Create Cost ElementsIn this IMG activity you create primary and secondary cost elements online.RequirementsYou have completed the IMG activity Maintain Controlling Area under General Controlling -> Organization.You have created G/L accounts in Financial Accounting (FI) for the primary cost elements.Activities1. Define the primary cost elements.Define the secondary cost elements.You can specify indicators such as:Cost element categoryRecord quantityQuantity unitDefault account assignments to cost centers or ordersNote on transportTo transport cost elements, a separate function is available in the IMG "General Controlling".Definition: secondary cost elementControlling (CO)A cost element that is used to allocate costs for internal activities.Secondary cost elements do not correspond to any G/L account in Financial Accounting. They are used only in Controlling and consequently cannot be defined in FI as an account.Primary Cost Element CategoriesYou can use the following cost element categories for primary cost elements:01: Primary costs / cost-reducing revenues This cost element category can be debited for all primary postings, for example, in Financial Accounting (FI) or in Materials Management (MM).Cost-reducing revenues are revenues that are to be handled in CO similarly to overhead costs, and which reduce the prices of an activity type or the costs to be assessed. This is the case, for example, with rent revenues, which reduce the room costs to be assessed. Cash discount amounts and exchange rate amounts are also cost-reducing revenues. Note: In contrast to revenues of cost element category 11, cost-reducing revenues in the CO module are typically assigned to cost centers. Note that when you use Profitability Analysis (CO-PA, costing-based) these cost-reducing revenues can only be transferred to Profitability Analysis during secondary allocations and not during invoicing. 03: Accrual Calculation Using the Percentage Method You can only use this cost element category during accrual calculation in Cost Center Accounting (component CO-OM-CCA) when you are using the percentage method. You can post directly from FI to take account of the actual costs incurred. The system also uses cost elements of this category to post the accrual amounts within Cost Center Accounting CO-OM-CCA. If you do take actual costs into account (say, for additional costs), create cost elements of this category in Controlling (CO) only. The account must be defined in the chart of accounts, but you do not need to create the general ledger account in FI.04: Accrual Calculation Using the Target=Actual Method Used in Cost Center Accounting (CO-OM-CCA) only for accrual calculation when you are using the target=actual method. You can post costs directly from FI to register actual costs incurred. At the same time, the system uses this category of cost element to post accrual cost amounts within Cost Center Accounting CO-OM-CCA. If you do take actual costs into account (say, for additional costs), create cost elements of this category in Controlling (CO) only. The account must be defined in the chart of accounts, but you do not need to create the general ledger account in FI.11: Revenues Used to post revenues. These revenues are generally posted during make-to-stock-production directly into the operating profit, or with make-to-order-production to the sales order.In Controlling (CO) revenues are displayed with negative +/- sign. An exception to this is Profitability Accounting (CO-PA, costing-based), in which all values, including revenues, are displayed with a positive +/- sign. Caution: If you post revenues to cost centers, the values are displayed as statistics only (for information purposes). This means: You can repost revenues to other cost centers to correct postings, but other allocation is not possible.Revenues are not taken into account during activity price iteration and are therefore not included in activity allocation prices. Note: Revenues are generally defined as cost element category 11. This enables the integrated transfer of billing documents to CO-PA. An exception to this rule is cost-effecting revenue. See the section "Primary Costs / Cost-Reducing Revenues".Example 12: Sales Deductions Used to post deductible items (sales adjustments, sales corrections) such as discounts and rebates. Certain deductible items (freight charged separately in the invoice, surcharges for small quantities, special orders) are not classified as sales deductions, but as revenue elements. You can use this category in the same manner as revenue elements (category 11). Values on cost centers are displayed as statistical only.22: External Settlement Used to settle order costs, project costs, or cost object costs to objects outside of CO. These objects could be assets (Asset Management), materials (Materials Management), or general ledger accounts (Financial Accounting). The R/3 System creates an accounting document when the costs are settled. Cost elements of this category cannot be used for settlement within CO (cost centers, orders, projects, and so on). Use secondary cost element category 21 for this purpose. The system does not create an accounting document when costs are settled within CO.90: Cost Elements for Balance Sheet Accounts in FI Automatically assigned when you create cost elements in CO whose general ledger accounts in FI are asset reconciliation accounts (special balance sheet accounts), not income statement accounts. You cannot change this category in CO master data maintenance. FI does not require CO account assignments to cost elements of category90. However, if you enter an account assignment, it is only recorded statistically for true objects.Category 90 cost elements enable you to check the budget of an order or project when you acquire fixed assets that can be directly capitalized. To do this, enter the capital investment order or the WBS element in the corresponding field of the asset master data. Asset Management (AM) ensures that the specified order or WBS element is automatically entered in the document during the asset acquisition.In CO the order or WBS element is debited statistically. This statistical debiting is checked by the system using the budget during availability control.