Cost Element Accounting

Cost Elements are “Overheads”

They are:

  • Primary Cost Elements
  • Secondary Cost Elements

Primary Cost elements are Direct & Indirect Overheads which are part of Finance. Secondary Cost elements are dependent  of primary cost element, which are part of controlling. Planning will be done for secondary cost elements to which actual amount is released through finance, using primary cost element while posting the actual entry secondary cost elements are not directly posted to as it is part of controlling to integrate finance & controlling there should be cost centers like Production, Admin, Sales, Research Etc, these cost centers will have profit center with which company will analyse profit of each & every cost center while generating reports we can view,

Debit Entry of Finance &

Credit entry of Controlling

Primary Cost Elements bring the data (financial postings) into SAP. As shown below, the Primary Cost Elements carry the values from FI into different modules depending on the category or classification assigned to the G/L account.


It is important to note that cost elements with a category of “01” are considered an expense and post to a cost center. The value will also appear in PCA because each cost center is tied to a profit center. PCA receives the posting because of that relationship and not directly from the cost element.

Secondary Cost Elements move data around within CO and have NO impact on the General ledger. An example of this would be the allocation of electricity.

  •  In this example, the bills are received from the electric company that services the corporate offices of company 3000. The AP department posts a financial transaction that debits Utility Expense for Cost center 2100, which is used as a holding place for HQ expenses.
  • at the end of the month the value in cost center 2100 is allocated to the departmental cost centers based upon square footage using Secondary Cost Element 990000.

The result is that the costs posted to the budgets now reflect an overhead cost.


Display Actual Cost Documents:

Accounting⇒ Controlling ⇒ Cost Element Accounting  Information System  ⇒Reports for Cost and Revenue Element Accounting ⇒ Document Display  ⇒Controlling Documents: Actual Costs