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Explain What You Understand by Cost Center and Activity Type in SAP PP

A cost center in SAP PP is an organizational unit that incurs costs but does not directly generate revenue, while activity types classify the work performed in cost centers. For example, in a production cost center the activity types could be machine hours or finished units. Work centers have available capacity only on defined working days according to a factory calendar and shift schedule.

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113 views3 pages

Explain What You Understand by Cost Center and Activity Type in SAP PP

A cost center in SAP PP is an organizational unit that incurs costs but does not directly generate revenue, while activity types classify the work performed in cost centers. For example, in a production cost center the activity types could be machine hours or finished units. Work centers have available capacity only on defined working days according to a factory calendar and shift schedule.

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ratnasap1
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© © All Rights Reserved
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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

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