Activity Types
Activity types are used to describe the various forms of activity that are performed at a cost center.
Activity types are valuated for each cost center and period with a charge rate that consists of a fixed portion and a variable (work-related) portion. Thus the costs incurred at a cost center can be distributed to products, according to which activities have been performed.
You can assign each standard value in the work center an activity type as a default
Relationships between the Cost Center, Activity Types, Work Center and Routing
The following graphic illustrates the relationships between cost center, activity types, work center and routing for costing internal activities.
Relationships between the Cost Center, Activity Types, Work Center and Routing
The "Production" cost center has been assigned four activity types. Each activity type was valuated with a charge rate that is made up of a fixed and a variable (work-related) part. In this example, a setup hour (SET) costs $70.
Since the work center is assigned to a cost center, the activity types (as long as permissible in the cost center) can be assigned to standard values in the work center. In this example the activity types SET, MAC and LAB are assigned to the standard values "Setup", "Machine" and "Labor" in the "Milling machine 5" work center. These activity types are then suggested when the work center is assigned to a routing
In the work center a formula can also be assigned to each standard value for costing. Formulas are used to calculate activities for the operation quantity from the general operation data and the standard values.
The activity types are used to calculate the costs for these activities.