Allocations in SAP Controlling

1. Introduction and BackgroundAllocations are an important part of every implementation using cost center accounting. This paper should help to make the right choice of allocation using best practices and show how to configure the SAP system. This paper primarily focuses on cost center allocations of actual costs. It is recommended that as far as possible the basis of plan allocations should be the same as for actual allocations to ensure consistency of data. In our implementation experience, the most common type of allocation is assessment. This type of allocation will be described in more detail.

2. Best PracticesAllocation is the apportionment of costs based on an estimate rather than a direct measurement. Financial accounting requires that all costs of manufacturing be included in valuing inventory and cost of sales. If the cost system is being used to value inventory for financial reporting, some allocation must be made to individual products. This allocation can be done based on units produced or inputs, such as labor or machine hours.

Allocation of overhead and other indirect costs is a necessary evil of financial accounting. For decision making purposes, though, allocated cost are often irrelevant. Allocation of overhead costs (e.g. accounting, human resources, etc.) to product line or product specific cost centers should be kept as simple as possible, if it is only an estimate to allocate costs. It is necessary to make sure there is direct relationship between additional costs and additional produced products. Any allocations could be misleading or distort decision making, if the relationship between output and overhead costs is not proportional.

If all the management accounting system is doing is taking the pool of overhead expenses and assigning it to units of output, little is accomplished. For example, overhead is often allocated based on direct labor hours. This is convenient, but does it reflect the actual relationship between activity and expenses? For companies with multiple services or products, different processes will lead to different relationships between labor and overhead. And what about other factors such as machine time, volume (short or long runs), or materials? Without the effort to uncover the true relationship between activity and cost, the time spent devising allocation formulas will succeed in spreading overhead costs, but will say nothing about what actually caused them or how you can control them.

Most companies have a large pool of expenses that do not appear directly related to the level of production or sales. In many companies this may even be the vast majority of expenses, including manufacturing overhead, such as wages for supervisors and inspectors, power, maintenance, insurance and rent. All selling, administrative, and interest expenses are also in this group. They often represent 60%, 80%, even 95% of a company's expenditures. They also are not as fixed as is often assumed. Although one additional unit of output won't change what is spent in the short term on rent, insurance, or supervisors, these expenses can change and do bear a relationship to activities. Three months, a year, or five years may pass, but all expenses become variable at some point. Since most management decisions involve some long-term commitment of resources - space, people, marketing - the impact on "fixed" costs becomes very relevant.

While the relationship maybe hard to spot, most overhead costs are driven by specific products and activities. The number of accounting clerks, purchasing agents, or warehouse personnel is often related to volume.

Because managers are allocated a portion of overhead, much of which arises in other departments and is considered beyond the line managers' control, no one is held accountable for overhead. Managers have an incentive to reduce their direct costs on which overhead expense is allocated, but no incentive to reduce overhead itself. Overhead is indeed controllable and the accounting system must reflect this. As mentioned earlier, if overhead expenses can be traced to the products or services that give rise to them, they should be. If not, recognize that not all expenses need to be allocated. If there is really no relationship between a product or service and an overhead expense, an allocation serves little purpose.

To budget and control these expenses separately is a better option, rather than create the illusion that volume or production efficiencies can change them. If the cost of the human resource department is independent of or too costly to trace to individual products, it is better to establish an operating budget and holding the department manager responsible for it. Perhaps it is possible to develop measures such as cost per applicant to measure efficiency. If costs change, the results are reported for just the department; the difference does not have to be absorbed by other departments or individual products.

The same holds true for companies that like to allocate a portion of all corporate expenses to division or product lines to create pro forma P&Ls. Although the allocation may ensure that all the costs of business are reported, it ends up assigning the costs to departments that have no control over them and the allocation is unrelated to the source of the expense.

The important thing is not to ignore the expenses or the line mangers held responsible for them. Overhead is too large to simply vanish in a series of allocations. The accounting system must ensure accountability for the level of overhead and it must be aligned with what the managers can actually control.

