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Cost Element Accounting (CO-OM-CEL)

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Cost Element Accounting (CO-OM-CEL)
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What is Cost Element Accounting (CO-OM-CEL)

Basically, Cost elements are carriers of costs. Cost and Revenue Element Accounting provides an overview of the costs and revenues that occur in an organization i.e.

>Primary Cost/Revenue Elements: When cost element carriers cost between FI and CO they are called Primary, corresponding general ledger (G/L) account exists in Financial Accounting (FI) chart of accounts to allow costs to flow....

Where COPA is active then revenue account (GL) are also cost elements, where COPA is not active then revenue account (GL) should not be made as a cost element.

Examples:

  • Material costs
  • Personnel costs
  • Energy costs

Secondary Cost Elements: When cost element carries cost within cost accounting (CO), does not flow to FI...

Examples: include:

• Assessment cost elements

• Cost elements for Internal Activity Allocation

• Cost elements for Order Settlement

>Integration: (from the Latin integer, meaning whole or entire) generally means combining parts so that they work together or form a whole. It is closely related to the general ledger accounts

- Document costs (differentiated by category) are incurred within a settlement period.

- Provide information concerning the value flow and the value consumption within the organization.

- Each posting to an account that is also a cost element, is assigned either to a Cost center or I/O.

This ensures that at period-end the data is subdivided by cost elements and cost centers/internal orders for analysis purposes.

  >Cost Element Categories

-       directly (post to an Account) – all primary cost element or

-       Indirectly (determine the account automatically) – Secondary cost element.

>>Primary cost elements categories:

  • 01: Primary cost element

Can be debited with all primary postings, for example, in Financial Accounting (FI) or Materials Management (MM).

  • 03: Accrual cost element /percentage method

May only be used in Cost Center Accounting (CO-OM-CCA) with the percentage method of accrual calculation. You can post directly in Financial Accounting to register when actual costs are incurred. The R/3 System uses this cost element category to post accrued costs in Cost Center Accounting.

If you do not want to consider actual costs (for example, additional costs), you can create this category of cost elements exclusively in Controlling. You define the account in the chart of accounts, but you do not need to create the account as a G/L account in Financial Accounting.

  • 04: Accrual cost element / target=actual method

May be used only in the target=actual method of accrual calculation with Cost Center Accounting. You can post the cost directly from Financial Accounting to register when actual costs are incurred.

If you do not want to consider actual costs (for example, additional costs), you can create this category of cost elements exclusively in Controlling. You define the account in the chart of accounts, but you do not need to create the account as a G/L account in Financial Accounting.

  • 11: Revenue elements

Used to post revenues.

Revenues are displayed in Controlling with a negative sign (-). An exception to this is Profitability Analysis (CO-PA). In CO-PA revenues are displayed with a positive sign (+).

  • 12: Sales deduction

Used to post sales deductions. 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, 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).

  • 22: External settlement

Used to settle order, project, or cost object costs to objects outside of Controlling. CO external objects can be, for example, assets (AM), materials (MM) or G/L accounts (FI). The R/3 System always creates an accounting document when you settle to external objects.

You cannot use this cost element category for settlement to objects within Controlling (such as cost centers, orders, or projects). Use secondary cost element category 21 for internal settlement. In contrast to settlement to CO-external objects, no accounting documents are generated by the R/3 System for settlement to CO internal objects as the value flow occurs exclusively within CO.

  • 90: Cost element for balance sheet accounts in Financial Accounting

are generated automatically when you create cost elements in Controlling that have asset reconciliation accounts, that is, special balance sheet accounts, as corresponding general ledger accounts in Financial Accounting.

You cannot change this cost element category in CO Master Data maintenance.

FI does not require CO account assignments of category 90. However, if you do enter a CO account assignment, this 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 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.

The R/3 System does not support other uses of category 90 cost elements at present. You cannot plan using these cost elements.

>>Secondary cost elements categories:

  • 21: Internal settlement

Used to settle (further allocate) order or project costs to Controlling (CO) internal objects. CO-internal objects are, for example, orders, profitability segments, cost centers and projects.

You cannot use this cost element category for settlement to CO-external objects (such as fixed assets, materials, or G/L accounts). Use primary cost element category 22 for external settlement.

  • 31: Order/project results analysis

Used to save the order/project results analysis data on the relevant order/project.

  • 41: Overhead rates

Used to further allocate overhead costs using overhead rates from cost centers to orders.

  • 42: Assessment

Used to allocate costs using the assessment method.

  • 43: Allocation of activities/processes

Used during internal activity allocation and in Activity-Based Costing.

  • 50: Incoming orders: sales revenues

Used for sales revenues from sales orders with incoming orders in the current period of the project-related incoming order.

  • 51: Incoming orders: other revenues

Used for other revenues, such as imputed interest, from sales orders with incoming orders in the current period of the project-related incoming order.

  • 52: Incoming orders: costs

Used for costs from sales orders with incoming orders in the current period of the project-related incoming order.

  • 61: Earned values

Used for the earned values from the earned value analysis in Project System.


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