Cure Your Cost Allocation Fears: Overcoming the Four Causes of CO Module "Activities Phobia"

  • by Tom Spetnagel, Senior FI/CO Configurator, Cox Target Media
  • May 15, 2002
The "activities" functionality in the CO module is a powerful allocation tool, but many sites fail to take full advantage of it due to confusion. The author clears up this confusion by explaining its root causes.

The Controlling (CO) functionality known as "activities" is potentially the most useful allocation tool in the module. This tool is capable of easily tracking "internal" work and dispensing the firm’s capacity-related period costs from its employee "resources" to its employee "consumers." Yet, despite its usefulness, its capabilities are a source of confusion and, as a consequence, its potential remains largely underutilized at many SAP sites.

I suspect four unfortunate circumstances are the root cause for this confusion:

 The word "activity" appears in several SAP terms, but not in a consistent way.

 In a standard SAP setup, a "plan" activity rate is used for the "actual" allocations.

 In SAP, the purpose for having "fixed" and "variable" portions of a cost rate is unclear.

 The CO menu options for allocating "activities" lack usable titles or instructions.

Understand these four issues and you can easily leverage CO activities. So that’s what we’ll do here — clarify each of these potential points of confusion and give you the head start you need to use activities (a.k.a. "Activity Types") in your overall cost allocation design.

Tom Spetnagel

Tom Spetnagel, a former platinum consultant and top performer for SAP America, is a specialist in R/3's Controlling module. Since 1995, Tom has helped several major R/3 customers implement CO and has taught a number of Profitability Analysis and Product Costing classes at SAP training centers as well. Tom is currently the senior FI/CO configurator at Cox Target Media near Tampa. He has both an MBA and a master's degree in aerospace engineering from Georgia Tech and an undergraduate degree in aerospace engineering from the University of Michigan.

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