Clearly the benefits of management accounting information must be weighed against the cost of collecting and compiling the information.

There is no single way to allocate costs, but some relationships will stand out as logical. For example:

Power can be tied to the number of machine hours a product requires.

Expenses for the building can be allocated first to departments based on square footage and then to any products produced in that department.

Telephone expenses can be allocated based on the headcount in different departments and then to the products produced in the departments.

Many allocations proceed in a step-down manner. For example, some portion of building costs may be allocated to a quality assurance department. These costs, added to wages in the department, are then allocated to several different assembly and packaging departments. Next total costs for these areas are allocated to products. In many companies labor hours are the basis of allocation. This scheme makes sense when production is labor intensive; however, as processes have gotten increasingly automated, many such allocations have become outdated. The best allocation scheme is one that traces costs as closely as possible to their source.

The best way to do so is using activity based costing (ABC). One of the most recent developments in management accounting is the field of activity based costing. ABC is a management accounting approach that traces all indirect costs, including administrative costs, back to the products that generated them. This practice recognizes the problems traditional cost systems have with allocating overhead and with ignoring selling and administrative expenses, even though these may vary with sales or production volume.

Management accounting and correct allocation methods are critical for internal decision making and control over the organization.

3. Options and Type of AllocationsThis section describes different types of allocations and their main purpose. Most allocations are used at period end.Period end allocations are procedures which handle indirect allocation methods. Indirect allocation methods do not have the exchange of activities which are used as the basis for cost allocation, but instead have user defined keys such as percentage rates, flat amounts, statistical key figures, or posted amounts. These type of allocations are usually carried out after all the primary postings for a relevant period have been made. In addition to month end allocations there is one important method of allocation that will happen during the month. Each internal activity is valuated to determine the costs for business events (e.g. Internal cost allocation)

The following allocation methods are available for cost center accounting:

2.1 Direct Internal Activity Allocation Internal cost allocation is used in cost center accounting. It involves measuring, entering and allocating of internal services performed. In order to use direct internal cost allocation the system requires relevant allocation bases which can be measured and used to allocate costs. These bases are known in SAP as activity types (e.g. quality control hours, maintenance hours ). The costs are allocated when operations are confirmed or activities recorded. This is a transaction -based allocation method, it does happen during the month for every transaction using activity types that is posted in cost center accounting. To obtain the costs the system multiplies the activity quantity produced by the activity price (determined for an activity). You can either set the activity rate manually when you plan the activity or let the system compute it automatically. This utility is useful in that activities on cost centers can be allocated when they occur and will be allocated on the base of utilization of activities in cost centers.

This type of allocation will be mainly used for production related cost centers, because it is not always possible to determine activities and activity rates for service and overhead cost centers as well as determine the use of activities in these cost centers.

2.2 Indirect Activity AllocationIndirect activity allocation is a tool for automatically allocating plan and actual activities. Unlike direct activity allocation you use self-determined keys to allocate activities. Prior to allocation a fixed activity network is generated and valuation executed iteratively using it for allocation.

2.3 Calculation of Imputed CostsImputed costs are costs which need to be handled differently in cost center accounting and financial accounting. For example, operating costs which can be shown in financial accounting on an annual basis should be shown within management accounting on a monthly basis. Thus the process of distributing irregularly incurred expenses evenly over a number of periods is known as imputed cost calculation.

2.4 DistributionIt is a method of allocating costs from one cost center to other cost centers. It allocates all costs on one primary cost element to the same primary cost element on different cost centers.

All information about the distributing posting, for example details on sender and receiver is documented in the cost accounting document.

