cost elements

[Former Member]

Please let me know what are all the G/L a/c 's we do not create as Cost elements

For eg: we won't create WIP, COGS G/l Acounts.

Let me know the other accounts

[Former Member]

Hi sudheer... Total Cost elements are divided in to two types... one is Primary cost elements and second is Secondary cost elements.

Before this u have to know about Controlling area.....

<b>Maintaining the Controlling Area</b>

(OX06 - Maintain Controlling Area)

The cost accounting environment where costs and revenues are managed.

The link between FI and CO is established throught the assignment of company codes to a controlling area.

A controlling area can have multiple company code assignments. However, a company code can be assigned to only one controlling area.

Then u have to know about Cost elements:

<b>Create Primary and Secondary Cost Elements</b>

A Primary Cost element is used to transfer cost from FI to CO. It is the cost carrier from FI to CO. It has to have a corresponding Gl a/c in FI. Every cost related txn will be carried over to CO by Primary Cost element ONLY.

A Primary cost elements can be directly posted and it is linked to a G/L account and must first be created in the FI Chart of Accounts.

A Secondary Cost element is used only in txn which are within CO only. There is no Txn effect in FI. It can be allocation, Distribution Reposting etc within CO ONLY. These data does not flow to FI.

A Secondary cost elements cannot be directly posted. An example will be the Cost Center. Secondary cost elements can only be created in Controlling.

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Cost element accounting records and groups the costs incurred. Cost elements are assigned to a commitment item in Funds Management. Many cost elements can be assigned to one CI. To simplify valuations, planning and cost allocations you can combine cost ements into groups (for example, separate groups for salaries and bonuses). By ombining cost element groups according to their intended purposes, you can create cost element hierarchies. This is valuable.

Cost elements describe the origin of costs. Cost element classifies the organizations valuated consumption of production factors within a controlling area. A cost element corresponds to a cost relevant item in the chart of accounts. Cost elements are defined as either primary or secondary

Every Profit and Loss GL account that needs to be controlled has to be defined as a cost element in SAP. Just as in FI General Ledger Accounts exist, in Controlling we have Cost element. Each FI General Ledger Account which is a Profit and Loss Account is also created as a Cost element in SAP

Primary Cost Elements are those which are created from FI general Ledger Accounts and impact the financial accounts eg. Travelling expenses,consumption account infact any Profit and Loss GL account. Primary (Direct Expenses) cost elements arise through the consumption of productions factors that are sourced externally.

Secondary Cost Elements are those which are created only in controlling and does not affect the financials of the company. It is used for internal reporting only. The postings to these accounts do not affect the Profit or Loss of the company.

Secondary (settlement / apportionment from dept to dept) cost elements arise through the consumption of production factors that are provided internally i.e., by the enterprise itself.

Secondary cost elements are posted indirectly.

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KA06 - Create Primary or Secondary Cost elements

If you maintain multiple controlling areas, remember to set the CO Area via Extras -> Set Controlling Area

I hope u got... the basics...

[Former Member]

Hi,

Normally the balance sheet accounts are not created as cost elements.Most of the P&L accounts(I will not say all) can be created as cost elements.Expense in FI is mapped to CO using these cost elements.(called primary).

Thanks

Aravind

Assign points if useful

[Former Member]

Hi

All the P&L accounts will converted as cost elements. Not balance shee accounts.

~Regards

Rajesh