What is meant by cost element

hi
what is meant by cost element

HI.
Differentiation of Cost Elements
Use
In call management, it is necessary to differentiate cost elements further for the settlement of orders in profitability analysis. Both the costs incurred and the sales deductions are classified according to their source, and assigned to the appropriate cost elements. For example, the following costs are differentiated:
Sales costs
Warranty costs
Good will costs
Sales deductions due to warranty
Sales deductions due to good will
The differentiation of costs and sales deductions enables you to assess more accurately the profitability of your products.
Integration
The differentiation of cost elements is only of use if the service orders are settled in profitability analysis.
Prerequisites
Resource-related billing must be performed for service orders.
You must have defined the accounting indicator in Customizing for Plant Maintenance.
When you create a service order, you define the accounting indicator in the header, under administrative data. Currently it is only possible to have one accounting indicator per order.
Once the order is released, the accounting indicator can no longer be changed in the order header.
Features
When actual postings are made for a service order, the system creates CO single records and a CO totals record. When doing this, it copies the accounting indicator defined in the order header, and enters it in the origin of the totals or single records.
In addition to the variance class and the cost element, the accounting indicator is a further characteristic of the PA transfer structure.
The transfer of the accounting indicator to the origin also makes it possible during the settlement of a service order in profitability analysis, to navigate more specifically in the PA transfer structure. The costs and sales deductions for warranty, good will, and sales are entered in the respective value fields.
Reward all helpfull answers.
Regards.
Jay

Similar Messages

  • What is meant by costing key?

    Dear Experts ,
                          while releasing the billing document to accounts , i am getting  error like
                Valuation with material cost estimate: error, The system looked for the material cost estimate using costing key "002", as defined in the Customizing settings for CO-PA,  incomplete due to FI/CO interface
    what is meant by costing key?
    regards
    rajakarthik

    Hi,
    In Costing based Profitability analysis you define costing keys. A costing key is a set of access parameters which are used in valuation to determine which data in Product cost planning should be read. In the costing key you attach the costing variant.
    In the costing key you specify whether the system should read the current standard cost estimate, the previous standard cost estimate or the future standard cost estimate or a saved cost estimate.
    The configuration settings to determine this costing key is as follows:
    Assign costing keys to the products u2013 Three costing keys can be attached to a single product for a specific point of valuation, record type, plan version.
    Assign costing keys to Material types
    Assign costing keys to any characteristics u2013 You can use your own strategy to determine the costing keys. This is through user defined assignment tables.
    regards,
    Santosh kumar

  • Cost element & work center

    Dear All,
    What is meant by cost element.any link between cost element and work center.how to configure this.Kindly give the steps to follow.
    Regards,
    Devi

    Hi Devi,
    Cost element is Classification of the organization's valuated consumption of production factors within a controlling area.
    Each cost element corresponds to a cost-relevant item in the chart of accounts.
    Primary Cost element & Secondary Cost element.
    Primary cost elements are like materail costs, personnel costs, energy costs... where a corresponding GL account exists in FI..to allow costs to flow...
    Secondary cost elements are like production costs, material overheads, production overheads, they can be created and administered in only CO.  These are used in internal cost allocation, overhead calculation, settlement transactions., it does not flow to FI...
    I don't think there is any link between Cost element and Work Center.
    If useful reward.
    Regards,
    Santosh

  • Cogs cost element

    hi,
    i read from forum that no cost element is needed for cogs.
    "certain expense accounts are not meant to flow to Cost Accounting. Examples include Price difference accounts, variance accounts, and COGS or COS."
    1) i still can see price difference account in ka03. why?
    2) what does it mean cost element not needed for cogs? meaning cogs directly post to copa? if yes, what tcode i can see it being defined?
    thanks

