What is SAP Cost element accounting

In SAP, cost element accounting (CO-OM-CEL) deals with the collection of costs and summarizes costs within controlling and posts to reconciliation ledger account. For every profit & loss type G/L account type, corresponding cost elements are to be created in SAP R/3 system.

What are cost elements?

Cost element is an item in the chart of accounts, which is used in controlling area to record the values assigned consumption of production factors like raw material, utilities, etc. cost elements are divided in to two types i.e.

  1. Primary Cost / Revenue Elements
  2. Secondary Cost Elements

Primary Cost Elements: –

Primary cost elements describes the costs that occurs outside of controlling. It links to SAP financial accounting (FI) expenses account (corresponding to G/L account required for costs). When you are creating new primary cost elements, the SAP check if a corresponding accounts are available in SAP Financial accounting.

Cost Element Categories: – You need to assign a particular cost element category when you are implementing cost element accounting in SAP.

  • 01 – Primary costs / cost reducing revenues
  • 11 – Revenues
  • 12 – Sales deductions

Secondary Cost Elements

It describes the costs flows that occurs only within controlling like allocations, overhead cost calculations, etc. No link to SAP FI expense accounts.

Secondary Cost element category: – Similarly you need to assign a cost element category when you are creating secondary cost elements. Some of the important secondary cost element category are

  • 01 – Internal Settlements
  • 31 – Order/ Project results analysis
  • 41 – Overhead
  • 42 – Assessment
  • 43 – Internal activity allocation

SAP Cost Element Accounting (CO-CEL) Configuration

The primary configuration of cost element accounting in SAP involve maintenance of cost element master data and information system.

SAP Cost Element Accounting configuration

The important configuration steps of SAP CO-CEL are

Also read: what is cost center accounting in SAP.