Advantages: Original cost element on the allocated costs is retained on receiver cost center

Disadvantages: Total on the original (sender ) cost center is 0, due to using the original cost element for allocation

More records are generated in the system

2.5 AssessmentIt is a method of allocating cots from one cost center to other cost centers. This method does not allocate using the primary cost element but transfers costs using and assessment (secondary) cost element. Therefore details of the original cost elements will not be shown on the receiver cost element. This method allows grouping together of different primary and secondary cost elements. All information about the allocation posting, for example details on sender and receiver is documented in the cost accounting document.

Advantages: Original costs remain on the cost center. So it is possible to report on just the primary costs.

Data in the system is grouped together, for example material costs can be put to one assessment cost element.

This method can allocate both primary and secondary cost elements on a cost center.

Disadvantages: The receiver cost element cannot identify the primary cost element.

4. Comparison of Allocation Types

5. Creation of an Assessment Cycle in the SystemAssessment is the allocation method that is used most to allocate costs, because it shows allocated costs on another cost element. The advantage of this method is that reporting can still be done on the original cost center of all costs before allocation.Allocation rules (cycles) are defined once in a year and can then be run on a monthly basis. A cycle groups together different sender-receiver relationships which are defined in segments. Separate allocation cycles must be created for allocating plan and actual costs, although the cycles my be copied form each other.

Which objects have to allocate costs (senders)?

Where are the costs to be allocated to (receivers)?

Which costs or activities are to be allocated?

Actual / plan costs

On what basis are the costs or activities to be allocated (tracing factors)?

Fixed amounts, fixed percentages, fixed portions (similar to fixed percentage, with the exception that the amount is not limited to 100. The sender base is derived from the total of the receiver tracing factors), variable portions (amounts are allocated based on postings in the database one the following types: cost elements, versions, activity types, statistical key figures)

When creating cycles there are various options available within the system:

Scaling negative tracing factorsA negative tracing factor can occur within the system if the tracing factors are not defined as fixed values or percentages, but are derived from objects such as statistical key figures or activity types. The problem arises only if one portion of the receivers has positive tracing factors and another portions has negative tracing factors. If the negative values are not scaled, then not only the sender is credited. Receivers with negative values are also credited and receivers with positive tracing factors are debited by a larger amount.

Example:

Sender cost center (CC 1) allocates $1000 to 2 receivers (CC 2, CC 3). The tracing factors (e.g. statistical key figures or activities) posted for the receivers are:+100 for CC 2, -90 for CC 3. The sender base is the total of the tracing factors: +100 - 90 = 10.

Without scaling of the tracing factors the allocated amounts are calculated as follows:

CC 2 receives $1000 * (+100)/10 = $10000

CC 3 receives $1000 * (-90)/10 = $-9000

CC 3 is thus credited with $9000 at the expense of CC2.

The scaling process works as follows:

1. The lowest tracing factor is set to 0.

2. The other tracing factors are increased accordingly.

Then the newly calculated tracing factors for our example are:

CC 3 is 0. CC 2 is increased by the scaling amount of 90. Sender CC 1 would now be credited 100% to CC 2 and CC 3 would be neither credited nor debited.

You must define scaling for single segments or for a segment and a cycle.

Iterative indicatorWhen a cycle is processed iteratively, all segments are processed one at a time. The result of one segment is then used by the next segment in the cycle. Note however that this indicator only applies to other senders within the cycle. If a later segment uses 'posted amounts' as a basis of receiving, then results of earlier segments are not taken into consideration. This indicator should only be used if really necessary, since it will run the cycle until all the costs in a sender are allocated, it may have an impact on runtime of the cycles. Depending on the sizes of the created cycles the runtime could be an issue.

Object currencyIf this field is set all the sender values in the object currency are computed separately and distributed in separate fields. This facility only functions when the object currency of all objects is the same because no translation will take place during processing.If this indicator is not set it will result in the object currency being determined by the controlling area currency.

Transaction currencyIn indicating the transaction currency posted sender values are computed separately and the receiver is updated in the posted transaction currency. In setting this indicator the allocation will create more records for each receiver and sender relationship. If you don't set this indicator the allocations will be carried out using the controlling area currency.