    Hi,
    1. Price difference account can not be made as a cost element. As generally this account you use to settle your variances to your product cost at the month End and following entry is passed in FI because of this :
    Price Difference A/C Dr
    To COGM A/C         Cr
    Generally in CO - PC, you can only get COGM not COGS. As, product costing only have cost of RM, PM, activity rates and Overheads. At the running of Std. cost, it doesn't has sales and dist. charges, which generally are getting captured from SD through condition types.
    2. Also in COPA all above mentioend costs come through value fields in CO and sales and Dist. charges come through condition type from SD (connected through value fields).
    So, for this reason also, COGS can not be created as a cost element as it can not be assigned to any cost object directly. You generally get COGS in COPA through report (through report painter).
    Thanks & Regards,
    Taral Patel

  • Statistical cost element 90

    Hi,
    Can any one please help me to understand the statistical cost element 90. I have created asset reconciliation account as statistical cost element. I come to know this will help to track the budgeting. But i don't have clear idea.
    Can any one help me undertand what is the purpose and how it functions in tracking the budgetsin CO??
    Regards,
    Deva

    Hi Phaneendra,
    Thank you for your reply. Still i having few more queries. I have created the Internal order as statistical order. Budgeting also done. While creating the PO i have given both AUC and Internal order as account ssignement reference. In this case the cost centre will get update throw cost center from Asset master. The Internal order gets statisticlly updated throw direct assignement in the PO.
    In my understanding the budget will be updated throw inernal order assignemet in the PO. If that is the case what is the statistical cost element role here??
    But in the case of project system we have created the real WBS element and not the statistical WBS. while creating the PO we are giving WBS element as the account assignment and its get updated in the budget. While settlement, value from WBS element will be settled to AUC and then from AUC to main asset.
    Can you please help me to understand the statistical cost element functionality here??? If my above understanding is wrong please excuse me.
    Regards,
    Deva

  • Reports for secondry cost elements

    Hi,
    I have an issue with regarding secondry cost element with cost element category 42, now i need a report, which should conatine all senders (cost objects or cost elements) details, plz some help me out.

    Hi Vijay,
    As far as standard reporting goes, you can see sender cost center, receiver cost center and secondary assessment cost element from the CO line item report(KSB1 or any other co report). But you can't see what's the sender cost element group. May be development needs to be done if your requirement is sender cost element group.
    I hope this clarifies.
    Regards
    Rajesh A

  • Statistical cost element

    hi all,
    What are the characteristics of a cost element in the following cases ?
    If I have an account without cost element I don't need to make my postings in a cost center in a FB60.
    If I have an account with a cost element with category 01 I will need to make my postings in a cost center.
    What happens with a cost element with 11 category (statistical)? Do I have to give a cost center ? Is it possible to bypass the cost center in this case ?
    Thanks in advance
    Pascal

    Cost Elements with category 11 are basically "Revenue Elements". These basically hold Revenue.
    Since Revenues cannot (normally) be posted to a Cost Centre, the system does not expect a CCtr when you post to type "11".
    But please note, this is not a "Cost". It is treated as "Revenue".
    Cheers.

  • What type of  P&L Accounts does not need Primary Cost Element ?

    Hi
    The General rule is to create primary cost element for all the P&L items (GL Accounts).
    However, it seems like certain P&L items are not suppose to create primary cost elements.
    How do i know under what circumstances a P&L items need to create primary cost element  and which are the one not require to create primary cost element?
    Moderator: Please, search SDN

    Hi Friends,
    I, my self resolved the issue. by considering the following 3 rd strategy in
    For Activity Type/Processes: Considered 3rd strategy as below:
    Activity Types/Processes: 1 plan Price for the Period, 6 Most Up-to-date Plan Price
    and 2 Plan Price as Average of All Fiscal Year Periods.
    Now it has been resolved.
    Thanks all.
    Now it is closed.
    Vemula

  • What is the relation between COST ELEMENT , COST CENTER n CONTROLLING AREA

    Hai can any one help me in understanding what is the relationship between COST ELEMENT
    COST CENTER and CONTROLLING AREA. and what actualy they explain me from basics.
    thank's in advance.

