings
Firstly, system will deduct all the Actual Fixed Costs posted in GLs which were planned to remain fixed. This cost equals to 400,000/=
Accordingly, Fixed rate will be calculated by dividing the 400,000 total with Actual Activity.
| GL Heads | Actual Fixed | Actual Variable | Actual Activity |
| Entertainment Expense | 250,000 | ||
| Setup Fixed Cost | 150,000 | ||
| Setup Variable Cost | 60,000 | 2,457.437 | |
| Total | 400,000 | 60,000 |
Fixed Cost = (250000 + 150000) / 2,457.437
= 162.771
**Variable cost will be calculated as Total Cost minus Fixed Cost divided by Actual Activity
Variable Cost = (460000 – 400000) / 2,457.437
= 24.415
Total Cost = 187.186
**System taken Price Unit as 10, therefore multiplying above amount with 10 will match the above rates with system calculations.
Actual Price Calculated
Conclusion:
Concluding the blog it can be said that segregating the costs into Variable and Fixed nature will no longer require any additional activity. It can be covered with SAP Standard Feature of Fixed and Variable Price Calculation using KSPI and KSII.
Hi Arslan,
Well explained, also, can you please mention the t-code which you used in these example including input t-codes and report t-codes?
Regards
Naveen
KSS4 - Plan Cost Splitting
KSPI - Plan Price Calculation
KSS2 - Actual Cost Splitting
KSII - Actual Price Calculation
KP06 - Cost Center Planning
KP26 - Activity Planning
S_ALR_7013611 - Cost Center Plan vs Actual Postings Report
Hi Arsalan,
Thanks for bringing up this topic and sharing it across.
I've noticed a line - "Now both the above costs will be segregated based on formula where Fixed Costs are divided with Plan Capacity and Variable Costs are divided by Plan Activity in order to calculate Plan Fixed and Plan Variable Prices."
In the activity type master data, there is a field called Price indicator which will indicate the system to compute the rates based on activity quantity or capacity. For a single activity type, calculation will be based on either quantity or capacity, not both. Irrespective whether the cost is fixed or variable, rate will be determined based on only quantity or only capacity.
Thanks,
Kathir