A Primer on Actual Costing Using CATS
- by Manuel Gallardo, SAP HR System Architect
- October 15, 2008
Learn how to perform actual costing and specify your activity type rate in Cross-Application Time Sheet (CATS). Find out the three different options for overriding the activity type rate and how to select the option that provides the best balance between your needs and internal constraints such as expertise and project deadlines.
An activity type determines the cost of each hour of work. You use it in activity allocation, which is the assignment of a cost between a sending cost center and a retrieving object. You can use the Cross-Application Time Sheet (CATS) to record activity allocations.
Actual costing is the process of calculating the activity type rate so that it closely reflects the true cost of performing an activity. Actual costing can be a complex topic, but once you grasp it, you will find that you can more easily attach actual costs to time records in Cross-Application Time Sheet (CATS).
Most companies require costs to be attached to the time records created in CATS. Actual costing differs from a predetermined activity allocation because the system calculates the activity type price dynamically during time entry. The precise definition of what should be included in the true cost of the activity is open to interpretation, but it usually includes the cost of labor plus a burden to represent benefits and administrative costs (usually in the form of a percentage of salary).
In this article I will review three options that CATS provides to calculate the price of an activity type:
- Manual override: The user manually enters the activity type rate during time entry
- User exit: The user exit calculates the activity type rate automatically
- CATS accounting variant: The system transfers the CATS data to the SAP HCM module. This allows the system to calculate the activity type rate using actual payroll results.
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