    Hi
    Go through the link given below :
    Cost Center , Cost element , GL Accounts , Cost sheet , Account Assignment
    http://wiki.answers.com/Q/What_are_cost_centre_accounting_and_cost_element_accounting_in_SAP_controlling
    Controlling Area
    With Regards
    Nikunj Shah

  • What is meant by estimated costs and estimated rows in SQL explain (ST05)?

    Hi
    I was just wondering if someone could explain/clarify exactly what is meant by estimated costs and estimated rows in the 'explain' / execution path functionality of ST05.
    For example, we could see a SQL statement was very inefficient accessing a table:
    Estimated Costs = 6.006.615 , Estimated #Rows = 0
    Does this literally mean that for 6 million costs / reads / effort, 0 results were returned??
    Is this a ratio of efficiency?
    We built an appropriate index and now we have:
    Estimated Costs = 2 , Estimated #Rows = 1
    A lot better! The job was taking 40+ hours and being cancelled; now it takes 5 minutes. So a 3 million times improvement sounds realistic...
    However, we had another instance where the explain showed:
    ( Estim. Costs = 195.077 , Estim. #Rows = 538.660 )
    and we built an index, and now the explain is:
    ( Estimated Costs = 41.867 , Estimated #Rows = 538.660 )
    What exactly does this mean - as the costs has been reduced, but the rows is the same?
    Thanks
    Ross

    Hi Ross,
    >I was just wondering if someone could explain/clarify exactly what is meant by estimated costs and estimated rows in the >'explain' / execution path functionality of ST05
    Take a look at note 766349, point 20.
    >An EXPLAIN displays "Estimated Costs" and "Estimated Rows", which
    >are simply the CBO's calculation results (refer to Note 7550631).
    >Since these results are based upon a number of assumptions (column
    >values are distributed equally, statistics), and depend upon the
    >database parameter settings, the calculated costs and rows are
    >useful only within a margin for error. High "Estimated Costs" and
    >"Estimated Rows" are therefore neither a satisfactory nor a
    >necessary indication of an expensive SQL statement. Also, the
    >calculated costs have no actual effect upon the performance - the
    >deciding costs are always the actual ones, in the form of BUFFER
    >GETs, DISK READs, or processed rows.
    So the costs and rows are values conjured up by the cost optimizer when calculating the access path that is most likely to be efficient. THEY ARE ESTIMATES!!!
    >Does this literally mean that for 6 million costs / reads / effort, 0 results were returned??
    As per the above, no. The costs and rows are estimated before the rows are fetched so there are no actual results yet.
    >What exactly does this mean - as the costs has been reduced, but the rows is the same?
    An efficient database access is exactly that; reads only the blocks that contain the rows it needs and nothing else. If the access is inefficient it will spend time accessing blocks that contain no data that is eventually contained in the result set.
    This question would be better placed in the Oracle forum...
    Regards,
    Peter

  • OKTZ what is "primary cost element split" flag use for?

    Hello all:
    anybody can elaborate the sample for this?
    Best Regards,
    Manthana

    Hi
    Primary cost component split in config for cost component structures drive the segreration and storage of primary cost into different buckets like material cost, labour cost.
    The main purpose of which is to track the Primary Cost at Cost Component level (when multiple cost elements have been planned against a single Activity Type).
    http://help.sap.com/saphelp_di46c2/helpdata/EN/7e/cb7e8643a311d189ee0000e81ddfac/frameset.htm
    Regards

  • KP26 cost element- Entry

    HI
    For a activity type we are assigning a cost center with a cost element (category 43).
    when that acitivity is performed the cost element is getting and debited ...i want to know to which cost element the credit will affect and where & how we assign the same.
    This is for  processing the REPETATIVE process order in ECC6.0.
    UR help is very much appreciated
    Regards
    Praveen

    Hi,
    For your information,
    In KP26,We are not assigning the cost element to the cost center,But what we are doing in KP26 is, JUST WE ARE MAINTAINING THE ACTIVITY RATES, if that particular activity is performed in that cost center, then those rates will be applied.
    You can maintain different activity rates for the same activity type, for another cost center. Pl check this.
    Regarding the credit cost element,unlike in financial accounting, no need to define cost element for credit. The cost element which is debited at the time of posting is a Secondary cost element, which is meant for purely cost accounting purpose.
    Hope,i have clarified you.
    Best Regards,
    Santosh

  • Cost element 41 is not getting displayed in basic data Cost Element Basic..

