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Cost element Accounting

Cost elemnt is nothing but cost/ revenue carrier from one object to another object
Without cost element not possible to transfer cost/ revenue from one object to another obj
Cost element are 2 types based on transfer the cost/revenue
Cost elements are identified based on cost element catogory
1 Primary cost elements : Is the cost element , which carry the cost from externa
E.g
From MM to CO or SD to CO or HR to CO or Direct from FI to CO
Which means , there is need of g/l account in FI for every value flow
Primary Cost elements are identified based on cost element catogor
Catogory Name
01
Primary cost element / Cost reduce revenue
11
Revenue Element
22

External settlement

12

Sales Exp

Profit /Loss in PA will get by subtracting from

2 Secondary cost elements : These are the cost elements which flow the values w
Such objects are CCTR, IO, WBS, Networks and So on
No Need of G/L account in FI
Secondary Cost elements are identified based on cost element cato
Catogory Name
21
Internal Sttlement
31
Result Analysis/ WIP
41
Overhead rate
42
Assessment
43

Indirect Activity Allocation

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other object
object to another object

CO Ojects
cctr
I.o
WBS
Network
Prod order

he cost from external controlling to controlling through Financial accounting

ct from FI to CO
I for every value flow in between from from external CO to CO
cost element catogory
Purpose
It is allways cost or Expence which carry from FI to CO or MM to CO and AA to CO
Carry the Revenue from FI to CO or SD to CO
It Flow the value to Profitability Analysis , Unless not possible to flow the Values
Where youu need flow of value from CO to External CO WITH SETTLEMENT
Here settlement to G/l in FI , Asset in AA and Material in MM
Which occures at the time of Sales, which mens after Manufacturing the Product
These cost flow the values to Profitability Analysis such as Sales Incentives, Sales man Commission

by subtracting from 11- ( 01 + 12 )

hich flow the values with in the CO from one object to another Object

on cost element catogory

Purpose
Within the CO, Settlling the cost, IO to CCTR or IO to IO or IO to WBS
We can Calculate Work In Process at Moth end
To Calculate Indirect Overhead rate, Such as MAT o/h or ADMIN o/h
To allocate/ oportion the cost from Service objects to Primary object
Such as CAF Costs allocating to Primary object such as BOIL, Mixing or Labling
To Calculate activity cost need to create Secondary cost element
Such activities are Setup Activity, Labour Activity and Macine Activity
To Calculate Direct Overhead

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man Commission