Create Cost Element – A summary of the activity

This activity allows you to define a cost element. Definition of a cost element is very important in MAC.

A cost element can be termed as an entity by which costs are identified. A cost element monitors major costs incurred at a cost center. A cost element is mapped to a “Detail” cost center. For example, if the finance department of a company has been defined as a cost center, the cost elements defined for it would be salary of the employees, audit fees, interest charges, printing and stationery or electricity charges.

A cost element can be categorized into three different types, namely, “Normal Cost Element”, “Allocation Cost Element” and “Activity Cost Element”. You can define a date range during which a cost element is effective. Unlike a cost center, the cost element is assigned a unit of measurement by which the costs are monitored. Cost Elements are created at the business unit level of the organization structure. The details of the logistics organization, business unit, company and organization unit are also stored along with the newly created cost elements.

This activity allows you to define multiple cost elements at a time.  You can define the cost elements based on the type of cost element. This activity also allows you to create normal cost elements based on the account codes that have been defined in the “Accounting Setup” business component. The system selects the account codes and generates cost elements.

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