What is overhead costing in SAP CO - Controlling?

SAP Term: overhead costing

• Component: CO

• Component Name: Controlling

• Description: The most common method of costing cost objects in Cost Object -PC-OBJ. This method first assigns the direct costs from Cost Element Accounting -OM-CEL to the cost object. Prorated overhead costs are then applied to the cost object in proportion to the direct costs, expressed as a percentage.

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• Key Concepts: 
  Overhead costing is a component of SAP Controlling (CO) that allows companies to allocate overhead costs to cost objects. It is used to accurately calculate the cost of production and services, and to determine the profitability of each product or service. Overhead costs are those costs that are not directly related to the production of a product or service, such as rent, utilities, and administrative costs. 
  
  How to use it: 
  In SAP Controlling, overhead costing is used to assign overhead costs to cost objects. This is done by creating cost elements and assigning them to cost centers. Cost elements are the individual components of overhead costs, such as rent or utilities. Cost centers are the organizational units responsible for incurring the overhead costs. Once the cost elements have been assigned to cost centers, they can be allocated to cost objects such as products or services. 
  
  Tips & Tricks: 
  When setting up overhead costing in SAP Controlling, it is important to ensure that all cost elements are correctly assigned to the appropriate cost centers. This will ensure that the overhead costs are accurately allocated to the correct cost objects. Additionally, it is important to regularly review and update the overhead costing setup in order to ensure that it remains accurate and up-to-date. 
  
  Related Information: 
  For more information on SAP Controlling and overhead costing, please refer to the official SAP documentation at https://help.sap.com/viewer/product/SAP_CONTROLLING/731/en-US.