# SAP Activity Type Rate Calculator: Plan Price, Utilization and Under or Over Absorption

> Source: https://netray.co/tools/sap-activity-type-rate-calculator
> Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems.
> Section: Free Tools

## Short answer

Work out the fixed, variable and total activity price from planned cost center cost and activity quantity, then test absorption at actual activity.

## Category

sap

## Erp

SAP ECC and S/4HANA

## Audience

- Cost accountant
- SAP FICO consultant
- Controller

## Tool

**Kind:** calculator

**Currency:** $

**Inputs:**

#### Planned fixed cost on the cost center

**Key:** fixed_cost

**Type:** number

**Default:** 420000

**Min:** 0

**Step:** 5000

**Unit:** per year

**Help:** Depreciation, rent, supervision and similar costs that do not move with activity.

#### Planned variable cost on the cost center

**Key:** var_cost

**Type:** number

**Default:** 310000

**Min:** 0

**Step:** 5000

**Unit:** per year

**Help:** Power, consumables and other costs that move with activity.

#### Planned activity quantity

**Key:** plan_act

**Type:** number

**Default:** 12000

**Min:** 1

**Step:** 100

**Unit:** hours

**Help:** Activity to be allocated to orders in the year.

#### Available capacity

**Key:** capacity

**Type:** number

**Default:** 15000

**Min:** 1

**Step:** 100

**Unit:** hours

**Help:** Maximum hours the resource could deliver.

#### Actual activity delivered

**Key:** actual_act

**Type:** number

**Default:** 11200

**Min:** 0

**Step:** 100

**Unit:** hours

**Help:** Hours actually allocated to orders.

#### Actual cost on the cost center

**Key:** actual_cost

**Type:** number

**Default:** 705000

**Min:** 0

**Step:** 5000

**Unit:** per year

**Help:** Fixed plus variable actual cost.

**Outputs:**

#### Fixed price per hour

**Key:** fix_rate

**Expr:** fixed_cost / plan_act

**Format:** currency

#### Variable price per hour

**Key:** var_rate

**Expr:** var_cost / plan_act

**Format:** currency

#### Total activity price per hour

**Key:** total_rate

**Expr:** fix_rate + var_rate

**Format:** currency

**Primary:** true

**Description:** Price to maintain for the activity type in KP26.

#### Planned capacity utilization

**Key:** util

**Expr:** plan_act / capacity * 100

**Format:** percent

#### Fixed price at full capacity

**Key:** cap_rate

**Expr:** fixed_cost / capacity

**Format:** currency

**Description:** Shows the idle capacity effect on the fixed rate.

#### Cost absorbed by orders

**Key:** absorbed

**Expr:** actual_act * total_rate

**Format:** currency

#### Under (+) or over (-) absorbed

**Key:** under_over

**Expr:** actual_cost - absorbed

**Format:** currency

**Primary:** true

**Description:** Positive means the cost center cost more than was charged to orders.

**Chart:**

#### Absorbed cost vs actual activity

**Type:** line

**X:** actual_act

**From:** 6000

**To:** 15000

**Steps:** 19

**Series:**

- absorbed
- under_over

**Disclaimer:** Planning logic only. Actual cost is held constant while the chart sweeps activity, so the under or over figure shows what a volume shortfall does to a fixed cost base.

## Content

**Intro:** An activity type price is how a cost center charges its cost to production orders, maintenance orders and projects. If it is wrong, product costs are wrong. This calculator divides planned cost by planned quantity into a fixed and variable price, shows the effect of idle capacity and tests the result at an actual activity level.

**Sections:**

#### How to use it

**Body:** Enter planned fixed and variable cost for the cost center, the activity quantity you plan to allocate, and the capacity. The result is the total price you would enter or confirm in KP26 or let SAP calculate through iterative price determination (KSPI) or activity price calculation from the planned cost. Then enter actual activity and actual cost to see whether the cost center ends the year under or over absorbed.

#### The formula behind it

**Body:** Price equals planned cost divided by planned activity quantity, split into fixed and variable portions. Many companies plan against capacity rather than planned activity so that idle capacity does not inflate product cost. The second fixed price output shows that alternative. Whichever basis you use, document it, because it changes the standard cost estimate for every product that uses the resource.

#### Reading the result

**Body:** With the defaults the price is about 60.83 per hour and planned utilization is 80 percent. At 11,200 actual hours the orders absorb 681,333, while the cost center spent 705,000, so it is under absorbed by about 23,667. That difference remains on the cost center until it is allocated or written off at period close, usually through an assessment or settlement to a variance account.

#### Common mistakes

**Body:** Planning activity from last year's actuals without adjusting for a sales forecast. Including costs allocated in from other centers in the fixed number twice. Forgetting to update the price after a significant change in depreciation. Using the same activity type for very different machines. Not reviewing the resulting price against the market cost of an outside subcontract.

**Cta:** If you want rates and utilization pulled from your own plan versions and actuals, Netray can build a read-only view across your SAP cost centers.

**Faq:**

#### What is the difference between fixed and variable activity price?

**Answer:** The fixed price spreads costs that do not change with volume, such as depreciation, over the planned quantity. The variable price spreads costs that follow volume, such as energy. Product costing uses both, and variance analysis often treats them separately.

#### Should I plan on capacity or on planned activity?

**Answer:** Planned activity gives a rate that reflects expected volume, but idle time inflates the price. Capacity-based planning gives a lower, stable rate and leaves idle cost on the cost center as an explicit loss. Choose one policy and apply it consistently.

#### Where is the price maintained in SAP?

**Answer:** Planned prices are maintained in KP26 for activity types and in KP27 for the plan values for an activity-dependent cost view. Automatic calculation is available through the activity price calculation transaction when you plan cost and quantity in the same version.

#### What does under absorption mean for product cost?

**Answer:** Orders were charged less than the cost center actually spent. The gap is not in product cost until it is allocated, so margins in profitability reports look better than the true cost until that allocation is made.

## Search terms

sap activity type price calculation, sap activity type rate, kp26 planning activity prices, machine hour rate calculation sap, cost center rate calculation, under absorption over absorption sap, sap iterative price calculation, ksps price calculation

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