What is 'overhead rate base' in SAP PP - Production Planning and Control?

overhead rate base - Overview

• Component: PP

• Component Name: Production Planning and Control

• Description: An overhead, in internal accounting, is determined for every main cost center when the cost center's overhead costs are found on a certain basis: On the production material with material cost centers On the direct labor costs with production cost centers On the cost of goods manufactured with the sales and administration cost centers

overhead rate base - Details

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  Key Concepts: 
  Overhead rate base is a term used in Production Planning and Control (PP) in SAP. It is a value used to calculate the overhead rate for a particular cost center. The overhead rate base is calculated by dividing the total overhead costs of a cost center by the total activity quantity of the cost center. 
  
  How to use it: 
  In order to calculate the overhead rate base, you must first determine the total overhead costs of a cost center. This can be done by adding up all of the costs associated with running the cost center, such as labor, materials, and other expenses. Once you have determined the total overhead costs, you must then determine the total activity quantity of the cost center. This can be done by adding up all of the activities that take place in the cost center, such as production, maintenance, and other activities. Once you have both of these values, you can then divide the total overhead costs by the total activity quantity to get your overhead rate base. 
  
  Tips & Tricks: 
  When calculating your overhead rate base, it is important to make sure that you are including all of the relevant costs and activities associated with running your cost center. This will ensure that your calculation is accurate and that you are not missing any important information.