Cost Elements

Cost elements classify an organization's valued consumption of production factors within a controlling area. They
provide information concerning the value flow and value consumption within the organization. A cost element
corresponds to a cost-relevant item in the chart of accounts.

Note
Cost elements are represented in the system as a type of G/L account.
You maintain cost elements in the SAP Menu under Accounting Financial Accounting General
Ledger Master Records G/L Accounts Individual Processing Centrally (transaction FS00) or the
corresponding Fiori app.

Primary Cost or Revenue Elements

Primary cost or revenue elements are G/L accounts of the G/L account type Primary Costs or Revenue. Primary
cost elements reflect operating expenses such as payroll, selling expenses, or administration costs.
Examples of primary cost elements:
 Material costs
 Personnel costs
 Energy costs

Secondary Cost Elements

Secondary cost elements are G/L accounts of the G/L account type Secondary Costs. Secondary cost elements
represent costs resulting from value flows within the organization, such as internal activity cost allocations,
overhead allocations, and settlement transactions.
Examples of secondary cost elements:
 Overhead allocation
 Internal activity allocation
 Order settlement

Cost Element Master Data

Cost element master data includes the following settings:
 Cost Element Category
Cost element categories determine the transactions with which you can use the cost element, such as
internal settlement or allocations.
For more information, see Cost Element Categories.
 Record Quantity
This checkbox defines whether a message is issued in case no quantity or quantity unit is specified for
commitments or actual postings. The checkbox has no effect on quantity updates.
 Internal Unit of Measurement
This indicator determines which unit of measurement is recorded.

Cost Element Groups

You can create hierarchical groups of cost elements with similar characteristics.
For more information, see Cost Element Groups.
 Integration
Cost Element Accounting and Cost Center Accounting/Internal Orders are closely linked. Each posting to a cost
element is assigned to either a cost center or an order. This ensures that the data is broken down into cost
elements and cost centers/internal orders for analysis purposes

Cost Element Categories

Cost element categories classify primary and secondary cost elements. They determine the transactions with
which you can use the cost element, such as internal settlement or allocation.
The cost element category determines whether you can post to a cost element directly or indirectly:
 Direct posting: You post a fixed amount to an account by specifying the account number. You can post
directly to all primary cost elements.
 Indirect posting: The account is determined automatically at the time of posting. Indirect posting is only
possible for secondary cost elements.

Cost Element Categories for Primary Cost Elements

Category Name Description
01 Primary costs/cost- Cost elements of this category can be debited with all primary postings, for
reducing revenues example, in Financial Accounting (FI) or Materials Management (MM).

03 Accrual/deferral per This cost element category can only be used with the percentage method of
surcharge accrual calculation in Cost Center Accounting. You can post directly
in Financial Accounting to record actual costs. The system also uses this cost
element category to post accrued costs in Cost Center Accounting.

04 Accrual/deferral per This cost element category can only be used with the target=actual method of
debit = actual accrual calculation in Cost Center Accounting. You can post directly
in Financial Accounting to record true actual costs. The system also uses this
cost element category to post accrued costs in Cost Center Accounting.

11 Revenues In Controlling, revenues are displayed with a negative sign (–) except
in Profitability Analysis (CO-PA) where revenues are displayed with a positive
sign (+).

Note
If you post revenues to cost centers, the values appear as statistical
information only. This means that while you can repost revenues for posting
adjustments to other cost centers, other allocations are not possible.
Revenues are ignored in iterative activity price calculation and are therefore
not included in the allocation price of an activity type.

