Entering content frameComponent documentation Activity-Based Costing Approaches Locate the document in its SAP Library structure


Activity-Based Costing provides helps assign overhead costs to products, customers, and other object in a way that is more correlated to cost drivers than traditional overhead allocation methods. The definition of cross-functional business processes in addition to the functional cost center standpoint opens a further dimension of overhead transparency in cost accounting.

First, the resources consumed by Business Processes are assigned according to the true origins of the costs. The characteristic unit of measure for this assignment is known as the resource driver. In the second step, the business processes are assigned to the assorted receiver objects based on their actual utilization of resources. The assignment of business processes takes place via " process drivers", which represent reasonable measurements of business process consumption. Receiver objects can be products, customers, sales channels, and other types of profitability segment.

Activity-Based Costing in the SAP System

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ABC, in contrast with traditional cost accounting, allows a more realistic profitability analysis of different products and customers because the resources of overhead areas can also be taken into account via process consumption by market segments using the business processes.

The primary costs in external accounting appear as primary cost element assignments to the responsible cost centers. In this way, the cost center structure offers the complete view of organizational overhead. The resources relevant to the business processes are provided in their entirety by the cost centers. This means you cannot make direct postings of primary costs from external accounting on business processes.


In general, we can distinguish between two different techniques used for assigning cost center resources to business processes (via resource drivers) and allocating business processes on the corresponding receiver objects (via process drivers). Both techniques are treated here as pure cost distribution (Push Approach) and as quantity tracing (Pull approach). Deciding for one of the two approaches has far-reaching consequences for the use of ABC as a management tool in your organization.

Cost distribution (push) and quantity inputs (pull)


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The SAP System supports numerous allocation methods that allow the realization of both approaches to Activity-Based Costing.

For more information on the methods, see : Pure Cost Distribution Methods (Push Approach), Method for Quantity Consumption (Pull).


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