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, Overhead Cost Definition and Define Overhead Cost pages.

When you create a new cost element you need to define the Overhead 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 230 the allowed overhead type will be Labor Overhead, and
When source element is 141 the allowed overhead type will be Delivery Overhead.

To use a predefined cost element as a source, select the new element's source from the List of values picker in the Source Element field. The source description is populated.

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 601,501,502,230 & 141, the element factor will be 100% and not possible to change.

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.

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.

Pages

Cost Elements
Define Overhead Cost
Overhead Cost Definitions

Activity Diagrams

BDR Set Up Costing Basic Data