activity price calculation

Cost Center Accounting (CO-OM-CCA)

Method for calculating the prices of planned activities for cost center/ type combinations in an iterative process taking all activity exchanges between cost centers into account.

Iterative means that the primary costs are first divided by the planned activity/capacity and the resulting activity prices are used to value the activity inputs.

The values are calculated based on

The capacity is only used for fixed costs. The R/3 System divides the total planned costs (primary, secondary, activity-dependent, activity- independent) by the planned activity or capacity.

There are three methods for calculating activity prices:

The costs incurred each period are divided by the activities performed each period. This results in different activity prices for each period. If strong fluctuations in the variable costs occur between periods. A relatively high activity price will be calculated for periods with low variable costs and low price will be calculated for the activity input in periods with high variable costs.
With this method all receivers are charged at the same rate irrespective of the period when the activity was input. The total costs for all periods are divided by the total activity for all periods of one activity type.
You should not use this method for calculating actual prices, since in the individual periods (except the last period) no values for calculating the actual prices exist.
With this method the activity price for one period is derived from the total costs up to and including the current period divided by the total activity for one activity type through to the current period.
This smoothes out fluctuations between periods. All the activity exchanges for all periods are revalued with the new activity price.
Unlike the average price method, the cumulative price method can be for calculating actual prices since the price calculation, the new price valuation and the adjustment postings are all made in the current period.
Once the R/3 System has calculated the prices for all activity types, the activity exchanges are all revalued with the new prices.