Cost element accounting:
Cost element accounting records and groups the costs incurred. Cost element accounting describes origin of cost. Cost element is used for representing specific costs incurred by the organization, where the actual cost was occurred. It helps to management to track costs according to internal accounting policies.

There are two types of cost elements.

  1. Primary cost element
    We can create for Fi & Co direct posting a fixed amount to an account by specifying the account number. Primary cost element generates an account of consumption of production factor externally. Allocation & Settlements are possible here.Primary cost element categories:
    when you want to create cost element you need to enter cost element category (unique no.) provided by the system. (eg. 1- primary cost, 11-revenue cost elements, etc.).

    • 1- Primary cost / Cost reducing revenues.
    • 3- Imputed cost elements
    • 4- Accrual / Deferral per debit = actual
    • 11- Revenue cost elements.
    • 12- Sales deductions
    • 22-External settlements
  2. Secondary cost element
    Secondary cost element originates an account of production factor internally. Allocation is possible settlements are not possible here. System determines the account automatically while posting. No account number is allowed to be entered.Secondary cost element categories:

    • 21- Internal settlements.
    • 41- Over head rates
    • 42- Assessments
    • 43- Internal activity allocation.

    Category types:

    F- Production
    H-Service cost center
    S-Social R&D

Please send us your questions, comments or assistance, and our team would be glad to assist you.

By Dipak Khatavkar. (on behalf of SAP Consulting Team)

SAP :: Streamlined

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