5.1 SegmentsA segment is a way of grouping together related sender-receiver relationships. Each segment defines the cost elements and cost centers to be allocated. The receivers can be cost centers, orders or WBS elements. Each segment has to have one assessment cost element assigned.

Sender cost centers, where the values to be allocated are calculated using the same rules, and the corresponding receiver cost centers, where the tracing factors are determined using the same rules, are combined in a segment.

The segments are processed sequentially during an allocation run.

Sender valuesSender values are either actual or planned. If not the total amount, but a fixed predefined amount or percentage should be allocated it can be defined here.

Tracing Factors Tracing Factors: The tracing factors within a segment control how the system will compute allocation. The system has four possible tracing factors:

Variable Portions - this tracing factor computes the allocation from the total file. In order to tell the system which totals file to access, the appropriate field group must be chosen. The field group indicates what the allocation base is for the segment. The following groups are available:actual costs, planned costs, actual consumption, planned consumption, actual statistical key figures, planned statistical key figures, actual activity, planned activityFixed Amounts- within the tracing factor screen the receivers are selected and charged directly with a fixed amount. The amount credited to the sender is derived from the total of the receiver debits.Fixed Percentages - the value form the sender is allocating according to the percentages on the receivers. The percentage value must not exceed 100. Where the percentage value is less than 100 the remainder stays on the sender.Fixed Portions - the value form the sender is allocated according to the total number of receiver portions. Unlike the percentage allocation the value can be a maximum of 999.99.

Allocation BaseThe use of allocation base only arises of the tracing factor '1' - variable portions is chosen. Then it is important to decide which of the field groups will be used to make the most meaningful allocation. If the field group entered is incorrect it may override any selection criteria chosen (e.g. if the field group actual costs is used but with a statistical key figure entered in the selection criteria the statistical key figure will be ignored. The allocation will be made on the basis of actual costs present on the receivers.)

Use of Statistical Key Figures in AssessmentsThere are two types of statistical key figures within SAP: a fixed value and total value key figure.

The fixed value key figure (type 1) indicates that a key figure is fixed from the initial month for all subsequent months of the current fiscal year.

A total value key figure (type 2) indicates that the amount of the key figure is set for the respective month and not carried forward to the subsequent months.

Statistical key figures can be incorporated in assessment cycles when the allocation is based on ratios like headcount square footage, telephone units etc.

6. Processing AllocationsCycles can be processed directly on-line or as a background job. They can be processed in a test mode or an updated mode and with/without a detailed list display. Usually allocation cycles are processed at the end of each month for the period that has to be financially closed.

The use of background jobs is recommended however it is imperative that these jobs are scheduled after all the statistical key figures have been input into the system.

If errors are found after the cycle has been run, provided the CO posting period is still open, the cycle can be reversed. It can be corrected if necessary and re-executed. This generates more records (one record for each posting, one for each reversal) on the database but is the safest way to perform corrections as no direct posting is permitted on assessment cost elements.

Examples for Indirect Activity Allocation Activity types of category 3, "Manual entry, indirect allocation"The cost center "Quality control" produces 1000 hours of activity type "Test". Activities go to cost centers "Goods receipt" and "Finished products". The allocation is made on the basis of the tracing factor "Number of test items" (NI). For "Goods receipt" these are 4000 items, for "Finished products" 6000.

Price per activity unit for "Quality control" equals 50 USD/hr. The resulting costs of activity production equal USD 50,000.

The receiver centers are debited according to the tracing factor with the following costs:

Goods receipt: (50,000 X 4000 NI) / 10,000 NI = $ 20,000Finished products: (50,000 X 6000 NI) / 10,000 NI = $ 30,000 Activity types of category 2, "Indirect entry, indirect allocation"Activity determination for the sender takes place via receiver tracing factors and weighting factors defined for each sender. The sender rule here is usually "Indirectly determined quantities"; receiver rule can be any rule.