    Hello All,
    Need you help in understanding and solving this issue, when ever I am creating a GL account in P&L, primary cost element is getting created, that is perfect, but for some G/L account I want to assign to CElem category to 41 for overhead, but due to some reason, only see 6 cost element category when try to look into mirror glass, or F4, only can see (1, 3, 4, 11, 12, 22). Please suggest how can I fixed this. If some one is having hard time understanding my question please feel free to write me.
    Thanks
    Nishan

    Christian,
    I belive you have not understood this issue, here I am not asking the difference between primary and secondary, let me articulate it one more time:
    When you create a G/L account under expenses for P&L and it create Primary cost element and instead of allocating it to primary costs/ cost-reducing revenue want to make it to 41 overhead cost element. but I dont see the option of 41 just see 6 option ( 1 for primary costs/ cost-revenue reducing revenues. 3 - Accrual, 4 , 11= revenue, 12 = sales deduction and 22 external settlement, and where as I dont see 41, what setting need to be changed so that I can see all the cost element type.
    thanks

  • G/L account 59500140 cannot be created as a cost element

    Hi Viewers,
    When I try to do the KO88 Process order settlement i am getting the below error:
    G/L account 59500140 cannot be created as a cost element
    Message no. KQ119
    Diagnosis
    When maintaining the posting rules for passing on results analysis data to Financial Accounting, you entered a G/L account that is defined as a primary cost element in cost and revenue element accounting. This is not allowed. You must enter a G/L account in the posting rules that is not defined as a cost element.
    System Response
    The entry invalid.
    Procedure
    You have the following options:
    Enter a G/L account for which no cost element is specified in Cost and Revenue Element Accounting.
    You can change the message type with user-defined error management (transaction OPR4_KKA). What should be observed when you enter a G/L account in a posting rule that is defined as a primary cost element in Cost and Revenue Element Accounting? You need to define a CO account assignment so that the posting defined in the posting rule can be executed. You do this with transaction OKB9 (default account assignment) or OKC9 (substitution), or using the default account assignment in the cost element master.
    I would like to know the GL Account 59500140  is a P&L Account. Is it correct?.
    Please help me to overcome from this issue.
    Thanks & Regards,
    Aswin

    Execute transaction code FSP0 and check whether the account is a P&L or a Balance Sheet.  Nevertheless, you can only enter accounts that are not created as cost elements in customizing transaction OKG8.  If you enter an account that is also a cost element, then you need to configure default CO account assignment using OKB9 or a substitution using OKC9.  Please refer to the following SAP Notes.
    https://service.sap.com/sap/support/notes/581296

  • Cost element Report

    Hi ,
    I have defined some primary cost elements regarding consumption with category 1.
    Now when I execute the cost center report (S_alr_87013611), system is not showing any figures regarding these consumption cost elements.
    I checked with FBL3N for such consumption accounts and found that there are postings made to the accounts. Controlling documents have also been generated for the transaction effecting the consumption accounts.
    What could be the reason due to which the system is not showing the figures in Controlling report?
    How to solve this?
    Makrand

    Hi Makarand,
    you have difined in OKB9  the default cost center.  This cost center will be picked only if there is no other cost object found at the time of posting.
    As you siad all these posting happend to Production Order.
    When the system able to find the a cost object on it own (in the given case, Production Order is the real cost object and the costs need to flow to only Production Order), then system will not consider the definitions in OKB9.
    OKB9 is relevant only when we don't give any cost object.  In such case it will pick up the cost object defined in OKB9.
    When you are doing the confirmation of materials to  production Order, Production Order will have over riding affect on the setting on OKB9.
    Hope you got the point
    Please let me know if you need further details in this regard
    Surya

Maybe you are looking for