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Chapter 18 ■ Customizing the Controlling Module
Cost Element Accounting
The Cost Element function is very important and plays a significant role when reconciling costs and postings
between FI and the Controlling (CO) module. Cost Element is a function in CO that reconciles costs and
revenue in FI and primary costs in CO. Simply put, all cost and revenue flows via its cost element between FI
and CO.
In SAP, cost element is classified into two categories:
• Primary cost element: The primary cost element allows costs and revenues to
flow between FI and CO when a corresponding G/L account exists in FI. This cost
element can only be created in an environment where costs/revenues exist in a
G/L account in the chart of accounts in FI.
• Secondary cost element: This is the opposite of the primary cost element. Costs that
arise in controlling are purely for internal cost allocations, overhead apportionments,
and other internal costs.
A cost element can be created in IMG (Using Automatic Creation of Primary and Secondary Cost
Elements) or in Accounting. In this exercise, you will set default settings for Automatic Creation of Primary
and Secondary Cost Elements, Create Batch Input Session, and Execute Batch Input Session.
Make Default Settings for Automatic Creation of Primary and
Secondary Cost Elements
In this exercise, you will use the automatic cost element’s default settings to maintain cost elements
individually or as intervals with a corresponding cost element category. To set a default, follow this menu
path: IMG: Controlling ➤ Cost Element Accounting ➤ Master Data ➤ Cost Elements ➤Automatic Creation
of Primary and Secondary Cost Elements ➤ Make Default Settings. Or use transaction code OKB2. The
Determine Work Area Entry dialog box pops up. Enter your chart of accounts (CA90) in the Chart of
Accounts field and click the Enter button at the bottom of the screen. The Change View “Automatic
Generation of Cost Elements: Default Setting screen is displayed. To set the default settings for the automatic
postings, click the
button at the top of the screen. The New Entries Overview of Added Entries
screen is displayed (Figure 18-8).
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