Using the example above, the receiver tracing factors are:

"Goods receipt" 4000 NI

"Finished products" 6000 NI

Total 10,000 NI

The sender is credited with 10,000 test items. This amount can be valuated with weighting factors defined per sender activity type.

Weighting factor, activity type "Test": 0.4

Debiting of the sender and the activity type "Test" are thus equal to

(50,000 / 10,000 NI) X 10,000 NI X 0,4 = $ 20,000Senders and Receivers in Indirect Activity Allocation

Use

Senders in both plan and actual indirect activity allocation are always business processes or cost center/activity type, whereby you can use only activity types of category 2 or 3 in a segment. You do not need to accept the default category from the activity type master data. It is merely a suggested value that you can change during activity type planning for each version and fiscal year. If activity type planning is complete, the SAP System checks whether the activity type category matches the segment definition.

The activity type category is 1 (manual entry, manual allocation): this case does not allow indirect activity allocation.

The activity type category 2 (indirect determination, indirect allocation): the segment definition must include the sender rule Indirectly calculated quantity as well as a receiver rule, or Fixed quantities as both sender and receiver rule.

The activity type category 3 (manual entry, indirect allocation): here the segment definition must include the sender rule Posted quantities and any receiver rule except Fixed quantities.If activity type planning and internal activity allocation has not yet taken place, indirect activity allocation is possible only for activity types of category 2 because the R/3 System has no basis for allocation (meaning plan and actual quantities) yet. In this case, determine the activity type category in the segment definition.

In actual indirect activity allocation, the activity type category is determined in segment definition or is drawn from the default value in the activity type master data.

Receivers for indirect activity allocation in the Activity-Based Costing component (CO-OM-ABC) are business processes and cost objects, just as in manual activity allocation (activity input planning). To do so, you must enter a delta version in the header information.

If the receiver of the activity allocation is a cost object (for example, a production order or a product cost collector), then the prices used in the valuation are determined based on the valuation variant. In this case, the valuation variant is linked to the cost object through the costing variant for the simultaneous costing. If the receiving cost object is not tied with a costing variant for the simultaneous costing, then the planned price for the period is used for the valuation.

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Displaying a Cycle for Indirect Activity Allocation

1. Call up the transaction as follows:

Menu PathTools AcceleratedSAP Customizing Edit Project

Transaction CodeKSC8

2. Choose SAP Reference IMG.

3. Open the tree Controlling Cost Center Accounting Planning Allocations Activity Allocation Indirect Activity Allocation.4. Choose Define Indirect Activity Allocation.

5. Place the cursor on the Change Plan Indirect Activity Allocation, choose Choose.

If the Set Controlling Area dialog box appears, enter the following data then choose :

FieldEuropeNorth America

Controlling area10002000

6. Enter the following data:

FieldEuropeNorth America

CycleI-IAP1I-IAP3

Starting date01.01.199501.01.1995

This cycle is used only for company code 1000 Germany or 3000 U.S.A., as these are the only company codes in which indirect activity allocation occurs. Company codes 2000 Great Britain (or 4000 Canada) use assessment to allocate secondary costs.

7. Choose .

8. Choose .

You see which areas are to be allocated using indirect activity allocation.

9. To close the dialog box, choose .

10. Choose First segment.

11. Choose the Sender/Receiver tab page.

You can see the specification of the sender and receiver cost centers for the allocation of cost center 1000 (Corporate Service). In this segment, the sender costs are allocated via activity type 1510 (caution, we use activity type categories 2 and 3).

12. Double-click on the receiver Cost Center Group VC1-050 (VC3-050).

The system displays the drilldown for the receiver cost center set. This contains all cost centers from numbers 1110 to 4500.13. Choose .

14. Choose the Recvr tracing factor tab page.

Statistical key figure 9101 (square meters) is used as the basis for the indirect activity allocation. This key figure is planned either as activity-type independent or activity-type dependent on the receiver cost center. The sender/receiver relationship is built up via indirect activity allocation, either activity-type independent or activity-dependent.

