Define Cost Element

Explanation

Use this activity to enter and maintain user-defined cost elements to be used within the system. This is the only way to create user-defined overhead costs.

A cost element corresponds to a cost-generating item, e.g., material cost, work center cost, or labor cost. Cost elements define the lowest level of cost collection detail and are used to allocate costs that are not driven by activities.  A number of system-generated cost elements are already connected to costs and drivers of costs throughout the system. This activity allows you to connect cost elements to cost buckets.

This activity can be performed in the Cost Elements, Costing Basic Data/Overhead Cost Definition, and Overhead Cost Assistant windows.

Prerequisites

This activity has no specific prerequisites.

System Effects

As a result of this activity:

• The defined cost elements can be connected to and accessed from cost buckets.
• Depending on which overhead type is chosen, the overhead cost will be attributed differently and transferred to WIP (Work in Progress), if the final carrier of cost is the base of a shop order, at a different time.
• Setting the overhead type to Material Overhead causes the cost from this element to be listed in WIP when issuing the material. It will also be handled as material overhead in the cost build-up.

Window

Cost Elements
Costing Basic Data
Overhead Cost Assistant

Related Window Descriptions

Cost Elements
Costing Basic Data
Costing Basic Data/Overhead Cost Definition
Overhead Cost Assistant

Procedure

To perform this activity in the Cost Elements window, follow these steps:

1. Open the Cost Elements window. 
2. Create a new record.
3. In the Cost Element ID field, enter up to five alphanumeric characters for the cost element ID.
4. In the Element Description field, enter a description of the element.
5. To use a predefined cost element as a source, select the new element's source from the List of Values in the Source Element field. The source description is populated. 
6. In the Element Factor field, change the default (100.00%) if desired. This is used if you selected a predefined cost element in the Source Element field and defines the percent of the source's costs to be absorbed by the new cost element. This field is mandatory if you used another cost element as a source.
   Note: For cost elements where source element is 601,501,502 and 141, the element factor will be 100% and not possible to change.
7. If you have not based your new element on a source, you can enter a fixed cost that should be absorbed by the cost element in the Element Fixed Cost field.
8. In the Overhead Type list, click the overhead cost type to use for the user-defined element. This decides the posting type and event used for the overhead cost.
   Note: For elements where source element is 601, the allowed overhead type will be Sales Overhead, and
   When source element is 501 the allowed overhead type will be Material Overhead, and
   When source element is 502 the allowed overhead type will be General Overhead, and
   When source element is 141 the allowed overhead type will be Delivery Overhead.
9. Save the changes.

In the Costing Basic Data/Overhead Cost Definition window:

1. Open the Costing Basic Data window and click the Overhead Cost Definition tab.
2. Create a new record.
3. In the Cost Element ID field, enter up to five alphanumeric characters for the cost element ID.
4. In the Description field, enter a description of the element.
5. In the Overhead Type list, click the overhead cost type.
   Note: For elements where Source element is 601, the allowed overhead type will be Sales Overhead, and
   When source element is 501 the allowed overhead type will be Material Overhead, and
   When source element is 502 the allowed overhead type will be General Overhead, and
   When source element is 141 the allowed overhead type will be Delivery Overhead.
6. To use a predefined cost element as a source, select the new element's source from the List of Values in the Source Element field. The source description is populated. 
7. In the Element Factor field, change the default (100.00%) if desired. This is used if you selected a predefined cost element in the Source Element field and defines the percent of the source's costs to be absorbed by the new cost element.  This field is mandatory if you used another cost element as a source.
   Note: For cost elements where source element is 601,501,502 & 141, the element factor will be 100% and not possible to change.
8. If you have not based your new element on a source, you can enter a fixed cost in the Element Fixed Cost field. This decides the posting type and event used for the overhead cost.
9. Save the changes.

To perform this activity in the Overhead Cost Assistant window, follow these steps:

1. Open the Overhead Cost Assistant window.
2. In the Site list, click the site to which you want to connect the cost element. The description is populated.
3. In the Cost Element ID field, enter the ID of the cost element. The description is populated.
4. Click Next.
5. From the Overhead Type list, select the type of overhead cost you want to use. The associated posting type will be given automatically.
   Note: If the overhead type is Sales Overhead, only the cost elements 500 and 601 will be available as source elements.
6. Click Next.
   Note: For elements where source element is 601, the allowed overhead type will be Sales Overhead, and
   When source element is 501 the allowed overhead type will be Material Overhead, and
   When source element is 502 the allowed overhead type will be General Overhead, and
   When source element is 141 the allowed overhead type will be Delivery Overhead.
   For cost elements where source element is 601,501,502 & 141, the element factor will be 100% and not possible to change.
7. Specify whether you want to use a fixed cost or a factor by clicking the relevant option.. To work with a fixed cost, specify the cost in the field to the right of the Use Fixed Cost option. If you create a fixed overhead and specify Unit as overhead cost relation, the system does not have to divide by lot size. To work with a percentage factor of a source element, specify a percentage value in the field to the right of the Use Factor option. You also have to specify, in the Source Element ID  field, the cost element to use as a source. You can click List to select from available source elements.
8. Click Next.
9. Check the information you have entered to make sure everything is correct, then click Next.
10. Select whether you want to assign the cost element you are creating to cost templates right away or later. If you select to assign the element to one or more cost templates, you specify the templates in the Cost Template ID field.
11. Click Finish to create the cost element.