CO-Indirect cost allocation

Step-1: Create a allocation cost element
Path: Accounting>>Controlling>>Cost Element Accounting>>Master Data>>Cost Element>>Individual Processing>> Create Secondary
T code: KA06
Enter your controlling area in the pop up screen for ‘Set Controlling Area’
Cost element <enter cost element unique number>
Valid from <first day of the current year>
Click on Master Data button
Name < Enter name of the cost element>
Description <enter description>
Cost element category <43>
<Save>

STEP-2: Create activity type
Path: Accounting>>Controlling>> Cost Center Accounting>> Master Data>> Activity Type>> Individual Processing>> T code:KL01 - Create
T code: KL01
Activity Type <enter unique activity ID>
Valid from <first day of the current year>
Click on Master Data button
Name <enter name of the activity>
Description <enter description of the activity>
Activity Unit <select HR>
Cost center categories < *>
Activity type category <3>
Allocation cost element <enter cost element, created in step-1>
Price indicator <3>
<Save>

Step-3: Enter activity price
Path: Accounting>>Controlling>> Cost Center Accounting>> Planning>> Activity Output/Prices>>Change
T code: KP26
Version <0>
From period <1> to period <12>
Fiscal Year <2009.>
Cost center <enter the sender cost center ID>
Activity type< enter the sender cost centre activity type, defined in step-2>
Select the radio button for Form Based option
Click on <Period screen>
Enter activity price for all periods in the presented screen in the column for fixed price.

Step-4: Enter Sender activities
Path: Accounting>>Controlling>> Cost Center Accounting>> Actual Postings>>Sender Activities>> Enter
T code:KB51N
Sender cost centre<Sender cost centre>
Sender activity type<sender’s activity created in step-2>
Total Quantity<total activity quantity of the sender>
<Save>

Step-5: Create SKF and enter SKF for the current period for at least 2 receiver cost centers.
T code: KK01 and KB31N

Step-6: Create cycle and segment
Path: Accounting>>Controlling>> Cost Center Accounting>> Period-End Closing>> Current Settings>> Define Indirect Activity Allocation
Cycle<unique ID for cycle>
Start date <first day of your fiscal year>
Hit <Enter>
Text <description>
Click on <Attach Segment>
Segment name<unique name>
Description<description>
Rule <Posted quantities>
Shares in % <100>
Confirm defaulted radio button for <Actual value>
Receiver Tracing Factor<Variable Portion>
Variable portion type<select Actual Statistical Figures>
Click on Sender/Receivers Tab
Sender:
Cost center <enter sender cost center>
Activity type<select activity type created in step-2>
Receiver:
Cost centre: From—To <enter receiver cost centres or Group
Click on Receiver Tracing Factor Tab
Variable portion type <Actual Statistical Figures>
Selection criteria:
Statistical key figure <select SKF created in step-5>
<Save>

Step-7: Execute indirect activity cycle and segment:
Path: Accounting>>Controlling>> Cost Center Accounting>> Period-End Closing>> Single function>> Allocations>>Indirect Activity Allocation
T code:KSC5
Period From –To <current period>
Fiscal year<current fiscal year>
Flag for Test Run
<Execute>
Review the results and if results correct, remove the test run flag and again execute in production mode.
Confirm postings in sender and receivers cost centers line item report.
T code KSB1

Source:
http://www.erpgenie.com/fico/1440-indirect-cost-allocation