15. Choose and until the overview tree appears.

If you are asked whether you wish to save the processed cycle, choose No.STEP-1: Create allocation cost element

Accounting>>Controlling>>Cost Element Accounting>>Master Data>>Cost Element>>Individual Processing>> Create Secondary

T code: KA06

Enter your controlling area in the pop up screen for Set Controlling Area

Cost element

Valid from

Click on Master Data button

Name < Enter name of the cost element>

Description

Cost element category

STEP-2: Create activity type

Accounting>>Controlling>> Cost Center Accounting>> Master Data>> Activity Type>> Individual Processing>> KL01 - Create

T code: KL01

Activity Type

Valid from

Click on Master Data button

Name

Description

Activity Unit

Cost center categories < *>

Activity type category

Allocation cost element

Price indicator

STEP-3: Set Planner Profile

Accounting>>Controlling>> Cost Center Accounting>> Planning>> Set Planner Profile

T code: KP04Select in the pop up screen for Set Planner Profile

Click on green check mark

STEP-4: Create 3 new cost centers (T code-KS01) and post transactions in one of this cost center in current date. This cost center you will use as sender cost center and the other two cost centers you will use as receiver cost centers.

STEP-5: Enter activity price

Accounting>>Controlling>> Cost Center Accounting>> Planning>> Activity Output/Prices>>Change

T code: KP26Version

From period to period

Fiscal Year

Select the radio button for Form Based option

Click on

Enter activity price for all periods in the presented screen in the column for fixed price.

STEP-6: Enter Activity Allocation

Accounting>>Controlling>> Cost Center Accounting>> Actual Postings>> Activity Allocation>>Enter

T code: KB21N

Sender cost centre

Sender Activity Type

Receiver cost center-1

Total quantity

Receiver cost center-2

Total quantity

STEP-7: Confirm the allocation postings in receiver and sender cost centers in cost center line item report. T code-KSB1.

Indirect cost allocation

How to define indirect activity that is electricity power consumption, water overhead, supplier, mechanical shifting (that is overhead) etc.... so how to define & assign, activity price planning. Pleases tell step by step procedure

STEP-1: Create a allocation cost element

Accounting>>Controlling>>Cost Element Accounting>>Master Data>>Cost Element>>Individual Processing>> Create Secondary

T code: KA06

Enter your controlling area in the pop up screen for Set Controlling Area

Cost element

Valid from

Click on Master Data button

Name < Enter name of the cost element>

Description

Cost element category

STEP-2: Create activity type

Accounting>>Controlling>> Cost Center Accounting>> Master Data>> Activity Type>> Individual Processing>> KL01 - Create

T code: KL01

Activity Type

Valid from

Click on Master Data button

Name

Description

Activity Unit

Cost center categories < *>

Activity type category

Allocation cost element

Price indicator

STEP-3: Enter activity price

Accounting>>Controlling>> Cost Center Accounting>> Planning>> Activity Output/Prices>>Change

T code: KP26

Version

From period to period

Fiscal Year

Cost center

Activity type< enter the sender cost centre activity type, defined in step-2>

Select the radio button for Form Based option

Click on

Enter activity price for all periods in the presented screen in the column for fixed price.

STEP-4: Enter Sender activities

Accounting>>Controlling>> Cost Center Accounting>> Actual Postings>>

Sender Activities>> Enter

T code: KB51N

Sender cost centre

Sender activity type

Total Quantity

STEP-5: Create SKF and enter SKF for the current period for at least 2 receiver cost centers.

