Cost Elements 


Cost elements classify an organizationís valuated consumption of production factors within a controlling area. A cost element corresponds to a cost-relevant item in the chart of accounts.


We distinguish between primary cost and revenue elements and secondary cost elements.

Primary Cost/Revenue Elements

A primary cost or revenue element is a cost or revenue-relevant item in the chart of accounts, for which a corresponding general ledger (G/L) account exists in Financial Accounting (FI). You can only create the cost or revenue element if you have first defined it as a G/L account in the chart of accounts and created it as an account in Financial Accounting. The R/3 System checks whether a corresponding account exists in Financial Accounting.

Examples of primary cost elements include:

Material costs

Personnel costs

Energy costs

Secondary Cost Elements

Secondary cost elements can only be created and administrated in cost accounting (CO). They portray internal value flows, such as those found in internal activity allocation, overhead calculations and settlement transactions.

When you create a secondary cost element, the R/3 System checks whether a corresponding account already exists in Financial Accounting. If one exists, you can not create the secondary cost element in cost accounting.

Examples of secondary cost elements include:

Assessment cost elements

Cost elements for Internal Activity Allocation

Cost elements for Order Settlement


Cost elements in Controlling (CO) are closely related to the general ledger accounts used in Financial Accounting (FI). This is because the SAP R/3 System is structured as an Integrated Accounting System:

Cost elements document which costs (differentiated by category) are incurred within a settlement period, and in which amount. They provide information concerning the value flow and the value consumption within the organization. Cost Element Accounting and Cost Center Accounting/Internal Orders are closely linked in the R/3 System. Each posting to an account that is also a cost element, is assigned either to a cost center or order. This ensures that at period-end the data is subdivided by cost elements and cost centers/internal orders for analysis purposes. The following section describes how you can subdivide and characterize cost elements in the R/3 System.

Cost element characteristics depend on the controlling area and the allocation methods used in your organization.