SAP Cost Allocation

1. Distribution Cycle
2. Actual Assessment
3. Plan Assessment
4. COPA Cycle

In SAP, a distribution cycle is used to allocate primary costs from one cost center to multiple cost centers or cost objects. This process helps in accurately distributing costs based on predefined rules, ensuring that each cost center or object receives its fair share of the costs.

T code for Distribution cycle:

1.????? KSV1 - Create Actual Distribution

2.????? KSV2 - Change Actual Distribution

3.????? KSV3 - Display Actual Distribution

4.????? KSV4 - Delete Actual Distribution

5.????? KSV5 - Execute Actual Distribution

Here's a brief overview of how it works:

• Sender and Receiver: The distribution cycle identifies a sender cost center (where the costs are initially recorded) and multiple receiver cost centers (where the costs will be allocated).
• Primary Cost Elements: Distribution cycles use primary cost elements, which are the original cost elements used to record the costs.
• Tracing Factors: The allocation is based on tracing factors, which can be percentages, fixed amounts, or statistical key figures that determine how the costs are split among the receivers.
• Execution: When the distribution cycle is executed, the sender cost center is credited, and the receiver cost centers are debited with their respective portions of the costs.

For example, if a factory cafeteria incurs costs that need to be distributed to various production departments, a distribution cycle can allocate these costs based on the number of employees in each department.

In SAP, actual cost assessment is a method used to allocate costs from one cost center to other cost centers, internal orders, or other cost objects. This process helps in accurately reflecting the actual costs incurred during a specific period.

T code for Actual Cost Assessment:

1.????? KSU1 - Create Actual Assessment

2.????? KSU2 - Change Actual Assessment

3.????? KSU3 - Display Actual Assessment

4.????? KSU4 - Delete Actual Assessment

5.????? KSU5 - Execute Actual Assessment

Here are the key aspects of actual cost assessment:

• Sender and Receiver: Similar to distribution cycles, actual cost assessments involve a sender cost center (where the costs originate) and multiple receiver cost centers or cost objects (where the costs are allocated).
• Secondary Cost Elements: Unlike distribution cycles, actual cost assessments use secondary cost elements. These elements are created specifically for internal cost allocations and do not appear in financial accounting.
• Allocation Basis: The allocation is based on predefined rules or keys, such as statistical key figures, percentages, or fixed amounts. These rules determine how the costs are split among the receivers.
• Execution: When the actual cost assessment is executed, the sender cost center is credited, and the receiver cost centers or objects are debited with their respective portions of the costs.
• Transparency: The original cost elements are not displayed on the receivers; instead, the costs are grouped and reclassified under the secondary cost element.

For example, if a manufacturing plant incurs utility costs, these costs can be allocated to various production departments based on their usage, ensuring that each department bears its fair share of the utility expenses.

In SAP ERP, plan assessment is a method used to allocate planned costs from one cost center to other cost centers or cost objects. This process helps in distributing the planned costs accurately based on predefined rules, ensuring that each cost center or object receives its fair share of the planned costs.

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T code for Plan Cost Assessment:

1.????? KSU7 - Create Plan Assessment

2.????? KSU8 - Change Plan Assessment

3.????? KSU9 - Display Plan Assessment

4.????? KSUB - Execute Plan Assessment

Here are the key aspects of plan assessment:

• Sender and Receiver: Similar to actual cost assessments, plan assessments involve a sender cost center (where the planned costs originate) and multiple receiver cost centers or cost objects (where the planned costs are allocated).
• Secondary Cost Elements: Plan assessments use secondary cost elements, which are created specifically for internal cost allocations and do not appear in financial accounting.
• Allocation Basis: The allocation is based on predefined rules or keys, such as statistical key figures, percentages, or fixed amounts. These rules determine how the planned costs are split among the receivers.
• Execution: When the plan assessment is executed, the sender cost center is credited, and the receiver cost centers or objects are debited with their respective portions of the planned costs.
• Version Control: In plan assessments, you need to specify the version of the plan data being used. This allows for comparison between different planning versions and actual costs.

For example, if a company plans its annual marketing expenses, these planned costs can be allocated to various departments based on their expected usage, ensuring that each department has a budget for marketing activities.

In SAP, COPA (Controlling-Profitability Analysis) cycles are used to allocate costs and revenues to profitability segments, helping organizations analyze their profitability by various dimensions such as products, customers, or regions.

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T code for COPA Assessment Cycle:

1.????? KEU1 - Create Actual Transfer of CCtr Costs

2.????? KEU2 - Change Actual Transfer of CCtr Costs

3.????? KEU3 - Display Actl Transfer of CCtr Costs

4.????? KEU4 - Delete Actual Transfer of CCtr Costs

5.????? KEU5 - Perform act. cost-ctr cost transfer?

Here are the key aspects of COPA cycles:

• Sender and Receiver: COPA cycles involve sender cost centers or cost elements and receiver profitability segments. The senders are the sources of costs or revenues, and the receivers are the profitability segments where these costs or revenues are allocated.
• Allocation Basis: The allocation is based on predefined rules or keys, such as statistical key figures, percentages, or fixed amounts. These rules determine how the costs or revenues are split among the receivers.
• Secondary Cost Elements: COPA cycles use secondary cost elements for internal allocations, which do not appear in financial accounting but are used for internal reporting and analysis.
• Execution: When a COPA cycle is executed, the sender cost centers or cost elements are credited, and the receiver profitability segments are debited with their respective portions of the costs or revenues.

Types of COPA: There are two types of COPA in SAP:

Costing-Based COPA: Focuses on costs and revenues using value fields.

Account-Based COPA: Uses accounts for cost and revenue postings, ensuring reconciliation with financial accounting.

For example, if a company wants to allocate marketing expenses to different product lines based on their sales revenue, a COPA cycle can be set up to distribute these costs, accordingly, providing insights into the profitability of each product line.

Stay tuned for more updates !! Keep learning !!

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