T. code KK01 and KB31N

STEP-6: Create cycle and segment

Accounting>>Controlling>> Cost Center Accounting>> Period-End Closing>> Current Settings>> Define Indirect Activity Allocation

Cycle

Start date

Hit

Text

Click on

Segment name

Description

Rule

Shares in %

Confirm defaulted radio button for

Receiver Tracing Factor

Variable portion type

Click on Sender/Receivers Tab

Sender:

Cost center

Activity type

Receiver:

Cost centre: FromTo >Controlling>> Cost Center Accounting>> Period-End Closing>> Single function>> Allocations>>Indirect Activity Allocation

T code: KSC5

Period From To

Fiscal year

Flag for Test Run

Review the results and if results correct, remove the test run flag and again execute in production mode. Confirm postings in sender and receivers cost centers line item report.

T code KSB1

Define Activity Types for Indirect Activity Allocation

You use indirect activity allocation for those activity types for which activity quantities cannot easily be determined.

It is important to distinguish between the following cases:

Sender activities can be summarized

The sender allocates activities to the receivers based on receiver tracing factors.

Sender activities impossible or difficult to determine

The sender allocates these activities:

Using receiver tracing factors and sender weighting factors

Using specified fixed amounts

Activities1. Create activity types of category 3 for sender activities which can be summarized.

2. Create activity types of category 2 for sender activities which are impossible or difficult to determine

NoteFor more information, see Create activity types.

Definition: activity type

Controlling (CO)

A unit in a controlling area that classifies the activities performed in a cost center.

ExampleActivity types in production cost centers are machine hours or finished units.

Definition: activity category

Controlling (CO)

The activity category determines how an activity type is allocated.

An activity type can be allocated using the following methods:

directly

using pre-distribution of fixed costs

indirectly (inverse computation of activities)

not allocated; the activity quantity produced is entered on the sender cost centers

Define Activity Types for Indirect Activity Allocation

You use indirect activity allocation for those activity types for which activity quantities cannot easily be determined.

It is important to distinguish between the following cases:

Sender activities can be summarized

The sender allocates activities to the receivers based on receiver tracing factors.

Sender activities impossible or difficult to determine

The sender allocates these activities:

Using receiver tracing factors and sender weighting factors

Using specified fixed amounts

Activities1. Create activity types of category 3 for sender activities which can be summarized.

2. Create activity types of category 2 for sender activities which are impossible or difficult to determine

Define Indirect Activity Allocation YOU determine rules for indirect activity allocation in the form of cycles.

For cost centers with activities that cannot be measured or measured only with great difficulty, the activity quantities can be determined indirectly.

In indirect activity allocation, the usage of sender activities (cost center/activity type) is determined via tracing factors from the viewpoint of the activity receivers.

The tracing factors are defined as in assessment or distribution.

Requirements You must maintain activity types for indirect allocation in actual and plan.

The requirement for indirect activity allocation in actual and planning data is that all senders and all receivers of the cost object cost center/activity type are included in activity type planning for activity type category 3.

You enter activity quantities for activity type category 3 ("Manual entry, automatic allocation") for planning data with activity type planning.

Note:Planning activity quantities with the aid of activity type planning is only possible for activity type category 3. For activity type category 2 the SAP system automatically creates a cost center/activity type record. Sender activity quantities are indirectly determined from the receiver tracing factors and through fixed quantities.

For actual data, a posted sender activity quantity can be created by entering non-allocatable activities.

Note:Entering posted activity quantities for activity type category 3 is not possible, since the activity quantities are indirectly determined.

The requirement for indirect activity allocation in actual and planning data for activity type category 2 is that a value NOT equal to zero is entered in the segment definition for the sender-specific weighting factors with the function Sender values. Only then will the corresponding record be included in the activity allocation.

Examples for Indirect Activity AllocationActivitiesCreate a cycle for indirect activity allocation as follows:

1. Determine a name for the cycle.

2. Determine a date as of which the cycle is to be valid.

3. Maintain the header data of the cycle by specifying the following:

a) an explanatory text

b) the date to which the cycle is to be valid

c) whether negative tracing factors are to be standardized

4. Define cycle segments in which you store the following information:

a) a name and text for each segment

b) the sender values

c) the tracing factor

d) the selection criteria (sender objects and receiver objects)

5. Save the cycle.

Notes for TransportIf, in your client, you have not selected the automatic recording of changes for client-specific objects (in Customizing under Basis Components -> System Administration -> Change and Transport System -> Configure Clients),you can transport your settings to the target system in a user-defined activity.To do this, in Customizing, choose Controlling -> General Controlling -> Production Start-Up Preparation -> Transport System Settings and then process the relevant activity.

