A cost element classifies what a cost is, occupying the position in CO that the G/L account occupies in FI. Every amount in CO carries one.
Two kinds
Cost elements divide into those arising from transactions with the outside world and those used only for internal movement.
| Aspect | Primary | Secondary |
|---|---|---|
| Matching G/L account | Yes, one expense account | None |
| Origin | External transactions โ purchases, payroll | Internal allocation and settlement |
| Total company expense | Increases | Unchanged |
| Typical use | Materials, personnel, depreciation | Overhead allocation, activity charging, assessment |
| Category | 1 (primary cost) and similar | 42 (assessment), 43 (activity allocation) |
Secondary cost elements exist so that internal movement can be recorded without touching FI. Allocating administration cost to sales adds nothing to total company expense; running it through an FI account would double-count.
Cost element categories
The category controls which transactions a cost element may be used in. Setting the wrong one blocks the postings you intended.
| Category | Kind | Use |
|---|---|---|
| 1 | Primary | Ordinary primary cost; the most common |
| 11 | Primary | Revenue, for CO-PA and profit centre accounting |
| 12 | Primary | Sales deductions โ discounts and rebates |
| 22 | Primary | External settlement, from an order to an asset or account |
| 41 | Secondary | Overhead application |
| 42 | Secondary | Assessment |
| 43 | Secondary | Internal activity allocation |
Cost element groups
A cost element group is a named set of cost elements, used to aggregate in reports and to scope allocations.
Defining groups such as personnel-related and facility-related keeps report definitions short, and adding a new cost element to a group updates every report that uses it. Groups can be nested for progressive levels of aggregation.
The S/4HANA merge
In ECC you created an expense account and then created a matching cost element separately with KA01 โ two master records under one number, and easy to get half-done.
S/4HANA removes the duplication. The cost element is an attribute of the G/L account, chosen through the account type when you create the account in FS00.
| Account type | Meaning |
|---|---|
| Balance sheet account | Never a cost element |
| Non-operating expense or income | A P&L account that is not a cost element |
| Primary cost or revenue element | A P&L account that is also a primary cost element |
| Secondary cost element | Internal CO movement only; never appears in FI |