Explain what you understand by cost center and activity type in SAP PP.

Definition

A cost center is part of an organization that does not produce direct profit and adds to
the cost of running a company.

The various activities type cost and work done will be flow into the cost center.

An example of a cost center production flow.

Activity Type

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

center.

 Activity types in production cost centers are machine hours or finished units.
 Work centers only have an available capacity on working days. In order to
calculate the available capacity, a factory calendar has to be maintained, in
which the working days are defined.

 You define the work start, work finish and break times for all work centers in a
shift definition.

 In shift sequences, you maintain the sequence of individual shift definitions for
all shift sequences.

 The cost center that you want to assign the work center must exist and belong
to the same controlling area as the work center plant.

 At XYZPLT we would be defining 3 Activity Types: 1) Machine, 2) Setup, 3)

Labor