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Primary Cost Elements Secondary Cost Elements
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In SAP, all primary cost elements are categorized as ‘1’ under CS00 controlling area. As we know, in Controlling there are two kinds of cost elements.īeing directly associated with G/L, it is linking FI and CO via FI direct posting to related cost objects (cost center, internal order, CO-PA object).
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In SAP Cost Allocation process, cost element plays the key role since costs flow from FI direct postings to related cost objects in Controlling. In course of daily operation, various department as given above incur costs which are captured under related cost centers: CCGAM, CCWH, CCLOG, CCRC, CCSERV. The following image will give us a good idea on organizational structure of CSN. SAP provides the most systematic foundation on how cost allocation process can contribute to the effecting reporting related to cost management. In this tutorial, we will try to understand different cost allocation methods in SAP which a successful organization can adapt in order to get clear insight about its cost accounting report.įor a dynamic organization with complex operations where multiple projects / activities are running on daily basis adding up to the company’s profitability, accurate costing flow between related cost objects becomes one of the vital factor to look at when it comes to project based costing. In this case, we will be using CSN departments as primary cost centers which will act as both sender and receiver cost objects. In the allocation planning, amount and quantities will be periodically determined and allocated from sender cost objects (like cost center) to receiver cost objects. This is where cost allocation planning comes to the picture where the company will consider impacted cost centers where costs will be allocated in related proportion. CSN management has come out with a strategy on how these costs can be charged to each impacted cost center to come out with the most efficient costing report. CSN Ltd has a division in the UK comprising of departments like Management, Logistics, Warehouse, Service and Quality Control.Įach of the departments has its own mode of operation running daily which incurs significant amount of cost which can be attributed as Direct and also Indirect. This company deals with after-sales services including repair and refurbishment services for products like laptops, PC, LCD monitors, etc. CSN Ltd operates as an IT equipment service center for reputed brands across the UK.