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secondary cost element........

Former Member
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Hi,

Is it necessary to create number of activities = to number of secondary cost element.

or

only one cost element is enough for all activities for posting to cost center.

Regards,

Imran

Accepted Solutions (1)

Accepted Solutions (1)

rupesh_brahmankar3
Active Contributor
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Dear,

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 further notes and configs see below link.

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

Hope clear to you.

Regards,

R.Brahmankar

Former Member
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Thank you very very much Mr.Brahmankar.

Really from you we SDN people are learning lot.

Answers (0)