Secondary Cost Element

[Former Member]

Hi,

Please explain me the secondary cost element with example.

Regards,

Vikas Malhotra

[Former Member]

Hi,

In brief, Secondary cost elements are used within Controlling to transfer costs from one Co object to another co object.

Ex: Machining expenses transfered from one cost center X to another cost center Y (say, machining expenses wrongly charged to cost center X).

This transfer of costs no way related to Financial Accounting.

[former_member687094]

Then What is the difference between cost objects & secondary cost elements?

[Former Member]

Hi,

Secondary cost element is created within controlling for the purpose of assessment.It carries the various costs within the controlling and distrubute the same to various cost centers.Whereas primary cost element uses G/L account .

Ex:take the canteen expenses to be allocatede on the basis of number of hours

[Former Member]

Assesment cost element:

During assesment ( transfer of costs of one cost center to another cost centers in grouped manner) like cafeteria costs. You can use this assesment cost element in assesment cycle.

Internal activity allocation cost element:

This works with activity allocation. You say that Cost center A activity lmachinery consumed by order XX. That time internal activity allocation cost element works debit the order credit the cost center. It is use in activity master data.

Settlement Cost Element:

You settle the cost of internal order or plant and maintenance order to cost center. You group all costs and settle them with a new cost element say it plant and maintenance costs. You see total of plant and maintenance cost in cost center the cost element detail is in order. This order can be an internal order for example education internal order and cost element for settlement can be education costs.

[Former Member]

Hi

Secondary Cost Element

When cost element carries cost with in CO, then they are called secondary cost element.

Example.... - Take Product Costing

-

On manufacture of the goods the cost of the above product (production order) is arrived at accumulating material cost + operational cost + overheads (%), additive cost if any.

The cost of operation is accumulated in cost centre be it production / production service / service cost centres, while booking FI entries.

Those operational cost has to be allocated to production order based on operational activities carried on and its cost involved in it. Those operation activities in CO are termed as activity types and has to link the same in KP26 with rates and cost centre (ie., sender cost centre and receiver production order).

In order to find the production order cost, the allocation of cost from sender cost centre to production order for the operational activities carried on and its cost associated with it, have to be loaded, hence in CO the cost centre allocate that portion of operational cost to production order, and this cost is carried by a cost element (since there are no FI involvement and entries are flowing within CO by crediting sender cost centre and debiting receiver production order a cost element has to be created.... say "Operational Cost - Activity" the entry will be

Operational Cost - Activity (Production Order) Dr Rs.XX

To Operational Cost - Activity (Cost Centre) Cr Rs.XX

The entries are with in CO. And the cost element created is secondary since it does not has an link with GL Account in FI correspondingly.

In CO the production order and cost centre are co object including but not limited to.

and furthur notes and configs see below link.

http://www.copacustomhelp.state.pa.us/infopak/nav/finance/controlling/301/index.htm

nagesh

[Priya34]

How to change secondary cost element number