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Former Member

expalin cost element category

Hi Experts,

Please explain me when to use which cost element category from the following:

1 Primary costs/cost-reducing revenues

3 Accrual/deferral per surcharge

4 Accrual/deferral per debit = actual

11 Revenues

12 Sales deduction

22 External settlement

I am more confused b/w 11 and 12. whats the difference b/w the 2.

Regards,

Sonali.

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1 Answer

  • Best Answer
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    Former Member
    Sep 01, 2008 at 11:13 AM

    Hello,

    Look at this:

    Primary Cost Element Categories

    You can use the following cost element categories for primary cost

    elements:

    o 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 overhead 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 room costs to be

    assessed. Cash discount amounts and exchange rate amounts are also

    cost-reducing revenues.

    Note:

    In contrast to revenues of cost element category 11, cost-reducing

    revenues in the CO module are typically assigned to cost centers. Note

    that when you use Profitability Analysis (CO-PA, costing-based) these

    cost-reducing revenues can only be transferred to Profitability Analysis

    during secondary allocations and not during invoicing.

    o 03: Accrual Calculation Using the Percentage Method

    You can only use this cost element category during accrual

    calculation in Cost Center 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 within Cost

    Center Accounting CO-OM-CCA.

    If you do take actual costs into account (say, for additional

    costs), create cost elements of this category in Controlling (CO)

    only. The account must be defined in the chart of accounts, but you

    do not need to create the general ledger account in FI.

    o 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 register actual costs incurred. At

    the same time, the system uses this category of cost 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 cost elements of this category in Controlling (CO)

    only. The account must be defined in the chart of accounts, but you

    do not need to create the general ledger account in FI.

    o 11: Revenues

    Used to post revenues. These revenues are generally posted during

    make-to-stock-production 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.

    Caution:

    If you post revenues to cost centers, the values are displayed as

    statistics only (for information purposes). This means:

    - You can repost revenues to other cost centers to correct

    postings, but other allocation is not possible.

    - Revenues are not taken into account during activity price

    iteration and are therefore not included in activity allocation

    prices.

    Note:

    Revenues are generally defined as cost element category 11. This

    enables the integrated transfer of billing documents to CO-PA. An

    exception to this rule is cost-effecting revenue. See the section

    "Primary Costs / Cost-Reducing Revenues".

    Example

    o 12: Sales Deductions

    Used to post deductible items (sales adjustments, sales corrections)

    such as discounts 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.

    o 22: External Settlement

    Used to settle order costs, project costs, or cost object costs to

    objects outside 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 centers, orders, projects, and so on). Use secondary cost

    element category 21 for this purpose. The system does not create an

    accounting document when costs are settled within CO.

    I hope it helps you.

    Regards,

    Daniel.

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