Create Activity Absorption Plan – A summary of the activity

This page allows you to create an activity absorption plan for an “Activity” Cost element. An absorption plan allows you to define the formula based on which the rate of the activity cost element can be retrieved. This plan allows you to consider all the normal cost elements that have to be considered while calculating the rate of the activity cost element.

A typical example of an activity absorption plan would be to calculate the per hour run time rate of a boiler in a factory. To calculate the run time rate, which is an “Activity” cost element, we would have to consider expenses like “Rent”, “Electricity”, “Wages” and so on, which are “Normal” cost elements. The run time rate would be calculated based on the weightage factor that has been accorded to each of these “Normal” cost elements.

This page allows you to enter the activity cost element for which you want to define an activity absorption plan. You can define absorption plan for the standard and the alternate rates of the “Activity” cost element. You can enter the normal cost elements along with the weightage that must be attributed to it. This page also provides you to facility to enter the cost element structure based on which the normal cost elements that form a part of it can be retrieved and a weightage factor attributed to it. The system saves the details of the newly created absorption plan. The system updates the status of the plan as “Active”. The system stores the login ID of the user and the system date along with the newly created absorption plan details.