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Create Cost Elements

In this IMG activity you create primary and secondary cost elements online.
You have completed the IMG activity Maintain Controlling Area under General Cont
rolling -> Organization.
You have created G/L accounts in Financial Accounting (FI) for the primary cost
1. Define the primary cost elements.
Define the secondary cost elements.
You can specify indicators such as:
Cost element category
Record quantity
Quantity unit
Default account assignments to cost centers or orders
Note on transport
To transport cost elements, a separate function is available in the IMG "General
Definition: secondary cost element
Controlling (CO)
A cost element that is used to allocate costs for internal activities.
Secondary cost elements do not correspond to any G/L account in Financial Accoun
ting. They are used only in Controlling and consequently cannot be defined in FI
as an account.
Primary Cost Element Categories
You can use the following cost element categories for primary cost elements:
01: Primary costs / cost-reducing revenues
This cost element category can be debited for all primary postings, for example,
in Financial Accounting (FI) or in Materials Management (MM).
Cost-reducing revenues are revenues that are to be handled in CO similarly to ov
erhead costs, and which reduce the prices of an activity type or the costs to be
assessed. This is the case, for example, with rent revenues, which reduce the r
oom costs to be assessed. Cash discount amounts and exchange rate amounts are al
so cost-reducing revenues.
In contrast to revenues of cost element category 11, cost-reducing revenues in t
he CO module are typically assigned to cost centers. Note that when you use Prof
itability Analysis (CO-PA, costing-based) these cost-reducing revenues can only
be transferred to Profitability Analysis during secondary allocations and not du
ring invoicing.
03: Accrual Calculation Using the Percentage Method
You can only use this cost element category during accrual calculation in Cost C
enter Accounting (component CO-OM-CCA) when you are using the percentage method.
You can post directly from FI to take account of the actual costs incurred. The

system also uses cost elements of this category to post the accrual amounts wit
hin Cost Center Accounting CO-OM-CCA.
If you do take actual costs into account (say, for additional costs), create cos
t elements of this category in Controlling (CO) only. The account must be define
d in the chart of accounts, but you do not need to create the general ledger acc
ount in FI.
04: Accrual Calculation Using the Target=Actual Method
Used in Cost Center Accounting (CO-OM-CCA) only for accrual calculation when you
are using the target=actual method. You can post costs directly from FI to regi
ster actual costs incurred. At the same time, the system uses this category of c
ost element to post accrual cost amounts within Cost Center Accounting CO-OM-CCA
If you do take actual costs into account (say, for additional costs), create cos
t elements of this category in Controlling (CO) only. The account must be define
d in the chart of accounts, but you do not need to create the general ledger acc
ount in FI.
11: Revenues
Used to post revenues. These revenues are generally posted during make-to-stockproduction directly into the operating profit, or with make-to-order-production
to the sales order.
In Controlling (CO) revenues are displayed with negative +/- sign. An exception
to this is Profitability Accounting (CO-PA, costing-based), in which all values
, including revenues, are displayed with a positive +/- sign.
If you post revenues to cost centers, the values are displayed as statistics onl
y (for information purposes). This means:

You can repost revenues to other cost centers to correct postings, but other all
ocation is not possible.
Revenues are not taken into account during activity price iteration and are ther
efore not included in activity allocation prices.
Revenues are generally defined as cost element category 11. This enables the int
egrated transfer of billing documents to CO-PA. An exception to this rule is cos
t-effecting revenue. See the section "Primary Costs / Cost-Reducing Revenues".

12: Sales Deductions

Used to post deductible items (sales adjustments, sales corrections) such as dis
counts and rebates. Certain deductible items (freight charged separately in the
invoice, surcharges for small quantities, special orders) are not classified as
sales deductions, but as revenue elements.
You can use this category in the same manner as revenue elements (category 11).
Values on cost centers are displayed as statistical only.
22: External Settlement
Used to settle order costs, project costs, or cost object costs to objects outsi
de of CO. These objects could be assets (Asset Management), materials (Materials
Management), or general ledger accounts (Financial Accounting). The R/3 System
creates an accounting document when the costs are settled.
Cost elements of this category cannot be used for settlement within CO (cost cen
ters, orders, projects, and so on). Use secondary cost element category 21 for t
his purpose. The system does not create an accounting document when costs are se
ttled within CO.
90: Cost Elements for Balance Sheet Accounts in FI
Automatically assigned when you create cost elements in CO whose general ledger
accounts in FI are asset reconciliation accounts (special balance sheet accounts
), not income statement accounts. You cannot change this category in CO master d
ata maintenance.
FI does not require CO account assignments to cost elements of category
90. However, if you enter an account assignment, it is only recorded statistical
ly for true objects.
Category 90 cost elements enable you to check the budget of an order or project
when you acquire fixed assets that can be directly capitalized. To do this, ente
r the capital investment order or the WBS element in the corresponding field of
the asset master data. Asset Management (AM) ensures that the specified order or
WBS element is automatically entered in the document during the asset acquisiti
In CO the order or WBS element is debited statistically. This statistical debiti
ng is checked by the system using the budget during availability control.