Further notesFor more information, see the SAP Library under Financials -> CO Controlling -> Cost Center Accounting -> Cost Center Planning -> Periodic Allocations -> Indirect Activity Allocation or in Period-End Closing -> Defining Periodic Repostings or Periodic Allocations.

Information for Indirect Activity Allocation Indirect activity allocation consists of two subfunctions which you can enter as required in a cycle. However, one segment can cover only one subfunction in each case:

1. Sender activity quantities are known and can be entered as totals. Using indirect activity allocation, the posted activity quantities are distributed from senders to receivers according to the tracing factors defined in the segment.

A segment uses this method if Posted quantities (rule 1) is the sender rule and Fixed quantities (rule 2) is NOT a receiver rule.

In a segment to distribute posted sender amounts, you can use activity types of category 3 manual entry, indirect allocation only.

2. Sender activity quantities are not known because measurement is either impossible or not feasible (for example, a joint office working for several cost centers). However, the SAP system can derive sender activity quantities indirectly, based on receiver tracing factors adjusted with a sender-specific weighting factor.

A segment uses this method if Indirectly determined quantities (rule 3) is the sender rule, or if Fixed quantities (rule 2) is a sender or receiver rule. Using the Sender values function, you can determine sender-specific weighting factors for the sender rule Indirectly determined quantities. The default value is "1".

In segments for indirect calculation of sender activity quantities you can only use activity types of category 2 indirect entry, indirect allocation.

Senders and receivers in indirect activity allocation In indirect activity allocation for actual and plan data, senders can be objects of the category cost center/activity type or business processes.

In a given segment, you can use category 2 or category 3 activity types only.

In indirect activity allocation for plan data, all usual CO objects are possible (cost center, cost center/activity type, orders, projects, etc.) as receiversAll of these receiver categories can appear in a cycle. However, cost objects of the category cost center/activity type may not be combined with other receiver categories.

In indirect activity allocation for actual data, you can use the same cost objects as receivers as in manual activity allocation, meaning no cost centers/activity types.

Fixed and variable activity references; evaluating activity quantities In indirect activity allocation for actual data, all quantities are posted as total quantities. The division into fixed and variable quantity parts is carried out through actual cost splitting.

In indirect activity allocation for plan data, the determination of fixed and variable quantity quotas depends on the receiver category:

Receivers of the category cost center/activity type post all activity quantities as variable quantities, with tracing factors dividing actual and plan activity into fixed and variable quantity parts.

For all other receivers the receiver quantities are posted as fixed.

If an activity price is available for a sender object, the activity quantities of the sender and the corresponding receivers are valuated using this activity price.

Updating the databasesThe activity quantity updated on the senders is determined either from read/posted sender quantities (subfunction 1) or from indirectly calculated activity quantities based on receiver tracing factors or predefined sender quantities/receiver quantities (subfunction 2). The activity quantity thus determined is posted to the respective sender as activity output (quantity credit) and to the respective receiver as activity-dependent or activity-independent activity input in relation to their tracing factors (quantity debit). The indefinite credit rate is updated for plan data as well (with activity type category 2).

Additionally, the following activity postings are based on the sender activity quantities:

If available quantities are distributed (subfunction 1), the scheduled quantity are updated.

If the sender activity quantities are indirectly determined or fixed, the activity quantity is also updated in addition to the scheduled quantity.

In actual indirect activity allocation, all quantities are treated as fixed quantities.

You use indirect activity allocation in activity price calculation.Page 1 of 15