In SAP PS (Project System), activity costs refer to the expenses associated with performing project

activities. Here's a brief overview:

1. **Cost Assignment**: Activity costs are assigned to specific project activities, allowing for accurate
tracking of expenses at the task level.

2. **Components**: Activity costs may include various components such as labor costs, material costs,
subcontracting costs, overheads, and other direct or indirect expenses incurred during the execution of
project tasks.

3. **Budgeting**: Activity costs are integrated with project budgets, enabling project managers to
allocate funds to individual activities and monitor actual costs against planned budgets.

4. **Resource Usage**: Costs are incurred based on the utilization of resources (e.g., labor hours,
material quantities) allocated to activity elements within the project structure.

5. **Time and Expense Recording**: Time and expenses incurred for executing activities are recorded in
SAP PS, allowing for accurate cost tracking and analysis.

6. **Variance Analysis**: By comparing actual activity costs with planned costs, project managers can
conduct variance analysis to identify discrepancies and take corrective actions to ensure project
profitability and adherence to budgetary constraints.

7. **Reporting**: SAP PS provides reporting functionalities to generate cost reports at various levels of
granularity, such as activity-level cost reports, project-level cost summaries, and overall project financial
performance reports.

8. **Integration**: Activity costs are integrated with other SAP modules like SAP Controlling (CO) and
SAP Financial Accounting (FI), ensuring consistency in cost accounting and financial reporting across the
organization.

Overall, activity costs in SAP PS play a crucial role in project financial management by providing visibility
into expenditure, enabling cost control measures, and facilitating informed decision-making throughout
the project lifecycle.