12 Sales deduction Sales deductions (reductions, adjustments, corrections) are adjustment or

deduction postings of revenues, such as discounts and rebates. Certain
revenues, such as freight charged separately in the invoice or surcharges for
small quantities or special orders, are not classified as sales deductions.
Such value items are defined as revenue elements.
The account assignment options for cost elements of this category are the
same as for cost element category 11 (revenue elements). Values on cost
centers are displayed statistically only (as for revenues).
Category Name Description
22 External settlement Cost elements of this category are used to settle costs for orders, projects, or
cost objects to objects outside of Controlling, such as assets (AM), materials
(MM), or G/L accounts (FI). When you settle to external objects, a journal
entry is created automatically.
You cannot use this cost element category for settlement to objects
within Controlling , such as cost centers, orders, or projects. Instead, use
secondary cost element category 21 for internal settlement. No journal entries
are generated for settlement to CO-internal objects as the value flow occurs
exclusively within CO.

90 Cost element for When you create an account, cost elements of this category are created
balance sheet automatically if all of the following conditions are true:
accounts in  The account has the G/L account type Balance Sheet Account.
Financial  The account is a reconciliation account for assets or materials.
Accounting  You selected the checkbox Apply Acct Assignments Statistically in Fixed
Asset Acct / Material Acct.

Note
The checkbox Apply Acct Assignments Statistically in Fixed Asset Acct /
Material Acct is only visible if the account is defined in account
determination as either of the following:
o A fixed asset balance sheet account in a depreciation area that
manages acquisition and production costs and posts to the general
ledger
o A material account
You can check this as follows.
For an asset account:
o In Customizing, choose Financial Accounting (New) Asset
Accounting (New) Integration with General Ledger Assign G/L
Accounts (transaction AO90). On the Balance Sheet Accountsview,
make sure the account is defined as a balance sheet account for
acquisition and production costs.
o In the SAP Easy Access Menu, choose Accounting Financial
Accounting General Ledger Master Records G/L
Accounts Individual Processing Centrally (transaction FS00).
o On the Type/Description tab, make sure the G/L account type
is Balance Sheet Account and the account group is Fixed asset
accounts.
o On the Control Data tab, make sure the Reconciliation Account for
Account Type is set to Assets.
For a material account:
o In Customizing, choose Materials Management Valuation and
Account Assignment Account Determination Account
Determination Without Wizard Configure Automatic Postings .
Choose Goto Account Assignment and make sure the account
is entered for the inventory posting procedure.
If you enter a CO account assignment, it is only updated statistically even for
true CO objects.
Cost elements of category 90 enable you to control the costs of an order or
project budget during the acquisition of fixed assets that can be directly
Category Name Description
capitalized. To achieve this, you enter a capital investment order or work
breakdown structure (WBS) element in the appropriate field in the asset
master data. The Asset Management (AM) component ensures that when the
asset is acquired, the order or WBS element is automatically entered in the
document. In Controlling, orders and WBS elements are debited statistically.
This statistical debit is checked with the budget during availability control.

Cost Element Categories for Secondary Cost Elements

Category Name Description
21 Internal settlement Cost elements of this category are used to settle order or project costs to
objects within CO. Such objects include orders, profitability segments,
cost centers, and projects.

31 Order/project results Cost elements of this category are used to save the order or project
analysis results analysis data on the relevant order or project.

41 Overhead rates Cost elements of this category are used to allocate overhead from cost
centers to orders based on overhead rates.

42 Assessment Cost elements of this category are used to allocate costs using the
assessment method.

43 Internal activity Cost elements of this category are used for internal activity allocation
allocation and in Activity-Based Costing.

50 Project-related incoming Cost elements of this category are used for sales revenues from sales
orders: Sales revenue orders with incoming orders in the current period of the project-related
incoming order.

51 Project-related incoming Cost elements of this category are used for other revenue (such as
orders: Other revenues imputed interest) from sales orders with incoming orders in the current
period of the project-related incoming order.

52 Project-related incoming Cost elements of this category are used for costs from sales orders with
orders: Costs incoming orders in the current period of the project-related incoming
order.

61 Earned value Cost elements of this category are used for earned value analysis
in Project System.

Note
Cost element characteristics depend on the controlling area and the allocation methods used in your
organization. The cost element characteristics are maintained at the controlling area level. If you change a setting
for a cost element attribute within a company, it affects all companies in the controlling area.