Setting Production Allocation Rates

Allocating Manufacturing Overhead Rates to the cost centers

Transaction code – KSU2

-Execute and go to first segment

- Go to Receiver tracing Factor.

- Update with the COGM Ratio calculations for manufacturing (SFG & FG COGM)
- Cost centers
1100101051 – Material OH – FG (FG COGM rate)
1100101070 – Production Ohs- SFG (SFG COGM rate)
Each segment has different cost centers to which the rates will be settled
- Go to the Next Segment and keep updating all segments with the rates until you have reached
the last segment.
- Once you have completed, click Without Check to save the document.
 Run assessment cycle to settle the costs to the various cost centers.

Transaction Code – KSU5

- Fill in the period you plan to settle

- The cycle MPLA01 (don’t change the date maintained)
- Run in Test Run Mode.

- Remove the test run and Execute

Transaction code – CO43

Start by settling Product Cost Collectors

Execute and go to next list level to download the costs being settled.

Download this for analysis.

Remove test run and execute.

Once it’s fully settled, incase you try to settle it again, you will get a blank screen as below.
 Variance Calculation

Transaction Code – KKS5

- Select W/Product Cost Collectors

- Maintain the period.
- Choose Selected Target Cost Vsns.

- Get the Total of the variances column (take note of it because then you run CO88H, the variance
settled should equal to that amount)
- The red button that signifies an error (double click and this can be ignored in case the Error is)

Only remaining var. in version 0 - no target costs for 000002000040

Go back, remove Test Run and Execute.

To settle the Variances

Transaction code – CO88H

- Choose Product Cost collectors.

- Maintain Period and run in Test Run Mode.
- Execute and check the detailed list
- The amount being settled should match the total of Production Variances
- If it doesn’t, then go back once and reverse.

After reversing, try and settled the Product cost collectors again. Analyze the total being settled and
confirm whether it matches the variances.
- Download the file to analyze the variances.
- Remove test and execute.

At this point you can check the P&L and confirm that the figure posted to Price differences- Finished
goods (403030) matches both Variances report and Finished goods variances settled through CO88H.
 Cost Center Report Review.

Run this report and check the absorption rate for the Production cost center.

Once you run KEU5, that rate is cleared to Zero.

The next activity is only done once the FI period has been closed. It settles the absorption costs to
the various cost centers.